Securities and Exchange Commission
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): June 24, 1998
CV REIT, INC.
(Exact name of registrant as specified in its charter.
Delaware 1-8073 59-0950354
(State or Other (Commission File Number) (IRS Employer
Jurisdiction of Identification
Incorporation) Number)
100 Century Boulevard, West Palm Beach, Florida 33417
(Address of Principal Executive Offices) (zip code)
Registrant's telephone number, including area code:
(407) 640-3155.
Item 2. Acquisition or Disposition of Assets.
On June 24, 1998, Marlton Plaza Associates II, L.P., a
Delaware limited partnership ("Partnership"), consummated the
acquisition of the Marlton Crossing Shopping Center - Phase I,
located in Evesham Township, Burlington County, New Jersey,
together with certain personal property and other interests
related thereto (collectively, the "Property"). The Property
consists of an approximately 151,745 square foot retail shopping
center. Tenants of the Property include SuperFresh Supermarket,
CVS Drug, Somnia Furniture and Champp's Restaurant. The Property
is 98.34% occupied. The Property was acquired from Marlton
Crossing Shopping Center Limited Partnership, a New Jersey
limited partnership ("Contributor"), pursuant to the terms of a
Contribution Agreement by and between Contributor and Montgomery
CV Realty L.P., a Delaware limited partnership (the "Operating
Partnership") which subsequently assigned all of its right, title
and interest in and to the Contribution Agreement to Partnership
(the "Agreement").
The purchase price for the Property under the Agreement was
Sixteen Million Fifty-Nine Thousand Dollars ($16,059,000) (the
"Purchase Price"). The Purchase Price was funded in part by a
loan in the amount of $11,650,000 (the "Loan") made by GMAC
Commercial Mortgage Corporation ("GMAC") to Partnership pursuant
to the terms of a Mortgage and Security Agreement dated as of
June 24, 1998 (the "Loan Agreement").
In connection with the Loan Agreement: (a) Partnership
delivered a $11,650,000 Promissory Note to GMAC; and (b)
Partnership granted GMAC a first mortgage on the Property and a
security interest in all of its personal property located on the
Property.
As a result of this acquisition by Partnership, the
Registrant indirectly obtained an interest in the Property. The
Registrant's ownership interest in the Property is held through
Montgomery CV Realty Trust, a Delaware business trust of which
Registrant is the one hundred percent (100%) beneficial owner
(the "Trust"). The Trust holds the general partner interest in
and approximately eighty-two percent (82%) of the limited partner
interests in the Operating Partnership. The Operating
Partnership is the sole member of Marlton Plaza II LLC, a
Delaware limited liability company (the "LLC") which is the sole
general partner of Partnership. The Operating Partnership is
also the sole limited partner of Partnership.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(a) Financial Statements of Business Acquired - Audited
financial statements of the Property are not included in this
report, and will be filed on or before August 8, 1998.
(b) Pro Forma Financial Information - Pro Forma information is
not included in this report, and will be filed on or before
August 8, 1998.
(c) Exhibits
2.1 Contribution Agreement dated May 29, 1998 by and
between Marlton Crossing Shopping Center Limited Partnership and
Montgomery CV Realty L.P.
2.2 Assignment and Assumption of Contribution Agreement
dated June 22, 1998 by and between Montgomery CV Realty L.P. and
Marlton Plaza Associates II, L.P.
2.3 Mortgage and Security Agreement dated as of June 24,
1998 by and between Marlton Plaza Associates II, L.P., as
Borrower, and GMAC Commercial Mortgage Corporation, as Lender.
2.4 $11,650,000 Promissory Note dated as of June 24, 1998
from Marlton Plaza Associates II, L.P. to GMAC Commercial
Mortgage Corporation.
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.
CV REIT, INC.
(Registrant)
Date: July 7, 1998
/s/ Louis P. Meshon, Sr.
Louis P. Meshon, Sr.
President and
Chief Executive Officer
EXHIBIT INDEX
2.1 tribution Agreement dated May 29, 1998 by and
between Marlton Crossing Shopping Center Limited
Partnership and Montgomery CV Realty L.P.
2.2 Assignment and Assumption of Contribution Agreement
dated June 22, 1998 by and between Montgomery CV Realty
L.P. and Marlton Plaza Associates II, L.P.
2.3 Mortgage and Security Agreement dated as of June 24,
1998 by and between Marlton Plaza Associates II, L.P.,
as Borrower, and GMAC Commercial Mortgage Corporation,
as Lender.
2.4 $11,650,000 Promissory Note dated as of June 24, 1998
from Marlton Plaza Associates II, L.P. to GMAC
Commercial Mortgage Corporation.
EXHIBIT 2.1
________________________________________________________________
CONTRIBUTION AGREEMENT
between
MARLTON CROSSING SHOPPING CENTER LIMITED PARTNERSHIP,
a New Jersey limited partnership
(as Contributor)
- and -
MONTGOMERY CV REALTY L.P.,
a Delaware limited partnership
(as Partnership)
_________________________________________________________________
Dated: May 29, 1998
Property: Marlton Crossing Shopping Center Phase I
Evesham Township, Burlington County, New
Jersey
TABLE OF CONTENTS
PAGE
1. Agreement to Contribute and Accept. . . . . . . . . . . . .1
2. OP Unit Amount; Existing and New Debt . . . . . . . . . . .2
2.1 Holding Period. . . . . . . . . . . . . . . . . .2
2.2 Mortgage Debt . . . . . . . . . . . . . . . . . .2
2.3 Deposit . . . . . . . . . . . . . . . . . . . . .2
2.4 Contributor and Partnership Condition . . . . . .3
2.5 Escrow of Deposit . . . . . . . . . . . . . . . .3
2.6 Title Insurer's Responsibility; Replacement Letter
of Credit3
3. Partnership's Covenants . . . . . . . . . . . . . . . . . .4
4. Title.. . . . . . . . . . . . . . . . . . . . . . . . . . .5
4.1 Condition of Title. . . . . . . . . . . . . . . .5
4.2 Inability to Convey Title . . . . . . . . . . . .6
5. Closing; Fees and Adjustments.. . . . . . . . . . . . . . .6
5.1 Closing Date. . . . . . . . . . . . . . . . . . .6
5.2 Cash Prorations . . . . . . . . . . . . . . . . .6
5.3 Fees and Closing Costs. . . . . . . . . . . . . .8
5.4 Contributor's Delivery Obligations at Closing.. 10
5.5 Partnership's Delivery Obligations at Closing . 14
6. Covenants, Representations and Warranties of Contributor. 14
6.1 Authority . . . . . . . . . . . . . . . . . . 14
6.2 No Defaults . . . . . . . . . . . . . . . . . 15
6.3 Leases. . . . . . . . . . . . . . . . . . . . 15
6.4 Service Contracts; Settlement Agreement . . . 16
6.5 Notices Regarding Physical Condition. . . . . 16
6.6 Condition of Property . . . . . . . . . . . . 17
6.6A Notices of Violations . . . . . . . . . . . . 17
6.7 Capital Accounts. . . . . . . . . . . . . . . 17
6.8 Assessments . . . . . . . . . . . . . . . . . 17
6.9 Condemnation. . . . . . . . . . . . . . . . . 17
6.10 Litigation . . . . . . . . . . . . . . . . . . 17
6.11 Environmental Disclosures. . . . . . . . . . . 18
6.12 Employees. . . . . . . . . . . . . . . . . . . 18
6.13 Title. . . . . . . . . . . . . . . . . . . . . 18
6.14 Untrue Statements. . . . . . . . . . . . . . . 19
6.15 Addresses. . . . . . . . . . . . . . . . . . . 19
6.16 Morgan-Stanley Letter. . . . . . . . . . . . . 19
6A. Covenants, Representations and
Warranties of Partnership . . . . . . . . 19
6A.1 Authority. . . . . . . . . . . . . . 19
6A.2 CV . . . . . . . . . . . . . . . . . 19
6A.3 No Defaults. . . . . . . . . . . . . 20
6A.4 Untrue Statements. . . . . . . . . . 20
6A.5 Partnership Agreement. . . . . . . . 20
6B. Special Provisions Regarding Cure. . . . . 20
7. Obligations and Operations Prior to Closing . . . . . . . 21
7.1 Existing Surveys and Reports. . . . . . . . . . 21
7.2 Maintenance of Operation. . . . . . . . . . . . 21
7.3 Leases and Service Contracts. . . . . . . . . . 21
7.4 Replacements. . . . . . . . . . . . . . . . . . 22
7.5 Liens . . . . . . . . . . . . . . . . . . . . . 22
7.6 Insurance . . . . . . . . . . . . . . . . . . . 22
7.7 Books and Records . . . . . . . . . . . . . . . 22
7.8 Inspections . . . . . . . . . . . . . . . . . . 22
7.9 Securities Compliance . . . . . . . . . . . . . 23
7.10 Right of First Refusal . . . . . . . . . . . . 23
8. Conditions Precedent to Partnership's Obligations . . . . 24
8.1 Omitted . . . . . . . . . . . . . . . . . . . . 24
8.2 Omitted . . . . . . . . . . . . . . . . . . . . 24
8.3 Title Policy. . . . . . . . . . . . . . . . . . 24
8.4 No Material Adverse Change. . . . . . . . . . . 24
8.5 Representations and Warranties. . . . . . . . . 24
8.6 Compliance by Contributor . . . . . . . . . . . 24
8.7 Omitted . . . . . . . . . . . . . . . . . . . . 24
8.8 ISRA Letter . . . . . . . . . . . . . . . . . . 24
8.9 Failure of Conditions . . . . . . . . . . . . . 25
8A. Conditions Precedent to Contributor's
Obligations . . . . . . . . . . . . . . . 25
8A.1 Representations and Warranties . . . 25
8A.2 Compliance by Partnership. . . . . . 25
8A.3 Failure of Conditions. . . . . . . . 25
9. Damage or Destruction; Condemnation; Insurance. . . . . . 26
9.1 Termination . . . . . . . . . . . . . . . . . . 26
9.2 Condemnation; No Termination. . . . . . . . . . 26
9.3 Casualty; No Termination. . . . . . . . . . . . 26
10. Partnership's Default . . . . . . . . . . . . . . . . . . 26
11. Contributor Default; Liability Limitation . . . . . . . . 26
12. Notices . . . . . . . . . . . . . . . . . . . . . . . . . 27
13. Brokers . . . . . . . . . . . . . . . . . . . . . . . . . 28
14. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . 28
14.1 Effective Date. . . . . . . . . . . . . . . . 28
14.2 Headings. . . . . . . . . . . . . . . . . . . 28
14.3 Parties at Interest . . . . . . . . . . . . . 28
14.4 Computation of Time . . . . . . . . . . . . . 29
14.5 Recording . . . . . . . . . . . . . . . . . . 29
14.6 Waiver. . . . . . . . . . . . . . . . . . . . 29
14.7 Survival. . . . . . . . . . . . . . . . . . . 29
14.8 Entire Agreement; Amendments. . . . . . . . . 30
14.9 Governing Law . . . . . . . . . . . . . . . . 30
14.10 "As Is" Contribution . . . . . . . . . . . . . 30
14.11 Counterparts . . . . . . . . . . . . . . . . . 30
14.12 Construction . . . . . . . . . . . . . . . . . 30
14.13 Partial Invalidity . . . . . . . . . . . . . . 30
14.14 Prevailing Party . . . . . . . . . . . . . . . 31
14.15 Time is of the Essence . . . . . . . . . . . . 31
14.16 Confidentiality. . . . . . . . . . . . . . . . 31
14.17 Undertakings by Contributor and Partnership. . 31
LIST OF EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . 33
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (the "Agreement") is made as of
the 29th day of May, 1998, by and between MARLTON CROSSING
SHOPPING CENTER LIMITED PARTNERSHIP, a New Jersey limited
partnership, whose address is c/o LCOR Incorporated, 300 Berwyn
Park, Suite 115, Berwyn, PA 19312 ("Contributor"), and MONTGOMERY
CV REALTY L.P., a Delaware limited partnership, whose address is
580 West Germantown Pike, Suite 200, Plymouth Meeting,
Pennsylvania 19462 ("Partnership"). (A list of all defined terms
used in this Agreement is set forth in Exhibit "A", attached
hereto and made a part hereof.)
WHEREAS, Contributor is the owner of a certain parcel of
land, together with the buildings and improvements thereon
erected ("Improvements"), and known as Marlton Crossing Shopping
Center Phase I, located in the Township of Evesham, County of
Burlington and State of New Jersey, as more fully described and
defined below as the "Real Estate"; and
WHEREAS, Contributor desires to contribute the Property to
Partnership, and Partnership desires to accept the Property from
Contributor, in return for the issuance by Partnership to
Contributor of certain limited partnership interests in
Partnership (all limited partnership interests in Partnership
being hereinafter referred to as "OP Units"), upon the terms and
conditions set forth in this Agreement.
NOW THEREFORE, in consideration of the covenants and
provisions contained herein and other good and valuable
consideration, and intending to be legally bound hereby, the
parties hereto agree as follows:
1. Agreement to Contribute and Accept. Contributor agrees
to contribute to Partnership, and Partnership agrees to accept
from Contributor, as a contribution to capital of Partnership
under Section 721 of the Code (hereinafter defined), subject to
the terms and conditions of this Agreement, the following
property:
(a) All that certain tract or piece of land situate in
Evesham, Burlington County, New Jersey, as more fully described
by metes and bounds on Exhibit "B" hereto, with the buildings and
other improvements situate thereon; together with all easements,
rights of way, licenses, privileges, hereditaments and
appurtenances, if any, belonging to or inuring to the benefit of
the land, and all right, title and interest of Contributor in and
to any land lying in the bed of any highway, street, road or
avenue, opened or proposed, in front of, or abutting or
adjoining, the real property (collectively, the "Real Estate");
and
(b) All fixtures, equipment, systems, furniture,
furnishings, appliances, supplies and other personal property of
every nature and description, owned by Contributor, tangible or
intangible, and attached or appurtenant to, or located in or on,
or used in connection with the Real Estate, including, but not
limited to, the heating, air conditioning, plumbing, sprinkler,
ventilation and utility systems, except such as are owned by
tenants of the Real Estate, and any and all rights Contributor
may have in or to all intangible property used by Contributor in
connection with the foregoing or the Real Estate, including,
without limitation, all contract rights, guarantees, licenses,
permits, warranties and the right (without representation or
warranty, and for use by Partnership solely in connection with
operation of the Improvements) to use the name "Marlton Crossing
Shopping Center" (collectively, the "Personalty"). The parties
acknowledge that the Personalty does not include Plenary Retail
Consumption Liquor License No. 0313-33-013-004 issued by Evesham
Township for use at the Property, which is currently owned by
Champps Entertainment, Inc., or any of Contributor's rights or
interests in any way relating to or arising out of such license
(including, without limitation, a Promissory Note and an Option
Agreement, both dated December 28, 1994, from Champps
Entertainment, Inc. and held by Contributor or its affiliates);
and
(c) All Leases, as defined in Section 4.1, and all
Service Contracts, as defined in Section 6.4. (The Real Estate,
the Personalty, the Leases and the Service Contracts are
hereinafter collectively referred to as the "Property.")
2. OP Unit Amount; Existing and New Debt. The aggregate
contribution value of the Property (the "OP Unit Amount") shall
be the number of OP Units equal to (a) the "Conversion Value",
which shall be equal to Sixteen Million Fifty-Nine Thousand
Dollars ($16,059,000) less the Existing Mortgage Payment (defined
below), divided by (b) the average closing price of the Common
Stock, as listed on the New York Stock Exchange, of CV Reit,
Inc., a Delaware corporation ("CV"), for the ten (10) trading
sessions immediately preceding the Closing (as defined in Section
5.1 below), excluding any trading session which occurs on the
date of Closing (the "Benchmark Value"). Fractional OP Units
shall not be issued, and the OP Unit Amount shall be rounded down
to the whole number of OP Units of which it is comprised.
2.1 Holding Period. The OP Unit Amount shall be
delivered into escrow at Closing to be held for one year in
accordance with the terms of the Escrow Agreement attached hereto
as Exhibit "C" and made a part hereof.
2.2 Mortgage Debt. At Closing, Partnership shall pay
Morgan Stanley Mortgage Capital, Inc. (the "Existing Mortgagee"),
the holder of the Contributor's Promissory Note dated July 14,
1987 in the original principal amount of $15,800,000 (the "Note")
and an existing Mortgage on the Property dated July 14, 1987 (the
"Mortgage"), the sum of up to Fifteen Million Eight Hundred
Thousand Dollars ($15,800,000) on account of the principal
indebtedness, accrued interest (other than for the month of
Closing, which is provided for in Section 5.3), equity
participation and other amounts evidenced by the Note and secured
by the Mortgage (the "Existing Mortgage Payment").
2.3 Deposit. As security for its obligations under
this Agreement, Partnership shall deposit with Chicago Title
Insurance Company ("Title Insurer") an irrevocable letter of
credit in the amount of Two Hundred Fifty Thousand Dollars
($250,000), with an expiration date of July 29, 1998. The
Deposit is hereby acknowledged to have been delivered into escrow
in accordance with Section 2.5 hereof. At Closing or upon the
earlier termination of this Agreement, the Deposit shall be
refunded to Partnership, except under the circumstances described
in Section 10 below.
2.4 Contributor and Partnership Condition.
Contributor's obligation to contribute the Property to
Partnership, and Partnership's obligations to accept the Property
from Contributor, make the Existing Mortgage Payment, and deliver
the OP Unit Amount to Contributor are expressly conditioned on
the Partnership obtaining a mortgage loan in the amount of no
less than Eleven Million Five Hundred Thousand Dollars
($11,500,000), the terms of which are non-recourse to Partnership
and its partners, except for standard lender required "carve
outs" which do not cause the mortgage loan to be classified as
recourse under Section 752 of the Internal Revenue Code of 1986,
as amended (the "Code"), with a fixed rate, requiring payment of
interest only or amortizing principal to no less than $11,500,000
by the date which is five (5) years after the date of Closing, at
Partnership's option (subject to the terms of Section 3(b)
below), having a maturity date at least seven (7) years
subsequent to the date of Closing, and including other terms and
conditions which are commercially reasonable in nature (the
"Replacement Mortgage"), for the purpose of financing in part the
Existing Mortgage Payment. Contributor and Partnership shall
cooperate in attempting to obtain the Replacement Mortgage.
Partnership shall pay the cost of placing the Replacement
Mortgage, including without limitation, the application,
commitment, appraisal, environmental audit, legal and other fees
and costs incurred or imposed by the lender who provides the
Replacement Mortgage. In the event that Partnership is unable to
obtain the Replacement Mortgage by the deadline for Closing
specified in Section 5.1 hereof, then the Deposit shall forthwith
be delivered to Contributor as non-refundable consideration for
Contributor's execution and delivery of this Agreement, this
Agreement shall be null and void and the parties hereto shall
have no further rights, obligations or liabilities hereunder.
2.5 Escrow of Deposit. The Deposit has this day been
deposited with and shall be held in escrow by Title Insurer, all
in accordance with the provisions of this Section 2.5 and the
laws of the State of New Jersey. The parties and Title Insurer
agree that the Deposit shall be delivered as follows:
2.5.1 If Closing is held, the Deposit shall be
returned to Partnership.
2.5.2 If Closing is not held by reason of
Partnership's default, the Deposit shall forthwith be delivered
to Contributor and shall be retained by Contributor as provided
for in Section 10 below; provided, however, that if Partnership
does not consent in writing to such delivery, Title Insurer shall
not deliver the Deposit to Contributor unless ordered to do so by
a court of competent jurisdiction.
2.5.3 If Closing is otherwise not held for any
reason other than a default of Partnership, the Deposit shall
forthwith be returned to Partnership; provided, however, that if
Contributor does not consent in writing to such delivery, Title
Insurer shall not deliver such Deposit to Partnership unless
ordered to do so by a court of competent jurisdiction.
2.6 Title Insurer's Responsibility; Replacement Letter
of Credit. The Title Insurer is acting only as escrowee
responsible for holding the Deposit in accordance with the
provisions of this Agreement. If there is a dispute between the
parties relating to the Deposit, then the Title Insurer shall
either (a) continue to hold the Deposit until directed otherwise
by notice of both Contributor and Partnership or court order or
(b) deliver the Deposit into court. Neither the Title Insurer,
nor any firm of which the Title Insurer is a member, shall, by
virtue of so acting, be disqualified from being engaged to
provide services to any party to this Agreement whether in the
event of litigation or otherwise. The parties agree that if the
Deposit is not replaced with a letter of credit in the same form
and amount at least ten (10) days prior to the expiration of any
letter of credit which then constitutes the Deposit, the Title
Insurer, or any court then holding the Deposit, shall present the
same for payment and hold the cash proceeds thereof as the
Deposit under this Agreement, in one or more money market type
interest bearing accounts with one or more banking or savings
institutions insured in the full principal amount by any agency
of the federal government. In such event, interest on the
Deposit shall be paid to the party who receives the Deposit under
this Agreement.
3. Partnership's Covenants. Provided that none of the OP
Units which comprise the OP Unit Amount have been converted by
Contributor or any other person who becomes the holder of the OP
Units into shares of the Common Stock of CV or otherwise sold,
transferred or conveyed by Contributor or any other person who
becomes the holder of the OP Units, Partnership agrees to fulfill
the following obligations for a period of four (4) years
following the Closing, at which time such obligations shall
terminate and become null and void, without any further action by
any party:
(a) Partnership shall not sell or otherwise dispose of
the Property, other than by virtue of Casualty Damage (as defined
in Section 9.1 hereof) or a Condemnation (as defined in Section
9.1 hereof), in a transaction which gives rise to taxable income
or gain to Contributor;
(b) Partnership shall maintain at least Eleven Million
Five Hundred Thousand Dollars ($11,500,000) of non-recourse debt
which encumbers the Property, except as such debt may be reduced
by a sale permitted under the preceding Section 3(a). For
purposes of this paragraph, "non-recourse debt" does not preclude
Partnership's agreement to accept standard "carve outs" from the
non-recourse nature of debt undertaken by Partnership which do
not cause such debt to be classified as recourse under Section
752 of the Code;
(c) Partnership shall not act as guarantor of or
surety for the non-recourse debt to be maintained by Partnership
pursuant to the preceding Section 3(b) (except for a guaranty of
or agreement to act as surety for the carve outs described in
such Section 3(b)), or secure the required non-recourse debt with
a mortgage of property other than the Property (and the terms of
the preceding Sections 3(a) and (b) shall not constitute
Partnership's agreement to act as guarantor or surety for the
non-recourse debt); and
(d) Partnership shall (i) utilize the "traditional
method" without curatives for purposes of Code Section 704(c)
relating generally to built-in gain, except for curative
allocations in connection with the sale or other taxable
disposition of the Property, as contemplated by Section 10.2 of
the Limited Partnership Agreement of Partnership, a copy of which
is acknowledged by Contributor to have been received by
Contributor, (ii) allocate for Federal income tax purposes not
less than Eleven Million Five Hundred Thousand Dollars
($11,500,000) of the non-recourse debt which is secured by the
Property to Contributor, and (iii) not take any action, except as
otherwise permitted by this Section 3, that would have the effect
of reducing the amount of the non-recourse debt which encumbers
the Property that is allocated to Contributor for purposes of
Code Section 752 (relating generally to the treatment of
partnership liabilities and related provisions) to be less than
Eleven Million Five Hundred Thousand Dollars ($11,500,000). Any
reduction in Contributor's allocable share of the non-recourse
debt which is secured by the Property resulting from any action
otherwise permitted herein (including, without limitation, a
permitted sale of the Property), or resulting from any increase
in the basis of the Property (including, without limitation,
increases resulting from renovations, replacements and/or the
addition of improvements to the Property), shall be deemed to be
permitted actions for the purposes of this Section 3(d).
Contributor and Partnership acknowledge and agree that any
taxes, interest, penalties and other costs, losses and expenses
incurred by Contributor, or any person controlling, controlled by
or under common control with the Contributor, as a result of the
allocation or reallocation of liabilities to Contributor or any
such person by any governmental authority that results in the
amount of non-recourse debt allocated to Contributor to be less
than the amount otherwise required hereunder, shall be borne
exclusively by, and shall be the sole responsibility of,
Contributor and such persons. Partnership shall have no
obligation or liability to Contributor or any such person (by way
of indemnification or otherwise) for any such taxes, interest,
penalties or other costs, losses or expenses.
Partnership shall, within ten (10) business days following
its receipt of notice of the beginning of an administrative
proceeding at the partnership level with regard to a partnership
item as contemplated by Section 6223(a)(1) of the Code, provide a
copy thereof to Contributor, together with a statement to the
best of its knowledge, information and belief as to whether at
that time Partnership has more than 100 partners and whether
Contributor has less than a 1% interest in the profits of
Partnership. Partnership will subsequently furnish to
Contributor within ten (10) business days of receipt copies of
all written notices and requests from the government with respect
to such partnership proceeding, unless such notice or request on
its face clearly indicates that Contributor was provided a copy
thereof.
4. Title.
4.1 Condition of Title. Title to the Real Estate
shall be good and marketable, free and clear of all liens,
encumbrances, encroachments, covenants, conditions, restrictions,
leases, licenses, security interests, easements, rights of way
and other title objections, except those leases, tenancies,
licenses and other rights of occupancy and use for all or any
portion of the Property (the "Leases") set forth in Exhibit "F"
hereto, and those other title objections described in Exhibit "D"
hereto (collectively the "Permitted Conditions of Title"); and
title shall be insurable as such under an ALTA Form B owner's
policy of title insurance (as most recently revised) (the "Title
Policy") issued at regular rates (with no additional charge for
the endorsements hereinafter described) by any reputable title
insurance company, in the amount of $16,300,000, which Title
Policy shall include, without limitation, endorsements insuring
that the covenants, conditions and restrictions which constitute
part of the Permitted Conditions of Title have not been violated
and that a future violation thereof will not cause a forfeiture
or reversion of title and such additional endorsements, such as
zoning, access, contiguity and location, as Partnership shall
notify Contributor will be necessary following Partnership's
review of the Title Commitment (hereinafter defined) and any
survey obtained by Partnership. Title to the Personalty shall be
good and marketable and free and clear of all liens, security
interests and other encumbrances, other than the Permitted
Conditions of Title. Partnership has obtained a commitment for
title insurance ("Title Commitment") and has delivered a copy
thereof to Contributor.
4.2 Inability to Convey Title. In the event
Contributor is unable to convey good and marketable title to the
Real Estate to Partnership such as will be insured by the Title
Policy, subject only to the Permitted Conditions of Title, then,
as Partnership's sole and exclusive remedy, Partnership shall
have the option of either (a) waiving its right to terminate this
Agreement due to the state of title and taking such title as
Contributor can give without abatement of the OP Unit Amount,
except that any existing liens or encumbrances which can be
removed by the payment of money (excluding the Existing Mortgage)
shall be paid and discharged by Contributor prior to Closing, or
(b) terminating this Agreement, in which event the Title Insurer
shall return the Deposit to Partnership, this Agreement shall
become null and void, and neither party shall have any further
obligations hereunder; provided, however, that if the inability
to convey title is due to the breach by Contributor of any of its
obligations hereunder, then Partnership's remedies shall not be
limited to termination of this Agreement and return of the
Deposit, and Partnership may exercise the remedies available to
Partnership as described in Section 11 hereof.
5. Closing; Fees and Adjustments.
5.1 Closing Date. Closing under this Agreement (the
"Closing") shall occur at 10:00 a.m. on or before June 29, 1998
at the offices of Fox, Rothschild, O'Brien and Frankel, LLP, 2000
Market Street, 10th Floor, Philadelphia, Pennsylvania 19103, or
the offices of Title Insurer, as Partnership may elect by written
notice to Contributor given not less than two (2) business days
prior to the date of Closing. Notwithstanding anything to the
contrary contained in this Agreement, under no circumstances
whatsoever shall Contributor be obligated to consummate the
transaction contemplated by this Agreement if Closing has not
occurred by 1:00 p.m. on June 30, 1998.
5.2 Cash Prorations. The following items of income
and expense shall be prorated as follows, based on a three
hundred sixty-five (365) day year:
5.2.1 Rents (excluding "Additional Rent" as
defined in Section 5.2.2 hereof, and "Percentage Rent" described
in Section 5.2.3 hereof) relating to the Property and collected
by Contributor for the month of Closing shall be deemed earned
ratably on a per diem basis and shall be prorated as of midnight
on the day immediately preceding the date of Closing ("Proration
Date"). Prepaid rents, to the extent attributable to a period
after the Proration Date, shall be credited to Partnership at
Closing. Unpaid or unbilled rents shall not be adjusted or
prorated at Closing but instead shall be handled in accordance
with the remaining provisions of this Section 5.2.1. All such
unpaid or unbilled rents collected by Contributor or Partnership
from a tenant or other payor after Closing shall be paid over and
applied in the following order of priority: (i) first, on
account of current rents due to Partnership after Closing from
such tenant or payor, until all current rents due from such
tenant or payor are paid; and (ii) thereafter, on account of
rents due to Contributor from such tenant or payor for the period
prior to Closing.
5.2.2 "Additional Rent" (i.e., common area
maintenance charges, taxes, insurance, utilities and similar
charges paid by the landlord and billed to tenants, but not
Percentage Rent) relating to the Property shall be prorated in
the following manner. At least five (5) days prior to Closing,
Contributor shall deliver to Partnership a statement of expenses
paid and payable by Contributor which have been billed or are
billable to tenants under their Leases. Such statement shall
include an adjustment of prepaid and payable items as of Closing,
in accordance with Section 5.2.6. The total amount of expenses
paid by Contributor, as so adjusted, which have been billed or
are billable to tenants under the Leases is referred to herein as
the "Expense Amount". The statement delivered by Contributor to
Partnership under this paragraph shall also include a calculation
by Contributor of Additional Rent collected by Contributor
(including, without limitation, Additional Rent billed and
collected on an estimated basis) on account of the Expense Amount
("Collected Additional Rent"). If the Expense Amount exceeds the
Collected Additional Rent, then at the time of each tenant's
reconciliation of Additional Rent at the end of the period in
which such reconciliation is to be made under the tenant's Lease
(the "Reconciliation Period"), Partnership shall bill the
appropriate portion of such excess amount to such tenant,
together with any deficiency in any estimated Additional Rent
collected by Partnership after Closing on account of expenses
incurred by Partnership after Closing which are applicable to the
Reconciliation Period. Partnership shall remit to Contributor
after Closing any amount received by Partnership in excess of
that which is due to Partnership on account of expenses incurred
by Partnership and billed to the tenant after Partnership has
been reimbursed for its share of expenses incurred after Closing
and during the Reconciliation Period which have been billed to
such tenant. In the event the Collected Additional Rent is
greater than the Expense Amount, then Partnership shall receive a
credit at Closing for the excess. Partnership and Contributor
shall make their books and records available to each other to the
extent necessary in order to carry out the intent of the
foregoing provisions and shall cooperate with each other in
connection therewith. In the event that, subsequent to Closing,
a tenant makes a claim or files an action against Contributor on
account of Contributor's collection from such tenant of such
tenant's share of Collected Additional Rent in excess of such
tenant's share of the Expense Amount, and Contributor has
credited Partnership at Closing for all or a part of the amount
which the tenant claims was overpaid to the Contributor, then
Partnership shall indemnify, defend and hold Contributor harmless
from and against any such claim or action to the extent of such
amount credited to Partnership.
5.2.3 Percentage rents relating to the Property
("Percentage Rent") shall be allocated and apportioned over the
period of time during which the sales giving rise thereto were
made. For example, if a tenant owes Percentage Rent for the
calendar year 1998, then Contributor's share shall be based on
the number of days during 1998 that Contributor held title to the
Property. Within ten (10) days after Partnership receives
Percentage Rent (or a statement thereof) from a tenant,
Partnership shall forward the appropriate amount thereof (or a
copy of said statement) to Contributor.
5.2.4 At Closing, Contributor shall transfer to
Partnership the amounts of all unapplied security deposits which
have been received from tenants under their Leases, if any,
together with all interest on such security deposits, if any,
which are due to the tenants under the provisions of the Leases
or applicable law, statute, code, order or regulation.
Contributor and Partnership shall also adjust as of the Proration
Date any payment for the month in which Closing occurs which is
due under the Settlement Agreement (as defined in Section 5.3.3).
5.2.5 All real estate taxes, special charges and
assessments for public improvements affecting the Property shall
be prorated on a per diem basis as of the Proration Date,
disregarding any discount or penalty and on the basis of the
fiscal year of the authority levying the same, whether or not
such have been levied as of the date of Closing. If any of the
same have not been finally assessed, as of the date of Closing,
for the current fiscal year of the taxing authority, then the
same shall be adjusted at Closing based upon the most recently
issued bills therefor, and shall be readjusted immediately when
and if final bills are issued.
5.2.6 Charges for water, electricity, sewer
rental, gas, telephone and all other utilities, and charges under
all Service Contracts assumed by Partnership shall be prorated on
a per diem basis as of the Proration Date, disregarding any
discount or penalty and on the basis of the fiscal year or
billing period of the authority, utility or other person levying
or charging for the same. If the consumption of any of the
foregoing is measured by meters, then in lieu of apportionment as
aforesaid, Contributor shall (i) not earlier than one (1) week
preceding the date of Closing, obtain a reading of each such
meter, (ii) prior to Closing pay all charges thereunder through
the date of the meter readings, and (iii) at Closing credit
Partnership with an amount, on an estimated basis, that is
sufficient to pay all charges for such metered utilities from the
date of the readings through the date of Closing. If there is no
such meter, or if meter readings cannot be obtained, or if the
bills for any of the foregoing charges have not been issued prior
to the date of Closing, the charges therefor shall be adjusted at
the Closing on the basis of the charges for the prior period for
which bills were issued and shall be further adjusted when the
bills for the current period are issued. Contributor and
Partnership shall cooperate to cause the transfer of the
Property's telephone numbers and utility accounts from
Contributor to Partnership. To the extent deposits held on
Contributor's behalf by utility companies are transferable to
Partnership, Contributor shall receive a credit at Closing in the
amount of such deposits (and any interest thereon), and such
deposits (and any interest thereon) shall be transferred and
placed in the name of Partnership. To the extent said deposits
are not transferable to Partnership, Contributor shall seek a
refund of such deposits, and Partnership shall have no claim with
regard to the same.
The adjustments and prorations made pursuant to this Section
5.2 shall be made in cash and shall not affect the Conversion
Value. Such adjustments and prorations shall be netted and
Contributor shall pay Partnership, or Partnership shall pay
Contributor, at Closing, the net cash amount which either party
owes the other pursuant to this Section 5.2.
5.3 Fees and Closing Costs. The parties agree to
payment and accounting of the following fees and costs in the
following manner:
5.3.1 At Closing, Partnership shall pay to LCOR
Asset Management Limited Partnership, a Delaware limited
partnership ("LCOR"), (a) a fee in the amount of Ninety-Five
Thousand Dollars ($95,000) (the "Financing Fee") in consideration
for the Existing Mortgagee's agreement to cancel the Note and
satisfy the Mortgage upon payment to the Existing Mortgagee of
the Existing Mortgage Payment, and (b) a fee in the amount of
Fifty Thousand Dollars ($50,000) ("Management Termination Fee")
for termination of an existing Management Agreement dated October
1, 1986, by and between Contributor and Realty Management Company
of South Jersey, Inc. ("Former Manager") and assigned January 18,
1995 by Former Manager to LCOR, with respect to the management of
the Property ("Management Agreement").
5.3.2 At or prior to Closing, Partnership shall
pay the following costs and expenses applicable to the
transactions contemplated by this Agreement:
(a) legal fees and costs of outside counsel
representing Contributor in such transactions;
(b) legal fees and costs of outside counsel
representing the Existing Mortgagee, to the extent the Existing
Mortgagee requires Contributor to pay such costs;
(c) other fees and costs imposed by the
Existing Mortgagee in connection with canceling the Note and
satisfying the Mortgage (excluding, however, scheduled periodic
debt service);
(d) interest due under the Note with respect
to the month in which Closing occurs;
(e) any tenant improvement costs which have
been incurred under Leases, or for which the landlord is
responsible under Leases regardless of whether they have yet
accrued, and which remain unpaid as of Closing; and
(f) leasing commissions under brokerage
agreements which Contributor is a party to or which Contributor
is bound by which have been earned but remain unpaid as of
Closing.
The foregoing costs and expenses described in this Section
5.3.2, together with the Financing Fee and the Management
Termination Fee, are hereinafter referred to as the "Accountable
Closing Costs". To the extent that Accountable Closing Costs
exceed Two Hundred Thousand Dollars ($200,000) (such excess
constituting "Excess Closing Costs"), the Conversion Value shall
be reduced by such Excess Closing Costs but not below One Hundred
Fifty Thousand Dollars ($150,000). Any Excess Closing Costs
which under the foregoing limitation are not applied to reduce
the Conversion Value shall be paid by Contributor to Partnership
in cash at Closing (or included in the netting of costs and
expenses described in the last paragraph of Section 5.2 hereof,
at the option of either party).
5.3.3 Partnership acknowledges that Contributor
is a party to that certain Settlement Agreement dated December
23, 1994, by and among, inter alia, Contributor and TDCR
Associates, L.P., a Delaware limited partnership ("TDCR"), a copy
of which is attached hereto as Exhibit "E" and made a part hereof
(the "Settlement Agreement"). In the event that, prior to
Closing, Contributor negotiates a permanent, level discount of
the annual amount payable by Partnership to TDCR subsequent to
Closing under the terms of the Settlement Agreement, then upon
delivery to Partnership of an agreement documenting such discount
executed by TDCR, Contributor and any other necessary parties
thereto, in a form reasonably acceptable to Partnership, the
Conversion Value will be increased at Closing by an amount equal
to $8.00 multiplied by the annual discount (not the aggregate
discount achieved over the life of the Settlement Agreement) so
received (the "Base Figure"), provided, however, that the Base
Figure shall be reduced by cash paid by the Partnership to TDCR
at Closing in an amount sufficient to effectuate the
aforementioned discount in its entirety.
5.3.4 At Closing, Partnership shall pay all
realty transfer taxes, recording fees, deed taxes and similar
charges assessed with respect to the conveyance of the Property.
Partnership shall be responsible and shall pay for all legal fees
and costs of outside counsel representing Partnership in the
transactions contemplated by this Agreement, and for all basic,
additional or special title premiums or other title charges.
Unless otherwise specified in this Agreement, each party shall
pay all other fees, costs and expenses incurred by such party in
the performance of such party's obligations hereunder.
5.3.5 If, within four years following Closing,
American Multi-Cinema, or an entity controlling, controlled by or
under common control with American Multi-Cinema (collectively,
"AMC") agrees to sell to Partnership or an entity controlling,
controlled by or under common control with Partnership the
approximately 26 acre tract of land located behind the Property
(the "AMC Tract"), then Partnership shall pay to LCOR or LCOR's
designee a fee equal to ten percent (10%) of the purchase price
payable for the AMC Tract ("Sales Fee"), at the time of Closing
of the sale and purchase of the AMC Tract. In the event that,
subsequent to the acquisition of the AMC Tract by Partnership or
an entity controlling, controlled by or under common control with
Partnership, LCOR or an entity controlling, controlled by or
under common control with LCOR provides development services to
the Partnership or such an entity related to Partnership which
acquires the AMC Tract, for the construction of an AMC multiplex
theater, then the entity which acquired the AMC Tract shall be
entitled to a credit against the aggregate development fee
payable on account of such development services in an amount
equal to thirty percent (30%) of the Sales Fee.
5.3.6 If any leasing commissions under brokerage
agreements which Contributor is a party to or which Contributor
is bound by are not earned as of Closing but are earned
subsequent to Closing, with respect to Leases of the Property
(including, without limitation, by virtue of any extension or
renewal of a Lease which becomes effective after Closing), then
Contributor shall remain solely liable for any such leasing
commissions, and shall indemnify, defend and hold Partnership
harmless from and against any and all liabilities, claims,
damages, costs or expenses arising from or in connection with the
obligation to pay such leasing commissions.
5.4 Contributor's Delivery Obligations at Closing.
At Closing, Contributor shall deliver to Partnership
the following:
5.4.1 A Bargain and Sale Deed with Covenants as
to Grantor's Acts (the "Deed"), duly executed and acknowledged by
Contributor, by which fee title to the Real Estate shall be
conveyed to Partnership.
5.4.2 A Bill of Sale, duly executed by
Contributor, conveying to Partnership all of Contributor's right,
title, and interest in and to the tangible Personalty, free and
clear of all liens, encumbrances, claims and security interests,
subject only to the Permitted Conditions of Title.
5.4.3 An assignment to Partnership of all of
Contributor's right, title and interest in and to all Leases and
all of Contributor's right, title and interest in and to all
security deposits, prepaid rent and other prepaid monies, if any,
paid or deposited by tenants under the Leases, and the interest
earned thereon, if any, to date (along with an accounting of such
security deposits, prepaid rents and other monies), duly executed
and acknowledged by Contributor, containing a warranty that
Contributor has not previously assigned or encumbered the Leases,
or Contributor's right, title and interest in and to said
security deposits, prepaid rent and other monies, which
assignment or encumbrance will remain outstanding after Closing,
and a provision wherein Contributor agrees to indemnify, defend
and hold Partnership harmless from and against any and all
liability, claims, or damages arising from or in connection with
Contributor's duties and obligations to tenants under the Leases
prior to the date of Closing, and any and all liability to or
claims or damages of tenants arising from or in connection with
those security deposits, prepaid rent and said other monies, made
by tenants with Contributor but not delivered or credited by
Contributor to Partnership at Closing pursuant to this Agreement
(the "Assignment and Assumption of Leases"). The Assignment and
Assumption of Leases shall also be executed by Partnership, who
shall therein agree to assume and agree to perform Contributor's
duties and obligations under the Leases accruing on and after the
date of Closing and to indemnify, defend and hold Contributor
harmless from any liability, claims or damages arising from or in
connection with Partnership's duties and obligations thereunder
from and after the date of Closing and any and all liability to
or claims or damages of tenants arising from or in connection
with those security deposits, prepaid rent and other prepaid
monies, if any, delivered or credited to Partnership pursuant to
this Agreement.
5.4.4 (a) An assignment to Partnership of all of
Contributor's right, title and interest in and to all Service
Contracts other than Rejected Contracts (as defined in Section
7.3), duly executed by Contributor (the "Assignment and
Assumption of Service Contracts"), wherein Contributor agrees to
indemnify, defend and hold Partnership harmless from and against
any and all liability, claims or damages arising from or in
connection with Contributor's duties and obligations under the
Service Contracts prior to the date of Closing. The Assignment
and Assumption of Service Contracts shall also be executed by
Partnership, who shall therein agree to assume and agree to
perform Contributor's duties and obligations under the Service
Contracts accruing on and after the date of Closing and to
indemnify, defend and hold Contributor harmless from any
liability, claims or damages arising from or in connection with
Partnership's duties and obligations thereunder from and after
the date of Closing, and (b) the written consent of all parties
to Service Contracts assigned by Contributor whose consents are
required in order to make such assignment binding upon such
parties, to the extent such consents have been obtained.
5.4.5 An assignment to Partnership of all
existing assignable written guarantees and warranties issued in
connection with the construction, improvement, alteration or
repair of the buildings, structures and other improvements
constituting part of the Real Estate and in connection with the
purchase or repair of any Personalty, duly executed by
Contributor, together with the original of each such guarantee
and warranty, to the extent available and in Contributor's
possession.
5.4.6 An assignment to Partnership of all of
Contributor's right, title and interest in and to the intangible
Personalty, to the extent assignable or transferable, including,
without representation or warranty, and for use by Partnership
solely in connection with operation of the Improvements, whatever
right, if any, Contributor may have to use the name "Marlton
Crossing Shopping Center", duly executed by Contributor.
5.4.7 Evidence of termination of the Management
Agreement.
5.4.8 To the extent then in Contributor's
possession, or the possession of any entity controlling,
controlled by or under common control with LCOR, the originals of
(i) all Leases, (ii) all Service Contracts, and (iii) all other
materials identified in the Exhibits hereto, all other records
and files relating to the current leasing, operation and
maintenance of the Property (whether or not specifically
enumerated herein), and keys to all locks on the Property.
5.4.9 To the extent existing and in Contributor's
possession, or the possession of any entity controlling,
controlled by or under common control with LCOR, all current
certificates of occupancy, licenses, permits, authorizations,
consents and approvals required by any law, ordinance, or
regulation for the use and occupancy of the Property and issued
by any governmental or quasi-governmental authority having
jurisdiction over the Property, and copies of all current
certificates, if any exist and are in Contributor's possession,
issued by the local board of fire underwriters (or other body
exercising similar functions) with respect to the Property.
5.4.10 To the extent existing and in
Contributor's possession or the possession of any entity
controlling, controlled by or under common control with LCOR, a
full set of final "as built" plans and specifications used in the
construction of the buildings, structures and other improvements
constituting part of the Real Estate, and any off-site
improvements constructed in connection therewith, and any
"as-built" drawings of underground utilities (including storm
sewer, sanitary sewer, water, and telephone electric service
cables) located under the Real Estate.
5.4.11 The real estate and personal property tax
bills pertaining to all or any part of the Property for the five
most recent years, including pending tax protests or appeals, if
any, and all documents and pleadings relating thereto, and the
current notice of assessed valuation.
5.4.12 An up-to-date rent roll marked as Exhibit
"F-1" as required by Section 6.3 hereof.
5.4.13 Notices to tenants, in the form prepared
by Partnership and approved by Contributor, duly executed by
Contributor, advising of the contribution of the Property by
Contributor to Partnership, and directing that rent and other
payments thereafter be sent to Partnership (or its agent) at the
address provided by Partnership at Closing, unless otherwise
directed by Partnership.
5.4.14 A tenant estoppel certificate from each
tenant leasing space at the Property who executes and delivers
such a certificate to Contributor, dated not earlier than sixty
(60) days prior to the date of Closing and consistent with
Contributor's representations set forth in Section 6.3 and
Exhibits "F" and "F-1". Contributor shall deliver tenant
estoppel certificates in the form of Exhibit "G" to all of the
tenants under Leases, and shall use reasonable business efforts
to have such certificates executed, such efforts to include,
without limitation, Contributor's bringing to the attention of
such tenants any provisions of their respective Leases which
require such tenants to execute such certificates. For each
tenant from whom Contributor is unable to obtain an estoppel
certificate in the form of Exhibit "G"; Contributor shall deliver
to Partnership a Landlord's Affidavit, in the form of Exhibit
"G-1", providing the same information requested from the tenants
in the tenant estoppel certificate.
5.4.15 A written certification dated no earlier
than ten (10) days prior to the date of Closing, in compliance
with The Tax Reform Act of 1984 (the "Act") and the regulations
thereunder that are imposed by the Foreign Investment in Real
Property Tax Act ("FIRPTA"), stating that Contributor is not a
person or entity subject to withholding under FIRPTA and the Act,
and containing Contributor's tax identification number and
address, duly executed by Contributor.
5.4.16 An affidavit to the Title Insurer of the
type customarily provided by sellers of real property to induce
title companies in the area of the Real Estate to insure over
certain "standard" or "preprinted" exceptions to buyers' title
policies, and such other affidavits and documents reasonably
required by the Title Insurer to issue the Title Policy.
5.4.17 A certificate executed by Contributor
stating that the representations and warranties made herein by
Contributor to Partnership on and as of the date of this
Agreement are true and correct in all material respects on and as
of the date of Closing, except that if such statement is
incorrect based upon changes in facts, upon the basis of which
such representations and warranties were made, occurring after
the date of this Agreement, then Contributor shall deliver to
Partnership a certificate executed by Contributor stating which
representations and warranties are still true and correct in all
material respects on and as of the date of Closing, which
representatives and warranties are no longer true and correct in
all material respects on and as of the date of Closing, and the
reasons why the latter representations and warranties are no
longer true and correct.
5.4.18 The Escrow Agreement duly executed and
acknowledged by Contributor.
5.4.19 Evidence of acceptance, in a form
reasonably satisfactory to the partnership counsel of
Partnership, of all of the terms and conditions of the Amended
and Restated Agreement of Limited Partnership of Partnership,
dated December 31, 1997, including, without limitation, the power
of attorney granted in Section 2.4 thereof, and such other
documents or instruments as may be reasonably required by such
counsel, in order to effectuate the Contributor's admission as a
limited partner in Partnership.
5.5 Partnership's Delivery Obligations at Closing. At
Closing, Partnership shall deliver the OP Unit Amount to
Contributor, by delivering same to Escrow Agent (as defined in
the Escrow Agreement) on behalf of Contributor, shall deliver to
the persons entitled thereto the other payments required under
this Agreement to be made by Partnership, and shall deliver the
following directly to Contributor:
5.5.1 The Assignment and Assumption of Leases
duly executed and acknowledged by Partnership.
5.5.2 The Assignment and Assumption of Services
Contracts duly executed by Partnership.
5.5.3 A certificate executed by Partnership to
the effect that the representations and warranties made herein by
Partnership to Contributor on and as of the date of this
Agreement are true and correct in all material respects on and as
of the date of Closing, except that if such statement is
incorrect based upon changes in facts, upon the basis of which
such representations and warranties were made, occurring after
the date of this Agreement, then Partnership shall deliver to
Contributor a certificate executed by Partnership stating which
representations and warranties are still true and correct in all
material respects on and as of the date of Closing, which
representatives and warranties are no longer true and correct in
all material respects on and as of the date of Closing, and the
reasons why the latter representations and warranties are no
longer true and correct.
5.5.4 The Escrow Agreement duly executed and
acknowledged by Partnership.
5.5.5 Evidence, in a form reasonably
satisfactory to counsel to Contributor, of Contributor's
admission as a limited partner in Partnership. Contributor's
receipt of a copy of Partnership's Amended and Restated Agreement
of Limited Partnership dated December 31, 1997, and documents
admitting Contributor as a limited partner in Partnership,
executed by Contributor, shall constitute satisfactory evidence
under this Section 5.5.5.
6. Covenants, Representations and Warranties of
Contributor. Contributor covenants, represents and warrants to
Partnership as follows (each of which is material and is being
relied upon by Partnership):
6.1 Authority. Contributor is a limited partnership,
duly formed and validly existing under the laws of the State of
New Jersey. Contributor has full power, authority and legal
right to execute, deliver and comply with this Agreement, any
other document relating thereto, and the transaction contemplated
hereby. The persons executing this Agreement and all other
documents required to consummate the transactions contemplated
hereby on behalf of Contributor are duly authorized to execute
this Agreement and such other documents on behalf of Contributor,
and are authorized to bind Contributor. All actions of
Contributor and other authorizations necessary or appropriate for
the execution and delivery of and compliance with this Agreement
and such other documents by Contributor have been taken or
obtained and, assuming the due execution and delivery of this
Agreement and such other documents by, and enforceability
against, Partnership, upon their execution by Contributor, this
Agreement and such other documents shall constitute the valid and
legally binding obligations of Contributor, enforceable against
Contributor in accordance with their respective terms, subject to
general principles of equity and laws pertaining to bankruptcy,
insolvency and similar matters.
6.2 No Defaults. The execution of this Agreement by
Contributor does not, and the performance by Contributor of the
transactions contemplated by this Agreement shall not, violate or
constitute a breach of (a) the partnership agreement of
Contributor, (b) any permit, license, order or decree affecting
Contributor or its assets, or (c) any indenture, mortgage, deed
of trust or other agreement to which Contributor is a party and
by which Contributor or its assets are bound.
6.3 Leases. There is stated on Exhibit "F" a complete
and correct list of all Leases in effect on the date of this
Agreement, and the information set forth therein is true and
correct as of the date hereof. A revised Exhibit "F", to be
designated Exhibit "F-1", shall be certified by Contributor to be
true and correct as of Closing, shall reflect those Leases in
effect on the date of Closing and shall be delivered to
Partnership at Closing as provided in Section 5.4.12 hereof. As
of the date hereof, other than as indicated in Exhibit "F", each
of the Leases described in Exhibit "F" is, to the best of
Contributor's knowledge, valid and subsisting and in full force
and effect, has not been amended, modified or supplemented, and
the tenant under each is in actual possession of the leased
premises in the normal course of business. The copies of the
Leases delivered by Contributor to Partnership for Partnership's
review were true and complete copies thereof. No tenant under
any of the Leases has given Contributor written notice of any
claim which remains outstanding on the date of this Agreement and
which would in any way affect the collection of rent from such
tenant, Contributor has received no written notice of default or
breach on the part of the landlord under any of the Leases which
remains uncured by the landlord, and all repairs, improvements,
alterations and other obligations required on the date hereof to
be performed by the landlord under each of the Leases have been
performed in all material respects and have been or will be paid
for by Contributor prior to Closing, except as described on
Exhibit "F". There are no tenant improvements or alterations
which are the Landlord's responsibility under Leases, but which
have not yet been performed in all material respects because such
performance is not yet required by Landlord thereunder, except as
described on Exhibit "F" (the "Remaining Work"). Contributor
shall complete the Remaining Work and pay for it in full prior to
Closing, except that to the extent that completion of any
Remaining Work is not required prior to Closing under the Leases,
Contributor may, in its discretion, not complete such Remaining
Work, in which event, as part of Exhibit "F-1" to be delivered to
Partnership at Closing, Contributor shall list the Remaining Work
which has not yet been done and the itemized cost thereof, which
cost shall serve as the basis for the adjustment described in
Section 5.3.2(e). The rents and other income and charges set
forth in Exhibit "F" or in the applicable Leases are the actual
rents, income and charges presently being charged by Contributor
under the Leases, and the same have been actually received as
indicated on Exhibit "F". Except as described in Exhibit "F" or
in the applicable Leases, no space within the Real Estate is
occupied rent free or by any employee of Contributor. Except as
expressly set forth on Exhibit "F" or in the applicable Leases,
no tenant under any of the Leases is entitled to any purchase
option, concessions, allowances, set-off, rebates or refunds
thereunder or has prepaid any rents or other charges for more
than the current month, and none of such Leases and none of the
rents or other amounts payable thereunder have been assigned,
pledged or encumbered by Contributor, which assignment or
encumbrance will remain outstanding after Closing. All of the
Leases are free and clear of any right or interest of any real
estate broker or any other person arising out of landlord's acts
or the acts of any predecessor landlord, and no brokerage or
leasing commission or other compensation is or will be due from
or payable by landlord to any person, firm, corporation or other
entity with respect to or on account of any of the Leases or any
extensions or renewals thereof, except as described on Exhibit
"F". There are currently no security deposits required under, or
being held pursuant to, any of the Leases, except as set forth in
Exhibit "F" hereto or in the applicable Leases. Except as shown
on Exhibit "F" or in the applicable Leases, to the best of
Contributor's knowledge, no party, person or entity is in
possession of the Real Estate or Personalty or any portion
thereof, and no party, person or entity has legal title of any
interest in the Real Estate or Personalty, or any portion
thereof, except Contributor.
6.4 Service Contracts; Settlement Agreement. There
are no contracts to which Contributor is a party, other than the
Management Agreement, relating to the ownership, development,
construction, operation, management, servicing or use of all or
any portion of the Property (including, without limitation,
equipment, supply, maintenance and concession agreements), or any
guarantees and warranties extended or assigned to Contributor in
connection therewith (collectively "Service Contracts") in effect
on the date hereof other than those which are described in
Exhibit "H", and the information set forth therein with respect
to such Service Contracts is true and correct as of the date
hereof. There are no persons employed on-site by Contributor in
connection with the management, operation or maintenance of all
or any portion of the Property whose employment will not be
lawfully terminated, prior to Closing, without recourse to
Partnership. The Service Contracts delivered by Contributor to
Partnership are true and complete copies of all Service Contracts
now in effect. No person or entity party to any Service Contract
has given notice to Contributor of any claim of default on the
part of the owner under any such Service Contract which remains
uncured by the owner. The fees and other charges described in
the Service Contracts have been paid on a current basis, to the
extent due, through the date hereof. No contractor under any of
the Service Contracts has claimed any additional fees or other
charges, or has received any prepaid fees or charges for other
than the current month. The Settlement Agreement attached hereto
as Exhibit "E" is a true, correct and complete copy, and has not
been modified or amended in any way. No person or entity party
to the Settlement Agreement has given notice to Contributor of
any claim of default on the part of Seller under the Settlement
Agreement, and Contributor shall correct any such default or
breach by Contributor of which notice is received prior to
Closing. The fees and other charges described in the Settlement
Agreement which are payable by Contributor have been paid on a
current basis, to the extent due, through the date hereof.
6.5 Notices Regarding Physical Condition. No notice
has been received by Contributor from any holder of any mortgage
on the Real Estate, from any insurance company which has issued a
policy with respect to any portion of the Real Estate, or from
any board of fire underwriters (or other body exercising similar
functions), any of which notices claim any defect or deficiency
or request the performance of any repairs, alterations or other
work to the Real Estate which remains uncomplied with by
Contributor.
6.6 Condition of Property. To the best of
Contributor's knowledge, there are no material defects in,
mechanical failure of or damage to the major components of the
physical Improvements which constitute part of the Property,
consisting of the roof, structure and load bearing walls.
6.6A Notices of Violations. Contributor has not
received, and has no knowledge of the issuance of, any notices of
any existing violations of any federal, state, county or
municipal laws, ordinances, orders, codes, regulations or
requirements affecting all or any portion of the Real Estate,
including, without limitation, violations of the housing,
building, safety, health, fire, subdivision or zoning laws,
ordinances, codes and regulations of the municipality or county
within which the Real Estate is located.
6.7 Capital Accounts. The aggregate deficit balances
of the capital accounts of the partners of Contributor, as
determined under Section 704 of the Code and the regulations
promulgated thereunder (the "Aggregate Deficit Accounts"), as of
December 31, 1997, was no less than (i.e., not a smaller negative
amount than) $10,935,890, and the Aggregate Deficit Accounts, as
of the date of Closing, will be no less than (i.e., not a smaller
negative amount than) $10,686,000.
6.8 Assessments. To the best of Contributor's
knowledge, no portion of the Real Estate is subject to any
special assessment (for public improvements or otherwise) whether
or not there is presently a lien thereon and Contributor has not
received notice from any governmental authority having
jurisdiction that such an assessment has been proposed. After
the most recent tax bills and assessments received by Contributor
and delivered to Partnership, Contributor has received no notice
of any proposed increase in the assessed valuation of the Real
Estate for tax purposes, or of any proceeding pending for the
reduction of the assessed valuation of all or any portion of the
Real Estate for tax purposes.
6.9 Condemnation. Contributor has not received notice
of any pending or threatened condemnation, expropriation, eminent
domain or similar proceeding affecting all or any portion of the
Real Estate.
6.10 Litigation. No actions, suits or proceedings
have been instituted and served upon Contributor and, to the best
of Contributor's knowledge, there are no actions, suits or
proceedings pending or threatened, which would affect the
Property or the right to occupy or utilize the Property, at law
or in equity, before any federal, state, county or municipal
governmental department, commission, board, bureau, agency or
instrumentality, except for that which is described on Exhibit
"I" attached hereto (the "Pending Litigation"). Contributor
shall indemnify, defend and hold Partnership harmless from and
against any and all claims, demands, damages, liabilities,
losses, costs and expenses arising out or of in any way relating
to the Pending Litigation.
6.11 Environmental Disclosures. To the best of
Contributor's knowledge, except as disclosed in any environmental
report or other material provided to or obtained by Partnership,
(a) the Real Estate has not been used for the disposal of any
industrial refuse or waste, or for the processing, manufacture,
storage, handling, treatment or disposal of any hazardous or
toxic substance or material, other than materials used by
Contributor, service providers and tenants in the ordinary course
of business which, to the best of Contributor's knowledge, have
been used in compliance with all environmental laws, (b) no
asbestos containing materials have been installed or used on the
Real Estate, (c) no machinery, equipment or fixtures containing
polychlorinated biphenyls (PCBs) have been located on, in or
under the Real Estate, (d) no toxic or hazardous substances or
materials have been located on, in or under the Real Estate,
which substances or materials, if found on the Real Estate, would
subject the owner or occupant of the Real Estate to damages,
penalties, liabilities or to an obligation to cleanup or remove
such substances or materials under any applicable federal, state
or local law, regulation or ordinance, and (e) no notice from any
governmental body has ever been served upon Contributor, its
agents or employees claiming any violation of any federal, state
or local law, regulation or ordinance concerning the
environmental state, condition, or quality of the Real Estate, or
requiring or calling attention to the need for any work, repairs,
construction, alterations, demolition, renovation or installation
on or in connection with the Real Estate in order to comply with
any law, regulation or ordinance concerning the environmental
state, condition or quality of the Real Estate. Contributor
agrees to deliver to Partnership within five (5) days after this
Agreement has been fully executed copies of all environmental
reports relating to the Real Estate in Contributor's possession
or in the possession of LCOR or any person controlling,
controlled by or under common control with LCOR.
6.12 Employees. There are no ERISA or other employee
benefit plans for employees of Contributor with respect to the
Real Estate that will in any manner impose any liability or
responsibility upon Partnership from and after the date of
Closing. The wages and employee taxes of all of Contributor's
employees who are employed in connection with the operation of
the Real Estate, if any, have been fully paid and the employment
of all such employees may be rightfully terminated by Contributor
at any time prior to Closing at no cost or expense to
Partnership.
6.13 Title. To the best of Contributor's knowledge,
Contributor has good and marketable fee simple title to the Real
Estate and good title to the Personalty, subject only to the
Permitted Conditions of Title and the Mortgage. At all times
through the Closing, Contributor shall have the right and
authority to convey or assign all of the Property to Partnership.
Contributor has not created or permitted the creation of any
recorded liens, encumbrances, encroachments, covenants,
conditions, restrictions, security interests, easements,
rights-of-way or other title objections which would affect the
Real Estate between March 28, 1998 and the Effective Date,
inclusive. There are no unrecorded monetary liens or other title
objections which have been created by Contributor and affect all
or any part of the Real Estate. No person, firm or corporation
or other entity has any right or option to acquire the Property,
or any part thereof, from Contributor. To the best of
Contributor's knowledge, there are no violations of any
restrictive covenants affecting the Real Estate. Notwithstanding
anything to the contrary contained herein, Contributor makes no
representation or warranty with respect to any outstanding
licenses of, or fictitious name registrations of, or other rights
to use, the name "Marlton Crossing" or any of its variations.
6.14 Untrue Statements. To the best of Contributor's
knowledge, (a) no representation or warranty by Contributor
contained herein, and (b) no statement or other information
contained in any exhibit hereto, financial information or
statements, certificates or other instruments or documents
furnished or to be furnished by Contributor to Partnership in
connection with the transaction contemplated hereunder, contains,
or at the Closing shall contain, any untrue statement of a
material fact, or omits or shall omit to state a material fact
necessary to make it not misleading.
6.15 Addresses. Attached hereto as Exhibit "J" is a
list of the names and addresses of all of the limited and general
partners of the Contributor as of the Effective Date.
Contributor acknowledges that Partnership is relying upon this
representation in distributing certain certificates and other
information regarding the Partnership and CV to such partners as
potential holders of OP Units and Common Stock of CV.
6.16 Morgan-Stanley Letter. The terms of repayment of
the sums secured by the Mortgage as described in a letter
agreement dated April 15, 1998 from the Existing Mortgagee to
Contributor (incorporated by reference herein as if fully set
forth herein) are in full force and effect, have not been
modified or amended in any way, and constitute the sole agreement
between Existing Mortgagee and Contributor regarding the subject
matter thereof.
6A. Covenants, Representations and Warranties of
Partnership. Partnership covenants, represents and warrants to
Contributor as follows (each of which is material and is being
relied upon by Contributor):
6A.1 Authority. Partnership is a limited partnership,
duly formed and validly existing under the laws of the State of
Delaware. Partnership has full power, authority and legal right
to execute, deliver and comply with this Agreement, any other
document relating thereto, and the transaction contemplated
hereby. The persons executing this Agreement and all other
documents required to consummate the transactions contemplated
hereby on behalf of Partnership are duly authorized to execute
this Agreement and such other documents on behalf of Partnership,
and are authorized to bind Partnership. All actions of
Partnership and other authorizations necessary or appropriate for
the execution and delivery of and compliance with this Agreement
and such other documents by Partnership have been taken or
obtained and, assuming the due execution and delivery of this
Agreement and such other documents by, and enforceability
against, Contributor, upon their execution by Partnership, this
Agreement and such other documents shall constitute the valid and
legally binding obligations of Partnership, enforceable against
Partnership in accordance with their respective terms, subject to
general principles of equity and laws pertaining to bankruptcy,
insolvency, and similar matters.
6A.2 CV. CV is a corporation, duly formed and validly
existing under the laws of the State of Delaware. Partnership is
majority owned and controlled by CV.
6A.3 No Defaults. The execution of this Agreement by
Partnership does not, and the performance by Partnership of the
transactions contemplated by this Agreement shall not, violate or
constitute a breach of (a) the partnership agreement of
Partnership, (b) the organizational documents of CV, (c) any
permit, license, order or decree affecting Partnership, CV or
their assets, (d) any indenture, mortgage, deed of trust or other
agreement to which Partnership or CV is a party and by which
either or its assets are bound.
6A.4 Untrue Statements. To the best of Partnership's
knowledge, (a) no representation or warranty by Partnership
contained herein, and (b) no statement or other information
contained in any exhibit hereto, financial information or
statements, certificates or other instruments or documents
furnished or to be furnished by Partnership to Contributor in
connection with the transaction contemplated hereunder contains,
or at the Closing shall contain, any untrue statement of a
material fact, or omits or shall omit to state a material fact
necessary to make it not misleading.
6A.5 Partnership Agreement. The Amended and Restated
Agreement of Limited Partnership of Montgomery CV Realty, L.P.
dated December 31, 1997, a copy of which has been delivered to
Contributor, is in full force and effect, and has not been
modified or amended.
6B. Special Provisions Regarding Cure. In the event that
Contributor receives, prior to Closing, (a) from a tenant under
any of the Leases, notice of default or breach on the part of the
landlord under the tenant's Lease, (b) from a person or entity
party to a Service Contract with Contributor, notice of any claim
of default on the part of the owner of the Real Estate under such
Service Contract, (c) from any holder of a mortgage on the Real
Estate, any insurance company which has issued a policy with
respect to the Real Estate or any Board of Fire Underwriters (or
other body exercising similar functions), a claim of a defect or
deficiency in the Real Estate, or a request for the performance
of any repairs, alterations or other work to the Real Estate, or
(d) from Partnership or any governmental or quasi-governmental
authority having jurisdiction over the Real Estate, notice of an
existing violation of federal, state, county or municipal law,
ordinance, order, code, regulation or requirement affecting all
or any portion of the Real Estate (all of the foregoing defaults,
breaches, defects, deficiencies, violations, repairs, alterations
and other work being collectively referred to as "Notices"), then
Contributor shall cure such Notices, prior to Closing, subject to
the balance of this paragraph. Contributor shall not be
obligated to expend in excess of $15,000, in the aggregate (the
"Cap"), in taking all action necessary to cure Notices. In the
event that it is impractical for Contributor to cure all Notices
prior to Closing, then Contributor may credit Partnership with
the reasonable costs of such cure at Closing, and such credit
shall be added to the sums spent directly by Contributor in
curing Notices for the purpose of applying the Cap. In the event
that the cost of curing all Notices exceeds $15,000, then
Contributor shall advise Partnership no later than the date
preceding the deadline for Closing whether Contributor intends to
cure prior to Closing or credit Partnership with the cost of
curing such Notices, the cost of which, to cure, would exceed the
Cap. If Contributor fails to advise Partnership whether
Contributor will accomplish a cure of all Notices, or will
provide Partnership with a credit for the reasonable cost of such
a cure in excess of the Cap, then Contributor shall be deemed to
have elected not to cure or provide such a credit. If
Contributor elects or is deemed to have elected not to cure all
Notices or credit Partnership with the cost of curing Notices,
the cost of which, to cure, would exceed the Cap, then
Partnership, by notice to Contributor on or prior to the Closing
deadline, may terminate this Agreement, in which event the
Deposit shall be returned to Partnership, this Agreement shall be
null and void and the parties hereto shall have no further
obligations hereunder. In the event Partnership is entitled to
terminate this Agreement pursuant to the preceding sentence, but
does not elect to do so, then Partnership shall receive a credit
at Closing in the amount of the Cap, less the sums expended by
Contributor prior to Closing in curing Notices.
7. Obligations and Operations Prior to Closing.
Contributor shall deliver to Partnership the documents set forth
in Section 7.1 as described therein. Between the Effective Date
and Closing, Contributor, at Contributor's sole cost and expense,
shall comply with the obligations set forth in Sections 7.2
through 7.10, inclusive:
7.1 Existing Surveys and Reports. As of the Effective
Date, Contributor shall have delivered to Partnership copies of
(a) the most recent survey of the Real Estate issued to
Contributor, showing no gaps or gores in the Real Estate and no
unrecorded easements or other matters which would adversely
affect the current use of the Real Estate, to the extent in
Contributor's possession or the possession of LCOR or any person
controlled by, controlling or under common control with LCOR, and
(b) any and all existing environmental and/or soil assessments,
studies, tests, reports and analyses of the Real Estate (or
portions thereof) which have been issued to and are in
Contributor's possession or the possession of LCOR or any person
controlled by, controlling or under common control with LCOR.
Upon any termination of this Agreement, Partnership agrees to
return all such materials delivered to Partnership pursuant to
this Agreement, and all other materials regarding the Property
obtained by Partnership, to Contributor promptly without request.
The terms of the preceding sentence shall survive termination of
this Agreement.
7.2 Maintenance of Operation. Contributor shall
maintain the Real Estate and Personalty and all portions thereof
in the same condition as on the Effective Date (subject to
reasonable wear and tear, casualty loss and condemnation),
including, without limitation, maintaining the roof in
water-tight condition and all systems in good operating
condition, and shall perform all routine or ordinary maintenance,
repairs and replacements thereto. The Real Estate shall be
operated by Contributor in substantially the same manner as it
has been operated prior to the date hereof.
7.3 Leases and Service Contracts. No new Leases or
Service Contracts shall be entered into, and there shall be no
amendment, modification, extension, renewal (subject to existing
tenant options) or termination by Contributor of any existing
Leases or Service Contracts, without Partnership's prior written
consent, which shall not be unreasonably withheld. Contributor
shall keep and perform all of the obligations to be performed by
Contributor under the Leases and Services Contracts in
substantially the same manner as it has kept and performed the
same prior to the Effective Date. Contributor shall deliver to
Partnership copies of any notices of default given or received by
Contributor with respect thereto. At Closing, Partnership shall
assume all Service Contracts entered into after the Effective
Date in accordance with the terms of this Section 7.3, and all
other Service Contracts which are not Rejected Contracts. Within
five (5) days following the Effective Date, the Partnership shall
notify Contributor of those Service Contracts in effect as of the
Effective Date which Partnership does not desire to assume as of
Closing. Contributor shall use reasonable efforts to obtain the
consent to an assignment of all other Service Contracts described
on Exhibit "H" to Partnership, to the extent that such consent is
required by the terms of such Service Contracts. Any Service
Contracts which Partnership notifies Contributor that Partnership
does not desire to assume and which Contributor has the legal
right to terminate within the period between Contributor's
receipt of Partnership's notice and the date of Closing, without
cost to Contributor, or which are described on Exhibit "H", but
cannot be assumed without the consent of a third party that has
not been obtained as of the Closing, are referred to herein as
"Rejected Contracts". Contributor shall indemnify, defend and
hold Partnership harmless from any liability, claims or damages
arising from Contributor's duties and obligations under Rejected
Contracts.
7.4 Replacements. Contributor shall not convey or
remove from the Property or any portion thereof any of the
Improvements or Personalty (except in the ordinary course of
business, or in the event of casualty or condemnation, for the
replacement of Personalty with similar items which are of equal
or better worth than the items which are replaced).
7.5 Liens. Contributor shall not create or permit the
creation of any liens, encumbrances, encroachments, covenants,
conditions, restrictions, security interests, easements, rights
of way or other title objections which would affect the Property
on or after the Effective Date.
7.6 Insurance. Contributor shall maintain
Contributor's existing casualty insurance, liability insurance
and other insurance policies respecting the Property.
7.7 Books and Records. Partnership, its accountants
and other representatives shall be afforded reasonable access to
all of Contributor's current books, records and files relating to
the Property. There shall be furnished to Partnership all
information possessed by Contributor concerning the Property
which Partnership, its accountant and its representatives shall
reasonably request, including, without limitation, an income and
expense statement indicating, in detail, all income generated
from the Property, and all operating and capital expenses
incurred in connection with Contributor's ownership, operation
and management of the Property for the three most recent calendar
years and the month(s) of January through March, 1998, and for
April, 1998 as soon as available. Said costs shall include,
without limitation, taxes, insurance, utility charges, repairs,
maintenance, management fees, capital replacement costs,
advertising costs and leasing commissions. In addition,
Contributor shall provide Partnership with (i) the operating and
maintenance budget for the Property for the calendar year 1997
and (ii) any and all operating or income statements for the
Property prepared after the date of this Agreement, as soon as
they are available.
7.8 Inspections. Partnership and its architects,
contractors, engineers, inspectors, agents and other
representatives shall have access to and permission to enter the
Real Estate (interior and exterior) including the offices of
Contributor at the Real Estate, if any, between the date hereof
and Closing, at reasonable times, upon reasonable notice to
Contributor, subject at all times to being accompanied by a
representative of Contributor, at Contributor's option, to
inspect, survey, test, measure or appraise the Property, and the
books and records relating thereto. Partnership shall not
unreasonably interfere with the rights, occupancy or business of
Contributor or any tenants of the Real Estate in conducting such
activities at the Real Estate. Partnership shall promptly
restore any damage done to the Real Estate, and indemnify, defend
and hold Contributor harmless from and against any claim or
damage, including without limitation any claim or damage arising
out of property damage and/or personal injury, that may be caused
by Partnership or its representatives entering upon the Real
Estate whether before or after the date hereof.
7.9 Securities Compliance. Prior to or immediately
following the Effective Date, Partnership has distributed or
intends to distribute (a) to Contributor the certificate attached
hereto as Exhibit "L" and made a part hereof, (b) to the general
partners of Contributor who are identified in Exhibit "J" the
certificate attached hereto as Exhibit "L-1" and made a part
hereof, (c) to the limited partners of Contributor who are
identified in Exhibit "J" the certificate attached hereto as
Exhibit "L-2" and made a part hereof. Accompanying each such
certificate shall be the information described on Exhibit "L-3"
attached hereto and made a part hereof. Contributor agrees to
complete, execute and deliver to Partnership the certificate
attached hereto as Exhibit "L" within ten (10) days following the
Effective Date. Contributor also agrees to use commercially
reasonable efforts (X) to obtain from each general partner of
Contributor and deliver to Partnership, prior to Closing, a
completed and executed certificate in the form of Exhibit "L-1",
and (y) to obtain from each limited partner of Contributor and
deliver to Partnership, prior to Closing, a completed and
executed certificate in the form of Exhibit "L-2".
7.10 Right of First Refusal. Contributor shall (a)
use its best efforts to cause the withdrawal, with prejudice, of
any and all litigation which Linpro Marlton Crossing Commercial
Land II Limited Partnership ("Linpro") currently has with Marlton
KDA Limited Partnership ("KDA") or its affiliates concerning a
right of first refusal (the "ROFR") reserved in Exhibit "G" of
that certain corrective deed dated April 8, 1986, between KDA
Limited II and KDA, covering certain real estate adjacent to the
Property ("Adjacent Real Estate") which is now subject to a
Purchase and Sale Agreement between KDA and Marlton Plaza
Associates, L.P. ("MPA"), an entity controlled by Partnership,
and concerning certain related matters, prior to Closing, (b)
cause Eric Eichler ("Eichler") to reasonably cooperate with
Partnership in its efforts to cause the ROFR to be removed as a
title exception to the title insurance policy issued by Title
Insurer to MPA in connection with its acquisition of the Adjacent
Real Estate, including, without limitation, providing to MPA all
partnership agreements and related relevant documents concerning
Contributor, Linpro or their affiliated entities, any settlement
agreement entered into by such parties and/or Eichler with KDA,
and the documents described in numbered paragraphs 1, 2 and 4 of
that certain letter dated May 15, 1998, from Janet R. Seligman of
the Title Insurer to Mark L. Morris, counsel to the Partnership,
a copy of which has been received by Contributor (it being
understood that the documents described in such paragraph 2 may
not include the "termination of the Declaratory Action" referred
to in paragraph 3 of such letter), and causing Eichler to execute
and deliver to the Title Insurer the notarized affidavit
described in numbered paragraph 5 of such letter, (c) cause
Eichler to provide KDA with a stipulation of facts reasonably
requested by KDA, to the extent that the stipulation is true and
correct in all respects, if it is required by KDA in seeking a
declaratory judgment or similar ruling declaring the ROFR to be
expired or terminated, and (d) use good faith efforts to cause
the partners of the holder of the ROFR (or the individuals who
hold the ROFR, as the case may be), excluding Jay Cranmer, George
Higgins and William M. Swain, Jr., to acknowledge in writing that
the ROFR is terminated or expired without exercise, and that they
claim no further interest in the ROFR. The obligations of
Contributor contained in this Section 7.10 are contingent upon
Contributor and KDA entering into an agreement pursuant to which
KDA is to dismiss with prejudice its counterclaims in the
litigation described in this Section 7.10, other than its claims
with respect to a declaratory judgment to quiet title to the
Adjacent Real Estate.
8. Conditions Precedent to Partnership's Obligations.
Partnership's obligation hereunder to accept the Property from
Contributor is expressly conditioned on the satisfaction of all
of the following conditions (any one or more of which may be
waived in writing in whole or in part by Partnership, at
Partnership's option):
8.1 Omitted.
8.2 Omitted.
8.3 Title Policy. Title to the Real Estate shall be
ready to be delivered to Partnership in the condition described
in Section 4 hereof, and the Title Insurer shall be prepared to
issue, upon Partnership's payment of the premium therefor, Title
Insurer's other charges and the other amounts required under this
Agreement to be paid by Partnership, the Title Policy to
Partnership on the date of Closing.
8.4 No Material Adverse Change. No material adverse
change shall have occurred with respect to the Property, or the
business or financial condition of the Property, from the date of
this Agreement through the date of Closing.
8.5 Representations and Warranties. All of the
representations and warranties of Contributor contained in this
Agreement shall (a) have been true and correct in all material
respects when made, and (b) shall be true and correct in all
material respects on the date of Closing with the same effect as
if made on and as of such date.
8.6 Compliance by Contributor. Contributor shall have
performed, observed and complied with all covenants and
agreements required by this Agreement to be performed, observed
and complied with on its part prior to Closing hereunder, and
shall be prepared to perform, observe and comply with all
covenants and agreements required by this Agreement to be
performed, observed and complied with on its part as of Closing,
including, without limitation, the delivery of all documents and
other items to be delivered by Contributor under Section 5.4
hereof.
8.7 Omitted.
8.8 ISRA Letter. Contributor shall have obtained and
be prepared to deliver to Partnership at Closing a "Letter of
Nonapplicability" issued by the New Jersey Department of
Environmental Protection ("NJDEP"), confirming that the terms and
conditions of the Industrial Site Recovery Act and the
regulations promulgated thereunder (collectively, "ISRA") do not
apply to the conveyance of the Real Estate to the Partnership,
together with copies of all affidavits and other documents and
statements submitted to NJDEP in connection with Contributor's
requests for such Letter of Nonapplicability, which affidavits
and documents shall comply with the requirements of NJDEP and
ISRA. If not previously applied for, Contributor shall apply for
such a Letter of Nonapplicability promptly following the
Effective Date. In lieu of delivery of such a Letter of
Nonapplicability to Partnership, Contributor may deliver to
Partnership a "negative declaration" (as defined in ISRA)
obtained by Contributor from NJDEP confirming the environmental
condition of the Property and its compliance with the terms and
conditions of ISRA.
8.9 Failure of Conditions. If any of the conditions
of Sections 8.3 through 8.8 are not satisfied (and not waived by
Partnership by consummating Closing) as of the deadline for
Closing set forth in Section 5.1, then Partnership shall be
deemed to have terminated this Agreement. In the case of such
termination, the Deposit shall forthwith be returned to
Partnership, this Agreement shall be null and void, and the
parties hereto shall have no further rights, obligations or
liabilities hereunder; provided, however, that if a failure of
condition specified in Section 8.5(a) or Section 8.6 occurs, then
Partnership's remedies in respect thereof shall not be limited to
the right to terminate this Agreement as set forth above, and
Partnership shall be permitted to exercise the remedies described
in Section 11.
8A. Conditions Precedent to Contributor's Obligations.
Contributor's obligation hereunder to contribute the Property to
Partnership is expressly conditioned on the satisfaction of all
of the following conditions (any one or more of which may be
waived in writing in whole or in part by Contributor, at
Contributor's option):
8A.1 Representations and Warranties. All of the
representations and warranties of Partnership contained in this
Agreement shall (a) have been true and correct in all material
respects when made, and (b) shall be true and correct in all
material respects on the date of Closing with the same effect as
if made on and as of such date.
8A.2 Compliance by Partnership. Partnership shall
have performed, observed and complied with all covenants and
agreements required by this Agreement to be performed, observed
and complied with on its part prior to Closing hereunder, and
shall be prepared to perform, observe and comply with all
covenants and agreements required by this Agreement to be
performed, observed and complied with on its part as of Closing,
including, without limitation, the delivery of all documents and
other items to be delivered by Partnership under Section 5.5
hereof.
8A.3 Failure of Conditions. If either of the
conditions of Sections 8A.1(a) or 8A.2 is not satisfied (and not
waived by Contributor by consummating Closing) as of the deadline
for Closing set forth in Section 5.1, then Contributor shall be
deemed to have terminated this Agreement, the Deposit shall
forthwith be delivered to Contributor, as Contributor's sole and
exclusive remedy, as liquidated damages (and not as a penalty) in
lieu of, and as full compensation for, all rights or claims of
Contributor against Partnership by reason of such
non-satisfaction of conditions, this Agreement shall be null and
void, and the parties hereto shall have no further rights,
obligations or liabilities hereunder. If the condition of
Section 8A.1(b) is not satisfied (and not waived by Contributor
by consummating Closing) as of the deadline for Closing set forth
in Section 5.1, then Contributor shall be deemed to have
terminated this Agreement, the Deposit shall be returned to
Partnership, this Agreement shall be null and void, and the
parties hereto shall have no further rights, obligations or
liabilities hereunder.
9. Damage or Destruction; Condemnation; Insurance.
9.1 Termination. If at any time prior to the date of
Closing, all or any portion of the Real Estate is destroyed or
damaged as a result of fire or any other casualty whatsoever
("Casualty Damage") and the cost of restoring such Casualty
Damage exceeds $50,000, or if all or any portion of the Real
Estate is condemned or taken by eminent domain proceedings by any
public authority ("Condemnation"), then Partnership, at
Partnership's option, may (a) terminate this Agreement by notice
in writing to Contributor prior to Closing, in which event the
Deposit shall be returned to Partnership, this Agreement shall be
null and void, and the parties hereto shall have no further
rights, obligations or liabilities hereunder, or (b) proceed with
Closing by the deadline for Closing provided in Section 5.1,
without extension and without reduction in the OP Unit Amount.
9.2 Condemnation; No Termination. If there is a
Condemnation and Partnership does not elect to terminate this
Agreement as permitted by Section 9.1, then all Condemnation
proceeds paid or payable to Contributor shall belong to
Partnership and shall be paid over and assigned to Partnership at
Closing, and Contributor shall further execute all assignments
and any other documents or instruments as Partnership may
reasonably request, as may be necessary to transfer all of
Contributor's interest in such proceeds to Partnership.
9.3 Casualty; No Termination. If there is Casualty
Damage and Partnership does not elect to terminate (or is not
permitted to terminate) this Agreement as provided in Section
9.1, then (i) all insurance proceeds paid or payable to
Contributor shall belong to Partnership and shall be paid over
and assigned to Partnership at Closing, (ii) Contributor shall
further execute all assignments and any other documents or other
instruments as Partnership may reasonably request, as may be
necessary to transfer all interest in all such proceeds to
Partnership, and (iii) Contributor shall credit Partnership at
Closing with an amount equal to the amount of any insurance
policy deductible.
10. Partnership's Default. In the event Partnership
defaults under this Agreement, then Contributor shall give
Partnership written notice of such default, and Partnership shall
have ten (10) days, or such shorter period as may remain prior to
the deadline for Closing, to cure such default. In the event all
defaults by Partnership are not cured prior to the deadline for
Closing, Title Insurer shall deliver the Deposit to Contributor,
as Contributor's sole and exclusive remedy, as liquidated damages
(and not as a penalty) in lieu of, and as full compensation for,
all rights or claims of Contributor against Partnership by reason
of such default; and thereupon this Agreement shall be null and
void and the parties hereto shall have no further rights,
obligations or liabilities hereunder.
11. Contributor Default; Liability Limitation. In the
event Contributor defaults under this Agreement prior to Closing,
then Partnership shall give written notice of such default to
Contributor, and Contributor shall have ten (10) days, or such
shorter period as may remain prior to the deadline for Closing,
to cure such default. In the event all defaults by Contributor
are not cured prior to the deadline for Closing, then Partnership
may, as Partnership's sole and exclusive remedy, either (a)
pursue the remedy of specific performance, or (b) elect, by
notice in writing to Contributor, to terminate this Agreement,
whereupon Title Insurer shall return the Deposit to Partnership,
and Contributor shall be liable to Partnership for actual (but
not consequential) damages of no greater than Two Hundred Fifty
Thousand Dollars ($250,000) on account of Contributor's default.
Notwithstanding the foregoing, in the event Partnership elects to
pursue the remedy of specific performance and determines that
Partnership desires to change its election of remedies to
termination of this Agreement and the pursuit of damages, then
Partnership may do so. Notwithstanding anything to the contrary
contained in this Agreement or in any document delivered in
connection with or pursuant to this Agreement (including without
limitation those delivered pursuant to Sections 5.4 and 7.9), the
liability of Contributor for breach of any representation,
warranty, covenant or obligation hereunder or thereunder,
including, without limitation, any indemnification obligation
hereunder or thereunder, shall be limited to the assets of
Contributor and the LCOR Assets (hereinafter defined). Such
liability shall not extend to or be enforceable against (whether
by levy, execution, sale or otherwise) any assets of
Contributor's general partners other than the business assets of
such general partners at the time of enforcement of such
liability then comprising or relating to the group of entities
and/or properties commonly known as or operating in whole or in
part under the "LCOR" or "Linpro" names (including any company,
entity or group of properties which is a successor to such group
of entities and/or properties, in whole or in part) (the "LCOR
Assets"). The parties agree that LCOR Assets as they may exist
from time to time will include those properties which are or have
been acquired after the date of this Agreement and will exclude
those properties which are or have been transferred after such
date in the ordinary course of business, but not those which are
or have been transferred by fraudulent conveyance.
12. Notices. All notices, consents and other
communications hereunder shall be in writing (whether or not a
writing is expressly required hereby), and either hand delivered,
delivered by overnight mail such as Federal Express or delivered
by first class certified mail, return receipt requested, postage
prepaid, and addressed to the respective parties at the addresses
listed below (or at such other address as a party may hereafter
designate for itself by notice to the other party as required
hereby), and such notices, consents and communications shall be
deemed given when received, unless hand delivery or delivery by
mail as aforesaid is refused, in which case notice shall be
deemed given when hand delivery is attempted or delivery by mail
is attempted, as the case may be:
If to Partnership:
Mr. Jeffrey Hipple
Montgomery CV Realty L.P.
580 West Germantown Pike
Suite 200
Plymouth Meeting, PA 19462
With a required contemporaneous copy to:
Mark L. Morris, Esquire
Fox, Rothschild, O'Brien & Frankel, L.P.
2000 Market Street - 10th Floor
Philadelphia, PA 19103
If to Contributor:
Mr. Peter DiLullo
LCOR Incorporated
300 Berwyn Park, Suite 104
Berwyn, PA 19312
With a required contemporaneous copy to:
Sigmund T. Weiner, Esquire
Jones, Day, Reavis & Pogue
1450 G Street, N.W., 6th Floor
Washington, DC 20005-2088
Notices, consents and other communications may be given on
behalf of the parties by
their respective counsel.
13. Brokers. Contributor and Partnership each warrant and
represent to the other that it has had no dealings, negotiations
or communications with any brokers or other intermediaries in
connection with this Agreement or the contribution of the
Property pursuant hereto. In the event that any claim is
asserted against Partnership by any person, firm or corporation,
whether broker or otherwise, claiming a commission and/or
finder's fee with respect to the contribution of the Property
resulting from any act, representation or promise of Contributor,
Contributor shall indemnify, defend and hold Partnership harmless
from and against any such claim, and in the event any such claim
shall be made against Contributor resulting from any act,
representation or promise of Partnership with respect to said
contribution, Partnership shall likewise indemnify, defend and
hold Contributor harmless from and against any such claim.
14. Miscellaneous.
14.1 Effective Date. The date inserted on the cover
page and in the introductory paragraph of this Agreement is
herein referred to as the "Effective Date".
14.2 Headings. The headings preceding the text of the
paragraphs and subparagraphs hereof are inserted solely for
convenience of reference and shall not constitute a part of this
Agreement, nor shall they affect its meaning, construction or
effect.
14.3 Parties at Interest. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto
and their respective heirs, personal representatives, successors
and permitted assigns. This Agreement and all or any portion of
Partnership's rights hereunder may be assigned by Partnership to
a partnership of which Partnership is the sole limited partner
and of which a limited liability company, of which Partnership is
the sole member, is the sole general partner, without the prior
consent of Contributor. However, Partnership may not assign its
obligations hereunder to any other party. All references to
Partnership in this Agreement shall be deemed to include
references to Partnership's assignee, to the extent any rights of
Partnership are assigned to such assignee.
14.4 Computation of Time. In computing any period of
time pursuant to this Agreement, the day of the act or event from
which the designated period of time begins to run shall not be
included. The last day of the period so computed shall be
included, unless it is a Saturday, Sunday or legal holiday in the
State of New Jersey, in which event the period shall run until
the end of the next day which is not a Saturday, Sunday or such
legal holiday.
14.5 Recording. This Agreement shall not be recorded
in any office or place of public record, and if Partnership shall
record this Agreement or cause the same to be recorded without
Contributor's express written consent thereto, Contributor may,
at Contributor's option, elect to treat such act as a breach of
this Agreement.
14.6 Waiver. The failure of either party to insist
upon strict compliance with any of the terms or conditions of
this Agreement shall not be deemed a waiver thereof, nor shall
any waiver of any right hereunder at any one or more times be
deemed a waiver or relinquishment of such right at any other time
or times.
14.7 Survival. Only the provisions of Sections 3,
5.2, 5.3.5, 5.3.6, 6 (other than the representations in Section
6.3 regarding Exhibit "F" (being supplanted by Exhibit "F-1"),
the first sentence of Section 6.8, the first two sentences of
Section 6.13 as they apply to the Real Estate, the third through
sixth sentences of Section 6.13, and clause (a) of Sections 6.14
and 6A.4 as such clause (a), in each case, relates to the other
representations and warranties described in this parenthetical),
Section 6A, the last sentences of Sections 7.3 and 7.8, and
Sections 9.2, 9.3, 11, 12, 13 and 14 hereof shall survive
Closing, and such surviving Sections shall survive only for a
period of one (1) year following Closing, except for
Contributor's and Partnership's respective representations,
warranties, agreements and indemnities set forth in Sections 3,
5.3.5, 5.3.6, the last sentences of Sections 6.10 and 6.13,
Section 6.15, the last sentences of Sections 7.3 and 7.8, and
Sections 11, 12, 13 and 14, which shall survive without time
limitation. If a party has not received written notice within
such one (1) year period of a claim by the other party of a
breach or default under any of the aforementioned surviving
sections, specifying with particularity the nature and extent of
the claimed breach or default, then all covenants, agreements,
conditions, representations, warranties, obligations and
undertakings contained in the surviving Section, except as so
specified and except as set forth in Sections 3, 5.3.5, 5.3.6,
the last sentences of Sections 6.10 and 6.13, Section 6.15, the
last sentences of Sections 7.3 and 7.8, and Sections 11, 12, 13
and 14, shall be deemed to have been fully performed, waived or
otherwise discharged. All covenants, representations,
warranties, agreements, conditions, obligations and undertakings
hereunder which are not specified to survive Closing shall be
deemed to have been fully performed, waived or otherwise
discharged by the occurrence of Closing, and shall merge into the
Deed. Notwithstanding anything to the contrary contained herein,
in the event a representation and warranty made by Contributor in
this Agreement shall be true and correct in all material respects
when made, but, do to a factual change in the circumstances upon
which such representation and warranty was based occurring
subsequent to the Effective Date, such representation and
warranty is not true and correct in all material respects as of
the Closing, and Partnership fails to exercise its rights to
terminate this Agreement pursuant to Section 8.5(b), then the
representation and warranty made as of the Effective Date shall
be revised to take into account such change in circumstances, as
described in the certificate delivered to Partnership at Closing
pursuant to Section 5.4.17 hereof.
14.8 Entire Agreement; Amendments. This Agreement and
the exhibits hereto set forth all of the promises, covenants,
agreements, conditions and undertaking between the parties hereto
with respect to the subject matter hereof, and supersede all
prior and contemporaneous agreements and understandings,
inducements or conditions, expressed or implied, oral or written,
between the parties, except as contained herein. This Agreement
may not be changed orally but only by an agreement in writing,
duly executed by or on behalf of the party against whom
enforcement of any waiver, change, modification, consent or
discharge is sought.
14.9 Governing Law. This Agreement and any and all
disputes arising out of or in connection herewith shall be
governed by the laws of the State of New Jersey.
14.10 "As Is" Contribution. Partnership hereby
acknowledges the Property has been inspected prior to the date of
this Agreement, or will be inspected by Partnership prior to
Closing. Subject to the provisions of this Agreement,
Partnership hereby agrees to accept contribution of the Property
"as is" and not in reliance upon any statement, representation or
warranty of Contributor not otherwise expressly set forth herein.
14.11 Counterparts. This Agreement may be executed
in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same instrument.
14.12 Construction. As used herein, the terms (a)
"person" shall mean an individual, a corporation, a partnership,
a trust, an unincorporated organization or any agency or
political subdivision thereof; and (b) "including" shall mean
including, without limiting the generality of the foregoing.
14.13 Partial Invalidity. If any provision of this
Agreement is found by a court of law to be in violation of any
applicable local, state or federal ordinance, statute, law,
administrative or judicial decision, or public policy, and if
such court should declare such provision of this Agreement to be
illegal, invalid, unlawful, void or unenforceable as written,
then it is the intent both of Contributor and Partnership that
the remainder of this Agreement shall be construed as if such
illegal, invalid, unlawful, void or unenforceable provision was
not contained herein and was replaced with a provision as close
in meaning and effect which is not illegal, invalid, unlawful,
void or unenforceable, and the rights, obligations and interest
of Contributor and Partnership under the remainder of this
Agreement shall continue in full force and effect.
14.14 Prevailing Party. If either Partnership or
Contributor brings an action to enforce its rights under this
Agreement, the successful party shall be reimbursed by the
unsuccessful party for all costs of enforcement, including
reasonable attorneys' fees and court costs. Tender of deed or
contribution consideration shall not be necessary where the other
party has defaulted.
14.15 Time is of the Essence. Time is of the
essence of this Agreement.
14.16 Confidentiality. Notwithstanding the terms
and conditions of a certain Confidentiality Agreement dated as of
February 20, 1998 by and among Partnership, LCOR and Contributor,
(a) each party shall have the right to disclose information
relating to this Agreement and such transactions to their
respective lenders (existing and proposed), counsels,
accountants, consultants and employees engaged in providing
services in connection with this Agreement or such transactions,
and (b) Contributor and Partnership shall be permitted to
disclose the details of this transaction to any person following
Closing.
14.17 Undertakings by Contributor and Partnership.
(a) In addition to the obligations required to be
performed hereunder by Contributor and Partnership at Closing,
Contributor and Partnership each agrees to perform such other
acts, and to execute, acknowledge and deliver, prior to, at or
subsequent to Closing, such other instruments, documents and
other materials as the other may reasonably request and as shall
be necessary in order to effect the consummation of the
transaction contemplated hereby and to vest title to the Property
in Partnership.
(b) Without limiting the generality of the
foregoing, Contributor agrees that, at Partnership's sole cost
and expense, Contributor shall cooperate with Partnership and any
affiliate or agent of Partnership ("Partnership's Affiliate") in
Partnership's compliance with the reporting requirements of the
Securities and Exchange Commission ("SEC") and Partnership's or
Partnership's Affiliate's primary commercial lender. Such
cooperation shall include, without limitation, providing copies
of existing audited financial statements, if any, prepared by
Contributor's accountant, along with a representation letter from
Contributor's accountant and/or attorney, permitting the
attachment of such financial statements as part of filings with
the SEC, for up to three (3) years prior to the Closing. If
audited financial statements are not available for any year for
which an audited statement is required by Partnership or
Partnership's Affiliate, Contributor shall provide Partnership
with access to Contributor's books and records sufficient to
permit Partnership to prepare such audited statements, at
Partnership's sole cost and expense. Partnership shall reimburse
Contributor and Contributor's accountant for any reasonable costs
incurred by Contributor or Contributor's accountant in complying
with the requirements of this Section 14.17(b), including,
without limitation, paying Contributor's accountant a reasonable
fee for the use of the audited financials and the issuance of the
consent letter, if applicable.
IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement.
CONTRIBUTOR:
MARLTON CROSSING SHOPPING
CENTER LIMITED PARTNERSHIP
By:/s/ Eric Eichler
Managing General Partner
PARTNERSHIP:
MONTGOMERY CV REALTY L.P., a Delaware
limited partnership
BY: MONTGOMERY CV REALTY TRUST, a Delaware
business trust, its general partner
By:/s/ Louis P. Meshon, Sr.
Louis P. Meshon, Sr., President
EXHIBIT 2.2
ASSIGNMENT AND ASSUMPTION OF CONTRIBUTION AGREEMENT
This ASSIGNMENT AND ASSUMPTION OF CONTRIBUTION
AGREEMENT is made as of the 22nd day of June, 1998, by and
between MONTGOMERY CV REALTY L.P., a Delaware limited partnership
("Assignor"), and MARLTON PLAZA ASSOCIATES II, L.P., a Delaware
limited partnership ("Assignee").
Assignor and Marlton Crossing Shopping Center Limited
Partnership, a New Jersey limited partnership ("Contributor"),
are parties to a Contribution Agreement dated May 29, 1998 (the
"Agreement"), pursuant to which Contributor agreed to contribute
to Assignor and Assignor agreed to accept from Contributor,
certain property located in the Township of Evesham, County of
Burlington, and State of New Jersey, known as Marlton Crossing
Shopping Center Phase I, as more particularly described in the
Agreement (the "Property"). Assignor now desires to assign its
right, title and interest in and to the Agreement to Assignee.
Accordingly, for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged by
Assignor, and intending to be legally bound hereby, Assignor
hereby transfers and assigns to Assignee all of Assignor's right,
title and interest in and to the Agreement, including, without
limitation, the right to accept the Property and all other items
to be contributed by Contributor thereunder, for the
consideration stated therein. Assignee hereby accepts such
assignment from Assignor.
IN WITNESS WHEREOF, the parties hereto have executed
this Assignment and Assumption of Contribution Agreement as of
the date and year first above written.
ASSIGNOR:
Montgomery CV Realty L.P., a Delaware limited
partnership
By: Montgomery CV Realty Trust, its general
partner
By: /s/ Louis P. Meshon, Sr.
Louis P. Meshon, Sr., President
ASSIGNEE:
Marlton Plaza Associates II, L.P., a Delaware
limited partnership
By: Marlton Plaza II LLC, its general
partner
By: Montgomery CV Realty L.P., its sole member
By: Montgomery CV Realty Trust, its general
partner
By: /s/ Louis P. Meshon, Sr.
Louis P. Meshon, Sr., President
EXHIBIT 2.3
MARLTON PLAZA ASSOCIATES II, L.P. as mortgagor
(Borrower)
to
GMAC COMMERCIAL MORTGAGE CORPORATION, as mortgagee
(Lender)
___________________________________
MORTGAGE AND
SECURITY AGREEMENT
___________________________________
Dated: June 24, 1998
Location: Route 73 and Old Marlton Pike
Evesham Township
Burlington County, NJ
Parcel Identification No: Block 24.21, Lot 2
Commonly known as Marlton Crossing Shopping Center I
PREPARED BY AND UPON RECORDATION RETURN TO:
Kathleen M. Sandone, Esquire
Ballard Spahr Andrews & Ingersoll, LLP
1735 Market Street - 51st Floor
Philadelphia, PA 19103
(215) 864-8706
TABLE OF CONTENTS
Page
Article 1 - GRANTS OF SECURITY . . . . . . . . . . . . . . . . .1
Section 1.1 Property Mortgaged.. . . . . . . . . . . . . .1
Section 1.2 Assignment of Leases and Rents. . . . . . . .4
Section 1.3 Security Agreement. . . . . . . . . . . . . .4
Section 1.4 Pledge of Monies Held. . . . . . . . . . . .4
Article 2 - DEBT AND OBLIGATIONS SECURED . . . . . . . . . . . .5
Section 2.1 Debt.. . . . . . . . . . . . . . . . . . . . .5
Section 2.2 Other Obligations. . . . . . . . . . . . . .5
Section 2.3 Debt and Other Obligations. . . . . . . . . .6
Section 2.4 Payments. . . . . . . . . . . . . . . . . . .6
Article 3 - BORROWER COVENANTS . . . . . . . . . . . . . . . . .6
Section 3.1 Payment of Debt. . . . . . . . . . . . . . . .6
Section 3.2 Incorporation by Reference. . . . . . . . . .6
Section 3.3 Insurance. . . . . . . . . . . . . . . . . . .7
Section 3.4 Payment of Taxes, Etc. . . . . . . . . . . 11
Section 3.5 Escrow Fund. . . . . . . . . . . . . . . . 12
Section 3.6 Condemnation. . . . . . . . . . . . . . . . 12
Section 3.7 Leases and Rents. . . . . . . . . . 13
Section 3.8 Maintenance of Property. . . . . . . . . . 14
Section 3.9 Waste. . . . . . . . . . . . . . . . . . . 15
Section 3.10 Compliance With Laws. . . . . . . . . . . 15
Section 3.11 Books and Records. . . . . . . . . . . . . 16
Section 3.12 Payment For Labor and Materials. . . . . . 17
Section 3.13 Performance of Other Agreements. . . . . . 18
Section 3.14 Change of Name, Identity or Structure.. . . 18
Section 3.15 Existence . . . . . . . . . . . . . . . . . 18
Article 4 - SPECIAL COVENANTS. . . . . . . . . . . . . . . . . 18
Section 4.1 Property Use.. . . . . . . . . . . . . . . . 18
Section 4.2 ERISA. . . . . . . . . . . . . . . . . . . 18
Section 4.3 Single Purpose Entity. . . . . . . . . . . 19
Section 4.4 Restoration After Casualty/Condemnation. . . 21
Article 5 - REPRESENTATIONS AND WARRANTIES . . . . . . . . . . 26
Section 5.1 Warranty of Title. . . . . . . . . . . . . . 26
Section 5.2 Authority. . . . . . . . . . . . . . . . . 26
Section 5.3 Legal Status and Authority. . . . . . . . . 26
Section 5.4 Validity of Documents. . . . . . . . . . . 26
Section 5.5 Litigation. . . . . . . . . . . . . . . . . 27
Section 5.6 Status of Property. . . . . . . . . . . . . 27
Section 5.7 No Foreign Person. . . . . . . . . . . . . 28
Section 5.8 Separate Tax Lot. . . . . . . . . . . . . . 28
Section 5.9 ERISA Compliance. . . . . . . . . . . . . . 29
Section 5.10 Leases. . . . . . . . . . . . . . . . . . 29
Section 5.11 Financial Condition. . . . . . . . . . . . 30
Section 5.12 Business Purposes. . . . . . . . . . . . . 30
Section 5.13 Taxes. . . . . . . . . . . . . . . . . . . 30
Section 5.14 Mailing Address. . . . . . . . . . . . . . 30
Section 5.15 No Change in Facts or Circumstances. . . . 30
Section 5.16 Disclosure. . . . . . . . . . . . . . . . 30
Section 5.17 Third Party Representations. . . . . . . . 30
Section 5.18 Illegal Activity. . . . . . . . . . . . . 30
Article 6 - DEBTOR/CREDITOR RELATIONSHIP . . . . . . . . . . . 31
Section 6.1 Relationship of Borrower and Lender. . . . . 31
Section 6.2 Servicing of the Loan. . . . . . . . . . . . 31
Article 7 - FURTHER ASSURANCES . . . . . . . . . . . . . . . . 31
Section 7.1 Recording of Security Instrument, Etc. . . . 31
Section 7.2 Further Acts, Etc. . . . . . . . . . . . . 31
Section 7.3 Changes in Tax, Debt Credit and Documentary
Stamp Laws. . . . . . . . . . . . . . . . . 32
Section 7.4 Estoppel Certificates. . . . . . . . . . . 32
Section 7.5 Flood Insurance. . . . . . . . . . . . . . 33
Section 7.6 Splitting of Security Instrument. . . . . . 34
Section 7.7 Replacement Documents. . . . . . . . . . . 34
Section 7.8 Amended Financing Statements. . . . . . . . 34
Article 8 - DUE ON SALE/ENCUMBRANCE. . . . . . . . . . . . . . 34
Section 8.1 No Sale/Encumbrance. . . . . . . . . . . . . 34
Section 8.2 Sale/Encumbrance Defined. . . . . . . . . . 35
Section 8.3 Lender's Rights. . . . . . . . . . . . . . 36
Article 9 - PREPAYMENT . . . . . . . . . . . . . . . . . . . . 36
Section 9.1 Prepayment Only in Accordance with Note. . . 36
Article 10 - DEFAULT . . . . . . . . . . . . . . . . . . . . . 37
Section 10.1 Events of Default.. . . . . . . . . . . . . 37
Article 11 - RIGHTS AND REMEDIES . . . . . . . . . . . . . . . 38
Section 11.1 Remedies. . . . . . . . . . . . . . . . . . 38
Section 11.2 Application of Proceeds. . . . . . . . . . 41
Section 11.3 Right to Cure Defaults. . . . . . . . . . 42
Section 11.4 Actions and Proceedings. . . . . . . . . . 42
Section 11.5 Recovery of Sums Required To Be Paid. . . 42
Section 11.6 Examination of Books and Records. . . . . 42
Section 11.7 Other Rights, Etc. . . . . . . . . . . . . 43
Section 11.8 Right to Release Any Portion of
the Property . . . . . . . . . . . . . 43
Section 11.9 Violation of Laws. . . . . . . . . . . . . 44
Section 11.10 Right of Entry. . . . . . . . . . . . . . 44
Article 12 - ENVIRONMENTAL HAZARDS . . . . . . . . . . . . . . 44
Section 12.1 Environmental Representations and
Warranties . . . . . . . . . . . . . . . . 44
Section 12.2 Environmental Covenants. . . . . . . . . . 45
Section 12.3 Lender's Rights. . . . . . . . . . . . . . 46
Article 13 - INDEMNIFICATION . . . . . . . . . . . . . . . . . 47
Section 13.1 General Indemnification.. . . . . . . . . . 47
Section 13.2 Mortgage and/or Intangible Tax. . . . . . 48
Section 13.3 ERISA Indemnification. . . . . . . . . . . 48
Section 13.4 Environmental Indemnification. . . . . . . 49
Section 13.5 Duty to Defend; Attorneys' Fees and
Other Fees and Expenses . . . . . . . . . . 50
Article 14 - WAIVERS . . . . . . . . . . . . . . . . . . . . . 50
Section 14.1 Waiver of Counterclaim. . . . . . . . . . . 50
Section 14.2 Marshalling and Other Matters. . . . . . . 50
Section 14.3 Waiver of Notice. . . . . . . . . . . . . 50
Section 14.4 Waiver of Statute of Limitations. . . . . . 51
Section 14.5 Sole Discretion of Lender. . . . . . . . . 51
Section 14.6 Survival. . . . . . . . . . . . . . . . . 51
Section 14.7 Waiver of Trial By Jury. . . . . . . . . . 51
Article 15 - EXCULPATION . . . . . . . . . . . . . . . . . . . 52
Section 15.1 Exculpation.. . . . . . . . . . . . . . . . 52
Section 15.2 Reservation of Certain Rights. . . . . . . 52
Section 15.3 Exceptions to Exculpation. . . . . . . . . 52
Section 15.4 Recourse. . . . . . . . . . . . . . . . . 53
Section 15.5 Bankruptcy Claims. . . . . . . . . . . . . 53
Article 16 - NOTICES . . . . . . . . . . . . . . . . . . . . . 53
Section 16.1 Notices.. . . . . . . . . . . . . . . . . . 53
Article 17 - APPLICABLE LAW. . . . . . . . . . . . . . . . . . 55
Section 17.1 Choice of Law.. . . . . . . . . . . . . . . 55
Section 17.2 Usury Laws. . . . . . . . . . . . . . . . 55
Section 17.3 Provisions Subject to Applicable Law. . . 55
Section 17.4 Inapplicable Provision. . . . . . . . . . 55
Article 18 - SECONDARY MARKET. . . . . . . . . . . . . . . . . 56
Section 18.1 Dissemination of Information. . . . . . . . 56
Article 19 - COSTS . . . . . . . . . . . . . . . . . . . . . . 56
Section 19.1 Performance at Borrower's Expense.. . . . . 56
Section 19.2 Attorney's Fees for Enforcement. . . . . . 57
Article 20 - DEFINITIONS . . . . . . . . . . . . . . . . . . . 57
Section 20.1 General Definitions.. . . . . . . . . . . . 57
Section 20.2 Headings, Etc. . . . . . . . . . . . . . . 58
Article 21 - MISCELLANEOUS PROVISIONS. . . . . . . . . . . . . 58
Section 21.1 No Oral Change. . . . . . . . . . . . . . . 58
Section 21.2 Liability. . . . . . . . . . . . . . . . . 58
Section 21.3 Duplicate Originals; Counterparts. . . . . 58
Section 21.4 Number and Gender. . . . . . . . . . . . . 58
Section 21.5 Subrogation. . . . . . . . . . . . . . . . 58
Section 21.6 Entire Agreement. . . . . . . . . . . . . 58
Article 22 - LOCAL LAW PROVISIONS. . . . . . . . . . . . . . . 59
Exhibits -
Exhibit A - Description of Land
Exhibit B - Local Law Provisions
Definitions
The terms set forth below are defined in the following Sections
of this Security Instrument:
a. ADA: Subsection 3.10(a);
b. Applicable Law: Subsection 3.10(a);
c. Attorneys' Fees/Counsel Fees: Section 20.1;
d. Bankruptcy Code: Subsection 1.1(f);
e. Borrower: Preamble;
f. Business Day: Section 16.1;
g. Casualty Consultant: Subsection 4.4(b)(iii);
h. Casualty Retainage: Subsection 4.4(b)(iv);
i. Collateral: Section 1.3;
j. Debt: Section 2.1;
k. Default Rate: Section 11.3;
l. Environmental Indemnity: Subsection 10.1(c);
m. Environmental Law: Section 12.1;
n. Environmental Liens: Section 12.2;
o. Environmental Report: Section 12.1;
p. ERISA: Subsection 4.2(a);
q. Escrow Fund: Section 3.5;
r. Event: Section 19.1;
s. Event of Default: Section 10.1;
t. Exculpated Parties: Section 15.1;
u. Force Majeure: Subsection 4.4(b);
v. Guarantor: Section 5.5;
w. Hazardous Substances: Section 12.1;
x. Improvements: Subsection 1.1(c);
y. Indemnified Parties: Section 13.1;
z. Indemnitor: Subsection 10.1(c);
aa. Independent Director: Subsection 4.3(c);
bb. Insurance Premiums: Subsection 3.3(b);
cc. Investor: Section 18.1;
dd. Land: Subsection 1.1(a);
ee. Lease Guaranty: Subsection 3.7(a);
ff. Leases: Subsection 1.1(f);
gg. Lender: Preamble;
hh. Loan Application: Section 5.15;
ii. Losses: Section 13.1;
jj. Net Proceeds: Subsection 4.4(b);
kk. Net Proceeds Deficiency: Subsection 4.4(b)(vi);
ll. Note: Recitals;
mm. Obligations: Section 2.3;
nn. Other Charges: Subsection 3.4(a);
oo. Other Obligations: Section 2.2;
pp. Other Security Documents: Section 3.2;
qq. Participations: 18.1;
rr. Permitted Exceptions: Section 5.1;
ss. Person: Section 20.1;
tt. Personal Property: Subsection 1.1(e);
uu. Policies/Policy: Subsection 3.3(b);
vv. Property: Section 1.1;
ww. Qualified Insurer: Subsection 3.3(b);
xx. Rating Agency: Subsection 3.3(b);
yy. Release: Section 12.1;
zz. Remediation: Section 12.1;
aaa. Rents: Subsection 1.1(f);
bbb. Restoration: Subsection 3.3(d);
ccc. Securities: Section 18.1;
ddd. Securitization: Section 18.1;
eee. Security Instrument: Preamble;
fff. Servicer: Section 6.2;
ggg. SPE Member: Subsection 4.3(b);
hhh. Taxes: Subsection 3.4(a); and
iii. Uniform Commercial Code: Subsection 1.1(e).
MORTGAGE AND SECURITY AGREEMENT (the "Security
Instrument") is made as of the 24th day of June, 1998, by MARLTON
PLAZA ASSOCIATES II, L.P., a Delaware limited partnership having
its principal place of business c/o Marlton Plaza II LLC,
Plymouth Plaza, 580 West Germantown Pike, Suite 200, Plymouth
Meeting, Pennsylvania 19462, as mortgagor ("Borrower") to GMAC
COMMERCIAL MORTGAGE CORPORATION, a California corporation, having
an address at 650 Dresher Road, Horsham, Pennsylvania 19044-8015,
as mortgagee ("Lender").
RECITALS:
Borrower by its promissory note of even date herewith
given to Lender is indebted to Lender in the principal sum of
$11,650,000 in lawful money of the United States of America (the
note together with all extensions, renewals, modifications,
consolidations, substitutions, replacements, restatements and
increases thereof shall collectively be referred to as the
"Note"), with interest from the date thereof at the rates set
forth in the Note, principal and interest to be payable in
accordance with the terms and conditions provided in the Note.
Borrower desires to secure the payment of the Debt (as
defined in Article 2) and the performance of all of its
obligations under the Note and the Other Obligations (as defined
in Article 2).
Article 1 - GRANTS OF SECURITY
Section 1.1 Property Mortgaged. Borrower does hereby
irrevocably (i) mortgage, grant, bargain, sell, pledge, assign,
warrant, transfer and convey to Lender and to its successors and
assigns with power of sale in accordance with the terms and
conditions hereof, for the use and benefit of Lender, and (ii)
grant a security interest to Lender and to its successors and
assigns with power of sale, in accordance with the terms and
conditions hereof, for the use and benefit of Lender, in, the
following property, rights, interests and estates now owned, or
hereafter acquired by Borrower (collectively, the "Property"):
(a) Land. The real property described in Exhibit A
attached hereto and made a part hereof (the "Land");
(b) Additional Land. All additional lands, estates
and development rights hereafter acquired by Borrower for use in
connection with the Land and the development of the Land that
may, from time to time, by supplemental mortgage or otherwise, be
expressly made subject to the lien of this Security Instrument;
(c) Improvements. The buildings, structures,
fixtures, additions, enlargements, extensions, modifications,
repairs, replacements and improvements now or hereafter erected
or located on the Land (the "Improvements");
(d) Easements. All easements, rights-of-way or use,
rights, strips and gores of land, streets, ways, alleys,
passages, sewer rights, water, water courses, water rights and
powers, air rights and development rights, and all estates,
rights, titles, interests, privileges, liberties, servitudes,
tenements, hereditaments and appurtenances of any nature
whatsoever, in any way now or hereafter belonging, relating or
pertaining to the Land and the Improvements and the reversion and
reversions, remainder and remainders, and all land lying in the
bed of any street, road or avenue, opened or proposed, in front
of or adjoining the Land, to the center line thereof and all the
estates, rights, titles, interests, dower and rights of dower,
curtesy and rights of curtesy, property, possession, claim and
demand whatsoever, both at law and in equity, of Borrower of, in
and to the Land and the Improvements and every part and parcel
thereof, with the appurtenances thereto;
(e) Fixtures and Personal Property. All machinery,
equipment, fixtures (including, but not limited to all heating,
air conditioning, plumbing, lighting, communications and elevator
fixtures) and other property of every kind and nature whatsoever
owned by Borrower, or in which Borrower has or shall have an
interest, now or hereafter located upon the Land or the
Improvements, or appurtenant thereto, and used in connection with
the present or future operation and occupancy of the Land and the
Improvements and all building equipment, materials and supplies
of any nature whatsoever owned by Borrower, or in which Borrower
has or shall have an interest, now or hereafter located upon the
Land and the Improvements, or appurtenant thereto, or used in
connection with the present or future operation and occupancy of
the Land and the Improvements (collectively, the "Personal
Property"), and the right, title and interest of Borrower in and
to any of the Personal Property which may be subject to any
security interests, as defined in the Uniform Commercial Code, as
adopted and enacted by the state or states where any of the
Property is located (the "Uniform Commercial Code"), superior in
lien to the lien of this Security Instrument and all proceeds and
products of the above;
(f) Leases and Rents. All leases and other agreements
affecting the use, enjoyment or occupancy of all or any part of
the Land or the Improvements heretofore or hereafter entered into
whether before or after the filing by or against Borrower of any
petition for relief under 11 U.S.C. 101 et seq. (the
"Bankruptcy Code"), as the same may be amended from time to time
(the "Leases") and all right, title and interest of Borrower, its
successors and assigns therein and thereunder, including, without
limitation, all guarantees, letters of credit and any other
credit support given by any guarantor in connection therewith,
cash or securities deposited under the Leases to secure the
performance by the lessees of their obligations thereunder and
all rents, additional rents, revenues, issues and profits
(including all oil and gas or other mineral royalties and
bonuses) from the Land and the Improvements whether paid or
accruing before or after the filing by or against Borrower of any
petition for relief under the Bankruptcy Code (the "Rents") and
all proceeds from the sale or other disposition of the Leases and
the right to receive and apply the Rents to the payment of the
Debt;
(g) Condemnation Awards. All awards or payments,
including interest thereon, which may heretofore and hereafter be
made with respect to the Property, whether from the exercise of
the right of eminent domain (including, but not limited to any
transfer made in lieu of or in anticipation of the exercise of
the right), or for a change of grade, or for any other injury to
or decrease in the value of the Property;
(h) Insurance Proceeds. All proceeds of and any
unearned premiums on any insurance policies covering the
Property, including, without limitation, the right to receive and
apply the proceeds of any insurance judgments, or settlements
made in lieu thereof, for damage to the Property;
(i) Tax Certiorari. All refunds, rebates or credits
in connection with a reduction in real estate taxes and
assessments charged against the Property as a result of tax
certiorari or any applications or proceedings for reduction;
(j) Rights. The right, in the name and on behalf of
Borrower, to commence any action or proceeding to protect the
interest of Lender in the Property and while an Event of Default
(defined in Section 10.1) remains uncured, to appear in and
defend any action or proceeding brought with respect to the
Property;
(k) Agreements. All agreements, contracts,
certificates, instruments, franchises, permits, licenses, plans,
specifications and other documents, now or hereafter entered
into, and all rights therein and thereto, respecting or
pertaining to the use, occupation, construction, management or
operation of the Land and any part thereof and any Improvements
or respecting any business or activity conducted on the Land and
any part thereof and all right, title and interest of Borrower
therein and thereunder, including, without limitation, the right,
while an Event of Default remains uncured, to receive and collect
any sums payable to Borrower thereunder;
(l) Intangibles. All accounts, escrows, chattel
paper, claims, deposits, trade names, trademarks, servicemarks,
logos, copyrights, goodwill, books and records and all other
general intangibles specific to or used in connection with the
operation of the Property, if any;
(m) Conversion. All proceeds of the conversion,
voluntary or involuntary, of any of the foregoing including,
without limitation, proceeds of insurance and condemnation
awards, into cash or liquidation claims; and
(n) Other Rights. Any and all other rights of
Borrower in and to the items set forth in Subsections (a) through
(m) above.
Section 1.2 Assignment of Leases and Rents. Borrower
hereby absolutely and unconditionally assigns to Lender
Borrower's right, title and interest in and to all current and
future Leases and Rents; it being intended by Borrower that this
assignment constitutes a present, absolute assignment and not an
assignment for additional security only. Nevertheless, subject
to the terms of this Section 1.2 and Section 3.7, Lender grants
to Borrower a revocable license to collect and receive the Rents.
Borrower shall hold the Rents, or a portion thereof, sufficient
to discharge all current sums due on the Debt, for use in the
payment of such sums.
Section 1.3 Security Agreement. This Security Instrument
is both a real property mortgage and a "security agreement"
within the meaning of the Uniform Commercial Code. The Property
includes both real and personal property and all other rights and
interests, whether tangible or intangible in nature, of Borrower
in the Property. By executing and delivering this Security
Instrument, Borrower hereby grants to Lender, as security for the
Obligations (defined in Section 2.3), a security interest in the
Property to the full extent that the Property may be subject to
the Uniform Commercial Code (said portion of the Property so
subject to the Uniform Commercial Code, the "Collateral"). This
Security Instrument is also a financing statement filed as a
"fixture filing" for the purposes of Article 12A:9-402(6) of
Division 9 of the Uniform Commercial Code. For the purposes of
compliance with the aforesaid section of the Uniform Commercial
Code, Lender is the secured party, the Borrower is the debtor,
and the address of the secured party from which information
concerning the security interest granted hereby may be obtained
as set forth in the first paragraph on page 1 of this Security
Instrument. Certain of the Personal Property is or is to become
fixtures related to the Land and Improvements.
Section 1.4 Pledge of Monies Held. Borrower hereby
pledges to Lender, and grants to Lender a security interest in,
any and all monies now or hereafter held by Lender, including,
without limitation, any sums deposited in the Escrow Fund
(defined in Section 3.5) and the Net Proceeds (defined in Section
4.4), as additional security for the Obligations until expended
or applied as provided in this Security Instrument.
CONDITIONS TO GRANT
TO HAVE AND TO HOLD the above granted and described
Property unto the Lender and its successors and assigns, with
power of sale in accordance with the terms and conditions hereof,
for the use and benefit of Lender, and the successors and assigns
of Lender, forever;
PROVIDED, HOWEVER, these presents are upon the express
condition that, if Borrower shall well and truly pay to Lender
the Debt at the time and in the manner provided in the Note and
this Security Instrument, shall well and truly perform the Other
Obligations as set forth in this Security Instrument and shall
well and truly abide by and comply with each and every covenant
and condition set forth herein and in the Note, these presents
and the estate hereby granted shall cease, terminate and be void.
Article 2 - DEBT AND OBLIGATIONS SECURED
Section 2.1 Debt. This Security Instrument and the
grants, assignments and transfers made in Article 1 are given for
the purpose of securing the following, in such order of priority
as Lender may determine in its sole discretion (the "Debt"):
(a) the payment of the indebtedness evidenced by the
Note in lawful money of the United States of America;
(b) the payment of interest, default interest, late
charges and other sums, as provided in the Note, this Security
Instrument or the Other Security Documents (defined in Section
3.2);
(c) the payment of any Defeasance Deposit for
Defeasance of the Loan (as such items are defined in the Note) as
well as all costs and expenses incurred by Lender in connection
with the Defeasance;
(d) the payment of all other monies agreed or provided
to be paid by Borrower in the Note, this Security Instrument or
the Other Security Documents;
(e) the payment of all sums advanced pursuant to this
Security Instrument to protect and preserve the Property and the
lien and the security interest created hereby; and
(f) the payment of all sums advanced and costs and
expenses incurred by Lender in connection with the Debt or any
part thereof, any renewal, extension, modification,
consolidation, change, substitution, replacement, restatement or
increase of the Debt or any part thereof, or the acquisition or
perfection of the security therefor, whether made or incurred at
the request of Borrower or Lender.
Section 2.2 Other Obligations. This Security Instrument
and the grants, assignments and transfers made in Article 1 are
also given for the purpose of securing the following (the "Other
Obligations"):
(a) the performance of all other obligations of
Borrower contained herein;
(b) the performance of each obligation of Borrower
contained in the Note in addition to the payment of the Debt and
of Borrower and of any Guarantor (defined in Section 5.5)
contained in the Other Security Documents; and
(c) the performance of each obliga tion of Borrower
and any Guarantor contained in any renewal, extension,
modification, consolidation, change, substitution, replacement
for, restatement or increase of all or any part of the Note, this
Security Instrument or the Other Security Documents.
Section 2.3 Debt and Other Obligations. Borrower's
obligations for the payment of the Debt and the performance of
the Other Obligations shall be referred to collectively below as
the "Obligations."
Section 2.4 Payments. Unless payments are made in the
required amount in immediately available funds at the place where
the Note is payable, remittances in payment of all or any part of
the Debt shall not, regardless of any receipt or credit issued
therefor, constitute payment until the required amount is
actually received by Lender in funds immediately available at the
place where the Note is payable (or any other place as Lender, in
Lender's sole discretion, may have established by delivery of
written notice thereof to Borrower) and shall be made and
accepted subject to the condition that any check or draft may be
handled for collection in accordance with the practice of the
collecting bank or banks. Acceptance by Lender of any payment in
an amount less than the amount then due shall be deemed an
acceptance on account only, and the failure to pay the entire
amount then due shall be and continue to be an Event of Default.
Article 3 - BORROWER COVENANTS
Borrower covenants and agrees with Lender that:
Section 3.1 Payment of Debt. Borrower will pay the Debt at
the time and in the manner provided in the Note and in this
Security Instrument.
Section 3.2 Incorporation by Reference. All the covenants,
conditions and agreements contained in (a) the Note and (b) all
and any of the documents other than the Note or this Security
Instrument now or hereafter executed by Borrower and/or others
and by or in favor of Lender, which wholly or partially secure or
guaranty payment of the Note or the other Obligations, including,
without limitation, the obligations of Borrower under that
certain letter by and between Borrower and Lender of even date
herewith relating to Borrower's intention to develop real
property adjacent to the Land (the "Consent Letter"), which
Consent Letter is attached as Exhibit B hereto and made a part
hereof (collectively, the "Other Security Documents"), are hereby
made a part of this Security Instrument to the same extent and
with the same force as if fully set forth herein.
Section 3.3 Insurance.
(a) Borrower shall obtain and maintain, or cause to be
maintained, insurance for Borrower and the Property providing at
least the following coverages:
(i) Property Insurance. Insurance with respect
to the Improvements and building equipment insuring against any
peril included within the classification "All Risks of Physical
Loss" in amounts at all times sufficient to prevent Lender from
becoming a co-insurer within the terms of the applicable policies
and under applicable law, but in any event such insurance shall
be maintained in an amount equal to the full insurable value of
the Improvements and building equipment, the term "full insurable
value" to mean the actual replacement cost of the Improvements
and building equipment (without taking into account any
depreciation, and exclusive of excavations, footings and
foundations, landscaping and paving) determined annually by an
insurer, a recognized independent insurance broker or an
independent appraiser selected and paid by Borrower and in no
event less than the coverage required pursuant to the terms of
any Lease. Absent such annual adjustment, each policy shall
contain inflation guard coverage insuring that the policy limit
will be increased over time to reflect the effect of inflation.
Borrower shall also maintain insurance against loss or damage to
such furniture, furnishings, fixtures, equipment and other items
(whether personalty or fixtures) included in the Property and
owned by Borrower from time to time, to the extent applicable, in
the amount of the cost of replacing the same, in each case, with
inflation guard coverage to reflect the effect of inflation, or
annual valuation. Each policy or policies shall contain a
replacement cost endorsement and either an agreed amount
endorsement (to avoid the operation of any co-insurance
provisions) or a waiver of any co-insurance provisions, all
subject to Lender's approval. The maximum deductible shall be
$10,000.00;
(ii) Liability Insurance. Comprehensive general
liability insurance, including personal injury, bodily injury,
death and property damage liability, insurance against any and
all claims, including all legal liability to the extent insurable
and imposed upon Lender and all court costs and attorneys' fees
and expenses, arising out of or connected with the possession,
use, leasing, operation, maintenance or condition of the Property
in such amounts as are generally available at commercially
reasonable premiums and are generally required by institutional
lenders for properties comparable to the Property but in no event
for a combined single limit of less than $5,000,000. During any
construction of the Property, Mortgagor's general contractor for
such construction shall also provide the insurance required in
this Subsection b. Lender hereby retains the right to
periodically review the amount of said liability insurance being
maintained by Borrower and to require an increase in the amount
of said liability insurance should Lender deem an increase to be
reasonably prudent under then existing circumstances;
(iii) Workers' Compensation Insurance. Statutory
workers' compensation insurance with respect to any work on or
about the Property covering all persons subject to the workers'
compensation laws of the state in which the Property is located;
(iv) Business Interruption. Business
interruption and/or loss of "rental income" insurance in an
amount sufficient to avoid any co-insurance penalty and to
provide proceeds which will cover a period of not less than one
(1) year from the date of casualty or loss, with a six month
extended period of indemnity, the term "rental income" to mean
the sum of (A) the total then ascertainable Rents payable under
the Leases and (B) the total ascertainable amount of all other
amounts to be received by Borrower from third parties which are
the legal obligation of the tenants, reduced to the extent such
amounts would not be received because of operating expenses not
incurred during a period of non-occupancy of that portion of the
Property then not being occupied. The amount of coverage shall
be adjusted annually to reflect the rents payable during the
succeeding twelve (12) month period.
(v) Boiler and Machinery Insurance. Broad form
boiler and machinery insurance (without exclusion for explosion)
covering all boilers or other pressure vessels, machinery, and
equipment located in, on or about the Property and insurance
against loss of occupancy or use arising from any breakdown in
such amount per accident equal to the replacement value of the
improvements housing the machinery or $2,000,000 or such other
amount reasonably determined by Lender. If one or more large
HVAC units is in operation at the Property, "System Breakdowns"
coverage shall be required, as determined by Mortgagee. Minimum
liability coverage per accident must equal the value of such
unit(s);
(vi) Flood Insurance. If required by Subsection
5.6(a) hereof, flood insurance in an amount at least equal to the
lesser of (A) the minimum amount required, under the terms of
coverage, to compensate for any damage or loss on a replacement
basis (or the unpaid balance of the indebtedness secured hereby
if replacement cost coverage is not available for the type of
building insured); or (B) the maximum insurance available under
the appropriate National Flood Insurance Administration program.
The deductible may not exceed $25,000.
(vii) During the period of any construction,
renovation or alteration of the Improvements which exceeds the
lesser of 10% of the principal amount of the Note or $500,000, at
Lender's request, a completed value, "All Risk" Builder's Risk
form, or "Course of Construction" insurance policy in
non-reporting form for any Improvements under construction,
renovation or alteration in an amount approved by Lender may be
required. During the period of any construction of any addition
to the existing Improvements, a completed value, "All Risk"
Builder's Risk form or "Course of Construction" insurance policy
in non-reporting form, in an amount approved by Lender, shall be
required.
(viii) Other Insurance. Such other insurance
with respect to the Property or on any replacements or
substitutions thereof or additions thereto as may from time to
time be required by Lender against other insurable hazards or
casualties which at the time are commonly insured against in the
case of property similarly situated, including, without
limitation, sinkhole, mine subsidence, earthquake and
environmental insurance, due regard being given to the height and
type of buildings, their construction, location, use and
occupancy.
(b) All insurance provided for in Subsection 3.3(a)
hereof shall be obtained under valid and enforceable policies
(the "Policies" or in the singular, the "Policy"), and shall be
issued by one or more domestic primary insurer(s) having an
investment grade rating of "A" or better ("AA" or better for
Loans of 25 million or more), or a comparable claims paying
ability assigned by S & P or equivalent one or more credit rating
agencies approved by Lender (a "Rating Agency"), (each such
insurer shall be referred to below as a "Qualified Insurer").
All insurers providing insurance required by this Security
Instrument shall be authorized to issue insurance in the state in
which the Property is located. The Policy referred to in
Subsection 3.3(a)(ii) above shall name Lender as an additional
named insured and the Policy referred to in Subsection 3.3(a)(i),
(iv), (v) and (vi) above shall provide that all proceeds be
payable to Lender as set forth in Section 4.4 hereof. The
Policies referred to in Subsections 3.3(a)(i), (v) and (vi) shall
also contain: (i) a standard "non-contributory mortgagee"
endorsement or its equivalent relating, inter alia, to recovery
by Lender notwithstanding the negligent or willful acts or
omission of Lender. All Policies described in Subsection 3.3(a)
above shall contain (i) a provision that such Policies shall not
be canceled or terminated, nor shall they expire, without at
least thirty (30) days' prior written notice to Lender in each
instance, except in the event of termination for failure to pay
premiums in which event only fifteen (15) days' prior written
notice shall be required; and (ii) include effective waivers by
the insurer of all claims for Insurance Premiums (defined below)
against any mortgagee, loss payees, additional insureds and named
insureds (other than Borrower). In the event that the Property
or the Improvements constitutes a legal non-conforming use under
applicable building, zoning or land use laws or ordinances, the
policy shall include an ordinance or law coverage endorsement
which will contain Coverage A: "Loss Due to Operation of Law"
(with a minimum liability limit equal to Replacement Cost With
Agreed Value Endorsement), Coverage B: "Demolition Cost" and
Coverage C: "Increased Cost of Construction" coverages.
Certificates of insurance with respect to all renewal and
replacement Policies shall be delivered to Lender not less than
thirty (30) days prior to the expiration date of any of the
Policies required to be maintained hereunder which certificates
shall bear notations evidencing payment of applicable premiums
(the "Insurance Premiums"). Originals or certificates of such
replacement Policies shall be delivered to Lender promptly after
Borrower's receipt thereof but in any case within thirty (30)
days after the effective date thereof. If Borrower fails to
maintain and deliver to Lender the original Policies or
certificates of insurance required by this Security Instrument,
upon ten (10) days' prior notice to Borrower, Lender may procure
such insurance at Borrower's sole cost and expense.
(c) Borrower shall comply with all insurance
requirements and shall not bring or keep or permit to be brought
or kept any article upon any of the Property or cause or permit
any condition to exist thereon which would be prohibited by an
insurance requirement, or would invalidate the insurance coverage
required hereunder to be maintained by Borrower on or with
respect to any part of the Property pursuant to this Section 3.3.
(d) If the Property shall be damaged or destroyed, in
whole or in part, by fire or other casualty, Borrower shall give
prompt notice of such damage to Lender and provided that Borrower
shall have received the Net Proceeds, Borrower shall promptly
commence and diligently prosecute the completion of the repair
and restoration of the Property as nearly as possible to the
condition the Property was in immediately prior to such fire or
other casualty, with such alterations as may be approved by
Lender (the "Restoration") and otherwise in accordance with
Section 4.4 of this Security Instrument.
(e) The insurance coverage required under Section
3.3(a) may be effected under a blanket policy or policies
covering the Property and other properties and assets not
constituting a part of the security hereunder; provided that any
such blanket policy shall specify, except in the case of public
liability insurance, the portion of the total coverage of such
policy that is allocated to the Property, and any sublimit in
such blanket policy applicable to the Property, and shall in any
case comply in all other respects with the requirements of this
Section 3.3.
(f) The insurance coverage required under Subsection
3.3(a)(ii) may be satisfied by a layering of Commercial General
Liability, Umbrella and Excess Liability Policies, but in no
event will the Commercial General Liability policy be written for
an amount less than $1,000,000 per occurrences and $2,000,000
aggregate for bodily injury and property damage liability. [The
Lender may require umbrella coverage which will be evaluated on a
case by case basis].
(g) The delivery to Lender of the insurance policies
or the certificates of insurance as provided above shall
constitute an assignment of all proceeds payable under such
insurance as relating to the Property by Borrower to Lender as
further security for the indebtedness secured hereby. In the
event of foreclosure of this Security Instrument, or other
transfer of title to the Property in extinguishment in whole or
in part of the secured indebtedness, all right, title and
interest of Borrower in and to all proceeds payable under such
policies then in force concerning the Property shall thereupon
vest in the purchaser at such foreclosure, or in Lender or other
transferee in the event of such other transfer of title.
Approval of any insurance by Lender shall not be a representation
of the solvency of any insurer or the sufficiency of any amount
of insurance.
(h) Lender shall not be responsible for nor incur any
liability for the insolvency of the insurer or other failure of
the insurer to perform, even though Lender has caused the
insurance to be placed with the insurer after failure of Borrower
to furnish such insurance. Borrower shall not obtain insurance
for the Property in addition to that required by Lender without
the prior written consent of Lender, which consent will not be
unreasonably withheld provided that (i) Lender is named insured
on such insurance, (ii) Lender receives complete copies of all
policies evidencing such insurance, and (iii) such insurance
complies with all of the applicable requirements set forth
herein.
Section 3.4 Payment of Taxes, Etc.
(a) Borrower shall pay by their due date all taxes,
assessments, water rates, sewer rents, governmental impositions,
and other charges, including, without limitation, vault charges
and license fees for the use of vaults, chutes and similar areas
adjoining the Land, now or hereafter levied or assessed or
imposed against the Property or any part thereof (the "Taxes"),
all ground rents, maintenance charges and similar charges, now or
hereafter levied or assessed or imposed against the Property or
any part thereof (the "Other Charges"), and all charges for
utility services provided to the Property as same become due and
payable. Borrower will deliver to Lender, promptly upon Lender's
request, evidence satisfactory to Lender that the Taxes, Other
Charges and utility service charges have been so paid or are not
then delinquent. Borrower shall not suffer and shall promptly
cause to be paid and discharged any lien or charge whatsoever
which may be or become a lien or charge against the Property.
Except to the extent sums sufficient to pay all Taxes and Other
Charges have been deposited with Lender in accordance with the
terms of this Security Instrument, Borrower shall furnish to
Lender paid receipts for the payment of the Taxes and Other
Charges prior to the date the same shall become delinquent.
(b) After prior written notice to Lender, Borrower, at
its own expense, may contest by appropriate legal proceeding,
promptly initiated and conducted in good faith and with due
diligence, the amount or validity or application in whole or in
part of any of the Taxes, provided that (i) no Event of Default
has occurred and is continuing under the Note, this Security
Instrument or any of the Other Security Documents, (ii) Borrower
is permitted to do so under the provisions of any other mortgage,
deed of trust or deed to secure debt affecting the Property,
(iii) such proceeding shall suspend the collection of the Taxes
from Borrower and from the Property or Borrower shall have paid
all of the Taxes under protest, (iv) such proceeding shall be
permitted under and be conducted in accordance with the
provisions of any other instrument to which Borrower is subject
and shall not constitute a default thereunder, (v) neither the
Property nor any part thereof or interest therein will be in
danger of being sold, forfeited, terminated, canceled or lost,
(vi) Borrower shall have set aside adequate reserves for the
payment of the Taxes, together with all interest and penalties
thereon, unless Borrower has paid all of the Taxes under protest,
and (vii) Borrower shall have furnished the security as may be
required in the proceeding, or as may be reasonably requested by
Lender to insure the payment of any contested Taxes, together
with all interest and penalties thereon, taking into
consideration the amount in the Escrow Fund available for payment
of Taxes.
Section 3.5 Escrow Fund. At the option of Lender, Lender
may require Borrower to establish an Escrow Fund (defined below)
sufficient to discharge its obligations for the payment of
Insurance Premiums and Taxes pursuant to Sections 3.3 and 3.4
hereof. Initial deposits of Taxes and Insurance Premiums shall
be made by Borrower to Lender in amounts determined by Lender in
its discretion on the date hereof to be held by Lender in escrow.
Additionally, Borrower shall pay to Lender on the first day of
each calendar month (a) one-twelfth of an amount which would be
sufficient to pay the Taxes payable, or estimated by Lender to be
payable, upon the due dates established by the appropriate taxing
authority during the next ensuing twelve (12) months and (b)
one-twelfth of an amount which would be sufficient to pay the
Insurance Premiums due for the renewal of the coverage afforded
by the Policies upon the expiration thereof (the initial deposits
together with the amounts in (a) and (b) above shall be called
the "Escrow Fund"). Borrower agrees to notify Lender immediately
of any changes to the amounts, schedules and instructions for
payment of any Taxes and Insurance Premiums of which it has
obtained knowledge and authorizes Lender or its agent to obtain
the bills for Taxes and Other Charges directly from the
appropriate tax authority. The 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
Borrower to Lender. Provided there are sufficient amounts in the
Escrow Fund and no Event of Default exists, Lender shall be
obligated to pay the Taxes and Insurance Premiums as they become
due on their respective due dates on behalf of Borrower by
applying the Escrow Fund to the payments of such Taxes and
Insurance Premiums required to be made by Borrower pursuant to
Sections 3.3 and 3.4 hereof. If the amount of the Escrow Fund
shall exceed the amounts due for Taxes and Insurance Premiums
pursuant to Sections 3.3 and 3.4 hereof, Lender shall, in its
discretion, return any excess to Borrower or credit such excess
against future payments to be made to the Escrow Fund. In
allocating such excess, Lender may deal with the person shown on
the records of Lender to be the owner of the Property. If the
Escrow Fund is not sufficient to pay the items set forth in (a)
and (b) above, Borrower shall promptly pay to Lender, upon
demand, an amount which Lender shall reasonably estimate as
sufficient to make up the deficiency. The Escrow Fund shall not
constitute a trust fund and may be commingled with other monies
held by Lender.
Section 3.6 Condemnation. Borrower shall promptly give
Lender notice of the actual or threatened commencement of any
condemnation or eminent domain proceeding and shall deliver to
Lender copies of any and all papers served in connection with
such proceedings. Lender may participate in any such proceedings
to the extent permitted by law. Upon an Event of Default,
Borrower shall deliver to Lender all instruments requested by it
to permit such participation. Borrower shall, at its expense,
diligently prosecute any such proceedings, and shall consult with
Lender, its attorneys and experts, and cooperate with them in the
carrying on or defense of any such proceedings. Borrower shall
not make any agreement in lieu of condemnation of the Property or
any portion thereof without the prior written consent of Lender
in each instance, which consent shall not be unreasonably
withheld or delayed in the case of a taking of an insubstantial
portion of the Property. Notwithstanding any taking by any
public or quasi-public authority through eminent domain or
otherwise (including, but not limited to any transfer made in
lieu of or in anticipation of the exercise of such taking),
Borrower shall continue to pay the Debt at the time and in the
manner provided for its payment in the Note and in this Security
Instrument and the Debt shall not be reduced until any award or
payment therefor shall have been actually received and applied by
Lender, after the deduction of expenses of collection, to the
reduction or discharge of the Debt. Lender shall not be limited
to the interest paid on the award by the condemning authority but
shall be entitled to receive out of the award interest at the
rate or rates provided herein or in the Note. If the Property or
any portion thereof is taken by the power of eminent domain,
Borrower shall promptly commence and diligently prosecute the
Restoration of the Property and otherwise comply with the
provisions of in accordance with Section 4.4 of this Security
Instrument. If the Property is sold, through foreclosure or
otherwise, prior to the receipt by Lender of the award or
payment, Lender shall have the right, whether or not a deficiency
judgment on the Note shall have been sought, recovered or denied,
to receive the award or payment, or a portion thereof sufficient
to pay the Debt.
Section 3.7 Leases and Rents.
(a) Except as otherwise consented to by Lender, all
Leases shall be written on a standard form of lease which shall
have been approved by Lender. Upon request, Borrower shall
furnish Lender with executed copies of all Leases. No material
changes may be made to the Lender-approved standard lease without
the prior written consent of Lender, which consent shall not be
unreasonably withheld or delayed. All proposed leases shall be
subject to the prior approval of Lender except that all proposed
leases which (i) are on the same form of lease which has been
approved by Lender, (ii) are the result of an arms-length
transaction, (iii) which provide for rental rates comparable to
existing market rates, (iv) where space to be leased does not
exceed more than ten percent (10%) of total rentable space of the
Property, (v) where the proposed tenant is an independent third
party not affiliated with the Borrower, and (vi) do not contain
any terms which would materially affect Lender's rights under
this Security Instrument, the Note or the Other Security
Documents, shall not be subject to the prior approval of Lender.
Borrower (i) shall observe and perform all the obligations
imposed upon the lessor under the Leases if the failure to
perform or observe the same would materially and adversely affect
the value of the Property taken as a whole and shall not do or
permit to be done anything to impair the value of the Leases as
security for the Debt; (ii) shall promptly send copies to Lender
of all notices of default which Borrower shall send or receive
thereunder; (iii) shall enforce in a commercially reasonable
manner all of the terms, covenants and conditions contained in
the Leases upon the part of the lessee thereunder to be observed
or performed; provided, however, with respect to multifamily
residential property, a residential Lease may be terminated in
the event of a default by the tenant thereunder; (iv) shall not
collect any of the Rents more than one (1) month in advance
(provided that a security deposit shall not be deemed rent
collected in advance); (v) shall not execute any other assignment
of the lessor's interest in the Leases or the Rents; (vi) shall
not (A) materially alter, modify or change the terms of the
Leases without the prior written consent of Lender, which consent
shall not be unreasonably withheld or delayed if the alteration,
modification or change does not materially and adversely affect
the value of the Property taken as a whole and provided further
that such Lease, as altered, modified or changed, is otherwise in
compliance with the requirements of this Security Instrument, or
(B) cancel or terminate any Lease (except for defaults
thereunder) of more than ten (10%) percent of the rentable space
of the Property or accept a surrender thereof or convey or
transfer or suffer or permit a conveyance or transfer of the Land
or of any interest therein so as to effect a merger of the
estates and rights of, or a termination or diminution of the
obligations of, lessees thereunder; (vii) shall not alter, modify
or change the terms of any guaranty, letter of credit or other
credit support with respect to the Leases (the "Lease Guaranty")
or cancel or terminate such Lease Guaranty without the prior
written consent of Lender; and (viii) shall not consent to any
assignment of or subletting under the Leases not in accordance
with their terms, without the prior written consent of Lender.
Notwithstanding the foregoing, subdivisions (ii), (vi), (vii) and
(viii) shall not apply to residential Leases for space in a
multifamily residential property.
(b) In the event the lessee under that certain Lease by
and between Marlton Crossing Shopping Center Limited Partnership,
as landlord and Super Fresh Food Markets, as tenant, dated March
17, 1986, as amended and/or assigned from time to time (the
"Super Fresh Lease") provides Borrower with notice of non-renewal
of such Super Fresh Lease, Borrower shall establish an
interest-bearing account for the benefit of Lender. Commencing
with the first rent payment due under the Super Fresh Lease
during the last twelve (12) months of the term of such lease,
Borrower shall deposit all rents, revenues, issues and profits
collected under the Super Fresh Lease into such account (the
"Super Fresh Cash Flow Account"). Notwithstanding the foregoing,
Borrower need not make deposits into the Super Fresh Cash Flow
Account which would cause such account to contain a balance in
excess of Five Hundred Thousand Dollars ($500,000). The balance
in the Super Fresh Cash Flow Account shall be released to
Borrower upon the occurrence of one of the following events: (i)
payment in full of the Debt, (ii) Defeasance of the Loan, or
(iii) commencement of rent payments by a replacement lessee
occupying the leased premises currently occupied by Super Fresh,
pursuant to a release executed by Lender and approving the
occupancy of such replacement lessee, the terms of the
replacement lease and the rent payments thereunder.
Section 3.8 Maintenance of Property. Borrower shall cause
the Property to be maintained in a good and safe condition and
repair. The Improvements and the Personal Property shall not be
removed, demolished or materially altered (except for normal
replacement of the Personal Property) without the consent of
Lender. Borrower shall promptly repair, replace or rebuild any
part of the Property which may be destroyed by any casualty, or
become damaged, worn or dilapidated or which may be affected by
any proceeding of the character referred to in Section 3.6 hereof
and shall complete and pay for any structure at any time in the
process of construction or repair on the Land. Borrower shall
not initiate, join in, acquiesce in, or consent to any change in
any private restrictive covenant, zoning law or other public or
private restriction, limiting or defining the uses which may be
made of the Property or any part thereof. If under applicable
zoning provisions the use of all or any portion of the Property
is or shall become a nonconforming use, Borrower will not cause
or permit the nonconforming use or Improvement to be discontinued
or abandoned without the express written consent of Lender.
Section 3.9 Waste. Borrower shall not commit or suffer any
waste of the Property or make any change in the use of the
Property which will in any way materially increase the risk of
fire or other hazard arising out of the operation of the
Property, or take any action that might invalidate or give cause
for cancellation of any Policy, or do or permit to be done
thereon anything that may in any way impair the value of the
Property or the security of this Security Instrument. Borrower
will not, without the prior written consent of Lender, permit any
drilling or exploration for or extraction, removal, or production
of any minerals from the surface or the subsurface of the Land,
regardless of the depth thereof or the method of mining or
extraction thereof.
Section 3.10 Compliance With Laws.
(a) Borrower shall promptly comply with all existing
and future federal, state and local laws, orders, ordinances,
governmental rules and regulations or court orders affecting the
Property, or the use thereof including, but not limited to, the
Americans with Disabilities Act ("ADA") (collectively,
"Applicable Law").
(b) Borrower shall from time to time, upon Lender's
request, provide Lender with evidence reasonably satisfactory to
Lender that the Property complies with all Applicable Laws or is
exempt from compliance with Applicable Laws.
(c) Notwithstanding any provisions set forth herein or
in any document regarding Lender's approval of alterations of
the Property, Borrower shall not alter the Property in any manner
which would materially increase Borrower's responsibilities for
compliance with Applicable Laws without the prior written
approval of Lender. Lender's approval of the plans,
specifications, or working drawings for alterations of the
Property shall create no responsibility or liability on behalf of
Lender for their completeness, design, sufficiency or their
compliance with Applicable Laws. The foregoing shall apply to
tenant improvements constructed by Borrower or by any of its
tenants. Lender may condition any such approval upon receipt of
a certificate of compliance with Applicable Laws from an
independent architect, engineer, or other person acceptable to
Lender.
(d) Borrower shall give prompt notice to Lender of the
receipt by Borrower of any notice related to a violation of any
Applicable Laws and of the commencement of any proceedings or
investigations which relate to compliance with Applicable Laws.
(e) After prior written notice to Lender, Borrower, at
its own expense, may contest by appropriate legal proceeding,
promptly initiated and conducted in good faith and with due
diligence, the Applicable Laws affecting the Property, provided
that (i) no Event of Default has occurred and is continuing under
the Note, this Security Instrument or any of the Other Security
Documents; (ii) Borrower is permitted to do so under the
provisions of any other mortgage, deed of trust or deed to secure
debt affecting the Property; (iii) such proceeding shall be
permitted under and be conducted in accordance with the
provisions of any other instrument to which Borrower is subject
and shall not constitute a default thereunder; (iv) neither the
Property nor any part thereof or interest therein nor any of the
tenants or occupants thereof shall be affected in any material
adverse way as a result of such proceeding; and (v) Borrower
shall have furnished to Lender all other items reasonably
requested by Lender.
Section 3.11 Books and Records.
(a) Borrower and any Guarantors and Indemnitors shall
keep adequate books and records of account in accordance with
methods acceptable to Lender in its sole discretion, consistently
applied and furnish to Lender:
(i) quarterly certified rent rolls signed and
dated by Borrower, detailing the names of all tenants of the
Improvements, the portion of Improvements occupied by each
tenant, the base rent and any other charges payable under each
Lease and the term of each Lease, including the expiration date,
and any other information as is reasonably required by Lender,
within thirty (30) days after the end of each fiscal quarter;
(ii) a quarterly operating statement of the
Property detailing the total revenues received, total expenses
incurred, total cost of all capital improvements, total debt
service and total cash flow, together with a balance sheet for
such quarter, to be prepared and certified by Borrower in the
form required by Lender, and if available, any quarterly
operating statement and/or balance sheet prepared by an
independent certified public accountant within thirty (30) days
after the close of each fiscal quarter.
(iii) an annual balance sheet and profit and
loss statement of Borrower, any Guarantors and any Indemnitors,
in the form required by Lender, prepared and certified by the
respective Borrower, Guarantor and/or Indemnitor, as applicable,
within ninety (90) days after the close of each fiscal year;
(iv) an annual certified rent roll presented on a
quarterly basis consistent with the quarterly certified rent
rolls described above within ninety (90) days after the close of
each fiscal year;
(v) an annual operating budget presented on a
monthly basis consistent with the annual operating statement
described above for the Property and all proposed capital
replacements and improvements at least thirty (30) days prior to
the start of each calendar year; and
(vi) such other financial statements, including
monthly operating statements and rent rolls, as Lender may
reasonably request.
(b) Upon reasonable request from Lender, Borrower and
its affiliates shall furnish to Lender:
(i) a property management report for the
Property, if available, showing the number of inquiries made
and/or rental applications received from tenants or prospective
tenants and deposits received from tenants and any other
information requested by Lender, in reasonable detail and
certified by Borrower under penalty of perjury to be true and
complete, but no more frequently than quarterly; and
(ii) an accounting of all security deposits held
in connection with any Lease of any part of the Property,
including the name and identification number of the accounts in
which such security deposits are held, the name and address of
the financial institutions in which such security deposits are
held and the name of the person to contact at such financial
institution, along with any authority or release necessary for
Lender to obtain information regarding such accounts directly
from such financial institutions.
(c) Borrower and its affiliates and any Guarantor and
Indemnitor shall furnish Lender with such other additional
financial or management information as may, from time to time, be
reasonably required by Lender in form and substance satisfactory
to Lender.
Section 3.12 Payment For Labor and Materials. Borrower
will promptly pay when due all bills and costs for labor,
materials, and specifically fabricated materials incurred in
connection with the Property and never permit to exist beyond the
due date thereof in respect of the Property or any part thereof
any lien or security interest, even though inferior to the liens
and the security interests hereof, and in any event never permit
to be created or exist in respect of the Property or any part
thereof any other or additional lien or security interest other
than the liens or security interests hereof, except for the
Permitted Exceptions (defined in Section 5.1).
Section 3.13 Performance of Other Agreements. Borrower
shall observe and perform each and every term to be observed or
performed by Borrower pursuant to the terms of any agreement or
recorded instrument affecting or pertaining to the Property.
Section 3.14 Change of Name, Identity or Structure.
Borrower will not change Borrower's name, identity (including its
trade name or names) or, if not an individual, Borrower's
corporate, partnership or other structure without notifying the
Lender of such change in writing at least thirty (30) days prior
to the effective date of such change and, in the case of a change
in Borrower's structure, without first obtaining the prior
written consent of the Lender.
Section 3.15 Existence. Borrower will continuously
maintain (a) its existence and shall not dissolve or permit its
dissolution, (b) its rights to do business in the state where the
Property is located and (c) its franchises and trade names.
Article 4 - SPECIAL COVENANTS
Borrower covenants and agrees with Lender that:
Section 4.1 Property Use. The Property shall be used only
for a commercial shopping center and for no other use without the
prior written consent of Lender, which consent may be withheld in
Lender's discretion.
Section 4.2 ERISA.
(a) It shall not engage in any transaction which
would cause any obligation, or action taken or to be taken,
hereunder (or the exercise by Lender of any of its rights under
the Note, this Security Instrument and the Other Security
Documents) to be a non-exempt (under a statutory or
administrative class exemption) prohibited transaction under the
Employee Retirement Income Security Act of 1974, as amended
("ERISA").
(b) Borrower further covenants and agrees to deliver
to Lender such certifications or other evidence from time to
time throughout the term of this Security Instrument, as
requested by Lender in its sole discretion, that (i) Borrower is
not an "employee benefit plan" as defined in Section 3(32) of
ERISA, which is subject to Title I of ERISA, or a "governmental
plan" within the meaning of Section 3(32) of ERISA; (ii) Borrower
is not subject to state statutes regulating investments and
fiduciary obligations with respect to governmental plans; and
(iii) one or more of the following circumstances is true:
(A) Equity interests in Borrower are
publicly offered securities, within the meaning of 29 C.F.R.
2510.3-101(b)(2);
(B) Less than 25 percent of each outstanding
class of equity interests in Borrower are held by "benefit plan
investors" within the meaning of 29 C.F.R. 2510.3-101(f)(2); or
(C) Borrower qualifies as an "operating
company" or a "real estate operating company" within the meaning
of 29 C.F.R. 2510.3-101(c) or (e) or an investment company
registered under The Investment Company Act of 1940.
Section 4.3 Single Purpose Entity.
(a) It has not and shall not:
(i) engage in any business or activity other than
the ownership, operation and maintenance of the Property, and
activities incidental thereto;
(ii) acquire or own any material assets other than
(A) the Property, and (B) such incidental Personal Property as
may be necessary for the operation of the Property;
(iii) merge into or consolidate with any
person or entity or dissolve, terminate or liquidate in whole or
in part, transfer or otherwise dispose of all or substantially
all of its assets or change its legal structure, without in each
case Lender's consent;
(iv) fail to preserve its existence as an entity
duly organized, validly existing and in good standing (if
applicable) under the laws of the jurisdiction of its
organization or formation, or without the prior written consent
of Lender, amend, modify, terminate or fail to comply with the
provisions of Borrower's partnership agreement, articles or
certificate of incorporation, operating agreement or similar
organizational documents, as the case may be, as same may be
further amended or supplemented, if such amendment, modification,
termination or failure to comply would adversely affect the
ability of Borrower to perform its obligations hereunder, under
the Note or under the Other Security Documents;
(v) own any subsidiary or make any investment in,
any person or entity without the consent of Lender;
(vi) commingle its assets with the assets of any
of its general partners, members, shareholders, affiliates,
principals or of any other person or entity;
(vii) incur any debt, secured or unsecured,
direct or contingent (including guaranteeing any obligation),
other than the Debt and trade payables incurred in the ordinary
course of business, provided same are paid when due;
(viii) fail to maintain its records, books of
account and bank accounts separate and apart from those of the
general partners, members, shareholders, principals and
affiliates of Borrower, the affiliates of a general partner or
member, or shareholder of Borrower, and any other person or
entity;
(ix) enter into any contract or agreement with any
general partner, member, shareholder, principal or affiliate of
Borrower, Guarantor or Indemnitor, or any general partner,
member, principal or affiliate thereof, 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 general partner, member,
shareholder, principal or affiliate of Borrower, Guarantor or
Indemnitor, or any general partner, member, principal or
affiliate thereof;
(x) seek the dissolution or winding up in whole,
or in part, of Borrower;
(xi) maintain its assets in such a manner that it
will be costly or difficult to segregate, ascertain or identify
its individual assets from those of any general partner, member,
shareholder, principal or affiliate of Borrower, or any general
partner, member, shareholder, principal or affiliate thereof or
any other person;
(xii) hold itself out to be responsible for
the debts of another person;
(xiii) make any loans or advances to any third
party, including any general partner, member, shareholder,
principal or affiliate of Borrower, or any general partner,
principal or affiliate thereof;
(xiv) fail to file its own tax returns;
(xv) agree to, enter into or consummate any
transaction which would render Borrower unable to furnish the
certification or other evidence referred to in Section 4.2(b)
hereof;
(xvi) fail either to hold itself out to the
public as a legal entity separate and distinct from any other
entity or person or to conduct its business solely in its own
name in order not (A) to mislead others as to the identity with
which such other party is transacting business, or (B) to suggest
that Borrower is responsible for the debts of any third party
(including any general partner, principal or affiliate of
Borrower, or any general partner, principal or affiliate
thereof);
(xvii) fail to 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; or
(xviii) file or consent to the filing of any
petition, either voluntary or involuntary, to take advantage of
any applicable insolvency, bankruptcy, liquidation or
reorganization statute, or make an assignment for the benefit of
creditors.
(b) Borrower is a limited partnership or a limited
liability company, each general partner or at least one member
(the "SPE Member") of Borrower, as applicable, is a corporation
or company whose sole asset is its interest in Borrower and each
general partner or the SPE Member of Borrower, as applicable,
will at all times comply, and will cause Borrower to comply, with
each of the covenants, terms and provisions contained in Section
4.3(a) as if such representation, warranty or covenant was made
directly by such general partner or SPE Member. Only the SPE
Member may be designated as a manager under the law where the
Borrower is organized.
(c) Intentionally deleted.
(d) Intentionally deleted.
Section 4.4 Restoration After Casualty/Condemnation. In
the event of a casualty or a taking by eminent domain, the
following provisions shall apply in connection with the
Restoration of the Property:
(a) If (i) the Net Proceeds (defined below) do not
exceed $250,000 ("Casualty Amount"); (ii) the costs of completing
the Restoration as reasonably estimated by Borrower shall be less
than or equal to the Casualty Amount; (iii) no Event of Default
shall have occurred and be continuing under the Note, this
Security Instrument or any of the Other Security Documents; (iv)
the Property and the use thereof after the Restoration will be in
compliance with, and permitted under, all applicable zoning laws,
ordinances, rules and regulations (including, without limitation,
all applicable Environmental Laws (defined in Section 12.1); and
(v) such fire or other casualty or taking, as applicable, does
not materially impair access to the Property or the Improvements,
then the Net Proceeds will be disbursed directly to Borrower and
Borrower shall commence and diligently prosecute to completion,
subject to Force Majeure (defined herein), the Restoration of the
Property to as nearly as possible the condition it was in
immediately prior to such fire or other casualty or to such
taking. Except upon the occurrence and continuance of an Event
of Default, Borrower shall settle any insurance claims with
respect to the Net Proceeds which in the aggregate are less than
or equal to the Casualty Amount. Lender shall have the right to
participate in and reasonably approve any settlement for
insurance claims with respect to the Net Proceeds which in the
aggregate are equal to or greater than the Casualty Amount. If
an Event of Default shall have occurred and be continuing,
Borrower hereby irrevocably empowers Lender, in the name of
Borrower as its true and lawful attorney-in-fact, to file and
prosecute such claim and to collect and to make receipt for any
such payment. If the Net Proceeds are received by Borrower, such
Net Proceeds shall, until the completion of the related work, be
held in trust for Lender and shall be segregated from other funds
of Borrower to be used to pay for the cost of the Restoration in
accordance with the terms hereof.
(b) If the Net Proceeds are greater than the Casualty
Amount, such Net Proceeds shall, subject to the provisions of the
Leases that are superior to the lien of this Security Instrument
or with respect to which subordination, non-disturbance
agreements binding upon Lender have entered into concerning the
deposits of Net Proceeds, be forthwith paid to Lender to be held
by Lender in a segregated account to be made available to
Borrower for the Restoration in accordance with the provisions of
this Subsection 4.4(b). Borrower shall commence and diligently
prosecute to completion, subject to Force Majeure (defined
below), the Restoration (in the case of a taking, to the extent
the Property is capable of being restored). The term "Net
Proceeds" for purposes of this Section 4.4 shall mean: (i) the
net amount of all insurance proceeds received by Lender under the
Policies carried pursuant to Subsections 3.3(a)(i), (iv), (v),
(vi) and (vii) of this Security Instrument as a result of such
damage or destruction, after deduction of its reasonable costs
and expenses (including, but not limited to reasonable counsel
fees), if any, in collecting the same, or (ii) the net
amount of all awards and payments received by Lender with respect
to a taking referenced in Section 3.6 of this Security
Instrument, after deduction of its reasonable costs and expenses
(including, but not limited to reasonable counsel fees), if any,
in collecting the same, whichever the case may be. The term
"Force Majeure" for the purpose of this Section 4.4 shall have
the following meaning: Borrower shall be excused for the period
of any delay in the performance of any obligations hereunder when
prevented from so doing by cause or causes beyond Borrower's
control such as, without limitation, all labor disputes, civil
commotion, war, war-like operations, invasion, rebellion,
hostilities, military or usurped power, sabotage, governmental
regulations or controls, fire or other casualty, inability to
obtain any materials or services, and acts of God.
(i) The Net Proceeds shall be made available to
Borrower for payment of, or reimbursement of Borrower's expenses
in connection with, the Restoration, subject to the following
conditions:
(A) no Event of Default shall have occurred
and be continuing under the Note, this Security Instrument or any
of the Other Security Documents;
(B) Lender shall, within a reasonable period
of time prior to request for initial disbursement, be furnished
with an estimate of the cost of the Restoration accompanied by an
independent architect's certification as to such costs and
appropriate plans and specifications for the Restoration;
(C) the Net Proceeds, together with any cash
or cash equivalent deposited by Borrower with Lender, are
sufficient to cover the cost of the Restoration as such costs are
certified by the independent architect;
(D) (1) in the event that the Net Proceeds
are insurance proceeds, less than fifty percent (50%) of the
total floor area of the Improvements has been damaged or
destroyed, or rendered unusable as a result of such fire or other
casualty; or (2) in the event that the Net Proceeds are
condemnation awards, less than fifty percent (50%) of the Land
constituting the Property is taken, such Land that is taken is
located along the perimeter or periphery of the Property and no
portion of the Improvements is located in such Lands;
(E) Lender shall be satisfied that any
operating deficits, including all scheduled payments of principal
and interest under the Note which will be incurred with respect
to the Property as a result of the occurrence of any such fire or
other casualty or taking, whichever the case may be, will be
covered out of (1) the Net Proceeds, or (2) other funds of
Borrower;
(F) Lender shall be satisfied that, upon the
completion of the Restoration and related lease-up, if
applicable, the net cash flow of the Property will be restored to
a level sufficient to cover all carrying costs and operating
expenses of the Property, including, without limitation, debt
service on the Note at a coverage ratio (on a "normalized" basis,
i.e., after deducting replacement reserve requirements and
reserves for tenant improvements and leasing commissions from net
operating income, whether or not such sums are escrowed with
Lender) of at least 1.40:1.00, which coverage ratio shall be
equal to or greater than the coverage ratio existing as of the
date of this Security Instrument or, if lower, the coverage ratio
which existed as of the date immediately preceding such casualty
or taking as the case may be;
(G) the Restoration can reasonably be
completed on or before the earliest to occur of (1) six (6)
months prior to the Maturity Date (as defined in the Note), (2)
the earliest date required for such completion under the terms of
any Lease and (3) such time as may be required under applicable
zoning law, ordinance, rule or regulation in order to repair and
restore the Property to as nearly as possible the condition it
was in immediately prior to such fire or other casualty or to
such taking, as applicable;
(H) the Property and the use thereof after
the Restoration will be in compliance with, and permitted under,
all applicable zoning laws, ordinances, rules and regulations
(including, without limitation, all applicable Environmental Laws
(defined in Section 12.1); and
(I) such fire or other casualty or taking,
as applicable, does not materially impair access to the Property
or the Improvements.
(ii) The Net Proceeds shall be held by Lender and,
until disbursed in accordance with the provisions of this
Subsection 4.4(b), shall constitute additional security for the
Obligations. The Net Proceeds other than the Net Proceeds paid
under the Policy described in Subsection 3.3(a)(iv) shall be
disbursed by Lender to, or as directed by, Borrower from time to
time during the course of the Restoration, upon receipt of
evidence satisfactory to Lender that (A) all materials installed
and work and labor performed (except to the extent that they are
to be paid for out of the requested disbursement) in connection
with the Restoration have been paid for in full, and (B) there
exist no notices of pendency, stop orders, mechanic's,
materialman's or contractor's liens or notices of intention to
file same, or any other liens or encumbrances of any nature
whatsoever on the Property arising out of the Restoration which
have not either been fully bonded and discharged of record or in
the alternative fully insured to the satisfaction of Lender by
the title company insuring the lien of this Security Instrument.
(iii) Lender shall have the use of the plans and
specifications and all permits, licenses and approvals required
or obtained in connection with the Restoration. The identity of
the contractors, subcontractors and materialmen engaged in the
Restoration, as well as the contracts under which they have been
engaged, shall be subject to prior review and acceptance by
Lender and an independent consulting engineer selected by Lender
(the "Casualty Consultant"), such acceptance not to be
unreasonably withheld or delayed. All costs and expenses incurred
by Lender in connection with making the Net Proceeds available
for the Restoration including, without limitation, reasonable
counsel fees and disbursements and the Casualty Consultant's
fees, shall be paid by Borrower.
(iv) In no event shall Lender be obligated to
make disbursements of the Net Proceeds in excess of an amount
equal to the costs actually incurred from time to time for work
in place as part of the Restoration, as certified by the Casualty
Consultant, minus the Casualty Retainage. The term "Casualty
Retainage" as used in this Subsection 4.4(b) shall mean an amount
equal to 10% of the costs actually incurred for work in place as
part of the Restoration, as certified by the Casualty Consultant,
until such time as the Casualty Consultant certifies to Lender
that 50% of the required Restoration has been completed. There
shall be no Casualty Retainage with respect to costs actually
incurred by Borrower for work in place in completing the last 50%
of the required Restoration. The Casualty Retainage shall in no
event, and notwithstanding anything to the contrary set forth
above in this Subsection 4.4(b), be less than the amount
actually held back by Borrower from contractors, subcontractors
and materialmen engaged in the Restoration. The Casualty
Retainage shall not be released until the Casualty Consultant
certifies to Lender that the Restoration has been completed in
accordance with the provisions of this Subsection 4.4(b) and that
all approvals necessary for the re-occupancy and use of the
Property have been obtained from all appropriate governmental and
quasi-governmental authorities, and Lender receives evidence
satisfactory to Lender that the costs of the Restoration have
been paid in full or will be paid in full out of the Casualty
Retainage, provided, however, that Lender will release the
portion of the Casualty Retainage being held with respect to any
contractor, subcontractor or materialman engaged in the
Restoration as of the date upon which the Casualty Consultant
certifies to Lender that the contractor, subcontractor or
materialman has satisfactorily completed all work and has
supplied all materials in accordance with the provisions of the
contractor's, subcontractor's or materialman's contract, and the
contractor, subcontractor or materialman delivers the lien
waivers and evidence of payment in full of all sums due to the
contractor, subcontractor or materialman as may be reasonably
requested by Lender or by the title company insuring the lien of
this Security Instrument. If required by Lender, the release of
any such portion of the Casualty Retainage shall be approved by
the surety company, if any, which has issued a payment or
performance bond with respect to the contractor, subcontractor or
materialman.
(v) Lender shall not be obligated to make
disbursements of the Net Proceeds more frequently than once every
calendar month.
(vi) If at any time the Net Proceeds or the
undisbursed balance thereof shall not, in the opinion of Lender,
be sufficient to pay in full the balance of the costs which are
estimated by the Casualty Consultant to be incurred in connection
with the completion of the Restoration, Borrower shall deposit
the deficiency (the "Net Proceeds Deficiency") with Lender before
any further disbursement of the Net Proceeds shall be made. The
Net Proceeds Deficiency deposited with Lender shall be held by
Lender and shall be disbursed for costs actually incurred in
connection with the Restoration on the same conditions applicable
to the disbursement of the Net Proceeds, and until so disbursed
pursuant to this Subsection 4.4(b) shall constitute additional
security for the Obligations.
(vii) The excess, if any, of the Net Proceeds and
the remaining balance, if any, of the Net Proceeds Deficiency
deposited with Lender after the Casualty Consultant certifies to
Lender that the Restoration has been completed in accordance with
the provisions of this Subsection 4.4(b), and the receipt by
Lender of evidence satisfactory to Lender that all costs incurred
in connection with the Restoration have been paid in full, shall
be remitted by Lender to Borrower, provided no Event of Default
shall have occurred and shall be continuing under the Note, this
Security Instrument or any of the Other Security Documents.
(c) All Net Proceeds not required (i) to be made
available for the Restoration or (ii) to be returned to Borrower
as excess Net Proceeds pursuant to Subsection 4.4(b)(vii) shall
be retained and applied by Lender toward the payment of the Debt
whether or not then due and payable in such order, priority and
proportions as Lender in its discretion shall deem proper or, at
the discretion of Lender, the same shall be paid, either in whole
or in part, to Borrower. If Lender shall receive and retain Net
Proceeds, the lien of this Security Instrument shall be reduced
only by the amount received and retained by Lender and actually
applied by Lender in reduction of the Debt.
Article 5 - REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Lender that:
Section 5.1 Warranty of Title. Borrower has good and
marketable title to the Property and has the right to mortgage,
grant, bargain, sell, pledge, assign, warrant, transfer and
convey the same and that Borrower possesses an unencumbered fee
simple absolute estate in the Land and the Improvements and that
it owns the Property free and clear of all liens, encumbrances
and charges whatsoever except for those exceptions shown in the
title insurance policy insuring the lien of this Security
Instrument (the "Permitted Exceptions"). The Permitted
Exceptions do not materially interfere with the security intended
to be provided by this Security Instrument or the use and
operations of the Property. Borrower shall forever warrant,
defend and preserve the title and the validity and priority of
the lien of this Security Instrument and shall forever warrant
and defend the same to Lender against the claims of all persons
whomsoever. Upon the recordation of this Security Instrument and
the filing of a Uniform Commercial Code Financing Statement in
the office of the Secretary of State for the state where the
Property is located, the Lender will have a first priority
perfected security interest in all personal property owned by
Borrower.
Section 5.2 Authority. Borrower (and the undersigned
representative of Borrower, if any) has full power, authority and
legal right to execute this Security Instrument, and to mortgage,
grant, bargain, sell, pledge, assign, warrant, transfer and
convey the Property pursuant to the terms hereof and to keep and
observe all of the terms of this Security Instrument on
Borrower's part to be performed.
Section 5.3 Legal Status and Authority. Borrower (a) is
duly organized, validly existing and in good standing under the
laws of its state of organization or incorporation; (b) is duly
qualified to transact business and is in good standing in the
State where the Property is located; and (c) has all necessary
approvals, governmental and otherwise, and full power and
authority to own the Property and carry on its business as now
conducted and proposed to be conducted. Borrower now has and
shall continue to have the full right, power and authority to
operate and lease the Property, to encumber the Property as
provided herein and to perform all of the other obligations to be
performed by Borrower under the Note, this Security Instrument
and the Other Security Documents.
Section 5.4 Validity of Documents. (a) The execution,
delivery and performance of the Note, this Security Instrument
and the Other Security Documents and the borrowing evidenced by
the Note (i) are within the power and authority of Borrower; (ii)
have been authorized by all requisite organizational action;
(iii) have received all necessary approvals and consents,
corporate, governmental or otherwise; (iv) will not violate,
conflict with, result in a breach of or constitute (with notice
or lapse of time, or both) a default under any provision of law
(including, without limitation, any usury laws), any order or
judgment of any court or governmental authority, the articles of
incorporation, by-laws, partnership or operating agreement, or
other governing instrument of Borrower, or any indenture,
agreement or other instrument to which Borrower is a party or by
which it or any of its assets or the Property is or may be bound
or affected; (v) will not result in the creation or imposition of
any lien, charge or encumbrance whatsoever upon any of its
assets, except the lien and security interest created hereby; and
(vi) will not require any authorization or license from, or any
filing with, any governmental or other body (except for the
recordation of this instrument in appropriate land records in the
State where the Property is located and except for Uniform
Commercial Code filings relating to the security interest created
hereby), and (b) the Note, this Security Instrument and the Other
Security Documents constitute the legal, valid and binding
obligations of Borrower.
Section 5.5 Litigation. There is no action, suit or
proceeding, judicial, administrative or otherwise (including any
condemnation or similar proceeding), pending or, to the best of
Borrower's knowledge, threatened or contemplated against
Borrower, any person or entity guaranteeing the payment of the
Debt or any portion thereof or performance by Borrower of any
terms of this Security Instrument (a "Guarantor"), if any, an
Indemnitor (defined in Subsection 10.1(c)), if any, or against or
affecting the Property that (a) has not been disclosed to Lender,
and has a material, adverse effect on the Property or Borrower's,
any Guarantor's or any Indemnitor's ability to perform its
obligations under the Note, this Security Instrument or the Other
Security Documents, or (b) is not adequately covered by
insurance, each as determined by Lender in its sole and absolute
discretion.
Section 5.6 Status of Property.
(a) No portion of the Improvements is located in an
area identified by the Secretary of Housing and Urban Development
or any successor thereto as an area having special flood hazards
pursuant to the National Flood Insurance Act of 1968 or the Flood
Disaster Protection Act of 1973, or the National Flood Insurance
Reform Act of 1994, as each may be amended, or any successor law,
or, if any portion of the Improvements is now or at any time in
the future located within any such area, Borrower has obtained
and will maintain the insurance prescribed in Section 3.3 hereof.
(b) Borrower has obtained all necessary certificates,
licenses and other approvals, governmental and otherwise,
necessary for the operation of the Property and the conduct of
its business and all required zoning, building code, land use,
environmental and other similar permits or approvals, all of
which are in full force and effect as of the date hereof and not
subject to revocation, suspension, forfeiture or modification.
(c) The Property and the present and contemplated use
and occupancy thereof are in full compliance with all Applicable
Laws, including, without limitation, zoning ordinances, building
codes, land use and Environmental Laws, laws relating to the
disabled (including but not limited to, the ADA) and other
similar laws.
(d) The Property is served by all utilities required
for the current or contemplated use thereof. All utility service
is provided by public utilities and the Property has accepted or
is equipped to accept such utility service.
(e) All public roads and streets necessary for service
of and access to the Property for the current or contemplated use
thereof have been completed, are serviceable and all-weather and
are physically and legally open for use by the public.
(f) The Property is served by public water and sewer
systems.
(g) The Property is free from damage caused by fire or
other casualty.
(h) All costs and expenses of any and all labor,
materials, supplies and equipment used in the construction of the
Improvements have been paid in full.
(i) Borrower has paid in full for, and is the owner
of, all furnishings, fixtures and equipment (other than tenants'
property) used in connection with the operation of the Property,
free and clear of any and all security interests, liens or
encumbrances, except the lien and security interest created
hereby.
(j) All liquid and solid waste disposal, septic and
sewer systems located on the Property are in a good and safe
condition and repair and in compliance with all Applicable Laws.
(k) All security deposits relating to the Leases
reflected on the certified rent roll delivered to Lender have
been collected by Borrower except as noted on the certified rent
roll.
(l) Borrower has received no notice of an actual or
threatened condemnation or eminent domain proceeding by any
public or quasi-public authority.
(m) All the Improvements lie within the boundaries of
the Property.
Section 5.7 No Foreign Person. Borrower is not a "foreign
person" within the meaning of Section 1445(f)(3) of the Internal
Revenue Code of 1986, as amended and the related Treasury
Department regulations, including temporary regulations.
Section 5.8 Separate Tax Lot. The Property is assessed for
real estate tax purposes as one or more wholly independent tax
lot or lots, separate from any adjoining land or improvements not
constituting a part of such lot or lots, and no other land or
improvements is assessed and taxed together with the Property or
any portion thereof.
Section 5.9 ERISA Compliance.
(a) As of the date hereof and throughout the term of
this Security Instrument, (i) Borrower is not and will not be an
"employee benefit plan" as defined in Section 3(32) of ERISA,
which is subject to Title I of ERISA, and (ii) the assets of
Borrower do not and will not constitute "plan assets" of one or
more such plans for purposes of Title I of ERISA; and
(b) As of the date hereof and throughout the term of
this Security Instrument, (i) Borrower is not and will not be a
"governmental plan" within the meaning of Section 3(32) of ERISA,
and (ii) transactions by or with Borrower are not and will not be
subject to state statutes applicable to Borrower regulating
investments of and fiduciary obligations with respect to
governmental plans.
Section 5.10 Leases. Except as disclosed in the certified
rent roll for the Property delivered to and approved by Lender,
(a) Borrower is the sole owner of the entire lessor's interest in
the Leases; (b) the Leases are valid and enforceable; (c) the
terms of all alterations, modifications and amendments to the
Leases are reflected in the certified rent roll delivered to and
approved by Lender; (d) none of the Rents reserved in the Leases
have been assigned or otherwise pledged or hypothecated (except
to Lender); (e) none of the Rents have been collected for more
than one (1) month in advance (provided that a security deposit
shall not be deemed rent collected in advance); (f) the premises
demised under the Leases have been completed and the tenants
under the Leases have accepted the same and have taken possession
of the same on a rent-paying basis; (g) there exist no offsets or
defenses to the payment of any portion of the Rents; (h) Borrower
has received no notice from any tenant challenging the validity
or enforceability of any Lease; (i) all payments due under the
Leases are current and are consistent with the certified rent
roll for the Property delivered to and approved by Lender; (j) no
tenant under any Lease is in default thereunder, or is a debtor
in any bankruptcy, reorganization, insolvency or similar
proceeding, or has demonstrated a history of payment problems
which suggest financial difficulty; (k) there are no agreements
with the tenants under the Leases other than expressly set forth
in each Lease; (l) the Leases are valid and enforceable against
Borrower and the tenants set forth therein; (m) no Lease contains
an option to purchase, right of first refusal to purchase, or any
other similar provision; (n) no person or entity has any
possessory interest in, or right to occupy, the Property except
under and pursuant to a Lease; (o) each Lease (other than a
residential Lease) is subordinate to this Security Instrument,
either pursuant to its terms or a recorded subordination
agreement; (p) no Lease has the benefit of a non-disturbance
agreement that would be considered unacceptable to prudent
institutional lenders; and (q) no brokerage commissions or
finders fees are due and payable regarding any Lease.
Section 5.11 Financial Condition. (a) Borrower is solvent,
and no bankruptcy, reorganization, insolvency or similar
proceeding under any state or federal law with respect to
Borrower has been initiated, (b) it has received reasonably
equivalent value for the granting of this Security Instrument,
and (c) the granting of this Security Instrument does not
constitute a fraudulent conveyance.
Section 5.12 Business Purposes. The loan evidenced by the
Note is solely for the business purpose of Borrower, and is not
for personal, family, household, or agricultural purposes.
Section 5.13 Taxes. Borrower, any Guarantor and any
Indemnitor have filed all federal, state, county, municipal, and
city income and other tax returns required to have been filed by
them and have paid all taxes and related liabilities which have
become due pursuant to such returns or pursuant to any
assessments received by them. Neither Borrower, any Guarantor
nor any Indemnitor knows of any basis for any additional
assessment in respect of any such taxes and related liabilities
for prior years.
Section 5.14 Mailing Address. Borrower's mailing address,
as set forth in the opening paragraph hereof or as changed in
accordance with Article 16, is true and correct.
Section 5.15 No Change in Facts or Circumstances. All
information in the application for the loan submitted to Lender
(the "Loan Application") and in all financing statements, rent
rolls, reports, certificates and other documents submitted in
connection with the Loan Application or in satisfaction of the
terms thereof, are accurate, complete and correct in all
respects. There has been no adverse change in any condition,
fact, circumstance or event that would make any such information
inaccurate, incomplete or otherwise misleading.
Section 5.16 Disclosure. Borrower has disclosed to Lender
all material facts and has not failed to disclose any material
fact that could cause any representation or warranty made herein
to be materially misleading.
Section 5.17 Third Party Representations. Each of the
representations and the warranties made by each Guarantor and
Indemnitor herein or in any Other Security Document(s) is true
and correct in all material respects.
Section 5.18 Illegal Activity. No portion of the Property
has been or will be purchased, improved, fixtured, equipped or
furnished with proceeds of any criminal or other illegal activity
and to the best of Borrower's knowledge, there are no illegal
activities or activities relating to controlled substance at the
Property.
Article 6 - DEBTOR/CREDITOR RELATIONSHIP
Section 6.1 Relationship of Borrower and Lender. The
relationship between Borrower and Lender is solely that of debtor
and creditor, and Lender has no fiduciary or other special
relationship with Borrower, and no term or condition of any of
the Note, this Security Instrument and the Other Security
Documents shall be construed so as to deem the relationship
between Borrower and Lender to be other than that of debtor and
creditor.
Section 6.2 Servicing of the Loan. At the option of
Lender, the loan secured hereby may be serviced by a
servicer/trustee (the "Servicer") selected by Lender and Lender
may delegate all or any portion of its responsibilities under the
Note, this Security Instrument, and the Other Security Documents
to the Servicer.
Article 7 - FURTHER ASSURANCES
Section 7.1 Recording of Security Instrument, Etc.
Borrower forthwith upon the execution and delivery of this
Security Instrument and thereafter, from time to time, will cause
this Security Instrument and any of the Other Security Documents
creating a lien or security interest or evidencing the lien
hereof upon the Property and each instrument of further assurance
to be filed, registered or recorded in such manner and in such
places as may be required by any present or future law in order
to publish notice of and fully to protect and perfect the lien or
security interest hereof upon, and the interest of Lender in, the
Property. Borrower will pay all taxes, filing, registration or
recording fees, and all expenses incident to the preparation,
execution, acknowledgment and/or recording of the Note, this
Security Instrument, the Other Security Documents, any note or
mortgage supplemental hereto, any security instrument with
respect to the Property and any instrument of further assurance,
and any modification or amendment of the foregoing documents, and
all federal, state, county and municipal taxes, duties, imposts,
assessments and charges arising out of or in connection with the
execution and delivery of this Security Instrument, any mortgage
supplemental hereto, any security instrument with respect to the
Property or any instrument of further assurance, and any
modification or amendment of the foregoing documents, except
where prohibited by law so to do.
Section 7.2 Further Acts, Etc. Borrower will, at the cost
of Borrower, and without expense to Lender, do, execute,
acknowledge and deliver all and every such further acts, deeds,
conveyances, mortgages, assignments, notices of assignments,
transfers and assurances as Lender shall, from time to time,
reasonably require, for the better assuring, conveying,
assigning, transferring, and confirming unto Lender, the property
and rights hereby mortgaged, granted, bargained, sold, conveyed,
confirmed, pledged, assigned, warranted and transferred or
intended now or hereafter so to be, or which Borrower may be or
may hereafter become bound to convey or assign to Lender, or for
carrying out the intention or facilitating the performance of the
terms of this Security Instrument or for filing, registering or
recording this Security Instrument, or for complying with all
Applicable Laws. Borrower, on demand, will execute and deliver
and hereby authorizes Lender to execute in the name of Borrower
or without the signature of Borrower to the extent Lender may
lawfully do so, one or more financing statements, chattel
mortgages or other instruments, to evidence or perfect more
effectively the security interest of Lender in the Property.
Borrower grants to Lender an irrevocable power of attorney
coupled with an interest for the purpose of exercising and
perfecting any and all rights and remedies available to Lender
pursuant to this Section 7.2.
Section 7.3 Changes in Tax, Debt Credit and Documentary
Stamp Laws.
(a) If any law is enacted or adopted or amended after
the date of this Security Instrument which deducts the Debt from
the value of the Property for the purpose of taxation or which
imposes a tax, either directly or indirectly, on the Debt or
Lender's interest in the Property, Borrower will pay the tax,
with interest and penalties thereon, if any. If Lender is
advised by counsel chosen by it that the payment of tax by
Borrower would be unlawful or taxable to Lender or unenforceable
or provide the basis for a defense of usury, then Lender shall
have the option by written notice of not less than ninety (90)
days to declare the Debt immediately due and payable.
(b) Borrower will not claim or demand or be entitled
to any credit or credits on account of the Debt for any part of
the Taxes or Other Charges assessed against the Property, or any
part thereof, and no deduction shall otherwise be made or claimed
from the assessed value of the Property, or any part thereof, for
real estate tax purposes by reason of this Security Instrument or
the Debt. If such claim, credit or deduction shall be required
by law, Lender shall have the option, by written notice of not
less than ninety (90) days, to declare the Debt immediately due
and payable.
(c) If at any time the United States of America, any
State thereof or any subdivision of any such State shall require
revenue or other stamps to be affixed to the Note, this Security
Instrument, or any of the Other Security Documents or impose any
other tax or charge on the same, Borrower will pay for the same,
with interest and penalties thereon, if any.
Section 7.4 Estoppel Certificates.
(a) After request by Lender (not more than twice in
any calendar year unless an Event of Default or an event which
with the giving of notice or lapse of time or both could become
an Event of Default, has occurred and is continuing), Borrower,
within ten (10) days, shall furnish Lender or any proposed
assignee with a statement, duly acknowledged and certified,
setting forth (i) the amount of the original principal amount of
the Note, (ii) the unpaid principal amount of the Note, (iii) the
rate of interest of the Note, (iv) the terms of payment and
maturity date of the Note, (v) the date installments of interest
and/or principal were last paid, (vi) that, except as provided in
such statement, there are no defaults or events which with the
passage of time or the giving of notice or both, would constitute
an event of default under the Note or the Security Instrument,
(vii) that the Note and this Security Instrument are valid, legal
and binding obligations and have not been modified or if
modified, giving particulars of such modification, (viii) whether
any offsets or defenses exist against the obligations secured
hereby and, if any are alleged to exist, a detailed description
thereof, (ix) that all Leases are in full force and effect and
(provided the Property is not a residential multifamily property)
have not been modified (or if modified, setting forth all
modifications), (x) the date to which the Rents thereunder have
been paid pursuant to the Leases, (xi) whether or not, to the
best knowledge of Borrower, any of the lessees under the Leases
are in default under the Leases, and, if any of the lessees are
in default, setting forth the specific nature of all such
defaults, (xii) the amount of security deposits held by Borrower
under each Lease and that such amounts are consistent with the
amounts required under each Lease, and (xiii) as to any other
matters reasonably requested by Lender and reasonably related to
the Leases, the obligations secured hereby, the Property or this
Security Instrument.
(b) Borrower shall deliver to Lender, promptly upon
request, duly executed estoppel certificates from any one or more
lessees as required by Lender attesting to such facts regarding
the Lease as Lender may require, including, but not limited to
attestations that each Lease covered thereby is in full force and
effect with no defaults thereunder on the part of any party, that
none of the Rents have been paid more than one month in advance,
except as security, and that the lessee claims no defense or
offset against the full and timely performance of its obligations
under the Lease. The foregoing requirement shall not apply to
residential Leases in a multifamily residential property.
(c) Upon any transfer or proposed transfer
contemplated by Section 18.1 hereof, at Lender's request,
Borrower, any Guarantors and any Indemnitors shall provide an
estoppel certificate to the Investor (defined in Section 18.1) or
any prospective Investor confirming the accuracy of information
provided by such person to Lender under or in respect of this
Security Instrument.
(d) After written request by Borrower not more than
semi-annually and annually, Lender shall furnish Borrower a
statement setting forth (i) the amount of the original principal
amount of the Note, (ii) the unpaid principal amount of the Note,
(iii) the rate of interest of the Note, and (iv) the balance of
the sums in the Escrow Fund, if any.
Section 7.5 Flood Insurance. After Lender's request,
Borrower shall deliver evidence satisfactory to Lender that no
portion of the Improvements is situated in a federally designated
"special flood hazard area" or, if it is, that Borrower has
obtained insurance meeting the requirements of Section
3.3(a)(vi).
Section 7.6 Splitting of Security Instrument. This
Security Instrument and the Note shall, at any time until the
same shall be fully paid and satisfied, at the sole election of
Lender, be split or divided into two or more notes and two or
more security instruments, each of which shall cover all or a
portion of the Property to be more particularly described
therein. To that end, Borrower, upon written request of Lender
and at no cost to Borrower, shall execute, acknowledge and
deliver to Lender and/or its designee or designees substitute
notes and security instruments in such principal amounts,
aggregating not more than the then unpaid principal amount
secured by this Security Instrument, and containing terms,
provisions and clauses no less favorable to Borrower than those
contained herein and in the Note, and such other documents and
instruments as may be required by Lender to effect the splitting
of the Note and this Security Instrument.
Section 7.7 Replacement Documents. Upon receipt of an
affidavit of an officer of Lender as to the loss, theft,
destruction or mutilation of the Note or any Other Security
Document which is not of public record, and, in the case of any
such mutilation, upon surrender and cancellation of such Note or
Other Security Document, Borrower will issue, in lieu thereof, a
replacement Note or Other Security Document, dated the date of
such lost, stolen, destroyed or mutilated Note or Other Security
Document in the same principal amount thereof and otherwise of
like tenor.
Section 7.8 Amended Financing Statements. Borrower will
execute and deliver to the Lender, prior to or contemporaneously
with the effective date of any such change, any financing
statement or financing statement change required by the Lender to
establish or maintain the validity, perfection and priority of
the security interest granted herein. At the request of the
Lender, Borrower shall execute a certificate in form satisfactory
to the Lender listing the trade names under which Borrower
intends to operate the Property, and representing and warranting
that Borrower does business under no other trade name with
respect to the Property.
Article 8 - DUE ON SALE/ENCUMBRANCE
Section 8.1 No Sale/Encumbrance. Borrower agrees that
Borrower shall not, without the prior written consent of Lender,
sell, convey, mortgage, grant, bargain, encumber, pledge, assign,
or otherwise transfer the Property or any part thereof or permit
the Property or any part thereof to be sold, conveyed, mortgaged,
granted, bargained, encumbered, pledged, assigned, or otherwise
transferred. Notwithstanding the foregoing, the Property may be
transferred with the prior written consent of Lender which
consent shall not be unreasonably withheld in the case of a
proposed transferee whose entity status, creditworthiness and
management ability meet standards consistently applied by Lender
for approval of borrowers for similar properties under mortgage
loans secured by similar properties, provided that (a) only one
such transfer shall be permitted during the term of the Note, (b)
prior to the effective date of the transfer, the transferee shall
execute and deliver to Lender a written assumption agreement in
form and substance acceptable to Lender in its sole discretion,
(c) a transfer fee equal to one percent (1%) of the Debt shall be
paid by Borrower to Lender upon notice being given to Borrower of
approval of the proposed transfer, (d) no transfer shall be
permitted hereunder if an Event of Default, or an event which
with the giving of notice or lapse of time or both could become
an Event of Default, has occurred and is continuing, and (e) such
transferee shall be a single purpose bankruptcy remote entity and
Borrower shall cause to be delivered to Lender a
non-consolidation opinion or an update of the same, in form and
substance reasonably acceptable to Lender, upon Lender's request
to do so. Borrower agrees that Borrower shall not incur any
debt, secured or unsecured, direct or contingent (including
guaranteeing any obligation), other than the Debt and trade
payables incurred in the ordinary course of business in
connection with the operation of the Property, provided same are
paid when due.
Section 8.2 Sale/Encumbrance Defined. A sale, conveyance,
mortgage, grant, bargain, encumbrance, pledge, assignment, or
transfer within the meaning of this Article 8 shall be deemed to
include, but not be limited to (a) an installment sales agreement
wherein Borrower agrees to sell the Property or any part thereof
for a price to be paid in installments; (b) an agreement by
Borrower leasing all or a substantial part of the Property for
other than actual occupancy by a space tenant thereunder or a
sale, assignment or other transfer of, or the grant of a security
interest in, Borrower's right, title and interest in and to any
Leases or any Rents; (c) if Borrower, any Guarantor, any
Indemnitor, or any general partner or managing member (or if no
managing member, any member) of Borrower, Guarantor or Indemnitor
is a corporation, the voluntary or involuntary sale, conveyance,
transfer or pledge of such corporation's stock (or the stock of
any corporation directly or indirectly controlling such
corporation by operation of law or otherwise) or the creation or
issuance of new stock by which an aggregate of more than 49% of
such corporation's stock shall be vested in a party or parties
who are not now owners of more than 49% of such corporation's
stock; (d) if Borrower, any Guarantor or Indemnitor or any
general partner or managing member (or if no managing member, any
member) of Borrower, any Guarantor or Indemnitor is a limited or
general partnership or joint venture, the change, removal or
resignation of a general partner or the transfer or pledge of the
partnership interest of any general partner or any profits or
proceeds relating to such partnership interest or the transfer or
pledge of any partnership interest of any limited partner or any
profits or proceeds relating to any such partnership interest,
which, whether singly or in the aggregate, result in more than
49% of the beneficial interests in Borrower, or the profits or
proceeds relating thereto, having been transferred or pledged;
and (e) if Borrower, any Guarantor, any Indemnitor or any general
partner or member of Borrower, any Guarantor or any Indemnitor is
a limited liability company, the change, removal or resignation
of a managing member or the transfer of the membership interest
of a managing member or any profits or proceeds relating to such
membership interest or the transfer or pledge of any membership
interest of any other member or any profits or proceeds relating
to any such membership interest, which, whether singly or in the
aggregate, result in more than 49% of the beneficial interests in
Borrower, or the profits or proceeds relating thereto, having
been transferred or pledged. Notwithstanding the foregoing, the
following transfers shall not be deemed to be a sale, conveyance,
mortgage, grant, bargain, encumbrance, pledge, assignment or
transfer within the meaning of this Article 8: (a) transfer by
devise or descent or by operation of law upon the death of a
member, general partner or stockholder of Borrower, any Guarantor
or Indemnitor or any member or general partner thereof, (b) a
sale, transfer or hypothecation of a membership, partnership or
shareholder interest in Borrower, whichever the case may be, by a
current member, general partner or shareholder, as applicable, to
an immediate family member (i.e., parents, spouses, siblings,
children or grandchildren) of such member, general partner or
shareholder, or to a trust for the benefit of an immediate family
member of such member, general partner or shareholder, and (c)
merger of CV Reit, Inc. with Montgomery CV Realty Trust during
the term of this Security Instrument, provided that, as to each
of clauses (a) and (b) of this sentence, with respect to any such
sale, transfer or hypothecation, Borrower shall deliver a
non-consolidation opinion or an update of the same, in form and
substance reasonably satisfactory to Lender, upon Lender's
request to do so, and provided that, as to clause (c) of this
sentence, (i) Borrower has given Lender at least thirty (30) days
notice of such merger and (ii) Lender has reviewed and is
satisfied with financial statements of CV Reit, Inc. and
Montgomery CV Realty Trust current as of the time of the merger.
Section 8.3 Lender's Rights. Lender reserves the right to
condition the consent required hereunder upon a modification of
the terms hereof and on assumption of the Note, this Security
Instrument and the Other Security Documents as so modified by the
proposed transferee, payment of a transfer fee and all of
Lender's expenses incurred in connection with such transfer, or
such other conditions as Lender shall determine in its sole
discretion to be in the interest of Lender. Lender shall not be
required to demonstrate any actual impairment of its security or
any increased risk of default hereunder in order to declare the
Debt immediately due and payable upon Borrower's sale,
conveyance, mortgage, grant, bargain, encumbrance, pledge,
assignment, or transfer of the Property without Lender's consent.
This provision shall apply to every sale, conveyance, mortgage,
grant, bargain, encumbrance, pledge, assignment, or transfer of
the Property regardless of whether voluntary or not, or whether
or not Lender has consented to any previous sale, conveyance,
mortgage, grant, bargain, encumbrance, pledge, assignment, or
transfer of the Property.
Article 9 - PREPAYMENT
Section 9.1 Prepayment Only in Accordance with Note. The
Debt may be prepaid only in strict accordance with the express
terms and conditions of the Note including, without limitation,
payment of any Prepayment Consideration (as defined in the Note,
if applicable), if applicable.
Article 10 - DEFAULT
Section 10.1 Events of Default. The occurrence of any one
or more of the following events shall constitute an "Event of
Default":
(a) if any Event of Default (as defined in the Note,
for purposes of this Section 10.1(a) only) occurs under the Note;
(b) if Borrower violates or does not comply with any
of the provisions of Sections 3.7, 4.3 or 8.1 or if any general
partner or the SPE Member of Borrower violates or does not
comply with any of the provisions of Section 4.3;
(c) if any representation or warranty of Borrower,
Indemnitor (as defined in that certain Environmental Indemnity
Agreement dated as of the date hereof (the "Environmental
Indemnity") or any Guarantor, or any member, general partner,
principal or beneficial owner of any of the foregoing, made
herein or in the Environmental Indemnity or in any guaranty, or
in any certificate, report, financial statement or other
instrument or document furnished to Lender shall have been false
or misleading in any material respect when made;
(d) if any default occurs under any guaranty or
indemnity executed in connection herewith and such default
continues after the expiration of applicable grace periods, if
any;
(e) except for the specific defaults set forth in this
Section 10.1, any other default hereunder or any of the Other
Security Documents by Borrower, which default is not cured (i) in
the case of any default which can be cured by the payment of a
sum of money, within five (5) days after written notice from
Lender to Borrower, or (ii) in the case of any other default,
within thirty (30) days after written notice from Lender to
Borrower; provided that if such default cannot reasonably be
cured within such thirty (30) day period and Borrower shall have
commenced to cure such default within such thirty (30) day period
and thereafter diligently and expeditiously proceeds to cure the
same, such thirty (30) day period shall be extended for so long
as it shall require Borrower in the exercise of due diligence to
cure such default, it being agreed that no such extension shall
be for a period in excess of one hundred twenty (120) days,
unless, only in the case of cures that require construction or
remedial work, such cure cannot with diligence be completed
within such one hundred twenty (120) day period, in which case
such period shall be extended for an additional one hundred
twenty (120) days;
(f) if Borrower or any Guarantor or Indemnitor shall
make an assignment for the benefit of creditors or if Borrower
shall generally not be paying its debts as they become due; or
(g) if the Policies are not kept in full force and
effect, or Borrower has not delivered evidence of the renewal of
the Policies ten (10) days prior to their expiration as provided
in Section 3.3(b); or
(h) if (i) Borrower or any Guarantor or Indemnitor
shall commence any case, proceeding or other action (A) under any
existing or future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization,
conservatorship or relief of debtors, seeking to have an order
for relief entered with respect to it, or seeking to adjudicate
it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or
(B) seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any
substantial part of its assets, or the Borrower or any Guarantor
or Indemnitor shall make a general assignment for the benefit of
its creditors'; or (ii) there shall be commenced against Borrower
or any Guarantor or Indemnitor any case, proceeding or other
action of a nature referred to in clause (i) above which (A)
results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed,
undischarged or unbonded for a period of ninety (90) days; or
(iii) there shall be commenced against the Borrower or any
Guarantor or Indemnitor any case, proceeding or other action
seeking issuance of a warrant of attachment, execution, distraint
or similar process against all or any substantial part of its
assets which results in the entry of any order for any such
relief which shall not have been vacated, discharged, or stayed
or bonded pending appeal within ninety (90) days from the entry
thereof; or (iv) the Borrower or any Guarantor or Indemnitor
shall take any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts set
forth in clause (i), (ii), or (iii) above; or (v) the Borrower or
any Guarantor or Indemnitor shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay its
debts as they become due.
Article 11 - RIGHTS AND REMEDIES
Section 11.1 Remedies.
(a) Upon the occurrence of any Event of Default,
Borrower agrees that Lender, may take such action, without notice
or demand, as it deems advisable to protect and enforce the
rights of Lender against Borrower and in and to the Property,
including, but not limited to the following actions, each of
which may be pursued concurrently or otherwise, at such time and
in such order as Lender may determine, in its sole discretion,
without impairing or otherwise affecting the other rights and
remedies of Lender:
(i) declare the entire unpaid Debt to be
immediately due and payable;
(ii) institute proceedings, judicial or otherwise,
for the complete foreclosure of this Security Instrument under
any applicable provision of law in which case the Property or
any interest therein may be sold for cash or upon credit in one
or more parcels or in several interests or portions and in any
order or manner;
(iii) with or without entry, to the extent
permitted and pursuant to the procedures provided by applicable
law, institute proceedings for the partial foreclosure of this
Security Instrument for the portion of the Debt then due and
payable, subject to the continuing lien and security interest of
this Security Instrument for the balance of the Debt not then
due, unimpaired and without loss of priority;
(iv) sell for cash or upon credit the Property or
any part thereof and all estate, claim, demand, right, title and
interest of Borrower therein and rights of redemption thereof,
pursuant to power of sale or otherwise, at one or more sales, as
an entity or in parcels, at such time and place, upon such terms
and after such notice thereof as may be required or permitted by
law;
(v) subject to the provisions of Article 15,
institute an action, suit or proceeding in equity for the
specific performance of any covenant, condition or agreement
contained herein, in the Note or in the Other Security Documents;
(vi) subject to the provisions of Article 15,
recover judgment on the Note either before, during or after any
proceedings for the enforcement of this Security Instrument or
the Other Security Documents;
(vii) apply for the appointment of a receiver,
trustee, liquidator or conservator of the Property, without
notice and without regard for the adequacy of the security for
the Debt and without regard for the solvency of Borrower, any
Guarantor, Indemnitor or of any person, firm or other entity
liable for the payment of the Debt;
(viii) subject to any applicable law, the
license granted to Borrower under Section 1.2 shall automatically
be revoked and Lender may enter into or upon the Property, either
personally or by its agents, nominees or attorneys and dispossess
Borrower and its agents and servants therefrom, without liability
for trespass, damages or otherwise and exclude Borrower and its
agents or servants wholly therefrom, and take possession of all
books, records and accounts relating thereto and Borrower agrees
to surrender possession of the Property and of such books,
records and accounts to Lender upon demand, and thereupon
Lender may (A) use, operate, manage, control, insure, maintain,
repair, restore and otherwise deal with all and every part of the
Property and conduct the business thereat; (B) complete any
construction on the Property in such manner and form as Lender
deems advisable; (C) make alterations, additions, renewals,
replacements and improvements to or on the Property; (D) exercise
all rights and powers of Borrower with respect to the Property,
whether in the name of Borrower or otherwise, including, without
limitation, the right to make, cancel, enforce or modify Leases,
obtain and evict tenants, and demand, sue for, collect and
receive all Rents of the Property and every part thereof; (E)
require Borrower to pay monthly in advance to Lender, or any
receiver appointed to collect the Rents, the fair and reasonable
rental value for the use and occupation of such part of the
Property as may be occupied by Borrower; (F) require Borrower to
vacate and surrender possession of the Property to Lender or to
such receiver and, in default thereof, Borrower may be evicted by
summary proceedings or otherwise; and (G) apply the receipts from
the Property to the payment of the Debt, in such order, priority
and proportions as Lender shall deem appropriate in its sole
discretion after deducting therefrom all expenses (including
reasonable attorneys' fees) incurred in connection with the
aforesaid operations and all amounts necessary to pay the Taxes,
Other Charges, insurance and other expenses in connection with
the Property, as well as just and reasonable compensation for the
services of Lender, its counsel, agents and employees;
(ix) exercise any and all rights and remedies
granted to a secured party upon default under the Uniform
Commercial Code, including, without limiting the generality of
the foregoing: (A) the right to take possession of the Collateral
or any part thereof, and to take such other measures as Lender
may deem necessary for the care, protection and preservation of
the Collateral, and (B) request Borrower at its expense to
assemble the Collateral and make it available to Lender at a
convenient place acceptable to Lender. Any notice of sale,
disposition or other intended action by Lender with respect to
the Collateral sent to Borrower in accordance with the provisions
hereof at least five (5) days prior to such action, shall
constitute commercially reasonable notice to Borrower;
(x) apply any sums then deposited in the Escrow
Fund and any other sums held in escrow or otherwise by Lender in
accordance with the terms of this Security Instrument or any
Other Security Document to the payment of the following items in
any order in its sole and absolute discretion:
(A) Taxes and Other Charges;
(B) Insurance Premiums;
(C) Interest on the unpaid principal balance
of the Note;
(D) amortization of the unpaid principal
balance of the Note; and all other sums payable pursuant to the
Note, this Security Instrument and the Other Security Documents,
including, without limitation, advances made by Lender pursuant
to the terms of this Security Instrument;
(xi) surrender the Policies maintained pursuant to
Article 3 hereof, collect the unearned Insurance Premiums and
apply such sums as a credit on the Debt in such priority and
proportion as Lender in its discretion shall deem proper, and in
connection therewith, Borrower hereby appoints Lender as agent
and attorney-in-fact (which is coupled with an interest and is
therefore irrevocable) for Borrower to collect such Insurance
Premiums;
(xii) apply the undisbursed balance of any Net
Proceeds or any Net Proceeds Deficiency deposit, together with
interest thereon, to the payment of the Debt in such order,
priority and proportions as Lender shall deem to be appropriate
in its discretion;
(xiii) prohibit Borrower and anyone claiming on
behalf of or through Borrower from making use of or withdrawing
any sums from any lockbox or similar account, if any;
(xiv) pursue such other remedies as Lender may
have under applicable law.
(b) In the event of a sale, by foreclosure, power of
sale, or otherwise, of less than all of the Property, this
Security Instrument shall continue as a lien and security
interest on the remaining portion of the Property unimpaired and
without loss of priority. Notwithstanding the provisions of this
Section 11.1 to the contrary, if any Event of Default as
described in Subsection 10.1 (h)(i) or (ii) shall occur, the
entire unpaid Debt shall be automatically due and payable,
without any further notice, demand or other action by Lender.
(c) Lender may adjourn from time to time any sale by
it to be made under or by virtue of this Security Instrument by
announcement at the time and place appointed for such sale or for
such adjourned sale or sales; and, except as otherwise provided
by any applicable provision of law, Lender, without further
notice or publication, may make such sale at the time and place
to which the same shall be so adjourned.
(d) Upon any sale made under or by virtue of this
Section 11.1, whether made under a power of sale or under or by
virtue of judicial proceedings or of a judgment or decree of
foreclosure and sale, Lender may bid for and acquire the Property
or any part thereof and in lieu of paying cash therefor may make
settlement for the purchase price by crediting upon the Debt the
net sales price after deducting therefrom the expenses of the
sale and costs of the action and any other sums which Lender is
authorized to deduct under this Security Instrument.
Section 11.2 Application of Proceeds. The purchase money,
proceeds and avails of any disposition of the Property, or any
part thereof, or any other sums collected by Lender pursuant to
the Note, this Security Instrument or the Other Security
Documents, may be applied by Lender to the payment of the Debt in
such priority and proportions as Lender in its discretion shall
deem proper.
Section 11.3 Right to Cure Defaults. Upon the occurrence
of any Event of Default, Lender may, but without any obligation
to do so and without notice to or demand on Borrower and without
releasing Borrower from any obligation hereunder, cure the same
in such manner and to such extent as Lender may deem necessary to
protect the security hereof. Lender is authorized to enter upon
the Property for such purposes, or appear in, defend, or bring
any action or proceeding to protect its interest in the Property
or to foreclose this Security Instrument or collect the Debt, and
the cost and expense thereof (including reasonable attorneys'
fees to the extent permitted by law), with interest as provided
in this Section 11.3, shall constitute a portion of the Debt and
shall be due and payable to Lender upon demand. All such costs
and expenses incurred by Lender in remedying such Event of
Default or in appearing in, defending, or bringing any such
action or proceeding shall bear interest at the Default Rate (as
defined in the Note), for the period after notice from Lender
that such cost or expense was incurred to the date of payment to
Lender. All such costs and expenses incurred by Lender together
with interest thereon calculated at the Default Rate shall
be deemed to constitute a portion of the Debt and be secured by
this Security Instrument and the Other Security Documents and
shall be immediately due and payable upon demand by Lender
therefor.
Section 11.4 Actions and Proceedings. After the occurrence
and during the continuance of an Event of Default, Lender has the
right to appear in and defend any action or proceeding brought
with respect to the Property and to bring any action or
proceeding, in the name and on behalf of Borrower, which Lender,
in its discretion, decides should be brought to protect its
interest in the Property.
Section 11.5 Recovery of Sums Required To Be Paid. Lender
shall have the right from time to time to take action to recover
any sum or sums which constitute a part of the Debt as the same
become due, without regard to whether or not the balance of the
Debt shall be due, and without prejudice to the right of Lender
thereafter to bring an action of foreclosure, or any other
action, for a default or defaults by Borrower existing at the
time such earlier action was commenced.
Section 11.6 Examination of Books and Records. Lender, its
agents, accountants and attorneys shall have the right upon prior
written notice to examine the records, books, management and
other papers of Borrower and its affiliates or of any Guarantor
or Indemnitor which reflect upon their financial condition, at
the Property or at any office regularly maintained by Borrower,
its affiliates or any Guarantor or Indemnitor where the books and
records are located. Lender and its agents shall have the right
upon notice to make copies and extracts from the foregoing
records and other papers. In addition, Lender, its agents,
accountants and attorneys shall have the right to examine and
audit the books and records of Borrower and its affiliates or of
any Guarantor or Indemnitor pertaining to the income, expenses
and operation of the Property during reasonable business hours at
any office of Borrower, its affiliates or any Guarantor or
Indemnitor where the books and records are located.
Section 11.7 Other Rights, Etc.
(a) The failure of Lender to insist upon strict
performance of any term hereof shall not be deemed to be a waiver
of any term of this Security Instrument. Borrower shall not be
relieved of Borrower's obligations hereunder by reason of (i) the
failure of Lender to comply with any request of Borrower, any
Guarantor or any Indemnitor to take any action to foreclose this
Security Instrument or otherwise enforce any of the provisions
hereof or of the Note or the Other Security Documents, (ii) the
release, regardless of consideration, of the whole or any part of
the Property, or of any person liable for the Debt or any portion
thereof, or (iii) any agreement or stipulation by Lender
extending the time of payment or otherwise modifying or
supplementing the terms of the Note, this Security Instrument or
the Other Security Documents.
(b) It is agreed that the risk of loss or damage to
the Property is on Borrower, and Lender shall have no liability
whatsoever for decline in value of the Property, for failure to
maintain the Policies, or for failure to determine whether
insurance in force is adequate as to the amount of risks insured.
Possession by Lender shall not be deemed an election of judicial
relief, if any such possession is requested or obtained, with
respect to any Property or collateral not in Lender's possession.
(c) Lender may resort for the payment of the Debt to
any other security held by Lender in such order and manner as
Lender, in its discretion, may elect. Lender may take action to
recover the Debt, or any portion thereof, or to enforce any
covenant hereof without prejudice to the right of Lender
thereafter to foreclose this Security Instrument. The rights of
Lender under this Security Instrument shall be separate, distinct
and cumulative and none shall be given effect to the exclusion of
the others. No act of Lender shall be construed as an election
to proceed under any one provision herein to the exclusion of any
other provision. Lender shall be limited exclusively to the
rights and remedies herein stated but shall be entitled to every
right and remedy now or hereafter afforded at law or in equity.
Section 11.8 Right to Release Any Portion of the Property.
Lender, may release any portion of the Property for such
consideration as Lender may require without, as to the remainder
of the Property, in any way impairing or affecting the lien or
priority of this Security Instrument, or improving the position
of any subordinate lienholder with respect thereto, except to the
extent that the obligations hereunder shall have been reduced by
the actual monetary consideration, if any, received by Lender for
such release, and may accept by assignment, pledge or otherwise
any other property in place thereof as Lender may require without
being accountable for so doing to any other lienholder. This
Security Instrument shall continue as a lien and security
interest in the remaining portion of the Property.
Section 11.9 Violation of Laws. If the Property is not in
compliance with Applicable Laws, Lender may impose additional
requirements upon Borrower in connection herewith including,
without limitation, monetary reserves or financial equivalents.
Section 11.10 Right of Entry. Lender and its agents shall
have the right upon prior written notice to enter and inspect the
Property at all reasonable times upon not less than five (5)
Business Days' notice (except in the case of emergencies when no
notice shall be required) to Borrower.
Article 12 - ENVIRONMENTAL HAZARDS
Section 12.1 Environmental Representations and Warranties.
Borrower represents and warrants, based upon that certain Phase I
Environmental Site Assessment of the Property by EMG dated April
27, 1998 and that certain Property Condition Survey of the
Property by EMG dated May 1, 1998 which have been delivered to
Lender (each, an "Environmental Report" and collectively, the
"Environmental Reports") and information that Borrower knows,
that: (a) there are no Hazardous Substances (defined below) or
underground storage tanks in, on, or under the Property, except
those that are both (i) in compliance with Environmental Laws
(defined below) and with permits issued pursuant thereto, if any,
and (ii) fully disclosed to Lender in writing pursuant to any
Environmental Report; (b) there are no past or present Releases
(defined below) of Hazardous Substances in violation of any
Environmental Law or which would require Remediation (defined
below) by a Governmental Authority in, on, under or from the
Property except as described in the Environmental Report; (c)
there is no past or present non-compliance with Environmental
Laws, or with permits issued pursuant thereto, in connection with
the Property except as described in the Environmental Report; (d)
Borrower does not know of, and has not received, any written or
oral notice or other communication from any person or entity
(including, but not limited to a governmental entity) relating to
Hazardous Substances or Remediation thereof, of possible
liability of any person or entity pursuant to any Environmental
Law, other environmental conditions in connection with the
Property, or any actual administrative or judicial proceedings in
connection with any of the foregoing; and (e) Borrower has
truthfully and fully provided to Lender, in writing, any and all
information relating to environmental conditions in, on, under or
from the Property that is known to Borrower and that is contained
in Borrower's files and records, including, but not limited to
any reports relating to Hazardous Substances in, on, under or
from the Property and/or to the environmental condition of the
Property. "Environmental Law" means any present, and for the
purposes of Sections 12.2. 12.3 and 13.4 only, future, federal,
state and local laws, statutes, ordinances, rules, regulations
and the like, as well as common law, relating to protection of
human health or the environment, relating to Hazardous
Substances, relating to liability for or costs of Remediation or
prevention of Releases of Hazardous Substances or relating to
liability for or costs of other actual or threatened danger to
human health or the environment. "Environmental Law" includes,
but is not limited to, the following statutes, as amended, any
successor thereto, and any regulations promulgated pursuant
thereto, and any state or local statutes, ordinances, rules,
regulations and the like addressing similar issues: the
Comprehensive Environmental Response, Compensation and Liability
Act; the Emergency Planning and Community Right-to-Know Act; the
Hazardous Substances Transportation Act; the Resource
Conservation and Recovery Act (including, but not limited to
Subtitle I relating to underground storage tanks); the Solid
Waste Disposal Act; the Clean Water Act; the Clean Air Act; the
Toxic Substances Control Act; the Safe Drinking Water Act; the
Occupational Safety and Health Act; the Federal Water Pollution
Control Act; the Federal Insecticide, Fungicide and Rodenticide
Act; the Endangered Species Act; the National Environmental
Policy Act; and the River and Harbors Appropriation Act.
"Environmental Law" also includes, but is not limited to, any
present, and for the purposes of Sections 12.2, 12.3 and
13.4 only, future, federal, state and local laws, statutes,
ordinances, rules, regulations and the like, as well as common
law: conditioning transfer of property upon a negative
declaration or other approval of a governmental authority of the
environmental condition of the property; requiring notification
or disclosure of Releases of Hazardous Substances or other
environmental condition of the Property to any governmental
authority or other person or entity, whether or not in connection
with transfer of title to or interest in property. "Hazardous
Substances" include but are not limited to any and all substances
(whether solid, liquid or gas) (i) defined, listed, or otherwise
classified as pollutants, hazardous wastes, hazardous substances,
hazardous materials, extremely hazardous wastes, or words of
similar meaning or regulatory effect under any present, or for
the purposes of Sections 12.2. 12.3 and 13.4 only, future,
Environmental Laws, or (ii) that may have a negative impact on
human health or the environment, including, but not limited to
petroleum and petroleum products, asbestos and
asbestos-containing materials, polychlorinated biphenyls, lead,
radon, radioactive materials, flammables and explosives.
"Release" of any Hazardous Substance includes, but is not limited
to any release, deposit, discharge, emission, leaking, spilling,
seeping, migrating, injecting, pumping, pouring, emptying,
escaping, dumping, disposing or other movement of Hazardous
Substances. "Remediation" includes, but is not limited to any
response, remedial removal, or corrective action, any activity to
cleanup, detoxify, decontaminate, contain or otherwise remediate
any Hazardous Substance, any actions to prevent, cure or mitigate
any Release of any Hazardous Substance, any action to comply with
any Environmental Laws or with any permits issued pursuant
thereto, any inspection, investigation, study, monitoring,
assessment, audit, sampling and testing, laboratory or other
analysis, or evaluation relating to any Hazardous Substances or
to anything referred to in this Article 12.
Section 12.2 Environmental Covenants. Borrower covenants
and agrees that so long as the Borrower owns, manages, is in
possession of, or otherwise controls the operation of the
Property: (a) all uses and operations on or of the Property,
whether by Borrower or any other person or entity, shall be in
compliance with all Environmental Laws and permits issued
pursuant thereto; (b) there shall be no Releases of Hazardous
Substances in, on, under or from the Property; (c) there shall be
no Hazardous Substances in, on, or under the Property, except
those that are in compliance with all Environmental Laws and with
permits issued pursuant thereto, if and to the extent required;
(d) Borrower shall keep the Property free and clear of all liens
and other encumbrances imposed pursuant to any Environmental Law,
whether due to any act or omission of Borrower or any other
person or entity (the "Environmental Liens"); (e) Borrower shall,
at its sole cost and expense, fully and expeditiously cooperate
in all activities pursuant to Section 12.3 below, including, but
not limited to providing all relevant information and making
knowledgeable persons available for interviews; (f) Borrower
shall, at its sole cost and expense, perform any environmental
site assessment or other investigation of environmental
conditions in connection with the Property, pursuant to any
reasonable written request of Lender after Lender has reason to
believe this Section 12.2 has been violated (including, but not
limited to sampling, testing and analysis of soil, water, air,
building materials and other materials and substances whether
solid, liquid or gas), and share with Lender the reports and
other results thereof, and Lender and other Indemnified Parties
(defined in Section 13.1) shall be entitled to rely on such
reports and other results thereof; (g) Borrower shall, at its
sole cost and expense, comply with all reasonable written
requests of Lender to (i) reasonably effectuate Remediation of
any condition (including, but not limited to a Release of a
Hazardous Substance) in, on, under or from the Property, (ii)
comply with any Environmental Law, (iii) comply with any
directive from any governmental authority, and (iv) take any
other reasonable action necessary or appropriate for protection
of human health or the environment; (h) Borrower shall not do or
allow any tenant or other user of the Property to do any act that
materially increases the dangers to human health or the
environment, poses an unreasonable risk of harm to any person or
entity (whether on or off the Property), impairs or may impair
the value of the Property, is contrary to any requirement of any
insurer, constitutes a public or private nuisance, constitutes
waste, or violates any covenant, condition, agreement or easement
applicable to the Property; and (i) Borrower shall immediately
notify Lender in writing promptly after it has become aware of
(A) any presence or Releases or threatened Releases of Hazardous
Substances in, on, under, from or migrating towards the
Property which is required to be reported to a governmental
authority under any Environmental Law, (B) any actual
Environmental Lien affecting the Property, (C) any required
Remediation of environmental conditions relating to the Property,
and (D) any written or oral notice or other communication of
which Borrower becomes aware from any source whatsoever
(including, but not limited to a governmental entity) relating in
any way to Hazardous Substances or Remediation thereof, possible
liability of any person or entity pursuant to any Environmental
Law, other environmental conditions in connection with the
Property, or any actual or threatened administrative or judicial
proceedings in connection with anything referred to in this
Article 12.
Section 12.3 Lender's Rights. Lender, its environmental
consultant, and any other person or entity designated by Lender,
including, but not limited to any receiver and any representative
of a governmental entity, shall have the right, but not the
obligation, at intervals of not less than one year, or more
frequently if the Lender reasonably believes that a Hazardous
Substance or other environmental condition violates or threatens
to violate any Environmental Law, after notice to Borrower, to
enter upon the Property at all reasonable times to assess any and
all aspects of the environmental condition of the Property and
its use, including, but not limited to conducting any
environmental assessment or audit of the Property or portions
thereof to confirm Borrower's compliance with the provisions of
this Article 12, and Borrower shall cooperate in all reasonable
ways with Lender in connection with any such audit. Such audit
shall be performed in a manner so as to minimize interference
with the conduct of business at the Property. If such audit
discloses that a violation of or a liability under any
Environmental Law exists or if such audit was required or
prescribed by law, regulation or governmental or
quasi-governmental authority, Borrower shall pay all costs and
expenses incurred in connection with such audit; otherwise, the
costs and expenses of such audit shall, notwithstanding anything
to the contrary set forth in this Section, be paid by Lender.
Article 13 - INDEMNIFICATION
Section 13.1 General Indemnification. Borrower shall, at
its sole cost and expense, protect, defend, indemnify, release
and hold harmless the Indemnified Parties from and against any
and all claims, suits, liabilities (including, without
limitation, strict liabilities), actions, proceedings,
obligations, debts, damages, losses, costs, expenses,
diminutions in value, fines, penalties, charges, fees, expenses,
judgments, awards, amounts paid in settlement, or punitive
damages, of whatever kind or nature (including, but not limited
to attorneys' fees and other costs of defense) (the "Losses")
imposed upon or incurred by or asserted against any Indemnified
Parties and directly or indirectly arising out of or in any way
relating to any one or more of the following (but excluding
Losses arising out of Lender's gross negligence or willful
misconduct): (a) ownership of this Security Instrument, the
Property or any interest therein or receipt of any Rents; (b) any
amendment to, or restructuring of, the Debt, and the Note, this
Security Instrument, or any Other Security Documents; (c) any and
all lawful action that may be taken by Lender in connection with
the enforcement of the provisions of this Security Instrument or
the Note or any of the Other Security Documents, whether or not
suit is filed in connection with same, or in connection with
Borrower, any Guarantor or Indemnitor and/or any member, partner,
joint venturer or shareholder thereof becoming a party to a
voluntary or involuntary federal or state bankruptcy, insolvency
or similar proceeding; (d) any accident, injury to or death of
persons or loss of or damage to property occurring in, on or
about the Property or any part thereof or on the adjoining
sidewalks, curbs, adjacent property or adjacent parking areas,
streets or ways; (e) any use, nonuse or condition in, on or about
the Property or any part thereof or on the adjoining sidewalks,
curbs, adjacent property or adjacent parking areas, streets or
ways; (f) any failure on the part of Borrower to perform or be in
compliance with any of the terms of this Security Instrument
or the Other Security Documents; (g) performance of any labor or
services or the furnishing of any materials or other property in
respect of the Property or any part thereof; (h) the failure of
any person to file timely with the Internal Revenue Service an
accurate Form 1099-B, Statement for Recipients of Proceeds from
Real Estate, Broker and Barter Exchange Transactions, which may
be required in connection with the Security Instrument, or to
supply a copy thereof in a timely fashion to the recipient of the
proceeds of the transaction in connection with which this
Security Instrument is made; (i) any failure of the Property to
be in compliance with any Applicable Laws; (j) the enforcement by
any Indemnified Party of the provisions of this Article 13; (k)
any and all claims and demands whatsoever which may be asserted
against Lender by reason of any alleged obligations or
undertakings on its part to perform or discharge any of the
terms, covenants, or agreements contained in any Lease; (l)
the payment of any commission, charge or brokerage fee to anyone
which may be payable in connection with the funding of the loan
evidenced by the Note and secured by this Security Instrument; or
(m) any misrepresentation made by Borrower in this Security
Instrument, the Other Security Documents, or any documents or
information provided pursuant to Section 18.1 hereof. Any
amounts payable to Lender by reason of the application of this
Section 13.1 shall become immediately due and payable and shall
bear interest at the Default Rate from the date loss or damage is
sustained by Lender until paid. For purposes of this Article 13,
the term "Indemnified Parties" means Lender and any person or
entity who is or will have been involved in the origination of
this loan, any person or entity who is or will have been involved
in the servicing of this loan, any person or entity, in whose
name the encumbrance created by this Security Instrument is or
will have been recorded, persons and entities who may hold or
acquire or will have held a full or partial interest in this loan
(including, but not limited to Investors or prospective Investors
in the Securities, as well as custodians, trustees and other
fiduciaries who hold or have held a full or partial interest in
this loan for the benefit of third parties) as well as the
respective directors, officers, shareholders, members, partners,
employees, agents, servants, representatives, contractors,
subcontractors, affiliates, subsidiaries, participants,
successors and assigns of any and all of the foregoing
(including, but not limited to any other person or entity who
holds or acquires or will have held a participation or other full
or partial interest in this loan or the Property, whether during
the term of this loan or as a part of or following a foreclosure
of this loan and including, but not limited to any successors by
merger, consolidation or acquisition of all or a substantial
portion of Lender's assets and business).
Section 13.2 Mortgage and/or Intangible Tax. Borrower
shall, at its sole cost and expense, protect, defend, indemnify,
release and hold harmless the Indemnified Parties from and
against any and all Losses imposed upon or incurred by or
asserted against any Indemnified Parties and directly or
indirectly arising out of or in any way relating to any tax
on the making and/or recording of this Security Instrument, the
Note or any of the Other Security Documents or in connection with
a transfer of all or a portion of the Property pursuant to a
foreclosure, deed in lieu of foreclosure or otherwise.
Section 13.3 ERISA Indemnification. Borrower shall, at its
sole cost and expense, protect, defend, indemnify, release and
hold harmless the Indemnified Parties from and against any and
all Losses (including, without limitation, attorneys' fees and
costs incurred in the investigation, defense, and settlement of
Losses incurred in correcting any prohibited transaction or in
the sale of a prohibited loan, and in obtaining any individual
prohibited transaction exemption under ERISA that may be
required, in Lender's sole discretion) that Lender may incur,
directly or indirectly, as a result of a default under Sections
4.2 or 5.9.
Section 13.4 Environmental Indemnification. Borrower
shall, at its sole cost and expense, protect, defend, indemnify,
release and hold harmless the Indemnified Parties from and
against any and all Losses and costs of Remediation (whether or
not performed voluntarily), engineers' fees, environmental
consultants' fees, and costs of investigation (including, but not
limited to sampling, testing and analysis of soil, water, air,
building materials and other materials and substances whether
solid, liquid or gas) imposed upon or incurred by or asserted
against any Indemnified Parties, and arising out of or in any way
relating to any one or more of the following, unless caused by
the gross negligence or willful misconduct of any Indemnified
Party: (a) any presence of any Hazardous Substances in, on,
above or under the Property; (b) any past, present or threatened
Release of Hazardous Substances in, on, above, under or from the
Property; (c) any activity by Borrower, any person or entity
affiliated with Borrower or tenant or other users of the Property
in connection with any actual, proposed or threatened use,
treatment, storage, holding, existence, disposition or other
Release, generation, production, manufacturing, processing,
refining, control, management, abatement, removal, handling,
transfer or transportation to or from the Property of any
Hazardous Substances at any time located in, under, on or above
the Property; (d) any activity by Borrower, any person or entity
affiliated with Borrower or tenant or other users of the Property
in connection with any actual or proposed Remediation of any
Hazardous Substances at any time located in, under, on or above
the Property, whether or not such Remediation is voluntary or
pursuant to court or administrative order, including, but not
limited to any removal, remedial or corrective action; (e) any
past, present or threatened violations of any Environmental Laws
(or permits issued pursuant to any Environmental Law) in
connection with the Property or operations thereon, including,
but not limited to any failure by Borrower, any person or entity
affiliated with Borrower or tenant or other users of the Property
to comply with any order of any governmental authority in
connection with Environmental Laws; (f) the imposition, recording
or filing of any Environmental Lien encumbering the Property; (g)
any administrative processes or proceedings or judicial
proceedings in any way connected with any matter addressed in
Article 12 and this Section 13.4; (h) any past, present or
threatened injury to, destruction of or loss of natural resources
in any way connected with the Property, including, but not
limited to costs to investigate and assess such injury,
destruction or loss; (i) any acts of Borrower or other users of
the Property in arranging for disposal or treatment, or arranging
with a transporter for transport for disposal or treatment, of
Hazardous Substances owned or possessed by such Borrower or other
users, at any facility or incineration vessel owned or operated
by another person or entity and containing such or similar
Hazardous Substance; (j) any acts of Borrower or other users of
the Property, in accepting any Hazardous Substances for transport
to disposal or treatment facilities, incineration vessels or
sites selected by Borrower or such other users, from which there
is a Release, or a threatened Release of any Hazardous Substance
which causes the incurrence of costs for Remediation; (k) any
personal injury, wrongful death, or property damage caused by
Hazardous Substances arising under any statutory or common law
or tort law theory, including, but not limited to damages
assessed for the maintenance of a private or public nuisance or
for the conducting of an abnormally dangerous activity on or
near the Property; and (l) any intentional misrepresentation in
any representation or warranty or material breach or failure to
perform any covenants or other obligations pursuant to Article
12.
Section 13.5 Duty to Defend; Attorneys' Fees and Other Fees
and Expenses. Upon written request by any Indemnified Party,
Borrower shall defend such Indemnified Party (if requested by any
Indemnified Party, in the name of the Indemnified Party) by
attorneys and other professionals approved by the Indemnified
Parties. Notwithstanding the foregoing, any Indemnified Parties
may, in their sole and absolute discretion, engage their own
attorneys and other professionals to defend or assist them, and,
at the option of Indemnified Parties, their attorneys shall
control the resolution of claim or proceeding. Upon demand,
Borrower shall pay or, in the sole and absolute discretion of the
Indemnified Parties, reimburse, the Indemnified Parties for the
payment of reasonable fees and disbursements of attorneys,
engineers, environmental consultants, laboratories and other
professionals in connection therewith.
Article 14 - WAIVERS
Section 14.1 Waiver of Counterclaim. Borrower hereby
waives the right to assert a counterclaim, other than a mandatory
or compulsory counterclaim, in any action or proceeding brought
against it by Trustee or Lender arising out of or in any way
connected with this Security Instrument, the Note, any of the
Other Security Documents, or the Obligations.
Section 14.2 Marshalling and Other Matters. Borrower
hereby waives, to the extent permitted by law, the benefit of all
appraisement, valuation, stay, extension, reinstatement and
redemption laws now or hereafter in force and all rights of
marshalling in the event of any sale hereunder of the Property or
any part thereof or any interest therein. Further, Borrower
hereby expressly waives any and all rights of redemption from
sale under any order or decree of foreclosure of this Security
Instrument on behalf of Borrower, and on behalf of each and
every person acquiring any interest in or title to the Property
subsequent to the date of this Security Instrument and on behalf
of all persons to the extent permitted by Applicable Law.
Section 14.3 Waiver of Notice. To the extent permitted by
Applicable Law, Borrower shall not be entitled to any notices of
any nature whatsoever from Lender except with respect to matters
for which this Security Instrument specifically and expressly
provides for the giving of notice by Lender to Borrower and
except with respect to matters for which Lender is required by
Applicable Law to give notice, and Borrower hereby expressly
waives the right to receive any notice from Lender with respect
to any matter for which this Security Instrument does not
specifically and expressly provide for the giving of notice by
Lender to Borrower.
Section 14.4 Waiver of Statute of Limitations. Borrower
hereby expressly waives and releases to the fullest extent
permitted by law, the pleading of any statute of limitations as a
defense to payment of the Debt or performance of its Other
Obligations.
Section 14.5 Sole Discretion of Lender. Wherever pursuant
to this Security Instrument (a) Lender exercises any right given
to it to approve or disapprove, (b) any arrangement or term is to
be satisfactory to Lender, or (c) any other decision or
determination is to be made by Lender, the decision of Lender to
approve or disapprove all decisions that arrangements or terms
are satisfactory or not satisfactory, and all other decisions and
determinations made by Lender, shall be in the sole and absolute
discretion of Lender and shall be final and conclusive, except as
may be otherwise expressly and specifically provided herein.
Section 14.6 Survival. Except as hereinafter specifically
set forth below, the representations and warranties, covenants,
and other obligations arising under Article 12 shall in no way be
impaired by: any satisfaction or other termination of this
Security Instrument, any assignment or other transfer of all or
any portion of this Security Instrument or Lender's interest in
the Property (but, in such case, shall benefit both Indemnified
Parties and any assignee or transferee), any exercise of Lender's
rights and remedies pursuant hereto including, but not limited to
foreclosure or acceptance of a deed in lieu of foreclosure, any
exercise of any rights and remedies pursuant to the Note or any
of the Other Security Documents, any transfer of all or any
portion of the Property (whether by Borrower, or by Lender,
following foreclosure or acceptance of a deed in lieu of
foreclosure or at any other time), any amendment to this Security
Instrument, the Note or the Other Security Documents, and any act
or omission that might otherwise be construed as a release or
discharge of Borrower from the obligations pursuant hereto. All
obligations and liabilities of Borrower under Article 12 shall
cease and terminate on the first (1st) anniversary of the date of
payment to Lender in cash of the entire Debt, provided that
contemporaneously with or subsequent to such payment, Borrower,
at its sole cost and expense, delivers to Lender an environmental
audit of the Property in form and substance, and prepared by a
qualified environmental consultant, reasonably satisfactory in
all respects to Lender and indicating the Property is in full
compliance with all applicable Environmental Laws.
Section 14.7 Waiver of Trial By Jury. BORROWER HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER
IN CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY
TO THE LOAN EVIDENCED BY THE NOTE, THE APPLICATION FOR THE LOAN
EVIDENCED BY THE NOTE, THE NOTE, THIS SECURITY INSTRUMENT OR THE
OTHER SECURITY DOCUMENTS OR ANY ACTS OR OMISSIONS OF LENDER, ITS
OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN CONNECTION THEREWITH.
Article 15 - EXCULPATION
Section 15.1 Exculpation. Notwithstanding anything to the
contrary contained in this Security Instrument or in any Other
Security Document (but subject to the provisions of Sections
15.2, 15.3, 15.4 and 15.5), Lender shall not enforce the
liability and obligation of Borrower to perform and observe the
obligations contained in the Note or this Security Instrument by
any action or proceeding to collect damages or wherein a money
judgment or any deficiency judgment or order or any judgment
establishing any personal obligation or liability shall be sought
against Borrower or any principal director, officer, employee,
beneficiary, shareholder, partner, member, trustee, agent or
affiliate of Borrower or any person owning, directly or
indirectly, any legal or beneficial interest in Borrower, or any
successors or assigns of any of the foregoing (collectively, the
"Exculpated Parties"). Lender, may bring a foreclosure action,
action for specific performance or other appropriate
action or proceeding to enable Lender to enforce and realize
upon this Security Instrument, the Other Security Documents, and
the interest in the Property, the Rents and any other collateral
given to Lender created by this Security Instrument and the Other
Security Documents; provided, however, subject to the provisions
of Sections 15.2, 15.3, 15.4 and 15.5, that any judgment in any
action or proceeding shall be enforceable against Borrower
only to the extent of Borrower's interest in the Property, in the
Rents and in any other collateral given to Lender in connection
with the Note. Lender, by accepting the Note and this Security
Instrument, agrees that it shall not, except as otherwise
provided below, sue for or demand any deficiency judgment against
Borrower or any of the Exculpated Parties in any action or
proceeding, under or by reason of or under or in connection with
the Note, the Other Security Documents or this Security
Instrument.
Section 15.2 Reservation of Certain Rights. The provisions
of Section 15.1 shall not (a) constitute a waiver, release or
impairment of the Obligations; (b) impair the right of Lender to
name Borrower as a party defendant in any action or suit for
judicial foreclosure and sale under this Security Instrument; (c)
affect the validity or enforceability of any indemnity, guaranty,
master lease or similar instrument made in connection with the
Note, this Security Instrument, or the Other Security Documents;
(d) impair the right of Lender to obtain the appointment of a
receiver; or (e) impair the enforcement of the Assignment of
Leases and Rents executed in connection herewith.
Section 15.3 Exceptions to Exculpation. Notwithstanding
the provisions of Article 15.1 to the contrary, Borrower and
Indemnitor shall be personally liable to Lender on a joint
and several basis for the Losses Lender incurs due to: (a) fraud
or intentional misrepresentation by Borrower or any other person
or entity in connection with the execution and the delivery of
the Note, this Security Instrument or the Other Security
Documents; (b) Borrower's misapplication or misappropriation of
Rents received by Borrower; (c) Borrower's misapplication or
misappropriation of tenant security deposits or Rents collected
in advance; (d) the misapplication or misappropriation of
insurance proceeds or condemnation awards; (e) any fees or
commissions paid by Borrower after the occurrence and during the
continuance of an Event of Default to any principal, affiliate or
general partner of Borrower, Indemnitor or Guarantor in violation
of the terms of the Note, this Security Instrument or the Other
Security Documents; (f) gross negligence, or criminal acts
perpetrated by it resulting in forfeiture, seizure or loss of any
portion of the security; (g) any failure by Borrower or
Indemnitor to comply with the terms and provisions of Section
13.4 hereof or of the Environmental Indemnity; (h) any failure
by Borrower or any general partner or the SPE Member of Borrower
to comply with the terms and provisions of Section 4.3 hereof;
(i) all fees and expenses of Lender pursuant to Section 19.2
hereof; or (j) any sale, conveyance, mortgage, grant, bargain,
encumbrance, pledge, assignment or transfer of the Property or
any part thereof, within the meaning of Article 8 hereof, without
the prior written consent of Lender.
Section 15.4 Recourse. Notwithstanding the foregoing, the
agreement of Lender not to pursue recourse liability as set forth
in Section 15.1 above SHALL BECOME NULL AND VOID and shall be of
no further force and effect in the event (a) the Property or any
part thereof shall become an asset in (i) a voluntary bankruptcy
or insolvency proceeding, or (ii) an involuntary bankruptcy or
insolvency proceeding commenced by any Person (other than
Lender) which is not dismissed within 90 days of the filing
thereof or (b) Borrower or any Guarantor or Indemnitor fails to
comply with the terms and provisions of Section 3.11 hereof
within thirty (30) days after written notice from Lender to
Borrower (which notice shall be a second notice given after the
expiration of any notice given pursuant to Section 10.1(e).
Section 15.5 Bankruptcy Claims. Nothing herein shall be
deemed to be a waiver of any right which Lender may have under
Sections 506(a), 506(b), 1111(b) or any other provisions of the
U.S. Bankruptcy Code to file a claim for the full amount of the
Debt secured by this Security Instrument or to require that all
collateral shall continue to secure all of the Debt owing to
Lender in accordance with the Note, this Security Instrument and
the Other Security Documents.
Article 16 - NOTICES
Section 16.1 Notices. All notices or other written
communications hereunder shall be deemed to have been properly
given (a) upon delivery, if delivered in person or by facsimile
transmission with receipt acknowledged by the recipient thereof,
(b) one (1) Business Day (defined below) after having been
deposited for overnight delivery with any reputable overnight
courier service, or (c) three (3) Business Days after having been
deposited in any post office or mail depository regularly
maintained by the U.S. Postal Service and sent by registered or
certified mail, postage prepaid, return receipt requested,
addressed as follows:
If to Borrower: Marlton Plaza Associates II, L.P.
c/o Marlton Plaza II LLC
Plymouth Plaza
580 West Germantown Pike, Suite 200
Plymouth Meeting, Pennsylvania 19462
Attention: Chief Financial Officer
Facsimile No: (610) 834-8110
With a copy to: Fox, Rothschild, O'Brien & Frankel, LLP
2000 Market Street - 10th Floor
Philadelphia, Pennsylvania 19103-3291
Attention: Stanley S. Cohen, Esquire
Facsimile No: (215) 299-2150
If to Lender: GMAC Commercial Mortgage Corporation
650 Dresher Road
Horsham, Pennsylvania 19044-8015
Attention: Executive Vice President,
Commercial Loan
Servicing
Facsimile No: (215) 328-3478
With a copy to: Commercial Capital Initiatives, Inc.
Wall Street Plaza
88 Pine Street
New York, New York 10005
Attention: Manager - Loan Administration
Facsimile No: (212) 269-5286
And to: Ballard Spar Andrews & Ingersoll, LLP
1735 Market Street - 51st Floor
Philadelphia, Pennsylvania 19103
Attention: Kathleen M. Sandone, Esquire
Facsimile No: (215) 864-8999
or addressed as such party may from time to time designate by
written notice to the other parties.
Either party by notice to the other may designate additional
or different addresses for subsequent notices or communications.
For purposes of this Subsection, "Business Day" shall mean a
day on which commercial banks are not authorized or required by
law to close in the State of New York.
Article 17 - APPLICABLE LAW
Section 17.1 Choice of Law. THIS SECURITY INSTRUMENT SHALL
BE GOVERNED, CONSTRUED, APPLIED AND ENFORCED IN ACCORDANCE WITH
THE LAWS OF THE STATE WHERE THE PROPERTY IS LOCATED AND THE
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
Section 17.2 Usury Laws. This Security Instrument and the
Note are subject to the express condition that at no time shall
Borrower be obligated or required to pay interest on the Debt at
a rate which could subject the holder of the Note to either civil
or criminal liability as a result of being in excess of the
maximum interest rate which Borrower is permitted by applicable
law to contract or agree to pay. If by the terms of this
Security Instrument or the Note, Borrower is at any time required
or obligated to pay interest on the Debt at a rate in excess of
such maximum rate, the rate of interest under the Security
Instrument and the Note shall be deemed to be immediately reduced
to such maximum rate and the interest payable shall be computed
at such maximum rate and all prior interest payments in excess of
such maximum rate shall be applied and shall be deemed to have
been payments in reduction of the principal balance of the Note.
All sums paid or agreed to be paid to Lender for the use,
forbearance, or detention of the Debt shall, to the extent
permitted by applicable law, be amortized, prorated, allocated,
and spread throughout the full stated term of the Note until
payment in full so that the rate or amount of interest on account
of the Debt does not exceed the maximum lawful rate of interest
from time to time in effect and applicable to the Debt for so
long as the Debt is outstanding.
Section 17.3 Provisions Subject to Applicable Law. All
rights, powers and remedies provided in this Security Instrument
may be exercised only to the extent that the exercise thereof
does not violate any applicable provisions of law and are
intended to be limited to the extent necessary so that they will
not render this Security Instrument invalid, unenforceable or
not entitled to be recorded, registered or filed under the
provisions of any Applicable Law.
Section 17.4 Inapplicable Provision. If any term of this
Security Instrument or any application thereof shall be invalid
or unenforceable, the remainder of this Security Instrument
and any other application of the term shall not be affected
thereby.
Article 18 - SECONDARY MARKET
Section 18.1 Dissemination of Information. If Lender
determines at any time to sell, transfer or assign the Note, this
Security Instrument and the Other Security Documents, and any or
all servicing rights with respect thereto, or to grant
participations therein (the "Participations") or issue mortgage
pass-through certificates or other securities (such sale and/or
issuance, the "Securitization") evidencing a beneficial interest
in a rated or unrated public offering or private placement (the
"Securities"), Lender may forward to each purchaser, transferee,
assignee, servicer, participant, investor, or their respective
successors in such Participations and/or Securities
(collectively, the "Investor") or any Rating Agency rating such
Securities and each prospective Investor, all documents and
information which Lender now has or may hereafter acquire
relating to the Debt and to Borrower, any Guarantor, any
Indemnitors and the Property (including, without limitation, all
financial statements), which shall have been furnished by
Borrower, any Guarantor or any Indemnitors, as Lender determines
necessary or desirable. Borrower, any Guarantor and any
Indemnitor agree to cooperate with Lender in connection with any
transfer made or any Securities created pursuant to this Section,
including, without limitation, the delivery to Lender of an
estoppel certificate required in accordance with Subsection
7.4(c) hereof and such other documents as may be reasonably
requested by Lender and, upon Lender's reasonable request,
meeting with Lender for due diligence purposes. Borrower shall
also furnish to Lender and Borrower, any Guarantor and any
Indemnitor consent to Lender furnishing to such Investors or such
prospective Investors or any Rating Agency any and all
information concerning the Property, the Leases, the financial
condition of Borrower, any Guarantor and any Indemnitor as may be
requested by Lender, any Investor or any prospective Investor or
Rating Agency in connection with any sale, transfer or
Participation. Borrower shall deliver to Lender on the
date hereof, at Borrower's sole cost and expense, a
nonconsolidation opinion, to Lender in form and substance and
delivered by counsel acceptable to Lender. Borrower shall
cooperate with Lender, within ten (10) days after demand of
Lender, by providing Lender with information deemed relevant to
counsel acceptable to Lender and the Rating Agency rating or
proposed to rate the Securities, as may be required by Lender
and/or such Rating Agency. Borrower's failure to deliver the
opinion or information required hereby shall constitute an Event
of Default hereunder.
Article 19 - COSTS
Section 19.1 Performance at Borrower's Expense. Borrower
acknowledges and confirms that Lender shall impose certain
administrative processing and/or commitment fees in connection
with (a) the extension, renewal, modification, amendment and
termination of its loans, (b) the release or substitution of
collateral therefor, (c) obtaining certain consents, waivers and
approvals with respect to the Property, or (d) the review of any
Lease or proposed Lease or the preparation or review of any
subordination, non-disturbance agreement (the occurrence of any
of the above shall be called an "Event"). Borrower further
acknowledges and confirms that it shall be responsible (not more
than once per calendar year unless an Event of Default, or an
event which with the giving of notice or lapse of time or
both could become an Event of Default, has occurred and is
continuing), for the payment of all costs of reappraisal of the
Property or any part thereof, whether required by law,
regulation, Lender or any governmental or quasi-governmental
authority. Borrower hereby acknowledges and agrees to pay,
immediately, with or without demand, all such fees (as the
same may be increased or decreased from time to time), and any
additional fees of a similar type or nature which may be imposed
by Lender from time to time, upon the occurrence of any Event or
otherwise. Wherever it is provided for herein that Borrower pay
any costs and expenses, such costs and expenses shall include,
but not be limited to, all legal fees and disbursements of Lender
(whether of retained firms, the reimbursement for the expenses of
in-house staff or otherwise).
Section 19.2 Attorney's Fees for Enforcement. (a)
Borrower shall pay all legal fees incurred by Lender in
connection with (i) the preparation of the Note, this Security
Instrument and the Other Security Documents; and (ii) the items
set forth in Section 19.1 above, and (b) Borrower shall pay to
Lender on demand any and all expenses, including legal expenses
and attorneys' fees, incurred or paid by Lender in protecting its
interest in the Property or the Collateral or in collecting any
amount payable hereunder or in enforcing its rights hereunder
with respect to the Property or the Collateral, whether or not
any legal proceeding is commenced hereunder or thereunder and
whether or not any default or Event of Default shall have
occurred and is continuing, together with interest thereon at the
Default Rate from the date paid or incurred by Lender until such
expenses are paid by Borrower.
Article 20 - DEFINITIONS
Section 20.1 General Definitions. Unless the context
clearly indicates a contrary intent or unless otherwise
specifically provided herein, words used in this Security
Instrument may be used interchangeably in singular or plural form
and the word "Borrower" shall mean "each Borrower and any
subsequent owner or owners of the Property or any part thereof or
any interest therein," the word "Lender" shall mean "Lender and
any subsequent holder of the Note," the word "Note" shall mean
"the Note and any other evidence of indebtedness secured by this
Security Instrument," the word "person" shall include an
individual, corporation, limited liability company, partnership,
trust, unincorporated association, government, governmental
authority, and any other entity, the word "Property" shall
include any portion of the Property and any interest therein, and
the phrases "attorneys' fees" and "counsel fees" shall include
any and all attorneys', paralegal and law clerk fees and
disbursements, including, but not limited to fees and
disbursements at the pre-trial, trial and appellate levels
incurred or paid by Lender in protecting its interest in the
Property, the Leases and the Rents and enforcing its rights under
this Security Instrument.
Section 20.2 Headings, Etc. The headings and captions of
various Sections of this Security Instrument are for convenience
of reference only and are not to be construed as defining or
limiting, in any way, the scope or intent of the provisions
hereof.
Article 21 - MISCELLANEOUS PROVISIONS
Section 21.1 No Oral Change. This Security Instrument, and
any provisions hereof, may not be modified, amended, waived,
extended, changed, discharged or terminated orally or by any act
or failure to act on the part of Borrower or Lender, but only by
an agreement in writing signed by the party against whom
enforcement of any modification, amendment, waiver, extension,
change, discharge or termination is sought.
Section 21.2 Liability. If Borrower consists of more than
one person, the obligations and liabilities of each such person
hereunder shall be joint and several. This Security Instrument
shall be binding upon and inure to the benefit of Borrower and
Lender and their respective successors and assigns forever.
Section 21.3 Duplicate Originals; Counterparts. This
Security Instrument may be executed in any number of duplicate
originals and each duplicate original shall be deemed to
be an original. This Security Instrument may be executed in
several counterparts, each of which counterparts shall be deemed
an original instrument and all of which together shall constitute
a single Security Instrument. The failure of any party hereto to
execute this Security Instrument, or any counterpart hereof,
shall not relieve the other signatories from their obligations
hereunder.
Section 21.4 Number and Gender. Whenever the context may
require, any pronouns used herein shall include the corresponding
masculine, feminine or neuter forms, and the singular form of
nouns and pronouns shall include the plural and vice versa.
Section 21.5 Subrogation. If any or all of the proceeds of
the Note have been used to extinguish, extend or renew any
indebtedness heretofore existing against the Property, then, to
the extent of the funds so used, Lender shall be subrogated to
all of the rights, claims, liens, titles, and interests existing
against the Property heretofore held by, or in favor of, the
holder of such indebtedness and such former rights, claims,
liens, titles, and interests, if any, are not waived but rather
are continued in full force and effect in favor of Lender and are
merged with the lien and security interest created herein as
cumulative security for the repayment of the Debt, the
performance and discharge of Borrower's obligations hereunder,
under the Note and the Other Security Documents and the
performance and discharge of the Other Obligations.
Section 21.6 Entire Agreement. The Note, this Security
Instrument and the Other Security Documents constitute the entire
understanding and agreement between Borrower and Lender with
respect to the transactions arising in connection with the Debt
and supersede all prior written or oral understandings and
agreements between Borrower and Lender with respect thereto.
Borrower hereby acknowledges that, except as incorporated in
writing in the Note, this Security Instrument and the Other
Security Documents, there are not, and were not, and no persons
are or were authorized by Lender to make, any representations,
understandings, stipulations, agreements or promises, oral or
written, with respect to the transaction which is the subject of
the Note, this Security Instrument and the Other Security
Documents.
Section 21.7 Acknowledgment of Receipt. Borrower hereby
acknowledges receipt, without charge, of a true copy of this
Security Instrument.
Article 22 - LOCAL LAW PROVISIONS
The provisions set forth on Exhibit C annexed hereto are
incorporated herein by reference as if fully set forth herein.
IN WITNESS WHEREOF, THIS SECURITY INSTRUMENT has been
executed by
Borrower as of the date first above written.
BORROWER:
MARLTON PLAZA ASSOCIATES II, L.P.
By: Marlton Plaza II LLC, a Delaware limited
liability company, its sole general partner
By: Montgomery CV Realty L.P., a Delaware limited
partnership, its sole member
By: Montgomery CV Realty Trust, a Delaware
business trust, its sole general partner
By: /s/Louis P. Meshon, Sr.
Louis P. Meshon, Sr.
President
EXHIBIT 2.4
PROMISSORY NOTE
$11,650,000.00 June 24, 1998
Philadelphia, Pennsylvania
FOR VALUE RECEIVED, and upon the terms and conditions set
forth herein, Marlton Plaza Associates II, L.P., a limited
partnership of the State of Delaware ("Borrower"), promises to
pay to the order of GMAC COMMERCIAL MORTGAGE CORPORATION, a
California corporation ("Lender"), at Lender's office located at
650 Dresher Road, P.O. Box 809, Horsham, Pennsylvania 19044-0809,
Attn: Servicing Accounting Manager, or at such other place as
Lender may designate to Borrower in writing from time to time,
the principal sum of ELEVEN MILLION SIX HUNDRED FIFTY THOUSAND
DOLLARS ($11,650,000.00), or so much thereof as is outstanding
and unpaid, together with interest thereon at an annual rate
equal to the sum of (i) 140 basis points (the "Spread") and (ii)
the Benchmark ten (10) year U.S. Treasury Security (the "Index")
as quoted by Lender, with the sum rounded up or down to the fifth
decimal place. ("Interest Rate"), in lawful money of the United
States of America, which, at the time of payment, shall be legal
tender in payment of all debts and dues, public and private.
1. COMPUTATION OF INTEREST. Interest under this Note
shall be paid in arrears and shall be calculated based on a
360-day year and paid for the actual number of days elapsed for
any whole or partial month in which interest is being calculated.
Interest shall accrue from the date on which funds are advanced
(regardless of the time of day such advance is made) through and
including the day on which funds are repaid, unless payment is
received by Lender prior to the time set forth in Section 2.03
hereof.
2. PAYMENT OF PRINCIPAL AND INTEREST.
2.01 Principal and Interest Payments. Borrower shall
pay principal and interest due under this Note as follows:
Borrower shall pay consecutive monthly
installments of interest only (each a "Monthly Interest Amount")
beginning on the first day of August, 1998, and continuing on the
first day of each and every successive month thereafter (each a
"Payment Date") through and including July 1, 2003; and
Borrower shall pay consecutive monthly
installments of principal and interest in the amount of
$81,984.16 (each a "Monthly Amount"), based on an amortization
schedule with respect to the stated principal amount evidence by
this Note, of twenty-five (25) years, beginning on the first day
of August, 2003 and continuing on each Payment Date through and
including the Payment Date immediately prior to the Maturity Date
(as defined below); and
On the first day of July, 2008 ("Maturity Date"),
the entire outstanding principal balance hereof, together with
all accrued but unpaid interest thereon and any other amounts due
under the Note or the other Loan Documents (hereafter defined)
shall be due and payable in full.
2.02 Payment of Short Interest. If this Note is
executed on a date other than the first day of a calendar month,
Borrower shall pay to Lender, contemporaneously with the
execution of this Note, an interest payment calculated by
multiplying (a) the number of days from and including the date of
this Note to and including the last day of such month (b) by a
daily rate based on the Interest Rate calculated for a 360 day
year.
2.03 Method of Payment. Each payment due hereunder
shall not be deemed received by Lender until received on a
Business Day (as hereafter defined) in Federal funds immediately
available to Lender prior to 2:00 p.m. local time at the place
then designated by Lender. Any payment received on a Business
day after the time established by the preceding sentence, shall
be deemed to have been received on the immediately following
Business Day for all purposes, including, without limitation, the
accrual of interest on principal.
2.04 Application of Payments. Payments under this Note
shall be applied first to the payment of late fees and other
costs and charges due in connection with this Note, as Lender
determines in its sole discretion, then to the payment of accrued
but unpaid interest, and then to reduction of the outstanding
principal balance (in inverse order of maturity whether or not
then due), but such application shall not reduce the amount of
the fixed monthly installments required to be paid hereunder
unless partial prepayments are expressly permitted in the event
of partial release of collateral under Section 2.05 (b) below.
No principal amount repaid may be reborrowed. All amounts due
under this Note shall be payable without setoff, counterclaim or
any other deduction whatsoever.
2.05 Loan Repayment and Defeasance.
(a) Repayment. Other than as set forth in this
Section 2.05, or as required or permitted pursuant hereto in
connection with a casualty or condemnation, Borrower shall have
no right to prepay all or any portion of the indebtedness
evidenced by this Note (sometimes referred to in this Section
2.05 as the "Loan") during the period commencing on the date
hereof through, but not including, the Payment Date which is six
(6) months prior to the Maturity Date ("Optional Prepayment
Date"). From and after the Optional Prepayment Date, the Loan
may be prepaid in whole or in part, on any Payment Date, together
with accrued interest to the date of such prepayment on the
principal amount prepaid, without penalty or premium. Any such
prepayment shall be subject, in each case, to the satisfaction of
the condition precedent that Borrower shall provide not less than
thirty (30) days prior written notice to Lender specifying the
Payment Date on which such prepayment is to occur and indicating
the principal amount of the Note to be so prepaid.
(b) Voluntary Defeasance of the Note. On or
after the date ("Optional Defeasance Date") which is the earlier
to occur of (i) three years after the date of this Note or (ii)
two years after the Loan is sold into a securitization
("Securitization"), and subject to confirmation from applicable
rating agencies ("Rating Agencies") having been obtained
therefor and to the terms and conditions set forth in this
Section 2.05(b), Borrower may defease all (but not less than all)
of the Loan ("Defeasance"). No Defeasance shall be required on
or after the Optional Prepayment Date. Defeasance shall be
subject to satisfaction of each of the following conditions
precedent:
(i) Borrower shall provide not less than
thirty (30) days prior written notice to Lender specifying a date
("Defeasance Date") which shall be a Payment Date, on which the
amount required to defease the Loan ("Defeasance Deposit") is to
be made and on which the Defeasance is to occur, as well as the
anticipated outstanding principal amount of this Note as of the
Defeasance Date.
(ii) Borrower shall pay to Lender all
accrued and unpaid interest on the outstanding principal balance
of this Note to but not including the Defeasance Date.
(iii) Borrower shall pay to Lender all
other sums, not including scheduled interest or principal
payments, then due under this Note, the Security Instrument
and any of the other Loan Documents (as defined below).
(iv) No Event of Default (as defined below)
shall exist on the Defeasance Date.
(v) Borrower shall pay to Lender the
required Defeasance Deposit for the Defeasance.
(vi) Borrower shall execute and deliver one
or more security agreements in form and satisfactory to Lender
(collectively, "Security Agreement"), creating a first priority
lien on, and security interest in, the Defeasance Deposit and the
U.S. Government Securities (as defined below) purchased with the
Defeasance Deposit in accordance with the provisions of Section
2.05(c).
(vii) Borrower shall deliver to Lender an
opinion of Borrower's counsel, which opinion shall be in form and
substance satisfactory to Lender in its sole discretion, stating,
among other things, that Lender has a perfected first priority
security interest in the U.S. Government Securities purchased
with the Defeasance Deposit.
(viii) If required by the applicable Rating
Agencies, Borrower also shall deliver or cause to be delivered
from Borrower's counsel a non-consolidation opinion with respect
to the Successor Borrower (as defined below), if any, which
opinion shall be in form and substance satisfactory to Lender in
its sole discretion and to the applicable Rating Agencies. In
addition, if the Loan is included in any REMIC formed pursuant to
a Securitization, Borrower also shall deliver or cause to be
delivered an opinion of Borrower's counsel, which opinion shall
be in form and substance satisfactory to Lender in its sole
discretion, stating that (A) after a Defeasance, the Loan will
continue to be a "qualified mortgage" within the meaning of
Section 860G of the United States Internal Revenue Code (as now
or hereafter amended, "Code") and (B) the REMIC will not fail to
maintain its status as a "real estate mortgage investment
conduit" within the meaning of Section 860D of the Code as a
result of such Defeasance.
(ix) Borrower shall deliver to Lender a
certification from Borrower, in form and substance satisfactory
to Lender, certifying that the requirements set forth in this
Section 2.05(b) have been satisfied.
(x) Borrower shall deliver such other
certificates, documents or instruments as Lender may reasonably
request, all of which shall be in form and substance acceptable
to Lender.
(xi) Borrower shall pay all reasonable
costs and expenses of Lender incurred in connection with the
Defeasance, including any costs and expenses associated with the
Release Instruments (as defined in Section 2.05(f) hereof) and
reasonable attorneys fees and expenses.
(xii) Borrower shall deliver to Lender a
confirmation, in form and substance satisfactory to Lender, by a
"Big Six" independent certified public accounting firm, that the
Defeasance Deposit is sufficient to pay all Scheduled Defeasance
Payments and other amounts required to be paid by Borrower
hereunder in connection with the proposed Defeasance.
(xiii) Borrower shall deliver to Lender
confirmation, in form and substance satisfactory to Lender, that
all conditions to Defeasance have been met from any applicable
Rating Agency that has required as a condition to Defeasance that
such conditions have been met.
(c) Purchase of U.S. Government Securities. In
connection with the Defeasance of this Note, Borrower hereby
appoints Lender as its agent and attorney-in-fact for the purpose
of using the Defeasance Deposit to purchase direct, non-callable
obligations of (or non-callable obligations, fully guaranteed as
to timely payment by) the United States of America ("U.S.
Government Securities") (which purchases, if made by Lender,
shall be made on an arms-length basis at then prevailing market
rates) which provide payments on or prior to, but as close as
possible to, all successive Payment Dates after the Defeasance
Date, (including the outstanding principal balance of this Note
due on the Maturity Date), and in amounts equal to the full
amounts due on each Payment Date under this Note ("Scheduled
Defeasance Payments"). Borrower, pursuant to the Security
Agreement or other appropriate document, shall irrevocably
authorize and direct that the payments received from the U.S.
Government Securities may be made directly to Lender and applied
to satisfy the obligations of the Borrower under this Note. In
connection with the Defeasance of the Loan, any portion of the
Defeasance Deposit in excess of the amount necessary to purchase
the U.S. Government Securities required by this Section 2.05 (c)
and satisfy Borrower's obligations under Section 2.05 shall be
remitted to Borrower. Any amounts received in payment on the
U.S. Government Securities in excess of the amounts necessary to
make monthly payments pursuant to Section 2 (including payments
due on the Maturity Date) shall treated in accordance with the
terms of Section 2.04 hereof.
(d) Successor Borrower Option. If requested by
Borrower, in connection with a Defeasance of the Loan, Lender, at
Borrower's expense, shall establish or designate one or more
successor entities ("Successor Borrower") and Borrower shall
transfer and assign all obligations, rights and duties under and
to this Note, together with the pledged U.S. Government
Securities to the Successor Borrower. The Successor Borrower
shall assume in writing the obligations under this Note, the
Security Agreement and the other Loan Documents, by agreements in
form and substance satisfactory to Lender, whereupon Borrower
shall be relieved of its obligations thereunder. Borrower shall
pay $1,000 to any such Successor Borrower as consideration for
assuming Borrower's obligations under the Note and the Security
Agreement. Notwithstanding anything in this Note or the Security
Instrument to the contrary, no other assumption fee shall be
payable upon a transfer of this Note in accordance with this
Section 2.05(d), but Borrower shall pay all out-of-pocket costs
and expenses incurred by Lender, including Lender's reasonable
attorneys fees and expenses, incurred in connection therewith.
(e) Repayment Upon Other Events. If all or any
part of the principal amount of this Note is prepaid following
Defeasance of this Note or upon acceleration of this Note
following the occurrence of an Event of Default prior to the
Optional Prepayment Date, then, in addition to such principal
payment, Borrower shall be required to make such payments ("Yield
Maintenance Payments") in an amount equal to the greater of (i)
one percent (1%) of the principal amount being repaid, or (ii)
the positive excess, if any, of (A) the aggregate respective
present values of all scheduled interest and principal payments
payable on each Payment Date in respect of this Note for the
period from the date of such prepayment to and including the
Maturity Date, discounted at an interest rate per annum equal to
the Treasury Constant Maturity Yield Index (defined below) over
(B) the then current outstanding principal amount of this Note.
For purposes hereof, "Treasury Constant Maturity Yield Index"
shall mean the average yield for "This Week" as reported
by the Federal Reserve Board in Federal Reserve Statistical
Release H.15(519) ("FRB Release") published during the second
full week preceding the date of such prepayment for instruments
having a maturity coterminous with the remaining term of this
Note. In the event the FRB Release is no longer published,
Lender shall select a comparable publication to determine the
Treasury Constant Maturity Yield Index. If there is no Treasury
Constant Maturity Yield Index for instruments having a maturity
coterminous with the remaining term of this Note, then the
weighted average yield to maturity of the Treasury Constant
Maturity Yield Indices with maturities next longer and shorter
than such remaining average life to maturity shall be used,
calculated by averaging (and rounding upward to the nearest whole
multiple of 1/100 of 1% per annum, if the average is not such a
multiple) the yields of the relevant Treasury Constant Maturity
Yield Indices (rounded, if necessary, to the nearest 1/100
of 1% with any figure of 1/200 of 1% or above rounded upward).
The Yield Maintenance Payments to be paid in connection with any
prepayment under this Section 2.05(e) shall be determined by
Lender and shall be conclusive and binding on Borrower (absent
manifest error). For purposes of this Section 2.05(e), the
unpaid principal amount due on this Note on the date of
prepayment shall be determined after giving effect to any payment
of scheduled amortization made on such date.
(f) Release of the Mortgaged Property. No
repayment, prepayment or Defeasance of all or any portion of this
Note shall cause, give rise to a right to require, or otherwise
result in, the release of the real or personal property subject
to the lien or mortgage created by the Security Instrument (as
defined below) (which real or personal property subject to the
lien or mortgage created by the Security Instrument is referred
to in this Section 2.05(f) as the "Mortgaged Property"), except
as follows:
(i) If Borrower has elected Defeasance, and
the requirements of Section 2.05(b) have been satisfied, the
Mortgaged Property shall be released from the lien and mortgage
created by the Security Instrument, whereupon the U.S. Government
Securities pledged pursuant to the Security Agreement shall be
the sole source of Borrower's collateral securing this Note. The
Security Instrument shall otherwise remain in full force and
effect as to provisions not pertaining to the Mortgaged Property.
(ii) In connection with the release of the
Mortgaged Property contemplated in this Section 2.05(f), Borrower
shall submit to Lender, not less than thirty (30) days prior to
the Defeasance Date, a release of the Mortgaged Property (and
related Loan Documents approved by Lender) for execution by
Lender which shall be in a form appropriate in the applicable
state and otherwise satisfactory to Lender in its reasonable
discretion, along with all other documentation Lender reasonably
requires to be delivered by Borrower in connection with such
release (collectively, "Release Instruments"), together with
a certification from Borrower, in form and substance satisfactory
to Lender, certifying that such documentation (A) is in
compliance with all Legal Requirements, and (B) will effect such
releases in accordance with the terms of this Section 2.05.
3. SECURITY; LOAN DOCUMENTS. The indebtedness evidenced
by this Note and the obligations created hereby (including
without limitation the amounts authorized by Section 4 to be
collected by Lender and the Prepayment Consideration (when due
hereunder) are secured by, among other things, a first mortgage,
security interest and lien on certain real and personal property
collateral of Borrower, tangible and intangible, as described
more particularly in that certain Deed of Trust and Security
Agreement or Mortgage and Security Agreement, as applicable
(either, "Security Instrument") from Borrower to Lender, dated as
of date hereof. The Security Instrument together with this Note
and all other documents to or of which Lender is a party or a
beneficiary now or hereafter evidencing, securing, guarantying,
modifying or otherwise relating to the indebtedness evidenced
hereby, and all extensions, renewals and modifications thereof,
are collectively referred to herein as the "Loan Documents."
4. DEFAULT.
4.01 Event of Default. The occurrence of any of the
following shall constitute an event of default ("Event of
Default") under this Note: (a) if any payment of principal and
interest or any other payment required under this Note is not
received by Lender on or before five (5) days after the date such
payment is due (except that no grace period is provided for the
payment of principal and interest due on the Maturity Date or
upon acceleration of indebtedness following the occurrence of an
Event of Default); or (b) if any default should occur under any
of the other Loan Documents which is not fully cured following
applicable notice or prior to the expiration of any applicable
grace or cure period. Upon the occurrence of an Event of
Default, at Lender's option, the outstanding principal balance of
this Note, together with all unpaid interest accrued thereon and
all other sums dues hereunder or under any other of the other
Loan Documents, shall, without notice or prior demand,
immediately become due and payable.
4.02 Late Charges. If any payment is not received by
Lender on or before the date on which such payment originally was
due (as such due date may be extended by applicable grace period,
if any), then, in addition to any default interest payments due
hereunder, Borrower also shall pay to Lender a late charge in an
amount equal to five percent (5.0%) of the amount of such overdue
payment to defray the expenses incurred by Lender in handling and
processing such delinquent payment and to compensate Lender for
the loss of the use of the delinquent payment. Such late charge
shall be immediately due and payable, without notice or demand
therefor.
4.03 Default Interest Rate. If this Note is not paid
in full on or before the Maturity Date or the date on which the
due date of the indebtedness has been accelerated pursuant to the
provisions hereof, the unpaid principal and accrued interest and
other amounts then due shall bear interest at a rate per annum
("Default Interest Rate") equal to the lesser of (a) five percent
(5.0%) in excess of the Interest Rate or (b) the maximum rate of
interest, if any, which may be charged or collected from Borrower
under applicable law. In addition, Lender shall have the right,
without acceleration of the indebtedness, to collect interest at
the Default Interest Rate on any payment due hereunder (including
without limitation late charges and fees for legal counsel) which
is not received by Lender on or before the date on which such
payment originally was due (as such due date may be extended by
applicable grace period, if any). Interest at the Default
Interest Rate shall be immediately due and payable from the due
date specified herein and shall accrue until all Events of
Default have been fully cured or full payment is received, as
applicable.
4.04 Interest on Judgments. Interest shall accrue on
any judgment obtained by Lender in connection with the
enforcement or collection of this Note until such judgment
amount is paid in full at a rate equal to the greater of (a) the
Default Interest Rate or (b) the legal rate applicable to
judgments within such jurisdiction; provided, however, that
interest shall not accrue at a rate in excess of the maximum rate
of interest, if any, which may be charged or collected from
Borrower under applicable law.
4.05 Cumulative Remedies; Attorney Fees. The remedies
of Lender in this Note and in the other Loan Documents, or at law
or in equity, shall be cumulative and concurrent, and may be
pursued singly, successively or together in Lender's sole
discretion and as often as occasion therefor shall arise. If
Borrower's obligations under this Note or any of the other Loan
Documents are enforced by Lender through an attorney-at-law, or
any payment due under this Note or the other Loan Documents is
collected by or through an attorney-at-law or collection agency,
Borrower agrees to pay all costs incurred by Lender in connection
therewith, including, but not limited to, reasonable fees and
disbursements of legal counsel (whether with respect to a
retained firm or Lender's in-house staff) and collection agency
costs, whether or not suit be brought. No provision of this
Section 4 shall be construed as an agreement or privilege to
extend the date on which any required payment is due (subject to
the applicable grace period, if any), nor as a waiver of any
other right or remedy accruing to Lender by reason of the
occurrence of an Event of Default. The payments required under
this Section 4 shall be in addition to, and shall in no way
limit, any other rights and remedies provided for in this Note or
any of the other Loan Documents, nor any other remedies provided
by law or in equity, and shall be added to the principal
evidenced by this Note and deemed secured by the Security
Instrument and other Loan Documents.
5. LIMITATIONS ON RECOURSE. Notwithstanding anything to
the contrary contained in this Note, the liability of Borrower
and of any general partner, principal or member of Borrower to
pay the indebtedness evidenced by this Note and for the
performance of the other agreements, covenant and obligations
contained herein and in the other Loan Documents shall be limited
as set forth in Article 15 of the Security Instrument.
6. NO USURY. This Note is subject to the express
condition that at no time shall Borrower be required or obligated
to pay interest (or any other amount agreed to be paid hereunder
which shall be deemed to be interest) at a rate which would
subject Lender to either civil or criminal liability as a result
of being in excess of the maximum interest rate which Borrower is
permitted by applicable law to pay. If, from any circumstance
whatsoever, Borrower is at any time required or obligated to pay
interest (or any other amount agreed to be paid hereunder shall
be deemed to be interest) at a rate in excess of such maximum
rate, then the amount to be paid immediately shall be reduced to
such maximum rate, and, as required by applicable law, all
previous payments in excess of such maximum shall be deemed to
have been payments in reduction of the principal balance owing
under this Note in the inverse order of maturity (whether or not
then due) or, at the option of Lender, be paid over to Borrower
and not to the payment of interest. All sums paid or agreed to
be paid to Lender for the use, forbearance or detention of the
indebtedness evidenced hereby shall, to the extent permitted by
applicable law, be amortized, prorated, allocated and spread
throughout the full stated term of this Note until payment in
full so that the rate or amount of interest on account of said
indebtedness does not exceed the maximum lawful rate of interest
from time to time in effect and applicable to this Note for so
long as the Note is outstanding. This Section will control all
agreements between Borrower and Lender in connection with this
Note.
7. GENERAL CONDITIONS.
7.01 No Waiver by Lender. No failure to accelerate the
debt evidenced hereby nor failure or delay in exercising any
other right or remedy upon the occurrence of an Event of Default
hereunder, or any acceptance of a partial or past due payment, or
indulgences granted from time to time shall be construed (a) as a
novation of this Note or as a reinstatement of the indebtedness
evidenced hereby, (b) as a waiver or impairment of Lender's right
of acceleration or any other right or remedy available to Lender
upon the occurrence of an Event of Default, or (c) as a waiver of
Lender's right thereafter to insist upon strict compliance with
the terms of this Note or any of the other Loan Documents; and
Borrower hereby expressly waives the benefit of any statute or
rule of law or equity now provided, or which may hereafter be
provided, which would produce a result contrary to or in conflict
with the foregoing. No extension of the time for payment of any
amount due under this Note or under any of the other Loan
Documents made by Lender's agreement with any person now or
hereafter liable for the payment thereof shall operate to
release, discharge, modify, change or affect the original
liability of Borrower under this Note or any such other person,
either in whole or in part unless Lender agrees otherwise in
writing.
7.02 Borrower's Waivers. Borrower, for itself and all
others who may become liable for payment of all or any part of
the indebtedness evidenced by this Note, hereby waives
presentment for payment, demand, protest, and notice of dishonor,
protest, nonpayment, demand, intent to accelerate, and
acceleration. Borrower, for itself and all others who may become
liable for payment of all or any part of the indebtedness
evidenced by this Note, hereby further waives and renounces, to
the fullest extent permitted by law, all rights to the benefits
of any moratorium, reinstatement, marshalling, forbearance,
valuation, stay, extension, redemption, appraisement, exemption
and homestead now or hereafter provided by the Constitution and
laws of the United States of America and of each state thereof,
both as to party and property (real and personal), against the
enforcement and collection of the obligations evidenced by this
Note or the other Loan Documents.
7.03 Unconditional Payment. If any payment received by
Lender hereunder shall be deemed by a court of competent
jurisdiction to have been a voidable preference or fraudulent
conveyance under any bankruptcy, insolvency or other debtor
relief law, then the obligation to make such payment shall
survive any cancellation or satisfaction of this Note or
return thereof to Borrower and shall not be discharged or
satisfied with any prior payment thereof or cancellation of this
Note, but shall remain a valid and binding obligation enforceable
in accordance with the terms and provisions hereof, and such
payment shall be immediately due and payable upon demand. No
release of any security for this Note or any party liable for
payment of this Note shall release or affect the liability of
Borrower or any other party who may become liable for payment of
all or any part of the indebtedness evidenced by this Note.
Lender may release any guarantor, surety or indemnitor of this
Note from liability, in every instance without the consent of
Borrower hereunder and without waiving any rights which Lender
may have hereunder or under any of the other Loan Documents or
under applicable law or in equity.
7.04 Authority. Borrower represents that Borrower has
full power, authority and legal right to execute, deliver and
perform its obligations pursuant to this Note, that the
execution, delivery and performance of this Note has been duly
authorized, that the person executing this Note on Borrower's
behalf has authority to do so, and that this Note, once executed
by Borrower, constitutes the valid and binding obligation of
Borrower, enforceable in accordance with its terms.
7.05 Negotiable Instrument. Borrower agrees that this
Note shall be deemed a negotiable instrument, even though this
Note, absent this paragraph, may not otherwise qualify as a
negotiable instrument under applicable law.
7.06 Sale of Loan by Lender. Lender shall have the
right to transfer, sell or assign this Note, the Security
Instrument and the other Security Documents, and the
Obligations hereunder.
8. MISCELLANEOUS.
8.01 Notices. All notices and other communications
under this Note or under the other Loan Documents are to be in
writing, addressed to the respective party as set forth in this
section, and shall be deemed to have been duly given (a) upon
delivery, if delivered in person with receipt acknowledged by the
recipient thereof, (b) one (1) business day after having been
deposited for overnight delivery, fee prepaid, with any reputable
overnight courier service, or (c) three (3) business days after
having been deposited in any post office or mail depository
regularly maintained by the U.S. Postal Service and sent by
registered or certified mail, postage prepaid, return receipt
requested. Initial addresses for each party are as follows:
Borrower: Marlton Plaza Associates II, L.P.
c/o Marlton Plaza II LLC
Plymouth Plaza
580 West Germantown Pike, Suite 200
Plymouth Meeting, Pennsylvania 19462
Attn: Chief Financial Officer
Lender: GMAC Commercial Mortgage Corporation
650 Dresher Road
P.O. Box 1015
Horsham, Pennsylvania 19044-8015
Attn: Servicing-Executive Vice President
Each party may establish a new address from time to time by
written notice to the other given in accordance with this
section; provided, however, that no such change of address will
be effective until written notice thereof is actually received by
the party to whom such change of address is sent. Notice to
additional parties now or hereafter designated by a party
entitled to notice are for convenience only and are not required
for notice to a party to be effective in accordance with this
section.
8.02 Entire Agreement; Time of Essence. This Note,
together with the other Loan Documents and Lender's commitment
letter to Borrower, if any, contain the entire agreements between
Borrower and Lender relating to the subject matter hereof and
thereof, and supercede all prior discussions and agreements (oral
or written) relative hereto and thereto which are not contained
herein or therein. Borrower represents and warrants that it is
not relying on any promises, covenants, representations or
agreements in connection with this Note or the other Loan
Documents, other than as expressly set forth herein or therein.
In the event of any conflict between the terms of the Loan
Documents, the following order of priority shall be used to
resolve such conflict: The Note shall control over the Security
Instrument and the Security Instrument shall control over all
other Loan Documents. Time is of the essence with respect to
all provisions of this Note.
8.03 Modification. Neither this Note nor any of the
other Loan Documents may not be changed, waived, supplemented,
discharged or terminated orally or by any act or failure to act
on the part of Borrower or Lender, but only by an agreement in
writing signed by the party against whom enforcement thereof is
sought and then only to the extent expressly set forth in such
writing. No person other than a duly authorized officer or agent
of Lender shall be deemed an agent of Lender nor have any
authority to waive, modify, supplement or terminate in any manner
whatsoever any of the terms of this Note.
8.04 Binding Effect; Joint and Several Obligations.
The terms and provisions of this Note and the other Loan
Documents shall be binding upon and inure to the benefit of
Borrower and Lender and their respective heirs, executors, legal
representatives, successors, successors and permitted assigns,
whether by voluntary action of the parties or by operation of
law. The foregoing shall not be construed, however, to alter
any limitations or restrictions applicable to Borrower under the
other Loan Documents. If Borrower consists of more than one
person or entity, each shall be jointly and severally liable to
perform the obligations of Borrower under this Note and the other
Loan Documents.
8.05 Unenforceable Provisions. Any provision of this
Note or the other Loan Documents which may be determined by
competent authority to be prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective only
to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
8.06 Ambiguity and Construction of Certain Terms.
Neither this Note nor any uncertainty or ambiguity herein shall
be construed or resolved against Lender by virtue of the fact
that such document has originated with Lender as drafter.
Borrower acknowledges that it has reviewed this Note and has had
the opportunity to consult with counsel on same. This Note,
therefore, shall be construed and interpreted according to the
ordinary meaning of the words used so as to fairly accomplish the
purposes and intentions of the parties hereto. All personal
pronouns used herein, whether used in the masculine, feminine or
neuter gender, shall be deemed to include all other genders; the
singular shall include the plural and vice versa. Titles of
articles and sections are for convenience only and in no way
define, limit, amplify or describe the scope or intent of any
provisions hereof. "Herein," "hereof" and "hereunder" and
other words of similar import refer to this Note as a whole and
not to any particular section, paragraph or other subdivision;
"Section" refers to the entire section and not to any particular
subsection, paragraph of other subdivision. Reference to days for
performance shall mean calendar days unless Business Days are
expressly indicated.
8.07 Governing Law. This Note and the other Loan
Documents shall be interpreted, construed and enforced according
to the laws of the state in which the real property encumbered by
the Security Instrument is located (without giving effect to its
conflict of laws rules).
8.08 Consent to Jurisdiction. Borrower and Lender, by
its acceptance of this Note, agree and consent to the exclusive
jurisdiction and venue of any state or federal court sitting in
the county and state where the real property encumbered by the
Security Instrument is located with respect to any legal action,
proceeding, or controversy between them and hereby expressly
waive any and all rights under applicable law or in equity to
object to the jurisdiction and venue of said courts. Borrower
further irrevocably consents to service of process by certified
mail, return receipt requested, to Borrower at the address for
Borrower last provided to Lender in accordance with the notice
provision of this Note and agrees that such service shall be
effective ten (10) days after mailing. Nothing herein shall,
however, preclude or prevent Lender from bringing any one or more
actions against Borrower in any other jurisdiction as may be
necessary to enforce or realize upon the Security or other
collateral provided for this Note.
8.09 WAIVER OF JURY TRIAL. BORROWER HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT BORROWER MAY HAVE
TO TRIAL BY JURY IN ANY LEGAL ACTION, PROCEEDING, OR
COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING
DIRECTLY OR INDIRECTLY TO THE INDEBTEDNESS EVIDENCED BY THIS
NOTE; THE APPLICATION OR COMMITMENT FOR THE LOAN EVIDENCED BY
THIS NOTE; THE INTERPRETATION, CONSTRUCTION, VALIDITY,
ENFORCEMENT OR PERFORMANCE OF THIS NOTE OR ANY OF THE OTHER LOAN
DOCUMENTS; OR ANY ACTS OR OMISSION OF LENDER, ITS OFFICERS,
EMPLOYEES, DIRECTORS OR AGENTS IN CONNECTION WITH ANY OF THE
FOREGOING.
8.10 Tax Identification Number. Borrower represents
and warrants that its current tax identification number is:
____________________________________________.
IN WITNESS WHEREOF, Borrower has executed this Note under
seal as of the date first above written.
MARLTON PLAZA ASSOCIATES II, L.P.
By: Marlton Plaza II LLC, a Delaware limited
liability company, its sole general partner
By: Montgomery CV Realty L.P., a Delaware limited
partnership, its sole member
By: Montgomery CV Realty Trust, a Delaware
business trust, its sole general partner
By: /s/ Louis P. Meshon, Sr.
Louis P. Meshon, Sr.
President
PAY TO THE ORDER OF , WITHOUT RECOURSE.
GMAC COMMERCIAL MORTGAGE CORPORATION
By: ______________________________________________
Name: ____________________________________________
Title: ___________________________________________
Date: ____________________________________________
