SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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) April 26, 1996
BALCOR PENSION INVESTORS
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Exact Name of Registrant
Illinois 0-9198
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State or other jurisdiction Commission file number
2355 Waukegan Road
Suite A200
Bannockburn, Illinois 36-2943462
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Address of principal I.R.S. Employer
executive offices Identification
Number
60015
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Zip Code
Registrant's telephone number, including area code:
(847) 267-1600
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
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Huntington Plaza Shopping Center
In 1979, the Partnership funded a $1,429,476 loan collateralized by a
wrap-around mortgage on the Huntington Plaza Shopping Center. The borrower did
not pay the outstanding amount due under the loan at maturity in 1991 and
commenced bankruptcy proceedings. Pursuant to an agreement executed in 1993
with the holder of the second mortgage on the property (the "Second
Mortgagee"), the Partnership acquired title to the property in 1993 for the
outstanding amount then due under the loan. All mortgage liens were eliminated
although the agreement with the Second Mortgagee remained in effect.
On April 26, 1996, the Partnership contracted to sell the property for a sale
price of $2,400,000 to an unaffiliated party, J. Herzog & Sons, Inc. (the
"Purchaser"), a Colorado corporation. The Purchaser has deposited $50,000 into
an escrow account as earnest money. The closing is scheduled to occur on May
21, 1996.
At closing, $300,000 of the purchase price will be payable in the form of a
purchase money note (the "Note") collateralized by a junior mortgage on the
property. The note will accrue interest at a rate of 8% per annum and be
payable in monthly installments of principal and interest based on a 20-year
amortization schedule through maturity, ten years after closing. The remainder
of the purchase price will be payable in cash. Neither the General Partner,
its affiliates nor any unaffiliated third party will receive a commission in
connnection with the sale of the property. The General Partner will be
reimbursed by the Partnership for actual expenses incurred in connection with
the sale.
Net proceeds of the sale of the property are to be distributed first to the
Partnership and then to the Second Mortgagee in amounts equal to their
respective claims and other amounts due relating to the original borrower's
bankruptcy proceedings, with the remainder distributed 75% to the Partnership
and 25% to the Second Mortgagee. However, the Second Mortgagee has agreed to a
$100,000 reduction of its 25% share of residual proceeds, with the share
allocated to the Partnership increased by such amount. The Second Mortgagee has
further agreed to accept the Note as a portion of its 25% residual share. Based
on the terms of the sale, it is expected that the Partnership and Second
Mortgagee will receive approximately $1,865,000 and $487,000 (excluding
interest on the Note) of the sale proceeds, respectively.
The closing is subject to the satisfaction of numerous terms and conditions.
There can be no assurance that all of the terms and conditions will be complied
with and, therefore, it is possible the sale of the property may not occur.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
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(a) FINANCIAL STATEMENTS AND EXHIBITS:
None
(B) PRO FORMA FINANCIAL INFORMATION:
None
(C) EXHIBITS:
(2) Documents relating to the sale of Huntington
Plaza, Huntington, Indiana.
(a) Agreement of Sale and attachment thereto.
(b) First Amendment to Agreement of Sale.
(c) Form of Junior Mortgage and Security Agreement.
(d) Form of Principal Note.
(e) Satisfaction and Release.
No information is required under Items 1, 3, 4, 5, 6 and 8 and these items
have, therefore, been omitted.
Signature
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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.
BALCOR PENSION INVESTORS
By: Balcor Mortgage Advisors, an Illinois
general partnership, its general
partner
By: RGF-Balcor Associates,
an Illinois general partnership,
a partner
By: The Balcor Company,
a Delaware corporation,
a partner
By: /s/Jerry M. Ogle
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Jerry M. Ogle, Vice President
and Secretary
Dated: May 10, 1996
<PAGE>
AGREEMENT OF SALE
THIS AGREEMENT, entered into as of the 26 day of April, 1996, by and between J.
HERZOG & SONS, INC. ("Purchaser") and HUNTINGTON PLAZA LIMITED PARTNERSHIP, an
Illinois Limited Partnership ("Seller").
WITNESSETH:
1. PURCHASE AND SALE. Purchaser agrees to purchase and Seller agrees to sell
at the price of Two Million Six Hundred Fifty Thousand and No/100 Dollars
($2,650,000.00), that certain property ("Property") in Huntington, Indiana,
more particularly described on Exhibit A attached hereto, which Property is
known as Huntington Plaza.
2. PURCHASE PRICE. The Purchase Price shall be paid as follows:
a. Upon the execution of this Agreement, the sum of $25,000.00 ("Earnest
Money") to be held in escrow by and in accordance with the provisions of the
Escrow Agreement ("Escrow Agreement") attached hereto as Exhibit B;
b. The sum of $25,000.00 as additional Earnest Money upon the earlier of
April 8, 1996 or the date when Purchaser receives an appraisal acceptable to
its lender. The additional Earnest Money shall be held in escrow by and in
accordance with the provisions of the Escrow Agreement.
c. On the Closing Date (as hereinafter defined), $2,350,000.00
(inclusive of all Earnest Money) adjusted in accordance with the prorations by
federally wired "immediately available" funds.
d. On the Closing Date, Purchaser will deliver a purchase money note
("Note") in the form of Exhibit M attached hereto in the amount of $300,000.00
as a portion of the Purchase Price. The Note will be secured by a Mortgage in
the form of Exhibit N attached hereto.
e. Post-Closing Adjustment. The assessed value for real property taxes
for 1995 was increased. An appeal is presently pending seeking a reduction of
the aforesaid increase in the assessment of the Property. If there is a
successful reduction of the assessed value of the Property, then the Note will
be increased pursuant to the terms set forth in the Note and the Purchase Price
will be increased by the same amount. The increase in the Note and Purchase
Price will occur at such time after Closing upon the conclusion of the tax
appeal, but shall be effective as of the Closing Date. The tax appeal for 1995
taxes will be handled by Seller in its sole and absolute discretion. Any 1995
tax refunds received by Purchaser shall be remitted to Seller forthwith.
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3. TITLE COMMITMENT AND SURVEY.
a. Attached hereto as Exhibit C is a title commitment dated December 4,
1995 ("Title Commitment") for an owner's standard coverage title insurance
policy ("Title Policy") issued by First American Title Insurance Company
("Title Insurer"). The owner's Title Policy issued at Closing will be in the
amount of the Purchase Price subject only to real estate taxes not yet due and
payable, the general printed exceptions contained in the policy and the special
title exceptions set forth in Schedule B-Section II, Numbers 5 and 9 through
22, 25 through 28, 30 through 34, 36 and 37 of the Title Commitment. All of
the above are herein referred to as the "Permitted Exceptions". On the Closing
Date, Seller shall deliver a current certified rent roll to the Title Insurer
and the Permitted Exceptions shall be revised accordingly. The Title
Commitment shall be conclusive evidence of good title as therein shown as to
all matters insured by the policy, subject only to the exceptions therein
stated. On the Closing Date, Seller shall cause the Title Insurer to issue the
Title Policy or a "marked up" commitment in conformity with the Title
Commitment. Purchaser and Seller shall equally share the costs of the Title
Policy; however, Purchaser shall pay for "extended coverage" or any special
endorsements which Purchaser requires.
b. Purchaser acknowledges receipt of a survey ("Survey") of the Property
prepared by Land Surveying and Consulting, Inc. dated July 6, 1994 and
Purchaser approves the Survey. Prior to Closing, Seller shall have the survey
updated and re-certified to Purchaser. Purchaser and Seller shall equally
share the cost of the updated Survey. However, if Purchaser requires any
additional revisions to the Survey, Purchaser shall pay for such additional
work.
4. CONDITION OF TITLE/CONVEYANCE. Seller agrees to convey fee simple title
to the Property by Special Warranty Deed ("Deed") in recordable form subject
only to the Permitted Exceptions. If Seller is unable to convey title to the
Property subject only to the Permitted Exceptions because of the existence of
an additional title exception ("Unpermitted Exception"), then Purchaser can
elect to take title to the Property subject to the Unpermitted Exception or
terminate this Agreement. Notwithstanding the aforesaid, Seller shall either
remove all liens of a definite and ascertainable amount or cause the Title
Insurer to issue a Title Indemnity insuring over such liens. If Purchaser
elects to terminate this Agreement, then the Earnest Money plus all accrued
interest shall be delivered to the Purchaser and, subject to the survival
provisions of Paragraph herein, neither party shall have any further liability
hereunder.
5. PAYMENT OF CLOSING COSTS. Purchaser and Seller shall equally share the
costs of the documentary stamps (if any) to be paid with reference to the Deed
and all other stamps, intangible, documentary, recording, sales tax and surtax
imposed by law with reference to any other documents delivered in connection
with this Agreement.
6. DAMAGE, CASUALTY AND CONDEMNATION.
a. If the Property suffers damage as a result of any casualty prior to
the Closing Date and can be repaired or restored in the case of real property
for $100,000 or less, then Seller shall commence the repair or restoration in
an expeditious manner. Seller shall retain all insurance proceeds. If the
cost of repair and restoration exceeds those amounts, then Seller can elect to
either: (a) repair and restore same, in which event the Closing Date will be
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extended until such date as may reasonably be required to complete the repair
or restoration; or (b) terminate this Agreement upon notice to Purchaser served
within twenty (20) business days of such casualty. If Seller elects to
terminate this Agreement pursuant to this Paragraph, then Purchaser will have
the option to accept the Property in its damaged condition together with an
assignment from Seller of all insurance proceeds and receive a credit at
Closing in the amount of the deductible, provided Purchaser notifies Seller by
notice served within twenty (20) days after receipt of Seller's notice of
election to terminate.
b. If condemnation proceedings ("Proceedings") have been instituted
against the Property and such Proceedings are in an amount in excess of
$100,000.00, then Purchaser can elect to either take the Property subject to
the Proceedings and an assignment of Seller's interest in the Proceedings or
terminate this Agreement. If Purchaser elects to terminate this Agreement, it
shall be by notice to the Seller within five (5) days after Seller notifies
Purchaser of the Proceedings.
c. If the Agreement is terminated pursuant to this Paragraph, then all
Earnest Money plus the interest accrued thereon shall be returned to the
Purchaser and, subject to the survival provisions of Paragraph herein, neither
party shall have any further liability hereunder.
7. AS-IS CONDITION.
a. Seller acquired title to the Property by virtue of a deed in lieu of
foreclosure, and therefore, except as may be specifically provided for herein,
Seller cannot make any representations as to the condition of the Property upon
which Purchaser can rely. Any information which Seller has as to the leases is
based solely upon information which Seller obtained subsequent to its
acquisition of the Property. Purchaser is not relying on Seller having made
any inquiry as to the condition of the Property or the leases. Purchaser
acknowledges and agrees that it will be purchasing the Property based solely
upon its inspection and investigations of the Property and that Purchaser will
be purchasing the Property "AS IS" and "WITH ALL FAULTS" based upon the
condition of the Property as of the date of this Agreement, subject to
reasonable wear and tear and loss by fire or other casualty or condemnation
from the date of this Agreement until the Closing Date. Without limiting the
foregoing, Purchaser acknowledges that, except as may otherwise be specifically
set forth elsewhere in this Agreement, neither Seller nor its consultants or
agents have made any other representations or warranties of any kind upon which
Purchaser is relying as to any matters concerning the Property, including, but
not limited to, the condition of the land or any improvements, the existence or
nonexistence of asbestos, lead in water, lead in paint, radon, underground or
aboveground storage tanks, petroleum, toxic waste or any Hazardous Materials or
Hazardous Substances (as such terms are defined below), the tenants of the
Property or the leases affecting the Property, economic projections or market
studies concerning the Property, any development rights, taxes, bonds,
covenants, conditions and restrictions affecting the Property, water or water
rights, topography, drainage, soil, subsoil of the Property, the utilities
serving the Property or any zoning, environmental or building laws, rules or
regulations affecting the Property. Seller makes no representation that the
Property complies with Title III of the Americans With Disabilities Act or any
fire codes or building codes. With reference to Hazardous Materials or
Hazardous Substances, Purchaser hereby releases Seller from any and all
liability in connection with any claims which Purchaser may have against
Seller, and Purchaser hereby agrees not to assert any claims, for damage, loss,
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compensation, contribution, cost recovery or otherwise, against Seller, whether
in tort, contract or otherwise, relating directly or indirectly to the
existence of asbestos or Hazardous Materials or Hazardous Substances on, or
environmental conditions of, the Property or arising under the Environmental
Laws (as such term is hereinafter defined) or relating in any way to the
quality of the indoor or outdoor environment at the Property. This release
shall survive the Closing. As used herein, the term "Hazardous Materials" or
"Hazardous Substances" means (i) hazardous wastes, hazardous materials,
hazardous substances, hazardous constituents, toxic substances or related
materials, whether solids, liquids or gases, including but not limited to
substances defined as "hazardous wastes", "hazardous materials", "hazardous
substances," "toxic substances," "pollutants," "contaminants," "radioactive
materials," or other similar designations in, or otherwise subject to
regulation under, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), 42 U.S.C. Section 9601 et seq.;
the Toxic Substance Control Act ("TSCA"), 15 U.S.C. Section 2601 et seq.; the
Hazardous Materials Transportation Act, 49 U.S.C. Section 1802; the Resource
Conservation and Recovery Act ("RCRA"), 42 U.S.C. Section 9601, et seq.; the
Clean Water Act ("CWA"), 33 U.S.C. Section 1251 et seq.; the Safe Drinking
Water Act, 42 U.S.C. Section 300f et seq.; the Clean Air Act ("CAA"), 42 U.S.C.
Section 7401 et seq.; and in any permits, licenses, approvals, plans, rules,
regulations or ordinances adopted, or other criteria and guidelines promulgated
pursuant to the preceding laws or other similar federal, state or local laws,
regulations, rules or ordinance now or hereafter in effect relating to
environmental matters (collectively the "Environmental Laws"); and (ii) any
other substances, constituents or wastes subject to any applicable federal,
state or local law, regulation or ordinance, including any Environmental Law,
now or hereafter in effect, including but not limited to (A) petroleum,
(B) refined petroleum products, (C) waste oil, (D) waste aviation or motor
vehicle fuel and (E) asbestos, (F) lead in water, paint or elsewhere, (G)
radon, (H) Polychlorinated Biphenyls (PCB's), and (I) ureaformaldehyde.
b. Seller has provided to Purchaser certain unaudited historical
financial information regarding the Property relating to certain periods of
time in which Seller owned the Property. Seller and Purchaser hereby
acknowledge that such information has been provided to Purchaser at Purchaser's
request solely as illustrative material. Except as may otherwise be
specifically set forth elsewhere in this Agreement, Seller makes no
representation or warranty that such material is complete or accurate or that
Purchaser will achieve similar financial or other results with respect to the
operations of the Property, it being acknowledged by Purchaser that Seller's
operation of the Property and allocations of revenues or expenses may be vastly
different than Purchaser may be able to attain. Purchaser acknowledges that it
is a sophisticated and experienced purchaser of real estate and further that
Purchaser has relied upon its own investigation and inquiry with respect to the
operation of the Property and releases Seller from any liability with respect
to such historical information.
8. CLOSING.
a. The closing ("Closing") of this transaction shall be on May 8, 1996
("Closing Date"), at the office of the Seller's attorney, at which time Seller
shall deliver possession of the Property to Purchaser.
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b. Upon Notice delivered to the Seller, no later than May 1, 1996,
Purchaser shall have the right to extend the Closing Date to June 15, 1996
("Extended Closing Date") provided that the Notice is accompanied by a
cashier's or unendorsed certified check in the sum of $50,000.00 as additional
Earnest Money to be deposited with and held by Escrow Agent in accordance with
the provisions of the Escrow Agreement. Thereafter, all references herein to
the Closing Date shall mean the Extended Closing Date. The additional deposit
of $50,000.00 shall be credited to the balance of the Purchase Price due at
Closing.
9. CLOSING DOCUMENTS.
a. On the Closing Date, Purchaser shall deliver to Seller an executed
closing statement, the executed Note, the executed Mortgage, the balance of the
Purchase Price, and such other documents as may be reasonably required in order
to consummate the transaction as set forth in this Agreement.
b. On the Closing Date, Seller shall deliver to Purchaser possession of
the Property; the Deed (in the form of Exhibit D attached hereto) subject to
the Permitted Exceptions and those Unpermitted Exceptions waived by Purchaser;
an executed closing statement; an executed assignment and assumption of all
service contracts (in the form of Exhibit E attached hereto); an executed
assignment and assumption of all leases and security deposits (in the form of
Exhibit F attached hereto); updated rent roll; a notice to the tenants of the
transfer of title and the assumption by Purchaser of the landlord's obligations
under the leases and the obligation to refund the security deposits (in the
form of Exhibit G attached hereto); a non-foreign affidavit (in the form of
Exhibit H attached hereto); the original leases or copies of the original
leases and tenant files; an executed assignment of all warranties, guaranties
and intangibles (with originals attached or copies if the originals are not in
Seller's possession) in the form of Exhibit I attached hereto; an inventory of
the personal property and a Bill of Sale for the same (in the form of Exhibit J
attached hereto); a written termination by Balcor Pension Investors ("BPI") of
its right to consent to a transfer or mortgage of the Burger King Ground Lease
or an assignment by BPI to Purchaser of BPI's right to consent; an executed
Environmental Disclosure Document (in the form of Exhibit P attached hereto)
which will be delivered at least ten (10) days prior to Closing; an agreement
by Seller, as junior mortgagee, covenanting not to disturb the Burger King
ground lease as required under such ground lease (in the form of Exhibit Q
attached hereto) and any other documents reasonably required of Seller as
junior mortgagee under the leases; a subordination agreement by Seller (in the
form of Exhibit R attached hereto), as junior mortgagee, subordinating the lien
of the junior mortgage to the lien of the senior mortgage; and such other
documents as may be reasonably required by the Title Insurer in order to
consummate the transaction as set forth in this Agreement.
10. DEFAULT BY PURCHASER. ALL EARNEST MONEY DEPOSITED INTO THE ESCROW IS TO
SECURE THE TIMELY PERFORMANCE BY PURCHASER OF ITS OBLIGATIONS AND UNDERTAKINGS
UNDER THIS AGREEMENT, INCLUDING ITS OBLIGATIONS TO MAKE ALL DEPOSITS ON OR
BEFORE THE DATES PROVIDED FOR HEREIN. IN THE EVENT OF ANY DEFAULT OF THE
PURCHASER UNDER THE PROVISIONS OF THIS AGREEMENT, SELLER SHALL RETAIN ALL OF
THE EARNEST MONEY AND THE INTEREST THEREON AS SELLER'S SOLE RIGHT TO DAMAGES OR
ANY OTHER REMEDY. THE PARTIES HAVE AGREED THAT SELLER'S ACTUAL DAMAGES, IN THE
EVENT OF A DEFAULT BY PURCHASER, WOULD BE EXTREMELY DIFFICULT OR IMPRACTICAL TO
DETERMINE. THEREFORE, BY PLACING THEIR INITIALS BELOW, THE PARTIES ACKNOWLEDGE
THAT THE EARNEST MONEY HAS BEEN AGREED UPON, AFTER NEGOTIATION, AS THE PARTIES'
REASONABLE ESTIMATE OF SELLER'S DAMAGES.
<PAGE>
11. SELLER'S DEFAULT. IF THIS SALE IS NOT COMPLETED BECAUSE OF SELLER'S
DEFAULT, PURCHASER'S SOLE REMEDY SHALL BE THE RETURN OF ALL EARNEST MONEY
TOGETHER WITH ANY INTEREST ACCRUED THEREON, AND, SUBJECT TO THE SURVIVAL
PROVISIONS OF PARAGRAPH B HEREIN, THIS AGREEMENT SHALL TERMINATE AND THE
PARTIES SHALL HAVE NO FURTHER LIABILITY TO EACH OTHER AT LAW OR IN EQUITY.
NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, IF SELLER'S DEFAULT
IS ITS REFUSAL TO DELIVER THE DEED, THEN PURCHASER WILL BE ENTITLED TO SUE FOR
SPECIFIC PERFORMANCE.
12. a. PRORATIONS. Rents (exclusive of delinquent rents, but including
prepaid rents); refundable security deposits (which will be assigned to and
assumed by Purchaser and credited to Purchaser at Closing) as set forth on the
rent roll and the tenant leases and the Tenant Estoppel Certificates (as that
term is hereinafter defined) received from the tenants; water and other utility
charges; fuels; prepaid operating expenses; real and personal property taxes
prorated on a "net" basis (i.e. adjusted for all tenants' liability, if any,
for such items); common area maintenance charges to tenants on a net basis;
percentage rents; and other similar items shall be adjusted ratably as of 11:59
P.M. on the Closing Date ("Proration Date"), and credited or debited to
the balance of the cash due at Closing. Percentage rents will be based on the
most recent ascertainable data and readjusted by a credit or debit against
payments due on the Note when the final data is available. If for any reason
the Proration Date is earlier than the Closing Date, then for the period from
the Proration Date through the Closing Date, Purchaser shall be entitled to the
benefit of all of the income from the Property and shall bear the burden of all
of the operating expenses of the Property, including, but not limited to,
insurance, service contracts, employee wages and benefits, management fees,
utility costs and interest on the existing mortgages encumbering the Property
(if any). If the amount of any of the items to be prorated is not then
ascertainable, the adjustment thereof shall be on the basis of the most recent
ascertainable data. Except for percentage rents and real and personal property
taxes, all prorations will be final. Taxes will be reprorated when the final
bills are available and will be finally prorated when the present tax appeal is
concluded by a credit or debit against payments due on the Note.
b. DELINQUENT RENTS. If, as of the Closing Date, any rent is in arrears
for thirty (30) days or less, then rents collected by Purchaser shall be
applied first to the delinquent rent and then to current rent. As to rents
that are in arrears for more than thirty (30) days, the first rent collected by
the Purchaser shall be applied to current rent and then to delinquent rent.
Those rents collected by Purchaser which belong to the Seller shall be remitted
to the Seller within ten (10) days after receipt.
13. TENANT ESTOPPEL CERTIFICATES. Within five (5) days after the execution of
this Agreement and Purchaser's deposit of the Earnest Money with the Escrow
Agent, Seller will request all of the tenants occupying space in the Property
to execute an estoppel certificate substantially in the form of Exhibit K
attached hereto ("Tenant Estoppel Certificate"). Purchaser's obligation to
close and purchase the Property is subject to and conditioned upon Seller's
obtaining a Tenant Estoppel Certificate from Target, J.C. Penney, Western Auto,
Hooks Drugs and Dollar General, and subordination agreements to the benefit of
Purchaser's lender from all tenants who are required under the terms of their
leases to deliver subordination agreements. Seller will cooperate with
Purchaser in attempting to obtain subordination agreements from all of the
tenants. Notwithstanding the aforesaid, if Seller does not receive Tenant
Estoppel Certificates from at least 70% of the remaining tenants, then in lieu
thereof, Seller shall deliver a Tenant Estoppel Certificate in the form of an
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affidavit ("Seller's Affidavit"), in the form of Exhibit K-1 attached hereto,
executed by Seller for the balance of the 70% requirement. The Seller's
Affidavit for a particular tenant will expire upon delivery to Purchaser of the
Tenant Estoppel Certificate for that tenant. Seller will forward copies of the
Tenant Estoppel Certificates to the Purchaser after they are received by Seller
and will deliver the originals at Closing. Purchaser shall have the right to
terminate this Agreement if the Tenant Estoppel Certificates raise issues which
cause Seller's representations and warranties to be materially false.
14. RECORDING. This Agreement shall not be recorded and the act of recording
by Purchaser shall be an act of default hereunder by Purchaser and shall be
subject to the provisions of Paragraph .
15. ASSIGNMENT. The Purchaser shall have the right to assign its interest in
this Agreement, provided that the assignment is effected at least ten (10) days
prior to Closing. However, Purchaser shall continue to be obligated for its
undertakings and indemnities under this Agreement.
16. BROKER. The parties hereto acknowledge that they have not engaged the
services of a real estate broker. Purchaser has not paid and will not pay at
any time before, at or after the Closing, any fee, commission or compensation
whatsoever to any person whomsoever directly or indirectly on account of this
Agreement, its negotiation, or the sale hereby contemplated. The foregoing
does not apply to any fee which may be paid to any affiliate of Seller as a
result of this transaction. Purchaser agrees to indemnify, defend and hold
harmless the Seller and any partner, affiliate, parent of Seller, and all
shareholders, employees, officers and directors of Seller or Seller's partner,
parent or affiliate (each of the above is individually referred to as an
"Seller Indemnitee") from all claims, including attorneys' fees and costs
incurred by an Seller Indemnitee as a result of anyone's claiming by or through
Purchaser any fee, commission or compensation on account of this Agreement, its
negotiation or the sale hereby contemplated. Purchaser does now and shall at
all times consent to a Seller Indemnitee's selection of defense counsel.
Seller agrees to indemnify, defend and hold harmless the Purchaser and all
shareholders, employees, officers and directors of Purchaser or Purchaser's
parent or affiliate (each of the above is individually referred to as a
"Purchaser Indemnitee") from all claims, including attorneys' fees and costs
incurred by a Purchaser Indemnitee as a result of anyone's claiming by or
through Seller any fee, commission or compensation on account of this
Agreement, its negotiation or the sale hereby contemplated. Seller does now
and shall at all times consent to a Purchaser Indemnitee's selection of defense
counsel. The provisions of this Paragraph will survive the Closing and
delivery of the Deed.
17. DOCUMENTS AND INSPECTION OF PROPERTY.
a. Seller has delivered to Purchaser copies of the most recent available
tax bills, rent rolls, insurance premiums, and service contracts (collectively
the "Documents"). Within five (5) days after the execution of this Agreement
by Seller, Seller shall deliver or make available to the Purchaser the
following documents, if they are in Seller's possession and Seller can locate
them:
i. Copies of the plans and specifications;
ii. Copies of the service contracts;
iii. Copies of documents that create any special parking arrangements
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with any of the tenants, unless such special parking
arrangements are set forth in the tenant leases or any
amendments thereto;
iv. operating statements for the Property for the prior three years;
v. sales and percentage rents for the prior three years;
vi. copies of all soils tests;
vii. copies of all engineering studies and reports;
viii. copies of the utility agreements;
ix. copies of water and sewer agreements;
x. notices of special assessments;
xi. tenant files (available for review);
xii. list of personal property;
xiii. copies of all warranties and guaranties; and
xiv. copies of all tenant leases.
b. Purchaser agrees to defend and hold Seller harmless from any
injuries, damages or claims of any nature whatsoever which Purchaser's
servants, agents or employees may have as a result of Purchaser's inspection of
the Property. Purchaser further agrees to restore any damage to the Property
which may arise as a result of Purchaser's inspection of the Property. The
terms and provisions of this subparagraph shall survive the termination of this
Agreement or the Closing and the delivery and recording of the Deed.
c. Purchaser's obligations to indemnify, defend and hold Seller harmless
under the provisions of this Paragraph shall survive the termination of this
Agreement or the Closing and the delivery and recording of the Deed.
18. SELLER'S REPRESENTATIONS AND WARRANTIES AND LIABILITY.
a. Any reference herein to Seller's knowledge, representation, warranty
or notice of any matter or thing, shall only mean such knowledge or notice that
has actually been received by Phillip Schechter, and any representation or
warranty of the Seller is based upon those matters of which Phillip Schechter
has actual knowledge. Any knowledge or notice given, had or received by any of
Seller's agents, servants or employees shall not be imputed to Seller or the
individual partners or the general partner of Seller.
b. Subject to the limitations set forth in subparagraph a above, Seller
hereby makes the following representations and warranties, all of which are
made to the best of Seller's knowledge, and shall also be true as of the
Closing Date and shall survive the Closing and delivery of the Deed for a
period of ninety (90) days:
i. The present use and occupancy of the Property conform with
applicable building and zoning laws and Seller has received no notice
that any such laws, rules or regulations are being violated.
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ii. The rent roll attached hereto as Exhibit O and which will be
updated as of the Closing Date is true and accurate.
iii. Seller has no knowledge of any pending or threatened litigation,
claim, cause of action or administrative proceeding concerning the
Property.
iv. Seller has not delivered any Documents which Seller knew were
false and misleading.
v. The person executing this Agreement has full authority to
execute this Agreement and upon such execution, this Agreement will
be binding upon the Seller.
vi. Seller has not received any written notices that any action is to
be taken by a governmental authority which would affect access from
the Property to the highway or road adjacent to the Property or which
would affect the utilities servicing the Property.
vii. Seller has not received any written notice from any governmental
authority having jurisdiction thereof, setting forth the existence of
the violation of any Environmental Law.
viii.No party has an option to purchase all or any portion of the
Property.
ix. Except for the tenants and the property manager, no other party
has a right to possession of any part of the Property.
x. Seller has not received a written notice from any tenant that
Seller is in default under any lease.
xi. As of the Closing Date, all leasing commissions will have been
fully satisfied.
xii. Except as set forth in the rent roll to be delivered at Closing,
no tenant has prepaid rent for more than thirty (30) days.
xiii.Seller has not made any representation or warranty which Seller
knows is false and misleading.
xiv. Seller has not instituted any insolvency proceedings nor have
such proceedings been instituted against the Seller.
19. ENVIRONMENTAL AND MISCELLANEOUS REPORTS. Attached to this Agreement as
Exhibit L are the following reports of the Property (collectively "Reports")
which Seller is delivering to Purchaser at Purchaser's request:
1. Stained Soil Excavation, Transportation and Disposal Proposal dated
11/29/95;
2. Monitor Well Installation/Surface Soil Sampling dated 11/15/95;
3. Phase I Environmental Site Assessment dated 8/16/95;
4. Geoprobe Investigation dated 10/10/95;
<PAGE>
5. Soil Sampling/Well Installation Proposal dated 10/16/95;
6. Soil Certification Sheet dated 1/3/96;
7. Manifest Form dated 1/5/96;
8. Phase I Environmental Site Assessment dated 12/6/91;
9. Phase I Environmental Site Assessment dated 6/30/92;
10. Letter from Target Stores dated 12/13/93 pertaining to ADA
Accessibility T-132;
11. Soil, Excavation, Removal and Disposal Report dated 2/9/96 prepared
by ATEC Associates, Inc.
Seller makes no representation or warranty that the Reports are accurate
or complete. Purchaser hereby releases Seller from any liability
whatsoever with respect to the Reports or, including, without limitation,
the matters set forth in the Reports, the accuracy and completeness of the
Reports.
20. LIMITATION OF SELLER'S LIABILITY. No general or limited partner of
Seller, nor any of its respective beneficiaries, shareholders, partners,
officers, agents, employees, heirs, successors or assigns shall have any
personal liability of any kind or nature for or by reason of any matter or
thing whatsoever under, in connection with, arising out of or in any way
related to this Agreement and the transactions contemplated herein, and
Purchaser hereby waives for itself and anyone who may claim by, through or
under Purchaser any and all rights to sue or recover on account of any such
alleged personal liability.
21. PURCHASER'S ORGANIZATIONAL DOCUMENTS. At least ten (10) days prior to the
Closing Date, Purchaser will provide Seller's attorney with copies of its
organizational documents, including a certified copy of its recorded
certificate of limited partnership and a true copy of its Partnership Agreement
or a certified copy of its Articles of Incorporation, corporate resolutions
authorizing the transaction, and an incumbency certificate, whichever is
applicable.
22. TIME OF ESSENCE. Time is of the essence of this Agreement.
23. NOTICES. Any notice or demand which either party hereto is required or
may desire to give or deliver to or make upon the other party shall be in
writing and may be personally delivered or given or made by overnight courier
such as Federal Express or by facsimile or made by United States registered or
certified mail addressed as follows:
<PAGE>
TO SELLER: c/o The Balcor Company
2355 Waukegan Road
Suite A200
Bannockburn, Illinois 60015
Attn: Ilona Adams
with copies to: The Balcor Company
2355 Waukegan Road
Suite A200
Bannockburn, Illinois 60015
Attn: Al Lieberman
847/267-1600
847/317-4462 (FAX)
and
Morton M. Poznak
Schwartz & Freeman
Suite 1900
401 North Michigan Avenue
Chicago, Illinois 60611
312/222-0800
312/222-0818 (FAX)
TO PURCHASER: Martin Herzog
Mark Hutner
J. Herzog & Sons, Inc.
1720 S. Bellaire Street
Suite 1209
Denver, Colorado 80222
303/757-8811
303/757-1911 (FAX)
with a copy to: Neil Oberfeld
Berenbaum & Weinshienk
26th Floor
Republic Plaza
370 17th Street
Denver, Colorado 80202-5626
303/825-0800
303/629-7610 (FAX)
subject to the right of either party to designate a different address for
itself by notice similarly given. Any notice or demand so given shall be
deemed to be delivered or made on the next business day if sent by overnight
courier, or on the same day if sent by facsimile before 5:00 P.M. Central Time,
or the next day if sent by facsimile after that time, or on the 4th business
day after the same is deposited in the United States Mail as registered or
certified matter, addressed as above provided, with postage thereon fully
prepaid. Any such notice, demand or document not given, delivered or made by
registered or certified mail or by overnight courier or by facsimile as
aforesaid shall be deemed to be given, delivered or made upon receipt of the
same by the party to whom the same is to be given, delivered or made. Copies
of all notices shall be served upon the Escrow Agent.
<PAGE>
24. EXECUTION OF AGREEMENT AND ESCROW AGREEMENT. Purchaser will execute three
(3) copies of this Agreement and three (3) copies of the Escrow Agreement and
forward them to Seller for execution, accompanied with the Earnest Money
payable to the Escrow Agent. Seller will forward one (1) copy of the executed
Agreement to Purchaser and will forward the following to the Escrow Agent:
(1) Earnest Money;
(2) One (1) fully executed copy of this Agreement; and
(3) Three (3) copies of the Escrow Agreement signed by the parties with a
direction to execute two (2) copies of the Escrow Agreement and deliver a fully
executed copy to the Purchaser and the Seller.
25. GOVERNING LAW. The provision contained herein with reference to retention
of the Earnest Money in the event of Purchaser's default shall be governed by
the laws of the State of Colorado. The remaining provisions of this Agreement
shall be governed by the laws of the State of Indiana.
26. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between
the parties and supersedes all other negotiations, understandings and
representations made by and between the parties and the agents, servants and
employees.
27. COUNTERPARTS. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same instrument.
28. CAPTIONS. Paragraph titles or captions contained herein are inserted as a
matter of convenience and for reference, and in no way define, limit, extend or
describe the scope of this Agreement or any provision hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of the
date set forth above.
Executed by Purchaser on PURCHASER:
April 4, 1996.
J. HERZOG & SONS, INC., a Colorado
corporation
By: /s/Martin H. Herzog
---------------------------------------
Executed by Seller on SELLER:
April 26, 1996.
HUNTINGTON PLAZA LIMITED
PARTNERSHIP, an Illinois limited partnership
By: Huntington Plaza, Inc., an Illinois
corporation, the general partner
By: /s/Philip Schechter
---------------------------------------
Authorized agent
<PAGE>
EXHIBITS
A - Legal
B - Escrow Agreement
C - Title Commitment
D - Deed
E - Assignment of Service Contracts
F - Assignment of Leases and Security Deposits
G - Notice to Tenants
H - Non-Foreign Affidavit
I - Assignment of Warranties and Guaranties
J - Bill of Sale
K - Tenant Estoppel Certificate
K-1 - Seller's Affidavit
L - Environmental Reports
M - Note
N - Mortgage
O - Rent Roll
P - Environmental Disclosure Document
Q - Covenant Not To Disturb Burger King Ground Lease
R - Subordination Agreement
<PAGE>
FIRST AMENDMENT TO
AGREEMENT OF SALE
THIS FIRST AMENDMENT TO AGREEMENT OF SALE ("Amendment") is made this _______
day of April, 1996 by and between J. Herzog & Sons, Inc., a Colorado
corporation ("Purchaser"), and Huntington Plaza Limited Partnership, an
Illinois limited partnership ("Seller").
WHEREAS, Purchaser and Seller entered into an Agreement of Sale dated
_____________, 1996 (the "Agreement", to which reference should be made for all
terms not otherwise herein defined), pertaining to the Property commonly known
as Huntington Plaza Shopping Center, Huntington, Indiana; and
WHEREAS, Purchase and Seller desire to amend the Agreement to provide, among
other things, for the adjustment of the Purchase Price and for certain
approvals, as more fully herein set forth.
NOW, THEREFORE, in consideration of the mutual covenants herein contained and
for other good and valuable consideration, the receipt and sufficiency which is
hereby acknowledged, the parties hereto hereby agree as follows:
1. Purchase Price
(a) The Purchase Price is amended by reducing the Purchase Price from
$2,650,000.00 to $2,400,000.00.
(b) The Earnest Money in the amount of $50,000.00 pursuant to Sections
2.a. and 2.b. of the Agreement shall be posted by Purchaser upon execution
hereof. The portion of the Purchase Price to be paid on the Closing Date
pursuant to Section 2.c. of the Agreement is amended by reducing such amount
from $2,350,000 to $2,050,000.
2. Closing Date. The Closing Date pursuant to Section 8 of the Agreement is
amended by extending the Closing Date from May 8, 1995 to May 21, 1996 and
extending the Extended Closing Date from June 15, 1996 to June 27, 1996.
3. Exhibits. Seller and Purchase acknowledge that the Note, the Mortgage and
the Subordination Agreement, attached hereto, shall be Exhibits M, N and R,
respectively, of the Agreement; provided, however, the original principal
amount of the Note shall be $300,000, the term of the Note shall be ten (10)
years, and the monthly installments under Section 1(b) of the Note shall be
determined on the basis of a twenty (20) year amortization.
4. Force and Effect. This Amendment shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns. As
herein modified, the Agreement shall remain in full force and effect in
accordance with the terms and conditions thereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the
date first above written.
PURCHASER:
J. HERZOG & SONS, INC., a
Colorado corporation
By: /s/ Martin H. Herzog
---------------------------------
Martin H. Herzog, President
SELLER:
HUNTINGTON PLAZA LIMITED
PARTNERSHIP, an Illinois limited
partnership
By: Huntington Plaza, Inc.,
an Illinois corporation, the
General Partner
By: /s/ Phillip Schechter
--------------------------
Name: Phillip Schechter
Title: Authorized Agent
<PAGE>
JUNIOR MORTGAGE AND SECURITY AGREEMENT
THIS INDENTURE, made as of the _____ day of _______________, 1996, by and
between ___________________________, a _____________, whose address is
______________________________________________________________________________
(herein referred to as "Mortgagor"), and HUNTINGTON PLAZA LIMITED
PARTNERSHIP, an Illinois limited partnership, whose address is @The Balcor
Company, 2355 Waukegan Road, Suite A200, Bannockburn, Illinois 60015 (herein
referred to as "Mortgagee");
W I T N E S S E T H:
THAT, WHEREAS, Mortgagor is indebted to Mortgagee in the principal sum of
THREE HUNDRED SEVENTY THOUSAND AND NO/100 DOLLARS ($370,000.00), evidenced by
that certain Principal Note of Mortgagor of even date herewith (hereinafter
referred to as the "Note") made payable to the order of Mortgagee and delivered
to Mortgagee, in and by which Note Mortgagor promises to pay the said principal
sum and interest at the rate and in installments as provided in the Note, with
a final payment of the balance, if not sooner paid, to be due on the ______ day
of _____________, 2006, and all of said principal and interest are made payable
at such place as the holder of the Note may, from time to time in writing
appoint, and in absence of such appointment, then at the office of Huntington
Plaza Limited Partnership, c/o The Balcor Company, 2355 Waukegan Road, Suite
A200, Bannockburn, Illinois 60015.
NOW, THEREFORE, Mortgagor, to secure the payment of said principal sum of
money and said interest in accordance with the terms, provisions and
limitations of this Mortgage, and of the Note secured hereby, and any other
sums advanced by Mortgagee to protect the security of this Mortgage or
discharge the obligations of Mortgagor hereunder, and also in consideration of
the sum of ONE AND NO/100 DOLLARS ($1.00) in hand paid, the receipt whereof is
hereby acknowledged, does by these presents MORTGAGE, GRANT, CONVEY and RELEASE
unto Mortgagee, its successors and assigns, the following described real estate
(hereinafter referred to as the "Land") and all of its estate, right, title and
interest therein, situate, lying and being in the County of Huntington and
State of Indiana, to-wit:
THE LAND MORTGAGED HEREBY IS DESCRIBED ON
EXHIBIT "A" ATTACHED HERETO AND MADE A PART HEREOF
which Land, with the property hereinafter described is referred to herein
collectively as the "Premises" or as the "Mortgaged Premises."
TOGETHER with all easements, rights of way, strips and gores of land,
vaults, streets, alleys, water rights, mineral rights, and rights used in
connection with the Land or to provide a means of access to the Land, and all
tenements, hereditaments and appurtenances thereof and thereto pertaining or
belonging, and all underground and overhead passageways and licenses in
connection therewith;
TOGETHER with all leasehold estates, right, title and interest of
Mortgagor in any and all leases, subleases, management agreements,
arrangements, concessions, or agreements, written or oral, relating to the use
and occupancy of the Land and improvements or any portion thereof located
thereon, now or hereafter existing or entered into;
<PAGE>
TOGETHER with all rents, issues and profits thereof for so long and during
all such times as Mortgagor may be entitled thereto and together with all
proceeds of insurance with respect thereto and any and all other proceeds
therefrom (all of which are pledged primarily and on a parity with said real
estate and not secondarily);
TOGETHER with any and all buildings and improvements now or hereafter
erected on the Land, including, but not limited to, the fixtures, attachments,
appliances, equipment, machinery, and other articles attached to said buildings
and improvements and all tangible personal property owned by Mortgagor now or
any time hereafter located on or at the Land or used in connection therewith;
TOGETHER with all the estate, interest, right, title, other claim or
demand, including claims or demands with respect to the proceeds of insurance
in effect with respect thereto, which Mortgagor now has or may hereinafter
acquire in the Premises, and any and all awards made for the taking by eminent
domain, or by any proceedings or purchase in lieu thereof, of the whole or any
part of the Premises, including, without any limitation, any awards resulting
from the change of grade of streets and awards for severance damages.
All of the land, estate and property hereinabove described, real, personal
and mixed, whether affixed or annexed or not (except where otherwise
hereinabove specified) and all rights hereby conveyed and mortgaged are
intended so to be as a unit and are hereby understood, agreed and declared to
form a part and parcel of the real estate and to be appropriated to the use of
the real estate, and shall for the purposes of this Mortgage be deemed to be
real estate and conveyed and mortgaged hereby.
Mortgagor covenants that it is lawfully seized of the Premises, that the
same are unencumbered except for title exceptions of record approved by
Mortgagee including the Senior Mortgage, and that it has good right, full power
and lawful authority to convey and mortgage the same, and that it will warrant
and forever defend the Premises and the quiet and peaceful possession of the
same against the lawful claims of all persons whomsoever.
TO HAVE AND TO HOLD the Premises unto Mortgagee, its successors and
assigns forever, free from all rights and benefits under and by virtue of the
Homestead Exemption Laws of the State of Indiana (which rights and benefits are
hereby expressly released and waived), for the uses and purposes herein set
forth.
IT IS FURTHER UNDERSTOOD AND AGREED THAT:
1. Maintenance, Repair and Restoration of Improvements, Payment of Prior
Liens, etc.: Mortgagor hereby represents and covenants to Mortgagee that it
shall (a) promptly repair, restore or rebuild any buildings now or hereafter on
the Premises which may become damaged or be destroyed; (b) keep the Premises in
good condition and repair, without waste, and free from mechanics' liens or
claims for lien not expressly subordinated to the lien hereof; provided,
however, that Mortgagor shall have the right to contest in good faith and with
reasonable diligence the validity of any such lien or claim upon furnishing (i)
to the title insurance company approved by Mortgagee such security or indemnity
as it may require to induce said title insurance company to issue its title
insurance commitment or its mortgage title insurance policy insuring against
all such claims or liens, in form satisfactory to Mortgagee, and (ii) to
Mortgagee such other security with respect to such claim as may be acceptable
to Mortgagee; (c) pay when due any indebtedness or installment or portion
<PAGE>
thereof which may be secured by a lien or charge on the Premises and comply
with all requirements of all loan documents evidencing or securing such
indebtedness, and upon request exhibit satisfactory evidence of the discharge
of such lien to Mortgagee; (d) comply in all material respects and cause the
Premises at all times to be operated in compliance in all material respects
with all requirements of law, municipal ordinances, or restrictions of record
with respect to the Premises and the use thereof; (e) pay each item of
indebtedness, or installment or portion thereof, due from Mortgagor to
Mortgagee other than the indebtedness evidenced by the Note; and (f) pay each
item of indebtedness secured by this Mortgage when due according to the terms
hereof or of the Note.
2. Representations and Covenants: Mortgagor hereby represents and
covenants to Mortgagee that:
2.1 Power, etc.: Mortgagor (a) is a limited partnership duly
organized, validly existing and in good standing under the laws of the State of
____________; (b) has the power and authority to own its properties and to
carry on its business as now being conducted; (c) is qualified to do business
in every jurisdiction in which the nature of its business or its properties
makes such qualification necessary; and (d) is in compliance with all laws,
regulations, ordinances and orders of public authorities applicable to it.
2.2 Capital Improvements: Mortgagor covenants and agrees that it
shall expend a total of Four Hundred Thousand Dollars $400,000 in connection
with the Mortgaged Premises as follows: (i) Mortgagor shall deposit Two Hundred
Thousand Dollars ($200,000.00) with the holder of the Senior Mortgage
(hereinafter defined) for the purpose of making tenant improvements and the
payment of leasing commissions with respect to the Mortgaged Premises within
Three years of the date of the execution of this Junior Mortgage and Security
Agreement; and (ii) Two Hundred Thousand Dollars ($200,000.00) within six (6)
months of date of the execution of this Junior Mortgage and Security Agreement
for repairs to the parking lot, parking lot lights, shopping center facade and
the roof; and Mortgagor shall provide Mortgagee with copies of the paid
receipts within Thirty (30) days of the completion of the repairs. Mortgagor's
capital investments shall be in the form of equity and shall be made from funds
that are not proceeds of the Senior Mortgage (hereinafter defined). Provided,
however, the funds for the capital investment in clause (ii) above may come
from proceeds of the senior mortgage that are withheld and reserved for that
purpose, but only to the extent that Mortgagor increases the portion of the
purchase price paid for the Mortgaged Premises that is in the form of equity
and that are not proceeds of the Senior Mortgage by a like amount and provided
that the amount secured by the Senior Mortgage does exceed the amount set forth
in any commitment outstanding as of March 27, 1996, which mortgagor represents
does not exceed $1,600,000.00.
3. Payment of Taxes: Mortgagor shall pay before any penalty attaches
all general taxes, and shall pay special taxes, special assessments, water
charges, sewer service charges, and other charges against the Premises of any
nature whatsoever and any personal property located thereon, and/or against the
rents and other income derived from the Premises, when due, and shall, upon
written request, furnish to Mortgagee duplicate receipts therefor. To prevent
default hereunder, Mortgagor shall pay in full under protest, in the manner
provided by statute, any tax or assessment which Mortgagor may desire to
contest.
<PAGE>
4. Insurance: Mortgagor shall keep the Premises, including all
buildings and improvements now or hereafter situated on the Land, insured
against loss or damage by fire and extended coverage, malicious mischief and
vandalism and such other hazards in such amounts as may reasonably be required
by Mortgagee. Mortgagor shall also provide and keep in effect comprehensive
public liability insurance with such limits for personal injury and death and
property damage as Mortgagee may reasonably require. All policies of insurance
to be furnished hereunder shall be in forms, companies and amounts reasonably
satisfactory to Mortgagee, with standard mortgagee loss payable clauses
attached to all policies in favor of and in form satisfactory to Mortgagee,
including a provision requiring that the coverage evidenced thereby shall not
be terminated or materially modified without thirty (30) days' prior written
notice to Mortgagee. Mortgagor shall deliver the original of all policies,
including additional and renewal policies, to Mortgagee.
So long as any sum remains due hereunder or under the Note secured
hereby, Mortgagor covenants and agrees that it shall not place, or cause to be
placed or issued, any separate casualty, fire, rent loss, liability, or war
damage insurance from the insurance required to be maintained under the terms
hereof, unless in each such instance Mortgagee herein is included therein as
the payee under a standard mortgagee's loss payable clause. Mortgagor
covenants to advise Mortgagee whenever any such separate insurance coverage is
placed, issued or renewed, and agrees to deposit the original of all such
policies with Mortgagee.
In the event of a foreclosure of this Mortgage, or in case of any
transfer of title to the Mortgaged Premises in extinguishment of the debt
secured hereby, all right, title and interest of Mortgagor to any insurance
policy covering the Mortgaged Premises shall pass to Mortgagee or transferee of
the Mortgaged Premises.
5. Adjustment of Losses with Insurer and Application of Proceeds of
Insurance:
A. In the event of any insured damage to or destruction of the
Mortgaged Property or any part thereof (herein called an "Insured Casualty"),
and if, in the collective judgment of the Mortgagor and the Mortgagee, the
Premises can be restored to an economic unit not less valuable than the same
was prior to the Insured Casualty, then, if no Event of Default, as hereinafter
defined, shall have occurred and be then continuing, the proceeds of insurance
shall be applied to the cost of restoring, repairing, replacing or rebuilding
the Premises or part thereof subject to the provisions in subparagraph D
hereof; and the Mortgagor hereby covenants and agrees forthwith to commence and
diligently to prosecute such restoring, repairing, replacing or rebuilding;
provided, always, that the Mortgagor shall pay all costs of such restoring,
repairing, replacing or rebuilding in excess of the net proceeds of insurance
made available pursuant to the terms hereof.
B. Except as provided in subsection A of this paragraph 5, and
subject to the rights of the holder of the Senior Mortgage (hereinafter
defined), the proceeds of insurance consequent upon any Insurance Casualty upon
the indebtedness hereby secured, shall be applied in such order or manner as
the Mortgagee may elect.
<PAGE>
C. In the event that proceeds of insurance, if any, shall be
applied to the restoring, repairing, replacing or rebuilding of the Premises as
provided in subparagraph D hereof, the Mortgagor hereby covenants to restore,
repair, replace or rebuild the same, to be of at least equal value, and of
substantially the same character as prior to such damage or destruction.
D. In the event Mortgagor and Mortgagee determine that insurance
proceeds shall be applied to the restoring, repairing, replacing, or rebuilding
of the Premises (either directly or to reimburse the Mortgagor for the costs
incurred by Mortgagor with respect thereto), such proceeds shall be disbursed
from time-to-time upon the Mortgagee being furnished with (i) evidence
reasonably satisfactory to it of the estimated cost of completion of the
restoration, repair, replacement and rebuilding, (ii) funds (or assurance
satisfactory to the Mortgagee that such funds are available to Mortgagor)
sufficient in addition to the proceeds of insurance, to complete the proposed
restoration, repair, replacement and rebuilding and (iii) such architect's
certificates, waivers of lien, contractor's sworn statements, title insurance
endorsements, plats of survey and such other evidence of cost, payment and
performance, including insurance against mechanics' liens as the Mortgagee may
reasonably require and approve. All plans and specifications for such
restoration, repair, replacement and rebuilding shall be submitted to and
approved by the Mortgagee prior to commencement of work. No payment made prior
to the final completion of the restoration, repair, replacement and rebuilding
shall exceed ninety percent (90%) of the value of the work performed from
time-to-time; funds other than proceeds of insurance shall be disbursed prior
to disbursement of such proceeds. Mortgagor covenants that at all times the
undisbursed balance of such proceeds, together with funds deposited for that
purpose or irrevocably committed to the satisfaction of the Mortgagee by or on
behalf of the Mortgagor for that purpose, shall be at least sufficient in the
reasonable judgment of the Mortgagee to pay for the cost of completion of the
restoration, repair, replacement or rebuilding, free and clear of all liens or
claims for lien. Any surplus which may remain out of insurance proceeds after
payment of such costs of restoration, repair, replacement or rebuilding shall,
subject to the rights of the holders of the Senior Mortgage (hereinafter
defined) be paid over to Mortgagor.
E. The rights of the parties shall be subject to the superior
rights of the holders of the Senior Mortgage (hereinafter defined).
F. Nothing contained in this Mortgage shall create any
responsibility or obligation on Mortgagee to collect any amount owing on any
insurance policy, to rebuild, repair or replace any damaged or destroyed
portion of the Premises, including any improvements, or to perform any act
hereunder.
6. Method of Taxation:
6.1 Stamp Tax: If, by the laws of the United States of America or
of any state, municipality or other governmental body having jurisdiction over
Mortgagor or its property, any tax imposition or assessment is due or becomes
due in respect of the issuance of the Note, this Mortgage or upon the interest
of Mortgagee in the Premises, or any tax, assessment or imposition is imposed
upon Mortgagee relating to the lien created hereunder, or any of the foregoing,
Mortgagor covenants and agrees to pay such tax, levy, assessment or imposition
in the manner required by any such law. Mortgagor further covenants to hold
harmless and agrees to indemnify Mortgagee, its successors or assigns, against
<PAGE>
any liability incurred by reason of the imposition of any tax on the issuance
of the Note.
6.2 Change in Method of Taxation: In the event of the enactment
after this date of any law of the state in which the Premises are located
deducting from the value of land for the purpose of taxation any lien thereon,
or imposing upon Mortgagee the payment of the whole or any part of the taxes or
assessments or charges or liens herein required to be paid by Mortgagor, or
changing in any way the laws relating to the taxation of mortgages or debts
secured by mortgages or Mortgagee's interest in the Premises, or the manner of
collection of taxes, so as to affect this Mortgage or the debt secured hereby
or the holder hereof, then, and in any such event, Mortgagor, upon demand by
Mortgagee, shall pay such taxes or assessments, or reimburse Mortgagee
therefor; provided, however, that if in the opinion of counsel for Mortgagee
(a) it might be unlawful to require Mortgagor to make such payment; or (b) the
making of such payment might result in the imposition of interest beyond the
maximum amount permitted by law, then and in such event, Mortgagee may elect,
by notice in writing given to Mortgagor, to declare all of the indebtedness
secured hereby to be and become due and payable without penalty or premium one
hundred eighty (180) days from the giving of such notice.
7. No Merger: It being the desire and intention of the parties hereto
that this Mortgage and the lien hereof do not merge in fee simple title to the
Premises, it is hereby understood and agreed that should Mortgagee acquire any
additional interest in or to the Premises or the ownership thereof, then,
unless a contrary intent is manifested by Mortgagee, as evidenced by an express
statement to that effect in an appropriate document duly recorded, this
Mortgage and the lien hereof shall not merge in the fee simple title, toward
the end that this Mortgage may be foreclosed as if owned by a stranger to the
fee simple title.
8. Prepayment Privilege: Mortgagor shall have the privilege of making
prepayments on the principal of the Note (in addition to the required payments)
in accordance with the terms and conditions set forth in the Note.
9. Assignment of Rents and Leases:
A. To further secure the indebtedness secured hereby, Mortgagor
does hereby sell, assign and transfer unto Mortgagee all the rents, issues and
profits now due with respect to the Premises and does hereby sell, assign and
transfer onto Mortgagee all Mortgagor's right, title and interest as lessor
under or by virtue of any lease, whether written or verbal, or any letting of,
or of any agreement for the use or occupancy of the Premises or any part
thereof, which may have been heretofore or may be hereafter made or agreed to
or which may be made or agreed to by Mortgagor or its agents under the powers
herein granted.
B. Mortgagor represents and agrees that from and after the date of
the execution of this Mortgage no rent will be paid by any person in possession
of any portion of the Premises for more than one installment in advance and
that the payment of none of the rents to accrue for any portion of the Premises
will be, without Mortgagee's consent, waived, released, reduced, discounted, or
otherwise discharged or compromised by Mortgagor. Mortgagor shall not grant
any rights of set off or permit any set off to rent by any person in possession
of any portion of the Premises. Mortgagor agrees that it will not assign any
lease or any rents or profits of the Premises, except to Mortgagee or with the
prior written consent of Mortgagee.
<PAGE>
C. Nothing herein contained shall be construed as constituting
Mortgagee as a mortgagee in possession in the absence of the taking of actual
possession of the Premises by Mortgagee pursuant to Paragraph 15 hereof. In
the exercise of the powers herein granted Mortgagee, no liability shall be
asserted or enforced against Mortgagee, all such liability being expressly
waived and released by Mortgagor.
D. Mortgagor further agrees to assign and transfer to Mortgagee all
future leases upon all or any part of the Premises promptly upon execution
thereof and to execute and deliver, at the request of Mortgagee, all such
further assurances and assignments in the Premises as Mortgagee shall from time
to time require.
E. Although it is the intention of the parties that the assignment
contained in this Paragraph 9 shall be a present assignment, it is expressly
understood and agreed, anything herein contained to the contrary
notwithstanding, that so long as there is no Event of Default hereunder,
Mortgagor shall have the privilege of collecting and retaining the rents
accruing under the leases assigned hereby, until such time as Mortgagee shall
elect to collect such rents pursuant to the terms and provisions of this
Mortgage.
F. At the option of Mortgagee, this Mortgage shall become subject
and subordinate, in whole or in part (but not with respect to priority of
entitlement to insurance proceeds or any award in eminent domain), to any one
or more leases affecting any part of the Premises, upon the execution by
Mortgagee and recording or registration thereof, at any time hereafter, in the
office wherein this Mortgage was registered or filed for record, of a
unilateral declaration to that effect.
10. Additional Rights of Mortgagee: Mortgagor hereby covenants and
agrees that:
10.1 This Mortgage is intended only as security for the obligations
herein set forth. Notwithstanding anything to the contrary contained in this
Mortgage, Mortgagee shall have no obligation or liability under, or with
respect to, or arising out of this Mortgage and shall not be required or
obligated in any manner to perform or fulfill any of the obligations of
Mortgagor hereunder.
10.2 Upon the occurrence of an Event of Default hereunder, Mortgagee
may, but need not, make any payment or perform any act herein required of
Mortgagor in any form and manner deemed expedient. By way of illustration and
not in limitation of the foregoing, Mortgagee may (but need not) do all or any
of the following: make payments of principal or interest or other amounts on
any lien, encumbrance or charge on any part of the Premises; complete
construction; make repairs; collect rents; pay insurance premiums; prosecute
collection of any sums due with respect to the Premises; purchase, discharge,
compromise or settle any tax lien or any other lien, encumbrance, suit,
proceeding, title or claim thereof; contest any tax or assessment; and redeem
from any tax sale or forfeiture affecting the Premises. All monies paid for
any of the purposes herein authorized and all expenses paid or incurred in
connection therewith, including reasonable attorneys' fees, and any other
monies advanced by Mortgagee to protect the Mortgaged Premises and the lien
hereof, shall be so much additional indebtedness secured hereby, and shall
become immediately due and payable without notice and with interest thereon at
Default Rate as defined in the Note. In making any payment or securing any
<PAGE>
performance relating to any obligation of Mortgagor hereunder, Mortgagee shall
(as long as it acts in good faith) be the sole judge of the legality, validity
and amount of any lien or encumbrance and of all other matters necessary to be
determined in satisfaction thereof. No such action of Mortgagee, and no
inaction of Mortgagee hereunder, shall ever be considered as a waiver of any
right accruing to it on account of any default on the part of Mortgagor. All
sums paid by Mortgagee for the purposes herein authorized shall be considered
additional advances made under the Note and pursuant to this Mortgage and shall
be secured by the Mortgage. WITH THE PROVISO THAT THE AGGREGATE AMOUNT OF THE
INDEBTEDNESS SECURED HEREBY TOGETHER WITH ALL SUCH ADDITIONAL SUMS ADVANCED
SHALL NOT EXCEED THREE HUNDRED PERCENT (300%) OF THE AMOUNT OF THE ORIGINAL
INDEBTEDNESS SECURED HEREBY. Provided, however, this proviso shall not apply
to any obligation described in paragraph 12 below and any such obligation shall
be excluded for all purposes from the operation of this proviso.
11. Reliance on Tax Bills: Mortgagee, in making any payment hereby
authorized: (a) relating to taxes and assessments, may do so according to any
bill, statement or estimate procured from the appropriate public office without
inquiry into the accuracy of such bill, statement or estimate or into the
validity of any tax, assessment, sale, forfeiture, tax lien or title or claim
thereof; or (b) for the purchase, discharge, compromise or settlement of any
other prior lien, may do so without inquiry as to the validity or amount of any
claim or lien which may be asserted.
12. Environmental Matters: Mortgagor hereby represents, warrants and
covenants to Mortgagee that:
A. Mortgagor shall comply with all applicable laws, ordinances and
regulations (including consent decrees and administrative orders) relating to
public health and safety and protection of the environment, including those
statutes, laws, regulations and ordinances identified in subparagraph G. below,
all as amended and modified from time-to-time (collectively, "Environmental
Laws") in connection with its ownership, operation and use of the Mortgaged
Property (including the underlying groundwater and areas leased to tenants, if
any). All governmental permits relating to the use and/or operation of the
Mortgaged Property required by applicable Environmental Laws will remain in
effect, and Mortgagor shall comply therewith. Notwithstanding the above,
hazardous or toxic substances or wastes shall be permitted on the Property
provided such substances or wastes are (i) permitted to be used or produced
pursuant to any applicable statute, rule, law or regulation, (ii) used in or
produced from the normal business operations of tenants, and (iii) used,
handled and disposed of in accordance with all applicable statutes, rules, laws
and regulations.
B. Mortgagor will not release, generate, disclose, manufacture,
store, treat, transport or dispose of "Hazardous Material" (hereinafter
defined)on, in, under (including the underlying ground water) or from the
Mortgaged Property or any parcel(s) of real estate adjacent thereto. Except as
provided in subsection (a) above, Mortgagor shall not cause there to be:
(i) any Hazardous Material on, in or under the Mortgaged Property (including
the underlying ground water) or any parcel(s) of real estate adjacent thereto;
(ii) any environmental, health or safety hazards that pertain to any of the
Mortgaged Property or the business or operations conducted thereon; and (iii)
any underground storage tanks present on or under the Mortgaged Property.
Except for those matters specifically disclosed in the documents relating to
Mortgagor's purchase of the Mortgaged Premises, as to which matters no further
action shall be required of Mortgagor, and without limitation of the foregoing:
<PAGE>
(i) Mortgagor will promptly notify Mortgagee, in writing, in the event that
Mortgagor has or acquires notice or knowledge that any Hazardous Material has
been or is threatened to be released, discharged, disposed of, transported, or
stored on, in, under or from or otherwise located on or beneath the surface of
the Mortgage Property or any parcel(s) of real estate adjacent thereto, and
(ii) if any Hazardous Material is found on or beneath the surface of the
Mortgaged Property, Mortgagor, at its own cost and expense, shall immediately
take such action as is necessary to detain the spread of, and remove, such
Hazardous Material to the reasonable satisfaction of Mortgagee and the
appropriate governmental authorities.
C. Mortgagor shall immediately notify Mortgagee and provide copies
upon receipt of all written complaints, claims, citations, demands, inquiries,
reports, or notices relating to the condition of the Mortgaged Property or
compliance with Environmental Laws. Mortgagor shall promptly cure and have
dismissed with prejudice any such actions and proceedings to the satisfaction
of the Mortgagee. Mortgagor shall keep the Mortgaged Property free of any lien
imposed pursuant to any Environmental Law.
D. Mortgagee shall have the right at all reasonable times and from
time-to-time hereafter to conduct environmental audits of the Mortgaged
Property, and Mortgagor shall cooperate in the conduct of each such audit.
Mortgagee shall give Mortgagor twenty four hours prior notice of any such
audit. The audits shall be conducted by a consultant of Mortgagee's choosing
and if any Hazardous Material in excess of such amounts as may be permissible
under any applicable Environmental Law is detected or if a violation of any
Environmental Law or a material breach of the warranties, representations or
covenants contained in this paragraph 12 is discovered, the fees and expenses
of such consultant shall be borne by Mortgagor and shall be paid by Mortgagor
to Mortgagee on demand. Such fees and expenses shall be a part of the
indebtedness secured hereby and shall bear interest at the default rate
contained in the Note.
E. If Mortgagor fails to comply with any of the foregoing
warranties, representations and covenants, Mortgagee may cause the removal
(and/or other cleanup acceptable to Mortgagee) of any Hazardous Material from
the Mortgaged Property. The reasonable costs of Hazardous Material removal
and/or other cleanup (including transportation and storage costs) shall be
added to the indebtedness, whether or not the costs exceed the amount of the
Note and whether or not a court has ordered the cleanup, and such costs shall
become due and payable on demand by Mortgagee, with interest thereon at the
default rate contained in the Note. Mortgagor shall give Mortgagee, its agents
and employees access to the Mortgaged Property to remove and/or otherwise
cleanup any Hazardous Material. Mortgagee, however, has no affirmative
obligation to remove or otherwise cleanup any Hazardous Material, and this
Mortgage and the Other Agreements shall not be construed as creating any such
obligation.
F. Mortgagor, agrees to indemnify, defend (with counsel reasonably
acceptable to Mortgagee and at Mortgagor's sole cost), and hold Mortgagee and
Mortgagee's shareholders, directors, officers, employees, and agents, free and
harmless from and against all losses, liabilities, obligations, penalties,
claims, litigation, demands, defenses, costs, judgments, suits, proceedings,
damages (including consequential damages), disbursements or expenses of any
kind or nature whatsoever (including attorneys' and experts' fees and expenses
and fees and expenses incurred in investigating, defending against or
prosecuting any litigation, claim or proceeding) which may at any time be
<PAGE>
imposed upon, incurred by or asserted or awarded against Mortgagee or any of
them in connection with or arising from or out of: (i) any misrepresentation,
inaccuracy or breach of any warranty, covenant or agreement contained or
referred to in this paragraph 12; (ii) any violation or claim of violation by
Mortgagor of any Environmental Law; or (iii) the imposition of any lien for the
recovery of any costs for environmental cleanup and/or other response costs
relating to the release or threatened release of Hazardous Material arising out
of or relating to any matter described in clauses (i) and (ii) of this
subparagraph F above.
The foregoing indemnification is the personal obligation of Mortgagor
and shall survive repayment of the Note, any sale or transfer of title or any
transfer of the Mortgage Property by foreclosure or by a deed in lieu of
foreclosure. Mortgagor, its successors and assigns, hereby waive, release and
agree not to make any claim or bring any cost recovery action against Mortgagee
under "CERCLA" (hereinafter defined) or any state equivalent, or any similar
law now existing or hereafter enacted. It is expressly understood and agreed
that to the extent that Mortgagee is strictly liable under any such law,
regulation, ordinance or requirement, the respective obligations of Mortgagor
to Mortgagee under this indemnity shall likewise be without regard to fault on
the part of Mortgagor with respect to the violation or condition which results
in liability to Mortgagee.
G. For purposes of this Mortgage, "Hazardous Material" means
(i) "hazardous substances", or "toxic substances" as those terms are defined by
the Comprehensive Environmental Response, Compensation, and Liability Act
("CERCLA"), 42 U.S.C. 9601 et seq.; or the Hazardous Materials Transportation
Act, 49 U.S.C. 1802, as amended and hereafter amended; (ii) "hazardous wastes",
as that term is defined by the Resource Conservation and Recovery Act ("RCRA"),
42 U.S.C. 6902 et seq., as amended and hereafter amended; (iii) "contaminants"
or "hazardous waste", as those terms are defined by I.C. 13-7-1-2, as amended
and hereafter amended; and (iv) any pollutant or contaminant or hazardous,
dangerous or toxic chemicals, materials, or substances within the meaning of
any other applicable federal, state, or local law, regulation, ordinance, or
requirement (including consent decrees and administrative orders) relating to
or imposing liability or standards of conduct concerning any hazardous, toxic
or dangerous waste substance or material, all as amended or hereafter amended.
Hazardous Material shall also include (v) crude oil or any fraction thereof
which is liquid at standard conditions of temperature and pressure (60 degrees
Fahrenheit and 14.7 pounds per square inch absolute); (vi) any radioactive
material, including any source, special nuclear or by-product material as
defined at 42 U.S.C. 2011 et seq., s amended or hereafter amended; (vii)
asbestos in any form or condition; and (viii) polychlorinated biphenyls
("PCB's") or substances or compounds containing PCB's.
13. Acceleration of Indebtedness in Case of Default: Any one of the
following events shall be deemed an "Event of Default" hereunder: (a) if
default be made in the due and punctual payment of the Note, or any installment
due in accordance with the terms thereof, either of principal or interest or in
the payment of any other sum required to be paid by Mortgagor or the maker of
the Note set forth in the Note, and any such default continues after the
expiration of any applicable grace or cure period; or (b) if Mortgagor shall
file a petition in voluntary bankruptcy or under Title 11 of the United States
Code or any other similar law, statute or regulation, state or federal, whether
now or hereafter existing, or an answer admitting insolvency or inability to
pay its debts, or fail to obtain a vacation or stay of involuntary proceedings
within ninety (90) days; or (c) if Mortgagor shall be adjudicated bankrupt or a
<PAGE>
trustee or receiver shall be appointed for Mortgagor for all of its property or
the major part thereof in any involuntary proceeding, or any court shall have
taken jurisdiction of the property of Mortgagor or the major part thereof in
any involuntary proceedings for the reorganization, dissolution, liquidation or
winding up of Mortgagor, and such trustee or receiver shall not be discharged
or such jurisdiction relinquished or vacated or stayed on appeal or otherwise
stayed with ninety (90) days; or (d) if Mortgagor shall make an assignment for
the benefit of creditors, or shall admit in writing its inability to pay its
debts generally as they become due, or shall consent to the appointment of a
receiver or trustee or liquidator of all of its property or the major part
thereof; or (e); if any representation or warranty made by Mortgagor in, under
or pursuant to the Note, or this Mortgage shall prove to have been false or
misleading in any material aspect as of the date on which such representation
or warranty was made; or becomes false or misleading thereafter and Mortgagor
fails to notify Mortgagee of such fact within thirty (30) days of learning of
such false or misleading warranty or fails to cure such default within thirty
(30) days of such notice, or in the absence of a notice from Mortgagor, if
mortgagee discovers a matter that would require Mortgagor to give mortgagee
notice under this paragraph, and Mortgagor fails to cure such default within
thirty days of any written notice from mortgagee; (f) if the holder of a
mortgage or of any other lien on the Mortgaged Premises (without hereby
implying Mortgagee's consent to any such mortgage or other lien) accepts or
agrees to accept a deed in lieu of foreclosure or institutes foreclosure
proceedings or other proceedings for the enforcement of its remedies thereunder
and the same remain undischarged or unbonded to Mortgagee's satisfaction for a
period of thirty (30) days; (g) if there shall have been an Event of Default or
other occurrence with respect to a Senior Mortgage (hereinafter defined) or
obligation secured thereby giving the holders of the Senior Mortgage
(hereinafter defined) the right to accelerate the indebtedness represented by
the Senior Mortgage (hereinafter defined) and such Event of Default or other
occurrence shall continue and remain uncured for a period of thirty (30) days
after written notice from Mortgagee to Mortgagor specifying such Event of
Default or other occurrence and requesting that same be remedied; (h) if the
holders of the Senior Mortgage (hereinafter defined) shall accelerate the
indebtedness represented thereby or institute proceedings to foreclose upon the
property covered by the Senior Mortgage (hereinafter defined); (i) if there is
a change in the actual or beneficial title or ownership of the Mortgaged
Property or a change in more than fifty percent (50%) of the interest of the
general partners, unless each of the following conditions shall have been
satisfied: (1) the financial reliability and capability and the management
ability of the prospective transferee shall be satisfactory to the Mortgagee;
(2) the transferee shall assume and agree to perform the terms of the note
secured by the Senior Mortgage (hereinafter defined) if still outstanding, the
Note, the indebtedness and this Mortgage; and (3) the Mortgagor and any
subsequent assignor shall remain liable for performance of the note secured by
the Senior Mortgage (hereinafter defined) if still outstanding; or (j) if
default shall be made in the due observance or performance of any other of the
covenants, agreements or conditions contained in this Mortgage, and required to
be kept or performed or observed by Mortgagor, other than the defaults
described in the preceding clauses (a) through (j) of this Paragraph 13 and any
other defaults deemed to be "Events of Default" hereunder, and the same shall
continue for thirty (30) days after written notice given by Mortgagee to
Mortgagor, or if such default cannot reasonably be cured within such thirty
(30) day period, then within such additional time as may be reasonably
necessary to cure such default, provided Mortgagor commences such cure within
such initial (30) day period and thereafter diligently pursues such cure. Upon
the occurrence of an Event of Default, then and in every such case the whole of
<PAGE>
said principal sum hereby secured shall, at once, at the option of Mortgagee,
become immediately due and payable, together with accrued interest thereon.
14. Foreclosure; Expense of Litigation:
A. If an Event of Default has occurred hereunder, or when the
indebtedness hereby secured, or any part thereof, shall become due, whether by
acceleration or otherwise, Mortgagee shall have the right to foreclose the lien
hereof for such indebtedness or part thereof, and in such event, the owner of
the Note may accelerate the payment of same and may institute proceedings to
foreclose this Mortgage for the entire amount then unpaid with respect to the
Note. In any suit to foreclose the lien hereof, there shall be allowed and
included as additional indebtedness in the decree for sale all expenditures and
expenses which may be paid or incurred by or on behalf of Mortgagee for
reasonable attorneys' fees, appraiser's fees, outlays for documentary and
expert evidence, stenographer's charges, publication costs, and costs (which
may be estimated as to items to be expended after entry of the decree) of
procuring all such abstracts of title, title searches and examinations, title
insurance policies and similar data and assurances with respect to title as
Mortgagee may deem reasonably necessary either to prosecute such suit or to
evidence to bidders at any sale which may be had pursuant to such decree the
true condition of the title to or the value of the Premises. All expenditures
and expenses of the nature in this paragraph mentioned, and such expenses and
fees as may be incurred in the protection of said Premises and the maintenance
of the lien of this Mortgage, including the fees of any attorney employed by
Mortgagee in any litigation or proceeding affecting this Mortgage, the Note or
the Premises, including probate and bankruptcy proceedings, or in preparations
for the commencement or defense of any proceeding or threatened suit or
proceeding, shall be due and payable by Mortgagor promptly upon demand and
shall be secured by this Mortgage.
B. This Mortgage may be foreclosed once against all, or
successively against any portion or portions of the Premises, as Mortgagee may
elect. This Mortgage and the right of foreclosure hereunder shall not be
impaired or exhausted by one or any foreclosure or by one or any sale, and may
be foreclosed successively and in parts, until all of the Premises have been
foreclosed against and sold. Mortgagor waives and relinquishes any and all
rights that Mortgagor may have to cause or compel a sale of any part or parcel
of the Premises less than the entire Premises.
C. Mortgagee may employ counsel for advice or other legal service
at Mortgagee's discretion in connection with any litigation or threatened
litigation to which Mortgagee may be made a party which affects the title to
the Mortgaged Premises or the validity of the indebtedness hereby secured, and
any reasonable attorneys' fees so incurred shall be added to and be a part of
the debt hereby secured. Any costs and expenses reasonably incurred in
connection with any other litigation or threatened litigation affecting said
debt or Mortgagee's title to the Mortgaged Premises, including reasonably
estimated amounts to conclude the transaction, shall be added to and be a part
of the indebtedness hereby secured. All such amounts shall be payable by
Mortgagor to Mortgagee promptly upon demand, and if not paid, shall be included
as a part of the mortgage debt and shall bear interest at the default rate
provided for in the Note.
<PAGE>
D. The proceeds of any foreclosure sale of the Premises shall be
distributed and applied in the following order of priority: first, on account
of all costs and expenses incident to the foreclosure proceedings, including
all such items as are mentioned in the preceding subparagraphs hereof, second,
on account of all other items which under the terms hereof constitute secured
indebtedness additional to that evidenced by the Note, with interest thereon as
herein provided; third, on account of all principal and interest remaining
unpaid on the Note in the order of priority therein described; and fourth, any
overplus to Mortgagor, its successors or assigns, as their rights may appear.
E. After an Event of Default, Mortgagee shall have the right and
option to commence a civil action to foreclose the lien of this Mortgage and to
obtain an order or judgment of foreclosure and sale subject to the rights of
any tenant or tenants of the Premises. The failure to join any tenant or
tenants of the Premises as party defendants in any such civil action or the
failure of any such order or judgment to foreclose their rights shall not be
asserted by Mortgagor as a defense in any civil action instituted to collect
the indebtedness secured hereby, or any part thereof, any statute or rule of
law at any time existing to the contrary notwithstanding.
15. Appointment of Receiver: Upon, or at any time after, the filing of a
complaint to foreclose this Mortgage, the court in which such complaint is
filed shall, upon the election of Mortgagee, appoint a receiver of the
Premises. Such appointment may be made either before or after sale, upon
notice, without regard to the solvency or insolvency of Mortgagor at the time
of application for such receiver and without regard to the then value of the
Premises or whether the same shall be then occupied as a homestead or not and
Mortgagee hereunder or any holder of the Note may be appointed as such
receiver. Such receiver shall have power to collect the rents, issues and
profits of the Premises during the pendency of such foreclosure suit and, in
case of a sale and a deficiency, during the full statutory period of
redemption, whether there be redemption or not, as well as during any further
times when Mortgagor, except for the intervention of such receiver, would be
entitled to collect such rents, issues and profits, and all other powers which
may be necessary or are usual in such cases for the protection, possession,
control, management and operation of the Premises during the whole of said
period. The court from time to time may authorize the receiver to apply the
net income in his hands after deducting reasonable compensation for the
receiver and his counsel as allowed by the court, in payment (in whole or in
part) of any or all of any obligation secured hereby, including without
limitation the following, in such order of application as Mortgagee may elect:
(i) amounts due upon the Note, (ii) amounts due upon any decree entered in any
suit foreclosing this Mortgage, (iii) costs and expenses of foreclosure and
litigation upon the Premises; (iv) insurance premiums, repairs, taxes, special
assessments, water charges and interest, penalties and costs, in connection
with the Premises; (v) any other lien or charge upon the Premises that may be
or become superior to the lien of this Mortgage, or of any decree foreclosing
the same; provided that such application is made prior to foreclosure sale, and
(vi) the deficiency in case of a sale and a deficiency.
16. Mortgagee's Right of Possession In Case of Default:
A. In any case in which under the provisions of this Mortgage
Mortgagee has a right to institute foreclosure proceedings, whether before or
after the whole principal sum secured hereby is declared to be immediately due
as aforesaid, or whether before or after the institution of legal proceedings
<PAGE>
to foreclose the lien hereof or before or after sale thereunder, forthwith,
upon demand of Mortgagee, Mortgagor shall surrender to Mortgagee and Mortgagee
shall be entitled to take actual possession of the Premises or any part thereof
personally, or by its agents or attorneys, as for condition broken, and
Mortgagee in its discretion may, with or without force and with or without
process of law, enter upon and take and maintain possession of all or any part
of the Premises, together with all documents, books, records, papers and
accounts of Mortgagor or the then owner of the Premises relating thereto, and
may hold, operate, manage and control the Premises and conduct the business, if
any, thereof, either personally or by its agents, contractors or nominees and
with full power to use such measures, legal or equitable, as in its reasonable
discretion or in the reasonable discretion of its successors or assigns may be
deemed proper or necessary to enforce the payment or security of the avails,
rents, issues and profits of the Premises, including actions for the recovery
of rent, actions in forcible detainer and actions in distress for rent, hereby
granting full power and authority to exercise each and every of the rights,
privileges and powers herein granted at any and all times hereafter and with
full power: (i) to cancel or terminate any lease or sublease for any cause or
on any ground which would entitle Mortgagor to cancel the same; (ii) to elect
to disaffirm any lease or sublease made subsequent to this Mortgage or
subordinated to the lien hereof; (iii) to make all necessary or proper repairs,
decorating, renewals, replacements, alterations, additions, betterments and
improvements to the Premises, including completion of construction in progress,
as to it may seem judicious; (iv) to insure and reinsure the same and all
reasonable risks incidental to Mortgagee's possession, operation and management
thereof; (v) to employ watchmen to protect the Mortgaged Premises; (vi) to
continue any and all outstanding contracts for the erection and completion of
improvements to the Premises; (vii) to make and enter into any contracts and
reasonable obligations wherever necessary in its own name, and to pay and
discharge all debts, obligations and liabilities incurred thereby, all at the
expense of Mortgagor; (viii) to receive all avails, rents, issues, profits and
proceeds therefrom and to perform such other acts in connection with the
management and operation of the Mortgaged Premises as Mortgagee, in its
discretion, may deem proper; and (ix) to extend or modify any then existing
leases and to make new leases, which extensions, modifications and new leases
may provide for terms to expire, or for options to lessees to extend or renew
terms to expire, or for options to lessees to extend or renew terms to expire
beyond the date of the issuance of a deed or deeds to a purchaser or purchasers
at a foreclosure sale, it being understood and agreed that any such leases, and
the options or other such provisions to be contained therein, shall be binding
upon Mortgagor and all persons whose interests in the Premises are subject to
the lien hereof and upon the purchaser or purchasers at any foreclosure sale,
notwithstanding any redemption from sale, discharge of the Mortgage
indebtedness, satisfaction of any foreclosure decree or issuance of any
certificate of sale or deed to any purchaser.
B. Mortgagee shall not be obligated to perform or discharge, nor
does it hereby undertake to perform or discharge, any obligation, duty or
liability under any leases.
17. Application of Income Received by Mortgagee: Mortgagee, in the
exercise of the rights and powers hereinabove conferred upon it by Paragraph 9
and Paragraph 15 hereof, shall have full power to use and apply the avails,
rents, issues and profits of the Premises to the payment of or on account of
the following, in such order as Mortgagee may determine: (a) to the payment of
the operating expenses of the Premises including cost of management and leasing
thereof (which shall include reasonable compensation to Mortgagee and its agent
<PAGE>
or agents, if management be delegated to an agent or agents, and shall also
include lease commissions and other compensation and expenses of seeking and
procuring tenants and entering into leases), established claims for damages, if
any, and premiums on insurance hereinabove authorized; (b) to the payment of
taxes and special assessments now due or which may hereafter become due on the
Premises; (c) to the payment of all repairs, decorating, renewals,
replacements, alterations, additions, betterments, and improvements of the
Premises, and of placing said property in such condition as will, in the
reasonable judgment of Mortgagee, make it readily rentable; and (d) to the
payment of any indebtedness secured hereby or any deficiency which may result
from any foreclosure sale.
18. Access by Mortgagee: Mortgagor shall permit access by Mortgagee to
its books and records, construction project reports, if any, tenant registers,
insurance policies and other papers for examination and making copies and
extracts thereof. Mortgagee, its agents and designees shall have the right to
inspect the Premises at all reasonable times and access thereto shall be
permitted for that purpose.
19. Condemnation: Mortgagor hereby assigns, offers and sets over unto
Mortgagee its entire interest in the proceeds (hereinafter referred to as the
"Condemnation Proceeds") of any award or any claim for damages for any of the
Mortgaged Premises taken or damaged under the power of eminent domain or by
condemnation or any action in lieu of condemnation or under threat of
(hereinafter referred to as "Condemnation"). Mortgagor hereby empowers
Mortgagee, in Mortgagee's sole discretion, and at its election to settle,
compromise and adjust any and all claims or rights arising under any
Condemnation relating to the Premises or any portion thereof. Mortgagor shall
so settle, compromise and adjust such claims or rights in the event Mortgagee
does not elect to do so as provided above. Nothing contained in this Mortgage
shall create any responsibility or obligation on Mortgagee to collect any
amount owing due to any Condemnation or to rebuild, repair or replace any
portion of the Premises or any improvements thereon or to perform any act
hereunder. Mortgagee may elect to apply the Condemnation Proceeds upon or in
reduction of the indebtedness secured hereby, whether due or not, or to require
Mortgagor to restore or rebuild, in which event the Condemnation Proceeds shall
be held by Mortgagee and used to reimburse Mortgagor for the cost of the
rebuilding or restoring of buildings or improvements on the Premises, in
accordance with plans and specifications to be submitted to and approved by
Mortgagee. Notwithstanding the foregoing, if Mortgagor is obligated to restore
or replace the damaged or destroyed buildings or improvements under the terms
of any lease or leases which are or may be prior to the lien of this Mortgage
and if such taking does not result in cancellation or termination of such
lease, the Condemnation Proceeds shall first be used to reimburse Mortgagor for
the cost of rebuilding or restoring of buildings or improvements on the
Premises, provided no Event of Default then exists under this Mortgage. In the
event Mortgagor is required or authorized, by Mortgagee's election as
aforesaid, to rebuild or restore, the Condemnation Proceeds shall be paid out
in the same manner as is provided in Paragraph 5 hereof for the payment of
insurance proceeds toward the cost of rebuilding or restoration. If the amount
of the Condemnation Proceeds is insufficient to cover the cost of rebuilding or
restoration, Mortgagor shall pay such cost in excess of the award, before being
entitled to reimbursement out of the award. Any surplus which may remain out
of said award after payment of such cost of rebuilding or restoration shall, at
the option of Mortgagee, be applied on account of the indebtedness secured
hereby or be paid to any other party entitled thereto.
<PAGE>
20. Non-Waiver of Rights. The holders of the indebtedness may seek
collection of the indebtedness from any other person or entity obligated
thereon or resort to any security given by this Mortgage or to any other
security now existing or hereafter given to secure the payment of any of the
indebtedness, in whole or in part, and in such portions and in such order as
may seem best to such holders in their sole and uncontrolled discretion, and
any such action shall not in anywise be considered as a waiver of any of the
rights, benefits or liens created hereby.
21. Release Upon Payment and Discharge of Mortgagor's Obligations:
Mortgagee shall release this Mortgage and the lien thereof by proper instrument
upon payment and discharge of all indebtedness and other obligations secured
hereby and upon payment of a reasonable fee to Mortgagee for preparation of any
necessary instruments.
22. Waiver of Defense: No action for the enforcement of the lien or of
any provision hereof shall be subject to any defense which would not be good
and available to the party interposing same in an action at law upon the Note.
23. Waiver of Statutory Rights: To the full extent permitted by law,
Mortgagor hereby covenants and agrees that it will not at any time insist upon
or plead, or in any manner whatsoever claim or take any advantage of, and
hereby voluntarily and knowingly waives, any stay, exemption, redemption,
reinstatement, homestead or extension law or any so-called "Moratorium Law" now
or at any time hereafter in force, nor claim, take or insist upon any benefit
or advantage of or from any law now or hereafter in force providing for the
valuation or appraisement of the Mortgaged Premises, or any part thereof, prior
to any sale or sales thereof to be made pursuant to any provisions herein
contained, or to any decree, judgment or order of any court of competent
jurisdiction; or after such sale or sales claim or exercise any rights under
any statute now or hereafter in force to redeem the property so sold, or any
part thereof, or relating to the marshaling thereof, upon foreclosure sale or
other enforcement hereof, on its own behalf, on behalf of all persons or
entities claiming or having an interest (direct or indirect) by, through or
under Mortgagor and on behalf of each and every person or entity acquiring any
interest in or title to the Mortgaged Premises subsequent to the date hereof.
Without limiting the foregoing, Mortgagor acknowledges that the transaction of
which this Mortgage is a part is a transaction which does not include either
agricultural or residential real estate. To the full extent permitted by law,
Mortgagor agrees that it will not, by invoking or utilizing any applicable law
or statute or otherwise, hinder, delay or impede the exercise of any right,
power or remedy herein or otherwise granted or delegated to Mortgagee, but will
suffer and permit the exercise of every such right, power and remedy as though
no such law or statute or other restriction have been or will have been made or
enacted. To the full extent permitted by law, Mortgagor hereby agrees that no
action for the enforcement of the lien or any provision hereof shall be subject
to any defense which would not be good and valid in an action at law upon the
Note. Mortgagor hereby expressly waives any right which it may have to direct
the order in which any of the Mortgaged Premises shall be sold in the event of
any sale thereof pursuant hereto.
24. Mortgagor's Additional Covenants: Mortgagor further covenants and
agrees with Mortgagee, its successors and assigns as follows:
<PAGE>
24.1 Mortgagor will comply in all material respects and cause
compliance in all material respects by tenants with all of the material terms,
conditions and provisions of all leases on the Premises so that the same shall
not become in default or be canceled, terminated or declared void, and will do
all that is needful or required to preserve all said leases in force. Except
for taxes and assessments to be paid by Mortgagor pursuant to paragraph 3 of
this Mortgage, Mortgagor will not create or suffer or permit to be created,
subsequent to the date of this Mortgage, any lien or encumbrance which may be
or become superior to any lease affecting the Premises.
24.2 Mortgagor will pay or cause to be paid all utility charges
incurred in connection with the Premises and all improvements thereon and
maintain all utility services now or hereafter available for use at the
Premises.
24.3 Mortgagor shall, within fifteen (15) days after a written
request by Mortgagee, furnish from time-to-time a signed statement setting
forth the amount of the obligation secured hereby and whether or not any Event
of Default, offset or defense then is alleged to exist against the same or with
respect to any lease affecting its premises and, if so, specifying the nature
thereof.
24.4 Mortgagor will pay all filing, registration, recording and
search and information fees, and all expenses incident to the execution and
acknowledgment of this Mortgage and all other documents securing the
indebtedness secured hereby and all federal, state, county and municipal taxes,
other taxes, duties, imposts, assessments and charges arising out of or in
connection with the execution, delivery, filing, recording or registration of
the indebtedness secured hereby, this Mortgage and all other documents securing
the indebtedness secured hereby and all assignments thereof.
24.5 Mortgagor covenants that the proceeds of the indebtedness
secured hereby will not be used for the purchase or carrying of registered
equity securities within the purview and operation of Regulation G issued by
the Board of Governors of the Federal Reserve System.
24.6 Mortgagor covenants that it shall not incur any additional
obligations or indebtedness secured by the Senior Mortgage (hereinafter
defined), except as expressly provided under the Senior Mortgage, without the
consent of Mortgagee. In addition, if Mortgagor renews, extends, modifies or
refinances the indebtedness secured by the Senior Mortgage (hereinafter
defined), the amount of indebtedness secured by the Senior Mortgage, or any
amended or new Senior Mortgage, shall not exceed the amount owing on the Senior
Mortgage (hereinafter defined) as of the date of such renewal, extension,
modification or refinancing determined without regard to the effect of such
renewal, extension, modification or refinancing. Mortgagee agrees that it
shall cooperate with Mortgagor in the event Mortgagor seeks to refinance any
Senior Mortgage (hereinafter defined) and shall execute any reasonable
documents necessary to maintain the relative rights and position of the parties
as Senior and Junior mortgagees. Mortgagor further covenants that it shall
provide Mortgagee notice of any and all defaults with respect to the Senior
Mortgage (hereinafter defined).
25. Usury Laws, Etc.:
<PAGE>
25.1 Mortgagor represents and agrees that the principal obligation
secured hereby constitutes a business loan.
25.2 If from any circumstances whatever fulfillment of any provision
of this Mortgage or the Note at the time performance of such provision shall be
due shall involve transcending the limit of validity prescribed by applicable
usury statute or any other law, then ipso facto the obligation to be fulfilled
shall be reduced to the limit of such validity, and paid according to the
provisions of the Note, so that in no event shall any exaction be possible
under this Mortgage or the Note that is in excess of the limit of such
validity; but such obligation shall be fulfilled to the limit of such validity.
In no event shall Mortgagor, its successors or assigns, be bound to pay for the
use, forbearance or detention of the money loaned and secured hereby interest
of more than the legal limit, and the right to demand any such excess shall be
and hereby is waived. The provisions of this paragraph shall control every
other provision of this Mortgage and the Note.
26. Binding on Successors and Assigns; Gender: This Mortgage and all
provisions hereof shall extend to and be binding upon Mortgagor, its
successors, vendees and assigns and all persons claiming under or through
Mortgagor, and the word "Mortgage" when used herein shall include all such
persons and all persons liable for the payment of the indebtedness or any part
thereof, whether or not such persons shall have executed the Note or this
Mortgage. The word "Mortgagee" when used herein shall include the successors,
vendees and assigns of Mortgagee named herein, and the holder or holders, from
time to time, of the Note. Wherever used, the singular number shall include
the plural and the plural the singular, and the use of any gender shall be
applicable to all genders.
27. Captions: The captions and headings of various paragraphs of this
Mortgage are for convenience only and are not to be construed as defining or
limiting, in anyway, the scope or intent of the provisions hereof.
28. Severability: In the event any of the provisions contained in this
Mortgage shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, legality or unenforceability shall, at the
option of Mortgagee, not affect any other provision of this Mortgage, the
obligations secured hereby and same shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein and therein.
This Mortgage has been executed and delivered at Indianapolis, Indiana, and
shall be construed in accordance with and governed by the laws of the State of
Indiana.
29. Mortgagor not a Joint Venturer or Partner: Mortgagor and Mortgagee
acknowledge and agree that in no event shall Mortgagee be deemed to be a
partner or joint venturer with Mortgagor or any beneficiary of Mortgagor.
Without limitation of the foregoing, Mortgagee shall not be deemed to be such a
partner or joint venturer on account of its becoming a mortgagee in possession
or exercising any rights pursuant to this Mortgage or pursuant to any other
instrument or document evidencing or securing any of the indebtedness secured
hereby, or otherwise.
30. Defeasance Clause: If Mortgagor pays to Mortgagee said principal sum
and all other sums payable by Mortgagor to Mortgagee as are hereby secured, in
accordance with the provisions of the Note and in the manner and at the times
therein set forth, without deduction, fraud, or delay, then and from
<PAGE>
thenceforth this Mortgage, and the estate hereby granted, shall cease and
become void, anything herein contained to the contrary notwithstanding.
31. Flood Insurance: If the Mortgaged Premises are now or hereafter
located in an area which has been identified by the Secretary of Housing and
Urban Development as a flood hazard area and in which flood insurance has been
made available under the National Flood Insurance Act of 1968 (the "Act"),
Mortgagor will keep the Mortgaged Premises covered for the term of the Note by
flood insurance up to the maximum limit of coverage available under the Act.
32. Mortgagee's Right to Exercise Remedies: The rights and remedies of
Mortgagee as provided in the Note and in this Mortgage or available under
applicable law, shall be cumulative and concurrent and may be pursued
separately, successively or together against Mortgagor or against other
obligors, if any, or against the Mortgaged Premises, or against any one or more
of them, at the sole discretion of Mortgagee, and may be exercised as often as
occasion therefor shall arise.
33. Incorporation of Riders, Exhibits and Addends: All riders, exhibits
and addenda attached to this Mortgage are by express and specific reference
incorporated in and made a part of this Mortgage; and with the proviso that the
covenants contained in each of said riders, exhibits and addenda, and the other
things therein set forth shall have the same force and effect as any other
covenant or thing herein expressed.
34. Subrogation: To the extent that Mortgagee, on or after the date
hereof, pays any sum due under any provision or law or any instrument or
document creating any lien prior or superior to the lien of this Mortgage, or
Mortgagor or any other person pays any such sum with the proceeds of the loan
secured hereby, Mortgagee shall have and be entitled to a lien on the Mortgaged
Premises equal in priority to the lien discharged (but in no event superior to
the Senior Mortgage), and Mortgagee shall be subrogated to, and receive and
enjoy all rights and liens possessed, held or enjoyed by, the holder of such
lien, which shall remain in existence and benefit Mortgagee in securing the
indebtedness secured hereby. Mortgagee shall be subrogated, notwithstanding
their release of record, to the lien of all mortgages, trust deeds, superior
titles, vendors' liens, liens, charges, encumbrances, rights and equities on
the Mortgaged Premises, to the extent that any obligation under any thereof is
directly or indirectly paid or discharged with proceeds of disbursements or
advances under the Note.
35. Security Agreement: This Mortgage shall be deemed a Security
Agreement as defined in the Indiana Uniform Commercial Code. This Mortgage
creates a security interest in favor of Mortgagee in all property owned by
Mortgagor, and not any tenants, including all personal property, fixtures and
goods affecting property either referred to or described herein or in any way
connected with the use or enjoyment of the Premises. The remedies for any
violation of the covenants, terms and conditions of the agreements herein
contained shall be (a) as prescribed herein, or (b) by general law, or (c) as
to such part of the security which is also reflected in any Financing Statement
filed to perfect the security interest herein created, by the specific
statutory consequences now or hereinafter enacted and specified in the Indiana
Uniform Commercial Code, all at Mortgagee's sole election. Mortgagor and
Mortgagee agree that the filing of such a Financing Statement in the records
normally having to do with personal property shall never be construed as in
anywise derogating from or impairing this declaration and the hereby stated
intention of the parties hereto, that everything used in connection with the
<PAGE>
production of income from the Mortgaged Premises and/or adapted for use therein
and/or which is described or reflected in this Mortgage is, and at all times
and for all purposes and in all proceedings both legal or equitable shall be,
regarded as part of the real estate irrespective of whether (i) any such item
is physically attached to the improvements, (ii) serial numbers are used for
the better identification of certain equipment items capable of being thus
identified in a recital contained herein or in any list filed with Mortgagee,
or (iii) any such item is referred to or reflected in any such Financing
Statement so filed at any time. Similarly, the mention in any such Financing
Statement of (i) the rights in or the proceeds of any fire and/or hazard
insurance policy, or (ii) any award in eminent domain proceedings for a taking
or for loss of value, or (iii) the debtor's interest as lessor in any present
or future lease or rights to income growing out of the use and/or occupancy of
the Premises, whether pursuant to lease or otherwise, shall never be construed
as in anywise altering any of the rights of Mortgagee as determined by this
instrument or impugning the priority of Mortgagee's lien granted hereby or by
any other recorded document, but such mention in the Financing Statement is
declared to be for the protection of Mortgagee in the event any court or judge
shall at any time hold with respect to (i), (ii) and (iii) that notice of
Mortgagee's priority of interest to be effective against a particular class of
persons, including, but not limited to, the Federal government and any
subdivisions or entity of the Federal government, must be filed in the
Commercial Code records. Notwithstanding the aforesaid, Mortgagor covenants
and agrees that so long as any balance remains unpaid on the Note, it will
execute (or cause to be executed) and delivered to Mortgagee, such renewal
certificates, affidavits, extension statements or other documentation in proper
form, so as to keep perfected the lien created by any Security Agreement and
Financing Statement given to Mortgagee by Mortgagor, and to keep and maintain
the same in full force and effect until the entire principal indebtedness and
all interest to accrue thereunder has been paid in full; with the proviso that
the failure of the undersigned Mortgagor to so do shall constitute an Event of
Default hereunder.
36. No Oral Modifications: This Mortgage may not be modified, amended,
discharged or waived orally, except by an agreement in writing and signed by
the party against whom enforcement of any such modification, amendment,
discharge or waiver is sought. It is understood and agreed that all
understandings and agreements heretofore had between the parties hereto are
merged in this Mortgage and the exhibits annexed hereto, which alone fully and
completely express their agreements, and that Mortgagor is not relying upon any
statement or representation not embodied in this Mortgage made by Mortgagee.
37. Management. In the event the conduct of the business of the
Mortgaged Premises shall be managed by an entity other than J. Herzog & Sons,
Inc.or an entity to whom ownership of the mortgaged premises could be
transferred pursuant to paragraph 13(i) hereinabove without the need to satisfy
the conditions contained in said section 13(i), such different management shall
be subject to prior consent in writing by Mortgagee, whose consent shall not be
unreasonably withheld. Prior to employment of such new management, mortgagor
shall notify Mortgagee in writing of his intent so to do furnishing the
following information concerning the intended manager: (i) name and address;
(ii) experience; (iii) financial reliability; (iv) reputation in the trade; and
(v) references upon which Mortgagee can rely to make its decision. Provided,
however, that Mortgagee's consent shall not be required if Mortgagor retains a
local management company for the purpose of providing for the on-site
management of the Mortgaged Premises so long as Mortgagor retains overall
management responsibility for the Mortgaged Premises.
<PAGE>
38. Governing Law and Jurisdiction. This Mortgage shall be governed by
the laws of the State of Indiana. Any action brought to enforce any of the
provisions of this Mortgage or otherwise relating to this Mortgage shall be
brought only in the Federal or State courts located in Marion County, Indiana,
and such courts shall have exclusive jurisdiction over any such action.
Mortgagor hereby waives any right to a trial by jury in any such action.
39. Notices: All notices hereunder shall be in writing and shall be
deemed to have been sufficiently given or served for all purposes when given as
provided in the Note.
40. Junior Mortgage Covenant: This Mortgage is a Junior Mortgage, the
lien of which is junior, subject and subordinate to the lien of any first
mortgage now existing or hereafter recorded against the Mortgaged Premises
(hereinafter referred to as a "Senior Mortgage"), and to any renewals,
extensions, modifications, and replacements thereof, in whole or part. Subject
to the provisions of subparagraph 24.6 above, in the event the current Senior
Mortgage is refinanced and an amendment to the Senior Mortgage or a new Senior
Mortgage is recorded against the Mortgaged Premises, Mortgagee agrees that this
Mortgage shall be subject and subordinate to the lien of any such amended
Senior Mortgage or new Senior Mortgage and that such subordination shall be
self-executing without the requirement of any further documentation; provided
that such refinancing complies with the provisions of paragraph 24.6. Such
subordination shall apply to subsequent refinancings after any initial
refinancing subject to the provisions of paragraph 26 hereinabove.
Notwithstanding anything herein to the contrary, all rights of Mortgagee
under this Mortgage are subject to the rights of the holder of the Senior
Mortgage so long as the same remains unpaid; but only in the event that the
provisions hereof conflict with, or are inconsistent with, or cover the same
subject matters as provisions of the Senior Mortgage.
41. Exculpatory Clause: Subject to the provisions set forth below,
neither Mortgagor nor any of its partners shall be personally liable to pay or
perform the obligations under the Note, this Mortgage or any other documents
evidencing the indebtedness hereunder and the Mortgagee agrees to look solely
to the Mortgaged Premises and any other collateral, now, or hereafter pledged
by any party to secure the Note. Notwithstanding the foregoing, Mortgagor
shall be personally liable:
A. For all losses, damages, costs and expenses including attorneys'
fees incurred by Mortgagee as a result of (i) any failure after the occurrence
and during the continuance of any default (without benefit of any applicable
grace or cure period), to apply any portion of the gross income from the
Mortgaged Premises to the Senior Mortgage, the Note or to customary operating
expenses of the Mortgaged Premises, (ii) any material misrepresentation in
connection with the covenant contained in paragraph 2.2 of this Mortgage, fraud
or any misappropriation of any funds deriving from the Mortgaged Premises (such
as insurance proceeds or condemnation awards),or (iii) any breach of any
representation covenant or obligation concerning hazardous materials set forth
in Section 12 hereof.
B. In the event of any breach of any of the covenants in
paragraphs 1(b), 13(i), 24.6 and/or 37 of this Mortgage:
<PAGE>
(i) In the case of a breach of the covenant in paragraph (1)(b) of
this Mortgage, to the extent that Mortgagor has distributed or paid over any
funds derived from the Mortgaged Property to its partners;
(ii) in the case of a breach of the covenant in paragraph 13(i) of
this Mortgage, to the extent that such breach impairs the value of Mortgagee's
interest in the Mortgaged Property;
(iii) in the case of a breach of the covenant in paragraph 24.6 of
this Mortgage, only to the extent that such additional indebtedness is not
expressly provided for under the Senior Mortgage and only to the extent of such
increase in the amount secured by the Senior Mortgage;
(iv) in the case of a breach of the covenant in paragraph 37 of this
Mortgage, to the extent that such breach impairs the value of Mortgagee's
interest in the Mortgaged Property.
The foregoing shall in no way limit or impair the enforcement against the
Mortgaged Premises or any other security granted by the loan documents of any
of the Mortgagee's rights and remedies pursuant to the loan documents.
IN WITNESS WHEREOF, Mortgagor has caused these presents to be signed by
its ________________________ on the day and year first above written.
By:_____________________________________
Its:____________________________________
<PAGE>
STATE OF ____________)
)
COUNTY OF __________ )
I, __________________, a Notary Public in and for said County in the State
aforesaid, DO HEREBY CERTIFY that _____________________________, as
_____________________ of ___________________________________, who is personally
known to me to be the same person whose name is subscribed to the foregoing
instrument as such ___________________ of said Company, appeared before me this
day in person and acknowledged that ____________________________ signed and
delivered the said instrument as - own free and voluntary act and as the free
and voluntary act of said Company, for the uses and purposes therein set forth.
GIVEN under my hand and notarial seal this ______ day of
_________________, 1996.
-------------------------------------
Notary Public
<PAGE>
EXHIBIT "A"
LEGAL DESCRIPTION OF THE LAND
<PAGE>
THE OBLIGATION REPRESENTED BY THIS NOTE IS SUBJECT TO THE TERMS OF A
SUBORDINATION AGREEMENT, DATED ________________________, 1996 IN FAVOR OF FORT
WAYNE NATIONAL BANK WHICH IS MADE A PART HEREOF, RESTRICTING THE RIGHTS OF THE
MAKER AND ANY HOLDER WITH RESPECT TO THE PAYMENT OF PRINCIPAL AND INTEREST
HEREUNDER.
PRINCIPAL NOTE
$ 370,000.00
______________, 199___
1. Agreement to Pay. FOR VALUE RECEIVED, the undersigned,
___________________________, a _________________________________ (hereinafter
referred to as the "Maker"), hereby promises to pay to the order of HUNTINGTON
PLAZA LIMITED PARTNERSHIP, an Illinois Limited Partnership, its endorsees or
assigns (hereinafter referred to as the "Payee"), in the manner hereinafter
provided, the principal sum of THREE HUNDRED SEVENTY THOUSAND AND NO/100THS
DOLLARS ($370,000.00), on or before ________________________, 2006, together
with interest from the date hereof, on the unpaid principal balance outstanding
from time-to-time, at the rate of eight percent (8%) per annum, payable as
follows:
(a) Interest only, at the rate of eight percent (8%) per annum shall
be due on the first day of the month following the date (hereinafter referred
to as the "Closing Date") of the closing of the acquisition by the Maker from
the Payee of the real estate encumbered by the Mortgage (hereinafter defined)
for the period of time commencing with the Closing Date through the last day of
the month in which the Closing Date occurs. If the Closing Date occurs on the
first day of the month, this paragraph shall be inapplicable and the first
payment shall be comprised of principal and interest as provided in
subparagraph (b) hereof.
(b) Commencing on the first day of the month following the Closing
Date if such date is on the first day of the month and, if not, then on the
first day of the second month after the Closing Date, installments of principal
and interest shall be due and payable in the amount of
_________________________________________________________, such payments to
continue monthly thereafter on the first day of each succeeding month for a
total of one hundred twenty (120) months; provided, however, that
notwithstanding the foregoing, the entire principal balance and all such
accrued interest, if not sooner paid, shall finally mature and become due and
payable on the Maturity Date.
(c) All interest hereunder shall be computed for the actual number
of days elapsed on the basis of a year consisting of three hundred sixty (360)
days.
(d) Notwithstanding the foregoing, the amount of this Note shall be
adjusted by applying the following formula, in which the year refers to the
year in which the real estate taxes on the Property are payable:
<PAGE>
Step 1: Subtract the final 1996 true tax value of the Property for real
estate tax assessment purposes determined following the
conclusion of the pending appeal of such value from
$4,337,800.00.
Step 2: Multiply the amount determined in Step 1 by 1/3 and the
applicable 1996 real estate tax rate.
Step 3: Multiply the amount determined in Step 2 by 4.2315.
Step 4: The amount of the note shall be adjusted by the lesser of the
amount determined in step 3 or $40,000.00.
Such increase shall be retroactive to date of the execution of this Note.
The monthly payments shall thereafter be computed by applying the original
amortization method to the adjusted principal balance of this note. Maker
shall also make a one time payment within thirty (30) days of the date on which
the amount of the adjustment becomes known equal to the difference between the
total payments that would have been due under this paragraph based upon the
adjusted principal balance of this Note and the amounts actually paid prior to
that adjustment.
(e) Notwithstanding the foregoing, the amount of this Note shall be
adjusted in accordance with the readjustments for percentage rents and taxes
under section 12a of the Agreement of Sale, dated _________________________,
1996, between Maker and Huntington Plaza Limited Partnership ("Seller") for the
Property. In the event that the readjustment of percentage rent and taxes
results in a balance due from Seller to Maker, such balance due shall be
satisfied by Maker's setoff of such balance against the succeeding payments due
under this Note. In the event that the readjustment of percentage rents and
taxes results in a balance due from Maker to Seller, such balance due shall be
satisfied by Maker paying the amount of such balance due to Payee within thirty
(30) days of the date of such readjustment. No offset to the note attributable
to a readjustment relating to percentage rents shall be made more than eighteen
(18) months following the Closing Date.
2. Application of Payments. All payments received on account of the
indebtedness evidenced by this Note shall be applied first to interest and then
to principal.
3. Method and Place of Payment. All such payments of principal and
interest are to be paid in lawful money of the United States of America and
shall be made at such place as the legal holder of this Note may from
time-to-time in writing appoint, and in the absence of such appointment, at the
office of the Payee, c/o The Balcor Company, 2355 Waukegan Road, Suite A200,
Bannockburn, Illinois 60015.
4. Default. The following shall be "Events of Default" hereunder:
(a) if default be made in any payment of (i) any interest herein
provided for, or (ii) the principal sums evidenced hereby, or any part thereof,
or (iii) any other sums payable pursuant to the terms of this Note or the
Mortgage (hereinafter defined) when the same may become due, if such default is
not cured within thirty (30) days after the due date, without the necessity of
any written notice from the Payee to the Maker; or
<PAGE>
(b) if Maker shall file a petition in voluntary bankruptcy or under
Title 11 of the United States Code or any other similar law, statute or
regulation, state or federal, whether now or hereafter existing, or an answer
admitting insolvency or inability to pay its debts, or fail to obtain a
vacation or stay of involuntary proceedings within ninety (90) days; or
(c) if Maker shall be adjudicated bankrupt or a trustee or receiver
shall be appointed for Maker for all of its property or the major part thereof
in any involuntary proceeding, or any court shall have taken jurisdiction of
the property of Maker or the major part thereof in any involuntary proceedings
for the reorganization, dissolution, liquidation or winding up of Maker, and
such trustee or receiver shall not be discharged or such jurisdiction
relinquished or vacated or stayed on appeal or otherwise stayed with ninety
(90) days; or
(d) if Maker shall make an assignment for the benefit of creditors,
or shall admit in writing its inability to pay its debts generally as they
become due, or shall consent to the appointment of a receiver or trustee or
liquidator of all of its property or the major part thereof; or
(e) if any representation or warranty made by Maker in, under or
pursuant to this Note or the Mortgage (hereinafter defined) shall prove to have
been false or misleading in any material aspect as of the date on which such
representation or warranty was made; or becomes false or misleading thereafter
and Maker fails to notify Payee of such fact within thirty (30) days of
learning of such false or misleading warranty or fails to cure such default
within thirty (30) days of such notices, or in the absence of a notice from
Maker, if Payee discovers a matter that would require Maker to give Payee
notice under this paragraph, and Maker fails to cure such default within thirty
days of any written notice from Payee; or
(f) if any other holder of a mortgage or of any other lien on the
real estate encumbered by the Mortgage (hereinafter defined) accepts or agrees
to accept a deed in lieu of foreclosure or institutes foreclosure proceedings
or other proceedings for the enforcement of its remedies thereunder and the
same remains undischarged or unbonded to Payee's satisfaction for a period of
thirty (30) days; or
(g) if there shall be a nonmonetary default under the Mortgage
(hereinafter defined) or there shall have been an Event of Default (as defined
in any applicable mortgage) or other occurrence with respect to any other
mortgage on the real estate encumbered by the Mortgage (hereinafter defined) or
any obligation secured thereby giving the holders of such mortgage the right to
accelerate the indebtedness represented by such mortgage and such Event of
Default or other occurrence shall continue and remain uncured for a period of
thirty (30) days after written notice from such mortgagee to Maker specifying
such Event of Default or other occurrence and requesting that same be remedied;
or
(h) if there is a change in the actual or beneficial title or
ownership of the real estate encumbered by the Mortgage (hereinafter defined)
or a change in more than fifty percent (50%) of the interest of Maker's general
partner(s), unless each of the following conditions shall have been satisfied:
(1) the financial reliability and capability and the management ability of the
prospective transferee shall be satisfactory to Payee; (2) the transferee shall
assume and agree to perform the terms of any Note secured by any mortgage
described in subparagraphs (f) and (g) above if still outstanding and this
<PAGE>
Note; and (3) the Maker and any subsequent assignor shall remain liable for
performance of any note secured by any mortgage described in subparagraphs (f)
and (g) above if still outstanding;
(i) if the conduct of the Maker's business relating to the real
estate encumbered by the Mortgage (hereinafter defined) shall be managed by an
entity other than J. Herzog & Sons, Inc.or an entity to whom ownership of such
real estate could be transferred without the need to satisfy the conditions
contained in subparagraph (h) above, and Maker fails to obtain Payee's prior
consent in writing to such different management. Prior to employment of such
new management, Maker shall notify Payee in writing of his intent so to do
furnishing the following information concerning the intended manager: (i) name
and address; (ii) experience; (iii) financial reliability; (iv) reputation in
the trade; and (v) references upon which Payee can rely to make its decision.
Payee's consent shall not be unreasonably withheld; provided that no default
shall exist if Maker retains a local management company for the purpose of
providing for the on-site management of the property so long as Maker retains
overall management responsibility for the property.
Upon the occurrence of any such Event of Default, at the option of the
holder of this Note, the whole of the principal sum then remaining unpaid
hereunder, together with all interest accrued thereon, shall immediately become
due and payable without notice. No waiver of any Event of Default by the
holder of this Note shall be deemed to constitute a waiver of the right of the
holder to enforce any other present or future Event of Default.
5. Late Charges. If any monthly installment of interest or principal
and interest is not paid when due, or the final payment of principal and
interest is not paid on the final due date hereof and such payment is not
received within ten (10) calendar days, the Maker agrees to pay a late charge
equal to eight Cents ($0.08) for each dollar of such unpaid installment or sum,
as compensation to the holder of the Note for the handling costs of such
delinquency.
6. Default Rate. From and after the maturity of this Note, either
according to its terms or as the result of a declaration of maturity made by
the holder hereof, or from and after the due date for the performance of any
covenants or conditions set forth in this Note of the Mortgage (hereinafter
defined) securing the same, regardless of any declaration of maturity, the
entire principal remaining unpaid hereunder shall bear interest at a default
rate of interest (the "Default Rate") equal to two percent (2%) per annum in
excess of the then applicable interest rate.
7. Interest Limitation. In the event the several interest provisions
hereof or any exactions provided for herein or in the Mortgage shall result, at
any time during the term hereof, in an effective rate of interest which, for
any month, transcends the limit of the usury or any other law applicable to the
Loan, all sums in excess of those lawfully collectible as interest for the
period in question shall, without further agreement or notice between or by any
party hereto, be applied upon principal immediately upon receipt of such monies
by the holder hereof, with the same force and effect as though the payer had
specifically designated such extra sums to be so applied to principal and the
holder hereof had agreed to accept such extra payments as a premium-free
prepayment.
<PAGE>
8. Attorneys' Fees. Upon the occurrence of an Event of Default, should
the holder retain an attorney to enforce the rights of the holder under this
Note or the Mortgage (hereinafter defined) securing the same, the Maker agrees
that, in addition to any principal, interest, late charges, or other sums which
may be due to the holder, the Maker shall also be liable for reasonable
attorneys' fees and costs of collection.
9. Waiver. To the extent permitted by law, the Maker and all endorsers,
guarantors, and all persons liable or to become liable on this Note waive:
(a) presentment, protest and demand, notice of protest, demand, and
dishonor; and
(b) all applicable appraisement, valuation and exemption rights.
10. Security. This Note is Secured by a Junior Mortgage and Security
Agreement (herein referred to as the "Mortgage") dated of even date herewith in
favor of the Payee, encumbering real property commonly known as Huntington
Plaza in Huntington County, Indiana (herein referred to as the "Property").
All the terms and provisions of the Mortgage are incorporated herein by
reference.
11. Prepayment. The indebtedness evidenced hereby may be prepaid, in
whole or in part, without the prior written consent of the holder hereof.
12. Notices. All notices hereunder shall be in writing and shall be
deemed to have been sufficiently given or served for all purposes when
presented personally, forwarded by expedited messenger with evidence of
delivery, or sent by registered or certified mail to the parties hereto as
follows:
If to the Maker:
With a copy to:
If to the Payee: c/o The Balcor Company
2355 Waukegan Road, Suite A200
Bannockburn, IL 60015
Attn: Ilona Adams
With copies to: The Balcor Company
2355 Waukegan Road, Suite A200
Bannockburn, IL 60015
Attn: Al Lieberman
AND
Schwartz & Freeman
401 North Michigan Avenue, Suite 1900
Chicago, IL 60611
Attn: Morton M. Poznak
<PAGE>
If to Betty K. Polak: 8037 Warbler Way
Indianapolis, IN 46256
With copies to: John R. Carr III
Buschmann, Carr & Shanks, P.C.
Ten West Market Street
1020 Market Tower
Indianapolis, IN 46204
or at such other address of which it shall have notified the party giving such
notice in writing. Whenever in this Note the giving of notice by mail or
otherwise is required, the giving of such notice may be waived in writing by
the person or persons entitled to receive such notice. All notices shall only
be effective upon delivery.
13. Captions. The captions to the Sections of this Note are for
convenience only and shall not be deemed part of the text of the respective
Sections and shall not vary, by implication or otherwise, any of the provisions
of this Note.
14. Governing Law. This Note shall be governed by the laws of the State
of Indiana, notwithstanding the place of execution, delivery, or payment.
15. Assignment. Maker acknowledges that it is contemplated that this
Note shall be assigned to Betty K. Polak contemporaneously herewith. Maker
hereby agrees that Betty K. Polak shall be entitled to the status of a holder
in due course as that term is defined in the Indiana Uniform Commercial Code as
same may be in force from time-to-time, and Maker hereby waives the right to
assert any claim or defense against Betty K. Polak that would not be valid as
against such a holder in due course. Provided, however, Betty K. Polak shall
not be entitled to the status of a holder in due course as to any defenses that
are based on her conduct subsequent to the date this Note is assigned to her.
16. Exculpation. Subject to the provisions set forth below, neither
Maker nor any of its partners shall be personally liable to pay or perform the
obligations under this Note, the Mortgage or any other documents evidencing the
indebtedness hereunder and Payee agrees to look solely to the real property
encumbered by the Mortgage and any other collateral now or hereafter pledged by
any party to secure the Note. Notwithstanding the foregoing, Maker shall be
personally liable for those obligations set forth in paragraph 41 of the
Mortgage.
17. The terms of the Subordination Agreement, dated ___________, 1996 in
favor of Fort Wayne National Bank shall control over the terms of this
Principal Note in the event of any conflict between the two.
IN WITNESS WHEREOF, the undersigned Maker has executed and delivered this
Note at Chicago, Illinois, as of the day and year first above written.
----------------------------------
By:
-------------------------------
<PAGE>
SATISFACTION AND RELEASE ("RELEASE")
The Release is entered into as of the 26 day of April, 1996, by and between
BALCOR PENSION INVESTORS, an Illinois Limited Partnership ("Balcor"),
HUNTINGTON PLAZA LIMITED PARTNERSHIP, an Illinois limited partnership
("Huntington"), and BETTY K. POLAK, individually ("Polak").
RECITALS
A. Balcor and Polak entered into an Agreement dated as of September 24, 1992,
("Agreement") which provided for among other things, certain rights that the
parties hereto were to have in that certain shopping center located in
Huntington, Indiana, known as Huntington Plaza (the "Property"), which
agreement was amended by an Amendment to Agreement as of September 25, 1992
("Amendment") and a Side Letter dated as of September 25, 1992 ("Side Letter").
The Agreement, Amendment, and Side Letter are collectively referred to herein
as the "Documents". Copies of the Documents are attached hereto as Exhibit A.
B. Huntington, as Seller, will, simultaneously with delivery by Polak of this
Release, enter with J. Herzog & Sons, Inc., as Purchaser, an Agreement of Sale
(the "Sale Agreement") which provides for the sale of the Property. A copy of
the proposed Sale Agreement is attached hereto as Exhibit B.
C. A portion of the purchase price for the Property will be paid by a note
from Purchaser or its assigns in the amount of Three Hundred Thousand Dollars
($300,000.00) (the "Note"), which Note will be secured by a Junior Mortgage
("Mortgage"). The Note will be endorsed to Polak without recourse and the
mortgage will likewise be assigned to Polak. Copies of the form of the Note
and mortgage are attached hereto as Exhibit C.
WITNESSETH:
NOW, THEREFORE, for good and valuable consideration the receipt of which is
hereby acknowledged, the parties hereto agree as follows:
1. Upon the Closing of the sale of the Property, proceeds to Huntington as
Seller will be generated in the amount of $2,400,000.00, plus or minus
prorations, and the parties anticipate that additional funds consisting, for
example, of post-closing rent will be paid to Huntington, all of which are
hereinafter referred to as "Proceeds". Proceeds will be further reduced by
Huntington's actual cost and expense of performing the Sale Agreement including
by way of illustration, but not limitation, title charges, escrow fees,
recording charges, copying and transmittal charges and attorney's fees ("Net
Proceeds"). Net Proceeds will consist of cash and the Note. Except as
provided in paragraph 2 below, Net Proceeds are to be allocated between Balcor
and Polak according to the Agreement, except that the amount allocated to
Balcor shall be $100,000.00 more than the amountthat Balcor would be entitled
to under the Agreement and the amount allocated to Polak shall be $100,000.00
less than the amount that Polak would be entitled to under the Agreement,
pursuant to the example of the Net Sales Proceeds Analysis attached hereto and
made a part hereof as Exhibit D, which allocated Net Proceeds are hereinafter
referred to as the Balcor Proceeds and the Polak Proceeds. Balcor further
agrees that within thirty (30) days following the Closing it shall prepare an
updated Exhibit D to reflect all transactions occurring subsequent to date
reflected on the original Exhibit D that are relevant to the allocation of Net
Proceeds, including but not limited to any post-closing rent paid to
<PAGE>
Huntington. Polak shall have a period of six (6) months from the date that
updated Exhibit D is received in which to audit the books and records related
to the operation of the Property and to notify Balcor that she intends to
assert a claim for adjustment and any such claim for which a notice is not sent
within the above period shall be forever barred. Balcor and Huntington shall
give Polak and her agents and representatives reasonable and prompt access to
the books and records related to the operation of the Property in order to
enable Polak to verify the accuracy of the information contained in updated
Exhibit D. Notwithstanding anything contained herein to the contrary, the
rights of Polak under this paragraph shall not be released until the expiration
of the six (6) month period set forth herein, extended by the time necessary to
resolve any claim made by Polak.
2. To induce Huntington to enter into the Sales Agreement, and to induce
Balcor to consent to the transaction, Polak agrees that the Note will be
allocated in its entirety at its principal face amount of $300,000.00, without
discount, to payment of the Polak Proceeds together with sufficient cash to pay
an amount equal to the full Polak Proceeds payable at Closing. Upon the
Closing and sale of the Property, Huntington will endorse the Note without
recourse to Polak. The entire Balcor Proceeds will be payable to it in cash at
the Closing. After Closing, further Net Proceeds, if any, will be allocated
between the parties in accordance with Exhibit D. Balcor agrees that it shall
assign the pending real estate tax appeal relating to the Property, including
all rights to any tax refund allocated to Balcor under the Sales Agreement, to
Polak at closing. Polak shall thereafter be responsible for pursuing the
appeal and shall be responsible for all fees and expenses incurred in
connection with the appeal.
3. Balcor and Polak agree that they shall deposit the sum of Twenty-Five
Thousand Dollars ($25,000.00) each from the cash proceeds payable to each of
them at Closing with First American Title Insurance Company ("Escrow Agent"),
as escrow agent, to be held for the purpose of satisfying claims that may be
made against Huntington arising out of (a) the breach of any warranty or
representation contained in the Sales Agreement; (b) any Seller's Affidavit
given Purchaser pursuant to paragraph 13 of the Sales Agreement, or any
settlement of any such claim, together with any reasonable attorneys fees and
other expenses incurred by Huntington, Balcor, or Polak in connection with any
such asserted claim ("Claim"). If no Claims have been made against the
escrowed funds within three months from the Closing or if any Claims made prior
thereto have been fully resolved, Escrow Agent shall return one-half (1/2) of
the then remaining escrowed funds to Balcor and the balance of the then
remaining escrowed funds shall be returned to Polak. If at the end of such
three month period there remain any unresolved Claims, Escrow Agent shall
distribute any balance remaining after reserving an amount sufficient to
satisfy any unresolved claims based on the assumption that such claims are
resolved in favor of the claimant. Any funds that are reserved which remain
after the resolution of all such Claims shall be promptly distributed. Polak's
liability to Huntington and Balcor for any Claims shall be limited to the
amount that Polak is hereby required to deposit in escrow. Notwithstanding
anything contained herein to the contrary the rights of Polak with respect to
the escrowed funds shall not be released until approval of the final report of
the Escrow Agent by Polak.
<PAGE>
4. Polak acknowledges that Huntington would not accept the Note as partial
payment of the purchase price for the Property unless Polak agreed to accept
the entire face value of the Note as partial payment and satisfaction of
Polak's entitlement to receive Polak Proceeds at the Closing. Polak further
agrees that, notwithstanding anything that may be contained in the Documents to
the contrary, she will accept the Polak Proceeds including the Note (endorsed
to Polak without recourse by Huntington), as full, complete and final payment
for any and all sums that have been due or may become due to Polak under the
Documents, including but not limited to: (i) management fees; (ii) leasing
commissions; (iii) other types of commissions; (iv) fees that may be due under
the Reserve List, (v) Net Sales Proceeds, and (vi) New Invested Funds.
5. Polak acknowledges that she has reviewed and approved all of the terms and
provisions contained in the Note. Polak acknowledges that the Note will be
subject to a Subordination Agreement in the form attached hereto as Exhibit E.
6. Balcor agrees that immediately following the Closing it shall send
Purchaser and Fort Wayne National Bank a Notice of Assignment in the form
attached hereto as Exhibit F.
7. Polak hereby remises, releases and forever discharges and by these
presents does for herself, her heirs, executors and administrators, remise,
release and forever discharge Balcor, its successors and assigns, of and from
any claims whatsoever, that she has or in the future may have pursuant to the
Documents or those matters which arose prior to and were the basis for the
execution and delivery of the Documents by Balcor and Polak, the operation of
the Property, the execution, delivery and performance of the Sale Agreement,
claims for management fees or local administrator fees or both, or any one or
more of such claims. This release shall not apply to the matters set forth in
the last sentence of paragraph 2 above.
8. Balcor and Huntington hereby remise, release, and forever discharge and by
these presents do for themselves, their parents, subsidiaries, related
entities, predecessors or successors-in-interest, officers, directors,
employees and agents, their heirs, executors, administrators, and their
assigns, remise, release and forever discharge Polak, her representatives and
agents, their successors-in-interest, heirs, executors and administrators and
their assigns, of and from any claims whatsoever that they have or in the
future may have pursuant to the Documents or those matters which arose prior to
and were the basis for the execution and delivery of the Documents by Balcor
and Polak, the operation of the Property, the execution, delivery and
performance of the Sale Agreement, or any one or more of such claims.
9. Simultaneously with the delivery of the Note to Polak, Polak shall cause
to be delivered to Balcor and Huntington a full and complete release and
satisfaction of any person or firm related to and claiming through Polak,
including specifically, but not exclusively, Polacorp, Inc., or Polak's sons,
Christopher K. Polak and Bradley T. Polak, or any of them, of any and all
claims any or all of them may have, against Balcor or Huntington for or on
account of any matter or thing arising under the Documents, the operation of
the Property, the execution, delivery and performance of the Sale Agreement,
claims for management fees or local administrator fees or both, and commission
claims, or any one or more of such claims. The release and satisfaction from
Christopher K. Polak shall include a provision acknowledging that any
management agreement or leasing commission agreement pertaining to the Property
has been terminated and fully satisfied.
<PAGE>
10. Capitalized terms used herein shall, unless otherwise defined herein, have
the same meaning as the capitalized terms in the Documents.
11. The releases provided for herein, shall become effective upon delivery to
Polak of the Polak Proceeds including cash and the original Note endorsed
without recourse. Should the contemplated transaction not close, then this
Agreement is of no further force or effect.
12. This Release contains the entire agreement and understanding of the
parties in respect to the subject matter hereof, the same may not be amended,
modified or discharged, nor any of its terms be waived except by an instrument
or writing signed by the parties to be bound thereby. This Release may be
executed in any number of counterparts with the same effect as if all parties
hereto had all signed the same document. All counterparts shall be construed
together and shall constitute one (1) agreement.
13. This Release shall inure to the benefit and shall be binding upon the
parties' successors and assigns, including without limitation affiliates of
Balcor and Huntington.
14. This Release shall be governed by and construed in accordance with the
laws in the State of Illinois.
15. Time is of the essence of this Release.
16. Any provision of this Release which is unenforceable or is invalid or
contrary to applicable law, or the inclusion of which would affect the
validity, legality or enforcement of this Release, shall be of no effect, and
in such case all remaining terms and provisions of this Release shall subsist
and be fully effective according to the tenor of this Release, the same as
though such invalid portion had never been included herein.
17. This Release may be executed in original counterparts, each of which shall
be deemed an original but all of which shall constitute one and the same
instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Release as of the 26
day of April, 1996.
BALCOR PENSION INVESTORS, AN ILLINOIS
LIMITED PARTNERSHIP
By: Balcor Mortgage Advisors, an Illinois
general partnership, the general partner
By: RGF Balcor Associates, an Illinois General
Partnership, a partner
By: The Balcor Company, a Delaware corporation
By: /s/Philip Schechter
--------------------------------------
Authorized agent
HUNTINGTON PLAZA LIMITED PARTNERSHIP
By: Huntington Plaza, Inc., its general partner
By: /s/Philip Schechter
--------------------------------------
Authorized agent
ACKNOWLEDGED:
Attorney for Betty K. Polak:
/s/John R. Carr III by BSC /s/Betty K. Polak
- ------------------------------ -----------------------
John R. Carr III Betty K. Polak
Buschmann, Carr & Shanks, P.C.
1020 Market Tower
Ten West Market Street
Indianapolis, IN 46204
Attorney for Balcor Pension Investors:
and Huntington Plaza Limited Partnership
/s/Morton M. Poznak
- ------------------------------
Morton M. Poznak
Schwartz & Freeman
401 N. Michigan Ave.
Suite 1900
Chicago, IL 60611
