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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report May 11, 2000
First Union Real Estate Equity and Mortgage Investments
(Exact name of Registrant as Specified in Its Charter)
Ohio 1-6249 34-6513657
(State or Other Jurisdiction of (Commission File Number) (I.R.S. Employer
Incorporation) Identification No.)
551 Fifth Avenue, Suite 1416
New York, New York 10176-1499
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (212) 905-1104
Former Name or Former Address, if Changed Since Last Report.
Suite 1900, 55 Public Square
Cleveland, Ohio 44113-1937
Total number of pages in report: 3
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ITEM 2. DISPOSITION OF ASSETS
On April 27, 2000, the Registrant issued a press release regarding the
sale of Crossroads Center to General Growth Properties, Inc. In addition the
press release discussed the financing of Park Plaza Mall.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
a. Financial Statements of Businesses Acquired
Not applicable
b. Pro Forma Financial Information
Pro Forma Combined Balance Sheet as of December 31, 1999.
Pro Forma Combined Statement of Operations for the twelve
months ended December 31, 1999.
The following pro forma combined balance sheet as of December
31, 1999 and the pro forma combined statement of operations
for the year ended December 31, 1999 give effect to properties
sold during 1999, the sale of the Registrant's Crossroads
Center Mall, the spin-off of Impark and the Canadian parking
facilities, and the financing of Park Plaza Mall. The spin-off
of Impark occurred in March 2000. The sale and financing
occurred in April 2000. The adjustments related to the pro
forma combined balance sheet assume the transactions were
consummated at December 31, 1999, while the adjustments to the
pro forma combined statement of operations assume the
transactions were consummated at January 1, 1999.
These pro forma adjustments are not necessarily reflective of
the results that actually would have occurred if the sale,
spin-off and financing had been in effect, as of, and for the
periods presented or what may be achieved in the future.
c. Exhibits
99.1 Pro Forma Combined Balance Sheet as of December 31,
1999.
99.2 Pro Forma Combined Statement of Operations for the
twelve months ended December 31, 1999.
99.3 Notes to Pro Forma Combined Financial Statements.
99.4 Press release dated April 27, 2000 regarding
refinancing of Park Plaza Mall and the sale of
Crossroads Center to General Growth Properties, Inc.
99.5 Promissory note dated April 20, 2000 between Park
Plaza Mall, LLC and First Union National Bank.
99.6 Mortgage and Security Agreement dated April 20, 2000
between Park Plaza Mall, LLC and First Union National
Bank.
99.7 Cash Management Agreement dated April 20, 2000 among
Park Plaza Mall, LLC, as borrower, Landau & Heymann
of Arkansas, Inc., as manager and First Union
National Bank, as holder.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
First Union Real Estate Equity
and Mortgage Investments
(Registrant)
Date: May 11, 2000 By:/S/ Brenda J. Mixson
------------ ------------------
Brenda J. Mixson
Chief Financial Officer
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Exhibit 99.1
FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
Pro Forma Combined Balance Sheet as of December 31, 1999
(In thousands)
<TABLE>
<CAPTION>
Sale of Impark Park Plaza Pro Forma
Historical Crossroads Spinoff Financing (Unaudited)
------------ ------------ ------------ ---------- --------------
ASSETS
Investment in real estate
<S> <C> <C> <C> <C> <C>
Land $ 53,028 $ (5,490) $ $ $ 47,538
Building and improvements 271,223 (30,118) 241,105
------------ ------------ ------------ ---------- --------------
324,251 (35,608) 288,643
Less - Accumulated depreciation (75,161) 14,257 (60,904)
------------ ------------ ------------ ---------- --------------
Total investment in real estate 249,090 (21,351) 227,739
Investment in joint venture 1,786 1,786
Mortgage loans and notes receivable 5,426 5,426
Other assets
Cash and cash equivalents - unrestricted 45,005 1,946 (39,000) 41,400 49,351
- restricted 12,836 (873) 11,963
Accounts receivable and prepayments, net of allowances 10,386 (1,436) 8,950
Investments 104,013 104,013
Inventory 3,395 3,395
Deferred charges and other, net 1,244 1,244
Unamortized debt issue costs, net 4,479 (2,574) 1,905
Other 385 600 985
Net assets of discontinued operations 23,407 (23,407) -
------------ ------------ ------------ ---------- --------------
Total assets $ 461,452 $ (24,288) $ (62,407) $ 42,000 $ 416,757
============ ============ ============ ========== ==============
LIABILITIES AND SHAREHOLDER'S EQUITY
Liabilities
Mortgage loans $ 195,051 $ (76,436) $ $ 42,000 $ 160,615
Notes payable 49,128 49,128
Senior notes 12,538 12,538
Accounts payable and accrued liabilities 22,936 (2,655) 20,281
Deferred obligations 10,579 10,579
Deferred items 1,510 (996) 514
------------ ------------ ------------ ---------- --------------
Total liabilities 291,742 (80,087) - 42,000 253,655
------------ ------------ ------------ ---------- --------------
Shareholder's equity
Preferred shares of beneficial interest 31,737 31,737
Shares of beneficial interest 42,472 42,472
Additional paid in capital 218,831 218,831
Undistributed loss from operations (123,322) 55,799 (62,407) (129,930)
Deferred compensation (8) (8)
------------ ------------ ------------ ---------- --------------
Total shareholder's equity 169,710 55,799 (62,407) - 163,102
------------ ------------ ------------ ---------- --------------
Total liabilities and shareholder's equity $ 461,452 $ (24,288) $ (62,407) $ 42,000 $ 416,757
============ ============ ============ ========== ==============
</TABLE>
See Notes to Pro Forma Combined Financial Statements.
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Exhibit 99.2
FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
Pro Forma Combined Statement of Operations
For the year Ended December 31, 1999
(In Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
Properties sold
during Sale of Spinoff of Park Plaza Pro Forma
Historical 1999 Crossroads Impark Financing (Unaudited)
------------ ----------- ----------- ---------- ----------- -------------
Revenues
<S> <C> <C> <C> <C> <C> <C>
Rents $ 116,482 $ (53,647) $ (11,378) $ $ $ 51,457
Interest - Mortgage loans 463 - 463
- Short-term investments 2,649 (567) (7) (1,950) - 125
Equity in income from joint venture 64 - 64
Management fees 332 - 332
Other Income 784 - 784
------------ ----------- ----------- ---------- ----------- -------------
120,774 (54,214) (11,385) (1,950) - 53,225
------------ ----------- ----------- ---------- ----------- -------------
Expenses
Property operating 44,894 (17,826) (1,844) 25,224
Real estate taxes 9,937 (3,709) (1,987) 4,241
Depreciation and amortization 25,331 (11,283) (1,691) 12,357
Interest - Mortgage loans 28,264 (11,221) (4,327) 698 13,414
- Notes payable 4,232 (4,193) 39
- Senior notes 1,113 - 1,113
- Bank loans and other 4,833 (3,253) 1,580
General and administrative 14,664 (3,516) 11,148
Unrealized loss on carrying value of
assets identified for - -
disposition and impaired assets 9,800 - 9,800
------------ ----------- ----------- ---------- ----------- -------------
143,068 (55,001) (9,849) - 698 78,916
------------ ----------- ----------- ---------- ----------- -------------
Income (loss) before capital gain,
extraordinary loss and preferred dividend $ (22,294) $ 787 $ (1,536) $ (1,950) $ (698) $ (25,691)
============ =========== =========== ========== =========== =============
Per share data
Adjusted shares of beneficial interest, basic 38,827 38,827
------------ -------------
Adjusted shares of beneficial interest, diluted 38,836 38,836
------------ -------------
Loss before capital gain, extraordinary loss and
preferred dividend, basic and diluted $ (0.57) $ (0.66)
============ =============
</TABLE>
See Notes to Pro Forma Combined Financial Statements.
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Exhibit 99.3
Notes to Pro Forma Combined Financial Statements
Distribution of Impark
In March 2000, the Registrant distributed all common stock of Impark to
its shareholders. One share of Impark common stock was distributed for every 20
of the Registrant's common shares of beneficial interest held on March 20, 2000.
Approximately 2.1 million shares of Impark common stock were distributed. As
part of the spin-off, the Registrant repaid Impark's bank credit facility of
approximately $24.2 million, contributed approximately $7.5 million of cash, its
14 Canadian parking properties and $6.7 million for a parking development
located in San Francisco, California. The Registrant will also provide a secured
line of credit for $8 million to Impark. Ownership of Ventek International,
Inc., a manufacturing subsidiary of Impark, was retained by the Registrant.
Financing of Park Plaza Mall
In April 2000, the Registrant obtained a $42 million first mortgage
loan secured by the Park Plaza Mall. The loan is non-recourse, has a 10 year
term and a fixed interest rate of 8.69% payable on a 30 year amortization
schedule. The Registrant received proceeds, net of closing costs and escrow
deposits, of $41.4 million. The adjustment to interest expense on the pro forma
combined statement of operations represents the net difference in interest
expense between the financing and the interest expense on the debt encumbering
the property through December 13, 1999. Annualized interest expense on the new
financing is approximately $3.6 million.
Sale of Crossroads Center Mall
In April 2000, the Registrant sold Crossroads Center Mall for $80.3
million, of which approximately $78.3 million was applied against a loan payable
to the purchaser and the assumption of the first mortgage debt on the mall. The
Registrant will recognize a gain on the sale of approximately $58 million, less
an extraordinary loss on extinguishment of debt of approximately $2.4 million
during the second quarter of 2000.
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EXHIBIT 99.4
FIRST UNION REAL ESTATE INVESTMENTS
AT THE COMPANY
Brenda J. Mixson
Chief Financial Officer
(212) 905-1104
FOR IMMEDIATE RELEASE
FIRST UNION REAL ESTATE INVESTMENTS ANNOUNCES
REFINANCING OF PARK PLAZA MALL AND SALE OF CROSSROADS CENTER
NEW YORK, NEW YORK, APRIL 27, 2000 - FIRST UNION REAL ESTATE INVESTMENTS
(NYSE:FUR) announced today that the Company has completed the refinancing of its
Park Plaza Mall in Little Rock, Arkansas. A $42.0 million mortgage loan was
obtained on the property from First Union National Bank. (First Union National
Bank is not affiliated with First Union Real Estate Investments.) The loan is
non-recourse, has a 10-year term and a fixed interest rate of 8.69% payable on a
30-year amortization schedule.
The Company also announced that General Growth Properties, Inc., a publicly
traded real estate investment trust headquartered in Chicago, Illinois,
exercised its option to purchase the Crossroads Center in St. Cloud, Minnesota.
In October 1999, General Growth made a loan to the Company of approximately
$30.0 million secured by a second mortgage and received, as part of the
consideration for the loan, an option to buy the property. The closing of the
sale occurred on April 26, 2000. The Company received aggregate consideration of
$80.3 million, of which approximately $78.3 million was applied against the
General Growth loan and the assumption of the first mortgage debt on the mall.
The gain for financial reporting purposes on the sale of Crossroads Center is
approximately $58.0 million, less an extraordinary loss on extinguishment of
debt of approximately $2.4 million, and approximately $53.0 million for tax
reporting purposes. The required distribution of this gain for REIT tax purposes
has already been partially satisfied through the spin-off of Imperial Parking
Corporation ("Impark"). In a taxable distribution of approximately $41.1 million
to First Union shareholders, the Company distributed one share of Impark common
stock for every 20 common shares of First Union. The quarterly dividends,
aggregating approximately $7.3 million, to be paid on April 28, 2000 to the
holders of the common and preferred shares of First Union, are also expected to
satisfy part of the capital gain distribution requirements. The treatment of
dividends paid during 2000 for tax purposes is subject to final determination
after the Company completes its year-end and reviews all transactions.
Certain statements contained in this news release that are forward-looking are
based on current expectations that are subject to a number of uncertainties and
risks, and actual results may differ materially. The uncertainties and risks
include, but are not limited to, changes in market activity, changes in local
real estate conditions and markets, actions by competitors, interest rate
movements and general economic conditions. Further information about these
matters can be found in the information included in the Annual Report filed by
the Company with the SEC on Form 10-K.
First Union Real Estate Equity and Mortgage Investments is a NYSE-listed
stapled-stock real estate investment trust (REIT) headquartered in New York, New
York.
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EXHIBIT 99.5
PROMISSORY NOTE
$42,000,000.00 as of April 20, 2000
FOR VALUE RECEIVED, the undersigned, PARK PLAZA MALL, LLC, a Delaware
limited liability company ("Maker"), whose address is c/o First Union Real
Estate Equity and Mortgage Investments, 551 Fifth Avenue, Suite 1416, New York,
New York 10176, promises to pay to the order of FIRST UNION NATIONAL BANK, a
national banking association ("Payee"), at the office of Payee at One First
Union Center, DC6, 301 South College Street, Charlotte, North Carolina
28288-0166, or at such other place as Payee may designate to Maker in writing
from time to time, the principal sum of FORTY-TWO MILLION and 00/100 DOLLARS
($42,000,000.00) together with interest on so much thereof as is from time to
time outstanding and unpaid, from the date of the advance of the principal
evidenced hereby, at the Applicable Interest Rate, in lawful money of the United
States of America, which shall at the time of payment be legal tender in payment
of all debts and dues, public and private.
ARTICLE 1 TERMS AND CONDITIONS
1.01 Computation of Interest. Interest shall be computed hereunder
based on a 360-day year and paid for on the actual number of days elapsed for
any whole or partial month in which interest is being calculated. Interest shall
accrue from the date on which funds are advanced (regardless of the time of day)
through and including the day on which funds are credited pursuant to Section
1.02 hereof.
1.02 Payment of Principal and Interest. Payments in federal funds
immediately available in the place designated for payment received by Payee
prior to 2:00 p.m. local time on a day on which Payee is open for business at
said place of payment shall be credited prior to close of business, while other
payments may, at the option of Payee, not be credited until immediately
available to Payee in federal funds at the place designated for payment prior to
2:00 p.m. local time at said place of payment on a day on which Payee is open
for business. A payment of interest only shall be payable on April 21, 2000 with
respect to the interest accrual period from April 21, 2000 through and including
the last day of this calendar month. Thereafter principal and interest shall be
payable in equal consecutive monthly installments of $328,615.99 each (the
"Monthly Payment Amount"), beginning on the first day of the second full
calendar month following the date of this Note (or on the first day of the first
full calendar month following the date hereof, in the event the advance of the
principal amount evidenced by this Note is the first day of a calendar month)
(the "First Payment Date"), and continuing on the first day of each and every
month thereafter (each, a "Payment Date") through and including May 1, 2030 (the
"Maturity Date"), at which time the entire outstanding principal balance hereof,
together with all accrued but unpaid interest thereon, shall be due and payable
in full.
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1.03 Application of Payments. So long as no Event of Default (as
hereinafter defined) exists hereunder or under any other Loan Document, each
such monthly installment shall be applied first, to any amounts hereafter
advanced by Payee hereunder or under any other Loan Document, second, to any
late fees and other amounts payable to Payee, third, to the payment of accrued
interest and last to reduction of principal.
1.04 Prepayment; Defeasance
(a) This Note may not be prepaid, in whole or in part (except
as otherwise specifically provided herein), at any time. In the event that Maker
wishes to have the Security Property (as hereinafter defined) released from the
lien of the Security Instrument (as hereinafter defined), Maker's sole option
shall be a Defeasance (as hereinafter defined) upon satisfaction of the terms
and conditions set forth in Section 1.04(d) hereof. This Note may be prepaid in
whole but not in part without premium or penalty on any Payment Date occurring
within three (3) months prior to the Anticipated Repayment Date provided (i)
written notice of such prepayment is received by Payee not more than ninety (90)
days and not less than thirty (30) days prior to the date of such prepayment,
and (ii) such prepayment is accompanied by all interest accrued hereunder
through and including the date of such prepayment and all other sums due
hereunder or under the other Loan Documents. If, upon any such permitted
prepayment on a Payment Date occurring within the three (3) months prior to the
Anticipated Repayment Date, the aforesaid prior written notice has not been
timely received by Payee, there shall be due a prepayment fee equal to, an
amount equal to the lesser of (i) thirty (30) days' interest computed at the
Applicable Interest Rate on the outstanding principal balance of this Note so
prepaid and (ii) interest computed at the Applicable Interest Rate on the
outstanding principal balance of this Note so prepaid that would have been
payable for the period from, and including, the date of prepayment through the
Anticipated Repayment Date of this Note as though such prepayment had not
occurred. In addition, on the Anticipated Repayment Date or on any Payment Date
thereafter, the Maker may, at its option and upon thirty (30) days prior written
notice from Maker to Payee, prepay this Note in whole or in part, in $100,000.00
increments only, without premium or penalty, provided, that if, upon any such
permitted prepayment the aforesaid prior written notice has not been timely
received by Payee, there shall be due a prepayment fee equal to thirty (30)
days' interest computed at the Applicable Interest Rate on the outstanding
principal balance of this Note so prepaid.
(b) Partial prepayments of this Note shall not be permitted,
except for partial prepayments resulting from Payee's election to apply
insurance or condemnation proceeds to reduce the outstanding principal balance
of this Note as provided in the Security Instrument, in which event no
prepayment fee or premium shall be due unless, at the time of either Payee's
receipt of such proceeds or the application of such proceeds to the outstanding
principal balance of this Note, an Event of Default, or an event which, with
notice or the passage of time, or both, would constitute an Event of Default,
shall have occurred and be continuing, which default or Event of Default is
unrelated to the applicable casualty or condemnation, in which event the
applicable prepayment fee or premium shall be due and payable based upon the
amount of the prepayment. No notice of prepayment shall be required under the
circumstances specified in the preceding sentence. No principal amount repaid
may be reborrowed. Any such partial
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prepayments of principal shall be applied to the unpaid principal balance
evidenced hereby but such application shall not reduce the amount of the fixed
monthly installments required to be paid pursuant to Section 1.02 above. Except
as otherwise expressly provided in Section 1.04(a) and this Section 1.04(b), the
prepayment fees provided in the immediate following paragraph shall be due, to
the extent permitted by applicable law, under any and all circumstances where
all or any portion of this Note is paid prior to the Anticipated Repayment Date,
whether such prepayment is voluntary or involuntary, including, without
limitation, if such prepayment results from Payee's exercise of its rights upon
Maker's default and acceleration of the Anticipated Repayment Date of this Note
(irrespective of whether foreclosure proceedings have been commenced), and shall
be in addition to any other sums due hereunder or under any of the other Loan
Documents. No tender of a prepayment of this Note with respect to which a
prepayment fee is due shall be effective unless such prepayment is accompanied
by the applicable prepayment fee. Notwithstanding the foregoing, upon the
occurrence of any one of the events described in clauses (i) and (iii) in the
definition of "Sweep Period" under the Cash Management Agreement, Maker shall
have the right within three (3) months of the occurrence of such event to prepay
the indebtedness evidenced by this Note in whole only without the payment of any
prepayment fee or penalty.
(c) If, at any time after the earlier of (x) the third (3rd)
anniversary of the First Payment Date and (y) the date which is two (2) years
after the "startup day," within the meaning of Section 860G(a) (9) of the
Internal Revenue Code of 1986, as amended from time to time or any successor
statute (the "Code"), of the "real estate mortgage investment conduit," within
the meaning of Section 860D of the Code, that holds this Note (the "Lockout
Expiration Date"), the indebtedness evidenced by this Note shall have been
declared due and payable by Payee pursuant to Article 2 hereof or the provisions
of any other Loan Document due to a default by Maker, then, in addition to the
indebtedness evidenced by this Note being immediately due and payable, there
shall also then be immediately due and payable a sum equal to the interest which
would have accrued on the principal balance of this Note at the Applicable
Interest Rate from the date of such acceleration to the Lock-out Expiration
Date, together with a prepayment fee in an amount equal to the Yield Maintenance
Premium (as hereinafter defined) based on the entire indebtedness on the date of
such acceleration. If such acceleration is on or following the Lockout
Expiration Date, the Yield Maintenance Premium shall also then be immediately
due and payable as though Maker were prepaying the entire indebtedness on the
date of such acceleration. In addition to the amounts described in the two
preceding sentences, in the event any such acceleration or tender of payment of
such indebtedness occurs or is made on or prior to the Lockout Expiration Date,
there shall also then be immediately due and payable an additional prepayment
fee of three percent (3%) of the principal balance of this Note. The term "Yield
Maintenance Premium" shall mean an amount equal to the greater of (A) three
percent (3.0%) of the principal amount being prepaid, and (B) the present value
of a series of payments each equal to the Payment Differential (as hereinafter
defined) and payable on each Payment Date over the remaining original term of
this Note and on the Anticipated Repayment Date, discounted at the Reinvestment
Yield (as hereinafter defined) for the number of months remaining as of the date
of such prepayment to each such Payment Date and the Anticipated Repayment Date.
The term "Payment Differential" shall mean an amount equal to (i) the Applicable
Interest Rate less the Reinvestment Yield, divided by (ii) twelve (12) and
multiplied by (iii) the principal sum outstanding under this Note after
application of the constant monthly payment due under this
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Note on the date of such prepayment, provided that the Payment Differential
shall in no event be less than zero. The term "Reinvestment Yield" shall mean
an amount equal to the yield on the primary issue U.S. Treasury with a term
equal to the remaining average life of the indebtedness evidenced by this Note,
with each such yield being based on the bid price for such issue as published
in the Wall Street Journal on the date that is fourteen (14) days prior to the
date of such prepayment set forth in the notice of prepayment (or, if such bid
price is not published on that date, the next preceding date on which such bid
price is so published) and converted to a monthly compounded nominal yield. In
the event that any prepayment fee is due hereunder, Payee shall deliver to
Maker a statement setting forth the amount and determination of the prepayment
fee, and, provided that Payee shall have in good faith applied the formula
described above, Maker shall not have the right to challenge the calculation or
the method of calculation set forth in any such statement in the absence of
manifest error, which calculation may be made by Payee on any day during the
fifteen (15) day period preceding the date of such prepayment. Payee shall not
be obligated or required to have actually reinvested the prepaid principal
balance at the Reinvestment Yield or otherwise as a condition to receiving the
prepayment fee.
(d) (i) At any time after the Lockout Expiration Date, and
provided no Event of Default has occurred hereunder or under any of the other
Loan Documents, Payee shall cause the release of the Security Property from the
lien of the Security Instrument and the other Loan Documents (a "Defeasance")
upon the satisfaction of the following conditions:
(A) Maker shall give not more than ninety (90) days or
less than forty-five (45) days prior written notice to Payee
specifying the date Maker intends for the Defeasance to be
consummated (the "Release Date"), which date shall be a Payment
Date.
(B) All accrued and unpaid interest and all other sums
due under this Note and under the other Loan Documents up to and
including the Release Date shall be paid in full on or prior to
the Release Date.
(C) Maker shall deliver to Payee on or prior to the
Release Date:
(1) a sum of money in immediately available funds
(the "Defeasance Deposit") equal to the
outstanding principal balance of this Note
plus an amount, if any, which together with
the outstanding principal balance of this
Note, shall be sufficient to enable Payee to
purchase, through means and sources
customarily employed and available to Payee,
for the account of Maker, direct,
non-callable obligations of the United States
of America that provide for payments prior,
but as close as possible, to all successive
monthly Payment Dates occurring after the
Release Date and to the Anticipated Repayment
Date, with each such payment being equal to
or greater than the amount of the
corresponding installment of principal and/or
interest required to be paid under this Note
(including, but not
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limited to, all amounts due on the
Anticipated Repayment Date) for the balance
of the term hereof ("the "Defeasance
Collateral"), each of which shall be duly
endorsed by the holder thereof as directed by
Payee or accompanied by a written instrument
of transfer in form and substance
satisfactory to Payee in its sole discretion
(including, without limitation, such
instruments as may be required by the
depository institution holding such
securities or the issuer thereof, as the case
may be, to effectuate book-entry transfers
and pledges through the book-entry facilities
of such institution) in order to perfect upon
the delivery of the Defeasance Security
Agreement (as hereinafter defined) the first
priority security interest in the Defeasance
Collateral in favor of Payee in conformity
with all applicable state and federal laws
governing granting of such security
interests.
(2) A pledge and security agreement, in form and
substance satisfactory to Payee in its sole
discretion, creating a first priority
security interest in favor of Payee in the
Defeasance Collateral (the "Defeasance
Security Agreement"), which shall provide,
among other things, that any excess received
by Payee from the Defeasance Collateral over
the amounts payable by Maker hereunder shall
be refunded to Maker promptly after each
monthly Payment Date.
(3) A certificate of Maker certifying that all of
the requirements set forth in this subsection
1.04(d)(i) have been satisfied.
(4) An opinion of counsel for Maker in form and
substance and delivered by counsel
satisfactory to Payee in its sole discretion
stating, among other things, that (x) Payee
has a perfected first priority security
interest in the Defeasance Collateral and
that the Defeasance Security Agreement is
enforceable against Maker in accordance with
its terms, (y) that any REMIC Trust formed
pursuant to a securitization will not fail to
maintain its status as a "real estate
mortgage investment conduit" within the
meaning of Section 860D of the Code as a
result of such defeasance.
(5) Maker shall deliver evidence in writing from
the applicable rating agencies to the effect
that the collateral substitution will not
result in a downgrading, withdrawal or
qualification of the respective ratings in
effect immediately prior to such defeasance
event for any securities issued in
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connection with the securitization which are
then outstanding.
(6) A certificate from a firm of independent
public accountants acceptable to Payee
certifying that the Defeasance Collateral is
sufficient to satisfy the provisions of
subparagraph (1) above.
(7) Such other certificates, documents or
instruments as Payee may reasonably require.
(8) Payment of all fees, costs, expenses and
charges incurred by Payee in connection with
the Defeasance of the Security Property and
the purchase of the Defeasance Collateral,
including, without limitation, legal fees and
all costs and expenses incurred by Payee or
its agents in connection with release of the
Security Property, review of the proposed
Defeasance Collateral and preparation of the
Defeasance Security Agreement and related
documentation, any revenue, documentary,
stamp, intangible or other taxes, charges or
fees due in connection with transfer of the
Note, assumption of the Note, or substitution
of collateral for the Security Property.
Without limiting Maker's obligations with
respect thereto, Payee shall be entitled to
deduct all such fees, costs, expenses and
charges from the Defeasance Deposit to the
extent of any excess of the Defeasance
Deposit.
(D) In connection with the Defeasance Deposit, Maker
hereby authorizes and directs Payee using the means and sources
customarily employed and available to Payee to use the Defeasance
Deposit to purchase for the account of Maker the Defeasance
Collateral. Furthermore, the Defeasance Collateral shall be
arranged such that payments received from such Defeasance
Collateral shall be paid directly to Payee to be applied on
account of the indebtedness of this Note. Any part of the
Defeasance Deposit in excess of the amount necessary to purchase
the Defeasance Collateral and to pay the other and related costs
Maker is obligated to pay under this Section 1.04 shall be
refunded to Maker.
(ii) Upon compliance with the requirements of subsection
1.04(d)(i), the Security Property shall be released from the lien of the
Security Instrument and the other Loan Documents, and the Defeasance Collateral
shall constitute collateral which shall secure this Note and all other
obligations under the Loan Documents. Payee will, at Maker's expense, execute
and deliver any agreements reasonably requested by Maker to release the lien of
the Security Instrument from the Security Property.
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(iii) Upon the release of the Security Property in accordance
with this Section 1.04(d), Maker shall assign all its obligations and rights
under this Note, together with the pledged Defeasance Collateral, to a newly
created entity which complies with the terms of Section 1.33 of the Security
Instrument designated by Maker and approved by Payee in its sole discretion.
Such successor entity shall execute an assumption agreement in form and
substance satisfactory to Payee in its sole discretion pursuant to which it
shall assume Maker's obligations under this Note and the Defeasance Security
Agreement. As conditions to such assignment and assumption, Maker shall (x)
deliver to Payee an opinion of counsel in form and substance and delivered by
counsel satisfactory to Payee in its sole discretion stating, among other
things, that such assumption agreement is enforceable against Maker and such
successor entity in accordance with its terms and that this Note and the
Defeasance Security Agreement as so assumed, are enforceable against such
successor entity in accordance with their respective terms, and (y) pay all
costs and expenses (including, but not limited to, legal fees) incurred by Payee
or its agents in connection with such assignment and assumption (including,
without limitation, the review of the proposed transferee and the preparation of
the assumption agreement and related documentation). Upon such assumption, Maker
shall be relieved of its obligations hereunder, under the other Loan Documents
other than the Hazardous Substances Indemnity Agreement (as hereinafter defined)
and under the Defeasance Security Agreement.
(iv) In the event that Maker intends to defease the Note in
accordance with this Section 1.04 after the Lockout Expiration Date but is
unable to do so due solely to the circumstance that this loan has not been
included in a real estate mortgage investment conduit for at least two (2) years
from the "startup day", then Maker and Payee agree that Maker may prepay this
Note in whole only upon payment of the Yield Maintenance Premium, together with
all accrued interest and other sums due hereunder and under the other Loan
Documents.
1.05 Security. The indebtedness evidenced by this Note and the
obligations created hereby are secured by, among other things, that certain
Mortgage and Security Agreement (the "Security Instrument") from Maker to Payee,
dated as of the date hereof, concerning property located in Pulaski, Arkansas.
The Security Instrument together with this Note and all other documents to or of
which Payee is a party or beneficiary now or hereafter evidencing, securing,
guarantying, modifying or otherwise relating to the indebtedness evidenced
hereby, are herein referred to collectively as the "Loan Documents". All of the
terms and provisions of the Loan Documents are incorporated herein by reference.
1.06 Cash Management.
(a) During any Sweep Period (as defined in the Cash Management
Agreement of even date herewith among Maker, Payee and Landau & Heyman of
Arkansas, Inc. (the "Cash Management Agreement")), Maker shall cause all Rents
and Profits (as defined in the Security Instrument) to be deposited in the
Clearing Account (as defined in the Cash Management Agreement). Commencing on
the first day of each Collection Period (as defined in the Cash Management
Agreement), all Rents and Profits deposited in the Cash Collateral Account (as
defined in the Cash Management Agreement) shall be allocated in the following
order of priority:
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(i) First, to fund the Impound Subaccount (as established
pursuant to the Cash Management Agreement) until the amount
on deposit therein is equal to the amount required to be
deposited in the Impound Account on the related Payment
Date in accordance with the terms and conditions of the
Security Instrument;
(ii) Second, to fund the Monthly Debt Service Subaccount (as
established pursuant to the Cash Management Agreement)
until the amount on deposit therein is equal to the Monthly
Payment Amount;
(iii) Third, to fund the Monthly Debt Service Subaccount with any
other amounts due to the Payee under the Loan Documents not
otherwise addressed by this section;
(iv) Fourth, to fund the Replacement Reserve Subaccount (as
established pursuant to the Cash Management Agreement)
until the amount on deposit therein is equal to the amount
required to be deposited in the Replacement Reserve (as
defined in the Security Instrument) on the related Payment
Date in accordance with the terms and conditions of the
Security Instrument; and
(v) Fifth, to fund the Operating Expense Subaccount (as
established pursuant to the Cash Management Agreement)
until the amount on deposit therein is equal to the Cash
Expenses, other than management fees payable to affiliates
of Maker, for the month in which such Collection Period
ends pursuant to the terms and conditions of the related
Approved Annual Budget;
(vi) Sixth, to fund the Operating Expense Subaccount with any
Net Capital Expenditures for the month in which such
Collection Period ends pursuant to the terms and conditions
of the related Approved Annual Budget;
(vii) Seventh, to fund the Operating Expense Subaccount with any
Extraordinary Expenses approved by Payee for the month in
which such Collection Period ends, if any; and
(viii) Lastly, provided no Cash Trap (as defined in the Cash
Management Agreement) has occurred, to pay to Maker any
Rents and Profits remaining after making the foregoing
payments.
If a Cash Trap occurs any Rents and Profits remaining after making
the foregoing payments specified in subparagraphs (i) to (vii) above shall
either (x) be retained by Payee as additional security for the Loan and shall be
held in a non interest bearing account or (y) be applied to the outstanding
principal balance of this Note, it being agreed that so long as no Event of
Default has occurred and is continuing any such application to the outstanding
principal balance shall not cause any prepayment fee or penalty to be incurred.
However, if the Cash Trap occurs due to an Event of Default, then Payee may
apply such funds to the outstanding principal balance of the Note and Maker
shall be liable for any prepayment fees or premiums. Nothing in
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this Section 1.06 shall limit, reduce or otherwise affect Maker's obligations to
make the scheduled monthly payments due on each Payment Date, payments to the
Impound Account and the Replacement Reserve due hereunder and under the other
Loan Documents, whether or not Rents and Profits are available to make such
payments.
(b) In the event that the Maker must incur an Extraordinary
Expense, then the Maker shall promptly deliver to Payee a reasonably detailed
explanation of such proposed Extraordinary Expense for the Payee's approval,
which approval may be granted or denied in the Payee's reasonable discretion.
(c) On or before 10 days from the date hereof Maker shall
submit to Payee an Annual Budget for fiscal year 2000 for its approval.
Thereafter, the Maker shall submit to the Payee for the Payee's written approval
an Annual Budget not later than sixty (60) days prior to the commencement of
such fiscal year, in form satisfactory to Payee setting forth in reasonable
detail budgeted monthly operating income and monthly operating capital and other
expenses for the Security Property. Each Annual Budget shall contain, among
other things, limitations on management fees, third party service fees, and
other expenses as the Maker may reasonably determine. Payee shall have the right
to approve such Annual Budget which approval shall not be unreasonably withheld,
and in the event that Payee objects to the proposed Annual Budget submitted by
Maker, Payee shall advise Maker of such objections within fifteen (15) days
after receipt thereof (and deliver to Maker a reasonably detailed description of
such objections) and Maker shall within three (3) days after receipt of notice
of any such objections revise such Annual Budget and resubmit the same to Payee.
Payee shall advise Maker of any objections to such revised Annual Budget within
ten (10) days after receipt thereof (and deliver to Maker a reasonably detailed
description of such objections) and Maker shall revise the same in accordance
with the process described in this subparagraph until the Payee approves an
Annual Budget, provided, however, that if Payee shall not advise Maker of its
objections to any proposed Annual Budget within the applicable time period set
forth in this paragraph, then such proposed Annual Budget shall be deemed
approved by Payee. Until such time that Payee approves a proposed Annual Budget,
the most recently Approved Annual Budget shall apply; provided that, such
Approved Annual Budget shall be adjusted to reflect actual increases in real
estate taxes, insurance premiums and utilities expenses.
1.07 In the event that the Maker does not pay the Debt in full prior to
the Anticipated Repayment Date, the provisions of paragraph 1.06 as set forth
above shall remain in full force and effect, and the following subparagraphs
also shall apply:
(a) From and after the Anticipated Repayment Date, interest
shall accrue on the unpaid principal balance from time to time outstanding on
this Note at the Extended Term Rate. Interest accrued at the Extended Term Rate
and not paid pursuant to this paragraph 1.07 shall be deferred and added to the
Debt and shall earn interest at the Extended Term Rate to the extent permitted
by applicable law (such accrued interest is hereinafter defined as "ACCRUED
Interest"). All of the Debt, including any Accrued Interest, shall be due and
payable on the Maturity Date.
(b) All Rents and Profits deposited in the Cash Collateral
Account during each Collection Period shall be allocated to in the following
order of priority, in each case to the extent sufficient funds remain therefor:
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(i) First, to fund the Impound Subaccount until the amount on
deposit therein is equal to the amount required to be
deposited in the Impound Account on the related Payment
Date in accordance with the terms and conditions of the
Security Instrument;
(ii) Second, to fund the Monthly Debt Service Subaccount until
the amount on deposit therein is equal to the Monthly
Payment Amount (to be applied first to the payment of
interest computed at the Initial Term Interest Rate with
the remainder applied to the reduction of the outstanding
principal balance of this Note);
(iii) Third, to fund the Monthly Debt Service Subaccount with any
other amounts due to the Payee under the Loan Documents not
otherwise addressed by this paragraph;
(iv) Fourth, to fund the Replacement Reserve Subaccount until
the amount on deposit therein is equal to the amount
required to be deposited in the Replacement Reserve on the
related Payment Date in accordance with the terms and
conditions of the Security Instrument; and
(v) Fifth, to fund the Operating Expense Subaccount until the
amount on deposit therein is equal to the Cash Expenses,
other than management fees payable to affiliates of Maker,
for the month in which such Collection Period ends pursuant
to the terms and conditions of the related Approved Annual
Budget;
(vi) Sixth, to fund the Operating Expense Subaccount with any
Net Capital Expenditures for the month in which such
Collection Period ends pursuant to the terms and conditions
of the related Approved Annual Budget;
(vii) Seventh, to fund the Operating Expense Subaccount with any
Extraordinary Expenses approved by Payee for the month in
which such Collection Period ends, if any;
(viii) Eighth, to fund the Monthly Debt Service Subaccount with
any amount equal to the remaining principal balance of the
Note, to be applied against the outstanding principal due
under this Note until such principal amount is paid in
full;
(ix) Ninth, to fund the Monthly Debt Service Subaccount with any
amount equal to any Accrued Interest, to be applied against
the outstanding amount thereof until all such Accrued
Interest has been repaid;
(x) Lastly, to pay to the Maker any excess amounts.
(c) In the event that the Maker must incur an Extraordinary
Expense, then the Maker shall promptly deliver to Payee a reasonably detailed
explanation of such proposed
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Extraordinary Expense for the Payee's approval, which approval may be granted or
denied in the Payee's reasonable discretion.
(d) Nothing in this Section 1.07 shall limit, reduce or otherwise
affect Maker's obligations to make payments of the Monthly Payment Amount,
payments to the Impound Account and the Replacement Reserve due hereunder and
under the other Loan Documents, whether or not Rents and Profits are available
to make such payments.
ARTICLE 2 DEFAULT
2.01 Event of Default. It is hereby expressly agreed that should any
default occur in the payment of principal or interest as stipulated above, or
should any other "Event of Default" or any default not cured within any
applicable grace or notice period occur under any other Loan Document, then an
event of default (an "Event of Default") shall exist hereunder, and in such
event the indebtedness evidenced hereby, including all sums advanced or accrued
hereunder or under any other Loan Document, and all unpaid interest accrued
thereon, shall, at the option of Payee and without notice to Maker, at once
become due and payable and may be collected forthwith, whether or not there has
been a prior demand for payment and regardless of the stipulated date of
maturity.
2.02 Late Charges and Default Interest Rate. In the event that any
payment is not received by Payee on the date when due, then in addition to any
default interest payments due hereunder, Maker shall also pay to Payee a late
charge in an amount equal to five percent (5.0%) of the amount of such overdue
payment. So long as any Event of Default exists, regardless of whether or not
there has been an acceleration of the indebtedness evidenced hereby, and at all
times after maturity of the indebtedness evidenced hereby (whether by
acceleration or otherwise), interest shall accrue on the outstanding principal
balance of this Note from the date of default at a rate per annum equal to the
lesser of (a) four percent (4.0%) in excess of the Applicable Interest Rate, or
(b) the maximum rate of interest, if any, which may be charged or collected from
Maker under applicable law (the "Default Interest Rate"), and such default
interest shall be immediately due and payable. Maker acknowledges that it would
be extremely difficult or impracticable to determine Payee's actual damages
resulting from any late payment or default, and such late charges and default
interest are reasonable estimates of those damages and do not constitute a
penalty.
2.03 Cumulative Remedies. The remedies of Payee in this Note or in the
Loan Documents, or at law or in equity, shall be cumulative and concurrent, and
may be pursued singly, successively or together in Payee's discretion. In the
event this Note, or any part hereof, is collected by or through an
attorney-at-law, Maker agrees to pay all costs of collection including, but not
limited to, reasonable attorneys' fees.
2.04 Exculpation. Notwithstanding anything in the Loan Documents to the
contrary, but subject to the qualifications hereinbelow set forth, Payee agrees
that:
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a. Maker shall be liable upon the indebtedness
evidenced hereby and for the other obligations arising
under the Loan Documents to the full extent (but only to
the extent) of the security therefor, the same being all
properties (whether real or personal), rights, estates and
interests now or at any time hereafter securing the payment
of this Note and/or the other obligations of Maker under
the Loan Documents (collectively, the "Security Property");
b. if an Event of Default occurs, any judicial
or other proceedings brought by Payee against Maker shall
be limited to the preservation, enforcement and
foreclosure, or any thereof, of the liens, security titles,
estates, assignments, rights and security interests now or
at any time hereafter securing the payment of this Note
and/or the other obligations of Maker under the Loan
Documents, and no attachment, execution or other writ of
process shall be sought, issued or levied upon any assets,
properties or funds of Maker other than the Security
Property, except with respect to the liability described
below in this section; and
c. in the event of a foreclosure of such liens,
security titles, estates, assignments, rights or security
interests securing the payment of this Note and/or the
other obligations of Maker under the Loan Documents, no
judgment for any deficiency upon the indebtedness evidenced
hereby shall be sought or obtained by Payee against Maker,
except with respect to the liability described below in
this section; provided, however, that, notwithstanding the
foregoing provisions of this section, Maker shall be fully
and personally liable and subject to legal action to the
extent of any loss, damage, cost, expense, liability,
claim, demand other obligation incurred by Payee (including
attorneys fees and costs incurred) arising out of or in
connection with the following: (i) for proceeds paid under
any insurance policies (or paid as a result of any other
claim or cause of action against any person or entity) by
reason of damage, loss or destruction to all or any portion
of the Security Property, to the full extent of such
proceeds not previously delivered to Payee, but which,
under the terms of the Loan Documents, should have been
delivered to Payee, (ii) for proceeds or awards resulting
from the condemnation or other taking by an entity having
the power of eminent domain in lieu of condemnation of all
or any portion of the Security Property, or any of them, to
the full extent of such proceeds or awards not previously
delivered to Payee, but which, under the terms of the Loan
Documents, should have been delivered to Payee, (iii) for
all tenant security deposits or other refundable deposits
paid by
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lessees of the Property to or held by Maker or any other
person or entity in connection with leases of all or any
portion of the Security Property which are not applied in
accordance with the terms of the applicable lease or other
agreement or are not paid, delivered or credited to Payee,
(iv) for rent and other payments received from tenants
under leases of all or any portion of the Security Property
paid more than one month in advance or are not paid or
delivered to Payee, (v) for rents, issues, profits and
revenues of all or any portion of the Security Property
received or applicable to a period after the occurrence of
any Event of Default or any event which, with notice or the
passage of time, or both, would constitute an Event of
Default hereunder or under the Loan Documents which are not
either applied to the ordinary and necessary expenses of
owning and operating the Security Property or paid to
Payee, (vi) for waste committed on the Security Property
by, or damage to the Security Property as a result of the
intentional misconduct or gross negligence of, Maker or any
of its principals, officers, general partners or members,
any guarantor, any indemnitor, or any agent or employee of
any such persons, or any removal of the Security Property
in violation of the terms of the Loan Documents, to the
full extent of the losses or damages incurred by Payee on
account of such occurrence, (vii) for failure to pay any
valid taxes, assessments, mechanic's liens, materialmen's
liens or other liens on any portion of the Security
Property which would be superior to the lien or security
title of the Security Instrument or the other Loan
Documents, to the full extent of the amount claimed by any
such lien claimant except, with respect to any such taxes
or assessments, to the extent that funds have been
deposited with Payee pursuant to the terms of the Security
Instrument specifically for the applicable taxes or
assessments and not applied by Payee to pay such taxes and
assessments, (viii) for all obligations and indemnities of
Maker under the Loan Documents relating to hazardous or
toxic substances or radon or compliance with environmental
laws and regulations to the full extent of any losses or
damages incurred by Payee as a result of the existence of
such hazardous or toxic substances or radon or failure to
comply with environmental laws or regulations, (ix) for
fraud or material misrepresentation or failure to disclose
a material fact by Maker or any of its principals,
officers, general partners or members, any guarantor, any
indemnitor or any agent, employee or other person
authorized to make statements, representations or
disclosures on behalf of Maker, any principal, officer,
general partner or member of Maker, any guarantor or any
indemnitor, to the full extent of any losses, damages and
expenses of Payee on account thereof, (x) for the payment
of the Yield Maintenance Premium with respect to any
prepayment of principal during a Cash Trap due to an Event
of
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Default, (xi) any claim, obligation (including, without
limitation, any obligation to make any payment), defense,
counter-claim or offset which may arise by virtue of (1)
any act or omission of Borrower or in connection with that
certain lease agreement dated December 1, 1987 ("Lease") by
and between Borrower's predecessor in interest, Southwest
Shopping Centers Co. II, L.L.C., and Luby's Restaurants
Limited Partnership, or (2) any surrender, termination,
amendment or modification of the Lease made without the
consent of Lender. Nothing contained in this section shall
(A) be deemed to be a release or impairment of the
indebtedness evidenced by this Note or the other
obligations of Maker under the Loan Documents or the lien
of the Loan Documents upon the Security Property, or (B)
preclude Payee from foreclosing the Loan Documents in case
of any default or from enforcing any of the other rights of
Payee except as stated in this section, or (C) release,
relieve, reduce, waive, limit or impair in any way
whatsoever, any obligation of any party to the Indemnity
and Guaranty Agreement and Hazardous Substances Indemnity
Agreement each of even date executed and delivered in
connection with the indebtedness evidenced by this Note.
Notwithstanding anything to the contrary in this Note, the
Security Instrument or any of the other Loan Documents, Payee shall not be
deemed to have waived any right which Payee may have under Section 506(a),
506(b), 1111(b) or any other provisions of the U.S. Bankruptcy Code to file a
claim for the full amount of the indebtedness evidenced hereby or secured by the
Security Instrument or any of the other Loan Documents or to require that all
collateral shall continue to secure all of the indebtedness owing to Payee in
accordance with this Note, the Security Instrument and the other Loan Documents.
ARTICLE 3 GENERAL CONDITIONS
3.01 No Waiver: Amendment. No failure to accelerate the debt evidenced
hereby by reason of default hereunder, acceptance of a partial or past due
payment, or indulgences granted from time to time shall be construed (a) as a
novation of this Note or as a reinstatement of the indebtedness evidenced hereby
or as a waiver of such right of acceleration or of the right of Payee thereafter
to insist upon strict compliance with the terms of this Note, or (b) to prevent
the exercise of such right of acceleration or any other right granted hereunder
or by any applicable laws; and Maker hereby expressly waives the benefit of any
statute or rule of law or equity now provided, or which may hereafter be
provided, which would produce a result contrary to or in conflict with the
foregoing. No extension of the time for the payment of this Note or any
installment due hereunder, made by agreement with any person now or hereafter
liable for the payment of this Note shall operate to release, discharge, modify,
change or affect the original liability of Maker under this Note, either in
whole or in part unless Payee agrees otherwise in writing. This Note may not be
changed orally, but only by an agreement in writing signed by the party against
whom enforcement of any waiver, change, modification or discharge is sought.
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3.02 Waivers. Presentment for payment, demand, protest and notice of
demand, intent to accelerate, acceleration, protest and nonpayment and all other
notices are hereby waived by Maker. Maker hereby further waives and renounces,
to the fullest extent permitted by law, all rights to the benefits of any
moratorium, reinstatement, marshalling, forbearance, valuation, stay, extension,
redemption, appraisement, exemption and homestead now or hereafter provided by
the Constitution and laws of the United States of America and of each state
thereof, both as to itself and in and to all of its property, real and personal,
against the enforcement and collection of the obligations evidenced by this Note
or the other Loan Documents.
3.03 Limit of Validity. The provisions of this Note and of all
agreements between Maker and Payee, whether now existing or hereafter arising
and whether written or oral, are hereby expressly limited so that in no
contingency or event whatsoever, whether by reason of demand or acceleration of
the maturity of this Note or otherwise, shall the amount paid, or agreed to be
paid ("Interest"), to Payee for the use, forbearance or detention of the money
loaned under this Note exceed the maximum amount permissible under applicable
law. If, from any circumstance whatsoever, performance or fulfillment of any
provision hereof or of any agreement between Maker and Payee shall, at the time
performance or fulfillment of such provision shall be due, exceed the limit for
Interest prescribed by law or otherwise transcend the limit of validity
prescribed by applicable law, then ipso facto the obligation to be performed or
fulfilled shall be reduced to such limit and if, from any circumstance
whatsoever, Payee shall ever receive anything of value deemed Interest by
applicable law in excess of the maximum lawful amount, an amount equal to any
excessive Interest shall be applied to the reduction of the principal balance
owing under this Note in the inverse order of its maturity (whether or not then
due) or at the option of Payee be paid over to Maker, and not to the payment of
Interest. All Interest (including, but not limited to, any amounts or payments
deemed to be Interest) paid or agreed to be paid to Payee shall, to the extent
permitted by applicable law, be amortized, prorated, allocated and spread
throughout the full period until payment in full of the principal balance of
this Note so that the Interest thereof for such full period will not exceed the
maximum amount permitted by applicable law. This Section 3.03 will control all
agreements between Maker and Payee.
3.04 Use of Funds. Maker hereby warrants, represents and covenants that
no funds disbursed hereunder shall be used for personal, family or household
purposes.
3.05 Unconditional Payment. Maker is and shall be obligated to pay
principal, interest and any and all other amounts which become payable hereunder
or under the other Loan Documents absolutely and unconditionally and without any
abatement, postponement, diminution or deduction and without any reduction for
counterclaim or setoff. In the event that at any time any payment received by
Payee hereunder shall be deemed by a court of competent jurisdiction to have
been a voidable preference or fraudulent conveyance under any bankruptcy,
insolvency or other debtor relief law, then the obligation to make such payment
shall survive any cancellation or satisfaction of this Note or return thereof to
Maker and shall not be discharged or satisfied with any prior payment thereof or
cancellation of this Note, but shall remain a valid and
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binding obligation enforceable in accordance with the terms and provisions
hereof, and such payment shall be immediately due and payable upon demand.
3.06 Waiver of Jury Trial. MAKER, TO THE FULL EXTENT PERMITTED BY LAW,
HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF
COMPETENT COUNSEL, WAIVES, RELINQUISHES AND FOREVER FORGOES THE RIGHT TO A TRIAL
BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY
RELATING TO THE DEBT EVIDENCED BY THIS NOTE OR ANY CONDUCT, ACT OR OMISSION OF
PAYEE OR MAKER, OR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS, PARTNERS,
MEMBERS, EMPLOYEES, AGENTS OR ATTORNEYS, OR ANY OTHER PERSONS AFFILIATED WITH
PAYEE OR MAKER, IN EACH OR THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT,
TORT OR OTHERWISE.
3.07 Secondary Market. Payee may sell, transfer and deliver the Loan
Documents to one or more investors in the secondary mortgage market. In
connection with such sale, Payee may retain or assign responsibility for
servicing the loan evidenced by this Note or may delegate some or all of such
responsibility and/or obligations to a servicer, including, but not limited to,
any subservicer or master servicer, on behalf of the investors. All references
to Payee herein shall refer to and include, without limitation, any such
servicer, to the extent applicable.
3.08 Miscellaneous. This Note shall be interpreted, construed and
enforced according to the laws of the State of New York. The terms and
provisions hereof shall be binding upon and inure to the benefit of Maker and
Payee and their respective heirs, executors, legal representatives, successors,
successors-in-title and assigns, whether by voluntary action of the parties or
by operation of law. As used herein, the terms "Maker" and "Payee" shall be
deemed to include their respective heirs, executors, legal representatives,
successors, successors-in-title and assigns, whether by voluntary action of the
parties or by operation of law. If Maker consists of more than one person or
entity, each shall be jointly and severally liable to perform the obligations of
Maker under this Note. All personal pronouns used herein, whether used in the
masculine, feminine or neuter gender, shall include all other genders; the
singular shall include the plural and vice versa. Titles of articles and
sections are for convenience only and in no way define, limit, amplify or
describe the scope or intent of any provisions hereof. Time is of the essence
with respect to all provisions of this Note. This Note and the other Loan
Documents contain the entire agreements between the parties hereto relating to
the subject matter hereof and thereof and all prior agreements relative hereto
and thereto which are not contained herein or therein are terminated.
3.09 Definitions.
As used in this Note:
(a) The term "ANNUAL BUDGET" shall mean an annual budget submitted
by Maker to Payee in accordance with the terms of Section 1.06(b) herein.
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(b) The term "ANTICIPATED REPAYMENT DATE" shall mean May 1, 2010.
(c) The term "APPLICABLE INTEREST RATE" shall mean from (a) the
date of this Note through but not including the Anticipated Repayment Date, the
Initial Term Interest Rate, and (b) from and after the Anticipated Repayment
Date through and including the date this Note is paid in full, the Extended Term
Rate.
(d) The term "APPROVED ANNUAL BUDGET" shall mean each Annual
Budget approved by Payee in accordance with terms herein.
(e) The term "CAPITAL EXPENDITURES" shall mean for any period, the
amount expended for items capitalized under generally accepted accounting
principles including expenditures for building improvements or major repairs,
leasing commissions and tenant improvements.
(f) The term "CASH EXPENSES" shall mean for any period, the
operating expenses for the Security Property (as hereinafter defined) as set
forth in an Approved Annual Budget to the extent that such expenses are actually
incurred by Maker minus payments into the Impound Account (as defined in the
Security Instrument) and the Replacement Reserve (as defined in the Security
Instrument).
(g) The term "CASH MANAGEMENT AGREEMENT" shall mean that certain
Cash Management Agreement dated as of the date hereof by and among Payee, Maker
and Landau & Heyman of Arkansas, Inc.
(h) The term "DEBT" shall mean, collectively, the whole of the
principal sum of this Note, together with all interest accrued and unpaid
thereon and all other sums due under the Loan Documents
(i) The term "EXTENDED TERM RATE" shall mean a rate per annum
equal to (1) the greater of (i) the Initial Term Interest Rate plus four (4)
percentage points or (2) for so long as the Note is an asset of the trust,
partnership, corporation or other entity formed in connection with a Secondary
Market Transaction (as defined in the Security Instrument) pursuant to which
securities rated by any rating agency have been issued, the Initial Term
Interest Rate plus two (2) percentage points.
(j) The term "EXTRAORDINARY EXPENSE" shall mean an extraordinary
operating expense or capital expense not set forth in the Approved Annual Budget
or allotted for in the Replacement Reserve.
(k) The term "INITIAL TERM INTEREST RATE" shall mean a rate of
eight and sixty-nine hundredths percent (8.69%) per annum.
(l) The term "NET CAPITAL EXPENDITURES" shall mean for any period
the amount by which Capital Expenditures during such period exceeds
reimbursements for such items during such period from any fund established
pursuant to the Loan Documents.
Maker's Tax Identification No.:
34-6513657
- -----------------------
17
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[THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, Maker has executed this Note under seal as of
the date first above written.
MAKER:
PARK PLAZA MALL, LLC, a Delaware
limited liability company
By: Park Plaza 3, LLC, a Delaware limited
liability company, its general manager
By: /s/ DANIEL P. FRIEDMAN
---------------------------------
Name: Daniel P. Friedman
Title: President
19
<PAGE> 20
State of Arkansas )
)ss.
County of Pulaski )
On this day personally appeared before me, a Notary Public, within and for
the County and State aforesaid, duly qualified, commissioned and acting, Daniel
P. Friedman, to me personally well known and who acknowledged that he was the
President of Park Plaza 3, LLC, who is the general manager of Park Plaza Mall,
LLC and was duly authorized as such to execute the foregoing instrument for, and
in the name and behalf of said company further stated and acknowledged that he
has so signed, executed and delivered said foregoing instrument for the
consideration and purposes therein mentioned and set forth.
WITNESS my hand and official seal on this 19th day of April, 2000.
/s/ GARY D. LAWMAN
------------------
NOTARY PUBLIC
GARY D. LAWMAN
Notary Public, State of New York
No. 41-5054632
Qualified in Queens County
Certificate Filed in New York County
Commission Expires Jan. 22, 2002
<PAGE> 1
Exhibit 99.6
LOAN NO. 26-5330821
===============================================================================
PARK PLAZA MALL, LLC,
a Delaware limited liability company
as Mortgagor
to
FIRST UNION NATIONAL BANK,
as Mortgagee
---------------------------
MORTGAGE AND SECURITY AGREEMENT
---------------------------
Date: April 20, 2000
PREPARED BY AND UPON RECORDATION RETURN TO:
Orrick, Herrington & Sutcliffe LLP
666 Fifth Avenue
New York, New York 10103
Attention: Corey A. Tessler, Esq.
===============================================================================
THIS INSTRUMENT AFFECTS REAL AND PERSONAL PROPERTY SITUATED IN THE STATE OF
ARKANSAS, COUNTY OF PULASKI, SECTION 1, TOWNSHIP 1 NORTH, RANGE 13 WEST, KNOWN
BY THE STREET ADDRESS OF 6000 W. MARKHAM, LITTLE ROCK, ARKANSAS 72205
THIS INSTRUMENT IS TO BE FILED AND INDEXED IN THE REAL ESTATE RECORDS AND IS
ALSO TO BE INDEXED IN THE INDEX OF FINANCING STATEMENTS UNDER THE NAMES OF
MORTGAGOR, AS "DEBTOR", AND MORTGAGEE, AS "SECURED PARTY".
<PAGE> 2
MORTGAGE AND SECURITY AGREEMENT
THIS MORTGAGE AND SECURITY AGREEMENT (this "Mortgage") is made as of
April 20, 2000 by PARK PLAZA MALL, LLC, a Delaware limited liability company, as
Mortgagor ("Mortgagor"), whose address is c/o First Union Real Estate Equity and
Mortgage Investments, 551 Fifth Avenue, Suite 1416, New York, New York 10176, to
FIRST UNION NATIONAL BANK, a national banking association, as Mortgagee
("Mortgagee"), whose address is One First Union Center DC-6, Charlotte, North
Carolina 28288-0166.
W I T N E S S E T H:
THAT FOR AND IN CONSIDERATION OF THE SUM OF TEN AND NO/100 DOLLARS
($10), AND OTHER VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH
ARE HEREBY ACKNOWLEDGED, MORTGAGOR HEREBY IRREVOCABLY MORTGAGES, GRANTS,
BARGAINS, SELLS, CONVEYS, TRANSFERS, PLEDGES, SETS OVER AND ASSIGNS TO
MORTGAGEE, with power of sale, all of Mortgagor's estate, right, title and
interest in, to and under any and all of the following described property (i.e.
(A)-(P) below), whether now owned or hereafter acquired by Mortgagor
(collectively, the "Mortgaged Property"):
(A) All that certain real property situated in the
County of Pulaski, State of Arkansas, more particularly described on
Exhibit A attached hereto and incorporated herein by this reference
(the "Premises"), together with all of the easements, rights,
privileges, franchises, tenements, hereditaments and appurtenances
now or hereafter thereunto belonging or in any way appertaining
thereto, including but not limited to those described in Exhibit
A-1, attached hereto and made a part hereof and all of the estate,
right, title, interest, claim and demand whatsoever of Mortgagor
therein or thereto, either at law or in equity, in possession or in
expectancy, now or hereafter acquired;
(B) All structures, buildings and improvements of every
kind and description now or at any time hereafter located or placed
on the Premises (the "Improvements");
(C) All furniture, furnishings, fixtures, goods,
equipment, inventory or personal property owned by Mortgagor and now
or hereafter located on, attached to or used in and about the
Improvements, including, but not limited to, all machines, engines,
boilers, dynamos, elevators, stokers, tanks, cabinets, awnings,
screens, shades, blinds, carpets, draperies, lawn mowers, and all
appliances, plumbing, heating, air conditioning, lighting,
ventilating, refrigerating, disposal and incinerating equipment, and
all fixtures and appurtenances thereto, and such other goods and
chattels and personal property owned by Mortgagor as are now or
hereafter used or furnished in operating the Improvements, or the
activities conducted therein, and all building materials and
equipment hereafter situated on or about the Premises or
Improvements, and all warranties and guaranties relating thereto,
and all additions thereto and substitutions and replacements
therefor (exclusive of any of the foregoing owned or leased by
tenants of space in the Improvements);
(D) All easements (including, without limitation, that
certain Construction, Operation and Reciprocal Easement Agreement
dated December 15, 1986, executed by
<PAGE> 3
Herring-Marathon Master Partnership B, a Texas general partnership
("Developer"), Construction Developers, Incorporated a Delaware
corporation ("Condev") and Dillard Department Stores, Inc., a
Delaware corporation ("Dillard"), as same has been or may be
amended, modified and supplemented from time to time, and the
estates, rights and interests of Developer thereunder which have
been assigned to Mortgagor (collectively, the "REA"),
rights-of-way, strips and gores of land, vaults, streets, ways,
alleys, passages, sewer rights, and other emblements now or
hereafter located on the Premises or under or above the same or
any part or parcel thereof, and all estates, rights, titles,
interests, tenements, hereditaments and appurtenances, reversions
and remainders whatsoever, in any way belonging, relating or
appertaining to the Mortgaged Property or any part thereof, or
which hereafter shall in any way belong, relate or be appurtenant
thereto, whether now owned or hereafter acquired by Mortgagor;
(E) All water, ditches, wells, reservoirs and drains and
all water, ditch, well, reservoir and drainage rights which are
appurtenant to, located on, under or above or used in connection
with the Premises or the Improvements, or any part thereof, whether
now existing or hereafter created or acquired;
(F) All minerals, crops, timber, trees, shrubs, flowers
and landscaping features now or hereafter located on, under or above
the Premises;
(G) All cash funds, deposit accounts and other rights
and evidence of rights to cash, now or hereafter created or held by
Mortgagee pursuant to this Mortgage or any other of the Loan
Documents (as hereinafter defined), including, without limitation,
all funds now or hereafter on deposit in the Impound Account, the
Payment Reserve, the Replacement Reserve and the Repair and
Remediation Reserve (each as hereinafter defined);
(H) All leases (including, without limitation, oil, gas
and mineral leases), licenses, concessions and occupancy agreements
of all or any part of the Premises or the Improvements (each, a
"Lease" and collectively, "Leases"), whether written or oral, now or
hereafter entered into and all rents, royalties, issues, profits,
bonus money, revenue, income, rights thereto and other benefits
(collectively, the "Rents and Profits") of the Premises or the
Improvements, now or hereafter arising from the use or enjoyment of
all or any portion thereof or from any present or future Lease or
other agreement pertaining thereto or arising from any of the Leases
or any of the General Intangibles (as hereinafter defined) and all
cash or securities deposited to secure performance by the tenants,
lessees or licensees (each, a "Tenant" and collectively, "Tenants"),
as applicable, of their obligations under any such Leases, whether
said cash or securities are to be held until the expiration of the
terms of said Leases or applied to one or more of the installments
of rent coming due prior to the expiration of said terms, subject,
however, to the provisions contained in Section 1.11 hereinbelow;
(I) All contracts and agreements now or hereafter
entered into covering any part of the Premises or the Improvements
(collectively, the "Contracts") and all revenue, income and other
benefits thereof, including, without limitation, management
agreements, service contracts, maintenance contracts, equipment
leases, personal property leases and any contracts or documents
relating to construction on any part of the Premises or the
2
<PAGE> 4
Improvements (including plans, drawings, surveys, tests, reports,
bonds and governmental approvals) or to the management or operation
of any part of the Premises or the Improvements; provided that the
REA shall be deemed an easement and not a Contract for purposes of
the Loan Documents;
(J) All present and future monetary deposits given to
any public or private utility with respect to utility services
furnished to any part of the Premises or the Improvements;
(K) All present and future funds, accounts, instruments,
accounts receivable, documents, causes of action, claims, general
intangibles (including, without limitation, trademarks, trade names,
service marks and symbols now or hereafter used in connection with
any part of the Premises or the Improvements, all names by which the
Premises or the Improvements may be operated or known, all rights to
carry on business under such names, and all rights, interest and
privileges which Mortgagor has or may have as developer or declarant
under any covenants, restrictions or declarations now or hereafter
relating to the Premises or the Improvements) and all notes or
chattel paper now or hereafter arising from or by virtue of any
transactions related to the Premises or the Improvements
(collectively, the "General Intangibles");
(L) All water taps, sewer taps, certificates of
occupancy, permits, licenses, franchises, certificates, consents,
approvals and other rights and privileges now or hereafter obtained
in connection with the Premises or the Improvements and all present
and future warranties and guaranties relating to the Improvements or
to any equipment, fixtures, furniture, furnishings, personal
property or components of any of the foregoing now or hereafter
located or installed on the Premises or the Improvements;
(M) All building materials, supplies and equipment now
or hereafter placed on the Premises or in the Improvements and all
architectural renderings, models, drawings, plans, specifications,
studies and data now or hereafter relating to the Premises or the
Improvements;
(N) All right, title and interest of Mortgagor in any
insurance policies or binders now or hereafter relating to the
Mortgaged Property, including any unearned premiums thereon;
(O) All proceeds, products, substitutions and accessions
(including claims and demands therefor) of the conversion, voluntary
or involuntary, of any of the foregoing into cash or liquidated
claims, including, without limitation, proceeds of insurance and
condemnation awards and all refunds of taxes or assessments levied
against all or any portion of the Mortgaged Property; and
(P) All other or greater rights and interests of every
nature in the Premises or the Improvements and in the possession or
use thereof and income therefrom, whether now owned or hereafter
acquired by Mortgagor.
FOR THE PURPOSE OF SECURING:
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<PAGE> 5
(1) The debt evidenced by that certain Promissory Note
(such Promissory Note, together with any and all renewals,
amendments, modifications, consolidations and extensions thereof, is
hereinafter referred to as the "Note") of even date with this
Mortgage, made by Mortgagor payable to the order of Mortgagee in the
principal face amount of FORTY-TWO MILLION AND NO/100 DOLLARS
($42,000,000.00), together with interest as therein provided;
(2) The full and prompt payment and performance of all
of the provisions, agreements, covenants and obligations herein
contained and contained in any other agreements, documents or
instruments now or hereafter evidencing, securing or otherwise
relating to the Debt (as hereinafter defined) including, but not
limited to, that certain Indemnity and Guaranty Agreement from
Indemnitor (as hereinafter defined) of even date herewith and the
Environmental Indemnity Agreement (as hereinafter defined)(the Note,
this Mortgage, and such other agreements, documents and instruments,
together with any and all renewals, amendments, extensions,
consolidations, replacements and modifications thereof, are
hereinafter collectively referred to as the "Loan Documents") and
the payment of all other sums herein or therein covenanted to be
paid;
(3) Any and all additional advances made by Mortgagee to
protect or preserve the Mortgaged Property or the lien or security
interest created hereby on the Mortgaged Property, or for taxes,
assessments or insurance premiums as hereinafter provided or for
performance of any of Mortgagor's obligations hereunder or under the
other Loan Documents or for any other purpose provided herein or in
the other Loan Documents (whether or not the original Mortgagor
remains the owner of the Mortgaged Property at the time of such
advances); and
(4) Any and all other indebtedness now owing or which
may hereafter be owing by Mortgagor to Mortgagee, including, without
limitation, all prepayment fees, however and whenever incurred or
evidenced, whether express or implied, direct or indirect, absolute
or contingent, or due or to become due, and all renewals,
amendments, modifications, consolidations, replacements and
extensions thereof, it being contemplated by Mortgagor and Mortgagee
that Mortgagor may hereafter become so indebted to Mortgagee.
(All of the sums referred to in Paragraphs (1) through (4) above are herein
referred to as the "Debt").
TO HAVE AND TO HOLD the Mortgaged Property unto Mortgagee, its
successors and assigns forever, and Mortgagor does hereby bind itself, its
successors and assigns, to WARRANT AND FOREVER DEFEND the title to the Mortgaged
Property, subject to the Permitted Encumbrances (as hereinafter defined), to
Mortgagee against every person whomsoever lawfully claiming or to claim the same
or any part thereof;
PROVIDED, HOWEVER, that if the principal and interest and all other
sums due or to become due under the Note or under the other Loan Documents,
including, without limitation, any prepayment fees required pursuant to the
terms of the Note, shall have been paid at the time and in the manner stipulated
therein and the Debt shall have been paid and all other covenants contained in
the Loan Documents shall have been performed, then, in such case, the liens,
4
<PAGE> 6
security interests, estates and rights granted by this Mortgage shall be
satisfied and the estate, right, title and interest of Mortgagee in the
Mortgaged Property shall cease, and upon payment to Mortgagee of all reasonable
and necessary costs and expenses incurred for the preparation of the release
hereinafter referenced and all recording costs if allowed by law, Mortgagee
shall promptly satisfy and release this Mortgage and all other recorded or filed
Loan Documents of record and the lien, security interest, operation and effect
hereof by proper instrument.
ARTICLE I
COVENANTS OF MORTGAGOR
For the purpose of further securing the Debt and for the protection
of the security of this Mortgage, for so long as the Debt or any part thereof
remains unpaid, Mortgagor covenants and agrees as follows:
1.1. REPRESENTATIONS, WARRANTIES AND COVENANTS OF MORTGAGOR.
Mortgagor, for itself and its successors and assigns, does hereby represent,
warrant and covenant to and with Mortgagee, its successors and assigns, that:
(a) Mortgagor has good, marketable and indefeasible fee simple
title to the Premises and Improvements, subject only to those matters set forth
in Exhibit B-1, attached hereto and made a part hereof, (such items being the
"Permitted Encumbrances"), and has full power and lawful authority to assign,
pledge, encumber and mortgage its interest in the Mortgaged Property in the
manner and form hereby done or intended. Mortgagor will preserve its interest in
and title to the Mortgaged Property and will forever warrant and defend the same
to Mortgagee against any and all claims whatsoever and will forever warrant and
defend the validity and priority of the lien and security interest created
herein against the claims of all persons and parties whomsoever, subject in all
cases to the Permitted Encumbrances. The foregoing warranty of title shall
survive the foreclosure of this Mortgage and shall inure to the benefit of and
be enforceable by Mortgagee in the event Mortgagee acquires title to the
Mortgaged Property pursuant to any foreclosure;
(b) No bankruptcy or insolvency proceedings are pending or
contemplated by Mortgagor or, to the best knowledge of Mortgagor, against
Mortgagor or by or against any endorser or cosigner of the Note or of any
portion of the Debt, or any guarantor or indemnitor under any guaranty or
indemnity agreement executed in connection with the Note or the loan evidenced
thereby and secured hereby (an "Indemnitor");
(c) All reports, certificates, affidavits, statements and other
data furnished by Mortgagor to Mortgagee in connection with the loan evidenced
by the Note are true and correct in all material respects and do not omit to
state any fact or circumstance necessary to make the statements contained
therein not misleading in any material respect;
(d) The execution, delivery and performance of this Mortgage, the
Note and all of the other Loan Documents have been duly authorized by all action
necessary to be, and are, binding and enforceable against Mortgagor in
accordance with the respective terms thereof and do not contravene, result in a
breach of or constitute a default (nor upon the giving of notice or the passage
of time or both will same constitute a default) under the operating agreement or
other
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<PAGE> 7
organizational documents of Mortgagor or any contract or agreement of any
nature to which Mortgagor is a party or by which Mortgagor or any of its
property may be bound and do not violate or contravene any law, order, decree,
rule or regulation to which Mortgagor is subject;
(e) The Premises and the Improvements and the current intended use
thereof by Mortgagor comply in all material respects with all applicable
restrictive covenants, zoning ordinances, subdivision and building codes, flood
disaster laws (if necessary), health and environmental laws and regulations and
all other ordinances, orders or requirements issued by any state, federal or
municipal authorities lawfully having jurisdiction over the Mortgaged Property.
The Premises constitutes one or more separate tax parcels for purposes of ad
valorem taxation. The Premises and Improvements do not require any rights over,
or restrictions against, other property that have not been obtained in order to
comply with any of the aforesaid governmental ordinances, orders or
requirements;
(f) All utility services necessary and sufficient for the full
use, occupancy, operation and disposition of the Premises and the Improvements
for their present purposes are available thereto, including water, storm sewer,
sanitary sewer, gas, electric, cable and telephone facilities, through public
rights-of-way or perpetual private easements approved by Mortgagee;
(g) All streets, roads, highways, and bridges contiguous to and
necessary for access to the present use, occupancy and operation of the Premises
and the Improvements have been completed, have been dedicated to and accepted by
the appropriate municipal authority and are open and available to the Premises
and the Improvements without further condition or cost to Mortgagor as shown on
the survey furnished to Mortgagee in connection with this Mortgage;
(h) All curb cuts, driveways and traffic signals shown on
the survey delivered to Mortgagee prior to the execution and delivery of this
Mortgage are existing and have been fully approved by the appropriate
governmental authority;
(i) Except as disclosed in writing to Mortgagee prior to
the execution and delivery of this Mortgage, there are no judicial,
administrative, mediation or arbitration actions, suits or proceedings pending
or threatened against or affecting Mortgagor (or, if Mortgagor is a partnership
or a limited liability company, any of its general partners or members) or the
Mortgaged Property which, if adversely determined, would materially impair
either the Mortgaged Property or Mortgagor's ability to perform the covenants or
obligations required to be performed under the Loan Documents;
(j) The Mortgaged Property is free from delinquent
water charges, sewer rents, taxes and assessments;
(k) Except as otherwise disclosed in the Engineering Report
(as hereinafter defined), as of the date of this Mortgage, the Improvements are
free from unrepaired damage caused by fire, flood, accident or other casualty;
(l) As of the date of this Mortgage, no part of the Premises or the
Improvements has been taken in condemnation, eminent domain or like proceeding
nor, to Mortgagor's knowledge and belief, is any such proceeding pending or
threatened or contemplated;
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<PAGE> 8
(m) Mortgagor possesses all franchises, patents, copyrights,
trademarks, trade names, licenses and permits necessary for the conduct of its
business substantially as now conducted on the Premises;
(n) Except as may otherwise be disclosed in the Engineering Report
(as hereinafter defined), the Improvements are structurally sound, in good
repair and free of defects in materials and workmanship and have been
constructed and installed in substantial compliance with the plans and
specifications relating thereto. All major building systems that are owned by
Mortgagor and are located within the Improvements, including, without
limitation, the heating and air conditioning systems and the electrical and
plumbing systems serving the common areas, are in good working order and
condition;
(o) Mortgagor has delivered to Mortgagee true, correct and
complete copies of all Contracts and all amendments thereto or modifications
thereof;
(p) Each Contract constitutes the legal, valid and binding
obligation of Mortgagor and, to the best of Mortgagor's knowledge and belief, is
generally enforceable against any other party thereto. To the best of
Mortgagor's knowledge, no default exists, or with the passing of time or the
giving of notice or both would exist, under any material Contract which would,
in the aggregate, have a material adverse effect on Mortgagor or the Mortgaged
Property;
(q) No Contract provides any party with the right to obtain a lien
or encumbrance upon the Mortgaged Property superior to the lien of this
Mortgage;
(r) Mortgagor and the Mortgaged Property are free from any past due
obligations for sales and payroll taxes;
(s) There are no security agreements or financing statements
affecting all or any portion of the Mortgaged Property other than (i) as
disclosed in writing by Mortgagor to Mortgagee prior to the date hereof and (ii)
the security agreements and financing statements created in favor of Mortgagee;
(t) Mortgagor has delivered a true, correct and complete schedule
(the "Rent Roll") of all Leases affecting the Mortgaged Property as of the date
hereof, which as of the date thereof accurately and completely sets forth in all
material respects for each such Lease, the following: the name of the Tenant,
the Lease expiration date, extension and renewal provisions, and the base rent
payable thereunder;
(u) Each Lease constitutes the legal, valid and binding obligation
of Mortgagor and, to the best of Mortgagor's knowledge and belief, is
enforceable against the Tenant thereof in all material respects. Except as
disclosed to Mortgagee in writing prior to the date hereof, no default exists,
or with the passing of time or the giving of notice or both would exist, under
any Lease which would, in the aggregate, have a material adverse effect on
Mortgagor or the Mortgaged Property;
(v) No Tenant under any Lease has, as of the date hereof, paid base
or fixed minimum rent more than thirty (30) days in advance, and the rents under
such Leases have not been waived, released, or otherwise discharged or
compromised;
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<PAGE> 9
(w) All work to be performed by Mortgagor under the Leases has been
substantially performed, all contributions to be made by Mortgagor to the
Tenants thereunder have been made and all other conditions precedent to each
such Tenant's obligation to pay rent and other charges thereunder have been
satisfied;
(x) Mortgagor has delivered to Mortgagee true, correct and complete
copies of all Leases described in the Rent Roll;
(y) To the best of Mortgagor's knowledge and belief, each Tenant
is free from bankruptcy, reorganization or arrangement proceedings or a general
assignment for the benefit of creditors;
(z) No Lease provides any party with the right to obtain a lien or
encumbrance upon the Mortgaged Property superior to the lien of this Mortgage;
and
(aa) Mortgagor is not a "foreign person" within the meaning of
Section 1445(f)(3) of the Internal Revenue Code of 1986, as amended, and the
related Treasury Department regulations, including temporary regulations;
(bb) The Permitted Encumbrances do not and will not materially
adversely affect (i) the ability of Mortgagor to pay in full the Debt in a
timely manner and (ii) the use of the Mortgaged Property for the use currently
being made thereof, the operation of the Mortgaged Property as currently being
operated or the value of the Mortgaged Property; and
(cc) The REA is in full force and affect and no material default,
breach or violation exists, or with the passing of time or giving of notice or
both, will exist under the REA. Neither the execution and delivery of the Loan
Documents, the Mortgagor's performance thereunder, the recordation of this
Mortgage, nor the exercise of any remedies by Mortgagee, will constitute a
breach or default under the REA.
1.2. DEFENSE OF TITLE. If, while this Mortgage is in force,
Mortgagor's title to the Mortgaged Property (or the interest of Mortgagee)
therein shall be the subject, directly or indirectly, of any action at law or in
equity, or be attached directly or indirectly, or endangered, clouded or
adversely affected in any manner, Mortgagor, at Mortgagor's expense, shall take
all necessary and proper steps for the defense of said title or interest,
including the employment of counsel reasonably approved by Mortgagee, the
prosecution or defense of litigation, and the compromise or discharge of claims
made against said title or interest. Notwithstanding the foregoing, in the event
that Mortgagee reasonably determines that Mortgagor is not adequately performing
its obligations under this Section, Mortgagee may, after notice without limiting
or waiving any other rights or remedies of Mortgagee hereunder, take such steps
with respect thereto as Mortgagee shall deem necessary or proper and any and all
costs and expenses incurred by Mortgagee in connection therewith, together with
interest thereon at the Default Interest Rate (as defined in the Note) from the
date incurred by Mortgagee until actually paid by Mortgagor, shall be
immediately paid by Mortgagor on demand and shall be secured by this Mortgage
and by all of the other Loan Documents securing all or any part of the
indebtedness evidenced by the Note.
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<PAGE> 10
1.3. PERFORMANCE OF OBLIGATIONS. Mortgagor shall pay when due the
principal of and the interest on the Debt in accordance with the terms of the
Note. Mortgagor shall also pay all charges, fees and other sums required to be
paid by Mortgagor as provided in the Loan Documents, in accordance with the
terms of the Loan Documents, and shall observe, perform and discharge all
obligations, covenants and agreements to be observed, performed or discharged by
Mortgagor set forth in the Loan Documents in accordance with their terms.
Further, Mortgagor shall promptly perform and comply with all material
covenants, conditions, obligations and prohibitions required of Mortgagor in
connection with any other document or instrument affecting title to the
Mortgaged Property, or any part thereof, regardless of whether such document or
instrument is superior or subordinate to this Mortgage.
1.4. INSURANCE. Mortgagor shall, at Mortgagor's expense, maintain in
force and effect on the Mortgaged Property at all times while this Mortgage
continues in effect the following insurance:
(a) Insurance against loss or damage to the Mortgaged Property by
fire, windstorm, tornado and hail and against loss and damage by such other,
further and additional risks as may be now or hereafter embraced by an
"all-risk" form of insurance policy. The amount of such insurance shall be not
less than one hundred percent (100%) of the full replacement cost (insurable
value) of the Improvements (as established by an MAI appraisal), without
reduction for depreciation. The determination of the replacement cost amount and
permissible deductibles shall be adjusted annually to comply with the
requirements of the insurer issuing such coverage or, at Mortgagee's election,
by reference to such indices, appraisals or information as Mortgagee determines
in its reasonable discretion in order to reflect increased replacement costs due
to inflation. Absent such annual adjustment, each policy shall contain inflation
guard coverage insuring that the policy limit will be increased over time to
reflect the effect of inflation. Full replacement cost, as used herein, means,
with respect to the Improvements, the cost of replacing the Improvements without
regard to deduction for depreciation, exclusive of the cost of excavations,
foundations and footings below the lowest basement floor. Mortgagor shall also
maintain insurance against loss or damage to furniture, furnishings, fixtures,
equipment and other items (whether personalty or fixtures) included in the
Mortgaged Property and owned by Mortgagor from time to time to the extent
applicable. Each policy shall contain a replacement cost endorsement and either
an agreed amount endorsement (to avoid the operation of any co-insurance
provisions) or a waiver of any co-insurance provisions, all subject to
Mortgagee's approval. The maximum deductible shall be $100,000.00, as adjusted
for inflation as set forth above.
(b) Commercial General Liability Insurance against claims for
personal injury, bodily injury, death and property damage occurring on, in or
about the Premises or the Improvements in amounts not less than $1,000,000.00
per occurrence and $5,000,000.00 in the aggregate plus umbrella coverage in an
amount not less than $5,000,000.00. Mortgagee hereby retains the right to
periodically review the amount of said liability insurance being maintained by
Mortgagor and to require an increase in the amount of said liability insurance
should Mortgagee deem an increase to be reasonably prudent under then existing
circumstances.
(c) Boiler and machinery insurance is required if steam boilers or
other pressure-fired vessels are in operation at the Premises. Minimum liability
coverage per accident
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must equal the greater of the replacement cost (insurable value) of the
Improvements housing such boiler or pressure-fired machinery or $2,000,000.00.
If one or more large HVAC units is in operation at the Premises, "Systems
Breakdowns" coverage shall be required, as determined by Mortgagee. Minimum
liability coverage per accident must equal the value of such unit(s).
(d) If the Improvements or any part thereof is situated in an area
designated by the Federal Emergency Management Agency ("FEMA") as a special
flood hazard area (Zone A or Zone V), flood insurance in an amount equal to the
lesser of: (a) the minimum amount required, under the terms of coverage, to
compensate for any damage or loss on a replacement basis (or the unpaid balance
of the Debt if replacement cost coverage is not available for the type of
building insured), or (b) the maximum insurance available under the appropriate
National Flood Insurance Administration program. The maximum deductible shall be
$3,000.00 per building or a higher minimum amount as required by FEMA or other
applicable law.
(e) During the period of any construction, renovation or alteration
of the existing Improvements which exceeds the lesser of 10% of the principal
amount of the Note or $500,000, at Mortgagee's request, a completed value, "All
Risk" Builder's Risk form or "Course of Construction" insurance policy in
non-reporting form, in an amount approved by Mortgagee, may be required. During
the period of any construction of any addition to the existing Improvements, a
completed value, "All Risk" Builder's Risk form or "Course of Construction"
insurance policy in non-reporting form, in an amount approved by Mortgagee,
shall be required.
(f) When and to the extent required by applicable law, ordinance or
other regulation, Worker's Compensation and Employer's Liability Insurance
covering all persons subject to the worker's compensation laws of the state in
which the Mortgaged Property is located.
(g) Business income (loss of rents) insurance in amounts sufficient
to compensate Mortgagor for all Rents or income during a period of not less than
eighteen (18) months. The amount of coverage shall be adjusted annually to
reflect the Rents or income payable during the succeeding eighteen (18) month
period.
(h) Such other insurance on the Mortgaged Property or on any
replacements or substitutions thereof or additions thereto as may from time to
time be reasonably required by Mortgagee against other insurable hazards or
casualties which at the time are commonly insured against in the case of
property similarly situated including, without limitation, Sinkhole, Mine
Subsidence and Environmental insurance, due regard being given to the height and
type of buildings, their construction, location, use and occupancy.
All such insurance shall (i) be with insurers fully licensed and
authorized to do business in the state within which the Premises is located and
who have and maintain a rating of at least AA from Standard & Poors, or
equivalent, (ii) contain the complete address of the Premises (or a complete
legal description), (iii) be for terms of at least one year, with premium
prepaid, and (iv) be subject to the reasonable approval of Mortgagee as to
insurance companies, amounts, content, forms of policies, method by which
premiums are paid and expiration dates, and (vi) include a standard,
non-contributory, mortgagee clause naming EXACTLY:
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First Union National Bank,
its Successors and Assigns ATIMA
Attn.: Structured Products Servicing
8739 Research Drive, Building URP4
Charlotte, North Carolina 28288-1075
(a) as an additional insured under all liability insurance policies, (b) as the
first mortgagee on all property insurance policies and (c) as the loss payee on
all loss of rents or loss of business income insurance policies.
Mortgagor shall, as of the date hereof, deliver to Mortgagee
evidence that said insurance policies have been prepaid as required above and
certified copies of such insurance policies and original certificates of
insurance signed by an authorized agent of the applicable insurance companies
evidencing such insurance satisfactory to Mortgagee. Mortgagor shall renew all
such insurance and deliver to Mortgagee certificates and policies evidencing
such renewals at least thirty (30) days before any such insurance shall expire.
Mortgagor further agrees that each such insurance policy: (i) shall provide for
at least thirty (30) days' prior written notice to Mortgagee prior to any policy
reduction or cancellation for any reason other than non-payment of premium and
at least ten (10) days' prior written notice to Mortgagee prior to any
cancellation due to non-payment of premium; (ii) shall contain an endorsement or
agreement by the insurer that any loss shall be payable to Mortgagee in
accordance with the terms of such policy notwithstanding any act or negligence
of Mortgagor which might otherwise result in forfeiture of such insurance; (iii)
shall waive all rights of subrogation against Mortgagee; (iv) in the event that
the Premises or the Improvements constitutes a legal non-conforming use under
applicable building, zoning or land use laws or ordinances, shall include an
ordinance or law coverage endorsement which will contain Coverage A: "Loss Due
to Operation of Law" (with a minimum liability limit equal to Replacement Cost
With Agreed Value Endorsement), Coverage B: "Demolition Cost" and Coverage C:
"Increased Cost of Construction" coverages; and (v) may be in the form of a
blanket policy provided that, in the event that any such coverage is provided in
the form of a blanket policy, Mortgagor hereby acknowledges and agrees that
failure to pay any portion of the premium therefor which is not allocable to the
Mortgaged Property or by any other action not relating to the Mortgaged Property
which would otherwise permit the issuer thereof to cancel the coverage thereof,
will require the Mortgaged Property to be insured by a separate, single-property
policy. The blanket policy must properly identify and fully protect the
Mortgaged Property as if a separate policy were issued for 100% of Replacement
Cost at the time of loss and otherwise meet all of Mortgagee's applicable
insurance requirements set forth in this Section 1.4. The delivery to Mortgagee
of the insurance policies or the certificates of insurance as provided above
shall constitute an assignment of all proceeds payable under such insurance
policies relating to the Mortgaged Property by Mortgagor to Mortgagee as further
security for the Debt. In the event of foreclosure of this Mortgage, or other
transfer of title to the Mortgaged Property in extinguishment in whole or in
part of the Debt, all right, title and interest of Mortgagor in and to all
proceeds payable under such policies then in force concerning the Mortgaged
Property shall thereupon vest in the purchaser at such foreclosure, or in
Mortgagee or other transferee in the event of such other transfer of title.
Approval of any insurance by Mortgagee shall not be a representation of the
solvency of any insurer or the sufficiency of any amount of insurance. In the
event Mortgagor fails to provide, maintain, keep in force or deliver and furnish
to Mortgagee the policies of insurance required by this Mortgage or evidence of
their renewal as required herein, Mortgagee may, but shall not be obligated
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to, procure such insurance and Mortgagor shall pay all amounts advanced by
Mortgagee therefor, together with interest thereon at the Default Interest Rate
from and after the date advanced by Mortgagee until actually repaid by
Mortgagor, promptly upon demand by Mortgagee. Any amounts so advanced by
Mortgagee, together with interest thereon, shall be secured by this Mortgage and
by all of the other Loan Documents securing all or any part of the Debt.
Mortgagee shall not be responsible for nor incur any liability for the
insolvency of the insurer or other failure of the insurer to perform, even
though Mortgagee has caused the insurance to be placed with the insurer after
failure of Mortgagor to furnish such insurance. Mortgagor shall not obtain
insurance for the Mortgaged Property in addition to that required by Mortgagee
without the prior written consent of Mortgagee, which consent will not be
unreasonably withheld provided that (i) Mortgagee is a named insured on such
insurance, (ii) Mortgagee receives complete copies of all policies evidencing
such insurance, and (iii) such insurance complies with all of the applicable
requirements set forth herein. Notwithstanding anything to the contrary,
Mortgagor shall not be required to insure those portions of the Improvements
that Tenants are, by the terms of their Leases, required to insure, if and for
so long as such Tenants actually provide such insurance, which otherwise
satisfies the requirements of this Section 1.4, including, without limitation,
naming Mortgagee as "first mortgagee", "loss payee" or "additional insured", as
the case may be.
1.5. PAYMENT OF TAXES. Mortgagor shall pay or cause to be paid,
except to the extent provision is actually made therefor pursuant to Section 1.6
of this Mortgage, all taxes and assessments which are or may become a lien on
the Mortgaged Property or which are assessed against or imposed upon the
Mortgaged Property. Mortgagor shall furnish Mortgagee with receipts (or if
receipts are not immediately available, with copies of canceled checks
evidencing payment with receipts to follow promptly after they become available)
showing payment of such taxes and assessments at least fifteen (15) days prior
to the applicable delinquency date therefor. Notwithstanding the foregoing,
Mortgagor may, in good faith, by appropriate proceedings and upon notice to
Mortgagee, contest the validity, applicability or amount of any asserted tax or
assessment so long as (a) such contest is diligently pursued, and (b) Mortgagee
determines, in its reasonable opinion, that such contest suspends the obligation
to pay the tax and that nonpayment of such tax or assessment will not result in
the sale, loss, forfeiture or diminution of the Mortgaged Property or any part
thereof or any interest of Mortgagee therein, or (c) prior to the earlier of the
commencement of such contest or the delinquency date of the asserted tax or
assessment, Mortgagor deposits in the Impound Account (as hereinafter defined)
an amount determined by Mortgagee to be adequate to cover the payment of such
tax or assessment and a reasonable additional sum equal to a reasonable estimate
of possible interest, costs and penalties; provided, however, that Mortgagor
shall promptly cause to be paid any amount adjudged by a court of competent
jurisdiction to be due, with all interest, costs and penalties thereon, promptly
after such judgment becomes final; and provided further that in any event each
such contest shall be concluded and the taxes, assessments, interest, costs and
penalties shall be paid prior to the date any writ or order is issued under
which the Mortgaged Property may be sold, lost or forfeited.
1.6. TAX AND INSURANCE IMPOUND ACCOUNT. Mortgagor shall establish
and maintain at all times while this Mortgage continues in effect an impound
account (the "Impound Account") with Mortgagee for payment of real estate taxes
and assessments and insurance on the Mortgaged Property and as additional
security for the Debt. Simultaneously with the execution hereof, Mortgagor shall
deposit in the Impound Account an amount reasonably determined by
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Mortgagee to be necessary to ensure that there will be on deposit with Mortgagee
an amount which, when added to the monthly payments subsequently required to be
deposited with Mortgagee hereunder on account of real estate taxes, assessments
and insurance premiums, will result in there being on deposit with Mortgagee in
the Impound Account an amount sufficient to pay the next due installment of real
estate taxes and assessments on the Mortgaged Property at least one (1) month
prior to the earlier of (a) the due date thereof or (b) any such date by which
Mortgagor or Mortgagee is required by law to pay same and the next due monthly
insurance premiums with respect to the Mortgaged Property at least one (1) month
prior to the due date thereof. Commencing on the first monthly payment date
under the Note and continuing thereafter on each monthly payment date under the
Note, Mortgagor shall pay to Mortgagee, concurrently with and in addition to the
monthly payment due under the Note and until the Debt is fully paid and
performed, deposits in an amount equal to one-twelfth (1/12) of the amount of
the annual real estate taxes and assessments that will next become due and
payable on the Mortgaged Property, plus one-twelfth (1/12) of the amount of the
annual premiums that will next become due and payable on insurance policies
which Mortgagor is required to maintain hereunder, each as estimated and
determined by Mortgagee. So long as no Event of Default has occurred, and no
event has occurred or failed to occur which with the passage of time, the giving
of notice, or both would constitute an Event of Default (a "Default"), all sums
in the Impound Account shall be held by Mortgagee in the Impound Account to pay
said taxes, assessments and insurance premiums before the same become
delinquent. Mortgagor shall be responsible for ensuring the receipt by
Mortgagee, at least thirty (30) days prior to the respective due date for
payment thereof, of all bills, invoices and statements for all taxes,
assessments and insurance premiums to be paid from the Impound Account, and so
long as no Event of Default has occurred, Mortgagee shall pay the governmental
authority or other party entitled thereto directly to the extent funds are
available for such purpose in the Impound Account. In making any payment from
the Impound Account, Mortgagee shall be entitled to rely on any bill, statement
or estimate procured from the appropriate public office or insurance company or
agent without any inquiry into the accuracy of such bill, statement or estimate
and without any inquiry into the accuracy, validity, enforceability or
contestability of any tax, assessment, valuation, sale, forfeiture, tax lien or
title or claim thereof. No interest on funds contained in the Impound Account,
if any, shall be paid by Mortgagee to Mortgagor.
1.7. Intentionally Omitted.
1.8. REPLACEMENT RESERVE.
(a) As additional security for the Debt, Mortgagor shall establish
and maintain at all times while this Mortgage continues in effect a reserve (the
"Replacement Reserve") with Mortgagee for payment of costs and expenses incurred
by Mortgagor in connection with the performance of work to the Improvements,
including but not limited to, roofs, chimneys, gutters, downspouts, paving,
curbs, ramps, driveways, balconies, porches, patios, exterior walls, exterior
doors and doorways, windows, elevators and mechanical, electrical, plumbing and
HVAC equipment (collectively, the "Repairs"), provided such costs and expenses
are incurred for repairs and replacements (i) not incurred during routine
maintenance at the Mortgaged Property and (ii) categorized under generally
accepted accounting principles as a capital expense and not as an operating
expense. Commencing on the first monthly Payment Date under the Note and
continuing thereafter on each monthly Payment Date under the Note, Mortgagor
shall pay to
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Mortgagee, concurrently with and in addition to the monthly payment due under
the Note and until the Debt is fully paid and performed, a deposit to the
Replacement Reserve in an amount equal to $4,410.72 per month. So long as no
Event of Default has occurred, all sums in the Replacement Reserve shall be held
by Mortgagee in the Replacement Reserve to pay the costs and expenses of
Repairs. So long as no Default or Event of Default has occurred, Mortgagee
shall, to the extent funds are available in the Replacement Reserve, disburse to
Mortgagor the amount incurred and paid by Mortgagor in performing such Repairs
within ten (10) days following: (a) the receipt by Mortgagee of a written
request from Mortgagor for disbursement from the Replacement Reserve and a
certification by Mortgagor in the form attached hereto as Exhibit B; (b) the
delivery to Mortgagee of paid invoices, receipts or other evidence reasonably
satisfactory to Mortgagee, verifying the cost and payment of performing the
Repairs (or, with respect to requests in excess of $10,000.00 unpaid invoices
shall be acceptable provided that disbursement shall be made by check payable
jointly to Mortgagor and the third party named in such invoice); (c) for
disbursement requests in excess of $10,000.00 per item, the delivery to
Mortgagee of affidavits, lien waivers or other evidence reasonably satisfactory
to Mortgagee showing that all materialmen, laborers, subcontractors and any
other parties who have furnished material or labor to the Mortgaged Property
have been paid all amounts due for labor and materials furnished to the
Mortgaged Property, conditioned only in the case of joint checks upon such
parties' actual receipt (if by check, subject to collection) of such amount due
for said labor and materials; (d) for disbursement requests in excess of
$10,000.00 per item, delivery to Mortgagee of a certification from an inspecting
architect, engineer, construction consultant or other third party reasonably
acceptable to Mortgagee describing the completed Repairs and verifying the
completion of the Repairs and the value of the completed Repairs; and (e) for
disbursement requests in excess of $10,000.00 per item, delivery to Mortgagee of
a new certificate of occupancy for the portion of the Improvements covered by
such Repairs, if said new certificate of occupancy is required by law, or a
certification by Mortgagor that no new certificate of occupancy is required; and
(f) the receipt by Mortgagee of an administrative fee in the amount of $150.00.
Mortgagee shall not be required to make advances from the Replacement Reserve
more frequently than once in any thirty (30) day period. In making any payment
from the Replacement Reserve, Mortgagee shall be entitled to rely on such
request from Mortgagor without any inquiry into the accuracy, validity or
contestability of any such amount. Mortgagee may, at Mortgagor's expense, make
or cause to be made during the term of this Mortgage an annual inspection of the
Mortgaged Property to determine the need, as determined by Mortgagee in its
reasonable judgment, for further Repairs of the Mortgaged Property. In the event
that such inspection reveals that further Repairs of the Mortgaged Property are
required, Mortgagee shall provide Mortgagor with a written description of the
required Repairs and subject to Mortgagor's right to question the necessity,
scope, or cost thereof Mortgagor shall complete such Repairs to the reasonable
satisfaction of Mortgagee within ninety (90) days after the receipt of such
description from Mortgagee, or such later date as may be approved by Mortgagee
in its sole discretion. Interest on the funds contained in the Replacement
Reserve shall be credited to Mortgagor as provided in Section 4.31 hereof.
(b) As additional security for the payment and performance by
Mortgagor of all duties, responsibilities and obligations under the Note and the
other Loan Documents, Mortgagor hereby unconditionally and irrevocably assigns,
conveys, pledges, mortgages, transfers, delivers, deposits, sets over and
confirms unto Mortgagee, and hereby grants to Mortgagee a security interest in,
(i) the Impound Account, the Replacement Reserve, the Leasing
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Reserve (as hereinafter defined) the Repair and Remediation Reserve (as
hereinafter defined) and any other reserve or escrow account established
pursuant to the terms hereof or of any other Loan Document (collectively, the
"Reserves"), (ii) the accounts into which the Reserves have been deposited,
(iii) all insurance on said accounts, (iv) all accounts, contract rights and
general intangibles or other rights and interests pertaining thereto, (v) all
sums now or hereafter therein or represented thereby, (vi) all replacements,
substitutions or proceeds thereof, (vii) all instruments and documents now or
hereafter evidencing the Reserves or such accounts, (viii) all powers, options,
rights, privileges and immunities pertaining to the Reserves (including the
right to make withdrawals therefrom), and (ix) all proceeds of the foregoing.
Mortgagor hereby authorizes and consents to the account into which the Reserves
have been deposited being held in Mortgagee's name or the name of any entity
servicing the Note for Mortgagee and hereby acknowledges and agrees that
Mortgagee, or at Mortgagee's election, such servicing agent, shall have
exclusive control over said account, subject to the applicable provisions of the
Loan Documents. Notice of the assignment and security interest granted to
Mortgagee herein may be delivered by Mortgagee at any time to the financial
institution wherein the Reserves have been established, and Mortgagee, or such
servicing entity, shall have possession of all passbooks or other evidences of
such accounts. Mortgagor hereby assumes all risk of loss with respect to amounts
on deposit in the Reserves so long as such amounts are deposited into "Permitted
Investments" as described in Exhibit D attached hereto. Mortgagor hereby
knowingly, voluntarily and intentionally stipulates, acknowledges and agrees
that the advancement of the funds from the Reserves as set forth herein is at
Mortgagor's direction and is not the exercise by Mortgagee of any right of
set-off or other remedy upon a Default or an Event of Default. Mortgagor hereby
waives all right to withdraw funds from the Reserves except as provided for in
this Mortgage. If an Event of Default shall occur hereunder or under any other
of the Loan Documents Mortgagee may, without notice or demand on Mortgagor, at
its option: (A) withdraw any or all of the funds (including, without limitation,
interest) then remaining in the Reserves and apply the same, after deducting all
costs and expenses of safekeeping, collection and delivery (including, but not
limited to, reasonable attorneys' fees, costs and expenses) to the Debt or any
other obligations of Mortgagor under the other Loan Documents in such manner as
Mortgagee shall deem appropriate in its sole discretion, and the excess, if any,
shall be paid to Mortgagor, (B) exercise any and all rights and remedies of a
secured party under any applicable Uniform Commercial Code, or (C) exercise any
other remedies available at law or in equity. No such use or application of the
funds contained in the Reserves shall be deemed to cure any Default or Event of
Default.
(c) The Reserves shall not, unless otherwise explicitly required by
applicable law, be or be deemed to be escrow or trust funds, but, at Mortgagee's
option and in Mortgagee's discretion, may either be held, subject to the
applicable provisions of the Loan Documents, in a separate account or be
commingled by Mortgagee with the general funds of Mortgagee. The Reserves are
solely for the protection of Mortgagee and entail no responsibility on
Mortgagee's part beyond compliance with the applicable provisions of the Loan
Documents and the payment of the respective items for which they are held
following receipt of bills, invoices or statements therefor in accordance with
the terms hereof. Upon assignment of this Mortgage by Mortgagee, any funds in
the Reserves shall be turned over to the assignee and Mortgagee, as assignor
shall have no responsibility for such funds from and after the date that the
assignee assumes Mortgagee's obligations with respect to such funds under the
Loan Documents. If the funds in the applicable Reserve shall exceed the amount
of payments actually applied by Mortgagee for
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the purposes and items for which the applicable Reserve is held, such excess may
be credited by Mortgagee on subsequent payments to be made hereunder or, at the
option of Mortgagee, refunded to Mortgagor. If, however, the applicable Reserve
shall not contain sufficient funds to pay the sums required by the dates on
which such sums are required to be on deposit in such account, Mortgagor shall,
within ten (10) days after receipt of written notice thereof, deposit with
Mortgagee the full amount of any such deficiency. If Mortgagor shall fail to
deposit with Mortgagee the full amount of such deficiency as provided above,
Mortgagee shall have the option, but not the obligation, to make such deposit,
and all amounts so deposited by Mortgagee, together with interest thereon at the
Default Interest Rate from the date so deposited by Mortgagee until actually
paid by Mortgagor, shall be immediately paid by Mortgagor on demand and shall be
secured by this Mortgage and by all of the other Loan Documents securing all or
any part of the Debt. If there is an Event of Default under this Mortgage,
Mortgagee may, but shall not be obligated to, apply at any time the balance then
remaining in any or all of the Reserves against the Debt in whatever order
Mortgagee shall reasonably determine. No such application of any or all of the
Reserves shall be deemed to cure any Event of Default. Upon full payment of the
Debt in accordance with its terms or at such earlier time as Mortgagee may
elect, the balance of any or all of the Reserves then in Mortgagee's possession
shall be paid over to Mortgagor and no other party shall have any right or claim
thereto.
1.9. CASUALTY AND CONDEMNATION. Mortgagor shall give Mortgagee
prompt written notice of the occurrence of any casualty affecting, or the
institution of any proceedings for eminent domain or for the condemnation of,
the Mortgaged Property or any portion thereof. All insurance proceeds on the
Mortgaged Property, and all causes of action, claims, compensation, awards and
recoveries for any damage, condemnation or taking of all or any part of the
Mortgaged Property or for any damage or injury to it for any loss or diminution
in value of the Mortgaged Property occasioned thereby, are hereby assigned to
and shall be paid to Mortgagee. Mortgagee will consult with Mortgagor concerning
any damage, condemnation or taking, provided such obligation to consult shall in
no way impair Mortgagee's rights, powers and privileges to participate and/or
act with respect to any such damage, condemnation or taking. Mortgagee may
participate in any suits or proceedings relating to any such proceeds, causes of
action, claims, compensation, awards or recoveries, and Mortgagee is hereby
authorized, in its own name or in Mortgagor's name, to adjust any loss covered
by insurance or any condemnation claim or cause of action, and to settle or
compromise any claim or cause of action in connection therewith, and Mortgagor
shall from time to time deliver to Mortgagee any instruments required to permit
such participation; provided, however, that, so long as no Default or Event of
Default shall have occurred, Mortgagee shall not have the right to participate
in the adjustment of any loss which is not in excess of the lesser of (i) five
percent (5%) of the then outstanding principal balance of the Note and (ii)
$2,000,000. Mortgagee shall apply any sums received by it under this Section
first to the payment of all of its costs and expenses (including, but not
limited to, reasonable legal fees and disbursements) incurred in obtaining those
sums, and then, as follows:
(a) In the event that less than sixty percent (60%) of the
Improvements located on the Premises have been taken or destroyed, then if and
so long as:
(i) no Default or Event of Default has occurred
hereunder or under any of the other Loan Documents, and
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(ii) the Mortgaged Property can, in Mortgagee's
reasonable judgment, with diligent restoration or repair, be returned to a
condition at least equal to the condition thereof that existed prior to the
casualty or partial taking causing the loss or damage within the earlier to
occur of (i) twelve (12) months after the receipt of insurance proceeds or
condemnation awards by either Mortgagor or Mortgagee, and (ii) sixty (60) days
prior to the stated maturity date of the Note, and
(iii) all necessary governmental approvals can be
obtained to allow the rebuilding and reoccupancy of the Mortgaged Property as
described in Section (a)(ii) above, and
(iv) there are sufficient sums available (through
insurance proceeds or condemnation awards and contributions by Mortgagor, the
full amount of which shall, at Mortgagee's option, have been deposited with
Mortgagee for disbursement to contractors and suppliers as work proceeds) for
such restoration or repair (including, without limitation, for any reasonable
and customary costs and expenses of Mortgagee to be incurred in administering
said restoration or repair) and for payment of principal and interest to become
due and payable under the Note during such restoration or repair, and
(v) the economic feasibility of the Improvements after
such restoration or repair will be such that income from their operation is
reasonably anticipated to be sufficient to pay operating expenses of the
Mortgaged Property and debt service on the Debt in full with the same coverage
ratio considered by Mortgagee in its determination to make the loan secured
hereby, including an assessment of the impact of the termination of any Leases
due to such casualty or condemnation such ratio to be determined in accordance
with the applicable provisions of Section 1.13 hereof, and
(vi) in the event that the insurance proceeds or
condemnation awards received as a result of such casualty or partial taking
exceed the lesser of (i) five percent (5%) of the then outstanding principal
balance of the Note and (ii) $2,000,000, Mortgagor shall have delivered to
Mortgagee, at Mortgagor's sole cost and expense, an appraisal report in form and
substance satisfactory to Mortgagee appraising the value of the Mortgaged
Property as proposed to be restored or repaired to be not less than the
appraised value of the Mortgaged Property considered by Mortgagee in its
determination to make the loan secured hereby, such appraised value to be
determined pursuant to and in accordance with the applicable provisions of
Section 1.13 hereof and
(vii) Mortgagor so elects by written notice delivered to
Mortgagee within ten (10) days after settlement of the aforesaid insurance or
condemnation claim to restore,
then, Mortgagee shall, solely for the purposes of such restoration or repair,
advance so much of the remainder of such sums as may be required for such
restoration or repair, and any funds deposited by Mortgagor therefor, to
Mortgagor in the manner and upon such terms and conditions as would be required
by a prudent interim construction lender, including, but not limited to, the
prior approval by Mortgagee of plans and specifications, contractors and form of
construction contracts and the furnishing to Mortgagee of permits, bonds, lien
waivers, invoices, receipts and affidavits from contractors and subcontractors,
in form and substance reasonably
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satisfactory to Mortgagee, with any remainder being applied by Mortgagee for
payment of the Debt in whatever order Mortgagee directs in its absolute
discretion.
(b) In all other cases, namely, in the event that sixty
percent (60%) or more of the Improvements located on the Premises have been
taken or destroyed or Mortgagor does not elect to restore or repair the
Mortgaged Property pursuant to clause (a) above or otherwise fails to meet the
requirements of clause (a) above, then, in any of such events, Mortgagee shall
elect, in Mortgagee's absolute discretion and without regard to the adequacy of
Mortgagee's security, to do either of the following: (1) accelerate the maturity
date of the Note and declare any and all of the Debt to be immediately due and
payable and apply the remainder of such sums received pursuant to this Section
to the payment of the Debt in whatever order Mortgagee directs in its absolute
discretion, with any remainder being paid to Mortgagor, or (2) notwithstanding
that Mortgagor may have elected not to restore or repair the Mortgaged Property
pursuant to the provisions of Section 1.9(a)(vii) above, require Mortgagor to
restore or repair the Mortgaged Property in the manner and upon such terms and
conditions as would be required by a prudent interim construction lender,
including, but not limited to, the deposit by Mortgagor with Mortgagee, within
thirty (30) days after demand therefor, of any deficiency reasonably determined
by Mortgagee to be necessary in order to assure the availability of sufficient
funds to pay for such restoration or repair, including Mortgagee's reasonable
and customary costs and expenses to be incurred in connection therewith, the
prior approval by Mortgagee of plans and specifications, contractors and form of
construction contracts and the furnishing to Mortgagee of permits, bonds, lien
waivers, invoices, receipts and affidavits from contractors and subcontractors,
in form and substance reasonably satisfactory to Mortgagee, and apply the
remainder of such sums toward such restoration and repair, with any balance
thereafter remaining being applied by Mortgagee for payment of the Debt in
whatever order Mortgagee directs in its absolute discretion.
Any reduction in the Debt resulting from Mortgagee's application of any sums
received by it hereunder shall take effect only when Mortgagee actually receives
such sums and elects to apply such sums to the Debt and, in any event, the
unpaid portion of the Debt shall remain in full force and effect and Mortgagor
shall not be excused in the payment thereof. Partial payments received by
Mortgagee, as described in the preceding sentence, shall be applied first to the
final payment due under the Note and thereafter to installments due under the
Note in the inverse order of their due date; provided, however, that in such
event, no prepayment premium or fee shall be due and Mortgagee shall be deemed
to have waived the benefit of Section 1.04 of the Note relative to the amounts
so applied in reduction of the Debt provided no Event of Default, nor any event
which, with the giving of notice of passage of time or both, would constitute an
Event of Default, shall have occurred and be continuing which is unrelated to
the applicable casualty or condemnation. If Mortgagor elects or Mortgagee
directs Mortgagor to restore or repair the Mortgaged Property after the
occurrence of a casualty or partial taking of the Mortgaged Property as provided
above, Mortgagor shall promptly and diligently, at Mortgagor's sole cost and
expense and regardless of whether the insurance proceeds or condemnation award,
as appropriate, shall be sufficient for the purpose, restore, repair, replace
and rebuild the Mortgaged Property as nearly as possible to its value, condition
and character immediately prior to such casualty or partial taking in accordance
with the foregoing provisions and Mortgagor shall pay to Mortgagee all
reasonable and customary costs and expenses of Mortgagee incurred in
administering said rebuilding, restoration or repair, provided that Mortgagee
makes such proceeds or award available for such purpose. Mortgagor agrees to
execute and deliver from time to time such further
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instruments as may be requested by Mortgagee to confirm the foregoing assignment
to Mortgagee of any award, damage, insurance proceeds, payment or other
compensation. Mortgagee is hereby irrevocably constituted and appointed the
attorney-in-fact of Mortgagor (which power of attorney shall be irrevocable so
long as any portion of the Debt is outstanding, shall be deemed coupled with an
interest, shall survive the voluntary or involuntary dissolution of Mortgagor
and shall not be affected by any disability or incapacity suffered by Mortgagor
subsequent to the date hereof), with full power of substitution, subject to the
terms of this Section, to settle for, collect and receive any such awards,
damages, insurance proceeds, payments or other compensation from the parties or
authorities making the same, to appear in and prosecute any proceedings therefor
and to give receipts and acquittances therefor and subject to the applicable
provision of the Loan Documents.
1.10. CONSTRUCTION LIENS. Mortgagor shall pay when due all claims
and demands of mechanics, materialmen, laborers and others for any work
performed or materials delivered for the Premises or the Improvements; provided,
however, that, Mortgagor shall have the right to contest in good faith any such
claim or demand, so long as it does so diligently, by appropriate proceedings
and without prejudice to Mortgagee and provided that neither the Mortgaged
Property nor any interest therein is or could reasonably be in any danger of
sale, loss or forfeiture as a result of such proceeding or contest. In the event
Mortgagor shall contest any such claim or demand, Mortgagor shall promptly
notify Mortgagee of such contest and thereafter shall, upon Mortgagee's request,
promptly provide a bond, cash deposit or other security reasonably satisfactory
to Mortgagee so as to protect Mortgagee's interest and security should the
contest be unsuccessful. If Mortgagor shall fail to immediately discharge or
provide security against any such claim or demand as aforesaid, Mortgagee may do
so and any and all expenses incurred by Mortgagee, together with interest
thereon at the Default Interest Rate from the date incurred by Mortgagee until
actually paid by Mortgagor, shall be immediately paid by Mortgagor on demand and
shall be secured by this Mortgage and by all of the other Loan Documents
securing all or any part of the Debt.
1.11. RENTS AND PROFITS. As additional and collateral security for
the payment of the Debt and cumulative of any and all rights and remedies herein
provided for, Mortgagor hereby absolutely and presently assigns to Mortgagee all
existing and future Rents and Profits. Mortgagor hereby grants to Mortgagee the
sole, exclusive and immediate right, without taking possession of the Mortgaged
Property, to demand, collect (by suit or otherwise), receive and give valid and
sufficient receipts for any and all of said Rents and Profits, for which purpose
Mortgagor does hereby irrevocably make, constitute and appoint Mortgagee its
attorney-in-fact with full power to appoint substitutes or a trustee to
accomplish such purpose (which power of attorney shall be irrevocable so long as
any portion of the Debt is outstanding, shall be deemed to be coupled with an
interest, shall survive the voluntary or involuntary dissolution of Mortgagor,
and shall not be affected by any disability or incapacity suffered by Mortgagor
subsequent to the date hereof). Mortgagee shall be without liability for any
loss which may arise from a failure or inability to collect Rents, proceeds or
other payments. However, until the occurrence of an Event of Default under this
Mortgage or under any other of the Loan Documents, Mortgagor shall have a right
and license to collect, receive, use and enjoy the Rents and Profits when due
and prepayments thereof for not more than one (1) month prior to due date
thereof. Upon the occurrence of an Event of Default, Mortgagor's license shall
automatically terminate without notice to Mortgagor and Mortgagee may
thereafter, without taking possession of the Mortgaged Property, collect the
Rents and Profits itself or by an agent or receiver. From and after the
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termination of such license, Mortgagor shall be the agent of Mortgagee in
collection of the Rents and Profits, and all of the Rents and Profits so
collected by Mortgagor shall be held in trust by Mortgagor for the sole and
exclusive benefit of Mortgagee, and Mortgagor shall, within one (1) business day
after receipt of any Rents and Profits, pay the same to Mortgagee to be applied
by Mortgagee as hereinafter set forth. Neither the demand for or collection of
Rents and Profits by Mortgagee shall constitute any assumption by Mortgagee of
any obligations under any agreement relating thereto. Mortgagee is obligated to
account only for such Rents and Profits as are actually collected or received by
Mortgagee. Mortgagor irrevocably agrees and consents that the respective payors
of the Rents and Profits shall, upon demand and notice from Mortgagee of an
Event of Default, pay said Rents and Profits to Mortgagee without liability on
such payor's part to determine the actual existence of any Event of Default
claimed by Mortgagee. Mortgagor hereby waives any right, claim or demand which
Mortgagor may now or hereafter have against any such payor by reason of such
payment of Rents and Profits to Mortgagee, and any such payment shall discharge
such payor's obligation to make such payment to Mortgagor. All Rents collected
or received by Mortgagee may be applied against all expenses of collection,
including, without limitation, reasonable attorneys' fees, against costs of
operation and management of the Mortgaged Property and against the Debt, in
whatever order or priority as to any of the items so mentioned as Mortgagee
directs in its sole subjective discretion and without regard to the adequacy of
its security. Neither the exercise by Mortgagee of any rights under this Section
nor the application of any Rents to the Debt shall cure or be deemed a waiver of
any Event of Default. The assignment of Rents and Profits hereinabove granted
shall continue in full force and effect during any period of foreclosure or
redemption with respect to the Mortgaged Property. Mortgagor has executed an
Assignment of Leases and Rents dated of even date herewith (the "Assignment") in
favor of Mortgagee covering all of the right, title and interest of Mortgagor,
as landlord, lessor or licensor, in and to any Leases. All rights and remedies
granted to Mortgagee under the Assignment shall be in addition to and cumulative
of all rights and remedies granted to Mortgagee hereunder.
1.12. LEASES.
(a) Mortgagor covenants and agrees that it shall not enter into any
Lease which (A) affects 7,500 square feet or more of the Mortgaged Property and
has a term of five (5) years or more, (B) affects 20,000 square feet or more of
the Mortgaged Property or (C) has a term of more than ten (10) years without the
prior written approval of Mortgagee, which approval shall not be unreasonably
withheld. The request for approval of each such proposed new Lease shall be made
to Mortgagee in writing and shall state that, pursuant to the terms of this
Mortgage, failure to approve or disapprove such proposed Lease within fifteen
(15) business days is deemed approval and Mortgagor shall furnish to Mortgagee
(and any loan servicer specified from time to time by Mortgagee): (i) complete
biographical and financial information about the proposed Tenant as Mortgagee
may reasonably require in conjunction with its review, (ii) a copy of the
proposed form of Lease, and (iii) a summary of the material terms of such
proposed Lease (including, without limitation, rental terms and the term of the
proposed lease and any options). It is acknowledged that Mortgagee intends to
include among its criteria for approval of any such proposed Lease the
following: (i) such Lease shall be with a bona-fide arm's-length tenant; (ii)
such Lease shall not contain any rental or other concessions which are not then
customary and reasonable for similar uses at similar properties and Leases in
the market area of the Premises; (iii) such Lease shall provide that the Tenant
pays a share of taxes, utilities,
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common area maintenance charges and other expenses attributable to its
occupancy; (iv) the rental and other economic terms thereof shall, in the
aggregate, be at least at the market rate then prevailing for similar uses at
similar properties and leases in the market areas of the Premises; and (v) such
Lease shall contain subordination and attornment provisions in form and content
acceptable to Mortgagee. Failure of Mortgagee to approve or disapprove any such
proposed Lease within fifteen (15) business days after receipt of such written
request and all the documents and information required to be furnished to
Mortgagee with such request shall be deemed approval by Mortgagee, provided that
the written request for approval specifically mentioned the same.
Notwithstanding anything to the contrary, the approval procedures for the Leases
that are set forth in this Section 1.12(a) shall apply to the submission of all
Leases and all amendments, modifications, supplements, restatements, extensions,
renewals, waivers, releases, consents, assignments, terminations and other
Lease-related actions and documents for which Mortgagee's consent or approval is
required under the Loan Documents.
(b) Prior to execution of any Leases of space in the Improvements
or otherwise at the Mortgaged Property after the date hereof, Mortgagor shall
submit to Mortgagee, for Mortgagee's prior approval, which approval shall not be
unreasonably withheld, a copy of the form lease Mortgagor plans to use in
leasing space in the Improvements or at the Mortgaged Property (Mortgagee
acknowledges that the form of lease delivered to Mortgagee is acceptable). All
such Leases of space in the Improvements or at the Mortgaged Property shall be
on terms consistent with the terms for similar leases in the market area of the
Premises, shall provide for free rent only if the same is consistent with
prevailing market conditions and shall provide for market rents then prevailing
in the market area of the Premises. Such Leases shall also provide for security
deposits where warranted by the Tenant's financial condition in reasonable
amounts consistent with prevailing market conditions. Mortgagor shall also
submit to Mortgagee for Mortgagee's approval, which approval shall not be
unreasonably withheld pursuant to the time frames set forth in Section 1.12(a)
hereinabove, prior to the execution thereof, any proposed Lease of the
Improvements or any portion thereof that differs materially and adversely from
the aforementioned form Lease. Mortgagor shall not execute any Lease for all or
a substantial portion of the Mortgaged Property, except for an actual occupancy
by the Tenant, lessee or licensee thereunder, and shall at all times promptly
and faithfully perform, or cause to be performed, all of the covenants,
conditions and agreements contained in all Leases with respect to the Mortgaged
Property, now or hereafter existing, on the part of the landlord, lessor or
licensor thereunder to be kept and performed. Mortgagor shall furnish to
Mortgagee, within ten (10) days after a request by Mortgagee to do so, but in
any event by January 1 of each year, a current Rent Roll, certified by Mortgagor
as being true and correct, containing the names of all Tenants with respect to
the Mortgaged Property, the terms of their respective Leases, the spaces
occupied and the rentals or fees payable thereunder and the amount of each
Tenant's security deposit. Upon the request of Mortgagee, Mortgagor shall
deliver to Mortgagee a copy of each such Lease not previously delivered.
Mortgagor shall not do or suffer to be done any act, or omit to take any action,
that will, with the passage of time, the giving of notice, or both, constitute a
default by the landlord, lessor or licensor under any such Lease or allow the
Tenant thereunder to withhold payment of rent or cancel or terminate such Lease
pursuant to the provisions thereof, unless such action is (i) permitted by the
express provisions of such Lease, and (ii) such provisions have been approved by
Mortgagee. Mortgagor shall not further assign any such Lease or any such Rents
and Profits. Mortgagor, at no cost or expense to Mortgagee, shall enforce in a
commercially reasonable manner, short of termination, the performance and
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observance of each and every condition and covenant of each of the parties under
such Leases and Mortgagor shall not anticipate, discount, release, waive,
compromise or otherwise discharge any rent payable under any of the Leases
unless any such action is permitted by the provisions and standards set forth in
the next sentence hereof. Mortgagor shall not, without the prior written consent
of Mortgagee, modify any of the Leases, terminate or accept the surrender of any
Leases, waive or release any other party from the performance or observance of
any obligation or condition under such Leases (including, without limitation,
modifying, terminating or releasing any guaranty, letter of credit or other
credit support thereof) except, with respect only to Leases which (A) affect
7,500 square feet or more of the Mortgaged Property and have a term of five (5)
years or more, (B) affect 20,000 square feet or more of the Mortgaged Property
or (C) has a term of more than ten (10) years, in the normal course of business
in a manner which is consistent with sound and customary leasing and management
practices for similar properties in the community in which the Mortgaged
Property is located, or unless Mortgagor has executed a replacement Lease for
such space (or a majority thereof) on terms consistent with the provisions of
this Section 1.12. Mortgagor shall not permit the prepayment of any rents under
any of the Leases for more than one (1) month prior to the due date thereof.
(c) Each Lease executed after the date hereof affecting any of the
Premises or the Improvements must provide, in a manner reasonably approved by
Mortgagee, that the Tenant will recognize as its landlord, lessor or licensor,
as applicable, and attorn to any person succeeding to the interest of Mortgagor
upon any foreclosure of this Mortgage or deed in lieu of foreclosure. Each such
Lease shall also provide that, upon request of said successor-in-interest, the
Tenant shall execute and deliver an instrument or instruments confirming its
attornment as provided for in this Section; provided, however, that neither
Mortgagee nor any successor-in-interest shall be bound by any payment of rent
for more than one (1) month in advance (unless said rent is actually received by
Mortgagee or such successor-in-interest, and then only to the extent thereof),
or any amendment or modification of said Lease made without the express written
consent of Mortgagee or said successor-in-interest or such amendment or
modification is deemed approved by Mortgagee or such successor-in-interest
pursuant to and in accordance with the provisions of Section 1.12(a) hereof.
Mortgagee may at any time and from time to time by specific written instrument
intended for such purpose, unilaterally subordinate the lien of this Mortgage to
any Lease, without joinder or consent of, or notice to, Mortgagor, any Tenant or
any other person. Notice is hereby given to each Tenant under a Lease of such
right to subordinate. No subordination referred to in this Section shall
constitute a subordination to any lien or other encumbrance, whenever arising,
or improve the right of any junior lienholder. Nothing herein shall be construed
as subordinating this Mortgage to any Lease.
(d) Upon the occurrence of an Event of Default under this Mortgage,
whether before or after the whole principal sum secured hereby is declared to be
immediately due or whether before or after the institution of legal proceedings
to foreclose this Mortgage, forthwith, upon demand of Mortgagee, Mortgagor shall
surrender to Mortgagee, and Mortgagee shall be entitled to take actual
possession of, the Mortgaged Property or any part thereof personally, or by its
agent or attorneys. In such event, Mortgagee shall have, and Mortgagor hereby
gives and grants to Mortgagee, the right, power and authority to make and enter
into Leases with respect to the Mortgaged Property or portions thereof for such
rents and for such periods of occupancy and upon conditions and provisions as
Mortgagee may deem desirable in its sole discretion, and Mortgagor expressly
acknowledges and agrees that the term of any such Lease may extend
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beyond the date of any foreclosure sale of the Mortgaged Property, it being the
intention of Mortgagor that in such event Mortgagee shall be deemed to be and
shall be the attorney-in-fact of Mortgagor for the purpose of making and
entering into Leases of parts or portions of the Mortgaged Property for the
rents and upon the terms, conditions and provisions deemed desirable to
Mortgagee in its sole discretion and with like effect as if such Leases had been
made by Mortgagor as the owner in fee simple of the Mortgaged Property free and
clear of any conditions or limitations established by this Mortgage. The power
and authority hereby given and granted by Mortgagor to Mortgagee shall be deemed
to be coupled with an interest, shall not be revocable by Mortgagor so long as
any portion of the Debt is outstanding, shall survive the voluntary or
involuntary dissolution of Mortgagor and shall not be affected by any disability
or incapacity suffered by Mortgagor subsequent to the date hereof. In connection
with any action taken by Mortgagee pursuant to this Section, Mortgagee shall not
be liable for any loss sustained by Mortgagor resulting from any failure to let
the Mortgaged Property, or any part thereof, or from any other act or omission
of Mortgagee in managing the Mortgaged Property, nor shall Mortgagee be
obligated to perform or discharge any obligation, duty or liability under any
Lease covering the Mortgaged Property or any part thereof or under or by reason
of this instrument or the exercise of rights or remedies hereunder. Mortgagor
shall, and does hereby, indemnify Mortgagee for, and hold Mortgagee harmless
from, any and all claims, actions, demands, liabilities, loss or damage which
may or might be incurred by Mortgagee under any such Lease or under this
Mortgage or by the exercise of rights or remedies hereunder and from any and all
claims and demands whatsoever which may be asserted against Mortgagee by reason
of any alleged obligations or undertakings on its part to perform or discharge
any of the terms, covenants or agreements contained in any such Lease other than
those finally determined by a court of competent jurisdiction to have resulted
solely from the gross negligence or willful misconduct of Mortgagee and the
agents, employees and contractors of Mortgagee. Should Mortgagee incur any such
liability covered by such indemnity, the amount thereof, including, without
limitation, costs, expenses and reasonable attorneys' fees, together with
interest thereon at the Default Interest Rate from the date incurred by
Mortgagee until actually paid by Mortgagor, shall be immediately due and payable
to Mortgagee by Mortgagor on demand and shall be secured hereby and by all of
the other Loan Documents securing all or any part of the Debt. Nothing in this
Section shall impose on Mortgagee any duty, obligation or responsibility for the
control, care, management or repair of the Mortgaged Property, or for the
carrying out of any of the terms and conditions of any such Lease, nor shall it
operate to make Mortgagee responsible or liable for any waste committed on the
Mortgaged Property by the Tenants or by any other parties or for any dangerous
or defective condition of the Mortgaged Property, or for any negligence in the
management, upkeep, repair or control of the Mortgaged Property.
1.13. ALIENATION AND FURTHER ENCUMBRANCES.
(a) Mortgagor acknowledges that Mortgagee has relied upon the
principals of Mortgagor and their experience in owning and operating the
Mortgaged Property and properties similar to the Mortgaged Property in
connection with the closing of the loan evidenced by the Note. Accordingly, and
except for dispositions of minor amounts of used personal property in the normal
course of business (because of obsolescence or otherwise) in accordance with
Section 1.21, and except as permitted under Section 1.23 hereof or elsewhere in
this Mortgage, in the event that the Mortgaged Property or any part thereof or
interest therein shall be sold, conveyed, disposed of, alienated, hypothecated,
leased (except to Tenants of space in the Improvements in
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accordance with the provisions of Section 1.12 hereof), assigned, pledged,
mortgaged, further encumbered or otherwise transferred or Mortgagor shall be
divested of its title to the Mortgaged Property or any interest therein, in any
manner or way, whether voluntarily or involuntarily, without the prior written
consent of Mortgagee being first obtained, which consent may be withheld in
Mortgagee's sole discretion, then the same shall constitute an Event of Default
hereunder and Mortgagee shall have the right, at its option, to declare any or
all of the indebtedness secured hereby, irrespective of the maturity date
specified in the Note, immediately due and payable and to otherwise exercise any
of its other rights and remedies contained in Article III hereof. If such
acceleration is during any period when a prepayment fee is payable pursuant to
the provisions set forth in the Note, then, in addition to all of the foregoing,
such prepayment fee shall also then be immediately due and payable to the same
end as though Mortgagor were prepaying the entire indebtedness secured hereby on
the date of such acceleration. For the purposes of this Section: (i) in the
event either Mortgagor or any of its general partners or managing members is a
corporation or trust, the sale, conveyance, transfer or disposition of more than
49% of the issued and outstanding capital stock of Mortgagor or any of its
general partners or of the beneficial interest of such trust (or the issuance of
new shares of capital stock in Mortgagor or any of its general partners or
managing members so that immediately after such issuance the total capital stock
then issued and outstanding is more than 149% of the total immediately prior to
such issuance) shall be deemed to be a transfer of an interest in the Mortgaged
Property; and (ii) in the event Mortgagor or any general partner or managing
member of Mortgagor is a limited or general partnership, a joint venture or a
limited liability company, a change in the ownership interests in any general
partner, any joint venturer or any managing member, either voluntarily,
involuntarily or otherwise, or the sale, conveyance, transfer, disposition,
alienation, hypothecation or encumbering of all or any portion of the interest
of any such general partner, joint venturer or managing member in Mortgagor or
such general partner (whether in the form of a beneficial or partnership
interest or in the form of a power of direction, control or management, or
otherwise), shall be deemed to be a transfer of an interest in the Mortgaged
Property. Notwithstanding the foregoing, however, (i) up to 49% of the limited
partnership or non-managing member interests in Mortgagor or in any general
partner or managing member or limited partner of Mortgagor shall be freely
transferable without the consent of Mortgagee, (ii) any involuntary transfer
caused by the death of Mortgagor or any general partner, shareholder, joint
venturer, or beneficial owner of a trust shall not be an Event of Default under
this Mortgage so long as Mortgagor is reconstituted, if required, following such
death and so long as those persons responsible for the management of the
Mortgaged Property remain unchanged as a result of such death or any replacement
management is approved by Mortgagee except that in the case of "replacement
management", no such approval shall be required if such "replacement management"
qualifies as a Qualified Manager (as said term is defined herein) and (iii)
gifts for estate planning purposes of any individual's interests in Mortgagor or
in any of Mortgagor's general partners, managing members or joint venturers to
the spouse or any lineal descendant of such individual, or to a trust for the
benefit of any one or more of such individual, spouse or lineal descendant,
shall not be an Event of Default under this Mortgage so long as Mortgagor is
reconstituted, if required, following such gift and so long as those persons
responsible for the management of the Mortgaged Property and Mortgagor remain
unchanged following such gift or any replacement management is approved by
Mortgagee except any change in management of the Mortgaged Property shall for
the purposes hereof be deemed to have not occurred if the successor management
qualifies as a Qualified Manager.
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Subject to Section 1.13(c) below, no person or entity may become an owner of a
direct or indirect interest in Mortgagor, which interest exceeds forty-nine
(49%) percent, without Mortgagee's written consent in each instance and a
written statement from the applicable rating agency to the effect that the
transfer of interest will not result in a downgrading, withdrawal or
qualification of the respective ratings in effect immediately prior to such
transfer for any securities issued in connection with a Secondary Market
Transaction (as hereinafter defined).
(b) Notwithstanding the foregoing provisions of this Section,
Mortgagee shall consent to one or more sales, conveyances or transfers of the
Mortgaged Property in its entirety (hereinafter, a "Sale") to any person or
entity provided that, for each Sale, each of the following terms and conditions
are satisfied:
(i) No Default and no Event of Default is then
continuing hereunder or under any of the other Loan Documents;
(ii) Mortgagor gives Mortgagee written notice of the
terms of such prospective Sale not less than thirty (30) days before the date on
which such Sale is scheduled to close and, concurrently therewith, gives
Mortgagee all such information concerning the proposed transferee of the
Mortgaged Property (hereinafter, "Buyer") as Mortgagee would require in
evaluating an initial extension of credit to a borrower and pays to Mortgagee a
non-refundable application fee in the amount of $5,000. Mortgagee shall have the
right to approve or disapprove the proposed Buyer. In determining whether to
give or withhold its approval of the proposed Buyer, Mortgagee shall consider
the Buyer's experience and track record in owning and operating facilities
similar to the Mortgaged Property, the Buyer's financial strength, the Buyer's
general business standing and the Buyer's relationships and experience with
contractors, vendors, tenants, lenders and other business entities; provided,
however, that, notwithstanding Mortgagee's agreement to consider the foregoing
factors in determining whether to give or withhold such approval, such approval
shall be given or withheld based on what Mortgagee determines to be commercially
reasonable; provided, however, the Mortgagee's consent shall not be unreasonably
withheld if the proposed Buyer (A) has a "net worth" on the date immediately
following such Sale of not less than $40 Million, (B) qualifies as a "Qualified
Manager" and (C) has the business experience and reputation at least equal to
that of "FURI" (as hereinafter defined) on the date hereof;
(iii) Mortgagor pays Mortgagee, concurrently with the
closing of such Sale, a non-refundable assumption fee in an amount equal to all
out-of-pocket costs and expenses, including, without limitation, reasonable
attorneys' fees, incurred by Mortgagee in connection with the Sale, plus an
amount equal to one percent (1.0%) of the then outstanding principal balance of
the Note or, (x) if such Buyer is affiliated with Simon DeBartolo Group, Inc., a
Maryland corporation, said fee shall be one-half of one percent (0.50%), or (y)
if such Buyer is related to First Union Real Estate Equity and Mortgage
Investments, an Ohio business trust ("FURI"), said fee shall be waived so long
as Buyer is a single asset, special purpose bankruptcy remote entity acceptable
to Mortgagee;
(iv) The Buyer assumes and agrees to pay the Debt
subject to the provisions of Section 4.27 hereof and, prior to or concurrently
with the closing of such Sale, the Buyer executes, without any cost or expense
to Mortgagee, such documents and agreements as
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Mortgagee shall reasonably require to evidence and effectuate said assumption
and delivers such legal opinions covering such subjects, which may include
non-consolidation, as Mortgagee may reasonably require;
(v) A party associated with the Buyer approved by
Mortgagee in its sole discretion assumes the obligations of the current
Indemnitor under its guaranty or indemnity agreement and such party executes,
without any cost or expense to Mortgagee, a new guaranty or indemnity agreement
in form and substance substantially the same as that executed on the date hereof
and delivered to Mortgagee and otherwise satisfactory to Mortgagee and delivers
such legal opinions as Mortgagee may reasonably require; provided, however, that
Mortgagee's consent shall not be unreasonably withheld if the party associated
with Buyer meets the criteria set forth in Section 1.13(b)(ii)(A), (B) and (C)
above;
(vi) Buyer executes, without any cost or expense to
Mortgagee, new financing statements or financing statement amendments and any
additional documents reasonably requested by Mortgagee;
(vii) Mortgagor delivers to Mortgagee, without any cost
or expense to Mortgagee, such endorsements to Mortgagee's title insurance
policy, hazard insurance policy endorsements or certificates and other similar
materials as Mortgagee may reasonably deem necessary at the time of the Sale,
all in form and substance reasonably satisfactory to Mortgagee, including,
without limitation, an endorsement or endorsements to Mortgagee's title
insurance policy insuring the lien of this Mortgage, extending the effective
date of such policy to the date of execution and delivery (or, if later, of
recording) of the assumption agreement referenced above in subparagraph (iv) of
this Section 1.13(b), with no additional exceptions added to such policy except
those permitted under the Loan Documents, including but not limited to Sections
1.12 and 1.23 hereof, and insuring that fee simple title to the Mortgaged
Property is vested in the Buyer;
(viii) Mortgagor executes and delivers to Mortgagee,
without any cost or expense to Mortgagee, a release of Mortgagee, its officers,
directors, employees and agents, from all claims and liability relating to the
transactions evidenced by the Loan Documents, through and including the date of
the closing of the Sale, which agreement shall be in form and substance
satisfactory to Mortgagee and shall be binding upon the Buyer;
(ix) Subject to the provisions of Section 4.27 hereof,
such Sale is not construed so as to relieve Mortgagor of any personal liability
under Section 2.04(c)(i)-(ix) of the Note or any of the other Loan Documents for
any acts or events occurring or obligations arising or accruing prior to or
simultaneously with the closing of such Sale, whether or not same is discovered
prior or subsequent to the closing of such Sale, and Mortgagor executes, without
any cost or expense to Mortgagee, such documents and agreements as Mortgagee
shall reasonably require to evidence and effectuate the ratification of said
personal liability under Section 2.04(c)(i)-(ix) of the Note. Mortgagor shall be
released from and relieved of any personal liability under the Note or any of
the other Loan Documents for any acts or events occurring or obligations arising
after the closing of such Sale which are not caused by or arising out of any
acts or events occurring or obligations arising or accruing prior to or
simultaneously with the closing of such Sale;
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(x) Such Sale is not construed so as to relieve any
current Indemnitor of its obligations under any guaranty or indemnity agreement
executed in connection with the loan secured hereby for any acts or events
occurring or obligations arising or accruing prior to or simultaneously with the
closing of such Sale, and each such current indemnitor executes, without any
cost or expense to Mortgagee, such documents and agreements as Mortgagee shall
reasonably require to evidence and effectuate the ratification of each such
guaranty and indemnity agreement to the date of Sale as aforesaid. Each such
current Indemnitor shall be released from and relieved of any of its obligations
under any guaranty or indemnity agreement executed in connection with the loan
secured hereby for any acts or events occurring or obligations arising after the
closing of such Sale which are not caused by or arising out of any acts or
events occurring or obligations arising or accruing prior to or simultaneously
with the closing of such Sale;
(xi) The Buyer shall furnish, if the Buyer is a
corporation, partnership or other entity, all appropriate papers evidencing the
Buyer's capacity and good standing, and the due authority of the signers to
execute the assumption of the Debt, which papers shall include certified copies
of all documents relating to the organization and formation of the Buyer and of
the entities, if any, which are partners of the Buyer. The Buyer and such
constituent partners, members or shareholders of Buyer (as the case may be), as
Mortgagee shall require, shall be single purpose, "bankruptcy remote" entities,
whose formation documents shall be reasonably approved by counsel to Mortgagee.
The individual recommended by the Mortgagor and approved by Mortgagee shall
serve as the independent director of the Buyer (if the Buyer is a corporation)
or the Buyer's corporate general partner or as independent member or, in
Mortgagee's discretion, as manager, of Buyer if the Buyer is a limited liability
company. The consent of such independent party shall be required for, among
other things, any merger, consolidation, dissolution, bankruptcy or insolvency
of such independent party or of the Buyer; and
(xii) Mortgagor delivers to Mortgagee a written
statement from the applicable rating agency (the "Rating Agency") to the effect
that the Sale will not result in a downgrading, withdrawal or qualification of
the respective ratings (an "Adverse Rating Impact") in effect immediately prior
to such Sale for any securities issued in connection with a Secondary Market
Transaction (as hereinafter defined). In the event the Secondary Market
Transaction has not yet occurred, Mortgagee shall, in its sole discretion, have
determined that the Sale would not have resulted in an Adverse Rating Impact had
the Secondary Market Transaction theretofore occurred.
(c) Mortgagor, by its acceptance of this Mortgage and reliance
hereof, agrees that notwithstanding the provisions of this Section 1.13 or any
similar provision in any other Loan Document:
(1) There shall be no restriction on the transfer, pledge,
encumbrance or hypothecation of any stock or shares of FURI which on the date
hereof owns, indirectly, a majority interest in the Mortgagor, except that FURI
shall not merge or consolidate into another entity (i.e. where FURI is not the
surviving entity); provided, however, that such merger or consolidation of FURI
into another entity shall not be prohibited, constitute a default or result in
the payment of any fee to Mortgagee under the Loan Documents so long as: (a)
Mortgagee receives 20 days prior written notice of such proposed merger or
consolidation, (b) the surviving
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entity executes any and all documents as are reasonably necessary to evidence
the assumption of FURI's obligations relative to the loan evidenced by the Note
(the "Loan") and delivers such other certificates and opinions (covering such
subjects, including nonconsolidation) as may be reasonably required by
Mortgagee, (c) the "net worth" of the surviving entity shall be $40 million or
more as of the date of the completion of such merger or consolidation, and (d)
if, as a result of such merger or consolidation, the manager of the Mortgaged
Property changes, the replacement manager is a "Qualified Manager" or such
replacement manager is approved by Mortgagee, and (e) the business experience
and reputation of the surviving entity shall be at least equal to that of FURI
on the date hereof. As used herein, the term "Qualified Manager" means any
person or entity that (i) has not less than 5 years experience in managing
enclosed regional shopping malls, and (ii) at the time in question manages not
less than 5 enclosed regional shopping malls that are similar in type and size
to the Mortgaged Property. A Qualified Manager shall be acceptable as manager of
the Improvements on the Mortgaged Property for all purposes under the Loan
Documents including Section 1.30 of the Mortgage.
(2) Park Plaza 1, LLC, a Delaware limited liability company which
owns, indirectly, a majority interest in the Mortgagor ("Park Plaza 1, LLC"),
shall not incur any indebtedness, provided, however, that Park Plaza 1, LLC
shall not be prohibited from incurring indebtedness (a "Mezzanine Loan"), and
its incurrence of a Mezzanine Loan shall not constitute a default or result in
payment of any fee to Mortgagee under the Loan Documents so long as: (a) the
security granted in connection with such indebtedness consists of a pledge of
the membership interests of Park Plaza 2, LLC, a Delaware limited liability
company ("Park Plaza 2, LLC"), which owns a majority interest in Mortgagor by
Park Plaza 1, LLC and distributions and dividends payable to Park Plaza 1, LLC,
and in no event may Park Plaza 3, LLC pledge any of its interest in Mortgagor,
(b) the Mortgaged Property has both (i) a debt service coverage ratio on the
date the Mezzanine Loan is incurred of a minimum of 1.10:1, calculated as the
ratio of (x) net operating income as determined in accordance with the Cash
Management Agreement (as defined in Section 1.35 hereof) from the Mortgaged
Property for the preceding 12 calendar months, determined in accordance with
generally accepted accounting principles applied on a consistent basis, by
subtracting expenses of the Mortgaged Property for such period (including
reasonable reserves for (A) repairs and replacements, and (B) tenant improvement
costs associated with lease rollovers, both as reasonably determined by the
appraiser selected pursuant to the provisions of subpart (ii) hereinbelow, from
revenue from the Mortgaged Property for such period, and otherwise determined in
a manner consistent with the manner that net operating income was determined by
Mortgagee in connection with its original underwriting of the Loan, and (y) the
principal and interest actually paid under the Loan to Mortgagee with respect to
such period plus the annual principal and interest payable under the proposed
Mezzanine Loan, and (ii) a loan-to-value ratio of 90% of the appraised value of
the Mortgaged Property pursuant to a current appraisal that complies with FIRREA
and the Uniform Standards of Professional Appraisal Practice, including the
Competency Provision, of the Appraisal Institute (in effect at the time),
prepared by the same appraiser used by Mortgagee in connection with its original
underwriting of the Loan, or if such appraiser is not available, by an
independent MAI/SREA appraiser selected by Mortgagor from Mortgagee's list of
approved appraisers, such appraisal to be reasonably acceptable to Mortgagee,
(c) the lender of the Mezzanine Loan executes and delivers an intercreditor
agreement to Mortgagee in substantially the same form as is attached hereto and
made a part hereof as Exhibit E (the "Intercreditor Agreement"), (d) such lender
qualifies as a "Permitted Institutional Transferee" under such Intercreditor
Agreement, (e) the
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Mezzanine Loan is, subordinate in time and in right to the Debt pursuant to the
Intercreditor Agreement, (f) the Lender under the Mezzanine Loan retains no more
than 75% of excess cash flow (after payment of operating expenses and debt
service on the Debt and the Mezzanine Loan), (g) the Mezzanine Loan is not cross
defaulted or cross collateralized with any other properties or loans, and (h)
the structure of and documentation for the Mezzanine Loan are reasonably
approved by Mortgagee, which approval shall not be unreasonably withheld if (i)
said documents and structure comply with the provisions of this paragraph 2, and
(ii) Mortgagee has received written confirmation from each Rating Agency that
the implementation of the structure of and execution and delivery of the
documentation (including the terms and conditions therein) for the Mezzanine
Loan will not result in a qualification, downgrade, or withdrawal of the
then-current ratings assigned by the Rating Agency to the securities issued in
connection with a Secondary Market Transaction. Mortgagee by its acceptance of
this Mortgage and reliance hereon, agrees, upon request of Mortgagor, that
Mortgagee shall use reasonable efforts to obtain written confirmation from each
Rating Agency that the implementation of the structure and execution and
delivery of the documentation will not result in a qualification, downgrade, or
withdrawal of the then-current ratings assigned by the Rating Agency to the
Certificates. Furthermore, the Mezzanine Lender shall, notwithstanding anything
to the contrary, have the right to enforce its rights and remedies under its
loan documents, including the right to realize upon the collateral for the
Mezzanine Loan that is described herein, succeed to the interest of Park Plaza
1, LLC in and to Park Plaza 2, LLC, and thereafter use, enjoy and exercise all
rights and benefits of Park Plaza 1, LLC as sole manager and member of Park
Plaza 2, LLC.
(3) FURI shall not transfer more than a 49% interest in the regular
membership interests of Park Plaza 1, LLC, provided, however, that FURI shall
not be prohibited from transferring any amount of the regular membership
interests of Park Plaza 1, LLC, if the following conditions are satisfied: (a)
Mortgagee receives 20 days prior written notice of such proposed transfer; and
(b) the transferee has a net worth on the date immediately following such
transfer of not less than $40 Million; (c) the transferee executes any and all
documents as are reasonably necessary to evidence such transferee's assumption
of FURI's obligations under its Indemnity and Guaranty of the Loan and delivers
such other certificates and opinions (covering such subjects, including
nonconsolidation) as may be reasonably required by Mortgagee, (d) the business
experience and reputation of the transferee shall be at least equal to that of
FURI on the date hereof, (e) the assumption fee otherwise payable under this
Section 1.13 shall apply, (f) if as a result of such transfer, the manager of
the Mortgaged Property changes, the replacement manager is a Qualified Manager
or is approved by Mortgagee, and (g) Mortgagee shall receive written
confirmation from each Rating Agency that such transfer will not result in a
qualification, downgrade or withdrawal of the then-current ratings assigned by
the Rating Agency to the Certificates. FURI shall be released and relieved of
and from all obligations and liabilities under the Indemnity and Guaranty that
arise from and after the date of transfer, but not prior thereto, if another
person or entity that has a "net worth" of $40 Million or more as of the date
immediately following such transfer executes any and all documents as are
reasonably necessary to evidence the assumption of FURI's obligations under said
Indemnity and Guaranty and delivers such other certificates and opinions as may
be reasonably required by Mortgagee.
(4) Southwest Shopping Co. II, L.L.C., a Delaware limited liability
company, may distribute all or any part of its assets to FURI and/or any of
FURI's successors and assigns permitted or contemplated hereunder on or before
April 30, 2001.
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1.14. PAYMENT OF UTILITIES, ASSESSMENTS, CHARGES, ETC. Mortgagor
shall pay when due all utility charges which are incurred by Mortgagor or which
may become a charge or lien against any portion of the Mortgaged Property for
gas, electricity, water and sewer services furnished to the Premises and/or the
Improvements and all other assessments or charges of a similar nature, or
assessments payable pursuant to any restrictive covenants, whether public or
private, affecting the Premises and/or the Improvements or any portion thereof,
whether or not such assessments or charges are or may become liens thereon.
1.15. ACCESS PRIVILEGES AND INSPECTIONS. Mortgagee and the agents,
representatives and employees of Mortgagee shall, subject to the rights of
Tenants, have full and free access to the Premises and the Improvements and any
other location where books and records concerning the Mortgaged Property are
kept at all reasonable times and, except in the event of an emergency, upon not
less than 2 days prior notice (which notice may be telephonic) for the purposes
of inspecting the Mortgaged Property and of examining, copying and making
extracts from the books and records of Mortgagor relating to the Mortgaged
Property. Mortgagor shall lend reasonable and customary assistance to all such
agents, representatives and employees of Mortgagee.
1.16. WASTE: ALTERATION OF IMPROVEMENTS. Mortgagor shall not
commit, suffer or permit any waste on the Mortgaged Property nor take any
actions that may reasonably invalidate any insurance carried on the Mortgaged
Property. Mortgagor shall maintain the Mortgaged Property in good condition and
repair. No part of the Improvements may be removed, demolished or materially
altered, without the prior written consent of Mortgagee unless promptly replaced
with construction of equal or greater utility or value or required in connection
with Mortgagor's ongoing leasing activities conducted in accordance with the
provisions of Section 1.12 hereof, or unless otherwise required to comply with
the Loan Documents. Without the prior written consent of Mortgagee, Mortgagor
shall not commence construction of any improvements on the Premises other than
improvements required for the maintenance or repair of the Mortgaged Property,
or required in connection with Mortgagor's ongoing leasing activities conducted
in accordance with the provisions of Section 1.12 hereof, or required to comply
with the Loan Documents.
1.17. ZONING. Without the prior written consent of Mortgagee,
Mortgagor shall not seek, make, suffer, consent to or acquiesce in any material
adverse change in the zoning or conditions of use of the Premises or the
Improvements. Mortgagor shall comply with and make all payments required under
the provisions of any covenants, conditions or restrictions affecting the
Premises or the Improvements. Mortgagor shall comply with all existing and
future requirements of all governmental authorities having jurisdiction over the
Mortgaged Property. Mortgagor shall keep all licenses, permits, franchises and
other approvals necessary for the operation of the Mortgaged Property in full
force and effect. Mortgagor shall operate the Mortgaged Property as a retail
shopping center for so long as the Debt is outstanding. If, under applicable
zoning provisions, the use of all or any part of the Premises or the
Improvements is or becomes a nonconforming use, Mortgagor shall not cause or
permit such use to be discontinued or abandoned without the prior written
consent of Mortgagee. Further, without Mortgagee's prior written consent,
Mortgagor shall not file or subject any part of the
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Premises or the Improvements to any declaration of condominium or co-operative
or convert any part of the Premises or the Improvements to a condominium,
co-operative or other form of multiple ownership and governance.
1.18. FINANCIAL STATEMENTS AND BOOKS AND RECORDS. Mortgagor shall
keep accurate books and records of account of the Mortgaged Property and its own
financial affairs sufficient to permit the preparation of financial statements
therefrom in accordance with generally accepted accounting principles. Mortgagee
and its duly authorized representatives shall have the right to examine, copy
and audit Mortgagor's records and books of account at all reasonable times. So
long as this Mortgage continues in effect, Mortgagor shall provide to Mortgagee,
in addition to any other financial statements required hereunder or under any of
the other Loan Documents, the following financial statements and information,
all of which must be certified to Mortgagee as being true and correct by
Mortgagor or the person or entity to which they pertain, as applicable, and,
with respect to the financial statements and information set forth in subsection
(d) hereof, audited by an independent certified public accountant, be prepared
in accordance with generally accepted accounting principles consistently
applied, and be in form and substance acceptable to Mortgagee:
(a) copies of all federal tax returns, if any, filed by
Mortgagor, within thirty (30) days after the date of filing;
(b) monthly operating statements for the Mortgaged
Property, within thirty (30) days after the end of each of the first (1st)
twelve (12) calendar months following the date hereof;
(c) quarterly operating statements for the Mortgaged
Property, within thirty (30) days after the end of each March, June, September
and December commencing with the first (1st) of such months to occur following
the first (1st) anniversary of the date hereof;
(d) annual balance sheets for the Mortgaged Property and
annual financial statements for Mortgagor, each principal or general partner in
Mortgagor, and each Indemnitor, within ninety (90) days after the end of each
calendar year; and
(e) such other information with respect to the Mortgaged
Property, Mortgagor, the principals or general partners in Mortgagor, and each
Indemnitor, which may be reasonably requested from time to time by Mortgagee,
within a reasonable time after the applicable request.
If any of the aforementioned materials are not furnished to Mortgagee within the
applicable time periods or Mortgagee is reasonably dissatisfied with the
contents of any of the foregoing and has notified Mortgagor of its
dissatisfaction, in addition to any other rights and remedies of Mortgagee
contained herein, Mortgagee shall have the right, but not the obligation, to
obtain the same by means of an audit by an independent certified public
accountant selected by Mortgagee, in which event Mortgagor agrees to pay, or to
reimburse Mortgagee for, all reasonable and customary costs and expenses of such
audit and further agrees to provide all necessary information to said accountant
and to otherwise cooperate in the making of such audit.
1.19. FURTHER DOCUMENTATION.
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(a) Mortgagor shall, on the request of Mortgagee and at
the expense of Mortgagor: (a) promptly correct any defect, error or omission
which may be discovered in the contents of this Mortgage or in the contents of
any of the other Loan Documents; (b) promptly execute, acknowledge, deliver and
record or file such further instruments (including, without limitation, further
mortgages, deeds of trust, security deeds, security agreements, financing
statements, continuation statements and assignments of rents or leases) and
promptly do such further acts as may be reasonably necessary, desirable or
proper to carry out more effectively the purposes of this Mortgage and the other
Loan Documents and to subject to the liens and security interests hereof and
thereof any property intended by the terms hereof and thereof to be covered
hereby and thereby, including specifically, but without limitation, any
renewals, additions, substitutions, replacements or appurtenances to the
Mortgaged Property; (c) promptly execute, acknowledge, deliver, procure and
record or file any document or instrument (including specifically, without
limitation, any financing statement) deemed advisable by Mortgagee to protect,
continue or perfect the liens or the security interests hereunder against the
rights or interests of third persons; and (d) promptly furnish to Mortgagee,
upon Mortgagee's request, a duly acknowledged written estoppel certificate
addressed to such party or parties as directed by Mortgagee and in form and
substance supplied by Mortgagee, setting forth to the best of its knowledge the
principal balance of and date to which interest due under the Note has been
paid, stating whether any Default or Event of Default has occurred hereunder,
stating whether any offsets or defenses exist against the Debt and containing
such other matters as Mortgagee may reasonably require.
(b) Mortgagor acknowledges that Mortgagee and its
successors and assigns may effectuate a Secondary Market Transaction. Mortgagor
shall cooperate in good faith with Mortgagee in effecting any such Secondary
Market Transaction provided that same shall impose only immaterial costs upon
Mortgagor and shall cooperate in good faith to implement all requirements
imposed by any rating agency involved in any Secondary Market Transaction
including, without limitation, all structural or other changes to the Debt, and
modifications to any documents evidencing or securing the loan; provided,
however, that the Mortgagor shall not be required to modify any documents
evidencing or securing the Debt which would modify (A) the interest rate payable
under the Note, (B) the stated maturity of the Note, (C) the amortization of
principal of the Note, (D) any other material economic term of the Debt, or (E)
increase any obligations or decrease any rights of Mortgagor under the Loan
Documents in a material manner. Mortgagor shall provide such information within
Mortgagor's possession or control, and documents relating to Mortgagor, any
guarantor or indemnitor, the Mortgaged Property and any tenants of the
Improvements as Mortgagee may reasonably request in connection with such
Secondary Market Transaction. Mortgagor shall make available to Mortgagee all
information concerning its business and operations that Mortgagee may reasonably
request. Mortgagee shall be permitted to share all such information with the
investment banking firms, rating agencies, accounting firms, law firms and other
third-party advisory firms involved with the Loan Documents or the applicable
Secondary Market Transaction. It is understood that the information provided by
Mortgagor to Mortgagee may ultimately be incorporated into the offering
documents for the Secondary Market Transaction and thus various investors may
also see some or all of the information. Mortgagee and all of the aforesaid
third-party advisors and professional firms shall be entitled to rely on the
information supplied by, or on behalf of, Mortgagor and Mortgagor indemnifies
Mortgagee as to any losses, claims, damages or liabilities that arise out of or
are based upon any untrue statement or alleged untrue statement of any
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material fact contained in such information or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to be
stated in such information or necessary in order to make the statements in such
information, or in light of the circumstances under which they were made, not
misleading. Mortgagee may publicize the existence of the Debt in connection with
its marketing for a Secondary Market Transaction or otherwise as part of its
business development. For purposes hereof, a "Secondary Market Transaction"
shall be (a) any sale of the Mortgage, Note and other Loan Documents to one or
more investors as a whole loan; (b) a participation of the Debt to one or more
investors, (c) any deposit of the Mortgage, Note and other Loan Documents with a
trust or other entity which may sell certificates or other instruments to
investors evidencing an ownership interest in the assets of such trust or other
entity, or (d) any other sale or transfer of the Debt or any interest therein to
one or more investors.
1.20. PAYMENT OF COSTS: REIMBURSEMENT TO MORTGAGEE. Mortgagor shall
pay all costs and expenses reasonably incurred in connection with the closing of
the loan evidenced by the Note and secured hereby or otherwise attributable or
chargeable to Mortgagor as the owner of the Mortgaged Property, including,
without limitation, appraisal fees, recording fees, documentary, stamp, mortgage
or intangible taxes, brokerage fees and commissions, title policy premiums and
title search fees, uniform commercial code/tax lien/litigation search fees,
escrow fees and reasonable attorneys' fees. If Mortgagor defaults in any such
payment, which default is not cured within any applicable grace or cure period,
Mortgagee may pay the same and Mortgagor shall reimburse Mortgagee on demand for
all such costs and expenses incurred or paid by Mortgagee, together with such
interest thereon at the Default Interest Rate from and after the date of
Mortgagee's making such payment until reimbursement thereof by Mortgagor. Any
such sums disbursed by Mortgagee, together with such interest thereon, shall be
additional indebtedness of Mortgagor secured by this Mortgage and by all of the
other Loan Documents securing all or any part of the Debt. Further, Mortgagor
shall promptly notify Mortgagee in writing of any litigation or threatened
litigation affecting the Mortgaged Property, or any other demand or claim,
which, if enforced, could impair or threaten to impair Mortgagee's security
hereunder. Without limiting or waiving any other rights and remedies of
Mortgagee hereunder, if Mortgagor fails to perform any of its covenants or
agreements contained in this Mortgage or in any of the other Loan Documents and
such failure is not cured within any applicable grace or cure period, or if any
action or proceeding of any kind (including, but not limited to, any bankruptcy,
insolvency, arrangement, reorganization or other debtor relief proceeding) is
commenced which affects Mortgagee's interest in the Mortgaged Property or
Mortgagee's right to enforce its security, then Mortgagee may, at it option,
with or without notice to Mortgagor, make any appearances, disburse any sums and
take any actions as may be necessary or desirable to protect or enforce the
security of this Mortgage or to remedy the failure of Mortgagor to perform its
covenants and agreements (without, however, waiving any default of Mortgagor).
Mortgagor agrees to pay on demand all expenses of Mortgagee incurred with
respect to the foregoing (including, but not limited to, reasonable fees and
disbursements of counsel), together with interest thereon at the Default
Interest Rate from and after the date on which Mortgagee incurs such expenses
until reimbursement thereof by Mortgagor. Any such expenses so incurred by
Mortgagee, together with interest thereon as provided above, shall be additional
indebtedness of Mortgagor secured by this Mortgage and by all of the other Loan
Documents securing all or any part of the Debt. The necessity for any such
actions shall be reasonably determined by Mortgagee and the amounts to be paid
shall be determined by Mortgagee in its reasonable
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discretion. Mortgagee is hereby empowered to enter and to authorize others to
enter upon the Mortgaged Property or any part thereof for the purpose of
performing or observing any such defaulted term, covenant or condition without
thereby becoming liable to Mortgagor. Mortgagor hereby acknowledges and agrees
that the remedies set forth in this Section 1.20 shall be exercisable by
Mortgagee, and any and all payments made or costs or expenses incurred by
Mortgagee pursuant to and in accordance with the provisions hereof shall be
secured hereby and shall be, without demand, immediately repaid by Mortgagor
with interest thereon at the Default Interest Rate, notwithstanding the fact
that such remedies were exercised and such payments made and costs incurred by
Mortgagee after the filing by Mortgagor of a voluntary case or the filing
against Mortgagor of an involuntary case pursuant to or within the meaning of
the Bankruptcy Reform Act of 1978, as amended, Title 11 U.S.C., or after any
similar action pursuant to any other debtor relief law (whether statutory,
common law, case law or otherwise) of any jurisdiction whatsoever, now or
hereafter in effect, which may be or become applicable to Mortgagor, Mortgagee,
any Indemnitor, the Debt or any of the Loan Documents. Mortgagor hereby
indemnifies and holds Mortgagee harmless from and against all loss, cost and
expenses with respect to any Event of Default hereof, any liens (i.e.,
judgments, mechanics' and materialmen's liens, or otherwise), charges and
encumbrances filed against the Mortgaged Property, and from any claims and
demands for damages or injury, including claims for property damage, personal
injury or wrongful death, arising out of or in connection with any accident or
fire or other casualty on the Premises or the Improvements or any nuisance made
or suffered thereon, except those that are due to Mortgagee's gross negligence
or willful misconduct as finally determined by a court of competent
jurisdiction, including, without limitation, in any case, reasonable attorneys'
fees, costs and expenses as aforesaid, whether at pretrial, trial or appellate
level, and such indemnity shall survive payment in full of the Debt. This
Section shall not be construed to require Mortgagee to incur any expenses, make
any appearances or take any actions.
1.21. SECURITY INTEREST. This Mortgage is also intended to encumber
and create a security interest in, and Mortgagor hereby grants to Mortgagee a
security interest in, all sums on deposit with Mortgagee pursuant to the
provisions of Section 1.6, Section 1.8, Section 1.34 and Section 1.36 hereof or
any other Section hereof or of any other Loan Document and all fixtures,
chattels, accounts, equipment, inventory, contract rights, general intangibles
and other personal property included within the Mortgaged Property, all
renewals, replacements of any of the aforementioned items, or articles in
substitution therefor or in addition thereto or the proceeds thereof (said
property is hereinafter referred to collectively as the "Collateral"), whether
or not the same shall be attached to the Premises or the Improvements in any
manner. It is hereby agreed that to the extent permitted by law, all of the
foregoing property is to be deemed and held to be a part of and affixed to the
Premises and the Improvements. The foregoing security interest shall also cover
Mortgagor's leasehold interest in any of the foregoing property which is leased
by Mortgagor. Notwithstanding the foregoing, all of the foregoing property shall
be owned by Mortgagor and no leasing or installment sales or other financing or
title retention agreement in connection therewith shall be permitted without the
prior written approval of Mortgagee, except for maintenance equipment for the
Improvements and the collateral is the equipment itself. Mortgagor shall, from
time to time upon the request of Mortgagee, supply Mortgagee with a current
inventory of all of the property in which Mortgagee is granted a security
interest hereunder, in such detail as Mortgagee may reasonably require.
Mortgagor shall promptly replace all of the Collateral subject to the lien or
security interest of this Mortgage when worn or
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obsolete with Collateral comparable to the worn out or obsolete Collateral when
new and will not, without the prior written consent of Mortgagee, remove from
the Premises or the Improvements any of the Collateral subject to the lien or
security interest of this Mortgage except such as is replaced by an article of
equal suitability and value as above provided, owned by Mortgagor free and clear
of any lien or security interest except that created by this Mortgage and the
other Loan Documents. All of the Collateral shall be kept at the location of the
Premises except for financial and accounting records which are kept at principal
place of business of Mortgagor or as otherwise required or permitted by the
terms of the Loan Documents. Mortgagor shall not use any of the Collateral in
violation of any applicable statute, ordinance or insurance policy.
1.22. SECURITY AGREEMENT. This Mortgage constitutes a security
agreement between Mortgagor and Mortgagee with respect to the Collateral in
which Mortgagee is granted a security interest hereunder, and, cumulative of all
other rights and remedies of Mortgagee hereunder, Mortgagee shall have all of
the rights and remedies of a secured party under any applicable Uniform
Commercial Code. Mortgagor hereby agrees to execute and deliver on demand and
hereby irrevocably constitutes and appoints Mortgagee the attorney-in-fact of
Mortgagor to execute and deliver and, if appropriate, to file with the
appropriate filing officer or office, such security agreements, financing
statements, continuation statements or other instruments as Mortgagee may
request or require in order to impose, perfect or continue the perfection of the
lien or security interest created hereby. To the extent specifically provided
herein, Mortgagee shall have the right of possession of all cash, securities,
instruments, negotiable instruments, documents, certificates and any other
evidences of cash or other property or evidences of rights to cash rather than
property, which are now or hereafter a part of the Mortgaged Property, and
Mortgagor shall promptly deliver the same to Mortgagee, endorsed to Mortgagee,
without further notice from Mortgagee. Mortgagor agrees to furnish Mortgagee
with notice of any change in the name, identity, organizational structure,
residence, or principal place of business or mailing address of Mortgagor within
ten (10) days of the effective date of any such change. Upon the occurrence of
any Event of Default, Mortgagee shall have the rights and remedies as prescribed
in this Mortgage, or as prescribed by general law, or as prescribed by any
applicable Uniform Commercial Code, all at Mortgagee's election. Any disposition
of the Collateral may be conducted by an employee or agent of Mortgagee. Any
person, including both Mortgagor and Mortgagee, shall be eligible to purchase
any part or all of the Collateral at any such disposition. Expenses of retaking,
holding, preparing for sale, selling or the like (including, without limitation,
Mortgagee's reasonable attorneys' fees and legal expenses), together with
interest thereon at the Default Interest Rate from the date incurred by
Mortgagee until actually paid by Mortgagor, shall be paid by Mortgagor on demand
and shall be secured by this Mortgage and by all of the other Loan Documents
securing all or any part of the Debt. Mortgagee shall have the right to enter
upon the Premises and the Improvements or any real property where any of the
Collateral is located to take possession of, assemble and collect the same or
Mortgagor, upon demand of Mortgagee, shall assemble such property and make it
available to Mortgagee at the Premises, or at a place which is mutually agreed
upon or, if no such place is agreed upon, at a place reasonably designated by
Mortgagee to be reasonably convenient to Mortgagee and Mortgagor. If notice is
required by law, Mortgagee shall give Mortgagor at least ten (10) days' prior
written notice of the time and place of any public sale of such property, or
adjournments thereof, or of the time of or after which any private sale or any
other intended disposition thereof is to be made, and if such notice is sent to
Mortgagor, as the same is provided for the mailing of
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notices herein, it is hereby deemed that such notice shall be and is reasonable
notice to Mortgagor. No such notice is necessary for any such property which is
perishable, threatens to decline speedily in value or is of a type customarily
sold on a recognized market. Any sale made pursuant to the provisions of this
Section shall be deemed to have been a public sale conducted in a commercially
reasonable manner if held contemporaneously with a foreclosure sale as provided
in Section 3.1(e) hereof upon giving the same notice with respect to the sale of
the Mortgaged Property hereunder as is required under said Section 3.1(e).
Furthermore, to the extent permitted by law, in conjunction with, in addition to
or in substitution for the rights and remedies available to Mortgagee pursuant
to any applicable Uniform Commercial Code:
(a) In the event of a foreclosure sale, the Mortgaged Property may,
at the option of Mortgagee, be sold as a whole; and
(b) It shall not be necessary that Mortgagee take possession of the
aforementioned Collateral, or any part thereof, prior to the time that any sale
pursuant to the provisions of this Section is conducted and it shall not be
necessary that said Collateral, or any part thereof, be present at the location
of such sale; and
(c) Mortgagee may appoint or delegate any one or more persons as
agent to perform any act or acts necessary or incident to any sale held by
Mortgagee, including the sending of notices and the conduct of the sale, but in
the name and on behalf of Mortgagee.
The name and address of Mortgagor (as Debtor under any applicable Uniform
Commercial Code) are:
c/o First Union Real Estate Equity
and Mortgage Investments
551 Fifth Avenue
Suite 1416
New York, New York 10176
The name and address of Mortgagee (as Secured Party under any applicable Uniform
Commercial Code) are:
First Union National Bank
One First Union Center DC6
Charlotte, North Carolina 28288-0166
1.23. EASEMENTS AND RIGHTS-OF-WAY. Mortgagor shall not grant any
easement or right-of-way with respect to all or any portion of the Premises or
the Improvements without the prior written consent of Mortgagee, which consent
shall not be unreasonably withheld, provided that the granting of same does not
have a material adverse effect on the utility or value of the Mortgaged
Property. The purchaser at any foreclosure sale hereunder may, at its
discretion, disaffirm any easement or right-of-way granted in violation of any
of the provisions of this Mortgage and may take immediate possession of the
Mortgaged Property free from, and despite the terms of, such grant of easement
or right-of-way. If Mortgagee consents to the grant of an easement or
right-of-way, Mortgagee agrees to grant such consent without charge to Mortgagor
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other than expenses, including, without limitation, reasonable attorneys' fees,
incurred by Mortgagee in the review of Mortgagor's request and in the
preparation of documents effecting the subordination.
1.24. COMPLIANCE WITH LAWS. Mortgagor shall at all times comply with
all statutes, ordinances, regulations and other governmental or
quasi-governmental requirements and private covenants now or hereafter relating
to the ownership, construction, use or operation of the Mortgaged Property,
including, but not limited to, those concerning employment and compensation of
persons engaged in operation and maintenance of the Mortgaged Property and any
environmental or ecological requirements, even if such compliance shall require
structural changes to the Mortgaged Property; provided, however, that, Mortgagor
may, upon providing Mortgagee with security reasonably satisfactory to
Mortgagee, proceed diligently and in good faith to contest the validity or
applicability of any such statute, ordinance, regulation or requirement so long
as during such contest the Mortgaged Property shall not be subject to any lien,
charge, fine or other liability and shall not be in danger of being forfeited,
lost or closed. Mortgagor shall not use or occupy, or allow the use or occupancy
of, the Mortgaged Property in any manner which violates any Lease of or any
other agreement (other than service contracts) applicable to the Mortgaged
Property or any applicable law, rule, regulation or order or which constitutes a
public or private nuisance or which makes void, voidable or cancelable, or
increases the premium of, any insurance then in force with respect thereto.
1.25. ADDITIONAL TAXES. In the event of the enactment after the date
hereof of any law of the state in which the Mortgaged Property is located or of
any other governmental entity deducting from the value of the Mortgaged Property
for the purpose of taxing any lien or security interest 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 security agreements or
debts secured by mortgages or security agreements or the interest of the
beneficiary, mortgagee or secured party in the property covered thereby, or the
manner of collection of such taxes, so as to adversely affect this Mortgage or
the Debt or Mortgagee, then, and in any such event, Mortgagor, upon demand by
Mortgagee, shall pay such taxes, assessments, charges or liens, 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 either such event, Mortgagee
may elect, by notice in writing given to Mortgagor, to declare all of the Debt
to be and become due and payable in full thirty (30) days from the giving of
such notice, and, in connection with the payment of such Debt, no prepayment
premium or fee shall be due and Mortgagee shall be deemed to have waived the
benefit of Section 1.04 of the Note relative thereto unless, at the time of such
payment, an Event of Default or a Default shall have occurred, which Default or
Event of Default is unrelated to the provisions of this Section 1.25, in which
event any applicable prepayment premium or fee in accordance with the terms of
the Note shall be due and payable.
1.26. SECURED INDEBTEDNESS. It is understood and agreed that this
Mortgage shall secure payment of not only the indebtedness evidenced by the Note
but also any and all substitutions, replacements, renewals and extensions of the
Note, any and all indebtedness and obligations arising pursuant to the terms
hereof and any and all indebtedness and obligations
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arising pursuant to the terms of any of the other Loan Documents, all of which
indebtedness is equally secured with and has the same priority as any amounts
advanced as of the date hereof. It is agreed that any future advances made by
Mortgagee to or for the benefit of Mortgagor from time to time under this
Mortgage or the other Loan Documents and whether or not such advances are
obligatory or are made at the option of Mortgagee, or otherwise, made for any
purpose, within twenty (20) years from the date hereof, and all interest
accruing thereon, shall be equally secured by this Mortgage and shall have the
same priority as all amounts, if any, advanced as of the date hereof and shall
be subject to all of the terms and provisions of this Mortgage.
1.27. MORTGAGOR'S WAIVERS. To the full extent permitted by law,
Mortgagor agrees that Mortgagor shall not at any time insist upon, plead, claim
or take the benefit or advantage of any law now or hereafter in force providing
for any appraisement, valuation, stay, moratorium or extension, or any law now
or hereafter in force providing for the reinstatement of the Debt prior to any
sale of the Mortgaged Property to be made pursuant to any provisions contained
herein or prior to the entering of any decree, judgment or order of any court of
competent jurisdiction, or any right under any statute to redeem all or any part
of the Mortgaged Property so sold. Mortgagor, for Mortgagor and Mortgagor's
successors and assigns, and for any and all persons ever claiming any interest
in the Mortgaged Property, to the full extent permitted by law, hereby
knowingly, intentionally and voluntarily, with and upon the advice of counsel:
(a) waives, releases, relinquishes and forever forgoes all rights of valuation,
appraisement, stay of execution, reinstatement and notice of election or
intention to mature or declare due the Debt (except such notices as are
specifically provided for herein); (b) waives, releases, relinquishes and
forever forgoes all right to a marshaling of the assets of Mortgagor, including
the Mortgaged Property, to a sale in the inverse order of alienation, or to
direct the order in which any of the Mortgaged Property shall be sold in the
event of foreclosure of the liens and security interests hereby created and
agrees that any court having jurisdiction to foreclose such liens and security
interests may order the Mortgaged Property sold as an entirety; and (c) waives,
releases, relinquishes and forever forgoes all rights and periods of redemption
provided under applicable law, including, but not limited to, all rights of
redemption confined by the Act passed by the General Assembly of Arkansas on May
8, 1899, and acts amendatory thereof. To the full extent permitted by law,
Mortgagor shall not have or assert any right under any statute or rule of law
pertaining to the exemption of homestead or other exemption under any federal,
state or local law now or hereafter in effect, the administration of estates of
decedents or other matters whatever to defeat, reduce or affect the right of
Mortgagee under the terms of this Mortgage to a sale of the Mortgaged Property,
for the collection of the Debt without any prior or different resort for
collection, or the right of Mortgagee under the terms of this Mortgage to the
payment of the Debt out of the proceeds of sale of the Mortgaged Property in
preference to every other claimant whatever. Furthermore, Mortgagor hereby
knowingly, intentionally and voluntarily, with and upon the advice of competent
counsel, waives, releases, relinquishes and forever forgoes all present and
future statutes of limitations as a defense to any action to enforce the
provisions of this Mortgage or to collect any of the Debt to the fullest extent
permitted by law. Mortgagor covenants and agrees that upon the commencement of a
voluntary or involuntary bankruptcy proceeding by or against Mortgagor,
Mortgagor shall not seek a supplemental stay or otherwise shall not seek
pursuant to 11 U.S.C. Section 105 or any other provision of the Bankruptcy
Reform Act of 1978, as amended, or any other debtor relief law (whether
statutory, common law, case law, or otherwise) of any jurisdiction whatsoever,
now or hereafter in effect, which may be or become applicable, to stay,
interdict, condition, reduce or inhibit the ability of Mortgagee to enforce any
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rights of Mortgagee against any guarantor or indemnitor of the Debt or any other
party liable with respect thereto by virtue of any indemnity, guaranty or
otherwise.
1.28. SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.
(a) MORTGAGOR, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT
COUNSEL, (i) SUBMITS TO PERSONAL JURISDICTION IN THE STATE IN WHICH THE PREMISES
IS LOCATED OVER ANY SUIT, ACTION OR PROCEEDING BY ANY PERSON ARISING FROM OR
RELATING TO THE NOTE, THIS MORTGAGE OR ANY OTHER OF THE LOAN DOCUMENTS, (ii)
AGREES THAT ANY SUCH ACTION, SUIT OR PROCEEDING MAY BE BROUGHT IN THE STATE OR
FEDERAL COURT OF COMPETENT JURISDICTION SITTING IN THE COUNTY IN WHICH THE
PREMISES IS LOCATED, (iii) SUBMITS TO THE JURISDICTION OF SUCH COURTS, AND (iv)
TO THE FULLEST EXTENT PERMITTED BY LAW, AGREES THAT IT WILL NOT BRING ANY
ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM (BUT NOTHING HEREIN SHALL AFFECT
THE RIGHT OF MORTGAGEE TO BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER
FORUM). MORTGAGOR FURTHER CONSENTS AND AGREES TO SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING BY
REGISTERED OR CERTIFIED U.S. MAIL, POSTAGE PREPAID, TO THE MORTGAGOR AT THE
ADDRESS FOR NOTICES DESCRIBED IN SECTION 4.5 HEREOF, AND CONSENTS AND AGREES
THAT SUCH SERVICE SHALL CONSTITUTE IN EVERY RESPECT VALID AND EFFECTIVE SERVICE
(BUT NOTHING HEREIN SHALL AFFECT THE VALIDITY OR EFFECTIVENESS OF PROCESS SERVED
IN ANY OTHER MANNER PERMITTED BY LAW).
(b) MORTGAGOR, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT
COUNSEL, WAIVES, RELINQUISHES AND FOREVER FORGOES THE RIGHT TO A TRIAL BY JURY
IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING
TO THE DEBT OR ANY CONDUCT, ACT OR OMISSION OF MORTGAGEE OR MORTGAGOR, OR ANY OF
THEIR RESPECTIVE DIRECTORS, OFFICERS, PARTNERS, MEMBERS, EMPLOYEES, AGENTS OR
ATTORNEYS, OR ANY OTHER PERSONS AFFILIATED WITH MORTGAGEE OR MORTGAGOR, IN EACH
OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.
1.29. ATTORNEY-IN-FACT PROVISIONS. With respect to any provision of
this Mortgage or any other Loan Document whereby Mortgagor grants to Mortgagee a
power-of-attorney, provided no Default or Event of Default has occurred under
this Mortgage, Mortgagee shall first give Mortgagor written notice at least
three (3) days prior to acting under such power, which notice shall demand that
Mortgagor first take the proposed action within such period and advising
Mortgagor that if it fails to do so, Mortgagee will so act under the power;
provided, however, that, in the event that a Default or an Event of Default has
occurred, or if necessary to prevent imminent death, serious bodily injury,
material damage, loss, forfeiture or diminution in value to the Mortgaged
Property or any surrounding property or to prevent any material adverse
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affect on Mortgagee's interest in the Mortgaged Property, Mortgagee may act
immediately and without first giving such notice. In such event, Mortgagee will
give Mortgagor notice of such action as soon thereafter as reasonably practical.
1.30. MANAGEMENT. The management of the Mortgaged Property shall be
by either: (a) Mortgagor or an entity affiliated with Mortgagor approved by
Mortgagee for so long as Mortgagor or said affiliated entity is managing the
Mortgaged Property in a first class manner; (b) a professional property
management company approved by Mortgagee; or (c) a Qualified Manager. Such
management by an affiliated entity or a professional property management company
shall be pursuant to a written agreement approved by Mortgagee. In no event
shall any manager be removed or replaced or the terms of any management
agreement be modified or amended, without the prior written consent of Mortgagee
which consent, in all cases, shall not be unreasonably withheld so long as such
manager is replaced with a Qualified Manager and such replacement manager
executes Mortgagee's form of Consent and Agreement of Manager and with respect
to any amendments, so long as (x) the management fee thereunder is no greater
than 4% of gross revenue of the Mortgaged Property, (y) such Management
Agreement is terminable by Mortgagee upon 30 days prior written notice to the
manager, and (z) the Management Agreement is subject and subordinate to the
terms of this Mortgage. After an Event of Default or a default under any
management contract then in effect, which default is not cured within any
applicable grace or cure period, Mortgagee shall have the right to terminate, or
to direct Mortgagor to terminate, such management contract upon thirty (30)
days' notice and to retain, or to direct Mortgagor to retain, a new management
agent that either qualifies as a Qualified Manager, or is reasonably approved by
Mortgagee.
All Rents and Profits generated by or derived from the Mortgaged
Property shall first be utilized solely for current expenses
directly attributable to the ownership and operation of the Mortgaged Property
(including management fees and leasing costs and commissions), including,
without limitation, current expenses relating to Mortgagor's liabilities and
obligations with respect to this Mortgage and the other Loan Documents, and none
of the Rents and Profits generated by or derived from the Mortgaged Property
shall be diverted by Mortgagor and utilized for any other purposes unless all
such current expenses attributable to the ownership and operation of the
Mortgaged Property (including management fees and leasing costs and commissions)
have been fully paid and satisfied.
1.31. HAZARDOUS WASTE AND OTHER SUBSTANCES.
(a) Mortgagor hereby represents and warrants to Mortgagee that, as
of the date hereof: (i) except as disclosed in any environmental site assessment
report prepared by IVI Environmental Inc. and dated March 3, 2000 (the
"Environmental Report"), to the best of Mortgagor's knowledge, information and
belief, none of Mortgagor nor the Mortgaged Property nor any Tenant at the
Premises nor the operations conducted thereon is in direct or indirect violation
of or otherwise exposed to any liability under any local, state or federal law,
rule or regulation or common law duty pertaining to the environment
(collectively, "Environment Laws"), including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42
U.S.C. Section 9601 et seq.), the Resource Conservation and Recovery Act of 1976
(42 U.S.C. Section 6901 et seq.), the Federal Water Pollution Control Act (33
U.S.C. Section 1251 et seq.), the Emergency Planning and Community-Right-to-Know
Act (42
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U.S.C. Section 11001 et seq.), the Toxic Substances Control Act (15
U.S.C. Section 2601 et seq.), and the Hazardous Materials Transportation Act (49
U.S.C. Section 1801 et seq.), regulations promulgated pursuant to said laws, all
as amended from time to time or otherwise exposed to any liability under any
Environmental Law relating to or affecting the Mortgaged Property, whether or
not used by or within the control of Mortgagor; (ii) except as otherwise
disclosed in the Environmental Report, no hazardous, toxic or harmful
substances, wastes, materials, pollutants or contaminants (including, without
limitation, asbestos or asbestos-containing materials, lead based paint,
polychlorinated biphenyls, petroleum or petroleum products or byproducts,
flammable explosives, radioactive materials, radon or raw materials which
include hazardous materials) or any other substances or materials, which are
regulated by Environmental Laws (collectively, "Hazardous Substances") are
located on, in or under or have been handled, generated, stored, processed or
disposed of on or released or discharged from the Mortgaged Property (including
underground contamination), except for those substances used by Mortgagor or any
Tenant in the ordinary course of their respective businesses and in compliance
with all Environmental Laws; (iii) the Mortgaged Property is not subject to any
private or governmental lien or judicial or administrative notice or action
arising under Environmental Laws; (iv) except as described in the Environmental
Report, there is no pending, nor, to Mortgagor's knowledge, information or
belief, threatened litigation arising under Environmental Laws affecting
Mortgagor or the Mortgaged Property; except as otherwise disclosed in the
Environmental Report there are no underground storage tanks or other underground
storage receptacles for Hazardous Substances or landfills or dumps on the
Mortgaged Property that do not comply with Environmental Laws; (v) Mortgagor has
received no notice of, and to the best of Mortgagor's knowledge and belief,
there exists no investigation, action, proceeding or claim by any agency,
authority or unit of government or by any third party which could result in any
liability, penalty, sanction or judgment under any Environmental Laws with
FFrespect to any condition, use or operation of the Mortgaged Property, nor does
Mortgagor know of any basis for such an investigation, action, proceeding or
claim; (vi) Mortgagor has received no notice of and, to the best of Mortgagor's
knowledge and belief, there has been no claim by any party that any use,
operation or condition of the Mortgaged Property has caused any nuisance or any
other liability or adverse condition on any other property, nor does Mortgagor
know of any basis for such an investigation, action, proceeding or claim; and
(vii) radon is not present at the Mortgaged Property in excess or in violation
of Environmental Laws that require disclosure to any tenant or occupant of or
invitee to the Mortgaged Property or to any governmental agency or the general
public.
(b) Except as otherwise disclosed in the Environmental Report,
Mortgagor has not received nor to the best of Mortgagor's knowledge, information
and belief has there been issued, any notice, notification, demand, request for
information, citation, summons, or order in any way relating to any actual,
alleged or potential violation or liability arising under Environmental Laws;
and
(c) Except as otherwise disclosed in the Environmental Report, to
the best of Mortgagor's knowledge, information and belief, neither the Mortgaged
Property, nor any property to which Mortgagor has, in connection with the
maintenance or operation of the Mortgaged Property, directly or indirectly
transported or arranged for the transportation of any Hazardous Substances is
listed or, to the best of Mortgagor's knowledge, information and belief,
proposed for listing on the National Priorities List promulgated pursuant to
CERCLA, on
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CERCLIS (as defined in CERCLA) or on any similar federal or state list of sites
requiring environmental investigation or clean-up.
(d) Mortgagor shall comply with all applicable Environmental Laws.
Mortgagor shall keep or cause the Mortgaged Property to be kept free from
Hazardous Substances (except those substances used by Mortgagor or any Tenant in
the ordinary course of their respective businesses and except in compliance with
all Environmental Laws) and in compliance with all Environmental Laws. Mortgagor
shall not install or use any underground storage tanks, shall expressly prohibit
the use, generation, handling, storage, production, processing and disposal of
Hazardous Substances by all Tenants in quantities or conditions that would
violate or give rise to any obligation to take remedial or other action under
any applicable Environmental Laws. Without limiting the generality of the
foregoing, during the term of this Mortgage, Mortgagor shall not install in the
Improvements or permit to be installed in the Improvements any asbestos or
asbestos-containing materials.
(e) Mortgagor shall promptly notify Mortgagee if Mortgagor shall
become aware of (i) the existence of any Hazardous Substances on the Mortgaged
Property other than those occurring in the ordinary course of Mortgagor's
business and which do not violate Environmental Laws, (ii) any direct or
indirect violation of any Environmental Laws, (iii) any lien, action or notice
affecting the Mortgaged Property or Mortgagor resulting from any violation or
alleged violation of or liability or alleged liability under any Environmental
Laws, (iv) the institution of any investigation, inquiry or proceeding
concerning Mortgagor or the Mortgaged Property pursuant to any Environmental
Laws or otherwise relating to Hazardous Substances, or (v) the discovery of any
occurrence, condition or state of facts which would render any representation or
warranty contained in this Mortgage incorrect in any material respect if made at
the time of such discovery. Immediately upon receipt of same, Mortgagor, shall
deliver to Mortgagee copies of any and all requests for information, complaints,
citations, summonses, orders, notices, reports or other communications,
documents or instruments in any way relating to any actual, alleged or potential
violation or liability of any nature whatsoever arising under Environmental Laws
and relating to the Mortgaged Property or to Mortgagor. Mortgagor shall remedy
or cause to be remedied in a timely manner (and in any event within the time
period permitted by applicable Environmental Laws) any violation of
Environmental Laws. Without limiting the foregoing, Mortgagor shall, promptly
and regardless of the source of the contamination or threat to the environment,
at its own expense, take all actions as shall be necessary or prudent, to bring
any and all portions of the Mortgaged Property into compliance with
Environmental Laws, including, without limitation, all investigative,
monitoring, removal, containment and remedial actions in accordance with all
applicable Environmental Laws (and in all events in a manner reasonably
satisfactory to Mortgagee) and shall further pay or cause to be paid, at no
expense to Mortgagee, all clean-up, administrative and enforcement costs of
applicable governmental agencies which may be asserted against the Mortgaged
Property. In the event Mortgagor fails to do so, Mortgagee may, but shall not be
obligated to, cause the Mortgaged Property or other affected property to be
brought into conformance with Environmental Laws and any and all costs and
expenses incurred by Mortgagee in connection therewith, together with interest
thereon at the Default Interest Rate from the date incurred by Mortgagee until
actually paid by Mortgagor, shall be immediately paid by Mortgagor on demand and
shall be secured by this Mortgage and by all of the other Loan Documents
securing all or any part of the Debt. Mortgagor hereby grants to Mortgagee and
its agents and employees access
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subject to the rights of any Tenants to the Mortgaged Property and a
license to remove any items deemed by Mortgagee to be in violation of
Environmental Laws and to do all things Mortgagee shall deem necessary to bring
the Mortgaged Property into conformance with Environmental Laws.
(f) Mortgagor covenants and agrees, at Mortgagor's sole cost and
expense, to indemnify, defend (at trial and appellate levels, and with
attorneys, consultants and experts reasonably acceptable to Mortgagee), and hold
Mortgagee harmless from and against any and all liens, damages (including
without limitation, punitive or exemplary damages), losses, liabilities
(including, without limitation, strict liability), obligations, settlement
payments, penalties, fines, assessments, citations, directives, claims,
litigation, demands, defenses, judgments, suits, proceedings, costs,
disbursements or expenses of any kind or of any nature whatsoever (including,
without limitation, reasonable attorneys', consultants' and experts' fees and
disbursements actually incurred in investigating, defending, settling or
prosecuting any claim, litigation or proceeding) which may at any time be
imposed upon, incurred by or asserted or awarded against Mortgagee or the
Mortgaged Property, and arising directly or indirectly from or out of: (i) any
violation or alleged violation of, or liability or alleged liability under, any
Environmental Law; (ii) the presence, release or threat of release of or
exposure to any Hazardous Substances or radon on, in, under or affecting all or
any portion of the Mortgaged Property or that have migrated from the Mortgaged
Property to any surrounding areas, regardless of whether or not caused by or
within the control of Mortgagor; (iii) any transport, treatment, recycling,
storage, disposal or arrangement therefor of Hazardous Substances whether on the
Mortgaged Property, originating from the Mortgaged Property, or otherwise
associated with Mortgagor or any operations conducted on the Mortgaged Property
at any time; (iv) the failure by Mortgagor to comply fully with the terms and
conditions of this Section 1.31; (v) the breach of any representation or
warranty contained in this Section 1.31; (vi) the enforcement of this Section
1.31, including, without limitation, the cost of assessment, investigation,
containment, removal and/or remediation of any and all Hazardous Substances from
all or any portion of the Mortgaged Property or any surrounding areas (that
originate from the Mortgaged Property or is otherwise caused by Mortgagor), the
cost of any actions taken in response to the presence, release or threat of
release of any Hazardous Substances on, in, under or affecting any portion of
the Mortgaged Property or any surrounding areas (that originate from the
Mortgaged Property or is otherwise caused by Mortgagor) to prevent or minimize
such release or threat of release so that it does not migrate or otherwise cause
or threaten danger to present or future public health, safety, welfare or the
environment, and costs incurred to comply with Environmental Laws in connection
with all or any portion of the Mortgaged Property or any surrounding areas. The
indemnity set forth in this Section 1.31 shall also include any diminution in
the value of the security afforded by the Mortgaged Property or any future
reduction in the sales price of the Mortgaged Property by reason of any matter
set forth in this Section 1.31. The foregoing indemnity shall specifically not
include any such costs relating to Hazardous Substances which are initially
placed on, in or under the Mortgaged Property after foreclosure or other taking
of title to the Mortgaged Property by Mortgagee or its successor or assigns or
agents, employees and contractors. Mortgagee's rights under this Section shall
survive payment in full of the Debt and shall be in addition to all other rights
of Mortgagee under this Mortgage, the Note and the other Loan Documents.
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(g) Upon Mortgagee's request, at any time after the occurrence of
an Event of Default or at such other time as Mortgagee has reasonable grounds to
believe that Hazardous Substances are or have been released, stored or disposed
of on or from the Mortgaged Property in violation of Environmental Laws, or that
the Mortgaged Property may be in violation of the Environmental Laws, Mortgagor
shall perform or cause to be performed, at Mortgagor's sole cost and expense and
in scope, form and substance reasonably satisfactory to Mortgagee, an inspection
or audit of the Mortgaged Property prepared by a hydrogeologist or environmental
engineer or other appropriate consultant reasonably approved by Mortgagee
indicating the presence or absence of Hazardous Substances on the Mortgaged
Property, the compliance or non-compliance status of the Mortgaged Property and
the operations conducted thereon with applicable Environmental Laws, or an
inspection or audit of the Mortgaged Property prepared by an engineering or
consulting firm reasonably approved by Mortgagee indicating the presence or
absence of friable asbestos or substances containing asbestos or lead or
substances containing lead or lead based paint ("Lead Based Paint") in violation
of the Environmental Laws on the Mortgaged Property. If Mortgagor fails to
provide reports of such inspection or audit within forty-five (45) days after
such request, Mortgagee may order the same, and Mortgagor hereby grants to
Mortgagee and its employees and agents access to the Mortgaged Property subject
to the rights of any Tenant thereat and an irrevocable license to undertake such
inspection or audit. The cost of such inspection or audit, together with
interest thereon at the Default Interest Rate from the date incurred by
Mortgagee until actually paid by Mortgagor, shall be immediately paid by
Mortgagor on demand and shall be secured by this Mortgage and by all of the
other Loan Documents securing all or any part of the Debt.
(h) Reference is made to that certain Environmental Indemnity
Agreement of even date herewith by and among Mortgagor, FURI and Mortgagee (the
"Environmental Indemnity Agreement"). The provisions of this Mortgage and the
Environmental Indemnity Agreement shall be read together to maximize the
coverage with respect to the subject matter thereof, as determined by Mortgagee.
(i) Mortgagor covenants and agrees to institute, within thirty (30)
days after the date hereof, an operations and maintenance program (the
"Maintenance Program") designed by an environmental consultant, satisfactory to
Mortgagee, with respect to asbestos containing materials ("ACM's"), consistent
with "Guidelines for Controlling Asbestos-Containing Materials in Buildings"
(USEPA, 1985) and other relevant guidelines, and such Maintenance Program will
hereafter continuously remain in effect until the Debt secured hereby is repaid
in full. In furtherance of the foregoing, Mortgagor shall inspect and maintain
all ACM's on a regular basis and ensure that all ACM's shall be maintained in a
condition that prevents exposure of residents to ACM's at all times. Without
limiting the generality of the preceding sentence, Mortgagee may require (i)
periodic notices or reports to Mortgagee in form, substance and at such
intervals as Mortgagee may specify, (ii) an amendment to such operations and
maintenance program to address changing circumstances, laws or other matters,
(iii) at Mortgagor's sole expense, supplemental examination of the Mortgaged
Property by consultants specified by Mortgagee, and (iv) variation of the
operations and maintenance program in response to the reports provided by any
such consultants.
(j) If, at any time hereafter, Lead Based Paint is suspected of
being present on the Mortgaged Property, Mortgagor agrees, at its sole cost and
expense and within twenty (20)
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days thereafter, to cause to be prepared an assessment report describing the
location and condition of the Lead Based Paint (the "Lead Based Paint Report")
prepared by an expert, and in form, scope and substance, acceptable to
Mortgagee.
(k) Mortgagor agrees that if it has been, or if at any time
hereafter it is, determined that the Mortgaged Property contains Lead Based
Paint, on or before thirty (30) days following such determination, if such
determination is hereafter made, as applicable, Mortgagor shall, at its sole
cost and expense, develop and implement, and thereafter diligently and
continuously carry out (or cause to be developed and implemented and thereafter
diligently and continually to be carried out), an operations, abatement and
maintenance plan for the Lead Based Paint on the Mortgaged Property, which plan
shall be prepared by an expert, and be in form, scope and substance, reasonably
acceptable to Mortgagee.
1.32. INDEMNIFICATION; SUBROGATION.
(a) Mortgagor shall indemnify, defend and hold Mortgagee harmless
against: (i) any and all claims for brokerage, leasing, finders or similar fees
which may be made relating to the Mortgaged Property or the Debt, and (ii) any
and all liability, obligations, losses, damages, penalties, claims, actions,
suits, costs and expenses (including Mortgagee's reasonable attorneys' fees) of
whatever kind or nature which may be asserted against, imposed on or incurred by
Mortgagee in connection with the Debt, this Mortgage, the Mortgaged Property, or
any part thereof, or the exercise by Mortgagee of any rights or remedies granted
to it under this Mortgage; provided, however, that nothing herein shall be
construed to obligate Mortgagor to indemnify, defend and hold harmless Mortgagee
from and against any and all liabilities, obligations, losses, damages,
penalties, fines, claims, actions, suits, costs and expenses asserted against,
imposed on or incurred by Mortgagee by reason of Mortgagee's or its agent's,
employee's or contractor's willful misconduct or gross negligence.
(b) If Mortgagee is made a party defendant to any litigation or any
claim is threatened or brought against Mortgagee concerning the Debt, this
Mortgage, the Mortgaged Property, or any part thereof, or any interest therein,
or the construction, maintenance, operation or occupancy or use thereof, then
Mortgagor shall indemnify, defend and hold Mortgagee harmless from and against
all liability by reason of said litigation or claims, including reasonable
attorneys' fees and expenses incurred by Mortgagee in any such litigation or
claim, whether or not any such litigation or claim is prosecuted to judgment
provided, however, that nothing herein shall be construed to obligate Mortgagor
to indemnify, defend and hold harmless Mortgagee from and against any and all
liabilities, obligations, losses, damages, penalties, fines, claims, actions,
suits, costs and expenses asserted against, imposed on or incurred by Mortgagee
by reason of Mortgagee's or its agent's, employee's or contractor's willful
misconduct or gross negligence. If Mortgagee commences an action against
Mortgagor to enforce any of the terms hereof or to prosecute any breach by
Mortgagor of any of the terms hereof or to recover any sum secured hereby,
Mortgagor shall pay to Mortgagee its reasonable attorneys' fees and expenses if
Mortgagee prevails in such litigation or proceeding. The right to such
attorneys' fees and expenses shall be deemed to have accrued on the commencement
of such action, and shall be enforceable whether or not such action is
prosecuted to judgment if Mortgagee prevails in such litigation or proceeding.
If Mortgagor breaches any term of this Mortgage, Mortgagee may engage the
services of an attorney or attorneys to protect its rights hereunder, and in the
event of
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such engagement following any breach by Mortgagor, Mortgagor shall pay
Mortgagee reasonable attorneys' fees and expenses incurred by Mortgagee, whether
or not an action is actually commenced against Mortgagor by reason of such
breach. All references to "attorneys" in this Subsection and elsewhere in this
Mortgage shall include, without limitation, any attorney or law firm engaged by
Mortgagee and Mortgagee's in-house counsel, and all references to "fees and
expenses" in this Subsection and elsewhere in this Mortgage shall include,
without limitation, any fees of such attorney or law firm, any appellate counsel
fees, if applicable, and any allocable charges and allocable costs of
Mortgagee's in-house counsel.
(c) A waiver of subrogation shall be obtained by Mortgagor from its
insurance carrier and, consequently, Mortgagor waives any and all right to claim
or recover against Mortgagee, its officers, employees, agents and
representatives, for loss of or damage to Mortgagor, the Mortgaged Property,
Mortgagor's property or the property of others under Mortgagor's control from
any cause insured against or required to be insured against by the provisions of
this Mortgage.
1.33. COVENANTS WITH RESPECT TO INDEBTEDNESS, OPERATIONS,
FUNDAMENTAL CHANGES OF MORTGAGOR.
A. Mortgagor hereby represents, warrants and covenants as of the
date hereof and until such time as the Debt is paid in full, that Mortgagor:
(a) will not, nor will any partner, limited or general,
member or shareholder thereof, as applicable, amend, modify or otherwise change
its partnership certificate, partnership agreement, articles of incorporation,
by-laws, operating agreement, articles of organization, or other formation
agreement or document, as applicable, in any material term or manner, or in a
manner which adversely affects Mortgagor's existence as a single purpose entity;
(b) will not liquidate or dissolve (or suffer any liquidation or
dissolution), or enter into any transaction of merger or consolidation, or
acquire by purchase or otherwise all or substantially all the business or assets
of, or any stock or other evidence of beneficial ownership of any entity;
(c) has not and will not guarantee, pledge its assets for the
benefit of, or otherwise become liable on or in connection with, any
obligation of any other person or entity;
(d) does not own and will not own any asset other than (i) the
Mortgaged Property and additions thereto contemplated or permitted by the Loan
Documents, and (ii) incidental personal property necessary for the operation of
the Mortgaged Property;
(e) is not engaged and will not engage, either directly or
indirectly, in any business other than the ownership, management, leasing
and operation of the Mortgaged Property;
(f) will not enter into any contract or agreement with any general
partner, principal, affiliate or member of Mortgagor, as applicable, or any
affiliate of any general partner, principal or member of Mortgagor, except upon
terms and conditions that are substantially
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similar to those that would be available on an arms-length basis with third
parties other than an affiliate;
(g) except as permitted by Section 1.13 of this Mortgage, has not
incurred and will not incur any debt, secured or unsecured, direct or
contingent (including guaranteeing any obligation), other than (i) the Debt, and
(ii) trade payables or accrued expenses (not exceeding five (5%) percent in the
aggregate of the original principal amount of the Note) incurred in the ordinary
course of business of owning and operating the Mortgaged Property (provided,
however, that all such sums are not evidenced by a promissory note and shall be
paid in full promptly by Mortgagor, but in no event later than sixty (60) days
of the date incurred), and except as permitted by this Mortgage, no other debt
will be secured (senior, subordinate or pari passu) by the Mortgaged Property;
(h) has not made and will not make any loans or advances to any
third party (including any affiliate) other than normal distributions and
dividends;
(i) is and will be solvent and pay its debts from its assets
(including contributions to its capital) as the same shall become due;
(j) has done or shall use commercially reasonable efforts to cause
to be done and will do all things necessary to preserve its
existence, and will observe all formalities applicable to it;
(k) will conduct and operate its business in its own name and as
presently conducted and operated;
(l) will maintain financial statements, books and records and bank
accounts separate from those of its affiliates, including, without
limitation, its general partners or members, as applicable;
(m) will be, and at all times will hold itself out to the public
as, a legal entity separate and distinct from any other entity (including,
without limitation, any affiliate, general partner, or member, as applicable, or
any affiliate of any general partner or member of Mortgagor, as applicable);
(n) will file its own tax returns, if required by law,
(o) will maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in
light of its contemplated business operations;
(p) will establish and maintain an office through which its
business will be conducted separate and apart from those of its affiliates and
shall allocate fairly and reasonably any overhead and expense for shared office
space;
(q) will not commingle the funds and other assets of Mortgagor with
those of any general partner, member, affiliate, principal or any other person
except as required or permitted by the Loan Documents;
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(r) has and will maintain its assets in such a manner that it is
not costly or difficult to segregate, ascertain or identify its individual
assets from those of any affiliate or any other person except as required or
permitted by the Loan Documents;
(s) does not and will not hold itself out to be responsible for the
debts or obligations of any other person;
(t) will pay any liabilities out of its own funds (including
contributions to its capital), including salaries of its employees, not
funds of any affiliate;
(u) will use stationery, invoices, and checks separate from its
affiliates;
(v) will not do any act which would make it impossible to carry on
the ordinary business of Mortgagor;
(w) will not possess the Mortgaged Property or incidental personal
property necessary for the operation of the Mortgaged Property for other than a
business or company purpose;
(x) will not sell, encumber or otherwise dispose of all or
substantially all of the Mortgaged Property or incidental personal property
necessary for the operation of the Mortgaged Property, except as required or
permitted by the Loan Documents;
(y) will not hold title to Mortgagor's assets other than in
Mortgagor's name; and
(z) will not, without the affirmative consent of the general
manager of the Mortgagor (including the unanimous approval of the board of
managers (including the Independent Party as such term is defined below) of the
general manager of Mortgagor), institute proceedings to be adjudicated bankrupt
or insolvent; or consent to the institution of bankruptcy or insolvency
proceedings against it; or file a petition seeking, or consent to,
reorganization or relief under any applicable federal or state law relating to
bankruptcy; or consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of the Mortgagor or a
substantial part of Mortgagor's property; or make any assignment for the benefit
of creditors; or admit in writing its inability to pay its debts generally as
they become due; or take any action in furtherance of any such action.
B. (a) Mortgagor's manager, Park Plaza 3, LLC, a Delaware limited
liability company (the "SPC Entity") shall be a limited liability company and
the SPC Entity will at all times comply, and will cause Mortgagor to comply,
with each of the representations, warranties, and covenants contained in this
Paragraph 1.33 as if such representation, warranty or covenant was made directly
by the SPC Entity;
(b) SPC Entity shall at all times cause there to be at least one
(1) duly appointed member of the board of managers of the SPC Entity who is
reasonably satisfactory to Mortgagee (an "Independent Party") who shall not have
been at the time of such individual's appointment, and may not have been at any
time during the preceding five years (i) a shareholder of, or an officer,
director, attorney, counsel, partner or employee of, Mortgagor or any of its
shareholders, subsidiaries or affiliates, (ii) a customer of, or supplier to,
Mortgagor or any of its shareholders,
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subsidiaries or affiliates, (iii) a person or other entity controlling or under
common control with any such shareholder, partner, supplier or customer of
Mortgagor or any of its shareholders, subsidiaries or affiliates, or (iv) a
member of the immediate family of any such shareholder, officer, director,
partner, employee, supplier or customer of any other director of Mortgagor. As
used herein, the term "control" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
person or entity, whether through ownership of voting securities, by contract or
otherwise;
(c) Mortgagor shall not cause or permit the board of managers of
the SPC Entity to take any action which, under the terms of its certificate of
formation, operating agreement or any voting trust agreement with respect to any
membership rights of the SPC Entity, requires a vote of the board of managers or
member(s) (as the case may be) of the SPC Entity, unless, at the time of such
action, there shall be at least one Independent Party; and
(d) Mortgagor shall conduct its business and shall cause each
Covered Party (as hereinafter defined) to conduct its business so that the
assumptions made with respect to each party (each a "Covered Party") addressed
in that certain opinion letter dated the date hereof (the "Insolvency Opinion")
delivered by Arter & Hadden, LLP in connection with the loan secured hereby
shall be true and correct in all respects.
1.34. REPAIR AND REMEDIATION RESERVE. Prior to the execution of this
Mortgage, Mortgagee has caused the Mortgaged Property to be inspected and such
inspection has revealed that the Mortgaged Property is in need of certain
maintenance, repairs and/or remedial or corrective work. Contemporaneously with
the execution hereof, Mortgagor has established with the Mortgagee a reserve in
the amount of $36,775.00 (the "Repair and Remediation Reserve") by depositing
such amount with Mortgagee. Mortgagor shall cause each of the items described in
Exhibit C attached hereto and made a part hereof and as more particularly
described in that certain Engineering Report (the "Engineering Report") entitled
Property Condition Report, dated March 21, 2000 and prepared by Inspection &
Valuation International (the "Deferred Maintenance") to be completed, performed,
remediated and corrected to the reasonable satisfaction of Mortgagee and as
necessary to bring the Mortgaged Property into compliance with all applicable
laws, ordinances, rules and regulations on or before the expiration of six (6)
months after the effective date hereof, as such time period may be extended by
Mortgagee in its sole discretion. So long as no Event of Default has occurred,
all sums in the Repair and Remediation Reserve shall be held by Mortgagee in the
Repair and Remediation Reserve to pay the costs and expenses of completing the
Deferred Maintenance. So long as no Event of Default has occurred, Mortgagee
shall, to the extent funds are available for such purpose in the Repair and
Remediation Reserve, disburse to Mortgagor the amount paid and incurred by
Mortgagor in completing, performing, remediating or correcting the Deferred
Maintenance upon (a) the receipt by Mortgagee of a written request from
Mortgagor for disbursement from the Repair and Remediation Reserve and a
certification by Mortgagor in the form annexed hereto as Exhibit B, (b) delivery
to Mortgagee of paid invoices, receipts or other evidence reasonably
satisfactory to Mortgagee verifying the costs of the Deferred Maintenance to be
reimbursed, (c) delivery to Mortgagee of a certification from an inspecting
architect, engineer or other consultant reasonably acceptable to Mortgagee
describing the completed work, verifying the completion of the work and the
value of the completed work and, if applicable, certifying that the Mortgaged
Property is, as a result of such work, in compliance with all applicable laws,
ordinances, rules and regulations
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relating to the Deferred Maintenance so performed, (d) delivery to Mortgagee of
affidavits, lien waivers or other evidence reasonably satisfactory to Mortgagee
showing that all materialmen, laborers, subcontractors and any other parties
furnishing or have furnished materials or labor to the Mortgaged Property have
been paid all amounts due for such labor and materials furnished to the
Mortgaged Property, and (e) the receipt by Mortgagee of an administrative fee in
the amount of $150.00. Mortgagee shall not be required to make advances from the
Repair and Remediation Reserve more frequently than once in any ninety (90) day
period. In making any payment from the Repair and Remediation Reserve, Mortgagee
shall be entitled to rely on such request from Mortgagor without any inquiry
into the accuracy, validity or contestability of any such amount. No interest on
the funds contained in the Repair and Remediation Reserve shall be paid by
Mortgagee to Mortgagor. Mortgagor hereby grants to Mortgagee a
power-of-attorney, coupled with an interest, to cause the Deferred Maintenance
to be completed, performed, remediated and corrected to the reasonable
satisfaction of Mortgagee upon Mortgagor's failure to do so in accordance with
the terms and conditions of this Section 1.34, and to apply the amounts on
deposit in the Repair and Remediation Reserve to the costs associated therewith,
all as Mortgagee may reasonably determine but without obligation to do so.
1.35. CASH MANAGEMENT AGREEMENT. On or before the date hereof
Mortgagor covenants and agrees to enter into one or more servicing account
agreements, lockbox servicing agreements and/or cash management agreements
acceptable to Mortgagee between Mortgagor, the manager of the Mortgaged
Property, Mortgagee and, as applicable, one or more certain financial
institutions (together with any modification, amendment, substitution or
replacement thereof, hereinafter collectively referred to as the "CASH
MANAGEMENT AGREEMENT"). During any Sweep Period (as defined in the Cash
Management Agreement), all Rents and Profits shall be applied as set forth in
the Cash Management Agreement and the escrows and reserves required hereunder
shall be funded as provided therein. Mortgagor shall pay all costs and expenses
of the servicer and any bank as required under the Cash Management Agreement.
Upon the occurrence of an Event of Default, Mortgagee may apply any sums then
held pursuant to the Cash Management Agreement to the payment of the Debt in any
order in its sole discretion. Until expended or applied, amounts held pursuant
to the Cash Management Agreement shall constitute additional security for the
Debt.
1.36. LEASING RESERVE. Contemporaneously herewith Mortgagor is
depositing $300,000.00 to be held in escrow as additional security for the
indebtedness secured hereby and to be used for tenant improvements and up-front
leasing commissions ("Leasing Costs") to retain or replace the former tenant at
the Property known as United Artists (the "Leasing Reserve"). So long as no
Event of Default has occurred, sums in the Leasing Reserve shall be held by
Mortgagee to pay Leasing Costs upon Mortgagee's receipt of a lease for the
entire United Artists' space from a tenant (or multiple tenants acceptable to
Mortgagee under leases acceptable to Mortgagee) acceptable to Mortgagee in form
and substance satisfactory to Mortgagee, containing terms, including financial
terms and other conditions acceptable to Mortgagee. Additionally, so long as no
Event of Default has occurred, Mortgagee shall, to the extent funds are
available for such purpose in the Leasing Reserve, disburse to Mortgagor the
amount paid by Mortgagor in performing such Leasing Costs following: (a) the
receipt by Mortgagee of a written request from Mortgagor for disbursement from
the Leasing Reserve and a certification by Mortgagor that (i) for Leasing Costs
consisting of commissions payable to brokers not affiliated with Mortgagor and
at a rate not greater than the then-current market rate, such leasing
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commission has been paid by Mortgagor, and (ii) for Leasing Costs consisting of
amounts required to be expended pursuant to the relevant Lease for tenant
improvement or related costs, said Leasing Costs have been paid and the tenant
under such Lease has taken possession of its demised premises and begun to pay
rent under its Lease, (b) the delivery to Mortgagee of invoices, receipts or
other evidence satisfactory to Mortgagee verifying the cost of such Leasing
Costs; (c) for disbursement requests in excess of $10,000.00, the delivery to
Mortgagee of affidavits, lien waivers or other evidence reasonably satisfactory
to Mortgagee showing that all materialmen, laborers, subcontractors and any
other parties who might or could claim statutory or common law liens and are
furnishing or have furnished material or labor to the property have been paid
(or will be paid out of such disbursement) all amounts due for labor and
materials furnished to the Property; (d) for disbursement requests in excess of
$10,000.00 (other than with respect to leasing commissions), delivery to
Mortgagee of a certification from an inspecting architect or other third party
acceptable to Mortgagee describing the completed tenant improvement or other
work, and verifying the completion and the value thereof; (e) for disbursement
requests in excess of $10,000.00 (other than with respect to leasing
commissions), delivery to Mortgagee of a new certificate of occupancy for the
portion of the Improvements covered by such Lease, if said new certificate of
occupancy was required by law, or a certification by Mortgagor that no new
certificate of occupancy was required and (f) the receipt by Mortgagee of an
administrative fee in the amount of $150.00. Mortgagee shall also pay such
servicing fees related to the Leasing Reserve as are normally and customarily
charged by the servicer of the Loan for administrating similar leasing reserves.
Notwithstanding the foregoing, at Mortgagor's request, with respect to
disbursement requests in excess of $10,000, Mortgagee will make disbursements
from the Leasing Reserve based upon an invoice and without requiring Mortgagor
to have previously paid such invoice so long as such disbursements are made by
virtue of a joint check in favor of Mortgagor and the applicable vendor or
contractor. In making any payment from the Leasing Reserve, Mortgagee shall be
entitled to rely on such request from Mortgagor without any inquiry into the
accuracy, validity or contestability of any such amount. The Leasing Reserve
shall not, unless otherwise explicitly required by applicable law, be or be
deemed to be escrow or trust funds, but, at Mortgagee's option and in
Mortgagee's discretion, may either be held in a separate account or be
commingled by Mortgagee with the general funds of Mortgagee. No interest on the
funds contained in the Leasing Reserve shall be paid by Mortgagee to Mortgagor.
The Leasing Reserve is solely for the protection of Mortgagee and entails no
responsibility on Mortgagee's part beyond the payment of the costs and expenses
described in this paragraph in accordance with the terms hereof and beyond the
allowing of due credit for the sums actually received. In the event that the
amounts on deposit or available in the Leasing Reserve are inadequate to pay
Leasing Costs in connection with any Lease, Mortgagor shall pay the amount of
such deficiency.
1.37. COVENANTS WITH RESPECT TO REA
(a) Mortgagor shall:
(i) promptly perform and/or observe all of the material
covenants and agreements required to be performed and observed by Mortgagor
under the REA, and do all things necessary to preserve and to keep unimpaired
its material rights thereunder;
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(ii) promptly notify Mortgagee of any default under the
REA of which it is aware;
(iii) promptly enforce the performance and observance of
all of the material covenants and agreements required to be performed and/or
observed by the other parties to the REA.
(b) Mortgagor shall not, without Mortgagee's prior consent:
(i) surrender, terminate or cancel the REA;
(ii) reduce or consent to the reduction of the term of
the REA;
(iii) increase or consent to the increase of the amount
of any charges payable by Mortgagor to another party to the REA pursuant to the
provisions thereof; or
(iv) otherwise modify, change, supplement, alter or
amend, or waive or release any of its rights and remedies under, the REA in any
material respect.
(c) Notwithstanding anything to the contrary, the
approval procedures for the Leases that are set forth in Section 1.12(a) hereof
shall apply to the submission and approval of all amendments, modifications and
terminations of REA for which Mortgagee's consent or approval is required under
the Loan Documents.
ARTICLE II
EVENTS OF DEFAULT
2.1. EVENTS OF DEFAULT. The occurrence of any of the following
events shall be an Event of Default hereunder:
(a) Mortgagor fails to pay any money to Mortgagee required
hereunder at the time or within any applicable grace period set forth herein, or
if no grace period is set forth herein, then within seven (7) days of the date
such payment is due (except those regarding payments to be made under the Note,
which failure is subject to any grace periods set forth in the Note).
(b) Mortgagor fails to provide insurance as required by Section 1.4
hereof or fails to perform any covenant, agreement, obligation, term or
condition set forth in Sections 1.5, 1.15, 1.31, 1.33 or 1.34 hereof.
(c) Mortgagor fails to perform any other covenant, agreement,
obligation, term or condition set forth herein, other than those otherwise
described in this Section 2.1, and, to the extent such failure or default is
susceptible of being cured, the continuance of such failure or default for
thirty (30) days after written notice thereof from Mortgagee to Mortgagor;
provided, however, that if such default is susceptible of cure but such cure
cannot be accomplished with reasonable diligence within said period of time, and
if Mortgagor commences to cure such default promptly after receipt of notice
thereof from Mortgagee, and thereafter prosecutes the curing of such default
with reasonable diligence, such period of time shall be
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extended for such period of time as may be necessary to cure such default with
reasonable diligence, but not to exceed an additional ninety (90) days.
(d) Any representation or warranty made herein, in or in connection
with any application or commitment relating to the loan evidenced by the Note,
or in any of the other Loan Documents to Mortgagee by Mortgagor, by any
principal, general partner, manager or member in Mortgagor, or by any Indemnitor
is determined by Mortgagee to have been false or misleading in any material
respect at the time made.
(e) There shall be a sale, conveyance, disposition, alienation,
hypothecation, leasing, assignment, pledge, mortgage, granting of a security
interest in or other transfer or further encumbrancing of the Mortgaged
Property, Mortgagor or its general partners or managing members, or any portion
thereof or any interest therein, in violation of Section 1.13 hereof.
(f) A default occurs under any of the other Loan Documents which
has not been cured within any applicable grace or cure period therein provided.
(g) Mortgagor, any principal, general partner, managing member or
non-member manager in Mortgagor or any Indemnitor becomes insolvent, or makes a
transfer in fraud of creditors, or makes an assignment for the benefit of
creditors, or files a petition in bankruptcy, or is voluntarily adjudicated
insolvent or bankrupt or admits in writing the inability to pay its debts as
they mature, or petitions or applies to any tribunal for or consents to or fails
to contest the appointment of a receiver, trustee, custodian or similar officer
for Mortgagor, for any such principal, general partner, managing member or
non-member manager of Mortgagor or for any Indemnitor or for a substantial part
of the assets of Mortgagor, of any such principal, general partner, managing
member or non-member manager of Mortgagor or of any Indemnitor, or commences any
case, proceeding or other action under any bankruptcy, reorganization,
arrangement, readjustment or debt, dissolution or liquidation law or statute of
any jurisdiction, whether now or hereafter in effect.
(h) A petition is filed or any case, proceeding or other action is
commenced against Mortgagor, against any principal, general partner, managing
member or non-member manager of Mortgagor or against any Indemnitor seeking to
have an order for relief entered against it as debtor or seeking reorganization,
arrangement, adjustment, liquidation, dissolution or composition of it or its
debts or other relief under any law relating to bankruptcy, insolvency,
arrangement, reorganization, receivership or other debtor relief under any law
or statute of any jurisdiction, whether now or hereafter in effect, or a court
of competent jurisdiction enters an order for relief against Mortgagor, against
any principal, general partner, managing member or non-member manager of
Mortgagor or against any Indemnitor, as debtor, or an order, judgment or decree
is entered appointing, with or without the consent of Mortgagor or of any
Indemnitor, a receiver, trustee, custodian or similar officer for Mortgagor, for
any such principal, general partner, managing member or non-member manager of
Mortgagor or for any Indemnitor, or for any substantial part of any of the
properties of Mortgagor, of any such principal, general partner, managing member
or non-member manager of Mortgagor or of any Indemnitor, and if any such event
shall occur, such petition, case, proceeding, action, order, judgment or decree
is not dismissed within ninety (90) days after being commenced.
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(i) The Mortgaged Property or any part material thereof is taken on
execution or other process of law in any action against Mortgagor.
(j) Mortgagor abandons all or a material portion of the Mortgaged
Property except as expressly permitted hereby.
(k) The holder of any lien or security interest on the Mortgaged
Property (without implying the consent of Mortgagee to the existence or creation
of any such lien or security interest), whether superior or subordinate to this
Mortgage or any of the other Loan Documents, declares a default and such default
is not cured within any applicable grace or cure period set forth in the
applicable document or such holder institutes foreclosure or other proceedings
for the enforcement of its remedies thereunder.
(l) The Mortgaged Property, or any part thereof, is subjected to
waste or to removal, demolition or material alteration (except as expressly
permitted hereby) so that the value of the Mortgaged Property is materially
diminished thereby and Mortgagee reasonably determines that it is not adequately
protected from any loss, damage or risk associated therewith.
(m) Any dissolution, termination, partial or complete liquidation,
merger or consolidation of Mortgagor, any of its principals, any general partner
or any managing member, or any Indemnitor except as expressly permitted by
Section 1.13 hereof.
(n) SPC Entity fails to perform any covenant, agreement,
obligation, term or condition of Section 1.33.
(o) If a default has occurred and continues beyond any applicable
cure period under the REA, but only if such default
permits any other party to the REA to terminate or cancel the REA;
ARTICLE III
REMEDIES
3.1. REMEDIES AVAILABLE. If there shall occur an Event of Default
under this Mortgage, then this Mortgage is subject to foreclosure as provided by
law and Mortgagee may, at its option and by or through a trustee, nominee,
assignee or otherwise, to the fullest extent permitted by law, exercise any or
all of the following rights, remedies and recourses, either successively or
concurrently:
(a) Acceleration. Accelerate the maturity date of the Note and
declare any or all of the Debt to be immediately due and payable without any
presentment, demand, protest, notice or action of any kind whatever (each of
which is hereby expressly waived by Mortgagor), whereupon the same shall become
immediately due and payable. Upon any such acceleration, payment of such
accelerated amount shall constitute a prepayment of the principal balance of the
Note and any applicable prepayment fee provided for in the Note shall then be
immediately due and payable.
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(b) Entry on the Mortgaged Property. Either in person or by agent,
with or without bringing any action or proceeding, or by a receiver appointed by
a court and without regard to the adequacy of its security, enter upon and take
possession of the Mortgaged Property, or any part thereof, without force or with
such force as is permitted by law and without notice or process or with such
notice or process as is required by law, unless such notice and process is
waivable, in which case Mortgagor hereby waives such notice and process, and do
any and all acts and perform any and all work which may be desirable or
necessary in Mortgagee's judgment to complete any unfinished construction on the
Premises, to preserve the value, marketability or rentability of the Mortgaged
Property, to increase the income therefrom, to manage and operate the Mortgaged
Property or to protect the security hereof, and all sums expended by Mortgagee
therefor, together with interest thereon at the Default Interest Rate, shall be
immediately due and payable to Mortgagee by Mortgagor on demand and shall be
secured hereby and by all of the other Loan Documents securing all or any part
of the Debt.
(c) Collect Rents. With or without taking possession of the
Mortgaged Property, sue or otherwise collect the Rents, including those past due
and unpaid.
(d) Appointment of Receiver. Upon, or at any time prior or after,
initiating the exercise of any power of sale, instituting any judicial
foreclosure or instituting any other foreclosure of the liens and security
interests provided for herein or any other legal proceedings hereunder, make
application to a court of competent jurisdiction for appointment of a receiver
for all or any part of the Mortgaged Property, as a matter of strict right and
without notice to Mortgagor and without regard to the adequacy of the Mortgaged
Property for the repayment of the Debt or the solvency of Mortgagor or any
person or persons liable for the payment of the Debt, and Mortgagor does hereby
irrevocably consent to such appointment, waive any and all notices of and
defenses to such appointment and agree not to oppose any application therefor by
Mortgagee, but nothing herein is to be construed to deprive Mortgagee of any
other right, remedy or privilege Mortgagee may now have under the law to have a
receiver appointed, provided, however, that the appointment of such receiver,
trustee or other appointee by virtue of any court order, statute or regulation
shall not impair or in any manner prejudice the rights of Mortgagee to receive
payment of the Rents pursuant to other terms and provisions hereof. Any such
receiver shall have all of the usual powers and duties of receivers in similar
cases, including, without limitation, the full power to hold, develop, rent,
lease, manage, maintain, operate and otherwise use or permit the use of the
Mortgaged Property upon such terms and conditions as said receiver may deem to
be prudent and reasonable under the circumstances as more fully set forth in
Section 3.3 below. Such receivership shall, at the option of Mortgagee, continue
until full payment of all of the Debt or until title to the Mortgaged Property
shall have passed by foreclosure sale under this Mortgage or deed in lieu of
foreclosure.
(e) Foreclosure. Immediately commence an action to foreclose this
Mortgage or to specifically enforce its provisions with respect to any of the
Debt, pursuant to the statutes in such case made and provided, and sell the
Mortgaged Property or cause the Mortgaged Property to be sold in accordance with
the requirements and procedures provided by said statutes in a single parcel or
in several parcels at the option of Mortgagee. In the event foreclosure
proceedings are instituted by Mortgagee, all expenses incident to such
proceedings, including, but not limited to, reasonable attorneys' fees and
costs, shall be paid by Mortgagor and secured by this Mortgage and by all of the
other Loan Documents securing all or any part of the Debt.
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The Debt and all other obligations secured by this Mortgage, including, without
limitation, interest at the Default Interest Rate, any prepayment charge, fee or
premium required to be paid under the Note in order to prepay principal (to the
extent permitted by applicable law), reasonable attorneys' fees and any other
amounts due and unpaid to Mortgagee under the Loan Documents, may be bid by
Mortgagee in the event of a foreclosure sale hereunder. In the event of a
judicial sale pursuant to a foreclosure decree, it is understood and agreed that
Mortgagee or its assigns may become the purchaser of the Mortgaged Property or
any part thereof.
(f) Judicial Remedies. Proceed by suit or suits, at law or in
equity, instituted by or on behalf of Mortgagee, to enforce the payment of the
Debt or the other obligations of Mortgagor hereunder or pursuant to the Loan
Documents, to foreclose the liens and security interests of this Mortgage as
against all or any part of the Mortgaged Property, and to have all or any part
of the Mortgaged Property sold under the judgment or decree of a court of
competent jurisdiction. This remedy shall be cumulative of any other
non-judicial remedies available to Mortgagee with respect to the Loan Documents.
Proceeding with the request or receiving a judgment for legal relief shall not
be or be deemed to be an election of remedies or bar any available non-judicial
remedy of Mortgagee.
(g) Other. Exercise any other right or remedy available hereunder,
under any of the other Loan Documents or at law or in equity.
3.2. APPLICATION OF PROCEEDS. To the fullest extent permitted by
law, the proceeds of any sale under this Mortgage shall be applied, to the
extent funds are so available, to the following items in such order as Mortgagee
in its discretion may determine:
(a) To payment of the reasonable costs, expenses and fees of taking
possession of the Mortgaged Property, and of holding, operating, maintaining,
using, leasing, repairing, improving, marketing and selling the same and of
otherwise enforcing Mortgagee's rights and remedies hereunder and under the
other Loan Documents, including, but not limited to, receivers' fees, court
costs, attorneys', accountants', appraisers', managers' and other professional
fees, title charges and transfer taxes.
(b) To payment of all sums expended by Mortgagee under the terms of
any of the Loan Documents and not yet repaid, together with interest on such
sums at the Default Interest Rate.
(c) To payment of the Debt and all other obligations secured by
this Mortgage, including, without limitation, interest at the Default Interest
Rate and, to the extent permitted by applicable law, any prepayment fee, charge
or premium required to be paid under the Note in order to prepay principal, in
any order that Mortgagee chooses in its sole discretion.
(d) The remainder, if any, of such funds shall be disbursed to
Mortgagor or to the person or persons legally entitled thereto.
3.3. RIGHT AND AUTHORITY OF RECEIVER OR MORTGAGEE IN THE EVENT OF
DEFAULT; POWER OF ATTORNEY. Upon the occurrence of an Event of Default, and
entry upon the Mortgaged Property pursuant to Section 3.1(b) hereof or
appointment of a receiver pursuant to Section 3.1(d) hereof, and under such
terms and conditions as may be prudent and reasonable under the
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circumstances in Mortgagee's or the receiver's sole discretion, all at
Mortgagor's expense, Mortgagee or said receiver, or such other persons or
entities as they shall hire, direct or engage, as the case may be, may do or
permit one or more of the following, successively or concurrently: (a) enter
upon and take possession and control of any and all of the Mortgaged Property;
(b) take and maintain possession of all documents, books, records, papers and
accounts relating to the Mortgaged Property; (c) exclude Mortgagor and its
agents, servants and employees wholly from the Mortgaged Property; (d) manage
and operate the Mortgaged Property; (e) preserve and maintain the Mortgaged
Property; (f) make repairs and alterations to the Mortgaged Property; (g)
complete any construction or repair of the Improvements, with such changes,
additions or modifications of the plans and specifications or intended
disposition and use of the Improvements as Mortgagee may in its sole discretion
deem appropriate or desirable to place the Mortgaged Property in such condition
as will, in Mortgagee's sole discretion, make it or any part thereof readily
marketable or rentable; (h) conduct a marketing or leasing program with respect
to the Mortgaged Property, or employ a marketing or leasing agent or agents to
do so, directed to the leasing or sale of the Mortgaged Property under such
terms and conditions as Mortgagee may in its sole discretion deem appropriate or
desirable; (i) employ such contractors, subcontractors, materialmen, architects,
engineers, consultants, managers, brokers, marketing agents, or other employees,
agents, independent contractors or professionals, as Mortgagee may in its sole
discretion deem appropriate or desirable to implement and effectuate the rights
and powers herein granted; (j) execute and deliver, in the name of Mortgagee as
attorney-in-fact and agent of Mortgagor or in its own name as Mortgagee, such
documents and instruments as are necessary or appropriate to consummate
authorized transactions; (k) enter into such leases, whether of real or personal
property, or tenancy agreements, under such terms and conditions as Mortgagee
may in its sole discretion deem appropriate or desirable; (1) collect and
receive the Rents from the Mortgaged Property; (m) eject tenants or repossess
personal property, as provided by law, for breaches of the conditions of their
leases or other agreements; (n) sue for unpaid Rents, payments, income or
proceeds in the name of Mortgagor or Mortgagee; (o) maintain actions in forcible
entry and detainer, ejectment for possession and actions in distress for rent;
(p) compromise or give acquittance for Rents, payments, income or proceeds that
may become due; (q) delegate or assign any and all rights and powers given to
Mortgagee by this Mortgage; and (r) do any acts which Mortgagee in its sole
discretion deems appropriate or desirable to protect the security hereof and use
such measures, legal or equitable, as Mortgagee may in its sole discretion deem
appropriate or desirable to implement and effectuate the provisions of this
Mortgage. This Mortgage shall constitute a direction to and full authority to
any lessee, or other third party who has heretofore dealt or contracted or may
hereafter deal or contract with Mortgagor or Mortgagee, at the request of
Mortgagee, to pay all amounts owing under any lease, contract, concession,
license or other agreement to Mortgagee without proof of the Event of Default
relied upon. Any such lessee or third party is hereby irrevocably authorized to
rely upon and comply with (and shall be fully protected by Mortgagor in so
doing) any request, notice or demand by Mortgagee for the payment to Mortgagee
of any Rents or other sums which may be or thereafter become due under its
lease, contract, concession, license or other agreement, or for the performance
of any undertakings under any such lease, contract, concession, license or other
agreement, and shall have no right or duty to inquire whether any Event of
Default under this Mortgage or under any of the other Loan Documents has
actually occurred or is then existing. Mortgagor hereby constitutes and appoints
Mortgagee, its assignees, successors, transferees and nominees, as Mortgagor's
true and lawful attorney-in-fact and agent, with full power of
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substitution in the Mortgaged Property, in Mortgagor's name, place and stead, to
do or permit any one or more of the foregoing described rights, remedies, powers
and authorities, successively or concurrently, and said power of attorney shall
be deemed a power coupled with an interest and irrevocable so long as any
portion of the Debt is outstanding. Any money advanced by Mortgagee in
connection with any action taken under this Section 3.3, together with interest
thereon at the Default Interest Rate from the date of making such advancement by
Mortgagee until actually paid by Mortgagor, shall be a demand obligation owing
by Mortgagor to Mortgagee and shall be secured by this Mortgage and by every
other instrument securing all or any portion of the Debt.
3.4. OCCUPANCY AFTER FORECLOSURE. In the event there is a
foreclosure sale hereunder and at the time of such sale, Mortgagor or
Mortgagor's representatives, successors or assigns, or any other persons
claiming any interest in the Mortgaged Property by, through or under Mortgagor
(except tenants of space in the Improvements subject to leases entered into
prior to the date hereof or otherwise having a legal right to do so (i.e. SNDA))
are occupying or using the Mortgaged Property, or any part thereof, then, to the
extent not prohibited by applicable law, each and all shall, at the option of
Mortgagee or the purchaser at such sale, as the case may be, immediately become
the tenant of the purchaser at such sale, which tenancy shall be a tenancy from
day-to-day, terminable at the will of either landlord or tenant, at a reasonable
rental per day based upon the value of the Mortgaged Property occupied or used,
such rental to be due daily to the purchaser. Further, to the extent permitted
by applicable law, in the event the tenant fails to surrender possession of the
Mortgaged Property upon the termination of such tenancy, the purchaser shall be
entitled to institute and maintain an action for unlawful detainer of the
Mortgaged Property in the appropriate court of the county in which the Premises
is located.
3.5. NOTICE TO ACCOUNT DEBTORS. Mortgagee may, at any time after an
Event of Default, notify the account debtors and obligors of any accounts,
chattel paper, negotiable instruments or other evidences of indebtedness due or
payable to Mortgagor included as part of the Mortgaged Property to pay Mortgagee
directly. Mortgagor shall at any time or from time to time upon the request of
Mortgagee provide to Mortgagee a current list of all such account debtors and
obligors and their addresses.
3.6. CUMULATIVE REMEDIES. All remedies contained in this Mortgage
are cumulative and Mortgagee shall also have all other remedies provided at law
and in equity or in any other Loan Documents. Such remedies may be pursued
separately, successively or concurrently at the sole subjective direction of
Mortgagee and may be exercised in any order and as often as occasion therefor
shall arise. No act of Mortgagee shall be construed as an election to proceed
under any particular provisions of this Mortgage to the exclusion of any other
provision of this Mortgage or as an election of remedies to the exclusion of any
other remedy which may then or thereafter be available to Mortgagee. No delay or
failure by Mortgagee to exercise any right or remedy under this Mortgage shall
be construed to be a waiver of that right or remedy or of any Event of Default.
Mortgagee may exercise any one or more of its rights and remedies at its option
without regard to the adequacy of its security.
3.7. PAYMENT OF EXPENSES. Mortgagor shall pay on demand all of
Mortgagee's expenses incurred in any efforts to enforce any terms of this
Mortgage, subject to the provisions below, whether or not any lawsuit is filed
and whether or not foreclosure is commenced but not
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completed, including, but not limited to, reasonable legal fees and
disbursements, foreclosure costs and title charges, together with interest
thereon from and after the date incurred by Mortgagee until actually paid by
Mortgagor at the Default Interest Rate, and the same shall be secured by this
Mortgage and by all of the other Loan Documents securing all or any part of the
Debt provided, however, if any litigation is commenced between the parties
hereto or their representatives, or if any party hereto institutes any
proceeding in any bankruptcy or similar court which has jurisdiction over such
party (or any or all of its property or assets) concerning any provision of this
Agreement or other rights or duties of such party in relation thereto, the party
prevailing in such litigation (or the non-bankrupt party, as the case may be)
shall be entitled, in addition to such other and further relief as may be
granted, to all costs incurred in enforcing its rights and remedies under this
Agreement, including but not limited to reasonable attorneys' fees,
out-of-pocket costs and expenses, and court costs in such litigation in an
amount determined by the court in such litigation, or in separate action brought
for the purpose of recovery of same.
ARTICLE IV
MISCELLANEOUS TERMS AND CONDITIONS
4.1. TIME OF ESSENCE. Time of performance is of the essence with
respect to all provisions of this Mortgage.
4.2. RELEASE OF MORTGAGE. If all of the Debt be paid, then and in
that event only, all rights under this Mortgage and the other Loan Documents,
except for those provisions hereof which by their terms survive, shall terminate
and the Mortgaged Property shall become wholly clear of the liens, security
interests, conveyances and assignments evidenced hereby, which shall be promptly
released of record by Mortgagee in due form at Mortgagor's cost. No release of
this Mortgage or the lien hereof shall be valid unless executed by Mortgagee.
4.3. CERTAIN RIGHTS OF MORTGAGEE. Without affecting Mortgagor's
liability for the payment of any of the Debt, Mortgagee may from time to time
and without notice to Mortgagor: (a) release any person liable for the payment
of the Debt; (b) extend or modify the terms of payment of the Debt; (c) accept
additional real or personal property of any kind as security or alter,
substitute or release any property securing the Debt; (d) recover any part of
the Mortgaged Property; (e) consent in writing to the making of any subdivision
map or plat thereof; (f) join in granting any easement therein; or (g) join in
any extension agreement of this Mortgage or any agreement subordinating the lien
hereof.
4.4. WAIVER OF CERTAIN DEFENSES. No action for the enforcement of
the lien hereof or of any provision hereof shall be subject to any defense which
would not be good and available to the party interposing the same in an action
at law upon the Note or any of the other Loan Documents.
4.5. NOTICES. All notices, demands, requests or other communications
to be sent by one party to the other hereunder or required by law shall be in
writing and shall be deemed to have been validly given or served by delivery of
the same in person to the intended addressee, or by depositing the same with
Federal Express or another reputable private courier service that obtains a
receipt upon delivery for next business day delivery, or by depositing the same
in the
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United States mail, postage prepaid, registered or certified mail, return
receipt requested, in any event addressed to the intended addressee to Mortgagor
at its address set forth on the first page of this Mortgage, to Mortgagee at
First Union National Bank, One First Union Center, DC 6, 301 South College
Street, Charlotte, North Carolina 28288-0166, Attn: Craig Lieberman, Real Estate
Capital Markets Contract Finance, or at such other address as may be designated
by either party as herein provided. All notices, demands and requests shall be
effective upon such personal delivery, or one (1) business day after being
deposited with the private courier service, or three (3) business days after
being deposited in the United States mail as required above. Rejection or other
refusal to accept or the inability to deliver because of changed address of
which no notice was given as herein provided shall be deemed to be receipt of
the notice, demand or request sent. By giving to the other party hereto at least
fifteen (15) days' prior written notice thereof in accordance with the
provisions hereof, the parties hereto shall have the right from time to time to
change their respective addresses and each shall have the right to specify as
its address any other or additional address within the United States of America.
4.6. SUCCESSORS AND ASSIGNS: JOINT AND SEVERAL LIABILITY. The terms,
provisions, indemnities, covenants and conditions hereof shall be binding upon
and shall inure to the benefit of Mortgagor and the successors and assigns of
Mortgagor, including all successors in interest of Mortgagor in and to all or
any part of the Property, Mortgagee, its directors, officers, shareholders,
employees and agents and their respective successors and assigns and shall
constitute covenants running with the land. All references in this Mortgage to
Mortgagor or Mortgagee shall be deemed to include all such parties' successors
and assigns, and the term "Mortgagee" as used herein shall also mean and refer
to any lawful holder or owner, including pledgees and participants, of any of
the indebtedness secured hereby. If Mortgagor or Mortgagee consists of more than
one person or entity, each will be jointly and severally liable to perform the
obligations of Mortgagor.
4.7. SEVERABILITY. A determination that any provision of this
Mortgage is unenforceable or invalid shall not affect the enforceability or
validity of any other provision, and any determination that the application of
any provision of this Mortgage to any person or circumstance is illegal or
unenforceable shall not affect the enforceability or validity of such provision
as it may apply to any other persons or circumstances.
4.8. GENDER. Within this Mortgage, words of any gender shall be held
and construed to include any other gender, and words in the singular shall be
held and construed to include the plural, and vice versa, unless the context
otherwise requires.
4.9. WAIVER: DISCONTINUANCE OF PROCEEDINGS. Mortgagee may waive any
single Event of Default by Mortgagor hereunder without waiving any other prior
or subsequent Event of Default. Mortgagee may remedy any Event of Default by
Mortgagor hereunder without waiving the Event of Default remedied. Neither the
failure by Mortgagee to exercise, nor the delay by Mortgagee in exercising, any
right, power or remedy upon any Event of Default by Mortgagor hereunder shall be
construed as a waiver of such Event of Default or as a waiver of the right to
exercise any such right, power or remedy at a later date. No single or partial
exercise by Mortgagee of any right, power or remedy hereunder shall exhaust the
same or shall preclude any other or further exercise thereof, and every such
right, power or remedy hereunder may be exercised at any time and from time to
time. No modification or waiver of any provision hereof
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nor consent to any departure by Mortgagor therefrom shall in any event be
effective unless the same shall be in writing and signed by Mortgagee, and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose given. No notice to or demand on Mortgagor in any case
shall of itself entitle Mortgagor to any other or further notice or demand in
similar or other circumstances. Acceptance by Mortgagee of any payment in an
amount less than the amount then due on any of the Debt shall be deemed an
acceptance on account only and shall not in any way affect the existence of an
Event of Default. In case Mortgagee shall have proceeded to invoke any right,
remedy or recourse permitted hereunder or under the other Loan Documents and
shall thereafter elect to discontinue or abandon the same for any reason prior
to completion thereof, Mortgagee shall have the unqualified right to do so and,
in such an event, Mortgagor and Mortgagee shall be restored to their former
positions with respect to the Debt, the Loan Documents, the Mortgaged Property
and otherwise, and the rights, remedies, recourses and powers of Mortgagee shall
continue as if the same had never been invoked.
4.10. SECTION HEADINGS. The headings of the sections and paragraphs
of this Mortgage are for convenience of reference only, are not to be considered
a part hereof and shall not limit or otherwise affect any of the terms hereof.
4.11. GOVERNING LAW. THIS MORTGAGE WILL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, PROVIDED THAT TO
THE EXTENT THAT ANY OF SUCH LAWS MAY NOW OR HEREAFTER BE PREEMPTED BY FEDERAL
LAW, SUCH FEDERAL LAW SHALL SO GOVERN AND BE CONTROLLING, AND PROVIDED FURTHER
THAT THE LAWS OF THE STATE IN WHICH THE PREMISES IS LOCATED SHALL GOVERN AS TO
THE CREATION, PRIORITY AND ENFORCEMENT OF LIENS AND SECURITY INTERESTS IN THE
MORTGAGED PROPERTY LOCATED IN SUCH STATE.
4.12. COUNTING OF DAYS. The term "days" when used herein shall mean
calendar days. If any time period ends on a Saturday, Sunday or holiday
officially recognized by the state within which the Premises is located, the
period shall be deemed to end on the next succeeding business day. The term
"business day" when used herein shall mean a weekday, Monday through Friday,
except a legal holiday or a day on which banking institutions in New York, New
York are authorized by law to be closed.
4.13. RELATIONSHIP OF THE PARTIES. The relationship between
Mortgagor and Mortgagee is that of a borrower and a lender only and neither of
those parties is, nor shall it hold itself out to be, the agent, employee, joint
venturer or partner of the other party.
4.14. APPLICATION OF THE PROCEEDS OF THE NOTE. To the extent that
proceeds of the Note are used to pay indebtedness secured by any outstanding
lien, security interest, charge or prior encumbrance against the Mortgaged
Property, such proceeds have been advanced by Mortgagee at Mortgagor's request
and Mortgagee shall be subrogated to any and all rights, security interests and
liens owned by any owner or holder of such outstanding liens, security
interests, charges or encumbrances, irrespective of whether said liens, security
interests, charges or encumbrances are released.
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4.15. UNSECURED PORTION OF INDEBTEDNESS. If any part of the Debt
cannot be lawfully secured by this Mortgage or if any part of the Mortgaged
Property cannot be lawfully subject to the lien and security interest hereof to
the full extent of such indebtedness, then all payments made shall be applied on
said indebtedness first in discharge of that portion thereof which is unsecured
by this Mortgage.
4.16. CROSS DEFAULT. An Event of Default hereunder which has not
been cured within any applicable grace or cure period shall be a default under
each of the other Loan Documents.
4.17. INTEREST AFTER SALE. In the event the Mortgaged Property or
any part thereof shall be sold upon foreclosure as provided hereunder, to the
extent permitted by law, the sum for which the same shall have been sold shall,
for purposes of redemption (pursuant to the laws of the State of in which the
Premises is located), bear interest at the Default Interest Rate.
4.18. INCONSISTENCY WITH OTHER LOAN DOCUMENTS. In the event of any
inconsistency between the provisions hereof and the provisions in any of the
other Loan Documents, it is intended that the provisions of the Note shall
control over the provisions of this Mortgage, and that the provisions of this
Mortgage shall control over the provisions of the Assignment of Leases and
Rents, the Guaranty and Indemnity Agreement, the Environmental Indemnity
Agreement, and the other Loan Documents.
4.19. CONSTRUCTION OF THIS DOCUMENT. This document may be construed
as a mortgage, security deed, deed of trust, chattel mortgage, conveyance,
assignment, security agreement, pledge, financing statement, hypothecation or
contract, or any one or more of the foregoing, in order to fully effectuate the
liens and security interests created hereby and the purposes and agreements
herein set forth.
4.20. NO MERGER. It is the desire and intention of the parties
hereto that this Mortgage and the lien hereof do not merge in fee simple title
to the Mortgaged Property. It is hereby understood and agreed that should
Mortgagee acquire any additional or other interests in or to the Mortgaged
Property or the ownership thereof, then, unless a contrary intent is manifested
by Mortgagee as evidenced by an appropriate document duly recorded, this
Mortgage and the lien hereof shall not merge in such other or additional
interests in or to the Mortgaged Property, toward the end that this Mortgage may
be foreclosed as if owned by a stranger to said other or additional interests.
4.21. RIGHTS WITH RESPECT TO JUNIOR ENCUMBRANCES. Any person or
entity purporting to have or to take a junior mortgage or other lien upon the
Mortgaged Property or any interest therein shall be subject to the rights of
Mortgagee to amend, modify, increase, vary, alter or supplement this Mortgage,
the Note or any of the other Loan Documents, and to extend the maturity date of
the Debt, and to increase the amount of the Debt, and to waive or forebear the
exercise of any of its rights and remedies hereunder or under any of the other
Loan Documents and to release any collateral or security for the Debt, in each
and every case without obtaining the consent of the holder of such junior lien
and without the lien or security interest of this Mortgage losing its priority
over the rights of any such junior lien.
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4.22. MORTGAGEE MAY FILE PROOFS OF CLAIM. In the case of any
receivership, insolvency, bankruptcy, reorganization, arrangement, adjustment,
composition or other proceedings affecting Mortgagor or the principals, general
partners or managing members in Mortgagor, or their respective creditors or
property, Mortgagee, to the extent permitted by law, shall be entitled to file
such proofs of claim and other documents as may be necessary or advisable in
order to have the claims of Mortgagee allowed in such proceedings for the entire
Debt at the date of the institution of such proceedings and for any additional
amount which may become due and payable by Mortgagor hereunder after such date.
4.23. FIXTURE FILING. This Mortgage shall be effective from the
date of its recording as a financing statement filed as a fixture filing with
respect to all goods constituting part of the Mortgaged Property which are or
are to become fixtures. This Mortgage shall also be effective as a financing
statement covering minerals or the like (including oil and gas) and is to be
filed for record in the real estate records of the county where the Premises is
situated. The mailing address of Mortgagor and the address of Mortgagee from
which information concerning the security interests may be obtained are set
forth in Section 1.22 above.
4.24. AFTER-ACQUIRED MORTGAGED PROPERTY. All property acquired by
Mortgagor after the date of this Mortgage which by the terms of this Mortgage is
subject to the lien and the security interest created hereby, shall immediately
upon the acquisition thereof by Mortgagor and without further mortgage,
conveyance or assignment become subject to the lien and security interest
created by this Mortgage. Nevertheless, Mortgagor shall execute, acknowledge,
deliver and record or file, as appropriate, all and every such further
mortgages, security agreements, financing statements, assignments and assurances
as Mortgagee shall require for accomplishing the purposes of this Mortgage.
4.25. NO REPRESENTATION. By accepting delivery of any item required
to be observed, performed or fulfilled or to be given to Mortgagee pursuant to
the Loan Documents, including, but not limited to, any officer's certificate,
balance sheet, statement of profit and loss or other financial statement,
survey, appraisal or insurance policy, Mortgagee shall not be deemed to have
warranted, consented to, or affirmed the sufficiency, legality, effectiveness or
legal effect of the same, or of any term, provision or condition thereof, and
such acceptance of delivery thereof shall not be or constitute any warranty,
consent or affirmation with respect thereto by Mortgagee.
4.26. COUNTERPARTS. This Mortgage may be executed in any number of
counterparts, each of which shall be effective only upon delivery and thereafter
shall be deemed an original, and all of which shall be taken to be one and the
same instrument, for the same effect as if all parties hereto had signed the
same signature page. Any signature page of this Mortgage may be detached from
any counterpart of this Mortgage without impairing the legal effect of any
signatures thereon and may be attached to another counterpart of this Mortgage
identical in form hereto but having attached to it one or more additional
signature pages.
4.27. PERSONAL LIABILITY. Notwithstanding anything to the contrary
contained in this Mortgage, the liability of Mortgagor and its officers,
directors, general partners, managers, members and principals for the Debt and
for the performance of the other agreements, covenants and obligations contained
herein and in the Loan Documents shall be limited as set forth in Section 2.6 of
the Note.
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4.28. RECORDING AND FILING. Mortgagor will cause the Loan Documents
and all amendments and supplements thereto and substitutions therefor to be
recorded, filed, re-recorded and re-filed in such manner and in such places as
Mortgagee shall reasonably request, and will pay on demand all such recording,
filing, re-recording and re-filing taxes, fees and other charges. Mortgagor
shall reimburse Mortgagee, or its servicing agent, for the reasonable and
customary costs incurred in obtaining a tax service company to verify the status
of payment of taxes and assessments on the Mortgaged Property.
4.29. ENTIRE AGREEMENT AND MODIFICATIONS. This Mortgage and the
other Loan Documents contain the entire agreements between the parties relating
to the subject matter hereof and thereof and all prior agreements relative
hereto and thereto which are not contained herein or therein are terminated.
This Mortgage and the other Loan Documents may not be amended, revised, waived,
discharged, released or terminated orally but only by a written instrument or
instruments executed by the party against which enforcement of the amendment,
revision, waiver, discharge, release or termination is asserted. Any alleged
amendment, revision, waiver, discharge, release or termination which is not so
documented shall not be effective as to any party.
4.30. MAXMIUM INTEREST. The provisions of this Mortgage and of all
agreements between Mortgagor and Mortgagee, whether now existing or hereafter
arising and whether written or oral, are hereby expressly limited so that in no
contingency or event whatsoever, whether by reason of demand or acceleration of
the maturity of the Note or otherwise, shall the amount paid, or agreed to be
paid to Mortgagee for the use, forbearance or retention of the money loaned
under the Note ("Interest") exceed the maximum amount permissible under
applicable law. If, from any circumstance whatsoever, performance or fulfillment
of any provision hereof or of any agreement between Mortgagor and Mortgagee
shall, at the time performance or fulfillment of such provision shall be due,
exceed the limit for Interest prescribed by law or otherwise transcend the limit
of validity prescribed by applicable law, then, ipso facto, the obligation to be
performed or fulfilled shall be reduced to such limit, and if, from any
circumstance whatsoever, Mortgagee shall ever receive anything of value deemed
Interest by applicable law in excess of the maximum lawful amount, an amount
equal to any excessive Interest shall be applied to the reduction of the
principal balance owing under the Note in the inverse order of its maturity
(whether or not then due) or, at the option of Mortgagee, be paid over to
Mortgagor, and not to the payment of Interest. All Interest (including any
amounts or payments deemed to be Interest) paid or agreed to be paid to
Mortgagee shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full period until payment in full
of the principal balance of the Note so that the Interest thereon for such full
period will not exceed the maximum amount permitted by applicable law. This
Section will be paramount to all other agreements between Mortgagor and
Mortgagee.
4.31. INTEREST PAYABLE BY MORTGAGOR. Mortgagee shall cause funds in
the Replacement Reserve to be deposited into interest bearing accounts of the
type described in Exhibit D hereto, which accounts may not yield the highest
interest rate then available. Interest payable on such amounts shall be computed
based on the daily outstanding balance in the Replacement Reserve. Such interest
shall be calculated on a simple, non-compounded interest basis based solely on
contributions made to the Replacement Reserve by Mortgagor. All interest earned
on amounts contributed to the Replacement Reserve shall be retained by Mortgagee
and
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accumulated for the benefit of Mortgagor and added to the balance in the
Replacement Reserve and shall be disbursed for payment of the items for which
other funds in the Replacement Reserve are to be disbursed.
4.32. DISSEMINATION OF INFORMATION.
(a) If Mortgagee determines at any time to sell, transfer or assign
the Note, this Mortgage and the other Loan Documents, and any or all servicing
rights with respect thereto, or to grant participations therein (the
"Participations") or issue mortgage pass-through certificates or other
securities evidencing a beneficial interest in a rated or unrated public
offering or private placement (the "Securities"), Mortgagee may forward to each
purchaser, transferee, assignee, servicer, participant, investor, or their
respective successors in such Participations and/or Securities (collectively,
the "Investor") or any rating agency rating such Securities, each prospective
Investor and each of the foregoing's respective counsel, all documents and
information which Mortgagee now has or may hereafter acquire relating to the
Debt and to Mortgagor, any guarantor, any indemnitor and the Mortgaged Property,
which shall have been furnished by Mortgagor, any guarantor or any indemnitor as
Mortgagee determines necessary or desirable.
(b) Secondary Market. Mortgagee may sell, transfer and deliver the
Loan Documents to one or more Investors in the secondary mortgage market. In
connection with such sale, may retain or assign responsibility for servicing the
loan or may delegate some or all of such responsibility and/or obligations to a
servicer, including, but not limited to, any subservicer or master servicer, on
behalf of the investors. All references to Mortgagee herein shall refer to and
include, without limitation, any such servicer, to the extent applicable.
[THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, Mortgagor has executed this Mortgage on the day
and year first written above.
MORTGAGOR:
PARK PLAZA MALL, LLC, a Delaware
limited liability company
By: Park Plaza 3, LLC, a Delaware limited
liability company, its general manager
By: /s/ DANIEL P. FRIEDMAN
--------------------------
Name: Daniel P. Friedman
Title: President
CONSENTED AND AGREED TO AS TO
THE PROVISIONS OF SECTION 1.33(b)
PARK PLAZA 3, LLC
a Delaware limited liability company
By: /s/ DANIEL P. FRIEDMAN
---------------------------
Name: Daniel P. Friedman
Its: President
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<PAGE> 68
State of New York )
) ss.
County of New York )
On this day personally appeared before me, a Notary Public, within
and for the County and State aforesaid, duly qualified, commissioned and acting,
Daniel P. Friedman, to me personally well known and who acknowledged that he was
the President of Park Plaza 3, LLC, who is the general manager of Park Plaza
Mall, LLC and was duly authorized as such to execute the foregoing instrument
for, and in the name and behalf of said company further stated and acknowledged
that he has so signed, executed and delivered said foregoing instrument for the
consideration and purposes therein mentioned and set forth.
WITNESS my hand and official seal on this 30th day of April,
----
2000.
/s/ GARY D. LAWMAN
-----------------------
NOTARY PUBLIC
GARY D. LAWMAN
Notary Public, State of New York
No. 41-5054632
Qualified in Queens County
Certificate Filed in New York County
Commission Expires Jan. 22, 2002
<PAGE> 69
EXHIBIT E
INTERCREDITOR AGREEMENT
INTERCREDITOR AGREEMENT (this "Agreement"), dated as of _______, 2000,
between PARK PLAZA MALL, LLC, a Delaware limited liability company, as mortgage
lender (together with its successors and assigns, the "First Mortgage Lender"),
and ____________________, a _______________, as mezzanine lender (together with
its successors and assigns, the "Mezzanine Lender").
RECITALS
WHEREAS, pursuant to a Mortgage and Security Agreement, dated as of April
___, 2000 (as amended, supplemented or otherwise modified from time to time, the
"First Mortgage Loan Agreement"), made by Park Plaza Mall, LLC, a Delaware
limited liability company as mortgagor (the "Company"), in favor of First
Mortgage Lender, as mortgagee, and as evidenced by a Promissory Note of even
date therewith (the "First Mortgage Note"), the First Mortgage Lender has
provided financing in the original principal amount of $42 Million to the
Company secured by the property owned by the Company and described on Exhibit A
hereto (the "Property") (the First Mortgage Note and the First Mortgage Loan
Agreement together with all other documents and instruments evidencing and/or
securing the First Mortgage Note, are hereinafter collectively referred to as
the "First Mortgage Loan Documents" and all obligations of the Company to First
Mortgage Lender now existing or hereafter arising, due or to become due, under
the First Mortgage Note and the First Mortgage Loan Documents are hereinafter
collectively referred to as the "First Mortgage Loan Liabilities");
WHEREAS, Mezzanine Lender is the owner and holder of a Note in the
original principal amount of $_______ (the "Mezzanine Note"), dated the date of
this Agreement, made by Park Plaza 1, LLC, a Delaware limited liability company
(together with its successors and assigns, the "Mezzanine Borrower"), payable to
the order of Mezzanine Lender; and
WHEREAS, [TO BE CONFORMED TO REFLECT PLEDGE OF MEMBERSHIP INTEREST OF
PARK PLAZA 2, LLC BY PARK PLAZA 1, LLC] Mezzanine Lender has entered into (i) a
Loan Agreement, dated the date of this Agreement, between Mezzanine Borrower and
Mezzanine Lender (as amended, supplemented or otherwise modified from time to
time, the "Mezzanine Loan Agreement"); (ii) a Pledge Agreement, dated the date
of this Agreement, by each of Mezzanine Borrower and _______________ ("Stock
Owner"), for the benefit of Mezzanine Lender (the "Pledge Agreement"), which
provides for (A) a pledge of Mezzanine Borrower's regular membership interest in
the Company ("Pledged Membership Interest") and (B) a pledge of the Stock
Owner's ownership of the stock of _______________, a _______________ (the
"Company Managing Member"; and all of such stock being the ("Pledged Stock"),
which owns a 1% managing membership interest in the Company; and (iii) a
Mezzanine Deposit Agreement, dated the date of this Agreement, among the
Company, Mezzanine Borrower and
<PAGE> 70
Mezzanine Lender (the "Mezzanine Deposit Agreement"; the Mezzanine Note,
Mezzanine Loan Agreement and Mezzanine Deposit Agreement, together with all
other documents and instruments evidencing and securing the Mezzanine Note, are
hereinafter collectively referred to as the "Mezzanine Loan Documents" or the
"Mezzanine Loan"; and all obligations of the Mezzanine Borrower to the Mezzanine
Lender now existing or hereafter arising, due or to become due, under the
Mezzanine Note and the Mezzanine Loan Documents are hereinafter collectively
referred to as the "Mezzanine Loan Liabilities").
NOW, THEREFORE, in consideration of the foregoing, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. CONSENT TO MEZZANINE LOAN. First Mortgage Lender hereby
acknowledges and agrees that Mezzanine Lender is making the Mezzanine Loan to
Mezzanine Borrower. First Mortgage Lender hereby consents to Mezzanine Lender's
making the Mezzanine Loan to Mezzanine Borrower, to the execution and delivery
of the Mezzanine Loan Documents to Mezzanine Lender and to the liens and
security interests created in favor of Mezzanine Lender by the Mezzanine Loan
Documents. First Mortgage Lender hereby acknowledges and agrees that any
conditions precedent to First Mortgage Lender's consent to mezzanine financing
on the Property as set forth in the First Mortgage Loan Documents or any other
agreements with Company are, as they apply to the Mezzanine Loan Documents or
the making of the Mezzanine Loan, either satisfied or waived.
2. RATING AGENCY CONFIRMATION.
(a) If there are any securities representing beneficial
interests in the First Mortgage Loan (the "Certificates") outstanding, Mezzanine
Lender shall not transfer any or all of its interest in the Mezzanine Loan or
exercise any rights it may have under the Pledge Agreement or any other
Mezzanine Loan Document to obtain title to, or sell, or transfer title to, all
or any part of the Mezzanine Collateral (as defined in section 2(b) below),
whether pursuant to a sale governed by the applicable uniform commercial code or
otherwise, unless First Mortgage Lender has received written confirmation from
each of Standard & Poor's Ratings Services ("S&P"), Moody's Investors Service,
Inc., Duff & Phelps Credit Rating Co. and Fitch IBCA, Inc. or any other
nationally recognized statistical rating organization who have at the time in
question actually issued a current rating of such Certificates ("Rating Agency")
that such transfer (and a transfer of the Mezzanine Collateral to such
, in either transferee) will not result in a qualification, downgrade or
withdrawal of the ratings assigned by the Rating Agency to the Certificates.
Notwithstanding the foregoing, Mezzanine Lender shall have the right to (i)
transfer all or any portion of the Mezzanine Loan to a Permitted Institutional
Transferee (as defined below) and/or (ii) exercise any rights it may have under
the Pledge Agreement or any other Mezzanine Loan Document to obtain title to, or
sell, or transfer title to, all or any protion of the Mezzanine Collateral so
long as the transferee of the Mezzanine Collateral is a Permitted Institutional
Transferee, in either case with respect to clause (i) or (ii) above without
having to obtain a confirmation from the Rating Agencies. Furthermore, if a
Rating Agency consents to a transfer of the Mezzanine Loan to a particular
person or entity (such transferee, an "Approved
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Transferee"), no further Rating Agency approval shall be required for a transfer
of the Mezzanine Collateral to such Approved Transferee. "Permitted
Institutional Transferee" means (i) an affiliate of Mezzanine Lender, (ii)
"qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act of 1933, as amended (other than a broker/dealer), (iii) an
insurance company, bank, savings and loan association, trust company, commercial
credit corporation, pension plan, pension fund or pension fund advisory firm,
mutual fund or other investment company, governmental entity or plan, a real
estate investment trust (or the trustees thereof) or a corporation qualifying as
such, the shares of beneficial interest of which are traded on a National
Securities Exchange, as defined in the Securities Exchange Act of 1934, as
amended, or an institution substantially similar to any of the foregoing, in
each case under this clause (iii) having at least $250,000,000 in
capital/statutory surplus or shareholder's equity and at least $600,000,000 in
total assets, and being experienced in making commercial loans; (iv) any entity
owned and controlled by any one or more institutions meeting the criteria in
clause (iii), (v) any lender listed on Exhibit B, attached hereto and made a
part hereof, or (vi) an Approved Transferee.
(b) If there are any Certificates outstanding and S&P is
providing a rating on the Certificates, Mezzanine Lender shall not exercise any
rights it may have under the Mezzanine Loan Documents, including, without
limitation any right under the Pledge Agreement to obtain title to the Pledged
Stock (collectively [and together with any other collateral securing the
Mezzanine Loan], the "Mezzanine Collateral"), unless Mezzanine Lender has
received the prior written consent of the servicer of the First Mortgage Loan,
which consent shall be deemed given if Mezzanine Lender qualifies as a Permitted
Institutional Transferee, as said term is defined in paragraph 2(a) above. In
the event Mezzanine Lender exercises its rights under the Mezzanine Loan
Documents to obtain, or sell, the title to all or any portion of the Mezzanine
Collateral, the Mezzanine Lender (or the purchaser of such interests at a UCC
sale) shall deliver to such servicer such certificates, opinions (covering such
subjects, including nonconsolidation) and documentation as shall be reasonably
requested by such servicer.
(c) If there are Certificates outstanding, Mezzanine Lender
shall not exercise any rights to terminate the manager of the Property (the
"Manager") and approve a replacement Manager therefor and execution of any
related management agreement, unless (a) the replacement Manager is, under the
standards set forth in paragraph 1.30 of the First Mortgage Loan Agreement,
qualified to act as the manager of the Property, and (b) First Mortgage Lender
shall in its discretion, reasonably exercised, have approved such replacement
Manager.
(d) Mezzanine Lender promptly shall notify First Mortgage
Lender of any intended action relating to the Mezzanine Loan which would require
confirmation by the Rating Agencies and shall cooperate with First Mortgage
Lender in obtaining such confirmation. First Mortgage Lender shall, upon request
of Mezzanine Lender, use reasonable efforts to obtain written confirmation from
each Rating Agency that a requested or proposed action by the Mezzanine Lender
will not result in a qualification, downgrade or withdrawal of the then-current
ratings assigned by the Rating Agency to the Certificates.
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<PAGE> 72
EXHIBIT A
LEGAL DESCRIPTION
Tract 1 (Reserve Tract "A"-Fee simple)
A part of the Northeast Quarter of the Northeast Quarter, Section 1, Township 1
North, Range 13 West, Pulaski County, Arkansas, more particularly described as
follows: From the Southeast corner of the said Northeast Quarter of the
Northeast Quarter, run thence North 88 degrees 38 minutes 23 seconds West and
along the South line of the said Northeast Quarter of the Northeast Quarter and
the centerline of West Markham Street (of 60 foot width) for 651.67 feet; thence
North 01 degrees 21 minutes 37 seconds East for 30.0 feet to the North right of
way line of West Markham Street; thence North 88 degrees 38 minutes 23 seconds
West and along the North right of way line of West Markham Street for 264.08
feet; thence North 01 degree 21 minutes 37 seconds East for 42.00 feet; thence
North 88 degrees 38 minutes 23 seconds West for 250.64 feet to the Point of
Beginning; thence North 00 degrees 29 minutes East for 168.54 feet; thence North
88 degrees 37 minutes 06 seconds West for 150.11 feet to the East right of way
line of McKinley Street (of 30.0 foot width) and a point 15.0 feet East of the
West line of the Northeast Quarter of the Northeast Quarter; thence South 00
degrees 29 minutes West and along the East right of way line of McKinley Street
and parallel with the West line of the Northeast Quarter of the Northeast
Quarter for 210.60 feet to the North right of way line of West Markham Street
and a point 30.0 feet North of the South line of the Northeast Quarter of the
Northeast Quarter, thence South 88 degrees 38 minutes 23 seconds East and along
the North right of way line of West Markham Street and parallel with the South
line of the Northeast Quarter of the Northeast Quarter for 150.11 feet; thence
North 00 degrees 29 minutes East for 42.0 feet to the Point of Beginning,
containing 0.7256 acres, more or less. Now platted as part of Tract A, Park
Plaza Addition, Little Rock, Pulaski County, Arkansas, as recorded in Plat Book
C, Page 519, records of Pulaski County, Arkansas.
LESS AND EXCEPT Part of Tract A, Park Plaza Addition in the City of Little Rock,
Pulaski County, Arkansas, as recorded in Plat Book C at Page 519 being more
particularly described as follows:
BEGINNING at the Southwest corner of the said Tract A. Park Plaza Addition:
thence North 00 degrees 29 minutes 00 seconds East along the existing East right
of way line of McKinley Street 210.6 feet; thence South 88 degrees 40 minutes 09
seconds East along the North Line of said Tract A, 18.14 feet: thence along the
proposed East right of way line of McKinley Street the following three courses
and distances: 1) South 05 degrees 10 minutes 05 seconds East 67.00 feet 2)
South 00 degrees 10 minutes 54 seconds West 124.18 feet: and 3) South 44 degrees
29 minutes 51 seconds East 28.43 feet to the North right-of-way line of West
Markham Street; thence along said North right-of-way line North 88 degrees 43
minutes 26 seconds West 45.49 feet to the point of beginning.
Tract 2: (Reserve Tract "B"-Fee simple)
A part of the Northeast Quarter of the Northeast Quarter, Section 1, Township 1
North, Range 13 West, Pulaski County, Arkansas, more particularly described as
follows: From the Southeast corner of the said Northeast Quarter of the
Northeast Quarter, run thence North 88 degrees 38 minutes 23 seconds West and
along the South line of the said Northeast Quarter of the Northeast Quarter and
the centerline of West Markham Street (of 60.0 foot width) for 651.67 feet;
thence North 01 degrees 21 minutes 37 seconds East for 30.0 feet to the North
right of way line of West Markham Street: thence North 88 degrees 38 minutes 23
seconds West and along the North
-continued-
<PAGE> 73
Exhibit "A"- continued
right of way line of West Markham Street for 264.08 feet to the Point of
Beginning; thence North 01 degrees 2 minutes 37 seconds East for 42.00 feet;
thence North 88 degrees; 38 minutes 23 seconds West for 250.64 feet; thence
South 00 degrees 29 minutes West for 42.00 feet to the North right of way
line of West Markham Street thence South 88 degrees 38 minutes 23 seconds East
and along the North right of way line of West Markham Street and parallel with
the South line of the Northeast Quarter of the Northeast Quarter for 250.00
feet, more less to the Point of Beginning, containing 0.2413 acres, more or
less, now platted as part of Tract D of Park Plaza Addition, Little Rock,
Pulaski County, Arkansas, as recorded in Plat recorded C-519, records of Pulaski
County. Arkansas.
Tract 3: (Reserve Tract "C"-Fee simple)
Being Lots 1, 2, 3 and 4, Henry Meirose Addition to the City of Little Rock,
Pulaski County, Arkansas, more particularly described as follows: from the
Southeast corner of the said Northeast Quarter of the Northeast Quarter, run
thence North 88 degrees 38 minutes 23 seconds West and along the South line of
the said Northeast Quarter of the Northeast Quarter and the centerline of West
Markham Street (of 60.0 foot width) for 651.67 feet; thence North 01 degrees 21
minutes 37 seconds East for 30.0 feet to the North right of way line of West
Markham Street; thence North 88 degrees 38 minutes 23 seconds West and along the
North right of way line of West Markham Street for 264.08 feet; thence North 01
degrees 21 minutes 37 seconds East for 42.0 feet thence North 88 degrees 38
minutes 23 seconds West for 250.64 feet; thence North 00 degrees 29 minutes East
for 168.54 feet; thence North 88 degrees 37 minutes 06 seconds West for 150.11
feet to the East right of way line of McKinley Street (of 30.0 foot width) and a
point 15.0 feet East of the West line of the Northeast Quarter of the Northeast
Quarter; thence North 00 degrees 29 minutes East and along the East right of way
line of McKinley Street and parallel with the West Line of the Northeast Quarter
of the Northeast Quarter for 556.51 feet to the Northwest corner of Lot 26,
Henry Meirose Addition to the City of Little Rock (as recorded in Plat Book 1,
Page 62) and the Southwest corner of an alley (of 20 foot width) running in an
East-West direction; thence North 00 degrees 29 minutes East and along the East
right of way line of McKinley Street and parallel with the West Line of the
Northeast Quarter of the Northeast Quarter for 20.0 feet to the Southwest corner
of 1, Henry Meirose Addition to the City of Little Rock (recorded in Plat Book
1, Page 62) and the Point of Beginning; thence continue North 00 degrees 29
minutes East and along the West line of said Lot 1 and par with the West line of
the Northeast Quarter of the Northeast Quarter for 140.0 feet to the Northwest
corner of said Lot 1 and a point on the South right of way line of "C" street
(of varying width); thence South 88 degrees 50 minutes 28 seconds East and along
the North line of Lots 1, 2, 3 and 4, Henry Meirose Addition to the C of Little
Rock and the South right of way line of "C" Street 196.0 feet to the common
North corner of Lots 4 and 5, Henry Meirose Addition, thence South 00 degrees 29
minutes West and along the common line of lots 4 and 5, Henry Meirose Addition
to the City of Little Rock, for 140.0 feet to the common South corner of said
Lots 4 and 5 and a point on the North line of the previously mentioned East-West
alley; thence North 88 degrees 50 minutes 28 seconds West and along the South
line of Lots 4, 3, 2 and 1, Henry Meirose Addition, the City of Little Rock and
the North line of previously mentioned East-West alley for 196.0 feet to the
Point of Beginning containing 0.6299 acres, more or less, now platted as Tract C
of Park Plaza Addition, Little Rock, Pulaski County, Arkansas as recorded in
Plat Record C-519, records of Pulaski County, Arkansas.
-continued-
<PAGE> 74
Exhibit "A"- continued
Tract 4 (Developer Tract-Fee simple)
A part of the Northeast Quarter of the Northeast Quarter, Section 1, Township 1
North, Range 13 West, which included "B" Street and Arthur Street, closed by
City of Little Rock Ordinance No. 11,439 and No. 11,061, and, parts of Lots 14,
15 and 16, Henry Meirose Addition to the City of Little Rock, all being in
Pulaski County, Arkansas, more particularly described as follows: From the
Southeast corner of the said Northeast Quarter of the Northeast Quarter, run
thence North 88 degrees 38 minutes 23 seconds West and along the South line of
the said Northeast Quarter of the Northeast Quarter and the centerline of West
Markham Street (of 60 foot width) for 651.67 feet; thence North 01 degrees 21
minutes 37 seconds East for 30.0 feet to the North right of way line of West
Markham Street and the Point of Beginning, said point being the Southeast corner
of the Dillard Department Stores, Inc., tract; thence North 01 degrees 21
minutes 37 seconds East for 194.81 feet; thence North 88 degrees 38 minutes 23
seconds West for 160.36 feet to a point which is in line with the East wall of
the two story brick building occupied by Dillard Department Stores, Inc.; thence
North 01 degrees 24 minutes 36 seconds East and along the East wall and East
wall projected North for 594.02 feet to the North line of an East-West alley and
a point on the South line of Lot 11, Henry Meirose Addition to the City of
Little Rock; thence South 88 degrees 50 minutes 28 seconds East and along the
South line of Lots 11, 12 and 13, Henry Meirose Addition to the City of Little
Rock and the North Line of the East-West alley for 114.11 feet to the Southeast
corner of said Lot 13; thence North 00 degrees 29 minutes East and along the
East line of said Lot and the West right of way line of Arthur Street for 26.12
feet to a point; thence South 89 degrees 03 ??? minutes seconds East; for 637.63
feet to the West right of way line of University Avenue (of 80 foot width) and
40.0 feet West: of the East line of the Northeast Quarter of the Northeast
Quarter; thence South and along the West right of way line of University Avenue
and parallel with the East line of the Northeast Quarter of the Northeast
Quarter for 55.00 feet; thence North 89 degrees 03 minutes 32 seconds West for
200.00 feet; thence South 01 degrees 21 minutes 37 seconds West for 200.00 feet;
thence North 88 degrees 38 minutes 23 seconds West for 59.44 feet; thence South
01 degrees 26 minutes 04 seconds West for 368.75 feet; thence North 88 degrees
38 minutes 23 seconds West for 69.86 feet; thence South 01 degrees 21 minutes 37
seconds West for 150.00 feet; thence South 88 degrees 38 minutes 23 seconds East
for 143.81 feet; thence North 01 degrees 21 minutes 37 seconds East for 129.01
feet; thence South 88 degrees 38 minutes 23 seconds East for 200.00 feet to the
West right of way line of University Avenue and a point 40.0 feet West of the
East line of the Northeast Quarter of the Northeast Quarter; thence South and
along the West right of way line of University Avenue and parallel with the East
line of the Northeast Quarter of the Northeast Quarter for 122.36 feet to the
P.C. of a curve to the right whose radius is 29.36 and whose delta angle is 91
degrees 03 minutes 53 seconds; thence along the Arc of said curve for 46.66 feet
(Chord bearing and distance of South 45 degrees 39 minutes 59 seconds West 41.91
feet) to the P.T. of said curve and a point on the North right of way line of
West Markham Street (at the point the distance from the centerline of West
Markham Street and from the South line of the Northeast Quarter of the Northeast
Quarter is 51.0 feet; thence North 88 degrees 38 minutes 23 seconds West and
along the North right of way line of West Markham Street and parallel with the
South line of the Northeast Quarter of the Northeast Quarter for 160.00 feet to
the P.C. of a curve to the left whose radius is 101.00 feet and delta angle 37
degrees 25 minutes 51 seconds; thence along the arc of said curve and North
right of way line of West Markham Street for 65.98 feet (chord bearing and
distance of South 72 degrees 26 minutes 51 seconds West 64.82 feet) the P.T. of
said curve and a point 30.0 feet North of the South line of the Northeast
Quarter of the Northeast Quarter, thence North 88 degrees 38 minutes 23 seconds
West and along the North right of way
-continued-
<PAGE> 75
Exhibit "A" -- continued
of West Markham Street and parallel with the South line of the Northeast Quarter
of the Northeast Quarter for 359.15 feet to the Point of Beginning, less and
except part of the previously mentioned East-West alley and a part of Arthur
Street more particularly described as follows: Beginning at the Southeast corner
of Lot 13, Henry Meirose Addition to the City of Little Rock; thence North 00
degrees 29 minutes East and along the East line of said Lot 13 and the West
right of way line of Arthur Street for 26.12 feet; thence South 89 degrees 03
minutes 32 seconds East for 15.33 feet (deed) 17.67 feet (measured); thence
South 00 degrees 36 minutes 17 seconds West for 46.18 feet; thence North 88
degrees 50 minutes 28 seconds West for 128.55 feet; thence North 01 degrees 24
minutes 34 seconds East for 20.0 feet to the North line of the East-West alley;
thence South 88 degrees 50 minutes 28 seconds East for 114.11 feet to the Point
of Beginning, containing 9.5841 acres including the alley and Street and 9.5154
acres excluding the alley and Street, now platted as Tract E of Park Plaza
Addition, Little Rock, Pulaski County, Arkansas, as recorded in Plat record
C-519, records of Pulaski County, Arkansas.
<PAGE> 76
EXHIBIT A-1
LEGAL DESCRIPTION -- EASEMENT PARCELS
Park Plaza Mall, Little Rock, Arkansas
Those certain easements, rights and privileges of use for pedestrian and
vehicular ingress, egress, parking, are other purposes as set forth in, and
created under and by virtue of that certain Construction, Operation and
Reciprocal Easement Agreement dated December 15, 1986, by and among Construction
Developers, Incorporated; Dillard Department Stores, Inc.; and Herring-Marathon
Masters Partnership B; filed in the official land records of Pulaski County,
Arkansas, on December 31, 1986, as instrument 86-82744, as amended, modified and
supplemented by that certain First Amendment to Construction, Operation and
Reciprocal Easement Agreement effective December 31, 1986, by and among
Construction Developers, Incorporated; Dillard Department Stores, Inc.; and
Herring-Marathon Masters Partnership B, filed in the official land records of
Pulaski County, Arkansas on July 27, 1989 as Instrument No. 88-39542, which
easements, rights and privileges benefit the land described in Exhibit A hereto,
and burden the following described land:
[See legal description attached hereto and made
a part hereto consisting of 3 pages]
<PAGE> 77
Tract 5 (Easement):
TOGETHER WITH rights of ingress and egress as set forth in that certain
Construction, Operation, and Reciprocal Easement Agreement recorded as
Instrument No. 86-82744 and amended by First Amendment to Construction,
Operation and Reciprocal Easement Agreement recorded as Instrument No. 88-39542
over and across the following described lands:
A part of the Northeast Quarter of the Northeast Quarter, Section 1, Township 1
North, Range 13 West, which includes a portion of "B" Street closed by City of
Little Rock, Ordinance No. 11,439 and Lots 7 through 13, Lots 14 through 26,
inclusive, Henry Meirose Addition to the City of Little Rock, all being in
Pulaski County, Arkansas, more particularly described as follows: From the
Southeast corner of the said Northeast Quarter of the Northeast Quarter; run
thence North 88 degrees 38 minutes 23 seconds West and along the South line of
said Northeast Quarter of the Northeast Quarter and the centerline of West
Markham Street (of 60 foot width for 651.67 feet; thence North 01 degrees 21
minutes 37 seconds East for 30.0 feet to the North right of way line of West
Markham Street and the Point of Beginning; thence North 88 degrees 38 minutes 23
seconds West along the North right of way line of West Markham Street for 264.08
feet; thence North 01 degrees 21 minutes 37 seconds East for 42.0 feet; thence
North 88 degrees 38 minutes 23 seconds West for 250.64 feet; thence North 00
degrees 29 minutes East for 168.54 feet; thence North 88 degrees 37 minutes 06
seconds West for 150.11 feet to the East right of way line of McKinley Street
(of 30.0 foot width) and a point 15.0 feet East of West line of the Northeast
Quarter of the Northeast Quarter; thence North 00 degrees 29 minutes East and
along the East right of way line of McKinley Street and parallel with the West
line of the Northeast Quarter of the Northeast Quarter for 556.51 feet to the
Northwest corner of Lot 26, Henry Meirose Addition to the City of Little Rock
(as recorded in Plat Book 1, Page 62) and the Southwest corner of an alley (of
20 foot width) running in an East-West direction; thence North 00 degrees 29
minutes East and along the East right of way of McKinley Street and parallel
with the West line of the Northeast Quarter of the Northeast Quarter for 20.1
feet to the Southwest corner of Lot 1, Henry Meirose Addition and the Northwest
corner of the East-West alley; thence South 88 degrees 50 minutes 28 seconds
East and along the South line of Lots 1, 2, 3, 4, 5, and 6, Henry Meirose
Addition to the City of Little Rock and the North line of the East-West alley
for 294.00 feet to the common South corner of Lots 6 and 7, Henry Meirose
Addition to the City of Little Rock; thence North 00 degrees 29 minutes East and
along the common line of said Lots 6 and 7 for 140.00 feet to the common North
corner of said Lots 6 and 7 and a point on the South right of way line of "C"
Street (varying width right of way line; thence South 88 degrees 50 minutes 28
seconds East and along the North line of Lots 7, 8, 9, 10, 11, 12 and Henry
Meirose Addition to the City of Little Rock and the South right of way line of
"C" Street for 336.50 feet to the Northeast corner of said Lot 13 and the West
right of way line of Arthur Street; thence South 00 degrees 29 minutes West and
along the West right of way line of Arthur Street 140.00 feet to the Southeast
corner of Lot 13, Henry Meirose Addition to the City of Little Rock, and a point
on the East-West alley previously mentioned; thence North 88 degrees 50 minutes
28 seconds West and along the South line of Lots 13, 12 and 11, Henry Meirose
Addition to the City of Little Rock and along the North line of said East-West
alley for 114.11 feet to a point which is in line with the East wall of a two
story brick building occupied by Dillard Department Stores, Inc.; thence South
01 degrees 34 minutes 36 seconds West and along the East wall and wall line
projected both North and South for 594.02 feet to a point; thence South 88
degrees 38 minutes 23 seconds East for 160.36 feet to a point; thence South 01
degrees 21 minutes 37 seconds West for 194.81 feet to the Point of Beginning;
less and except the East-West alley (of 20 foot width) running through Henry
Meirose Addition to the City of Little Rock, more particularly described as
follows: Beginning at the Northwest corner
--continued--
<PAGE> 78
Exhibit "A-1"-continued
of Lot 26, Henry Meirose Addition to the City of Little Rock (as recorded in
Plat Book 1, Page 62) and the Southwest corner of an alley (of 20 foot width)
running in an East-West direction; thence North 00 degrees 29 minutes East and
along the East right of way line of McKinley Street and parallel with the West
line of the Northeast Quarter of the Northeast Quarter for 20.0 feet to the
Northwest corner of the alley and the Southwest corner of Lot 1, Henry Meirose
Addition; thence South 88 degrees 50 minutes 28 seconds East and along the North
line of said East-West alley and the South line of Lots 1, 2, 3, 4, 5, 6, 7, 8,
9, 10 and 11, Henry Meirose Addition to the City of Little Rock, 516.39 feet;
thence South 01 degrees 24 minutes 36 seconds West for 20.0 feet to a point on
the North line of Lot 16, Henry Meirose Addition to the City of Little Rock and
a point on the South line of said East-West alley; thence North 88 degrees 50
minutes 28 seconds West and along the North line of Lots 16 through 28,
inclusive, Henry Meirose Addition to the City of Little Rock and the South line
of said East-West alley for 516.07 feet to the Point of Beginning, LESS AND
EXCEPT Part of Tract D, Park Plaza Addition in the City of Little Rock, Pulaski
County, Arkansas, as recorded in Plat Book C at Page 519, being more
particularly described as follows:
Beginning at the Northwest corner of the Tract A, Park Plaza Addition; thence
North 00 degrees 29 minutes ?? seconds East along the existing East right-of-way
line of McKinley Street 183.00 feet; thence 05 degrees 10 minutes 05 seconds
East along the proposed East right-of-way line of McKinley Street 184.17 feet;
thence North 88 degrees 40 minutes 09 seconds West 18.14 feet to the point of
beginning, containing 10.0577 acres, including East-West alley and 9.8207 acres,
excluding the alley, now platted as Tract B and Part of Tract D ?? Park Plaza
Addition, Little Rock, Pulaski County, Arkansas, as recorded in Plat in Book
C-519, records of Pulaski County, Arkansas.
Tract 6 (Easement):
TOGETHER WITH rights of ingress and egress as set forth in that certain
Construction, Operation, and Reciprocal Easement Agreement recorded as
Instrument No. 86-82744 and amended by First Amendment to Construction,
Operation and Reciprocal Easement Agreement recorded as Instrument No.88-39542,
over and across the following described lands:
A part of the Northeast Quarter of the Northeast Quarter, Section 1, Township 1
North, Range 13 West, Pulaski County, Arkansas more particularly described as
follows: From the Southeast corner of the said Northeast Quarter of the
Northeast Quarter, run thence North 88 degrees 38 minutes 23 seconds West and
along the South line of the said Northeast Quarter of the Northeast Quarter and
the centerline of West Markham Street (of 6?? feet width) for 651.67 feet;
thence North 01 degrees 21 minutes 37 seconds East for 30.0 feet to the North ??
of way line of West Markham Street; thence North 01 degrees 21 minutes 37
seconds East for 194.81 feet; thence North 88 degrees 38 minutes 23 seconds West
for 160.36 feet to a point which is in line with the East wall of a two story
brick building occupied by Dillard Department Stores, Inc.; thence North 01
degrees 24 minutes 36 seconds East and along the East wall projected North for
594.02 feet to the North line of an East-West alley and a point on the
South line of Lot 11, Henry Meirose Addition to the City of Little Rock; thence
South 88 degrees 50 minutes 28 seconds East and along the South line of Lots 11,
12 and 13, Henry Meirose Addition to the City of Little Rock, Pulaski County,
Arkansas, and the North line of the East-West alley for
-continued-
<PAGE> 79
Exhibit "A-1"-continued
114.11 feet to the Southeast corner of said Lot 13; thence North 00 degrees 29
minutes East and along the East line of said Lot 13 and the West right of way
line of Arthur Street for 26.12 feet to a point; thence South 89 degrees 03
minutes 32 seconds East for 637.63 feet to the West right of way line of
University Avenue (of 80 foot width) and 40.0 feet West of the East line of the
Northeast Quarter of the Northeast Quarter, thence South and along the West
right of way line of University Avenue and parallel with the East line of the
Northeast Quarter of the Northeast Quarter for 55.00 to the Point of Beginning;
thence North 89 degrees 03 minutes 32 seconds West for 200.00 feet; thence South
01 degrees 21 minutes 37 seconds West for 200.00 feet; thence North 88 degrees
38 minutes 23 seconds West for 59.44 feet; thence South 01 degrees 26 minutes 04
seconds West for 368.75 feet; thence North 88 degrees 38 minutes 23 seconds West
for 69.86 feet; thence South 01 degrees 21 minutes 37 seconds West for 150.00
feet; thence South 88 degrees 38 minutes 23 seconds East for 143.81 feet; thence
North 01 degrees 21 minutes 37 seconds East for 129.01 feet; thence South 88
degrees 38 minutes 23 seconds East for 200.00 feet to the West right of way line
of University Avenue; thence North and along the West right of way line of
University Avenue and parallel with the East line of the Northeast Quarter of
the Northeast Quarter for 591.37 feet to the Point of Beginning, containing
3.7999 acres, more or less, now platted as Tract F of Park Plaza Addition,
Little Rock, Pulaski County, Arkansas, as recorded in Plat Record 519, records
of Pulaski County, Arkansas.
<PAGE> 80
EXHIBIT B
MORTGAGOR'S CERTIFICATE
The undersigned is the _______________ of __________, the general partner
of (the "Mortgagor") and has made due investigation as to the matters
hereinafter set forth and does hereby certify the following to induce FIRST
UNION NATIONAL BANK, (the "Mortgagee") to, and does hereby request that
Mortgagee, advance the aggregate sum of $________________________ (the
"Disbursement") [from the Replacement Reserve or Repair and Remediation Reserve
or Environmental Reserve] to the Mortgagor pursuant to the terms of that certain
Mortgage and Security Agreement, dated as of __________, 2000, between the
Mortgagee and the Mortgagor (together with any amendments, modifications,
supplements and replacements thereof or therefor, the "Mortgage"), dated
_______________, pursuant to that certain Disbursement request which is being
submitted to the Mortgagee. (Capitalized terms used and not otherwise define
shall have the respective meanings given to them in the Mortgage.)
1. No default beyond any applicable notice and/or grace period exists
under the Mortgage or under any of the other Loan Documents.
2. The [Repairs, Deferred Maintenance or Environmental Work] relative
to the Disbursement have been delivered or provided to Mortgagor and are
properly, completely and permanently installed on or about the Mortgaged
Property or otherwise properly completed, as applicable.
3. All of the statements, invoices, receipts and information delivered
in connection with the Disbursement request being submitted to the Mortgagee in
connection herewith are true and correct as of the date hereof, and the amount
requested in said Disbursement request accurately reflects the precise amounts
due and payable during the period covered by such Disbursement request. All of
the funds to be received pursuant to such Disbursement request shall be used
solely for the purpose of reimbursing the Mortgagor for items previously paid or
otherwise paying third parties for work or services completed pursuant to the
provisions of Section 1.8 of the Mortgage.
4. Nothing has occurred subsequent to the date of the Mortgage which
has or may result in the creation of any lien, charge or encumbrance upon the
Premises or the Improvements or any part thereof, or anything affixed thereto or
used in connection therewith, or which has or may substantially and adversely
impair the ability of the Mortgagor to make any payments of principal and
interest on the Note or the ability of the Mortgagor to meet its obligations
under the Mortgage.
5. None of the labor, materials, overhead or other items of expense
specified in the Disbursement request submitted herewith has previously been the
basis of any Disbursement request by the Mortgagor or any payment by the
Mortgagee and, when added to all sums previously disbursed by Mortgagee on
account of the [Deferred Maintenance, Repairs or Environmental Work], do not
exceed the costs of all [Deferred Maintenance, Repairs or
69
<PAGE> 81
EXHIBIT B-1
PERMITTED TITLE EXCEPTIONS
1. All streets and public rights-of way.
2. All applicable laws, ordinances, rules, regulations, codes, orders and
requirements of any federal, state, or local governmental authority
thereunder now in effect.
3. All general taxes not due and payable as of the date hereof.
4. All special assessments for Little Rock Sanitary Sewer System not due and
payable as of the date hereof.
5. State of facts shown on map or plot of survey entitled ALTA/ACSM Land Title
Survey Park Plaza Mall Little Rock, Pulaski County, Arkansas dated 2-15-00,
last revised 3-23-00, prepared by Ben Kittler, Jr., Arkansas Professional
Land Surveyor No. 568, bearing No. 50-01M-13W-0-01-110-60-0568, consisting
of two pages.
6. Right of way easement in favor of City of Little Rock, Arkansas, for the
use and benefit of the Little Rock Municipal Water Works: recorded in Book
784 at Page 139, records of Pulaski County, Arkansas.
7. Right of way easement in favor of City of Little Rock, Arkansas, for the
use and benefit of the Little Rock Municipal Water Works: recorded in Book
1018 at Page 47, records of Pulaski County, Arkansas.
8. Restrictions, reservations and conditions contained in Plat and Bill of
Assurance recorded in Plat Book C at Page 519 and Bill of Assurance
recorded as Document No. 88-37459 records of Pulaski County, Arkansas.
9. Unrecorded lease agreement by and between Herring-Marathon Master
Partnership B and Morrison Incorporated d/b/a Ruby Tuesday: a Short Form
thereof being executed April 23, 1988, filed May 24, 1988, recorded as
Document No. 88-26227, and related assignment and assumption of Lease
executed May 2, 1995, and recorded July 25, 1995, as Document No. 95-42300,
records of Pulaski County, Arkansas.
10. Unrecorded lease agreement by and between Herring-Marathon Master
Partnership B and Luby's Cafeterias, Inc.: a Short Form thereof being
executed December 1, 1987, filed February 3, 1988, recorded as Document No.
88-88-4855, records of Pulaski County, Arkansas.
11. Right of way easement in favor of City of Little Rock, Arkansas and
Corporation Dedication Deed Incorporated therein: recorded as Document No.
93-63651, records of Pulaski County, Arkansas.
12. Right of way easement in favor of City of Little Rock, Arkansas and
Corporation Dedication Deed Incorporated therein: recorded as Document No.
93-63652, records of Pulaski County, Arkansas.
Page 1 of 2
<PAGE> 82
13. Construction, Operation and Reciprocal Easement Agreement dated December
15, 1986, by and among Construction Developers, Incorporated, Dillard
Department Stores, Inc. and Herring-Marathon Masters Partnership B, filed
in the official land records of Pulaski County, Arkansas on December 31,
1986 as Instrument 86-82744, as amended, modified and supplemented by that
certain First Amendment to Construction, Operation and Reciprocal Easement
Agreement effective December 31, 1986 by and among Construction Developers,
Incorporated, Dillard Department Stores, Inc. and Herring-Marathon Masters
Partnership B. filed in the official land records of Pulaski County,
Arkansas on July 27, 1989 as Instrument No. 88-39542, and related
assignment and assumption of Lease executed May 2, 1995, and recorded July
25, 1995, as Document No. 96-13164 and Assignment of Reciprocal Easement
Agreement recorded as Document No. 96-68743, records of Pulaski County,
Arkansas.
Page 2 of 2
<PAGE> 83
EXHIBIT C
-------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
DESCRIPTION COST
- -------------------------------------------------------------------------------------------------
<S> <C>
Exterior Repairs $ 4,700.00
- -------------------------------------------------------------------------------------------------
Roofing Repairs $ 9,570.00
- -------------------------------------------------------------------------------------------------
Parking/Paving $ 1,650.00
- -------------------------------------------------------------------------------------------------
Amenities (Stair Railing) Repairs $ 7,500.00
- -------------------------------------------------------------------------------------------------
Miscellaneous (Fire Sprinkler System) $ 6,000.00
- -------------------------------------------------------------------------------------------------
TOTAL $29,420.00 X125% = $36,775.00
- -------------------------------------------------------------------------------------------------
</TABLE>
71
<PAGE> 84
EXHIBIT D
"Permitted Investments" shall mean any one or more of the following
obligations or securities acquired at a purchase price of not greater than par,
including those issued by Mortgagor, any servicer, REMIC Trustee or any of their
respective affiliates:
(i) direct obligations of, or obligations fully
guaranteed as to payment of principal and interest by,
(a) the United States or any agency or instrumentality
thereof provided such obligations are backed by the full
faith and credit of the United States of America, or (b)
FHLMC, FNMA, the Federal Farm Credit System or the
Federal Home Loan Banks provided such obligations at the
time of purchase or contractual commitment for purchase
are qualified by the Rating Agencies as a Permitted
Investment hereunder as evidenced in writing;
(ii) fully FDIC-insured demand and time deposits in or
certificates of deposit of, or bankers' acceptances
issued by, any bank or trust company, savings and loan
association or savings bank, provided that the
commercial paper and long-term unsecured debt
obligations of such depository institution or trust
company have the highest rating available for such
securities by the Rating Agencies, or such lower rating
as will not result in the downgrading or withdrawal of
the rating then assigned to the Certificates by any
Rating Agency as evidenced in writing;
(iii) repurchase obligations with respect to any
security described in clause (i) above entered into with
a depository institution or trust company (acting as
principal) described in clause (ii) above;
(iv) general obligations of or obligations guaranteed by
any State of the United States or the District of
Columbia receiving the highest long-term unsecured debt
rating available for such securities by the Rating
Agencies, or such lower rating as will not result in the
downgrading or withdrawal of the rating then assigned to
the Certificates by any Rating Agency as evidenced in
writing;
72
<PAGE> 85
(v) securities bearing interest or sold at a discount
that are issued by any corporation incorporated under
the laws of the United States of America or any State
thereof or the District of Columbia and is rated by the
Rating Agencies in their highest long-term unsecured
rating categories at the time of such investment or
contractual commitment providing for such investment;
provided, however, that securities issued by any such
corporation will not be Permitted Investments to the
extent that investment therein will cause the then
outstanding principal amount of securities issued by
such corporation and held as part of the Central Account
to exceed 20% of the aggregate principal amount of all
Permitted Investments held in the Central Account;
(vi) commercial or finance company paper (including both
non-interest-bearing discount obligations and
interest-bearing obligations payable on demand or on a
specified date not more than one year after the date of
issuance thereof) that is rated by the Rating Agencies
in their highest short-term unsecured debt rating
available at the time of such investment or contractual
commitment providing for such investment, and is issued
by a corporation the outstanding senior long-term debt
obligations of which are then rated by the Rating
Agencies in their highest rating available in their
short-term and long-term unsecured debt ratings, or such
lower rating as will not result in the downgrading or
withdrawal of the rating then assigned to the
Certificates by any Rating Agency as evidenced in
writing;
(vii) guaranteed reinvestment agreements acceptable to
the Rating Agencies issued by any bank, insurance
company or other corporation rated in the highest
long-term unsecured rating levels available to such
issuers by the Rating Agencies throughout the duration
of such agreements, or such lower rating as will not
result in the downgrading or withdrawal of the rating
then assigned to the Certificates by any Rating Agency
as evidenced in writing;
(viii) units of taxable money market funds, which funds
are regulated investment companies, seek to
73
<PAGE> 86
maintain a constant net asset value per share and invest
solely in obligations backed by the full faith and
credit of the United States, which funds have been
designated in writing by the Rating Agencies as
Permitted Investments with respect to this definition;
and
(ix) if previously confirmed in writing to the REMIC
Trustee, any other demand, money market or time deposit,
or any other obligation, security or investment, that
may be acceptable to the Rating Agencies as a permitted
investment of funds backing securities having ratings
equivalent to their initial rating of the Certificates;
provided, however, that no instrument or security shall be a Permitted
Investment if (y) such instrument or security evidences a right to receive only
interest payments or (z) the right to receive principal and interest payments
derived from the underlying investment provide a yield to maturity in excess
of 120% of the yield to maturity at par of such underlying investment.
74
<PAGE> 87
(e) In the event Mezzanine Lender or any purchaser at a UCC
sale obtains title to the Mezzanine Collateral pursuant to and in accordance
with the provisions of this Agreement, First Mortgage Lender hereby
acknowledges and agrees that any transfer or assumption fee in the First
Mortgage Loan Documents shall be waived as a condition to such transfer and any
such transfer shall not constitute a breach or default under the First Mortgage
Loan Documents or result in the acceleration of the First Mortgage Note.
(f) If there are no Certificates outstanding, Mezzanine Lender
may not transfer the Mezzanine Loan, or any part thereof, or exercise any
rights it may have under the Mezzanine Loan Documents to obtain title to, or
sell or transfer title to, all or any portion of the Mezzanine Collateral
without first obtaining the approval of the First Mortgage Lender, except, in
either case, if such transfer or sale is to a Permitted Institutional
Transferee.
3. SUBORDINATION; INSURANCE PROCEEDS AND CONDEMNATION; CONSTRUCTIVE
TRUST.
(a) Mezzanine Lender acknowledges and agrees that (i) the
Mezzanine Loan is and shall remain in all respects subject and subordinate in
time and in right to the First Mortgage Loan, its lien on the Property and
collateral and all of its terms and provisions and to any modifications,
consolidations, extension or renewals thereof and to any increases therein
resulting from advances to protect or preserve the lien of the First Mortgage
Loan Documents on the Property, (ii) no tenant under any lease of any portion of
the Property will be made a party defendant in any foreclosure of the Mezzanine
Collateral, nor will any other action be taken in connection with such
foreclosure which would have the effect of terminating any such lease, and (iii)
no portion of the accounts, accounts receivable, rents, issues and profits of
the Property shall be collected in connection with the foreclosure of the
Mezzanine Collateral.
(b) In the event of a casualty to the buildings or
improvements constructed on the Property or a condemnation or taking under a
power of eminent domain of the Property, the buildings or improvements thereon,
First Mortgage Lender shall have a first and prior interest in and to any
payments, awards, proceeds, distributions, or consideration arising from any
such event (the "Award"), provided that if the amount of the Award is in excess
of all amounts due under the First Mortgage Loan Liabilities, such excess Award
shall be paid to or held by First Mortgage Lender (or any other person), as a
distribution from the Company to the Mezzanine Borrower and for the benefit of
Mezzanine Lender unless other parties (other than the Company and its
Affiliates) have claimed the right to such awards or proceeds, in which case
the First Mortgage Lender shall only be required to provide prompt written
notice to the Mezzanine Lender of such excess Award and such claims by other
parties. Notwithstanding the foregoing, in the event of a casualty or
condemnation, First Mortgage Lender shall release the Awards from any such
event to Company if and to the extent required by the terms and conditions of
the First Mortgage Loan Documents in order to repair and restore the Property in
accordance with the terms and provisions of the First Mortgage Loan Documents.
Awards made available to Company for the repair or restoration of the Property
shall not be subject to attachment by Mezzanine Lender to the extent used for
such purpose.
-4-
<PAGE> 88
(c) In the event Mezzanine Lender receives any payment or
other distribution of any kind or character from the Company or with respect to
the Property (other than (i) with respect to funds payable to Mezzanine Lender
pursuant to the terms of the Mezzanine Loan Documents, or (ii) with respect to
voluntary prepayments of all or any portion of the Mezzanine Loan at a time
when no Event of Default exists with respect to the First Mortgage Loan
Documents), including with respect to Awards pursuant to Section 3(b) hereof,
such payment or other distribution shall be received and shall be held by
Mezzanine Lender in trust for First Mortgage Lender and promptly turned over by
Mezzanine Lender to First Mortgage Lender upon demand therefor.
4. AMENDMENTS TO LOAN DOCUMENTATION; MEZZANINE BORROWER
ORGANIZATIONAL DOCUMENTS.
(a) Notwithstanding any provision in the Mezzanine Loan
Documents, First Mortgage Lender shall have the right to enter into, execute
and agree to modify, amend, consolidate, spread, restate or waive any provision
of the First Mortgage Loan Documents (including amending the First Mortgage
Loan Documents in order to effectuate a defeasance of the First Mortgage Loan)
without obtaining the consent of the Mezzanine Lender, provided no such
modification, amendment, consolidation, spreader, restatement or waiver shall
(i) increase the principal amount secured by the First Mortgage Loan, (ii)
increase the interest rate payable under the First Mortgage, (iii) provide for
the payment of any additional interest, kicker or similar equity feature, (iv)
modify the maturity date of the First Mortgage Loan (except that First Mortgage
Lender may extend the maturity date of the First Mortgage Loan in connection
any work-out or other surrender, compromise, release, renewal, or indulgence
relating to the First Mortgage Loan), (v) spread the lien of the First Mortgage
Loan to encumber any additional collateral, (vi) cross-default the First
Mortgage Loan with any other indebtedness, (vii) make any amendment,
modification or supplement to that certain Cash Management Agreement by and
between the Company and First Mortgage Lender that is dated of even date with
the First Mortgage Note which adversely affects the Mezzanine Lender, or (viii)
adversely affects in any material respect the rights and interests of Mezzanine
Lender under the Mezzanine Loan Documents. Notwithstanding the foregoing, any
amounts funded by First Mortgage Lender under the First Mortgage Loan Documents
as a result of (A) the making of any protective advances or other advances by
First Mortgage Lender expressly permitted by the terms of the First Mortgage
Loan Documents, or (B) interest accruals or accretions and any compounding
thereof (including default interest) shall not at any time be deemed to
contravene this Section 4(a).
(b) First Mortgage Lender shall deliver to Mezzanine Lender
copies of any and all modifications, amendments, extensions, consolidations,
spreaders, restatements, alterations, changes or revisions to any one or more
of the First Mortgage Loan Documents (including, without limitation, any side
letters, waivers or consents entered into, executed or delivered by First
Mortgage Lender) within five (5) business days after any of such applicable
instruments have been executed by First Mortgage Lender.
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<PAGE> 89
(c) Mezzanine Lender shall have the right to modify, amend,
consolidate, spread or restate any provision of the Mezzanine Loan Documents
without obtaining the consent of the First Mortgage Lender; provided no such
modification, amendment, consolidation, spreader, restatement or waiver shall
(i) increase the principal amount secured by the Mezzanine Loan, (ii) increase
the interest rate payable under the Mezzanine Loan, (iii) provide for the
payment of any additional interest, kicker or similar equity feature, (iv)
modify the maturity date of the Mezzanine Loan (except that Mezzanine Lender may
extend the maturity date of the Mezzanine Loan in connection any work-out or
other surrender, compromise, release, renewal, or indulgence relating to the
Mezzanine Loan), (v) spread the lien of the Mezzanine Loan to encumber any
additional collateral, (vi) cross-default the Mezzanine Loan with any other
indebtedness, or (vii) adversely affect in any material respect the rights and
interests of First Mortgage Lender under the First Mortgage Loan Documents,
(viii) pledge the regular membership interests of Borrower owned by Park Plaza
2, LLC or Park Plaza 3, LLC, or (ix) materially increase the economic
obligations of Mezzanine Borrower under the Mezzanine Loan Documents.
Notwithstanding the foregoing, any amounts funded by Mezzanine Lender under the
Mezzanine Loan Documents as a result of (A) the making of any protective
advances or other advances by Mezzanine Lender expressly permitted by the terms
of the Mezzanine Loan Documents, or (B) interest accruals or accretions and any
compounding thereof (including default interest) shall not at any time be
deemed to contravene this Section 4(c).
(d) Mezzanine Lender shall deliver to First Mortgage Lender
copies of any and all modifications, amendments, extensions, consolidations,
spreaders, restatements, alterations, changes or revisions to any one or more of
the Mezzanine Loan Documents (including, without limitation, any side letters,
waivers or consents entered into, executed or delivered by Mezzanine Lender)
within five (5) business days after any of such applicable instruments have
been executed by Mezzanine Lender.
(e) Mezzanine Lender shall consent to the amendment or
modification of the Company's organizational documents upon request by the First
Mortgage Lender in order to satisfy reasonable requests made by any Rating
Agency in connection with the issuance of the Certificates; provided that same
does not materially and adversely affect the rights and interests of Mezzanine
Lender under the Mezzanine Loan Documents.
5. CURING. Subject to the terms of Section 6, the Mezzanine Lender
shall have the right, but not the obligation, (a) to cure an "Event of Default"
by the Company under the First Mortgage Loan Agreement (subject to any right of
the Company to contest an Event of Default under the First Mortgage Loan
Agreement), and (b) to satisfy any Liens (as defined in the First Mortgage Loan
Documents), claims or judgments against the Property, in either case, subject
to the Company's right to contest such matters under the First Mortgage Loan
Agreement. The Mezzanine Borrower shall reimburse the Mezzanine Lender on
demand for any and all costs incurred by the Mezzanine Lender in connection
with curing such an Event of Default by the Company under the First Mortgage
Loan or satisfying any Liens, claims or judgments against the Property
permitted hereunder.
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<PAGE> 90
6. NOTICES OF DEFAULT AND CURE.
(a) Mezzanine Lender shall, simultaneously with delivery to the
Company, give First Mortgage Lender copies of any notices given to Mezzanine
Borrower under the Mezzanine Loan Documents of "Events of Default" or notices of
events that with the passage of time and failure to cure, would result in the
occurrence of a "default" or "Event of Default" under the Mezzanine Loan
Documents, simultaneously with giving such notices to Mezzanine Borrower.
(b) First Mortgage Lender, simultaneously with delivery to the
Company, shall give Mezzanine Lender copies of all (i) notices given to Company
under the First Mortgage Loan Documents of "Events of Default," (ii) notices of
events that with the passage of time, the giving of notice, or both, may result
in the occurrence of a "default" or "Event of Default" under the First Mortgage
Loan Documents, and (iii) notice of payment defaults. The First Mortgage Lender
shall not accelerate the indebtedness evidenced, secured and/or guaranteed by
the First Mortgage Loan Documents, and it shall not pursue any remedies under
the First Mortgage Loan Documents, unless the Mezzanine Lender shall have been
given written notice of default at the time and in the manner specified herein
and shall have failed to cure or cause to be cured such default within the cure
period for such default, if any, under the First Mortgage Loan Documents, or
within five (5) days after notice of any payment default, provided the
foregoing shall not be construed to contravene the provisions of the First
Mortgage Loan Documents with respect to late payment charges and default
interest. The cure rights provided for in this Section 6(b) and Section 5 shall
not be applicable in the event the Mezzanine Lender shall be the Company or any
person or entity owned or controlled by the Company.
(c) Mezzanine Lender shall be bound by any approvals, consents
or waivers made by First Mortgage Lender to the extent First Mortgage Lender has
the right to approve, consent to or waive any matter pursuant to and in
accordance with the provisions of the First Mortgage Loan Documents.
7. TERMINATION. This Agreement shall terminate upon full and final
payment of any and all amounts due under the First Mortgage Loan, provided that
all rights of Mezzanine Lender hereunder shall automatically terminate at such
time as the Mezzanine Loan have been paid in full.
8. MISCELLANEOUS.
(a) Successors and Assigns. This Agreement shall be binding
upon, and shall inure to the benefit of, Mezzanine Lender and First Mortgage
Lender and their respective successors and assigns, whether immediate or remote.
First Mortgage Lender and the Mezzanine Lender agree, and as a condition to
assignment of the First Mortgage Loan or the Mezzanine Loan their assignees
shall agree, that this Agreement will be assigned to all future assignees of the
First Mortgage Loan or the Mezzanine Loan (as the case may be).
-7-
<PAGE> 91
(b) No Waiver by First Mortgage Lender or Mezzanine Lender.
First Mortgage Lender shall not be prejudiced in its rights under this Agreement
by any act or failure to act by Company or Mezzanine Lender, or any
non-compliance of Company or Mezzanine Lender with any agreement or obligation,
regardless of any knowledge thereof which First Mortgage Lender may have or with
which First Mortgage Lender may be charged; and no action of First Mortgage
Lender permitted hereunder shall in any way affect or impair the rights of First
Mortgage Lender and the obligations of Mezzanine Lender under this Agreement. No
delay on the part of First Mortgage Lender in the exercise of any rights or
remedies shall operate as a waiver thereof; and no single or partial exercise by
First Mortgage Lender of any other right or remedy shall preclude other or
further exercise thereof or the exercise of any other right or remedy; nor shall
any modification or waiver of any of the provisions of this Agreement be binding
upon First Mortgage Lender except as expressly set forth in a writing duly
signed and delivered on behalf of First Mortgage Lender.
Mezzanine Lender shall not be prejudiced in its rights under this
Agreement by any act or failure to act by Company, Mezzanine Borrower, or First
Mortgage Lender, or any non-compliance of Company, Mezzanine Borrower, or First
Mortgage Lender with any agreement or obligation, regardless of any knowledge
thereof which Mezzanine Lender may have or with which Mezzanine Lender may be
charged; and no action of Mezzanine Lender permitted hereunder shall in any way
affect or impair the rights of Mezzanine Lender and the obligations of First
Mortgage Lender under this Agreement. No delay on the part of Mezzanine Lender
in the exercise of any rights or remedies shall operate as a waiver thereof; and
no single or partial exercise by Mezzanine Lender of any right or remedy shall
preclude other right or remedy; nor shall any modification or waiver of any of
the provisions of this Agreement be binding upon Mezzanine Lender except as
expressly set forth in a writing duly signed and delivered on behalf of
Mezzanine Lender.
(c) Further Assurances.
(i) Mezzanine Lender shall execute such further documents
or instruments and take such further action as First Mortgage Lender may
reasonably require from time to time to carry out the intent of this
Agreement.
(ii) First Mortgage Lender shall execute such further
documents or instruments and take such further action as Mezzanine Lender
may reasonably require from time to time to carry out the intent of this
Agreement.
(d) Notices. Any notice, demand or other communication which
any party may desire or may be required to give to any other party shall be in
writing, and shall be deemed given (i) if and when personally delivered, (ii)
upon receipt if sent by a nationally recognized overnight courier addressed to a
party at its address set forth below, or (iii) on the third business day after
being deposited in United States registered or certified mail, postage prepaid,
addressed to a party at its address set forth below:
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<PAGE> 92
If to First Mortgage Lender:
-------------------------------------
-------------------------------------
-------------------------------------
If to Mezzanine Lender:
-------------------------------------
-------------------------------------
-------------------------------------
Any party hereto may change the address at which notices hereunder are required
to be given to such party by notice to the other parties in accordance herewith.
(e) Construction and Interpretation of this Agreement. This
Agreement shall be governed by and construed in accordance with the laws of the
State of Arkansas. Whenever possible, each provision of this Agreement shall be
interpreted in such a manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or be invalid
under such law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
(f) Amendments and Waivers. Neither this Agreement nor any terms
hereof may be amended, modified or waived other than by a written agreement
executed by the party against which such amendment, modification or waiver is
sought to be enforced.
(g) Counterparts. This Agreement may be executed in execution
counterparts by the signatories hereto and each such counterpart shall have the
force and effect of an original.
(h) Third Party Beneficiary. Neither the Company, the Mezzanine
Borrower, nor any other person shall be deemed a third party beneficiary of this
Agreement.
SIGNATURES COMMENCE ON THE FOLLOWING PAGE
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<PAGE> 93
IN WITNESS WHEREOF, this Agreement has been executed and delivered as of
the date set forth above.
--------------------------------,
as First Mortgage Lender
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
--------------------------------,
as Mezzanine Lender
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Attached: Exhibit A - Legal Description
Exhibit B - Approved Mezzanine Lenders
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<PAGE> 94
STATE OF __________________ )
) ss:
COUNTY OF _________________ )
This instrument was acknowledged before me on the ___ day of ____________,
19__, by ________________, the ____________________ of ___________________, a
__________________, on behalf of said ______________________ for the uses and
purposes therein set forth.
----------------------------------------
Notary Public
My Commission Expires:
------------------
----------------------------------------
Printed or Typed Name of Notary
STATE OF __________________ )
) ss:
COUNTY OF _________________ )
This instrument was acknowledged before me on the ___ day of ____________,
19__, by ________________, the ____________________ of ___________________, a
__________________, on behalf of said ______________________ for the uses and
purposes therein set forth.
----------------------------------------
Notary Public
My Commission Expires:
------------------
----------------------------------------
Printed or Typed Name of Notary
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<PAGE> 95
EXHIBIT A
LEGAL DESCRIPTION
[Attached]
<PAGE> 1
Exhibit 99.7
CASH MANAGEMENT AGREEMENT
(this "Agreement")
dated as of April 20, 2000
among
PARK PLAZA MALL, LLC
c/o First Union Real Estate Equity and Mortgage Investments
551 Fifth Avenue, Suite 1416
New York, New York 10176
(the "Borrower"),
LANDAU & HEYMAN OF ARKANSAS, INC.
120 S. Riverside Plaza, Suite 1605
Chicago, Illinois 60606
(the "Manager")
and
FIRST UNION NATIONAL BANK
One First Union Center, DC6
301 South College Street
Charlotte, North Carolina 28288-0166
(together with its successors and
assigns, the "Holder")
<PAGE> 2
WHEREAS, pursuant to the Mortgage and Security Agreement dated as of
April 20, 2000 (the "Mortgage"), by and between the Holder and the Borrower, the
Holder has provided financing (the "Loan") to the Borrower secured by the
property or properties owned by the Borrower and described in the Mortgage (the
"Property");
WHEREAS, during any Sweep Period (as defined below), the Holder may
deliver to the Borrower's bank or banks (the "Clearing Bank") maintaining the
operating account or accounts of the Borrower (the "Property Account") a
Clearing Bank Instruction Letter attached as Exhibit A hereto (together with any
modifications, amendments or replacements thereof, the "Instruction Letter"),
which provides that all Rents and Profits (as defined in the Mortgage) be
deposited in the account named therein (upon delivery of the Instruction Letter,
a "Clearing Account") and swept periodically into the accounts established
hereunder;
NOW THEREFORE, in consideration of the mutual premises contained herein
and for other good and valuable consideration the sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
Section 1. Defined Terms.
(a) As used herein the following capitalized terms shall have the
respective meanings set forth below:
"Account Proceeds" shall mean any and all Rents and Profits and
other revenue in connection with any Property that is deposited by any Clearing
Bank, the Borrower and the Manager or otherwise into the Cash Collateral Account
from time to time.
"Anticipated Repayment Date" means the "Anticipated Repayment
Date" as defined in the Note.
"Borrower Remainder Account" shall mean the account of Borrower to
which monies in the Borrower Remainder Sub-account are allocated in accordance
with the terms hereof.
"Business Day" shall mean any day other than a Saturday, Sunday
or any day on which commercial banks in New York, New York or the City in which
the Deposit Bank is located are required or permitted by law to be closed.
"Cash Collateral Account" shall have the meaning ascribed to such
term in Section 2 hereof.
"Certificates" means the securities issued in connection with a
Secondary Market Transaction of the Loan.
"Clearing Account" shall have the meaning given such term in the
Recitals.
"Clearing Bank" shall have the meaning given such term in the
Recitals.
<PAGE> 3
"Collateral" shall mean the Cash Collateral Account, all
Permitted Investments and any and all proceeds and products thereof.
"Collection Period" with respect to any Payment Date, shall mean
the period of days from the first day of the month immediately preceding the
Payment Date to the last day of the month prior to which such Payment Date
occurs.
"Debt Service Coverage Ratio" shall mean a ratio for the
applicable twelve month calendar period, annualized by the Holder as applicable,
in which: (A) the numerator is the Net Operating Income for such period as set
forth in the statements required hereunder; and (B) the denominator is the
aggregate amount of principal and interest due and payable on the Note.
"Deposit Bank" shall mean the bank or banks selected by the
Holder to maintain the Cash Collateral Account.
"Eligible Account": Either (i) an account or accounts maintained
with an Eligible Bank or (ii) a Trust Account. Eligible Accounts may bear
interest.
"Eligible Bank" shall mean a bank that (i) satisfies the Rating
Criteria and (ii) insures deposits held by such bank through the Federal Deposit
Insurance Corporation.
"Event of Default" shall mean an "Event of Default" or default
beyond applicable grace or cure period under Loan Documents.
"Gross Income from Operations" shall mean all income, computed in
accordance with generally accepted accounting principles, derived from the
ownership and operation of the Property from whatever source, including, but not
limited to, Rents and Profits, utility charges, escalations, forfeited security
deposits, interest on credit accounts, service fees or charges, license fees,
parking fees, rent concessions or credits, and other pass-through or
reimbursements paid by tenants under the Leases of any nature but excluding
sales, use and occupancy or other taxes on receipts required to be accounted for
by Borrower to any government or governmental agency, refunds and uncollectible
accounts, sales of furniture, fixtures and equipment, proceeds of casualty
insurance and condemnation awards (other than business interruption or other
loss of income insurance), and any disbursements to the Borrower from the
Impound Sub-account, the Replacement Reserve Sub-account, or any other escrow
fund established by the Loan Documents.
"Instruction Letter" shall have the meaning ascribed to such term
in the Recitals.
"Loan" shall have the meaning ascribed to such term in the
Recitals.
"Loan Documents" shall have the meaning set forth for such term
in the Mortgage.
"Mezzanine Note" shall, if applicable, mean the promissory note
from Park Plaza 2, LLC to the mezzanine lender in connection with the proposed
Mezzanine Loan (as defined in the Mortgage), as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.
2
<PAGE> 4
"Monthly Payment Amount" shall have the meaning given to such
term in the Note.
"Mortgage Satisfaction Event" shall mean the satisfaction in full
of the Obligations.
"Mortgage Sub-accounts" shall have the meaning ascribed to such
term in Section 2(c).
"Net Operating Income" shall mean the amount obtained by
subtracting Operating Expenses from Gross Income from Operations.
"Note" shall mean that certain Promissory Note of even date
herewith, made by the Borrower in favor of the Holder and evidencing the Loan,
as the same may be amended, restated, replaced, supplemented or otherwise
modified from time to time.
"Obligations" shall mean any and all debt, liabilities and
obligations of the Borrower to the Holder pursuant to or in connection with the
Loan, whether now or hereafter existing, including without limiting the
generality of the foregoing, the indebtedness evidenced by the Note, all
interest accruing thereon, and any and all debt, liabilities and obligations of
the Borrower under the Loan Documents.
"Operating Expenses" shall mean the total of all expenditures,
computed in accordance with generally accepted accounting principles, of
whatever kind relating to the operation, maintenance and management of the
Property that are incurred on a regular monthly or other periodic basis,
including without limitation, utilities, ordinary repairs and maintenance,
insurance, license fees, property taxes and assessments, advertising expenses,
management fees, payroll and related taxes, computer processing charges,
operational equipment or other lease payments as approved by Holder, and other
similar costs, but excluding depreciation, debt service, capital expenditures,
and contributions to the Replacement Reserve Sub-account Fund, the Impound
Sub-account, the Leasing Reserve Sub-account and any other reserves required
under the Loan Documents.
"Payment Date" shall have the meaning given to such term in the
Note.
"Permitted Investments" shall mean any investment suitable for
the investment of escrows and reserves established under mortgage loans included
in a Secondary Market Transaction in which some or all of the Certificates
issued are rated "AAA" (or the equivalent rating) by the Rating Agencies, as the
standards therefor are established from time to time, or such investments which
are otherwise acceptable to the Holder.
"Person" shall mean any individual, sole proprietorship,
partnership, limited liability partnership, joint venture, trust, unincorporated
organization, association, corporation, limited liability company, institution,
entity, party or government (whether territorial, national, federal, state,
county, city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).
3
<PAGE> 5
"Property" shall have the meaning ascribed to such term in the
Recitals.
"Rating Agencies" shall mean (i) any nationally-recognized
statistical rating organizations that provide a rating on any Certificates on
the date of issuance of the Certificates or (ii) prior to the issuance of the
Certificates, S&P and any other nationally-recognized statistical rating
organizations that have been designated by the Holder in its sole discretion.
"Rating Criteria" with respect to any Person, shall mean that (i)
the short-term unsecured debt obligations of such Person are rated at least
"A-1" by S&P and, if rated by another Rating Agency, are rated in an equivalent
category by such other Rating Agency, if deposits are held by such person for a
period of less than 30 days, or (ii) the long-term unsecured debt obligations of
such Person are rated at least "AA-" by S&P and, if rated by another Rating
Agency, are rated in an equivalent category by such other Rating Agency, if
deposits are held by such person for a period of 30 days or more.
"Rents and Profits" shall have the meaning ascribed to such term
in the Mortgage.
"S&P" shall mean Standard & Poor's Ratings Services, a division
of The McGraw-Hill Companies, Inc.
"Secondary Market Transaction" shall have the meaning given to
such term in the Mortgage.
"Servicer" shall mean a servicer or account administrator of the
Loan designated by and acting for the benefit of the Holder.
"Sweep Period" shall mean (i) any period during which the Debt
Service Coverage Ratio is less than 1.15 computed by Holder on a trailing twelve
month basis as of any date, (ii) the period during which a Mezzanine Note has
been issued and the outstanding balance has not been paid in full, (iii) if,
after July 27, 2003, (but said date shall only apply so long as Borrower uses
commercially reasonable efforts to enforce Section 4.2 of the "REA" as defined
in the Mortgage) either of the two Dillard's Department Stores located on the
land adjacent to the Property becomes vacant or fails to operate in accordance
with Section 4.2 of the REA, (iv) the period of time from the date which is
three months prior to the Anticipated Repayment Date to the occurrence of a
Mortgage Satisfaction Event or (v) the period of time from the occurrence of an
Event of Default to the occurrence of a Mortgage Satisfaction Event; provided,
however, that if such period commenced as a result of a monetary default and
Borrower tenders and Holder accepts, in its sole discretion, a cure of such
monetary default, then such period shall terminate upon Holder's acceptance of
such cure; provided, further, that in no event shall Holder be obligated to
terminate such period more than one (1) time in any twelve (12) month period
(the occurrence of any of items (i), (iii) or (v) is referred to as a "CASH
TRAP").
"Trust Account" shall mean a segregated trust account maintained
by a corporate trust department of a federal depository institution or a state
chartered depository institution subject to regulations regarding fiduciary
funds on deposit similar to Title 12 of the Code of Federal Regulations Section
9.10(B) which has corporate trust powers and is acting in its fiduciary
capacity.
4
<PAGE> 6
(b) The meanings given to capitalized terms defined herein shall be
equally applicable in both singular and plural forms of such terms.
(c) Capitalized terms used and not defined herein shall have the
respective meanings given to such terms in the Mortgage. Establishment of the
Cash Collateral Account.
Section 2. Establishment of the Cash Collateral Account.
(a) The Holder has established and will maintain while the Loan is
outstanding a cash collateral account (which may be a book-entry sub-account of
an Eligible Account) at the Deposit Bank (the "Cash Collateral Account") which
shall be entitled "FIRST UNION NATIONAL BANK as Mortgagee of Park Plaza Mall,
LLC Cash Collateral Account". In connection with a Secondary Market Transaction,
the Holder shall have the right to cause Deposit Bank to entitle the Cash
Collateral Account with such other designation as the Holder may select in its
reasonable discretion to reflect such assignment or transfer. The Holder shall,
or shall cause the Servicer to, cause the Deposit Bank to deposit into the Cash
Collateral Account, all Rents and Profits and other amounts transferred to the
Deposit Bank from the Clearing Bank.
(b) The Cash Collateral Account shall be an interest bearing account.
The interest rate with respect to funds held in the Cash Collateral Account
shall be the rate for such deposits as is customarily paid by the Deposit Bank
or Servicer, as applicable. All such interest income remaining in the Cash
Collateral Account shall be for the benefit of the Holder and credited to the
Cash Collateral Account. The Cash Collateral Account shall be assigned the
federal tax identification number of the Borrower, which number is __________.
Borrower shall provide Holder or the Deposit Bank, at any time upon request of
Holder, with a Form W-8 or W-9 to evidence Borrower is not subject to any
back-up withholding under the United States Internal Revenue Code. Prior to
application in accordance with the terms hereof, all amounts in the Cash
Collateral Account shall remain an asset of Borrower, subject to the lien and
security interest granted Holder hereunder, and subject to all of the terms and
conditions of this Agreement and the other Loan Documents.
(c) The following sub-accounts (collectively, the "Mortgage Sub-
accounts") of the Cash Collateral Account shall be maintained on a ledger-entry
basis:
(i) "Impound Sub-account";
(ii) "Monthly Debt Service Sub-account";
(iii) "Replacement Reserve Sub-account";
(iv) Operating Expense Sub-account'
(v) "Casualty and Condemnation Proceeds Sub-account";
(vi) "Borrower Remainder Sub-account".
5
<PAGE> 7
Amounts allocated to the Mortgage Sub-accounts shall be disbursed in
accordance with the terms of this Agreement and the Note.
(d) (i) During any Sweep Period, the Holder may deliver one or more
executed Instruction Letters to the Clearing Bank. The Borrower hereby agrees
that if the bank, bank location or account number of the Property Account is
changed prior to a Sweep Period, the Borrower shall, within five (5) Business
Days after such change, execute a replacement Instruction Letter to cover the
new bank, bank location and/or account, which replacement Instruction Letter
shall be in the form of the Instruction Letter annexed hereto as Exhibit A, with
such changes thereto as may be requested by such new Clearing Bank in order to
conform such Instruction Letter with such new bank's customary requirements. If
any Clearing Bank shall request any changes, modifications or supplements to any
Instruction Letter to conform to the Clearing Bank's customary practice or
requirements, as the same may change from time to time, then if such changes,
modifications or supplements are acceptable to Holder, Borrower shall execute
and deliver to Holder such instruments as the Clearing Bank shall request to
effectuate such modifications or changes. In the event the Borrower fails to
execute an Instruction Letter as provided above, Borrower hereby irrevocably
appoints the Holder as its attorney-in-fact (coupled with an interest) with full
authority to enter into replacement Instruction Letter(s) and to execute on
behalf of the Borrower any new modified Instruction Letter acceptable to the
proposed Clearing Bank and to execute on behalf of the Borrower the Lessee
Payment Direction Letters and the Payment Direction Letters described below. All
costs and expenses, including, but not limited to legal fees and disbursements,
incurred by the Holder to negotiate and execute any modified Instruction Letter
shall be paid by the Borrower.
(ii) At the election of the Holder, during any Sweep Period, within
ten (10) Business Days, the Borrower will establish a new Eligible Account
(which shall become the Clearing Account) at a bank selected by the Holder and
shall cause all funds in the existing Clearing Account to be transferred to the
new Clearing Account and any future Rents and Profits from the Property to be
deposited in such new Clearing Account.
(e) The Holder or the Servicer may (but shall not be obligated to)
direct the Deposit Bank to invest amounts allocated to the Cash Collateral
Account in Permitted Investments selected by the Holder. All earnings on such
Permitted Investments on funds allocated to in such Accounts (net, to the extent
applicable, of any interest income payable to Borrower as provided herein) shall
be for the benefit of the Servicer as additional servicing compensation. If the
Holder or Servicer elects to invest funds in such accounts in Permitted
Investments, then the Holder or Servicer, as applicable, shall have liability
for any loss in investments of funds that are invested in Permitted Investments
but no such loss or liability shall affect Borrower's obligations to make all
payments and deposits required to be made by Borrower under the Loan Documents.
(f) It is the intention of the parties hereto that the entire amounts
deposited in the Cash Collateral Account (or as much thereof as the Holder may
reasonably arrange to invest) may be invested in Permitted Investments, and, in
such event, that such Account shall be a so-called "zero balance" account. All
funds in such Account that are invested in a Permitted Investment are deemed to
be held in such Account for all purposes of the Mortgage and the other Loan
Documents.
6
<PAGE> 8
(g) In order to further secure the performance by the Borrower of the
Obligations and as a material inducement for the Holder to make the Loan in
accordance with the terms of the Loan Documents, the Borrower hereby (i)
requests that the Cash Collateral Account be established on its behalf at the
Deposit Bank in the names set forth above and (ii) acknowledges that (A) the
Cash Collateral Account will be subject to the sole dominion, control and
discretion of the Holder (which may be exercised through the Servicer), subject
to the terms, covenants and conditions of this Agreement and the Mortgage, (B)
the Holder shall have the sole right to make withdrawals or transfers of funds
from the Cash Collateral Account and (C) neither the Borrower nor any other
Person claiming on behalf of or through the Borrower shall have any right or
authority, whether express or implied, to make use of, or withdraw any funds,
investments or other properties from, the Cash Collateral Account, or to give
any instructions with respect to the Cash Collateral Account. Allocation and
Disbursement of Funds in the Cash Collateral Account.
Section 3. Allocation and Disbursement of Funds in the Cash Collateral Account.
(a) Commencing on the first Business Day of each Collection Period
on or after the commencement, and during the continuance of, a Sweep Period
occurring prior to the Anticipated Repayment Date, the Holder or the Servicer
shall allocate amounts deposited in the Cash Collateral Account from time to
time during such Collection Period in the order and priority set forth in
Section 1.06 of the Note. Commencing on or prior to the first Business Day of
each Collection Period beginning on or after the Anticipated Repayment Date, the
Lender or the Servicer shall allocate amounts deposited in the Cash Collateral
Account from time to time during such Collection Period in the order and
priority set forth in Section 1.07 of the Note.
(b) The Holder or the Servicer shall disburse:
(i) Amounts allocated to the Impound Sub-account on each
Payment Date for further disbursement therefrom as set forth in the Mortgage;
(ii) Amounts allocated to the Monthly Debt Service Sub-account
to the Holder on the related Payment Date;
(iii) Amounts allocated to the Replacement Reserve as set forth
in the Mortgage;
(iv) Amounts allocated to the Operating Expense Sub-account on
the last Business Day of each week to the following account:
7
<PAGE> 9
<TABLE>
<CAPTION>
<S> <C>
American National Bank
ABA#: 071000770
Attention: Tari Tomi (phone 312-661-5874)
Fax: 312-661-3566
Account: Landau & Heyman of Arkansas Inc.
as Managing Agent - Operating Account
Account #: 5330232945
----------
</TABLE>
(iv) Amounts allocated to the Borrower Remainder Sub-account on
the last Business Day of each week to the following account:
<TABLE>
<CAPTION>
<S> <C>
Bank: HSBC
ABA#: 021001088
Attention: Roger Heitman or Mary Ellen Smyth
Fax: (212) 983-8962
Account: Park Plaza Mall, LLC
Account #: 0006946615
</TABLE>
Section 4. Fees
(a) The Borrower agrees to pay the fees of the Servicer and the
Deposit Bank in accordance with the customary fees charged by the Deposit Bank
and the Servicer for the services described herein, as such fees are established
from time to time.
(b) Upon the request of the Borrower, the Holder shall cause the
Deposit Bank and the Servicer to include their fees in an account analysis
statement.
Section 5. Termination.
(a) The Holder may replace the Deposit Bank from time to time
with a new Deposit Bank upon five days' notice to the Borrower. The Borrower
hereby agrees that it shall take all reasonable action necessary to facilitate
the transfer of the respective obligations, duties and rights of the Deposit
Bank to the successor thereof selected by the Holder in its sole discretion.
(b) The Holder shall terminate this Agreement upon the occurrence
of a Mortgage Satisfaction Event and return to Borrower all monies then held in
the Cash Collateral Account after liquidating all Permitted Investments.
Section 6. Matters Concerning the Borrower.
(a) At the option of the Holder, the Holder may require one or
more of the following upon the commencement and during the continuation of any
Sweep Period:
(i) Pursuant to an instruction letter in the form of Exhibit
B hereto (a "Payment Direction Letter"), the Borrower or the Manager shall
immediately instruct each of the
8
<PAGE> 10
credit card companies with which the Borrower or the Manager has entered into
merchant's or other credit card agreements that all Rents and Profits payable
with respect to the Property, in accordance with such merchant's agreements or
otherwise, shall be transferred instead by wire transfer or the ACH System to
the Clearing Bank for deposit in the Clearing Account.
(ii) The Borrower or the Manager shall immediately instruct all
Persons that presently or hereafter maintain open accounts with Borrower or
the Manager or with whom the Manager or the Borrower presently or hereafter does
business on an "accounts receivable" basis with respect to the Property to
deliver all payments due under such accounts to the Clearing Bank at a lock box
address at the Clearing Bank (the "Lock Box Address") in the form of cashier's
checks or equivalent instruments for the payment of money. Neither the Borrower
nor the Manager shall direct any such Person to make payments due under such
accounts in any other manner.
(iii) Pursuant to an instruction letter in the form of Exhibit C
hereto (a "Lessee Payment Direction Letter"), the Borrower or the Manager shall
immediately notify and advise each tenant of the Property (collectively, the
"Tenants") under each lease with respect to the Property (whether such lease is
presently effective or executed after the date hereof), to send directly to the
lockbox address at the Clearing Bank promptly when due all payments, whether in
the form of checks, cash, drafts, money orders or any other type of payment
whatsoever of rent or any other item payable to the Borrower as landlord under
such Leases. The foregoing requirements need not be satisfied with respect to
any Lease executed after the date hereof to the extent the terms and conditions
of the Lessee Payment Direction Letter are incorporated in the applicable Lease.
(iv) If notwithstanding the provisions of this Section 6(a),
Borrower or Manager (or any affiliate thereof) receives any Rents and Profits
then (x) Borrower or Manager (or such affiliate) shall be deemed to hold such
Rents and Profits in trust for Holder and (y) the Borrower and the Manager shall
deposit with the Clearing Bank within one Business Day of receipt all such Rents
and Profits received by the Borrower or the Manager (or such affiliate).
(b) Upon request of Holder, Borrower shall deliver to Holder such
evidence as Holder may reasonably request to evidence that Borrower is
complying with the provisions of this Section 6(a). Without the prior written
consent of the Holder, neither the Borrower nor the Manager shall (i) terminate,
amend, revoke or modify any Lessee Payment Direction Letter in any manner or
(ii) direct or cause any Tenant to pay any amount in any manner other than as
provided specifically in the related Lessee Payment Direction Letter.
(c) The Borrower hereby pledges, transfers and assigns to the Holder,
and grants to the Holder, as additional security for the payment and performance
of the Obligations, a continuing perfected first priority security interest in
and to, and a first lien upon, (i) the Cash Collateral Account, the Clearing
Account, the Property Account and all of the Borrower's right, title and
interest in and to all cash, property or rights transferred to or deposited
therein from time to time, (ii) all earnings, investments and securities held in
the Cash Collateral Account in accordance with this Agreement and (iii) any and
all proceeds of the foregoing. This Agreement and the pledge, assignment and
grant of security interest made hereby shall secure payment of all amounts
payable by the Borrower to the Holder under the Note and the other Obligations.
The
9
<PAGE> 11
Borrower acknowledges that the Servicer, Clearing Bank and Deposit Bank are
acting as the agent of, and at the direction of, the Holder in connection with
the subject matter of this Agreement. The Borrower further agrees to execute,
acknowledge, deliver, file or do at its sole cost and expense, all other acts,
assignments, notices, agreements or other instruments as the Holder may
reasonably require in order to effectuate, assure, convey, secure, assign,
transfer and convey unto the Holder any of the rights granted by this Agreement
and to more fully perfect and protect any lien or security interest granted
hereby.
(d) In its sole discretion, the Borrower may, from time to time
deposit amounts into the Cash Collateral Account in respect of any Mortgage
Sub-account from sources of the Borrower other than those received by the
Clearing Bank with respect to the then-current Collection Period; provided, that
if the Borrower deposits such amounts, the amounts deposited shall be subject to
all of the terms hereof as if not separately deposited by the Borrower, and may
not be withdrawn except as otherwise provided for in this Agreement. Nothing
contained herein shall impair or otherwise limit Borrower's obligations to
timely make the payments (including, without limitation, interest and principal)
required by the Note, the Mortgage and the other Loan Documents, it being
understood that such payments shall be so timely made in accordance with the
Loan Documents regardless of the amounts on deposit in the Clearing Account
and/or Cash Collateral Account.
(e) The Borrower hereby covenants and agrees that amounts allocated
to the Operating Expense Sub-account with respect to the payment of operating
expenses or capital expenditures shall be used only for payment of checks made
by the Borrower for the payment of expenses incurred in the ordinary course of
business of the ownership and operation of the Property or for the payment of
expenditures approved by the Holder.
(f) If the actual Operating Expenses paid during any Collection
Period are less than the amount transferred to the Operating Account during such
Collection Period, the amount of such difference shall promptly be deposited by
Borrower back into the Cash Collateral Account, in any event no later than
twenty (20) days after the end of the applicable Collection Period, such amount
to be applied in accordance with the Annual Budget then applicable when such sum
is redeposited into the Cash Collateral Account. Within twenty (20) days after
the end of each Collection Period, Borrower shall prepare and deliver to Holder
a financial statement in form and substance satisfactory to Holder in all
material respects setting forth all amounts expended for Operating Expenses
during such Collection Period, including showing variances from budget and
setting forth a short explanation of any variance in excess of ten percent (10%)
of the budget line item in question and identifying any payment made to an
affiliate and the reasons therefor. Each such financial statement shall be
certified by an officer of Borrower as being true, correct and complete in all
material respects and include a certification that all amounts transferred to
the Operating Account pursuant to this Agreement were expended for Operating
Expenses in accordance with this Agreement or have been or are being returned to
the Cash Collateral Account as provided above. Borrower shall promptly deliver
to Holder such further documentation (including, without limitation, invoices,
canceled checks or copies of contracts) and information as Holder may reasonably
request regarding any payments described in Borrower's financial statements. If
Borrower shall fail to deposit any excess funds in the Cash Collateral Account
or provide its required financial statements or, after written request of
Holder, evidence of expenditures, in each case, within the time periods provided
in the preceding
10
<PAGE> 12
sentences and such failure continues for ten (10) or more days after notice of
such failure, then in addition to any other remedies which Holder may have with
respect thereto, Holder may elect not to fund the Operating Expense Sub-account
from monies in the Cash Collateral Account or Holder may continue to hold the
funds in the Operating Expense Sub-account until such failure is cured.
Section 7. Certain Matters Regarding the Holder.
(a) The parties agree that the Deposit Bank shall pay over to the
Holder all amounts deposited in any account maintained hereunder on demand,
without notice to the Borrower, provided, that in making such demand, the Holder
gives notice, in writing, signed by the Holder or an authorized agent thereof,
that an Event of Default under the Mortgage has occurred and is continuing.
Notwithstanding the foregoing, the Borrower shall not be deemed to have waived
any rights the Borrower may have against the Holder if it is determined that the
Holder acted improperly.
(b) Holder may exercise in respect of the Collateral all rights
and remedies available to Holder hereunder or under the other Loan Documents or
otherwise available at law or in equity. Without limiting the generality of the
foregoing or the provisions of paragraph (a) above, upon the occurrence and
during the continuance of an Event of Default, Borrower acknowledges and agrees
that it will have no further right to request or otherwise require Holder to
disburse funds from the Clearing Account or the Cash Collateral Account in
accordance with the terms of this Agreement, it being agreed that Holder may, at
its option, (i) direct the Deposit Bank to continue to hold the funds in the
Cash Collateral Account and/or (ii) continue from time to time to apply all or
any portion of the funds held in the Cash Collateral Account to any payment(s)
which such funds could have been applied to prior to such Event of Default, to
the extent and in such order and manner as Holder in its sole discretion may
determine, and/or (iii) direct that the Deposit Bank or Clearing Bank from time
to time disburse all or any portion of the funds held in the Cash Collateral
Account or other Collateral then or thereafter held by the Deposit Bank or
Clearing Bank, as applicable, to Holder, in which event Holder may apply the
funds held in the Cash Collateral Account or other Collateral to the Obligations
in any order and in such manner as Holder may determine in its sole discretion.
(c) Upon the occurrence and during the continuance of any Event o
f Default, Holder may, at any time or from time to time, collect, appropriate,
redeem, realize upon or otherwise enforce its rights with respect to the
Collateral, without notice to Borrower and without the need to institute any
legal action, make demand, exhaust any other remedies or otherwise proceed to
enforce its rights.
(d) No failure on the part of Holder to exercise, and no delay
in exercising, any right under this Agreement shall operate as a waiver thereof;
nor shall any single or partial exercise of any such right preclude any other or
further exercise thereof or the exercise of any other right under this Agreement
or the other Loan Documents. The remedies provided in this Agreement, the Note,
the Mortgage and the other Loan Documents are cumulative and not exclusive of
any remedies provided at law or in equity.
11
<PAGE> 13
Section 8. Casualty and Condemnation Proceeds Sub-account.
Notwithstanding anything to the contrary contained herein during any
Sweep Period, the following items of Rents and Profits shall be deposited and
held in the Mortgage Sub-accounts described below and shall be applied in the
order of priority set forth in this Section 8, and Borrower shall advise Holder
at the time of receipt thereof of the nature of such Receipt so that Holder
shall have sufficient time to instruct the Deposit Bank to deposit and hold such
amounts in the appropriate Mortgage Sub-account:
(a) Proceeds of any insurance, including, without limitation, rent
or business interruption insurance, which amounts shall be deposited in the
Casualty and Condemnation Proceeds Sub-account and shall be applied (by
instructions of Holder or Servicer to the Deposit Bank) in accordance with the
provisions of the Mortgage applicable thereto.
(b) Condemnation awards, which amounts shall be deposited in the
Casualty and Condemnation Proceeds Sub-account and shall be applied (by
instructions of Holder or Servicer to the Deposit Bank) in accordance with the
provisions of the Mortgage applicable thereto.
Section 9. Successors and Assigns; Assignments; Agents.
(a) This Agreement shall bind and inure to the benefit of and be
enforceable by the Borrower, the Holder and the Manager and their respective
successors and assigns.
(b) The Holder shall have the right to assign or transfer rights
and obligations under this Agreement without limitation. Any assignee or
transferee shall be entitled to all the benefits afforded the Holder under this
Agreement; provided, that such assignee or transferee shall upon written request
deliver to the other parties hereto written confirmation that such assignee or
transferee agrees to be bound by the terms of this Agreement and is also the
assignee or transferee of the Note and the other Loan Documents.
(c) The Borrower shall have the right to assign and transfer its
rights and obligations hereunder only with the prior written consent of the
Holder.
(d) Any duties or actions of the Holder hereunder may be
performed by the Holder or its agent(s), including without limitation, any
Servicer or trustee in a Secondary Market Transaction, which includes the Loan.
Section 10. Amendment.
This Agreement may be amended from time to time in writing by all parties
hereto. All amendments to this Agreement shall be in writing.
Section 11. Notices.
Notices to the parties hereto shall be addressed and delivered in the
manner set forth in the Mortgage. Unless otherwise expressly provided herein,
all such notices, to be effective, shall be in writing (including by facsimile),
and shall be deemed to have been duly given or made (a) when delivered by hand
or by nationally recognized overnight carrier, (b) upon
12
<PAGE> 14
receipt after being deposited in the mail, certified mail and postage prepaid or
(c) in the case of facsimile notice, when sent and electronically confirmed,
addressed as set forth above with a confirmatory copy to follow by regular mail.
Section 12. Limitation on Liability.
Holder shall not be liable for any acts, omissions, errors in judgment or
mistakes of fact or law, including, without limitation, acts, omissions, errors
or mistakes with respect to the Collateral, except for those arising as a result
of Holder's active gross negligence or willful misconduct. Without limiting the
generality of the foregoing, except as otherwise expressly provided for herein
or as required by applicable law, Holder shall have no duty as to any
Collateral, as to ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Collateral, whether or not Holder has or is deemed to have knowledge of such
matters, or as to the taking of any necessary steps to preserve rights against
any parties or any other right pertaining to any Collateral. Holder is hereby
authorized by Borrower to act on any written instruction believed by Holder in
good faith to have been given or sent by Borrower.
Section 13. Mortgagee-in-Possession.
Borrower hereby confirms and agrees that notwithstanding the provisions
of this Agreement, Borrower retains sole control of the operation and
maintenance of the Property, subject to the obligations of Borrower under the
Mortgage, the Mortgage, the Assignment of Leases and Rents and the other Loan
Documents, and Holder is not and shall not be deemed to be a mortgagee in
possession.
Section 14. Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.
[SIGNATURES COMMENCE ON THE FOLLOWING PAGE]
13
<PAGE> 15
IN WITNESS WHEREOF, the parties hereto have executed this CASH MANAGEMENT
AGREEMENT in several counterparts (each of which shall be deemed an original)
as of the date first above written.
PARK PLAZA MALL, LLC, a Delaware
limited liability company
By: Park Plaza 3, LLC, a Delaware limited
liability company, its general manager
By: /s/ DANIEL FREIDMAN
-------------------------
Name: Daniel P. Friedman
Title: President
FIRST UNION NATIONAL BANK
a national banking association
By:
--------------------------
Name:
Title:
LANDAU & HEYMAN OF ARKANSAS, INC.,
an Arkansas corporation
By:
------------------------
Name:
Title:
14
<PAGE> 16
IN WITNESS WHEREOF, the parties hereto have executed this CASH MANAGEMENT
AGREEMENT in several counterparts (each of which shall be deemed an original)
as of the date first above written.
PARK PLAZA MALL, LLC, a Delaware
limited liability company
By: Park Plaza 3, LLC, a Delaware limited
liability company, its general manager
By:
-------------------------
Name: Daniel P. Friedman
Title: President
FIRST UNION NATIONAL BANK
a national banking association
By: /s/ ROBERT VERNON
--------------------------
Name: Robert Vernon
Title: Director
LANDAU & HEYMAN OF ARKANSAS, INC.,
an Arkansas corporation
By:
------------------------
Name:
Title:
14
<PAGE> 17
IN WITNESS WHEREOF, the parties hereto have executed this CASH MANAGEMENT
AGREEMENT in several counterparts (each of which shall be deemed an original)
as of the date first above written.
PARK PLAZA MALL, LLC, a Delaware
limited liability company
By: Park Plaza 3, LLC, a Delaware limited
liability company, its general manager
By:
-------------------------
Name: Daniel P. Friedman
Title: President
FIRST UNION NATIONAL BANK
a national banking association
By:
--------------------------
Name:
Title:
LANDAU & HEYMAN OF ARKANSAS, INC.,
an Arkansas corporation
By: [SIG]
------------------------
Name:
Title:
14
<PAGE> 18
EXHIBIT A
CLEARING BANK INSTRUCTION LETTER
___________ __, 1999
Re:
Ladies and Gentlemen:
Park Plaza Mall, LLC (the "Borrower") has entered into a Mortgage and
Security Agreement, dated as of April __, 2000 (the "Mortgage"), with FIRST
UNION NATIONAL BANK (together with its successors and assigns, the "Holder"),
pursuant to which the Holder has provided financing to the Borrower secured by
certain mortgages and/or deeds of trust on certain properties owned by the
Borrower, including the property described in the caption of this letter (the
"Property"). The Property is currently being managed by the Landau & Heyman (the
"Manager").
Currently, the Borrower maintains the following account (the "Property
Account") with you:
Name:
Account
The Borrower hereby notifies you that the Holder has required that it
implement certain automatic clearing and processing functions and hereby
instructs you, commencing on [ ], 200 [ ] (the "Sweep Commencement Date"),
to disburse all revenues from the Property ("Revenues") deposited in the
Property Account from time to time in accordance with the following terms and
provisions:
Promptly upon receipt of this letter, you shall establish a post office
box address in which the Borrower shall cause all Revenues in the form of
checks, money orders and similar instruments to be deposited. Within one
Business day (as defined below) of receipt, you, as the "Clearing Bank," shall
receive and process all Revenues and shall deposit the same into the Property
Account referred to above, which Property Account, or an appropriate
substitution or replacement thereof, shall thereafter be referred to as the
"Clearing Account." Checks made payable to the Borrower, the Manager, the
Property or the Clearing Account shall be deemed suitable for deposit in the
Clearing Account. Items deposited with Clearing Bank that are returned for
insufficient or uncollected funds will be redeposited the first time. Items
returned unpaid a second time shall be processed in accordance with the standard
procedures of the Clearing Bank.
The Clearing Account shall be an account of the Borrower but shall be
under the sole dominion and control of the Holder and any servicer (a
"Servicer") or other designee of the
A-1
<PAGE> 19
Holder named below or in a subsequent written notice from the Holder.
The Clearing Account shall be assigned the federal tax identification number of
the Borrower, which number is ______________. You shall hold amounts on deposit
in the Clearing Account as agent for the Holder and shall not commingle such
amounts with any other amounts held by you on behalf of the Holder, the Borrower
or any other person or entity. If, in accordance with standard operating
procedures, the Clearing Account may be established as a trust account for the
benefit of the Holder, Borrower directs that the Clearing Account be maintained
as such an account.
The Borrower hereby notifies the Clearing Bank that, in accordance with
the Mortgage, the Clearing Account and all amounts held therein from time to
time, and all renewals, replacements and substitutions therefor, have been
irrevocably pledged to the Holder as additional security for the loan evidenced
by the Mortgage. In connection with such pledge, the Borrower hereby waives all
right of withdrawal from the Clearing Account.
The Borrower hereby irrevocably instructs and authorizes you, beginning
on the first business day after the Sweep Commencement Date, to disburse on the
last business day of each week via the ACH System, if available, or otherwise by
wire transfer, all amounts constituting available funds on deposit in the
Clearing Account to the following account:
---------------------------------------------
---------------------------------------------
---------------------------------------------
---------------------------------------------
If transferring such amounts by the ACH System and if required by
Clearing Bank, each such transfer shall be initiated by the Holder or by the
Servicer. If the Clearing Bank provides electronic data transfer services, the
Clearing Bank shall provide the Holder and the Servicer access to the Clearing
Bank's electronic data transfer system for purposes of effecting such transfers.
At any time that funds may not be transferred as described above in this
paragraph, the Clearing Bank shall transfer amounts by wire transfer of
immediately available funds.
The instructions set forth herein are irrevocable and are not subject to
modification in any manner, except that the Holder or the Servicer may, by
written notice to you, amend the instructions contained herein.
In the event that the Clearing Bank fails to acknowledge that its
procedures with respect to the Property Account are governed by this letter due
to an objection to the terms hereof or otherwise, the Borrower hereby appoints
the Holder as its attorney-in-fact with full authority to make changes to this
letter and to execute on behalf of the Borrower any new modified letter
acceptable to the proposed Clearing Bank.
Matters not covered by this letter shall be determined in accordance with
the customary procedures of the Clearing Bank and in the event of a conflict
between the terms of this letter and the customary procedures of the Clearing
Bank, the terms of this letter shall govern.
A-2
<PAGE> 20
The undersigned also notifies you that the name and address of the
current Servicer with respect to the Cash Management Agreement is:
---------------------------------------------
---------------------------------------------
---------------------------------------------
---------------------------------------------
If you have any questions concerning this letter or the Cash Management
Agreement, please contact
------------------- of the Holder at
( ) or of the Servicer at
- ---------------------------- ------------------------
.
- --------------------------
The address of the current Manager is:
---------------------------------------------
---------------------------------------------
---------------------------------------------
---------------------------------------------
A-3
<PAGE> 21
Please acknowledge receipt of this letter and your agreement to the terms
described herein by executing and returning to the Borrower an acknowledgment
in the form of Schedule 1 hereto.
PARK PLAZA MALL, LLC,
a Delaware limited liability company
By: Park Plaza 3, LLC,
a Delaware limited liability company,
its general manager
By:
---------------------------
Name: Daniel P. Friedman
Title: President
ACKNOWLEDGED AND AGREED:
- -------------------------------
By:
---------------------------
Name:
Title:
A-4
<PAGE> 22
SCHEDULE 1
FORM OF ACKNOWLEDGMENT
[DATE]
[Borrower]
[Holder]
Reference is made to that certain Clearing Bank Instruction Letter dated
____, 199[ ] (the "Instruction Letter") from [________________________] (the
"Borrower"). I, _____________ , on behalf of ______________________(the "Bank"),
hereby acknowledge receipt of the instructions set forth in the Instruction
Letter and notice of the pledges and security interest described therein. The
Bank hereby agrees to perform the instructions set forth in the Instruction
Letter upon the delivery by [____________________________ ] (the "Holder") of
the Instruction Letter.
[BANK]
By:
---------------------------------
Name:
Title:
LOCK BOX ADDRESS:
- ---------------------------------------------
- ---------------------------------------------
- ---------------------------------------------
1
<PAGE> 23
EXHIBIT B
FORM OF PAYMENT DIRECTION LETTER
[MANAGER LETTERHEAD]
[Date]
[Addressee]
Re: Payment Direction Letter for [Property]
Dear [ ]:
[BORROWER] (the "Owner"), the owner of the [PROPERTY] (the "Property"),
has mortgaged the Property to __________________________ (together with its
successors and assigns, the "Holder") and has agreed that all Rents received
with respect to the Property will be paid directly to a bank selected by the
Holder. Therefore, from and after [DATE], please remit all payments due to the
[Owner] [MANAGER], the manager of the Property (the "Manager"),] [under that
certain [REFERENCE AGREEMENT], dated [_______], 199[__] (the "Agreement")
between the [Owner][Manager] and you, as follows:
(1) If paying by check, money order or other instrument, please
mail such items to the following address:
[CLEARING BANK]
[Lockbox Address]
All checks or other instruments should be made out to the name of the
"[PROPERTY]"; or
(2) Transfer such amounts by the ACH System or wire transfer to
the following account:
[CLEARING BANK]
ABA#
Attn:
Fax:
Account of:
Account #
------------------------
These payment instructions cannot be withdrawn or modified without the
prior written consent of the Holder or its agent (the "Servicer"), or pursuant
to a joint written instruction from the Borrower and the Holder or the Servicer.
Until you receive written instructions from the Holder or the Servicer, continue
to send all payments due under the
B-1
<PAGE> 24
Agreement to [CLEARING BANK]. All payments due under the Agreement shall be
remitted to [CLEARING BANK] no later than the day on which such amounts are due.
If you have any questions concerning this letter, please contact
[_________] at [___________]. We appreciate your cooperation in this matter.
Sincerely,
[OWNER] [MANAGER]
By:
------------------------------
Name:
Title:
B-2
<PAGE> 25
EXHIBIT C
FORM OF LESSEE PAYMENT DIRECTION LETTER
[MANAGER LETTERHEAD]
[Date]
[Addressee]
Re: Payment Direction Letter for [Property]
Dear [ ]:
[BORROWER], the owner of the [PROPERTY] (the "Property"), has mortgaged
the Property to ________________ (together with its successors and assigns, the
"Holder") and has agreed that all Rents and Profits due for the Property will be
paid directly to a bank selected by the Holder. Therefore, from and after
[DATE], all rent to be paid by you under the [LEASE] between you and
[BORROWER/MANAGER] (the "Lease") should be sent directly to the following
address:
[CLEARING BANK]
[Lockbox Address]
All checks should be made out to the "[PROPERTY]".
These payment instructions cannot be withdrawn or modified without the
prior written consent of the Holder or its agent (the "Servicer"), or pursuant
to a joint written instruction from the Borrower and the Holder or the Servicer.
Until you receive written instructions from the Holder or the Servicer, continue
to send all rent payments due under the Lease to [CLEARING BANK]. All rent
payments must be delivered to [CLEARING BANK] no later than the day on which
such amounts are due under the Lease.
If you have any questions concerning this letter, please contact
[_________] at [________]. We appreciate your cooperation in this matter.
[MANAGER]
By:
------------------------------
Name:
Title:
C-1
