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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 16, 1994
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AMERICAN INDUSTRIAL PROPERTIES REIT
(Exact name of registrant as specified in its charter)
Texas 1-9016 75-6335572
(State or Other Jurisdiction) (Commission File Number) (I.R.S. Employer
of Incorporation Identification Number)
6220 North Beltline, Suite 205, Irving, Texas 75063
(Address of Principal Executive Offices) (zip code)
Registrant's telephone number, including area code: (214) 550-6053
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Item 5. Other Events
On November 16, 1994, the Registrant announced that it closed a $14,500,000
financing with AMRESCO Capital Corporation. The financing, which consists of
two separate loans of $12,250,000 and $2,250,000, is secured by first liens on
two properties held by wholly-owned subsidiaries of the Trust. Each of the
loans includes a variable interest rate equal to the 30-day LIBOR rate plus
3.15%, which yields an initial rate of approximately 8.6%. Each loan has a
maturity of seven years with a 25-year principal amortization and a cap rate
feature which limits the maximum interest rate to 11.375%. Proceeds from the
financing will be used by the Trust to defease its outstanding Zero Coupon
Notes, retire existing indebtedness and provide funds for general corporate
purposes.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits
99.1 Note dated November 15, 1994 in the original principal amount of
$12,250,000 with AIP Properties #1 L.P. as Maker and AMRESCO Capital
Corporation as Payee.
99.2 Mortgage, Deed of Trust and Security Agreement dated November 15,
1994 between AIP Properties #1 L.P. and AMRESCO Capital Corporation.
99.3 Note dated November 15, 1994, in the original principal amount of
$2,250,000 with AIP Properties #2 L.P. as Maker and AMRESCO Capital
Corporation as Payee.
99.4 Mortgage, Deed of Trust and Security Agreement dated November 15,
1994 between AIP Properties #2 L.P. and AMRESCO Capital Corporation.
2
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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.
AMERICAN INDUSTRIAL PROPERTIES REIT
/s/ Charles W. Wolcott
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Charles W. Wolcott
President and Chief Executive Officer
DATE: November 22, 1994
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Index to Exhibits
Sequentially
Exhibit No. Description Numbered Page
- ----------- ----------- -------------
*99.1 Note dated November 15, 1994 in the original
principal amount of $12,250,000 with AIP Properties
#1 L.P. as Maker and AMRESCO Capital Corporation as
Payee.
*99.2 Mortgage, Deed of Trust and Security Agreement dated
November 15, 1994 between AIP Properties #1 L.P. and
AMRESCO Capital Corporation.
*99.3 Note dated November 15, 1994, in the original
principal amount of $2,250,000 with AIP Properties
#2 L.P. as Maker and AMRESCO Capital Corporation as
Payee.
*99.4 Mortgage, Deed of Trust and Security Agreement dated
November 15, 1994 between AIP Properties #2 L.P. and
AMRESCO Capital Corporation.
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* Filed herewith.
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EXHIBIT 99.1
Loan No. 32023
NOTE
$12,250,000.00 November 15, 1994
FOR VALUE RECEIVED AIP PROPERTIES #1 L.P., a Delaware limited partnership
(hereinafter referred to as "Maker"), promises to pay to the order of AMRESCO
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CAPITAL CORPORATION, a Texas corporation, its successors and assigns
(hereinafter referred to as "Payee"), at the office of Payee or its agent,
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designee, or assignee at 1845 Woodall Rodgers Freeway, Suite 1700, Dallas, Texas
75201 or at such place as Payee or its agent, designee, or assignee may from
time to time designate in writing, the principal sum of Twelve Million Two
Hundred Fifty Thousand and No/100 Dollars ($12,250,000.00), in lawful money of
the United States of America, with interest thereon to be computed on the unpaid
principal balance from time to time outstanding at the Applicable Interest Rate
(hereinafter defined), and to be paid in installments as follows:
1. A payment of interest only on the first day of December, 1994;
2. On the first day of January, 1995 and on the first day of each
calendar month thereafter up to and including the first day of
December, 2001, a payment in an amount that would fully amortize the
Debt (hereinafter defined), both principal and interest, at the
Applicable Interest Rate as of the first day of the month immediately
preceding the payment due date, in equal monthly installments over a
period, decreasing each month by one month and ending on a fixed date
twenty-five (25)years after the date of this Note; provided that
notwithstanding such date, the actual Maturity Date (hereinafter
defined) shall be as provided below;
and the balance of said principal sum, together with accrued and unpaid interest
and any other amounts due under this Note shall be due and payable on the first
day of December, 2001 or upon earlier maturity hereof whether by acceleration or
otherwise (the "Maturity Date"). Interest on the principal sum of this Note
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shall be calculated on the basis of a three hundred sixty (360) day year
composed of twelve (12) months of thirty (30) days each, except that interest
due and payable for a period less than a full month shall be calculated by
multiplying the actual number of days elapsed in such period by a daily rate
based on said 360 day year. Payments under this Note shall be applied first, to
the payment of interest and other costs and charges due in connection with this
Note or the Debt (as hereinafter defined), as Payee may determine in its sole
discretion, and the balance shall be applied toward the reduction of the
principal sum. All
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amounts due under this Note shall be payable without setoff, counterclaim or any
other deduction whatsoever.
The term "Applicable Interest Rate" means from the date of this Note
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through and including the Maturity Date, a rate equal to the lesser of (a) the
maximum rate permitted by applicable law, (b) eleven and three-eights percent
(11.375) per annum (the "Cap Rate") or (c) an adjustable rate calculated each
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month by an upward adjustment to the nearest one-eighth (1/8th) of one percent
(1%) per annum of the sum of (i) three and fifteen one-hundredths percent
(3.15%) per annum (the "Adjustable Interest Rate Spread"), plus (ii) the 30-Day
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LIBOR, as defined below. As used herein, "LIBOR" or "30-Day LIBOR" shall mean a
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per annum interest rate as quoted at Telerate Page 3750 for U.S. dollar deposits
for a 30-day period in the London interbank market in an amount approximately
equal to the amount of the Debt. The 30-Day LIBOR used in calculating the first
monthly interest payment on the Debt shall be 5.4375% per annum and, subject to
the limitations of subparagraphs (a) and (b) above of this paragraph, the
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Applicable Interest Rate used in calculating such first monthly interest payment
on the Debt shall be 8.5875% per annum. Subject to the limitations of
subparagraphs (a) and (b) above of this paragraph, the Applicable Interest Rate
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shall be adjusted on the day that the first interest payment is due and on the
first day of each calendar month thereafter during the term of the Debt in
accordance with any change in the 30-Day LIBOR as of each such date. In the
event Telerate ceases to be available or ceases to display the 30-Day LIBOR,
Payee shall select a comparable publication or service to determine the 30-Day
LIBOR and shall provide notice thereof to Maker. If Payee at any time
determines, in the sole but reasonable exercise of its discretion, that it has
miscalculated the amount of the monthly payment of principal and interest
(whether because of a miscalculation of the Applicable Interest Rate or
otherwise), Payee shall give notice to Maker of the corrected amount of such
monthly payment (and the corrected LIBOR, if applicable) and (a) if the
corrected amount of such monthly payment represents an increase thereof, then
Maker shall, within ten (10) calendar days thereafter, pay to Payee any sums
that Maker would have otherwise been obligated to pay to Payee had the amount of
such monthly payment not been miscalculated, or (b) if the corrected amount of
such monthly payment represents a decrease thereof and Maker is not otherwise in
breach or default under any of the terms and provisions of this Note or the
other Loan Documents (hereinafter defined), then Maker shall within ten (10)
calendar days thereafter be paid the sums that Maker would not have otherwise
been obligated to pay to Payee had the amount of such monthly payment not been
miscalculated.
This Note is secured by the Mortgage, Assignment, Environmental Agreement,
the Closing Certificate and the other Loan Documents (hereinafter defined). The
term "Mortgage" means the Mortgage, Deed of Trust and Security Agreement dated
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the date hereof given by Maker for the use and benefit of Payee covering the fee
estate of Maker in certain premises as more particularly described therein (the
"Mortgaged Property"). The term "Assignment" means the Assignment of Leases and
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Rents of even date herewith executed by Maker in favor of Payee. The term
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"Environmental Agreement" means the Environmental Liabilities Agreement
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of even date herewith executed by Maker in favor of Payee. The term "Loan
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Documents" refers collectively to this Note, the Mortgage, the Assignment, the
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Environmental Agreement and any and all other documents executed in connection
with this Note or now or hereafter executed by Maker and/or others and by or in
favor of Payee, which wholly or partially secure or guarantee payment of this
Note including, but not limited to, the Term Loan Commitment issued by Payee on
October 12, 1994 and accepted by Maker (the "Commitment").
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If any installment payable under this Note (except the final installment
due on the Maturity Date) is not paid within ten (10) days after the date on
which it is due (without regard to any cure and/or notice period), Maker shall
pay to Payee upon demand an amount equal to the lesser of five percent (5%) of
such unpaid sum or the maximum amount permitted by applicable law to defray the
expenses incurred by Payee in handling and processing such delinquent payment
and to compensate Payee for the loss of the use of such delinquent payment, and
such amount shall be secured by the Loan Documents. If an Event of Default (as
defined in the Mortgage) shall occur, other than a failure to pay any part of
the Debt, which Event of Default is not cured within a period of twenty (20)
days after the date on which the Event of Default first occurs, Maker shall pay
to Payee an amount equal to the lesser of five percent (5%) of the next
installment due under this Note (except the final installment due on the
Maturity Date) or the maximum amount permitted by applicable law to defray the
expenses incurred by Payee in its efforts to obtain the cure of the Event of
Default by Maker or otherwise incurred by Payee in relation to the Event of
Default. The term "Debt" means, collectively, (i) the unpaid principal balance
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of and the accrued but unpaid interest on this Note, (ii) all other sums due,
payable or reimbursable to Maker under the Loan Documents, and (iii) any and all
other liabilities and obligations of Maker under this Note or the other Loan
Documents.
Upon the occurrence of an Event of Default, Payee may, at its option,
without notice or demand, declare the Debt immediately due and payable,
foreclose all liens and security interests securing payment hereof, pursue any
and all other rights, remedies and recourses available to Payee or pursue any
combination of the foregoing. All remedies hereunder, under the Loan Documents
and at law or in equity shall be cumulative. In the event that it should become
necessary to employ counsel to collect the Debt or to protect or foreclose the
security for the Debt or to defend against any claims asserted by Maker arising
from or related to the Loan Documents, Maker also agrees to pay to Payee on
demand all costs of collection or defense incurred by Payee, including
reasonable attorneys' fees for the services of counsel whether or not suit be
brought.
Upon the occurrence of an Event of Default Maker shall pay interest on the
entire unpaid principal sum and any other amounts due at the rate equal to the
lesser of (a) the maximum rate permitted by applicable law, or (b) the greater
of (i) five percent (5%) above the Applicable
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Interest Rate or (ii) 8% per annum above the 30-Day LIBOR, as hereinabove
defined (the "Default Rate"). The Default Rate shall be computed from the
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occurrence of the Event of Default until the actual receipt and collection of
the Debt and shall not be limited by the Cap Rate defined above. This charge
shall be added to the Debt, and shall be deemed secured by the Loan Documents.
This clause, however, shall not be construed as an agreement or privilege to
extend the date of the payment of the Debt, nor as a waiver of any other right
or remedy accruing to Payee by reason of the occurrence of any Event of Default.
The principal balance of this Note may not be prepaid in whole or in part
(except with respect to the application of casualty or condemnation proceeds)
prior to the first day of the third (3rd) Loan Year (as hereinafter defined).
During the third (3rd) Loan Year or at anytime thereafter, provided no Event of
Default exists, the principal balance of this Note may be prepaid, in whole but
not in part (except with respect to the application of casualty or condemnation
proceeds), on any scheduled payment date under this Note upon not less than
thirty (30) days prior written notice to Payee specifying the scheduled payment
date on which prepayment is to be made (the "Prepayment Date") and upon payment
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of (a) interest accrued and unpaid on the principal balance of this Note to and
including the Prepayment Date, (b) all other sums then due under this Note, and
the other Loan Documents, and (c) a prepayment consideration in an amount equal
to the following percentage of the principal balance of the Debt outstanding on
the Prepayment Date during the following Loan Years:
<TABLE>
<CAPTION>
Loan Year Percentage
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<S> <C>
3 5%
4 4%
5 3%
6 2%
</TABLE>
plus, if the cost of the agreement relating to the Cap Rate (the "Rate Cap
- ---- --------
Agreement") was amortized and included in the Adjustable Interest Rate Spread,
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then an amount sufficient to pay the unamortized cost of the Rate Cap Agreement
which would have been paid during the remainder of the original term of the
Debt. Notwithstanding the foregoing, Maker shall have the additional privilege
to prepay the entire principal balance of this Note on any date during the
twelve (12) months preceding the Maturity Date without any fee or consideration
for such privilege. If any such notice of prepayment is given, the principal
balance of this Note and the other sums required under this paragraph shall be
due and payable on the Prepayment Date. Payee shall not be obligated to accept
any prepayment of the principal balance of this Note unless it is accompanied by
the prepayment consideration due in connection therewith. The term "Loan Year"
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for purposes of this paragraph means each complete 365-day period (366 days in a
leap year) after the date of this Note.
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If following the occurrence of any Event of Default, Maker shall tender
payment of an amount sufficient to satisfy the Debt at any time prior to a sale
of the Mortgaged Property, either through foreclosure or the exercise of the
other remedies available to Payee under the Mortgage, such tender by Maker shall
be deemed to be a voluntary prepayment under this Note in the amount tendered.
If at the time of such tender, prepayment of the principal balance of this Note
is not permitted, Maker shall, in addition to the entire Debt, also pay to Payee
a sum equal to interest which would have accrued on the principal balance of
this Note at the Applicable Interest Rate from the date of such tender to the
earlier of (i) the Maturity Date, or (ii) the first day of the period during
which prepayment of the principal balance of this Note would have been
permitted, together with a prepayment consideration equal to the prepayment
consideration which would have been payable as of the first day of the period
during which prepayment would have been permitted. If at the time of such
tender, prepayment of the principal balance of this Note is permitted, Maker
shall, in addition to the entire Debt, also pay to Payee the applicable
prepayment consideration specified in this Note. If the prepayment results from
the application to the Debt of the casualty or condemnation proceeds from the
Mortgaged Property, no prepayment consideration will be imposed. Partial
prepayments of principal resulting from the application of casualty or insurance
proceeds to the Debt shall not change the amounts of subsequent monthly
installments nor change the dates on which such installments are due, unless
Payee shall otherwise agree in writing.
It is expressly stipulated and agreed to be the intent of Maker and Payee
at all times to comply with applicable state law or applicable United States
federal law (to the extent that it permits Payee to contract for, charge, take,
reserve or receive a greater amount of interest than under state law) and that
this section shall control every other covenant and agreement in this Note and
the other Loan Documents. If the applicable law (state or federal) is ever
judicially interpreted so as to render usurious any amount called for under this
Note or under any of the other Loan Documents, or contracted for, charged,
taken, reserved or received with respect to the indebtedness evidenced by this
Note and the other Loan Documents, or if Payee's exercise of the option to
accelerate the maturity of this Note, or if any prepayment by Maker results in
Maker having paid any interest in excess of that permitted by applicable law,
then it is Maker's and Payee's express intent that all excess amounts
theretofore collected by Payee be credited on the principal balance of this Note
(or, if this Note has been or would thereby be paid in full, refunded to Maker),
and the provisions of this Note and the other Loan Documents immediately be
deemed reformed and the amounts thereafter collectible hereunder and thereunder
reduced, without the necessity of the execution of any new document, so as to
comply with the applicable law, but so as to permit the recovery of the fullest
amount otherwise called for hereunder and thereunder. All sums paid or agreed
to be paid to Payee for the use, forbearance and detention of the indebtedness
evidenced hereby and by the other Loan Documents shall, to the extent permitted
by applicable law, be amortized, prorated, allocated and spread throughout the
full term of such indebtedness until payment in full so that the rate or amount
of interest on account of such
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indebtedness does not exceed the maximum rate permitted under applicable
law from time to time in effect and applicable to the indebtedness evidenced
hereby for so long as such indebtedness remains outstanding. Notwithstanding
anything to the contrary contained herein or in any of the other Loan Documents,
it is not the intention of Payee to accelerate the maturity of any interest that
has not accrued at the time of such acceleration or to collect unearned interest
at the time of such acceleration.
Except as specifically provided in the Loan Documents, Maker and any
endorsers, sureties or guarantors hereof jointly and severally waive presentment
and demand for payment, notice of intent to accelerate maturity, notice of
acceleration of maturity, protest and notice of protest and non-payment, all
applicable exemption rights, valuation and appraisement, notice of demand, and
all other notices in connection with the delivery, acceptance, performance,
default or enforcement of the payment of this Note and the bringing of suit and
diligence in taking any action to collect any sums owing hereunder or in
proceeding against any of the rights and collateral securing payment hereof.
Maker and any surety, endorser or guarantor hereof agree (i) that the time for
any payments hereunder may be extended from time to time without notice and
consent, (ii) to the acceptance of further collateral, (iii) the release of any
existing collateral for the payment of this Note, (iv) to any and all renewals,
waivers or modifications that may be granted by Payee with respect to the
payment or other provisions of this Note, and/or (v) that additional makers,
endorsers, guarantors or sureties may become parties hereto all without notice
to them and without in any manner affecting their liability under or with
respect to this Note. No extension of time for the payment of this Note or any
installment hereof shall affect the liability of Maker under this Note or any
endorser or guarantor hereof even though the Maker or such endorser or guarantor
is not a party to such agreement.
Failure of Payee to exercise any of the options granted herein to Payee
upon the happening of one or more of the events giving rise to such options
shall not constitute a waiver of the right to exercise the same or any other
option at any subsequent time in respect to the same or any other event. The
acceptance by Payee of any payment hereunder that is less than payment in full
of all amounts due and payable at the time of such payment shall not constitute
a waiver of the right to exercise any of the options granted herein to Payee at
that time or at any subsequent time or nullify any prior exercise of any such
option without the express written acknowledgment of the Payee.
Subject to the exception and qualifications below in this paragraph, Payee
shall not enforce the liability and obligation of Maker, to perform and observe
the obligations contained in this Note, or the other Loan Documents by any
action or proceeding wherein a money judgment shall be sought against Maker,
except that Payee may bring a foreclosure action, an action for specific
performance or any other appropriate action or proceeding to enable Payee to
enforce and realize upon this Note and the other Loan Documents, and the
interests in the
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Mortgaged Property and any other collateral given to Payee pursuant to the Loan
Documents; provided, however, that, except as specifically provided in this
paragraph, any judgment in any such action or proceeding shall be enforceable
against Maker only to the extent of Maker's interest in the Mortgaged Property
and in any other collateral given to Payee. Payee, by accepting this Note and
the other Loan Documents, agrees that it shall not sue for, seek or demand any
deficiency judgment against Maker, in any such action or proceeding, under or by
reason of or under or in connection with the Loan Documents or this Note. In
the event (i) of fraud or material misrepresentation by Maker or guarantors in
connection with the loan evidenced by this Note and (ii) the first full monthly
payment on the Note is not paid when due, the foregoing sentence will be void,
ab initio, and this Note shall be with full recourse to Maker. The provisions
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of this paragraph shall not, however, (a) constitute a waiver, release or
impairment of any obligation evidenced or secured by the Loan Documents or this
Note; (b) impair the right of Payee to name Maker as a party defendant in any
action or suit for foreclosure and sale under the Mortgage; (c) affect the
validity or enforceability of any guaranty made in connection with the Loan
Documents; (d) impair the right of Payee to obtain the appointment of a
receiver; (e) impair the enforcement of any of the Loan Documents; or (f)
constitute a waiver of the right of Payee to enforce the liability and
obligation of Maker, by money judgment or otherwise, to the extent of any loss,
damage, cost, expense, liability, claim or other obligation (including
reasonable attorneys' fees) incurred by Payee arising out of or in connection
with the following:
A. the gross negligence, willful misconduct of Maker, its agents or
employees, or physical waste of the Mortgaged Property and any failure to
maintain, repair or restore any part of the Mortgaged Property as may be
required by the Mortgage or any of the other Loan Documents;
B. the breach of provisions in the Environmental Agreement, including
the indemnification provision contained therein;
C. the removal or disposal of any portion of the Mortgaged Property
after an Event of Default under the Loan Documents (other than trade
fixtures owned by tenants and removed in accordance with its lease) to the
extent such Mortgaged Property is not replaced by like property of
equivalent value, function and design;
D. the misapplication or conversion by Maker of (i) any insurance
proceeds paid by reason of any loss, damage or destruction to the Mortgaged
Property, (ii) any awards or other amounts received in connection with the
condemnation of all or a portion of the Mortgaged Property, or (iii) rents,
issues, profits, proceeds, accounts, or other amounts received by Maker
that Payee is otherwise entitled to receive pursuant to the terms of the
Loan Documents and utilized for purposes other than the payment of
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legitimate operating expenses of the Mortgaged Property in accordance with
the Loan Documents;
E. the costs (including reasonable attorneys' fees) incurred by Payee
in connection with the collection or enforcement of the Debt, including but
not limited to any costs incurred by Payee arising from or relating to the
filing of a petition under the U.S. Bankruptcy Code by or against Maker,
provided, however, that Payee shall only be entitled to recover its costs
(including reasonable attorneys' fees) incurred as a result of any
litigation not involving a bankruptcy in which Payee is the prevailing
party or otherwise adjudicated as being entitled to recover its costs;
F. failure to pay in accordance with the provisions of the Mortgage
taxes and insurance premiums (provided that the liability of Maker shall be
only for amounts in excess of the amount held by Payee in the Tax and
Insurance Escrow maintained pursuant to the provisions of the Mortgage),
assessments, charges for labor or materials or other charges that can
create liens on any portion of the Mortgaged Property;
G. any indemnification of Payee set forth in the Loan Documents;
H. any loss, damage, expense or liability incurred by Payee arising
out of (i) Maker's failure to permit on-site inspections of the Mortgaged
Property or to provide financial reports and information pertaining to the
Mortgaged Property as required by the Mortgage; (ii) Maker's failure to
obtain Payee's prior written consent to any subordinate financing or any
other encumbrance on the Mortgage Property; and (iii) Maker's failure to
obtain Payee's prior written consent to any transfer of the Mortgaged
Property as provided in the Mortgage;
I. the failure to deliver any security deposits collected with
respect to the Mortgaged Property to Payee or any other party entitled to
receive such security deposits under the Loan Documents following an Event
of Default; and
J. seizure or forfeiture of the Mortgaged Property, or any portion
thereof, or Payee's interest therein, resulting from criminal wrongdoing or
other unlawful actions of Maker or its affiliates under any federal, state
or local law.
Nothing herein shall be deemed to be a waiver of any right which Payee may have
under Sections 506(a), 506(b), 1111(b) or any other provisions of the U.S.
--------------------------------
Bankruptcy Code to file a claim for the full amount of the Debt secured by the
Loan Documents or to require that all collateral shall continue to secure all of
the Debt owing to Payee in accordance with this Note and the other Loan
Documents.
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<PAGE>
Maker (and the undersigned representative of Maker, if any) represents that
Maker has full power, authority and legal right to execute, deliver and perform
its obligations pursuant to this Note and the other Loan Documents and that this
Note and the other Loan Documents constitute legal, valid and binding
obligations of Maker. Maker further represents that the loan evidenced by the
Loan Documents was made for business or commercial purposes and not for
personal, family or household use.
All notices or other communications required or permitted to be given
pursuant hereto shall be given in the manner and be effective as specified in
the Mortgage, directed to the parties at their respective addresses as provided
therein.
Payee shall have the unrestricted right at any time or from time to time to
sell this Note and the loan evidenced by this Note and the Loan Documents or
participation interests therein. Maker shall execute, acknowledge and deliver
any and all instruments requested by Payee to satisfy such purchasers or
participants that the unpaid indebtedness evidenced by this Note is outstanding
upon the terms and provisions set out in this Note and the other Loan Documents
(provided, however, in no event shall such instruments add additional terms and
provisions to such documents). To the extent, if any specified in such
assignment or participation, such assignee(s) or participant(s) shall have the
rights and benefits with respect to this Note and the other Loan Documents as
such assignee(s) or participant(s) would have if they were the Payee hereunder.
MAKER HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF
RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT
ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS NOTE OR THE
OTHER LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN
CONNECTION THEREWITH INCLUDING, BUT NOT LIMITED TO THOSE RELATING TO (A)
ALLEGATIONS THAT A PARTNERSHIP EXISTS BETWEEN PAYEE AND MAKER; (B) USURY OR
PENALTIES OR DAMAGES THEREFOR; (C) ALLEGATIONS OF UNCONSCIONABLE ACTS, DECEPTIVE
TRADE PRACTICE, LACK OF GOOD FAITH OR FAIR DEALING, LACK OF COMMERCIAL
REASONABLENESS, OR SPECIAL RELATIONSHIPS (SUCH AS FIDUCIARY, TRUST OR
CONFIDENTIAL RELATIONSHIP); (D) ALLEGATIONS OF DOMINION, CONTROL, ALTER EGO,
INSTRUMENTALITY, FRAUD, REAL ESTATE FRAUD, MISREPRESENTATION, DURESS, COERCION,
UNDUE INFLUENCE, INTERFERENCE OR NEGLIGENCE; (E) ALLEGATIONS OF TORTIOUS
INTERFERENCE WITH PRESENT OR PROSPECTIVE BUSINESS RELATIONSHIPS OR OF ANTITRUST;
OR (F) SLANDER, LIBEL OR DAMAGE TO REPUTATION. THIS WAIVER OF RIGHT TO TRIAL BY
JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY MAKER, AND IS INTENDED
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TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO
A TRIAL BY JURY WOULD OTHERWISE ACCRUE. PAYEE IS HEREBY AUTHORIZED TO FILE A
COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER
BY MAKER.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE IN WHICH THE REAL PROPERTY ENCUMBERED BY THE MORTGAGE IS LOCATED
(WITHOUT REGARD TO ANY CONFLICT OF LAWS PRINCIPLES) AND THE APPLICABLE LAWS OF
THE UNITED STATES OF AMERICA. MAKER HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY COURT OF COMPETENT JURISDICTION LOCATED IN THE STATE IN
WHICH THE MORTGAGED PROPERTY IS LOCATED IN CONNECTION WITH ANY PROCEEDING OUT OF
OR RELATING TO THIS NOTE.
THE PROVISIONS OF THIS NOTE AND THE LOAN DOCUMENTS MAY BE AMENDED OR
REVISED ONLY BY AN INSTRUMENT IN WRITING SIGNED BY THE MAKER AND PAYEE. THIS
NOTE AND ALL THE OTHER LOAN DOCUMENTS EMBODY THE FINAL, ENTIRE AGREEMENT OF
MAKER AND PAYEE AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS
OF MAKER AND PAYEE. THERE ARE NO ORAL AGREEMENTS BETWEEN MAKER AND PAYEE.
Special Colorado Provision: Notwithstanding anything to the contrary in
--------------------------
this Note, the following terms and provisions shall apply:
The provisions of this Note which establish prepayment consideration
in conjunction with an Event of Default shall also be applicable to any
tender by Maker of an amount sufficient to redeem the Mortgaged Property in
accordance with applicable Colorado laws after the foreclosure sale of the
Mortgaged Property. If the prepayment is not actually tendered prior to
Payee's bid for any foreclosure sale under the Mortgage pursuant to an
Event of Default, the prepayment shall be deemed made as of the Payee's
making of its foreclosure bid solely for purposes of establishing and
calculating the amount of the prepayment consideration, which consideration
shall constitute part of the Debt and may be included within Payee's
foreclosure bid.
(The balance of this page is intentionally left blank.)
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<PAGE>
Executed as of the day and year first above written.
MAKER:
AIP PROPERTIES #1 L.P.,
a Delaware limited partnership
BY: AIP TAMARAC, INC.,
a Texas corporation,
General Partner
By:/s/ DAVID B. WARNER
------------------------------------
David B. Warner, Vice President
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<PAGE>
EXHIBIT 99.2
Loan No. 32023
RETURN TO:
- ---------
- ------------------------------
- ------------------------------
- ------------------------------
MORTGAGE, DEED OF TRUST AND
SECURITY AGREEMENT
THIS MORTGAGE, DEED OF TRUST AND SECURITY AGREEMENT, (as the same may from
time to time be extended, renewed or modified, the "Mortgage"), is made
--------
November 15, 1994, by AIP PROPERTIES #1 L.P., a Delaware limited partnership
("Mortgagor"), having its principal place of business at 6210 North Beltline,
---------
Suite 90, Irving, Texas 75063 to the Public Trustee of Denver County, Colorado
(the "Trustee"), the trustee hereunder to the extent that this Mortgage
-------
operates as a deed of trust, and to AMRESCO CAPITAL CORPORATION, a Texas
corporation ("Mortgagee"), having its principal place of business at 1845
---------
Woodall Rodgers Freeway, Suite 1700, Dallas, Texas 75201, Attention: Paul
Nauschutz, the mortgagee hereunder to the extent that this Mortgage operates as
a mortgage, the grantee hereunder to the extent that this Mortgage operates as a
deed to secure debt and the beneficiary hereunder to the extent that this
Mortgage operates as a deed of trust. (Reference hereby is made to Section
-------
57(a) below).
- -----
To secure (i) the payment of an indebtedness in the original principal sum
of Twelve Million Two Hundred Fifty Thousand and No/100 Dollars
($12,250,000.00), lawful money of the United States of America, to be paid with
interest according to a certain note dated the date hereof made by Mortgagor to
Mortgagee (the note together with all extensions, renewals or modifications
thereof being hereinafter collectively called the "Note"), and all other sums,
----
liabilities and obligations constituting the Debt (as defined in the Note), (ii)
the payment of all sums advanced or incurred by Mortgagee contemplated hereby,
and (iii) the performance of the obligations and covenants herein contained,
Mortgagor has mortgaged, given, granted, bargained, sold, alienated, enfeoffed,
conveyed, confirmed, warranted, pledged, assigned, and hypothecated and by these
presents does hereby mortgage, give, grant, bargain, sell, alien, enfeoff,
convey, confirm, warrant, pledge, assign and hypothecate unto Mortgagee and/or
Trustee, the real property described in Exhibit A attached hereto (the
---------
"Premises") and the buildings, structures, fixtures, additions, enlargements,
--------
extensions, modifications, repairs, replacements and improvements now or
hereafter located thereon (the "Improvements");
------------
TOGETHER WITH: all right, title, interest and estate of Mortgagor now owned, or
hereafter acquired, in and to the following property, rights, interests and
estates (the Premises, the
-1-
<PAGE>
Improvements together with the following property, rights, interests and estates
being hereinafter described are collectively referred to herein as the
"Mortgaged Property"):
- -------------------
(a) all easements, rights-of-way, strips and gores of land, streets, ways,
alleys, passages, sewer rights, water, water courses, water rights and powers,
air rights and development rights, and all estates, rights, titles, interests,
privileges, liberties, tenements, hereditaments and appurtenances of any nature
whatsoever, in any way belonging, relating or pertaining to the Premises and the
Improvements and the reversion and reversions, remainder and remainders, and all
land lying in the bed of any street, road or avenue, opened or proposed, in
front of or adjoining the Premises, to the center line thereof and all the
estates, rights, titles, interests, dower and rights of dower, curtesy and
rights of curtesy, property, possession, claim and demand whatsoever, both at
law and in equity, of Mortgagor of, in and to the Premises and the Improvements
and every part and parcel thereof, with the appurtenances thereto;
(b) all machinery, furnishings, equipment, fixtures (including but not
limited to all heating, air conditioning, plumbing, lighting, communications and
elevator fixtures) and other property of every kind and nature (hereinafter
collectively called the "Equipment"), whether tangible or intangible, whatsoever
---------
owned by Mortgagor, or in which Mortgagor has or shall have an interest, now or
hereafter located upon the Premises and the Improvements, or appurtenant
thereto, and usable in connection with the present or future operation and
occupancy of the Premises and the Improvements and all building equipment,
materials and supplies of any nature whatsoever owned by Mortgagor, or in which
Mortgagor has or shall have an interest, now or hereafter located upon the
Premises and the Improvements, or appurtenant thereto, or usable in connection
with the present or future operation, enjoyment and occupancy of the Premises
and the Improvements, including the proceeds of any sale or transfer of the
foregoing, and the right, title and interest of Mortgagor in and to any of the
Equipment which may be subject to any security interests, as defined in the
Uniform Commercial Code, as adopted and enacted by the State or States where any
of the Mortgaged Property is located (the "Uniform Commercial Code") superior in
-----------------------
lien to the lien of this Mortgage;
(c) all awards or payments, including interest thereon, which may
heretofore and hereafter be made with respect to the Premises and the
Improvements, whether from the exercise of the right of eminent domain or
condemnation (including but not limited to any transfer made in lieu of or in
anticipation of the exercise of said rights), or for a change of grade, or for
any other injury to or decrease in the value of the Premises and Improvements;
(d) all leases, subleases and other agreements affecting the use, enjoyment
or occupancy of the Premises and the Improvements heretofore or hereafter
entered into (including, without limitation, any and all security interests,
contractual liens and security deposits) (the "Leases") and all income, rents,
------
issues, profits and revenues (including all oil and gas or other mineral
royalties and bonuses) from the Premises and the Improvements (the "Rents") and
-----
all proceeds from the sale or other disposition of the Leases and the right to
receive and apply the Rents to the payment of the Debt;
-2-
<PAGE>
(e) all proceeds of and any unearned premiums on any insurance policies
covering the Mortgaged Property, including, without limitation, the right to
receive and apply the proceeds of any insurance, judgments, or settlements made
in lieu thereof, for damage to the Mortgaged Property;
(f) the right, in the name and on behalf of Mortgagor, to appear in and
defend any action or proceeding brought with respect to the Mortgaged Property
and to commence any action or proceeding to protect the interest of Mortgagee in
the Mortgaged Property;
(g) all accounts, escrows, documents, instruments, chattel paper, claims,
deposits and general intangibles, as the foregoing terms are defined in the
Uniform Commercial Code, and all contract rights, franchises, books, records,
plans, specifications, permits, licenses (to the extent assignable), approvals,
actions, and causes of action which now or hereafter relate to, are derived from
or are used in connection with the Premises, or the use, operation, maintenance,
occupancy or enjoyment thereof or the conduct of any business or activities
thereon (hereinafter collectively called the "Intangibles"); and
-----------
(h) any and all proceeds and products of any of the foregoing and any and
all other security and collateral of any nature whatsoever, now or hereafter
given for the repayment of the Debt and the performance of Mortgagor's
obligations under the Loan Documents (as defined in the Note), including
(without limitation) the Tax and Insurance Escrow Fund (hereinafter defined) and
the Replacement Escrow Fund (hereinafter defined).
TO HAVE AND TO HOLD the above granted and described Mortgaged Property unto
and to the use and benefit of Mortgagee and/or Trustee, and their successors and
assigns, forever (subject, however, to the matters referred to on Exhibit B
---------
attached hereto and hereby made a part hereof [the "Permitted Exceptions"]);
--------------------
PROVIDED, HOWEVER, these presents are upon the express condition that, if
Mortgagor shall well and truly pay to Mortgagee the Debt at the time and in the
manner provided in the Note and this Mortgage and shall well and truly abide by
and comply with each and every covenant and condition set forth herein, in the
Note and in the other Loan Documents in a timely manner, these presents and the
estate hereby granted shall cease, terminate and be void;
AND Mortgagor represents and warrants to and covenants and agrees with
Mortgagee as follows:
1. Payment of Debt and Incorporation of Covenants, Conditions and
--------------------------------------------------------------
Agreements. Mortgagor will pay the Debt at the time and in the manner provided
- ----------
in the Note and in this Mortgage. Mortgagor will duly and punctually perform
all of the covenants, conditions and agreements contained in the Note, this
Mortgage and the other Loan Documents all of which covenants, conditions and
agreements are hereby made a part of this Mortgage to the same extent and with
the same force as if fully set forth herein.
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<PAGE>
2. Warranty of Title. Mortgagor warrants that Mortgagor is the sole owner
-----------------
of and has good, legal, indefeasible and insurable fee simple title to the
Mortgaged Property (subject, however, to the Permitted Exceptions) and has the
full power, authority and right to execute, deliver and perform its obligations
under this Mortgage and to encumber, mortgage, give, grant, bargain, sell,
alienate, enfeoff, convey, confirm, pledge, assign and hypothecate the same and
that Mortgagor possesses an unencumbered fee estate in the Premises and the
Improvements and that it owns the Mortgaged Property free and clear of all
liens, encumbrances and charges whatsoever except for those exceptions shown in
the title insurance policy insuring the lien of this Mortgage and that this
Mortgage is and will remain a valid and enforceable first lien on and security
interest in the Mortgaged Property, subject only to the Permitted Exceptions.
Mortgagor shall forever warrant, defend and preserve such title and the validity
and priority of the lien of this Mortgage and shall forever warrant and defend
the same to Mortgagee and/or Trustee against the claims of all persons
whomsoever.
3. Insurance. (a) Mortgagor, at its sole cost and expense, will keep the
---------
Mortgaged Property insured during the entire term of this Mortgage for the
mutual benefit of Mortgagor and Mortgagee against loss or damage by fire and
against loss or damage by other risks and hazards covered by a standard extended
coverage insurance policy and included within the classification "All Risks of
Physical Loss" including, but not limited to, riot and civil commotion,
vandalism, malicious mischief, burglary and theft. Such insurance shall be in
an amount (i) equal to the greater of the then full replacement cost of the
Improvements and Equipment, without deduction for physical depreciation, or the
outstanding amount of the Debt, and (ii) with extended coverage in amounts
sufficient such that the insurer would not deem Mortgagor a co-insurer under
said policies. The policies of insurance carried in accordance with this
paragraph shall be paid annually in advance and shall contain the "Replacement
Cost Endorsement" with a waiver of depreciation.
(b) Mortgagor, at its sole cost and expense, for the mutual benefit of
Mortgagor and Mortgagee, shall also obtain and maintain during the entire term
of this Mortgage the following policies of insurance:
(i) Flood insurance if any part of the Mortgaged Property is located
in an area identified by the Federal Emergency Management Agency as an area
having special flood hazards and in which flood insurance has been made
available under the National Flood Insurance Act of 1968 (and any amendment
or successor act thereto) in an amount at least equal to the outstanding
principal amount of the Note or the maximum limit of coverage available
with respect to the Improvements and Equipment under said Act, whichever is
less.
(ii) Comprehensive public liability insurance, including broad form
property damage, blanket contractual and personal injuries (including death
resulting therefrom) coverages and containing minimum limits per occurrence
of $1,000,000.00 for the
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<PAGE>
Improvements and the Premises, with excess/umbrella coverage in an amount
of at least $10,000,000.00 arising our of any one occurrence.
(iii) Rental loss insurance in an amount equal to the aggregate
annual amount of all rents and additional rents payable by all of the
tenants under the Leases (whether or not such Leases are terminable in the
event of a fire or casualty), such rental loss insurance to cover rental
losses for a period of at least one year after the date of the fire or
casualty in question. The amount of such rental loss insurance shall be
increased from time to time during the term of this Mortgage as and when
new Leases and renewal Leases are entered into (or as and when existing
Leases expire and/or are terminated) in accordance with the terms of this
Mortgage and the other Loan Documents, to reflect all increased rent and
increased additional rent payable by all of the tenants under such renewal
Leases and all rent and additional rent payable by all of the tenants under
such new Leases.
(iv) Insurance against loss or damage from (1) leakage of sprinkler
systems, and (2) explosion of steam boilers, air conditioning equipment,
high pressure piping, machinery and equipment, pressure vessels or similar
apparatus now or hereafter installed in the Improvements and including
broad form boiler and machinery insurance (without exclusion for explosion)
covering all boilers or other pressure vessels, machinery and equipment
located in, on, or about the Premises and the Improvements.
(v) If the Mortgaged Property includes commercial property, worker's
compensation insurance with respect to any employees of Mortgagor, as
required by any governmental authority or legal requirement.
(vi) Such other insurance as may from time to time be reasonably
required by Mortgagee in order to protect its interests.
(c) All policies of insurance (the "Policies") required pursuant to
--------
Section 3: (i) shall contain a standard noncontributory mortgagee clause naming
- ---------
Mortgagee as the person to which all payments made by such insurance company
shall be paid, (ii) shall be maintained throughout the term of this Mortgage
without cost to Mortgagee, (iii) shall be assigned and delivered to Mortgagee,
(iv) shall contain such provisions as Mortgagee deems reasonably necessary or
desirable to protect its interest including, without limitation, endorsements
providing that neither Mortgagor, Mortgagee nor any other party shall be a co-
insurer under said Policies and that Mortgagee shall receive at least thirty
(30) days prior written notice of any modification, reduction or cancellation,
(v) shall be for a term of not less than one year, (vi) shall be issued by an
insurer licensed in the state in which the Mortgaged Property is located, (vii)
shall provide that Mortgagee may, but shall not be obligated to, make premium
payments to prevent any cancellation, endorsement, alteration or reissuance, and
such payments shall be accepted by the insurer to prevent same, and (viii) shall
be satisfactory in form and substance to Mortgagee and shall be approved by
Mortgagee as to amounts, form, risk coverage, deductibles, loss payees and
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<PAGE>
insureds. All Policies required pursuant to subsections 3(a) and 3(b)(i), (ii)
----------------------------------
[and] (iii) [and (vi)] shall be issued by an insurer with a claims paying
--- ----- --------
ability rating of "A" or better by Standard & Poor's Corporation plus an
equivalent rating as established by one other nationally recognized statistical
rating organization satisfactory to Mortgagee and the Policies as required in
subsections 3(b)(iv) and (v) shall be issued by an insurer having a claims
- ----------------------------
paying ability rating of "A" or better by Standard & Poor's Corporation plus an
equivalent rating as established by Moody's and/or Duff & Phelps. Mortgagor
shall pay the premiums for such Policies (the "Insurance Premiums") as the same
------------------
become due and payable. Not later than thirty (30) days prior to the expiration
date of each of the Policies, Mortgagor will deliver to Mortgagee satisfactory
evidence of the renewal of each Policy. If Mortgagor receives from any insurer
any written notification or threat of any actions or proceedings regarding the
non-compliance or non-conformity of the Mortgaged Property with any insurance
requirements, Mortgagor shall give prompt notice thereof to Mortgagee.
(d) In the event of the entry of a judgment of foreclosure, sale of the
Mortgaged Property by non-judicial foreclosure sale, or delivery of a deed in
lieu of foreclosure, Mortgagee hereby is authorized (without the consent of
Mortgagor) to assign any and all Policies to the purchaser or transferee
thereunder, or to take such other steps as Mortgagee may deem advisable to cause
the interest of such transferee or purchaser to be protected by any of the
Policies without credit or allowance to Mortgagor for prepaid premiums thereon.
(e) If the Mortgaged Property shall be damaged or destroyed, in whole or in
part, by fire or other casualty, Mortgagor shall give prompt notice thereof to
Mortgagee.
(i) In case of loss covered by Policies, Mortgagee may either (1)
settle and adjust any claim without the consent of Mortgagor, or (2) allow
Mortgagor to agree with the insurance company or companies on the amount to
be paid upon the loss; provided, that Mortgagor may adjust losses
aggregating not in excess of $100,000.00 if such adjustment is carried out
in a competent and timely manner, and provided that in any case Mortgagee
shall and is hereby authorized to collect and receipt for any such
insurance proceeds; and the expenses incurred by Mortgagee in the
adjustment and collection of insurance proceeds shall become part of the
Debt and be secured hereby and shall be reimbursed by Mortgagor to
Mortgagee upon demand.
(ii) In the event of any insured damage to or destruction of the
Mortgaged Property or any part thereof (herein called an "Insured
-------
Casualty") where the loss is in an aggregate amount less than twenty-five
--------
percent (25%) of the original principal balance of the Note, and if, in the
reasonable judgment of Mortgagee, the Mortgaged Property can be restored
within six (6) months to an economic unit not less valuable (including an
assessment of the impact of the termination of any Leases due to such
Insured Casualty) and not less useful than the same was prior to the
Insured Casualty, and after such restoration will adequately secure the
outstanding balance of the Debt, then, if no Event of Default (hereinafter
defined) shall have occurred and be then continuing, the proceeds
-6-
<PAGE>
of insurance shall be applied to reimburse Mortgagor for the cost of
restoring, repairing, replacing or rebuilding the Mortgaged Property or
part thereof subject to Insured Casualty, as provided for below; and
Mortgagor hereby covenants and agrees forthwith to commence and diligently
to prosecute such restoring, repairing, replacing or rebuilding; provided
always, that Mortgagor shall pay all costs (and if required by Mortgagee,
Mortgagor shall deposit the total thereof with Mortgagee in advance) of
such restoring, repairing, replacing or rebuilding in excess of the net
proceeds of insurance made available pursuant to the terms hereof.
(iii) Except as provided above, the proceeds of insurance collected
upon any Insured Casualty shall, at the option of Mortgagee in its sole
discretion, be applied to the payment of the Debt or applied to reimburse
Mortgagor for the cost of restoring, repairing, replacing or rebuilding the
Mortgaged Property or part thereof subject to the Insured Casualty, in the
manner set forth below. Any such application to the Debt shall be
considered a voluntary prepayment requiring payment of the prepayment
consideration provided in the Note, but shall not reduce or postpone any
payments otherwise required pursuant to the Note, other than the final
payment on the Note.
(iv) In the event that proceeds of insurance, if any, shall be made
available to Mortgagor for the restoring, repairing, replacing or
rebuilding of the Mortgaged Property, Mortgagor hereby covenants to
restore, repair, replace or rebuild the same to be of at least equal value
and of substantially the same character as prior to such damage or
destruction, all to be effected in accordance with applicable law and plans
and specifications approved in advance by Mortgagee.
(v) In the event Mortgagor is entitled to reimbursement out of
insurance proceeds held by Mortgagee, such proceeds shall be disbursed from
time to time upon Mortgagee being furnished with (1) evidence satisfactory
to it of the estimated cost of completion of the restoration, repair,
replacement and rebuilding, (2) funds, or, at Mortgagee's option,
assurances satisfactory to Mortgagee that such funds are available,
sufficient in addition to the proceeds of insurance to complete the
proposed restoration, repair, replacement and rebuilding, and (3) such
architect's certificates, waivers of lien, contractor's sworn statements,
title insurance endorsements, bonds, plats of survey and such other
evidences of cost, payment and performance as Mortgagee may reasonably
require and approve; and Mortgagee may, in any event, require that all
plans and specifications for such restoration, repair, replacement and
rebuilding be submitted to and approved by Mortgagee prior to commencement
of work. With respect to disbursements to be made by Mortgagee: (A) no
payment made prior to the final completion of the restoration, repair,
replacement and rebuilding shall exceed ninety percent (90%) of the value
of the work performed from time to time; (B) funds other than proceeds of
insurance shall be disbursed prior to disbursement of such proceeds; and
(C) at all times, the undisbursed balance of such proceeds remaining in the
hands of Mortgagee, together with funds deposited for that purpose or
irrevocably committed to the satisfaction of
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<PAGE>
Mortgagee by or on behalf of Mortgagor for that purpose, shall be at least
sufficient in the reasonable judgment of Mortgagee to pay for the cost of
completion of the restoration, repair, replacement or rebuilding, free and
clear of all liens or claims for lien. Any surplus which may remain out of
insurance proceeds held by Mortgagee after payment of such costs of
restoration, repair, replacement or rebuilding shall be paid to any party
entitled thereto.
4. Payment of Taxes, etc. Mortgagor shall pay all taxes, assessments,
---------------------
water rates and sewer rents, now or hereafter levied or assessed or imposed
against the Mortgaged Property or any part thereof (the "Taxes") and all ground
-----
rents, maintenance charges, other governmental impositions, and other charges,
including without limitation vault charges and license fees for the use of
vaults, chutes and similar areas adjoining the Premises, now or hereafter levied
or assessed or imposed against the Mortgaged Property or any part thereof (the
"Other Charges") as the same become due and payable. Mortgagor will deliver to
- --------------
Mortgagee evidence satisfactory to Mortgagee that the Taxes and Other Charges
have been so paid or are not then delinquent no later than thirty (30) days
following the date on which the Taxes and/or Other Charges would otherwise be
delinquent if not paid. Mortgagor shall not suffer and shall promptly cause to
be paid and discharged any lien or charge whatsoever which may be or become a
lien or charge against the Mortgaged Property, and shall promptly pay for all
utility services provided to the Mortgaged Property.
5. Tax and Insurance Escrow Fund. Mortgagor shall pay to Mortgagee on
-----------------------------
the first day of each calendar month (a) one-twelfth of an amount which would be
sufficient to pay the Taxes payable, or estimated by Mortgagee to be payable,
during the next ensuing twelve (12) months, and (b) one-twelfth of an amount
which would be sufficient to pay the Insurance Premiums due for the renewal of
the coverage afforded by the Policies upon the expiration thereof (said amounts
in [a] and [b] above hereinafter called the "Tax and Insurance Escrow Fund").
-----------------------------
The Tax and Insurance Escrow Fund and the payments of interest or principal or
both, payable pursuant to the Note, shall be added together and shall be paid as
an aggregate sum by Mortgagor to Mortgagee. Mortgagor hereby pledges to
Mortgagee any and all monies now or hereafter deposited in the Tax and Insurance
Escrow Fund as additional security for the payment of the Debt. Mortgagee will
apply the Tax and Insurance Escrow Fund to payments of Taxes and Insurance
Premiums required to be made by Mortgagor pursuant to Sections 3 and 4 hereof.
----------------
If the amount of the Tax and Insurance Escrow Fund shall exceed the amounts due
for Taxes and Insurance Premiums pursuant to Sections 3 and 4 hereof, Mortgagee
----------------
shall, in its discretion, return any excess to Mortgagor or credit such excess
against future payments to be made to the Tax and Insurance Escrow Fund. In
allocating such excess, Mortgagee may deal with the person shown on the records
of Mortgagee to be the owner of the Mortgaged Property. If the Tax and
Insurance Escrow Fund is not sufficient to pay the items set forth in (a) and
(b) above, Mortgagor shall promptly pay to Mortgagee, upon demand, an amount
which Mortgagee shall estimate as sufficient to make up the deficiency. Upon
the occurrence of an Event of Default, Mortgagee shall be entitled to exercise
both the rights of setoff and banker's lien, if applicable, against the interest
of Mortgagor in the Tax and Insurance Escrow Fund to the full extent of the
outstanding
-8-
<PAGE>
balance of the Debt, application of any such sums to the Debt to be in any order
in its sole discretion. Until expended or applied as above provided, any
amounts in the Tax and Insurance Escrow Fund shall constitute additional
security for the Debt. The Tax and Insurance Escrow Fund shall not constitute a
trust fund and may be commingled with other escrow monies held by Mortgagee. No
earnings or interest on the Tax and Insurance Escrow Fund shall be payable to
Mortgagor.
6. Replacement Escrow Fund. Mortgagor shall pay to Mortgagee on the
-----------------------
first day of each calendar month one-twelfth of the amount reasonably estimated
by Mortgagee to be due for replacements and capital repairs required to be made
to the Mortgaged Property during each calendar year (the "Replacement Escrow
------------------
Fund"). Mortgagor hereby pledges to Mortgagee any and all monies now or
- ----
hereafter deposited in the Replacement Escrow Fund as additional security for
the payment of the Debt. At least thirty (30) days prior to the end of each
calendar year, Mortgagor shall deliver to Mortgagee for Mortgagee's review and
approval, a capital expenditure budget (the "Budget") itemizing the replacements
------
and capital repairs which are anticipated to be made to the Mortgaged Property
during the next immediately succeeding calendar year. Mortgagee may, upon
notice to Mortgagor, adjust the monthly amounts required to be deposited into
the Replacement Escrow Fund to a monthly amount equal to one-twelfth of the
total amount specified in each approved Budget. Mortgagee shall make
disbursements from the Replacement Escrow Fund for items specified in each
approved Budget on a quarterly basis in increments of no less than $5,000.00
upon delivery by Mortgagor of Mortgagee's standard form of draw request
accompanied by copies of paid invoices for the amounts requested and, if
required by Mortgagee, lien waivers and releases from all parties furnishing
materials and/or services in connection with the requested payment and
reimbursement of all out-of-pocket inspection fees incurred by Mortgagee.
Mortgagee may require an inspection of the Mortgaged Property prior to making a
quarterly disbursement in order to verify completion of replacements and
repairs. The Replacement Escrow Fund shall be held in an interest bearing
account in Mortgagee's name at a financial institution selected by Mortgagee in
its sole discretion. Upon the occurrence of an Event of Default, Mortgagee may
apply any sums then present in the Replacement Escrow Fund to the payment of the
Debt in any order in its sole discretion. Until expended or applied as above
provided, the Replacement Escrow Fund shall constitute additional security for
the Debt. The Replacement Escrow Fund shall not constitute a trust fund and may
be commingled with other monies held by Mortgagee. All earnings or interest on
the Replacement Escrow Fund shall be and become part of such Replacement Escrow
Fund and shall be disbursed as provided in this section.
7. Condemnation. Mortgagor shall promptly give Mortgagee written notice
------------
of the actual or threatened commencement of any condemnation or eminent domain
proceeding and shall deliver to Mortgagee copies of any and all papers served in
connection with such proceedings. Mortgagee is hereby irrevocably appointed as
Mortgagor's attorney-in-fact, coupled with an interest, with exclusive power to
collect, receive and retain any award or payment for said condemnation or
eminent domain and to make any compromise or settlement in connection with such
proceeding, subject to the provisions of this Mortgage. Notwithstanding any
taking by any
-9-
<PAGE>
public or quasi-public authority through eminent domain or otherwise (including
but not limited to any transfer made in lieu of or in anticipation of the
exercise of such taking), Mortgagor shall continue to pay the Debt at the time
and in the manner provided for its payment in the Note, in this Mortgage and the
other Loan Documents and the Debt shall not be reduced until any award or
payment therefor shall have been actually received after expenses of collection
and applied by Mortgagee to the discharge of the Debt. Mortgagee shall not be
limited to the interest paid on the award by the condemning authority but shall
be entitled to receive out of the award interest at the rate or rates provided
in the Note. Mortgagor shall cause the award or payment made in any condemnation
or eminent domain proceeding, which is payable to Mortgagor, to be paid directly
to Mortgagee. Mortgagee may apply any such award or payment to the reduction or
discharge of the Debt whether or not then due and payable (such application to
be at the reduced prepayment consideration provided in the Note, except that if
an Event of Default, or an event with notice and/or the passage of time, or
both, would constitute an Event of Default, has occurred, then such application
shall be subject to the full prepayment consideration computed in accordance
with the Note). If the Mortgaged Property is sold, through foreclosure or
otherwise, prior to the receipt by Mortgagee of such award or payment, Mortgagee
shall have the right, whether or not a deficiency judgment on the Note shall
have been sought, recovered or denied, to receive said award or payment, or a
portion thereof sufficient to pay the Debt.
8. Representations Concerning Loan. Mortgagor represents, warrants and
-------------------------------
covenants as follows:
(a) Neither Mortgagor nor any guarantor of the Debt or any part thereof (a
"Guarantor") has any defense to the payment in full of the Debt that arises from
---------
applicable local, state or federal laws, regulations or other requirements.
None of the Loan Documents are subject to any right of rescission, set-off,
abatement, diminution, counterclaim or defense, including the defense of usury,
nor will the operation of any of the terms of any such Loan Documents, or the
exercise of any right thereunder, render any Loan Documents unenforceable, in
whole or in part, or subject to any right of rescission, set-off, abatement,
diminution, counterclaim or defense, including the defense of usury, and no such
right of rescission, set-off, abatement, diminution, counterclaim or defense has
been, or will be, asserted with respect thereto.
(b) All certifications, permits and approvals, including, without
limitation, certificates of completion and occupancy permits required for the
legal use and occupancy of the Mortgaged Property, have been obtained and are in
full force and effect. The Mortgaged Property is in good repair, good order and
good condition and free and clear of any damage that would affect materially and
adversely the value of the Mortgaged Property as security for the Debt and the
Mortgaged Property has not been materially damaged by fire, wind or other
casualty or physical condition (including, without limitation, any soil or
geological condition), which damage has not been fully repaired. There are no
proceedings pending or threatened for the partial or total condemnation of the
Mortgaged Property.
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<PAGE>
(c) Except as disclosed on the survey delivered by Mortgagor to Mortgagee,
all of the Improvements which were included in determining the appraised value
of the Mortgaged Property lie wholly within the boundaries and building
restriction lines of the Mortgaged Property, and no improvements on adjoining
properties encroach upon the Mortgaged Property, and no easements or other
encumbrances upon the Premises encroach upon any of the Improvements, so as to
affect the value or marketability of the Mortgaged Property except for
immaterial encroachments which do not adversely affect the security intended to
be provided by this Mortgage or the use, enjoyment, value or marketability of
the Mortgaged Property. All of the Improvements comply with all material
requirements of any applicable zoning and subdivision laws and ordinances.
(d) The Mortgaged Property is not subject to any leases or operating
agreements other than the leases and the operating agreements, if any, described
in the rent roll delivered to Mortgagee in connection with this Mortgage, and
all such leases and agreements are in full force and effect. No person has any
possessory interest in the Mortgaged Property or right to occupy the same except
under and pursuant to the provisions of the leases and any such operating
agreements.
(e) All financial data, including, without limitation, statements of cash
flow and income and operating expenses, delivered to Mortgagee by, or on behalf
of Mortgagor are (i) true and correct in all material respects; (ii) accurately
represent the financial condition of Mortgagor or the Mortgaged Property as of
the date thereof in all material respects; and (iii) to the extent reviewed by
an independent certified public accounting firm, have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods covered.
(f) The survey of the Mortgaged Property delivered to Mortgagee in
connection with this Mortgage, has been performed by a person purporting to be a
duly licensed surveyor or registered professional engineer in the jurisdiction
in which the Mortgaged Property is situated, and. to the knowledge of Mortgagor,
does not fail to reflect any material matter affecting the Mortgaged Property or
the title thereto.
(g) To the knowledge of Mortgagor, the loan evidenced by the Loan Documents
complies with, or is exempt from, applicable state or federal laws, regulations
and other requirements pertaining to usury and any and all other requirements of
any federal, state or local law.
(h) The Mortgaged Property is located on a dedicated, all-weather road, or
has access to an irrevocable easement permitting ingress and egress which are
adequate in relation to the premises and location on which the Mortgaged
Property is located.
(i) The Mortgaged Property is served by public utilities and services in
the surrounding community, including police and fire protection, public
transportation, refuse removal, public education, and enforcement of safety
codes which are adequate in relation to the premises and location on which the
Mortgaged Property is located.
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<PAGE>
(j) The Mortgaged Property is serviced by public water and sewer systems
which are adequate in relation to the premises and location on which the
Mortgaged Property is located.
(k) The Mortgaged Property has parking and other amenities necessary for
the operation of the business currently conducted thereon.
(l) The Mortgaged Property is a contiguous parcel and a separate tax
parcel, and there are no delinquent Taxes or other outstanding charges adversely
affecting the Mortgaged Property.
(m) The Mortgaged Property is not relied upon by, and does not rely upon,
any building or improvement not part of the Mortgaged Property to fulfill any
zoning, building code or other governmental or municipal requirement for
structural support or the furnishing of any essential building systems or
utilities, except to the extent of any valid and existing reciprocal easement
agreements shown in the title insurance policy insuring the lien of this
Mortgage.
(n) No action, omission, misrepresentation, negligence, fraud or similar
occurrence has taken place on the part of any person that would reasonably be
expected to result in the failure or impairment of full and timely coverage
under any insurance policies providing coverage for the Mortgaged Property.
(o) There are no defaults by Mortgagor beyond any applicable grace period
under any contract or agreement (other than this Mortgage and the other Loan
Documents) that binds Mortgagor and/or the Mortgaged Property, including any
management, service, supply, security, maintenance or similar contracts; and
Mortgagor has no knowledge of any such default for which notice has not yet been
given; and no such agreement is in effect with respect to the Mortgaged Property
that is not capable of being terminated by Mortgagor on less than thirty (30)
days notice except as previously disclosed to Mortgagee by a delivery of a copy
of all such agreements.
(p) The representations and warranties contained in the Closing Certificate
executed by Mortgagor in connection with the Note (which certificate constitutes
one of the Loan Documents) are true and correct and Mortgagee shall observe the
covenants contained therein.
9. Single Purpose Entity/Separateness. Mortgagor represents, warrants
----------------------------------
and covenants as follows:
(a) Mortgagor does not own and will not own any encumbered asset or
property other than (i) the Mortgaged Property, and (ii) incidental personal
property necessary for the ownership or operation of the Mortgaged Property.
(b) Mortgagor will not engage in any business other than the ownership,
management and operation of the Mortgaged Property and Mortgagor will conduct
and operate its business as presently conducted and operated.
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<PAGE>
(c) Mortgagor will not enter into any contract or agreement with any
Guarantor or any party which is directly or indirectly controlling, controlled
by or under common control with Borrower or Guarantor (an "Affiliate"), except
---------
upon terms and conditions that are intrinsically fair and substantially similar
to those that would be available on an arms-length basis with third parties
other than any Guarantor or Affiliate.
(d) Mortgagor has not incurred and will not incur any indebtedness, secured
or unsecured, direct or indirect, absolute or contingent (including guaranteeing
any obligation), other than (i) the Debt, and (ii) trade and operational debt
incurred in the ordinary course of business with trade creditors and in amounts
as are normal and reasonable under the circumstances. No indebtedness other
than the Debt may be secured (subordinate or pari passu) by the Mortgaged
---- -----
Property.
(e) Mortgagor has not made and will not make any loans or advances to any
third party (including Guarantor or any Affiliate).
(f) Mortgagor is and will remain solvent and Mortgagor will pay its debts
from its assets as the same shall become due.
(g) Mortgagor has done or caused to be done and will do all things
necessary, to preserve its existence, and Mortgagor will not modify or otherwise
change the partnership certificate, partnership agreement, articles of
incorporation and bylaws, trust or other organizational documents of Mortgagor
in a manner which would adversely affect the Mortgagor's existence as a single
purpose entity.
(h) Mortgagor will maintain books and records and bank accounts separate
from those of its Affiliates and Mortgagor will file its own tax returns.
(i) Mortgagor will preserve and keep in full force and effect its
existence, good standing and qualification to do business in the state in which
the Mortgaged Property is located and will be, and at all times will hold itself
out to the public as, a legal entity separate and distinct from any other entity
(including any Affiliate or any Guarantor).
(j) Mortgagor will maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in light of
its contemplated business operations.
(k) Mortgagor will not seek the dissolution or winding up, in whole or in
part, of the Mortgagor nor will Mortgagor merge with or be consolidated into any
other entity.
(l) Mortgagor will not commingle the funds and other assets of Mortgagor
with those of any Affiliate, any Guarantor or any other person.
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<PAGE>
(m) Mortgagor has and will maintain its assets in such a manner that it
will not be costly or difficult to segregate, ascertain or identify its
individual assets from those of any Affiliate, Guarantor or any other person.
(n) Mortgagor does not and will not hold itself out to be responsible for
the debts or obligations of any other person.
(o) Mortgagor shall obtain and maintain in full force and effect, and abide
by and satisfy the material terms and conditions of, all material permits,
licenses, registrations and other authorizations with or granted by any
governmental authorities that may be required from time to time with respect to
the performance of its obligations under this Mortgage.
10. Maintenance of Mortgaged Property. Mortgagor shall cause the
---------------------------------
Mortgaged Property to be operated and maintained in a good and safe condition
and repair and in keeping with the condition and repair of properties of a
similar use, value, age, nature and construction. Mortgagor shall not use,
maintain or operate the Mortgaged Property in any manner which constitutes a
public or private nuisance or which makes void, voidable, or cancelable, or
increases the premium of, any insurance then in force with respect thereto. The
Improvements and the Equipment shall not be removed, demolished or materially
altered (except for normal replacement of the Equipment and for trade fixtures
owned by tenants and removed in accordance with its lease) without the consent
of Mortgagee. Mortgagor shall promptly comply with all laws, orders and
ordinances affecting the Mortgaged Property, or the use thereof. Mortgagor
shall promptly repair, replace or rebuild any part of the Mortgaged Property
which may be destroyed by any casualty, or become damaged, worn or dilapidated
or which may be affected by any proceeding of the character referred to in
Section 7 hereof and shall complete and pay for any structure at any time in the
- ---------
process of construction or repair on the Premises (subject, however, to Section
-------
3(e) with respect to damage or destruction of the Mortgaged Property, in whole
- ----
or in part, by fire or other casualty).
11. Use of Mortgaged Property. Mortgagor shall not initiate, join in,
-------------------------
acquiesce in, or consent to any change in any private restrictive covenant,
zoning law or other public or private restriction, limiting or defining the uses
which may be made of the Mortgaged Property or any part thereof. If under
applicable zoning provisions the use of all or any portion of the Mortgaged
Property is or shall become a nonconforming use, Mortgagor will not cause or
permit such nonconforming use to be discontinued or abandoned without the
express written consent of Mortgagee. Mortgagor shall not permit or suffer to
occur any waste on or to the Mortgaged Property or to any portion thereof and
shall not take any steps whatsoever to convert the Mortgaged Property, or any
portion thereof, to a condominium or cooperative form of management. Mortgagor
will not install or permit to be installed on the Premises any underground
storage tank.
12. Transfer or Encumbrance of the Mortgaged Property. (a) Mortgagor
-------------------------------------------------
acknowledges that Mortgagee has examined and relied on the creditworthiness and
experience of Mortgagor in
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<PAGE>
owning and operating properties such as the Mortgaged Property in agreeing to
make the loan secured hereby, and that Mortgagee will continue to rely on
Mortgagor's ownership of the Mortgaged Property as a means of maintaining the
value of the Mortgaged Property as security for repayment of the Debt. Mortgagor
acknowledges that Mortgagee has a valid interest in maintaining the value of the
Mortgaged Property so as to ensure that, should Mortgagor default in the
repayment of the Debt, Mortgagee can recover the Debt by a sale of the Mortgaged
Property. Mortgagor shall not, without the prior written consent of Mortgagee,
sell, convey, alienate, mortgage, encumber, pledge or otherwise transfer the
Mortgaged Property or any part thereof, or permit the Mortgaged Property or any
part thereof to be sold, conveyed, alienated, mortgaged, encumbered, pledged or
otherwise transferred; provided, however, Mortgagee may, in its sole discretion,
give such written consent (but shall have no obligation to do so) to any such
sale, conveyance, alienation, mortgage, encumbrance, pledge or other transfer,
and any such consent may be conditioned upon one or more of the following
conditions precedent as Mortgagee may require: the grantee's integrity,
reputation, character, creditworthiness and management ability are satisfactory
to Lender in its sole judgment, the grantee's single purpose and bankruptcy
remote character being satisfactory to Mortgagee in its sole judgment, the
grantee executing (prior to such sale or transfer) a written assumption
agreement containing such terms as Mortgagee may require, a principal paydown on
the Note, an increase in the rate of interest payable on the Note, a transfer
fee, payment by Mortgagor of Mortgagee's costs and expenses associated with the
transaction (including reasonable attorneys' fees), and the satisfaction of any
conditions imposed by any national rating agency for Certificates, together with
such other modifications of the Loan Documents, and such legal opinions,
certifications and similar matters that Mortgagee may require.
(b) A sale, conveyance, alienation, mortgage, encumbrance, pledge or
transfer within the meaning of this paragraph shall not include transfers made
by devise or descent or by operation of law upon the death of a joint tenant,
partner or shareholder or otherwise by operation of law in the event of a
bankruptcy, but shall be deemed to include (i) an installment sales agreement
wherein Mortgagor agrees to sell the Mortgaged Property or any part thereof for
a price to be paid in installments; (ii) an agreement by Mortgagor leasing all
or a substantial part of the Mortgaged Property for other than actual occupancy
by a space tenant thereunder or a sale, assignment or other transfer of, or the
grant of a security interest in, Mortgagor's right, title and interest in and to
any Leases or any Rents; (iii) if Mortgagor, Guarantor, or any general partner
of Mortgagor or Guarantor is a corporation, any merger, consolidation or the
voluntary or involuntary sale, conveyance or transfer of such corporation's
stock (or the stock of any corporation directly or indirectly controlling such
corporation by operation of law or otherwise) or the creation or issuance of new
stock in one or a series of transactions by which an aggregate of more than 10%
of such corporation's stock shall be vested in a party or parties who are not
now stockholders (provided, however, in no event shall this subpart (iii) apply
-------------
to any Guarantor whose stock or shares are traded on a nationally recognized
stock exchange); (iv) if Mortgagor, Guarantor, or any general partner of
Mortgagor or Guarantor is a limited liability company or limited partnership,
the voluntary or involuntary sale, conveyance or transfer by which an aggregate
of more than fifty percent (50%) of the ownership interest in such limited
liability
-15-
<PAGE>
company or limited partnership shall be vested in parties not having an
ownership interest as of the date of this Mortgage within a two (2) year period;
and (v) if Mortgagor, any Guarantor or any general partner of Mortgagor or any
Guarantor is a limited or general partnership or joint venture, the change,
removal or resignation of a general partner, managing partner or joint venturer
or the transfer of all or any portion of the partnership interest of any general
partner, managing partner or joint venturer.
(c) Mortgagee may predicate its decision to grant or withhold consent
hereunder on Mortgagee's satisfaction with all relevant factors which shall
include, but not be limited to, the creditworthiness of the proposed transferee
and such proposed transferee's management experience, adjustment of the term of
the Note or the interest rate of the Note, and upon the execution of an
assumption agreement in form and substance acceptable to Mortgagee, the payment
of an assumption fee equal to one percent (1%) of the then unpaid principal
balance of the Note and the payment of all costs and expenses incurred by
Mortgagee in connection with the assumption including reasonable attorneys'
fees. Mortgagee agrees not to unreasonably withhold its consent to a sale or
transfer of the Mortgaged Property. Mortgagee shall be deemed to be reasonable
in withholding its consent if a sale to the proposed transferee receives
unfavorable comment from a national rating agency for Certificates (hereinafter
defined). Mortgagee shall not be required to demonstrate any actual impairment
of its security or any increased risk of default hereunder in order to declare
the Debt immediately due and payable upon Mortgagor's sale, conveyance,
alienation, mortgage, encumbrance, pledge or transfer of the Mortgaged Property
without Mortgagee's consent. This provision shall apply to every sale,
conveyance, alienation, mortgage, encumbrance, pledge or transfer of the
Mortgaged Property regardless of whether voluntary or not, or whether or not
Mortgagee has consented to any previous sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer of the Mortgaged Property.
(d) Mortgagee's consent to one sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer of the Mortgaged Property shall not be deemed to
be a waiver of Mortgagee's right to require such consent to any future
occurrence of same. Any sale, conveyance, alienation, mortgage, encumbrance,
pledge or transfer of the Mortgaged Property made in contravention of this
paragraph shall be null and void and of no force and effect.
(e) Mortgagor agrees to bear and shall pay or reimburse Mortgagee on demand
for all reasonable expenses (including, without limitation, reasonable
attorney's fees and disbursements, title search costs and title insurance
endorsement premiums) incurred by Mortgagee in connection with the review,
approval and documentation of any such sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer.
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<PAGE>
13. Estoppel Certificates and No Default Affidavits.
-----------------------------------------------
(a) After request by Mortgagee, Mortgagor shall within ten (10) days
furnish Mortgagee with a statement, duly acknowledged and certified, setting
forth (i) the amount of the original principal amount of the Note, (ii) the
unpaid principal amount of the Note, (iii) the rate of interest of the Note,
(iv) the date installments of interest and/or principal were last paid, (v) any
defenses to the payment of the Debt, if any, and a confirmation that there are
no offsets against the Debt, and (vi) that the Note, this Mortgage and the other
Loan Documents are valid, legal and binding obligations and have not been
modified or if modified, giving particulars of such modification.
(b) After request by Mortgagee, Mortgagor shall within ten (10) days
furnish Mortgagee with a certificate reaffirming all representations and
warranties of Mortgagor set forth herein and in the other Loan Documents as of
the date requested by Mortgagee or, to the extent of any changes to any such
representations and warranties, so stating such changes.
(c) If the Mortgaged Property includes commercial property, Mortgagor shall
deliver to Mortgagee upon request, tenant estoppel certificates from each
commercial tenant at the Mortgaged Property in form and substance reasonably
satisfactory to Mortgagee provided that Mortgagor shall not be required to
deliver such certificates more frequently than two (2) times in any calendar
year.
14. Changes in the Laws Regarding Taxation. If any law is amended,
--------------------------------------
enacted or adopted after the date of this Mortgage which deducts the Debt from
the value of the Mortgaged Property for the purpose of taxation or which imposes
a tax, either directly or indirectly, on the Debt or Mortgagee's interest in the
Mortgaged Property, Mortgagor will pay such tax, with interest and penalties
thereon, if any. In the event Mortgagee is advised by counsel chosen by it that
the payment of such tax or interest and penalties by Mortgagor would be unlawful
or taxable to Mortgagee or unenforceable or provide the basis for a defense of
usury, then in any such event, Mortgagee shall have the option, by written
notice of not less than forty-five (45) days, to declare the Debt immediately
due and payable.
15. No Credits on Account of the Debt. Mortgagor will not claim or demand
---------------------------------
or be entitled to any credit or credits on account of the Debt for any part of
the Taxes or Other Charges assessed against the Mortgaged Property, or any part
thereof, and no deduction shall otherwise be made or claimed from the assessed
value of the Mortgaged Property, or any part thereof, for real estate tax
purposes by reason of this Mortgage or the Debt. In the event such claim,
credit or deduction shall be required by law, Mortgagee shall have the option,
by written notice of not less than ninety (90) days, to declare the Debt
immediately due and payable.
16. Documentary Stamps. If at any time the United States of America, any
------------------
State thereof or any subdivision of any such State shall require revenue or
other stamps to be affixed
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<PAGE>
to the Note or this Mortgage, or impose any other tax or charge on the same,
Mortgagor will pay for the same, with interest and penalties thereon, if any.
17. Controlling Agreement. It is expressly stipulated and agreed to be
---------------------
the intent of Mortgagor, Trustee and Mortgagee at all times to comply with
applicable state law or applicable United States federal law (to the extent that
it permits Mortgagee to contract for, charge, take, reserve, or receive a
greater amount of interest than under state law) and that this section shall
control every other covenant and agreement in this Mortgage and the other Loan
Documents. If the applicable law (state or federal) is ever judicially
interpreted so as to render usurious any amount called for under the Note or
under any of the other Loan Documents, or contracted for, charged, taken,
reserved, or received with respect to the Debt, or if Mortgagee's exercise of
the option to accelerate the maturity of the Note, or if any prepayment by
Mortgagor results in Mortgagor having paid any interest in excess of that
permitted by applicable law, then it is Mortgagor's, Trustee's and Mortgagee's
express intent that all excess amounts theretofore collected by Mortgagee shall
be credited on the principal balance of the Note and all other Debt (or, if the
Note and all other Debt have been or would thereby be paid in full, refunded to
Mortgagor), and the provisions of the Note and the other Loan Documents
immediately be deemed reformed and the amounts thereafter collectible hereunder
and thereunder reduced, without the necessity of the execution of any new
documents, so as to comply with the applicable law, but so as to permit the
recovery of the fullest amount otherwise called for hereunder or thereunder.
All sums paid or agreed to be paid to Mortgagee for the use, forbearance, or
detention of the Debt shall, to the extent permitted by applicable law, be
amortized, prorated, allocated, and spread throughout the full stated term of
the Debt until payment in full so that the rate or amount of interest on account
of the Debt does not exceed the maximum rate permitted under applicable law from
time to time in effect and applicable to the Debt for so long as the Debt is
outstanding. Notwithstanding anything to the contrary contained herein or in
any of the other Loan Documents, it is not the intention of Trustee and/or
Mortgagee to accelerate the maturity of any interest that has not accrued at the
time of such acceleration or to collect unearned interest at the time of such
acceleration.
18. Books and Records. Mortgagor will keep accurate books and records in
-----------------
accordance with sound accounting principles in which full, true and correct
entries shall be promptly made with respect to the Mortgaged Property and the
operation thereof, and will permit all such books and records (including without
limitation all contracts, statements, invoices, bills and claims for labor,
materials and services supplied for the construction, repair or operation of the
Improvements) to be inspected or audited and copies made by Mortgagee and its
representatives during normal business hours upon forty-eight (48) hours prior
notice to Mortgagor. Mortgagor represents that its chief executive office is as
set forth in the introductory paragraph of this Mortgage and that all books and
records pertaining to the Mortgaged Property are maintained at such location (or
at such other locations as may be designated by Mortgagor in writing to
Mortgagee). Mortgagor will furnish, or cause to be furnished, to Mortgagee on
or before forty-five (45) days after June 30 and December 31 of each calendar
year the following items, each certified by Mortgagor as being true and correct:
(a) a written statement (rent roll)
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dated as of the last day of each such reporting period identifying each of the
Leases by the term, space occupied, rental required to be paid, security deposit
paid, any rental concessions, and identifying any defaults or payment
delinquencies thereunder; (b) monthly and year to date operating statements
prepared for each calendar month during each such reporting period; (c) a
property balance sheet for each such reporting period; and (d) a comparison of
the budgeted income and expenses and the actual income and expenses for each
reporting period and year to date, together with a detailed explanation of any
variances between budgeted and actual amounts that are greater than (i)
$2,000.00, or (ii) five percent (5%) or more for each line item therein. Within
ninety (90) days following the end of each calendar year, Mortgagor shall
furnish a statement of the financial affairs and condition of the Mortgaged
Property including a statement of profit and loss for the Mortgaged Property in
such detail as Mortgagee may request, and setting forth the financial condition
and the income and expenses for the Mortgaged Property for the immediately
preceding calendar year prepared by an independent certified public accountant.
Mortgagor shall deliver to Mortgagee copies of all income tax returns, requests
for extension and other similar items contemporaneously with its delivery of
same to the Internal Revenue Service. On or before November 30 of each calendar
year, Mortgagor shall deliver to Mortgagee an itemized operating budget and
capital expenditure budget of the Mortgaged Property and a management plan for
the Mortgaged Property for the next succeeding calendar year in such detail as
Mortgagee may request. At any time and from time to time Mortgagor shall
deliver to Mortgagee or its agents such other financial data as Mortgagor
prepares for its own use and which Mortgagee or its agents shall request with
respect to the ownership, maintenance, use and operation of the Mortgaged
Property, including, but not limited to, schedules of gross sales for percentage
rents under Leases. Furthermore, in order to satisfy the guidelines,
requirements or directives of any national rating agency for Certificates,
Lender may require (pursuant to written notice thereof delivered on or before
October 31 for the applicable year) that all balance sheets and operating
statements be audited by independent certified public accountants of recognized
standing, selected by Mortgagor and approved by Mortgagee (which balance sheets
and operating statements shall be without qualification or exception other than
those approved by Mortgagee). Mortgagor will permit representatives appointed
by Mortgagee, including independent accountants, agents, attorneys, appraisers
and any other persons, to visit and inspect (at Mortgagee's cost) during its
normal business hours and at any other reasonable times (following forty-eight
[48] hours prior notice) any of the Mortgaged Property and to make photographs
thereof, and to write down and record any information such representatives
obtain, and shall permit Mortgagee or its representatives to investigate and
verify the accuracy of the information furnished to Mortgagee under or in
connection with this Mortgage or any of the other Loan Documents and to discuss
all such matters with its officers, employees and representatives. Mortgagor
will furnish to Mortgagee at Mortgagor's expense all evidence which Mortgagee
may from time to time reasonably request as to the accuracy and validity of or
compliance with all representations and warranties made by Mortgagor in the Loan
Documents and satisfaction of all conditions contained therein. Any inspection
or audit of the Mortgaged Property or the books and records of Mortgagor, or the
procuring of documents and financial and other information, by or on behalf of
Mortgagee, shall be for Mortgagee's protection only, and shall not constitute
any assumption of responsibility or liability by Mortgagee to Mortgagor or
anyone else with
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<PAGE>
regard to the condition, construction, maintenance or operation of the Mortgaged
Property, nor Mortgagee's approval of any certification given to Mortgagee nor
relieve Mortgagor of any of Mortgagor's obligations.
19. Performance of Other Agreements. Mortgagor shall observe and perform
-------------------------------
each and every term to be observed or performed by Mortgagor pursuant to the
terms of any agreement or recorded instrument affecting or pertaining to the
Mortgaged Property.
20. Further Acts, etc. (a) Mortgagor will, at the cost of Mortgagor, and
-----------------
without expense to Mortgagee, do, execute, acknowledge and deliver all and every
such further acts, deeds, conveyances, mortgages, assignments, notices of
assignment, Uniform Commercial Code financing statements or continuation
statements, transfers and assurances as Mortgagee shall, from time to time,
require, for the better assuring, conveying, assigning, transferring, and
confirming unto Mortgagee the property and rights hereby mortgaged, given,
granted, bargained, sold, alienated, enfeoffed, conveyed, confirmed, pledged,
assigned and hypothecated or intended now or hereafter so to be, or which
Mortgagor may be or may hereafter become bound to convey or assign to Mortgagee,
or for carrying out the intention or facilitating the performance of the terms
of this Mortgage or for filing, registering or recording this Mortgage.
Mortgagor, on demand, will execute and deliver and hereby authorizes Mortgagee
to execute in the name of Mortgagor or without the signature of Mortgagor to the
extent Mortgagee may lawfully do so, one or more financing statements, chattel
mortgages or other instruments, to evidence more effectively the security
interest of Mortgagee in the Mortgaged Property. Mortgagor grants to Mortgagee
an irrevocable power of attorney coupled with an interest for the purpose of
exercising and perfecting any and all rights and remedies available to Mortgagee
at law and in equity, including without limitation such rights and remedies
available to Mortgagee pursuant to this paragraph.
(b) Mortgagee (and its mortgage servicer) shall have the right to disclose
in confidence such financial information regarding Mortgagor, Guarantor or the
Mortgaged Property as may be necessary to complete any sale or attempted sale of
the Note or participations in the loan (or any transfer of the mortgage
servicing thereof) evidenced by the Note and the Loan Documents, including,
without limitation, all Loan Documents, financial statements, projections,
internal memoranda, audits, reports, payment history, appraisals and any and all
other information and documentation in the Mortgagee's files (and such
servicer's files) relating to the Mortgagor, any Guarantor and the Mortgaged
Property. This authorization shall be irrevocable in favor of the Mortgagee
(and its mortgage servicer), and Mortgagor and Guarantor waive any claims that
they may have against the Mortgagee, its mortgage servicer or the party
receiving information from the Mortgagee pursuant hereto regarding disclosure of
information in such files and further waive any alleged damages which they may
suffer as a result of such disclosure.
(c) The Mortgagor acknowledges that the Mortgagee intends to sell the loan
evidenced by the Note and the Loan Documents or a participation interest therein
to a party who may pool the loan with a number of other loans and to have the
holder of such loans (most likely a special purpose REMIC) issue one or more
classes of Mortgage Backed Pass-Through Certificates (the
-20-
<PAGE>
"Certificates"), which may be rated by one or more national rating agencies.
------------
The Mortgagee (and its mortgage servicer) shall be permitted to share any of the
information referred to in subsection (b) above with the investment banking
--------------
firms, rating agencies, accounting firms, custodians, successor mortgage
servicers, law firms and other third-party advisory firms involved with the loan
evidenced by the Note and the Loan Documents or the Certificates. It is
understood that the information provided by the Mortgagor to the Mortgagee (or
its mortgage servicer) or otherwise received by Mortgagee (or its mortgage
servicer) in connection with the loan evidenced by the Loan Documents may
ultimately be incorporated into the offering documents for the Certificates and
thus various prospective investors may also see some or all of the information.
The Mortgagee (and its mortgage servicer) and all of the aforesaid third-party
advisors and professional firms shall be entitled to rely on the information
supplied by, or on behalf of, the Mortgagor.
21. Recording of Mortgage, etc. Upon the execution and delivery of this
--------------------------
Mortgage and thereafter, from time to time, Mortgagor will cause this Mortgage,
and any security instrument creating a lien or security interest or evidencing
the lien hereof upon the Mortgaged Property and each instrument of further
assurance to be filed, registered or recorded in such manner and in such places
as may be required by any present or future law in order to publish notice of
and fully to protect the lien or security interest hereof upon, and the interest
of Mortgagee in, the Mortgaged Property. Mortgagor will pay all filing,
registration or recording fees, and all expenses (including Mortgagee's
attorneys' fees) incident to the preparation, execution and acknowledgment of
this Mortgage, any mortgage supplemental hereto, any security instrument with
respect to the Mortgaged Property and any instrument of further assurance, and
all federal, state, county and municipal, taxes, duties, imposts, assessments
and charges arising out of or in connection with the execution and delivery of
this Mortgage, any mortgage supplemental hereto, any security instrument with
respect to the Mortgaged Property or any instrument of further assurance, except
where prohibited by law so to do. Mortgagor shall hold harmless and indemnify
Mortgagee, its successors and assigns, against any liability incurred by reason
of the imposition of any tax on the making and recording of this Mortgage.
22. Reporting Requirements. Mortgagor agrees to give prompt notice to
----------------------
Mortgagee of the insolvency or bankruptcy filing of Mortgagor or the death,
insolvency or bankruptcy filing of any Guarantor.
23. Events of Default. The term "Event of Default" as used herein shall
----------------- ----------------
mean the occurrence or happening, at any time and from time to time, of any one
or more of the following:
(a) if any portion of the Debt is not paid within ten (10) days from the
date when the same is due;
(b) subject to Mortgagor's right to contest as provided herein, if any of
the Taxes or Other Charges are not paid when the same are due and payable;
-21-
<PAGE>
(c) if the Policies are not kept in full force and effect, or if the
Policies are not delivered to Mortgagee upon request;
(d) if Mortgagor sells, conveys, alienates, mortgages, encumbers, pledges
or otherwise transfers any portion of the Mortgaged Property or permits the
Mortgaged Property or any part thereof to be sold, conveyed, alienated,
mortgaged, encumbered, levied, pledged or otherwise transferred in violation of
Section 12 above;
- ----------
(e) if any representation or warranty of Mortgagor, or of any Guarantor,
made herein, in any Loan Document, any guaranty, or in any certificate, report,
financial statement or other instrument or document furnished to Mortgagee shall
have been false or misleading in any material respect when made;
(f) if Mortgagor or any Guarantor shall make an assignment for the benefit
of creditors or if Mortgagor or any Guarantor shall admit in writing its
inability to pay, or Mortgagor's or any Guarantor's failure to pay, debts
generally as the debts become due;
(g) if a receiver, liquidator or trustee of Mortgagor or of any Guarantor
shall be appointed or if Mortgagor or any Guarantor shall be adjudicated a
bankrupt or insolvent, or if any petition for bankruptcy, reorganization or
arrangement pursuant to federal bankruptcy law, or any similar federal or state
law, shall be filed by or against, consented to, or acquiesced in by, Mortgagor
or any Guarantor or if Mortgagor or any Guarantor shall admit in writing its
insolvency or bankruptcy or if any proceeding for the dissolution or liquidation
of Mortgagor or of any Guarantor shall be instituted; however, if such
appointment, adjudication, petition or proceeding was involuntary and not
consented to by Mortgagor or such Guarantor, upon the same not being discharged,
stayed or dismissed within sixty (60) days;
(h) subject to Mortgagor's right to contest as provided herein, if the
Mortgaged Property becomes subject to any mechanic's, materialman's, mortgage or
other lien except a lien for local real estate taxes and assessments not then
due and payable;
(i) if Mortgagor fails to cure properly any violations of laws or
ordinances affecting or which may be interpreted to affect the Mortgaged
Property;
(j) except as permitted in this Mortgage, the actual or threatened
alteration, improvement, demolition or removal of any of the Improvements
without the prior consent of Mortgagee;
(k) damage to the Mortgaged Property in any manner which is not covered by
insurance solely as a result of Mortgagor's failure to maintain insurance
required in accordance with this Mortgage;
-22-
<PAGE>
(l) if Mortgagor shall default under any term, covenant, or condition of
this Mortgage or any of the other Loan Documents other than as specified in any
of the above subparagraphs;
(m) if without Mortgagee's prior consent (i) the managing agent for the
Mortgaged Property resigns or is removed (provided, however, Mortgagor shall
have the right to designate a replacement of such managing agent provided the
designated agent has comparable business expertise and ability as such managing
agent and is reasonably satisfactory to Mortgagee), or (ii) the ownership,
management or control of such managing agent is transferred to a person or
entity other than the general partner or managing partner of the Mortgagor
(provided, however, Mortgagor shall have the right to designate a replacement of
such managing agent provided the designated agent has comparable business
expertise and ability as such managing agent and is reasonably satisfactory to
Mortgagee), or (iii) there is any material change in the property management
agreement for the Mortgaged Property;
(n) if all or a substantial part of Mortgagor's assets (other than the
Mortgaged Property) are attached, seized, subjected to a writ or distress
warrant or are levied upon (unless such attachment, seizure, writ, distress
warrant or levy is vacated within sixty [60] days following the date of the
same);
(o) entry of a judgment in excess of $100,000.00 and the expiration of any
appeal right rights or the dismissal or final adjudication of appeals against
Mortgagor or any Guarantor (unless such judgment is vacated within sixty [60]
days following the date of the same);
(p) the Mortgage shall cease to constitute a first-priority lien on the
Mortgaged Property (other than in accordance with its terms); and
(q) seizure or forfeiture of the Mortgaged Property, or any portion
thereof, or Mortgagor's interest therein, resulting from criminal wrongdoing or
other unlawful action of Mortgagor or its affiliates under any federal, state of
local law.
24. Notice and Cure. Notwithstanding the foregoing, Mortgagee agrees to
---------------
give to Mortgagor written notice of (a) Mortgagor's failure to pay any part of
the Debt when due (a "Monetary Default"), and (b) a default referred to in
----------------
subsections 23(b), (c), (h), (i) or (p) above (a "Nonmonetary Default").
- --------------------------------------- -------------------
Mortgagor shall have a period of ten (10) days from its receipt of notice in
which to cure a Monetary Default (which written notice period may run
concurrently with the ten [10] day period referred to in subsection 23[a]) and
----------------
shall have a period of twenty (20) days from its receipt of notice in which to
cure a Nonmonetary Default unless such Nonmonetary Default is not susceptible to
cure within such twenty (20) day period, in which case Mortgagor shall commence
to cure such Nonmonetary Default within twenty (20) days following notice and
diligently prosecute such cure to completion, provided, however, that Mortgagor
will provide Mortgagee with such information as Mortgagee may reasonably request
concerning the status of any attempted cure and such cure must be completed to
the satisfaction of Mortgagee within one hundred and eighty (180) days of notice
in any case. Notwithstanding the foregoing, Mortgagor shall not be entitled to
notice of a Monetary Default more frequently than two times in any calendar
year. A Monetary Default and/or Nonmonetary Default shall
-23-
<PAGE>
nevertheless be an Event of Default for all purposes under the Loan Documents
except that the acceleration of the Debt or other exercise of remedies shall not
be prior to the expiration of the applicable cure and/or grace periods provided
in Section 23 or in this section.
----------
25. Remedies. Upon the occurrence of an Event of Default and subject to
--------
any applicable cure period, Mortgagee may, at Mortgagee's option, and by or
through Trustee, by Mortgagee itself or otherwise, do any one or more of the
following:
(a) Right to Perform Mortgagor's Covenants. If Mortgagor has failed to
--------------------------------------
keep or perform any covenant whatsoever contained in this Mortgage or the other
Loan Documents, Mortgagee may, but shall not be obligated to any person to do
so, perform or attempt to perform said covenant; and any payment made or expense
incurred in the performance or attempted performance of any such covenant,
together with any sum expended by Mortgagee that is chargeable to Mortgagor or
subject to reimbursement by Mortgagor under the Loan Documents, shall be and
become a part of the "Debt," and Mortgagor promises, upon demand, to pay to
Mortgagee, at the place where the Note is payable, all sums so incurred, paid
or expended by Mortgagee, with interest from the date when paid, incurred or
expended by Mortgagee at the Default Rate as specified in the Note.
(b) Right of Entry. Mortgagee may, prior or subsequent to the institution
--------------
of any foreclosure proceedings, enter upon the Mortgaged Property, or any part
thereof, and take exclusive possession of the Mortgaged Property and of all
books, records, and accounts relating thereto and to exercise without
interference from Mortgagor any and all rights which Mortgagor has with respect
to the management, possession, operation, protection, or preservation of the
Mortgaged Property, including without limitation the right to rent the same for
the account of Mortgagor and to deduct from such Rents all costs, expenses, and
liabilities of every character incurred by the Mortgagee in collecting such
Rents and in managing, operating, maintaining, protecting, or preserving the
Mortgaged Property and to apply the remainder of such Rents on the Debt in such
manner as Mortgagee may elect. All such costs, expenses, and liabilities
incurred by the Mortgagee in collecting such Rents and in managing, operating,
maintaining, protecting, or preserving the Mortgaged Property, if not paid out
of Rents as hereinabove provided, shall constitute a demand obligation owing by
Mortgagor and shall bear interest from the date of expenditure until paid at the
Default Rate as specified in the Note, all of which shall constitute a portion
of the Debt. If necessary to obtain the possession provided for above, the
Mortgagee may invoke any and all legal remedies to dispossess Mortgagor,
including specifically one or more actions for forcible entry and detainer,
trespass to try title, and restitution. In connection with any action taken by
the Mortgagee pursuant to this subparagraph, the Mortgagee shall not be liable
for any loss sustained by Mortgagor resulting from any failure to let the
Mortgaged Property, or any part thereof, or from any other act or omission of
the Mortgagee in managing the Mortgaged Property unless such loss is caused by
the willful misconduct of the Mortgagee, nor shall the Mortgagee be obligated to
perform or discharge any obligation, duty, or liability under any Lease or under
or by reason hereof or the exercise of rights or remedies hereunder. Mortgagor
shall and does hereby agree to indemnify the Mortgagee for, and to hold
-24-
<PAGE>
the Mortgagee harmless from, any and all liability, loss, or damage, which may
or might be incurred by the Mortgagee under any such Lease or under or by reason
hereof or the exercise of rights or remedies hereunder, and from any and all
claims and demands whatsoever which may be asserted against the Mortgagee by
reason of any alleged obligations or undertakings on its part to perform or
discharge any of the terms, covenants, or agreements contained in any such
Lease. Should the Mortgagee incur any such liability, the amount thereof,
including without limitation costs, expenses, and reasonable attorneys' fees,
together with interest thereon from the date of expenditure until paid at the
Default Rate as specified in the Note, shall be secured hereby, and Mortgagor
shall reimburse the Mortgagee therefor immediately upon demand. Nothing in this
subsection shall impose any duty, obligation, or responsibility upon the
Mortgagee for the control, care, management, leasing, or repair of the Mortgaged
Property, nor for the carrying out of any of the terms and conditions of any
such Lease; nor shall it operate to make the Mortgagee responsible or liable for
any waste committed on the Mortgaged Property by the tenants or by any other
parties, or for any hazardous substances or environmental conditions on or under
the Mortgaged Property, or for any dangerous or defective condition of the
Mortgaged Property or for any negligence in the management, leasing, upkeep,
repair, or control of the Mortgaged Property resulting in loss or injury or
death to any tenant, licensee, employee, or stranger. Mortgagor hereby assents
to, ratifies, and confirms any and all actions of the Mortgagee with respect to
the Mortgaged Property taken under this subparagraph.
(c) Right to Accelerate. Mortgagee may, without notice except as provided
-------------------
in Section 24 above, demand, presentment, notice of nonpayment or
----------
nonperformance, protest, notice of protest, notice of intent to accelerate,
notice of acceleration, or any other notice or any other action, all of which
are hereby waived by Mortgagor and all other parties obligated in any manner
whatsoever on the Debt, declare the entire unpaid balance of the Debt
immediately due and payable, and upon such declaration, the entire unpaid
balance of the Debt shall be immediately due and payable.
(d) Foreclosure-Power of Sale. Mortgagee may institute a proceeding or
-------------------------
proceedings, judicial, or nonjudicial, by advertisement or otherwise, for the
complete or partial foreclosure of this Mortgage or the complete or partial sale
of the Mortgaged Property under the power of sale contained herein or under any
applicable provision of law. Mortgagee may sell the Mortgaged Property, and all
estate, right, title, interest, claim and demand of Mortgagor therein, and all
rights of redemption thereof, at one or more sales, as an entirety or in
parcels, with such elements of real and/or personal property, and at such time
and place and upon such terms as it may deem expedient, or as may be required by
applicable law, and in the event of a sale, by foreclosure or otherwise, of less
than all of the Mortgaged Property, this Mortgage shall continue as a lien and
security interest on the remaining portion of the Mortgaged Property.
(e) Rights Pertaining to Sales. Subject to the requirements of applicable
--------------------------
law and except as otherwise provided herein, the following provisions shall
apply to any sale or sales of all or any portion of the Mortgaged Property under
or by virtue of subsection (d) above, whether
-25-
<PAGE>
made under the power of sale herein granted or by virtue of judicial proceedings
or of a judgment or decree of foreclosure and sale:
(i) Trustee or Mortgagee may conduct any number of sales from time
to time. The power of sale set forth above shall not be exhausted by any
one or more such sales as to any part of the Mortgaged Property which shall
not have been sold, nor by any sale which is not completed or is defective
in Mortgagee's opinion, until the Debt shall have been paid in full.
(ii) Any sale may be postponed or adjourned by public announcement
at the time and place appointed for such sale or for such postponed or
adjourned sale without further notice.
(iii) After each sale, Mortgagee, Trustee or an officer of any
court empowered to do so shall execute and deliver to the purchaser or
purchasers at such sale a good and sufficient instrument or instruments
granting, conveying, assigning and transferring all right, title and
interest of Mortgagor in and to the property and rights sold and shall
receive the proceeds of said sale or sales and apply the same as specified
in the Note. Each of Trustee and Mortgagee is hereby appointed the true and
lawful attorney-in-fact of Mortgagor, which appointment is irrevocable and
shall be deemed to be coupled with an interest, in Mortgagor's name and
stead, to make all necessary conveyances, assignments, transfers and
deliveries of the property and rights so sold, Mortgagor hereby ratifying
and confirming all that said attorney or such substitute or substitutes
shall lawfully do by virtue thereof. Nevertheless, Mortgagor, if requested
by Trustee or Mortgagee, shall ratify and confirm any such sale or sales by
executing and delivering to Trustee, Mortgagee or such purchaser or
purchasers all such instruments as may be advisable, in Trustee's or
Mortgagee's judgment, for the purposes as may be designated in such
request.
(iv) Any and all statements of fact or other recitals made in any of
the instruments referred to in subparagraph (iii) of this subsection (e)
----------------- --------------
given by Trustee or Mortgagee shall be taken as conclusive and binding
against all persons as to evidence of the truth of the facts so stated and
recited.
(v) Any such sale or sales shall operate to divest all of the
estate, right, title, interest, claim and demand whatsoever, whether at law
or in equity, of Mortgagor in and to the properties and rights so sold, and
shall be a perpetual bar both at law and in equity against Mortgagor and
any and all persons claiming or who may claim the same, or any part thereof
or any interest therein, by, through or under Mortgagor to the fullest
extent permitted by applicable law.
(vi) Upon any such sale or sales, Mortgagee may bid for and acquire
the Mortgaged Property and, in lieu of paying cash therefor, may make
settlement for the
-26-
<PAGE>
purchase price by crediting against the Debt the amount of the bid made
therefor, after deducting therefrom the expenses of the sale, the cost of
any enforcement proceeding hereunder, and any other sums which Trustee or
Mortgagee is authorized to deduct under the terms hereof, to the extent
necessary to satisfy such bid.
(vii) Upon any such sale, it shall not be necessary for Trustee,
Mortgagee or any public officer acting under execution or order of court to
have present or constructively in its possession any of the Mortgaged
Property.
(f) Mortgagee's Judicial Remedies. Mortgagee, or Trustee upon written
-----------------------------
request of Mortgagee, may proceed by suit or suits, at law or in equity, to
enforce the payment of the Debt to foreclose the liens and security interests of
this Mortgage as against all or any part of the Mortgaged Property, and to have
all or any part of the Mortgaged Property sold under the judgment or decree of a
court of competent jurisdiction. This remedy shall be cumulative of any other
nonjudicial remedies available to the Mortgagee under this Mortgage or the other
Loan Documents. Proceeding with a request or receiving a judgment for legal
relief shall not be or be deemed to be an election of remedies or bar any
available nonjudicial remedy of the Mortgagee.
(g) Mortgagee's Right to Appointment of Receiver. Mortgagee, as a matter of
--------------------------------------------
right and (i) without regard to the sufficiency of the security for repayment of
the Debt without notice to Mortgagor, (ii) without any showing of insolvency,
fraud, or mismanagement on the part of Mortgagor, (iii) without the necessity of
filing any judicial or other proceeding other than the proceeding for
appointment of a receiver, and (iv) without regard to the then value of the
Mortgaged Property, shall be entitled to the appointment of a receiver or
receivers for the protection, possession, control, management and operation of
the Mortgaged Property, including (without limitation), the power to collect the
Rents, enforce this Mortgage and, in case of a sale and deficiency, during the
full statutory period of redemption (if any), whether there be a redemption or
not, as well as during any further times when Mortgagor, except for the
intervention of such receiver, would be entitled to collection of such Rents.
Mortgagor hereby irrevocably consents to the appointment of a receiver or
receivers. Any receiver appointed pursuant to the provisions of this subsection
shall have the usual powers and duties of receivers in such matters.
(h) Mortgagee's Uniform Commercial Code Remedies. The Mortgagee may
--------------------------------------------
exercise its rights of enforcement under the Uniform Commercial Code in effect
in the state in which the Mortgaged Property is located.
(i) Other Rights. Mortgagee (i) may surrender the Policies maintained
------------
pursuant to this Mortgage or any part thereof, and upon receipt shall apply the
unearned premiums as a credit on the Debt, and, in connection therewith,
Mortgagor hereby appoints Mortgagee as agent and attorney-in-fact (which is
coupled with an interest and is therefore irrevocable) for Mortgagor to collect
such premiums; and (ii) may apply the Tax and Insurance Escrow Fund and/or the
-27-
<PAGE>
Replacement Escrow Fund toward payment of the Debt; and (iii) shall have and may
exercise any and all other rights and remedies which Mortgagee may have at law
or in equity, or by virtue of any of the Loan Documents, or otherwise.
(j) Discontinuance of Remedies. In case Mortgagee shall have proceeded to
--------------------------
invoke any right, remedy, or recourse permitted under the Loan Documents and
shall thereafter elect to discontinue or abandon same for any reason, Mortgagee
shall have the unqualified right so to do and, in such event, Mortgagor and
Mortgagee shall be restored to their former positions with respect to the Debt,
the Loan Documents, the Mortgaged Property or otherwise, and the rights,
remedies, recourses and powers of Mortgagee shall continue as if same had never
been invoked.
(k) Remedies Cumulative. All rights, remedies, and recourses of Mortgagee
-------------------
granted in the Note, this Mortgage and the other Loan Documents, any other
pledge of collateral, or otherwise available at law or equity: (i) shall be
cumulative and concurrent; (ii) may be pursued separately, successively, or
concurrently against Mortgagor, the Mortgaged Property, or any one or more of
them, at the sole discretion of Mortgagee; (iii) may be exercised as often as
occasion therefor shall arise, it being agreed by Mortgagor that the exercise or
failure to exercise any of same shall in no event be construed as a waiver or
release thereof or of any other right, remedy, or recourse; (iv) shall be
nonexclusive; (v) shall not be conditioned upon Mortgagee exercising or pursuing
any remedy in relation to the Mortgaged Property prior to Mortgagee bringing
suit to recover the Debt; and (vi) in the event Mortgagee elects to bring suit
on the Debt and obtains a judgment against Mortgagor prior to exercising any
remedies in relation to the Mortgaged Property, all liens and security
interests, including the lien of this Mortgage, shall remain in full force and
effect and may be exercised thereafter at Mortgagee's option.
(l) Election of Remedies. Mortgagee may release, regardless of
--------------------
consideration, any part of the Mortgaged Property without, as to the remainder,
in any way impairing, affecting, subordinating, or releasing the lien or
security interests evidenced by this Mortgage or the other Loan Documents or
affecting the obligations of Mortgagor or any other party to pay the Debt. For
payment of the Debt, Mortgagee may resort to any collateral securing the payment
of the Debt in such order and manner as Mortgagee may elect. No collateral
taken by Mortgagee shall in any manner impair or affect the lien or security
interests given pursuant to the Loan Documents, and all collateral shall be
taken, considered, and held as cumulative.
(m) Waivers. Mortgagor hereby irrevocably and unconditionally waives and
-------
releases: (i) all benefits that might accrue to Mortgagor by virtue of any
present or future law exempting the Mortgaged Property from attachment, levy or
sale on execution or providing for any appraisement, valuation, stay of
execution, exemption from civil process, redemption, or extension of time for
payment; (ii) all notices of any Event of Default except as expressly provided
herein or of Trustee's exercise of any right, remedy, or recourse provided for
under the Loan Documents; and (iii) any right to a marshalling of assets, a sale
in inverse order of alienation or any other right to direct in any manner, the
order of sale of any of the Mortgaged Property.
-28-
<PAGE>
(n) Statute of Limitations. To the extent permitted by applicable law,
----------------------
Mortgagee's rights hereunder shall continue even to the extent that a suit for
collection of the Debt, or part thereof, is barred by a statute of limitations.
Mortgagor hereby expressly waives and releases to the fullest extent permitted
by law, the pleading of any statute of limitations as a defense to payment of
the Debt.
(o) Waiver of Automatic or Supplemental Stay. In the event of the filing
----------------------------------------
of any voluntary or involuntary petition under the U.S. Bankruptcy Code (the
"Bankruptcy Code") by or against Mortgagor (other than an involuntary petition
- ----------------
filed by or joined in by Mortgagee), the Mortgagor shall not assert, or request
any other party to assert, that the automatic stay under (S) 362 of the
-------
Bankruptcy Code shall operate or be interpreted to stay, interdict, condition,
reduce or inhibit the ability of Mortgagee to enforce any rights it has by
virtue of this Mortgage, or any other rights that Mortgagee has, whether now or
hereafter acquired, against any guarantor of the Debt. Further, Mortgagor shall
not seek a supplemental stay or any other relief, whether injunctive or
otherwise, pursuant to (S) 105 of the Bankruptcy Code or any other provision
-------
therein to stay, interdict, condition, reduce or inhibit the ability of
Mortgagee to enforce any rights it has by virtue of this Mortgage against any
guarantor of the Debt. The waivers contained in this paragraph are a material
inducement to Mortgagee's willingness to enter into this Mortgage and Mortgagor
acknowledges and agrees that no grounds exits for equitable relief which would
bar, delay or impede the exercise by Mortgagee of Mortgagee's rights and
remedies against Mortgagor or any guarantor of the Debt.
(p) Bankruptcy Acknowledgement. In the event the Mortgaged Property or any
--------------------------
portion thereof or any interest therein becomes property of any bankruptcy
estate or subject to any state or federal insolvency proceeding, then Mortgagee
shall immediately become entitled, in addition to all other relief to which
Mortgagee may be entitled under this Mortgage, to obtain (i) an order from the
Bankruptcy Court or other appropriate court granting immediate relief from the
automatic stay pursuant to (S) 362 of the Bankruptcy Code so to permit Mortgagee
-------
to pursue its rights and remedies against Mortgagor as provided under this
Mortgage and all other rights and remedies of Mortgagee at law and in equity
under applicable state law, and (ii) an order from the Bankruptcy Court
prohibiting Mortgagor's use of all "cash collateral" as defined under (S) 363 of
-------
the Bankruptcy Code. In connection with such Bankruptcy Court orders, Mortgagor
shall not contend or allege in any pleading or petition filed in any court
proceeding that Mortgagee does not have sufficient grounds for relief from the
automatic stay. Any bankruptcy petition or other action taken by the Mortgagor
to stay, condition, or inhibit Mortgagee from exercising its remedies are hereby
admitted by Mortgagor to be in bad faith and Mortgagor further admits that
Mortgagee would have just cause for relief from the automatic stay in order to
take such actions authorized under state law.
(q) Application of Proceeds. The proceeds from any sale, lease, or other
-----------------------
disposition made pursuant to this Mortgage, or the proceeds from the surrender
of any insurance policies pursuant hereto, or any Rents collected by Mortgagee
from the Mortgaged Property, or the Tax and Insurance Escrow Fund or the
Replacement Escrow Fund or sums received pursuant to
-29-
<PAGE>
Section 7 hereof, or proceeds from insurance which Mortgagee elects to apply to
- ---------
the Debt pursuant to Section 3 hereof, shall be applied by Trustee, or by
---------
Mortgagee, as the case may be, to the Debt in the following order and priority:
(1) to the payment of all expenses of advertising, selling, and conveying the
Mortgaged Property or part thereof, and/or prosecuting or otherwise collecting
Rents, proceeds, premiums or other sums including reasonable attorneys' fees and
a reasonable fee or commission to Trustee, not to exceed five percent of the
proceeds thereof or sums so received; (2) to that portion, if any, of the Debt
with respect to which no person or entity has personal or entity liability for
payment (the "Exculpated Portion"), and with respect to the Exculpated Portion
------------------
as follows: first, to accrued but unpaid interest, second, to matured
principal, and third, to unmatured principal in inverse order of maturity; (3)
to the remainder of the Debt as follows: first, to the remaining accrued but
unpaid interest, second, to the matured portion of principal of the Debt, and
third, to prepayment of the unmatured portion, if any, of principal of the Debt
applied to installments of principal in inverse order of maturity; (4) the
balance, if any or to the extent applicable, remaining after the full and final
payment of the Debt to the holder or beneficiary of any inferior liens covering
the Mortgaged Property, if any, in order of the priority of such inferior liens
(Trustee and Mortgagee shall hereby be entitled to rely exclusively on a
commitment for title insurance issued to determine such priority); and (5) the
cash balance, if any, to the Mortgagor. The application of proceeds of sale or
other proceeds as otherwise provided herein shall be deemed to be a payment of
the Debt like any other payment. The balance of the Debt remaining unpaid, if
any, shall remain fully due and owing in accordance with the terms of the Note
and the other Loan Documents.
26. Right of Inspection. Mortgagee and its agents shall have the right to
-------------------
enter and inspect the Mortgaged Property during normal business hours upon
reasonable notice.
27. Security Agreement. This Mortgage is both a real property mortgage or
------------------
deed of trust and a "security agreement" within the meaning of the Uniform
Commercial Code. The Mortgaged Property includes both real and personal
property and all other rights and interests, whether tangible or intangible in
nature, of Mortgagor in the Mortgaged Property. Mortgagor by executing and
delivering this Mortgage has granted and hereby grants to Mortgagee, as security
for the Debt, a security interest in the Mortgaged Property to the full extent
that the Mortgaged Property may be subject to the Uniform Commercial Code (said
portion of the Mortgaged Property so subject to the Uniform Commercial Code
being called in this paragraph the "Collateral"). Mortgagor hereby agrees with
----------
Mortgagee to execute and deliver to Mortgagee, in form and substance
satisfactory to Mortgagee, such financing statements and such further assurances
as Mortgagee may from time to time, reasonably consider necessary to create,
perfect, and preserve Mortgagee's security interest herein granted. This
Mortgage shall also constitute a "fixture filing" for the purposes of the
Uniform Commercial Code. All or part of the Mortgaged Property are or are to
become fixtures. Information concerning the security interest herein granted
may be obtained from the parties at the addresses of the parties set forth in
the first paragraph of this Mortgage. If an Event of Default shall occur,
Mortgagee, in addition to any other rights and remedies which they may have,
shall have and may exercise immediately and without demand, any and all rights
and remedies granted to a secured party upon default
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<PAGE>
under the Uniform Commercial Code, including, without limiting the generality of
the foregoing, the right to take possession of the Collateral or any part
thereof, and to take such other measures as Mortgagee may deem necessary for the
care, protection and preservation of the Collateral. Upon request or demand of
Mortgagee, Mortgagor shall at its expense assemble the Collateral and make it
available to Mortgagee at a convenient place acceptable to Mortgagee. Mortgagor
shall pay to Mortgagee on demand any and all expenses, including legal expenses
and attorneys' fees, incurred or paid by Mortgagee in protecting the interest in
the Collateral and in enforcing the rights hereunder with respect to the
Collateral. Any notice of sale, disposition or other intended action by
Mortgagee with respect to the Collateral sent to Mortgagor in accordance with
the provisions hereof at least ten (10) days prior to such action, shall
constitute commercially reasonable notice to Mortgagor. The proceeds of any
disposition of the Collateral, or any part thereof, may be applied by Mortgagee
to the payment of the Debt in such priority and proportions as Mortgagee in its
discretion shall deem proper. In the event of any change in name, identity or
structure of any Mortgagor, such Mortgagor shall notify Mortgagee thereof and
promptly after request shall execute, file and record such Uniform Commercial
Code forms as are necessary to maintain the priority of Mortgagee's lien upon
and security interest in the Collateral, and shall pay all expenses and fees in
connection with the filing and recording thereof. If Mortgagee shall require
the filing or recording of additional Uniform Commercial Code forms or
continuation statements, Mortgagor shall, promptly after request, execute, file
and record such Uniform Commercial Code forms or continuation statements as
Mortgagee shall deem necessary, and shall pay all expenses and fees in
connection with the filing and recording thereof, it being understood and
agreed, however, that no such additional documents shall increase Mortgagor's
obligations under the Note, this Mortgage and the other Loan Documents.
Mortgagor hereby irrevocably appoints Mortgagee as its attorney-in-fact, coupled
with an interest, to file with the appropriate public office on its behalf any
financing or other statements signed only by Mortgagee, as Mortgagor's attorney-
in-fact, in connection with the Collateral covered by this Mortgage.
Notwithstanding the foregoing, Mortgagor shall appear and defend in any action
or proceeding which affects or purports to affect the Mortgaged Property and any
interest or right therein, whether such proceeding affects title or any other
rights in the Mortgaged Property (and in conjunction therewith, Mortgagor shall
fully cooperate with Mortgagee in the event Mortgagee is a party to such action
or proceeding).
28. Actions and Proceedings. Mortgagee has the right to appear in and
-----------------------
defend any action or proceeding brought with respect to the Mortgaged Property
and to bring any action or proceeding, in the name and on behalf of Mortgagor,
which Mortgagee, in its discretion, decides should be brought to protect their
interest in the Mortgaged Property. Mortgagee shall, at its option, be
subrogated to the lien of any mortgage or other security instrument discharged
in whole or in part by the Debt, and any such subrogation rights shall
constitute additional security for the payment of the Debt.
29. Waiver of Setoff and Counterclaim. All amounts due under this
---------------------------------
Mortgage, the Note and the other Loan Documents shall be payable without setoff,
counterclaim or any deduction whatsoever. Mortgagor hereby waives the right to
assert a setoff, counterclaim or
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<PAGE>
deduction in any action or proceeding in which Mortgagee is a participant, or
arising out of or in any way connected with this Mortgage, the Note, any of the
other Loan Documents, or the Debt.
30. Contest of Certain Claims. Notwithstanding the provisions of Sections
------------------------- --------
4 and 23(i) hereof, Mortgagor shall not be in default for failure to pay or
- -----------
discharge Taxes, Other Charges or mechanic's or materialman's lien asserted
against the Mortgaged Property if, and so long as, (a) Mortgagor shall have
notified Mortgagee of same within five (5) days of obtaining knowledge thereof;
(b) Mortgagor shall diligently and in good faith contest the same by appropriate
legal proceedings which shall operate to prevent the enforcement or collection
of the same and the sale of the Mortgaged Property or any part thereof, to
satisfy the same; (c) Mortgagor shall have furnished to Mortgagee a cash
deposit, or an indemnity bond satisfactory to Mortgagee with a surety
satisfactory to Mortgagee, in the amount of the Taxes, Other Charges or
mechanic's or materialman's lien claim, plus a reasonable additional sum to pay
all costs, interest and penalties that may be imposed or incurred in connection
therewith, to assure payment of the matters under contest and to prevent any
sale or forfeiture of the Mortgaged Property or any part thereof; (d) Mortgagor
shall promptly upon final determination thereof pay the amount of any such
Taxes, Other Charges or claim so determined, together with all costs, interest
and penalties which may be payable in connection therewith; (e) the failure to
pay the Taxes, Other Charges or mechanic's or materialman's lien claim does not
constitute a default under any other deed of trust, mortgage or security
interest covering or affecting any part of the Mortgaged Property; and (f)
notwithstanding the foregoing, Mortgagor shall immediately upon request of
Mortgagee pay (and if Mortgagor shall fail so to do, Mortgagee may, but shall
not be required to, pay or cause to be discharged or bonded against) any such
Taxes, Other Charges or claim notwithstanding such contest, if in the opinion of
Mortgagee, the Mortgaged Property or any part thereof or interest therein may be
in danger of being sold, forfeited, foreclosed, terminated, cancelled or lost.
Mortgagee may pay over any such cash deposit or part thereof to the claimant
entitled thereto at any time when, in the judgment of Mortgagee, the entitlement
of such claimant is established.
31. Recovery of Sums Required to Be Paid. Mortgagee shall have the right
------------------------------------
from time to time to take action to recover any sum or sums which constitute a
part of the Debt as the same become due, without regard to whether or not the
balance of the Debt shall be due, and without prejudice to the right of
Mortgagee thereafter to bring an action of foreclosure, or any other action, for
a default or defaults by Mortgagor existing at the time such earlier action was
commenced.
32. Handicapped Access. (a) Mortgagor agrees that the Mortgaged Property
------------------
shall at all times strictly comply to the extent applicable with the
requirements of the Americans with Disabilities Act of 1990, the Fair Housing
Amendments Act of 1988, all state and local laws and ordinances related to
handicapped access and all rules, regulations, and orders issued pursuant
thereto including, without limitation, the Americans with Disabilities Act
Accessibility Guidelines for Buildings and Facilities (collectively "Access
------
Laws").
- ----
-32-
<PAGE>
(b) Notwithstanding any provisions set forth herein or in any other
document regarding Mortgagee's approval of alterations of the Mortgaged
Property, Mortgagor shall not alter the Mortgaged Property in any manner which
would increase Mortgagor's responsibilities for compliance with the applicable
Access Laws without the prior written approval of Mortgagee. The foregoing
shall apply to tenant improvements constructed by Mortgagor or by any of its
tenants. Mortgagee may condition any such approval upon receipt of a
certificate from an architect, engineer, or other person acceptable to Mortgagee
of compliance with Access Laws.
(c) Mortgagor agrees to give prompt notice to Mortgagee of the receipt by
Mortgagor of any complaints related to violation of any Access Laws and of the
commencement of any proceedings or investigations which relate to compliance
with applicable Access Laws.
33. Indemnification. In addition to any other indemnifications provided
---------------
in any of the Loan Documents, Mortgagor shall protect, defend, indemnify and
save harmless Mortgagee, its subsidiaries, affiliates, persons controlling or
under common control with Mortgagee, their agents, officers, directors,
shareholders, employees, servants, consultants, representatives and their
respective successors and assigns and Trustee (collectively, the "Indemnified
-----------
Parties"), from and against all liabilities, obligations, claims, demands,
- -------
damages, penalties, causes of action, losses, fines, costs and expenses
(including without limitation reasonable attorneys' fees and expenses), imposed
upon or incurred by or asserted against any of the Indemnified Parties by reason
of (a) ownership of this Mortgage, the Mortgaged Property or any interest
therein or receipt of any Rents; (b) any accident, injury to or death of persons
or loss of or damage to property occurring in, on or about the Mortgaged
Property or any part thereof or on the adjoining sidewalks, curbs, adjacent
property or adjacent parking areas, streets or ways; (c) any use, nonuse or
condition in, on or about the Mortgaged Property or any part thereof or on
adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets
or ways; (d) any failure on the part of Mortgagor to perform or comply with any
of the terms of Sections 2 through 50 of this Mortgage; (e) performance of any
---------------------
labor or services or the furnishing of any materials or other property in
respect of the Mortgaged Property or any part thereof; (f) any failure of the
Mortgaged Property to comply with any Access Laws; (g) any representation or
warranty made in the Note, this Mortgage or the other Loan Documents being false
or misleading in any respect as of the date such representation or warranty was
made; (h) any claim by brokers, finders or similar persons claiming to be
entitled to a commission in connection with any Lease or other transaction
involving the Mortgaged Property or any part thereof under any legal requirement
or any liability asserted against Mortgagee with respect thereto; and (i) the
claims of any lessee to any portion of the Mortgaged Property or any person
acting through or under any lessee or otherwise arising under or as a
consequence of any Lease. Any amounts payable to any of the Indemnified Parties
by reason of the application of this paragraph shall be secured by this Mortgage
and shall become immediately due and payable and shall bear interest at the
Default Rate specified in the Note from the date loss or damage is sustained by
any of the Indemnified Parties until paid. The obligations and liabilities of
Mortgagor under this subsection 33(i) shall survive for a period of one (1) year
----------------
following any release of this Mortgage executed by Mortgagee and satisfaction of
the loan evidenced by the Loan Documents, and (ii) shall survive the transfer or
assignment of
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<PAGE>
this Mortgage, the entry of a judgment of foreclosure, sale of the Mortgaged
Property by nonjudicial foreclosure sale, or delivery of a deed in lieu of
foreclosure (including, without limitation, any transfer by Mortgagor of any of
its rights, title and interest in and to the Mortgaged Property to any party,
whether or not affiliated with Mortgagor).
34. Trustee. Trustee may resign by the giving of notice of such
-------
resignation in writing or verbally to Mortgagee. If Trustee shall die, resign,
or become disqualified from acting in the execution of this trust, or if, for
any reason, Mortgagee shall prefer to appoint a substitute trustee or multiple
substitute trustees, or successive substitute trustees or successive multiple
substitute trustees, to act instead of the aforenamed Trustee, Mortgagee shall
have full power to appoint a substitute trustee (or, if preferred, multiple
substitute trustees) in succession who shall succeed (and if multiple substitute
trustees are appointed, each of such multiple substitute trustees shall succeed)
to all the estates, rights, powers, and duties of the aforenamed Trustee. Such
appointment may be executed by any authorized agent of Mortgagee, and if such
Mortgagee be a corporation and such appointment be executed in its behalf by any
officer of such corporation, such appointment shall be conclusively presumed to
be executed with authority and shall be valid and sufficient without proof of
any action by the board of directors or any superior officer of the corporation.
Mortgagor hereby ratifies and confirms any and all acts which the aforenamed
Trustee, or his successor or successors in this trust, shall do lawfully by
virtue hereof. If multiple substitute Trustees are appointed, each of such
multiple substitute Trustees shall be empowered and authorized to act alone
without the necessity of the joinder of the other multiple substitute trustees,
whenever any action or undertaking of such substitute trustees is requested or
required under or pursuant to this Mortgage or applicable law. Any substitute
Trustee appointed pursuant to any of the provisions hereof shall, without any
further act, deed, or conveyance, become vested with all the estates,
properties, rights, powers, and trusts of its or his predecessor in the rights
hereunder with like effect as if originally named as Trustee herein; but
nevertheless, upon the written request of Mortgagee or of the substitute
Trustee, the Trustee ceasing to act shall execute and deliver any instrument
transferring to such substitute Trustee, upon the trusts herein expressed, all
the estates, properties, rights, powers, and trusts of the Trustee so ceasing to
act, and shall duly assign, transfer and deliver any of the property and moneys
held by such Trustee to the substitute Trustee so appointed in the Trustee's
place. No fees or expenses shall be payable to Trustee, except in connection
with a foreclosure of the Mortgaged Property or any part thereof or in
connection with the release of the Mortgaged Property following payment in full
of the Debt.
35. Notices. Any notice, demand, statement, request or consent made
-------
hereunder shall be in writing and shall be deemed to be received by the
addressee on the day such notice is deposited with the United States postal
service first class certified mail, return receipt requested, addressed to the
address, as set forth above, of the party to whom such notice is to be given, or
to such other address as Mortgagor or Mortgagee, as the case may be, shall in
like manner designate in writing.
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<PAGE>
36. Authority. (a) Mortgagor (and the undersigned representative of
---------
Mortgagor, if any) has full power, authority and right to execute, deliver and
perform its obligations pursuant to this Mortgage, and to mortgage, give, grant,
bargain, sell, alien, enfeoff, convey, confirm, warrant, pledge, hypothecate and
assign the Mortgaged Property pursuant to the terms hereof and to keep and
observe all of the terms of this Mortgage on Mortgagor's part to be performed;
and (b) Mortgagor represents and warrants that Mortgagor is not a "foreign
person" within the meaning of Section 1445(f)(3) of the Internal Revenue Code of
------------------
1986, as amended and the related Treasury Department regulations.
37. Waiver of Notice. Mortgagor shall not be entitled to any notices of
----------------
any nature whatsoever from Mortgagee except with respect to matters for which
this Mortgage specifically and expressly provides for the giving of notice by
Mortgagee to Mortgagor and except with respect to matters for which Mortgagee is
required by applicable law to give notice, and Mortgagor hereby expressly waives
the right to receive any notice from Mortgagee with respect to any matter for
which this Mortgage does not specifically and expressly provide for the giving
of notice by Mortgagee to Mortgagor.
38. Remedies of Mortgagor. In the event that a claim or adjudication is
---------------------
made that Mortgagee has acted unreasonably or unreasonably delayed acting in any
case where by law or under the Note, this Mortgage or the other Loan Documents,
it has an obligation to act reasonably or promptly, Mortgagee shall not be
liable for any monetary damages, and Mortgagor's remedies shall be limited to
injunctive relief or declaratory judgment.
39. Sole Discretion of Mortgagee. Wherever pursuant to this Mortgage,
----------------------------
Mortgagee exercises any right given to it to approve or disapprove, or any
arrangement or term is to be satisfactory to Mortgagee, the decision of
Mortgagee to approve or disapprove or to decide that arrangements or terms are
satisfactory or not satisfactory shall be in the sole discretion of Mortgagee
and shall be final and conclusive, except as may be otherwise expressly and
specifically provided herein.
40. Non-Waiver. The failure of Mortgagee to insist upon strict
----------
performance of any term hereof shall not be deemed to be a waiver of any term of
this Mortgage. Mortgagor shall not be relieved of Mortgagor's obligations
hereunder by reason of (a) the failure of Mortgagee to comply with any request
of Mortgagor or Guarantor to take any action to foreclose this Mortgage or
otherwise enforce any of the provisions hereof or of the Note or other Loan
Documents, (b) the release, regardless of consideration, of the whole or any
part of the Mortgaged Property, or of any person liable for the Debt or any
portion thereof, or (c) any agreement or stipulation by Mortgagee extending the
time of payment or otherwise modifying or supplementing the terms of the Note,
this Mortgage, or the other Loan Documents. Mortgagee may resort for the
payment of the Debt to any other security held by Mortgagee in such order and
manner as Mortgagee, in its discretion, may elect. Mortgagee may take action to
recover the Debt, or any portion thereof, or to enforce any covenant hereof
without prejudice to the right of Mortgagee thereafter to foreclosure this
Mortgage. The rights and remedies of Mortgagee under
-35-
<PAGE>
this Mortgage shall be separate, distinct and cumulative and none shall be
given effect to the exclusion of the others. No act of Mortgagee shall be
construed as an election to proceed under any one provision herein to the
exclusion of any other provision. Mortgagee shall not be limited exclusively to
the rights and remedies herein stated but shall be entitled to every right and
remedy now or hereafter afforded at law or in equity.
41. No Oral Change. This Mortgage may not be modified, amended, waived,
--------------
extended, changed, discharged or terminated orally or by any act or failure to
act on the part of Mortgagor or Mortgagee, but only by an agreement in writing
signed by the party against whom enforcement of any modification, amendment,
waiver, extension, change, discharge or termination is sought.
42. Liability. If Mortgagor consists of more than one person, the
---------
obligations and liabilities of each such person hereunder shall be joint and
several. Subject to the provisions hereof requiring Mortgagee's consent to any
transfer of the Mortgaged Property, this Mortgage shall be binding upon and
inure to the benefit of Mortgagor and Mortgagee and their respective successors
and assigns forever.
43. Inapplicable Provisions. If any term, covenant or condition of this
-----------------------
Mortgage is held to be invalid, illegal or unenforceable in any respect, this
Mortgage shall be construed without such provision.
44. Headings, etc. The headings and captions of various paragraphs of
-------------
this Mortgage are for convenience of reference only and are not to be construed
as defining or limiting, in any way, the scope or intent of the provisions
hereof.
45. Counterparts. This Mortgage may be executed in any number of
------------
counterparts each of which shall be deemed to be an original but all of which
when taken together shall constitute one agreement.
46. Definitions. Unless the context clearly indicates a contrary intent
-----------
or unless otherwise specifically provided herein, words used in this Mortgage
may be used interchangeably in singular or plural form and the word "Mortgagor"
---------
shall mean "each Mortgagor and any subsequent owner or owners of the Mortgaged
Property or any part thereof or any interest therein," the word "Mortgagee"
---------
shall mean "Mortgagee and any subsequent holder of the Note," the word "Debt"
----
shall mean "the Note and any other evidence of indebtedness secured by this
Mortgage," the word "person" shall include an individual, corporation,
------
partnership, trust, unincorporated association, government, governmental
authority, and any other entity, and the words "Mortgaged Property" shall
------------------
include any portion of the Mortgaged Property and any interest therein and the
words "attorneys' fees" shall include any and all attorneys' fees, paralegal and
law clerk fees, including, but not limited to, fees at the pre-trial, trial and
appellate levels incurred or paid by Mortgagee in protecting its interest in the
Mortgaged Property and Collateral and enforcing its rights hereunder. Whenever
the context may require, any pronouns used herein shall
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<PAGE>
include the corresponding masculine, feminine or neuter forms, and the singular
form of nouns and pronouns shall include the plural and vice versa.
47. Homestead. Mortgagor hereby waives and renounces all homestead and
---------
exemption rights provided by the constitution and the laws of the United States
and of any state, in and to the Premises as against the collection of the Debt,
or any part hereof.
48. Assignments. Mortgagee shall have the right to assign or transfer its
-----------
rights under this Mortgage and the other Loan Documents without limitation,
including, without limitation, the right to assign or transfer its rights to a
servicing agent. Any assignee or transferee shall be entitled to all the
benefits afforded Mortgagee under this Mortgage and the other Loan Documents.
49. Survival of Obligations; Survival of Warrants and Representations.
-----------------------------------------------------------------
Each and all of the covenants and obligations of Mortgagor (other than
warranties and representations contained herein) shall survive the execution and
delivery of the Loan Documents and shall continue in full force and effect until
the Debt shall have been paid in full; provided, however, that nothing contained
in this paragraph shall limit the obligations of Mortgagor except as otherwise
set forth herein. In addition, any and all warranties and representations of
Mortgagor contained herein shall survive the execution and delivery of the Loan
Documents and (i) shall continue for a period of one (1) year following any
release of this Mortgage executed by Mortgagee and satisfaction of the loan
evidenced by the Loan Documents, and (ii) shall survive the transfer or
assignment of this Mortgage, the entry of a judgment of foreclosure, sale of the
Mortgaged Property by non-judicial foreclosure or deed in lieu of foreclosure
(including, without limitation, any transfer of the Mortgage by Mortgagee of any
of its rights, title and interest in and to the Mortgaged Property to any party,
whether or not affiliated with Mortgagee).
50. Covenants Running with the Land. All covenants, conditions,
-------------------------------
warranties, representations and other obligations contained in this Mortgage and
the other Loan Documents are intended by Mortgagor, Mortgagee and Trustee to be,
and shall be construed as, covenants running with the Mortgaged Property until
the lien of this Mortgage has been fully released by Mortgagee.
51. Governing Law; Jurisdiction. THIS MORTGAGE AND THE OTHER LOAN
---------------------------
DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE IN WHICH THE MORTGAGED PROPERTY IS LOCATED (WITHOUT REGARD TO ANY CONFLICT
OF LAWS PRINCIPLES) AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
MORTGAGOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY COURT OF
COMPETENT JURISDICTION LOCATED IN THE STATE IN WHICH THE MORTGAGED PROPERTY IS
LOCATED IN CONNECTION WITH ANY PROCEEDING OUT OF OR RELATING TO THIS MORTGAGE.
-37-
<PAGE>
52. Time. Time is of the essence in this Mortgage and the other Loan
----
Documents.
53. No Third Party Beneficiaries. The provisions of this Mortgage and the
----------------------------
other Loan Documents are for the benefit of Mortgagor, Mortgagee and Trustee and
shall not inure to the benefit of any third party (other than any successor or
assignee of either Trustee or Mortgagee). This Mortgage and the other Loan
Documents shall not be construed as creating any rights, claims or causes of
action against Mortgagee or any of its officers, directors, agents or employees
in favor of any party other than Mortgagor including but not limited to any
claims to any sums held in the Tax and Insurance Escrow Fund or the Replacement
Escrow Fund.
54. Relationship of Parties. The relationship of Mortgagee and Mortgagor
-----------------------
is solely that of debtor and creditor, and Mortgagee has no fiduciary or other
special relationship with the Mortgagor, and no term or condition of any of the
Loan Documents shall be construed to be other than that of debtor and creditor.
Mortgagor represents and acknowledges that the Loan Documents do not provide for
any shared appreciation rights or other equity participation interest.
55. Trustee Provisions. In the event that this Mortgage operates as a
------------------
mortgage pursuant to the provisions of Section 57 below, the provisions of this
----------
Mortgage which pertain to the Trustee shall be of no force or effect.
56. Investigations. Any and all representations, warranties, covenants
--------------
and agreements made in this Mortgage (and/or in other Loan Documents) shall
survive any investigation or inspection made by or on behalf of Mortgagee.
57. Special State Provisions (Colorado). In the event of any conflict
-----------------------------------
between the terms and provisions of this Section 57 and any other provision of
----------
this Mortgage, the terms and provisions of this section shall govern and
control.
(a) Instrument; Confirmation of Grant. This Mortgage shall be deemed
---------------------------------
to be and shall be enforceable as a deed of trust [or leasehold deed of trust,
if applicable] and financing statement.
(i) Notwithstanding any other provisions of this Mortgage that may
imply or indicate to the contrary, by this Mortgage Mortgagor irrevocably
grants, conveys and assigns to Trustee, in trust for the benefit of Beneficiary,
with power of sale, the Premises, Improvements and Mortgaged Property for
purposes of securing the payment and satisfaction of the Note, all other sums,
liabilities and obligations constituting the Debt, and other secured obligations
as set forth at the beginning of this Mortgage. This grant is made solely and
exclusively to the Trustee, and notwithstanding the other provisions of this
Mortgage to the contrary, such grant is not made to or vested in Mortgagee
(except to the extent of the Mortgagee's security interest in the Collateral as
established under Section 27 hereof). The provisions of Section 34 of this
---------- ----------
Mortgage shall be inapplicable so long as the State of Colorado continues to
adhere to the public trustee system for non-judicial foreclosures.
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<PAGE>
(ii) Mortgagee, at its election and as authorized by C.R.S.
------
(S)4-9-501(4), may foreclose (or in connection with a public trustee
- -------------
foreclosure cause the Trustee to foreclose) against all or any part of the
Collateral as part of and in conjunction with any foreclosure of the Mortgaged
Property or any portion thereof.
(iii) If not otherwise accelerated due to an Event of Default or
any other circumstance permitting acceleration by Mortgagee, the remaining
outstanding principal balance under the Note, and all accrued and unpaid
interest under the Note shall become due and payable in full without notice on
December 1, 2001.
(iv) The water rights and powers encompassed within the Mortgaged
Property shall include all water and water rights, wells and well rights, canals
and canal rights, ditches and ditch rights, and reservoirs and reservoir rights
appurtenant to or associated with the Premises, whether or not decreed,
tributary, non-tributary or not non-tributary, surface or underground,
appropriated or unappropriated, or conditional or unconditional, and together
with any and all shares of stock in water, ditch, lateral and canal companies,
well permits and all other evidences of any such rights.
(v) Upon the payment and satisfaction in full of the Debt and all
obligations secured by this Mortgage and the other Loan Documents, Mortgagee
shall execute and deliver to Trustee an appropriate acknowledgement of such
satisfaction and request that the Trustee execute and record an appropriate
release of this Mortgage. Notwithstanding the other provisions of this Mortgage
to the contrary, the lien of this Mortgage and the rights and interests of
Mortgagee hereunder shall remain in force and effect until such release has been
recorded.
(b) Foreclosure. Upon the occurrence of any Event of Default,
-----------
Mortgagee may request Trustee to proceed with foreclosure under the power of
sale which is hereby conferred, such foreclosure to be accomplished in
accordance with the following provision (which provision specifically supersedes
all contrary provisions in Sections 25(d) and (e) hereof):
-------------- ---
Foreclosure Against Mortgaged Property. Mortgagee may foreclose this
--------------------------------------
Deed of Trust, either by judicial action or through Trustee. Foreclosure
through Trustee will be initiated by Mortgagee's filing of its notice of
election and demand for sale with Trustee, together with the delivery by
Mortgagee to Trustee of such affidavits, instruments and certificates as
required by applicable law. Upon the filing of such notice of election and
demand for sale, Trustee shall promptly comply with all notice and other
requirements of the laws of Colorado then in force with respect to such
sales, and shall give four weeks' public notice of the time and place of
such sale by advertisement weekly in some newspaper of general circulation
then published in the County or City and County in which the Mortgaged
Property is located. Any sale conducted by Trustee pursuant to this
Section shall be held at the front door of the county courthouse for such
County or City and County, or on the Mortgaged Property, or at such other
place as similar sales are then customarily held in such County or City and
County, provided that the actual place of sale
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<PAGE>
shall be specified in the notice of sale. The proceeds of any sale under
this Section shall be applied first to the fees and expenses of the Trustee
or other officer conducting the sale (all of which shall be part of the
obligations secured by this Mortgage), and then to the reduction or
discharge of the Debt; any surplus remaining shall be paid over to
Mortgagor or to such other person or persons as may be lawfully entitled to
such surplus. Mortgagee may bid at any such foreclosure sale, and in
connection therewith Mortgagee may credit bid all or any portion of the
Debt (including, without limitation, the Trustee's fees and expenses,
Mortgagee's attorneys' and appraisal fees, and all other expenses incurred
by Mortgagee in undertaking the foreclosure). At the conclusion of any
foreclosure sale, the officer conducting the sale shall execute and deliver
to the purchaser at the sale a certificate of purchase which shall describe
the Mortgaged Property sold to such purchaser and shall state that upon the
expiration of the applicable periods for redemption, the holder of such
certificate will be entitled to a deed to the Mortgaged Property described
in the certificate. After the expiration of all applicable periods of
redemption, unless the Mortgaged Property sold has been redeemed by
Mortgagor, the officer who conducted such sale shall, upon request, execute
and deliver an appropriate deed to the holder of the certificate of
purchase or the last certificate of redemption, as the case may be, and
such deed shall operate to divest Mortgagor and all persons claiming under
Mortgagor of all right, title, and interest, whether legal or equitable, in
the Mortgaged Property described in the deed. Nothing in this Section or
elsewhere in this Mortgage dealing with foreclosure procedures or
specifying particular actions to be taken by Mortgagee or by Trustee or any
similar officer shall be deemed to contradict or add to the requirements
and procedures nor or hereafter specified by Colorado law, and any such
inconsistency shall be resolved in favor of Colorado law applicable at the
time of foreclosure. Without limitation on the generality of the foregoing
qualifications, the provisions of Section 25(q) governing the application
-------------
of foreclosure proceeds shall be deemed amended and modified as necessary
to cause the same to conform to requirements of Colorado law.
(c) Colorado Common Interest Ownership Act. All terms defined in the
--------------------------------------
Colorado Common Interest Ownership Act, Title 38, Article 33.3 of the Colorado
----------------------
Revised Statutes ("CIOA"), shall have the same meaning when used in this
----
paragraph. Without the prior written consent of Mortgagee, Mortgagor shall not
include the Mortgaged Property within a Common Interest Community ("CIC") and
---
shall not initiate, request, consent to or join in any application, petition or
other action to elect treatment under CIOA. To the extent that the Mortgaged
Property is included within a CIC, Mortgagor shall (a) pay all assessments for
the Mortgaged Property no later than their due date (before penalties or
interest attach), (b) not waive, release or allow to lapse, and not exercise
with respect to the Mortgaged Property, any Special Declarant right, (c) not
file, record or publish any plat or map that includes the Mortgaged Property and
that shows contemplated improvements on any property within the map or plat
other than with the label "NEED NOT BE BUILT," (d) describe each individual lot,
unit or site included within the Mortgaged Property from time to time as a
separate portion of real estate subject to a right of withdrawal, (e) preserve
in the Declaration the right to maintain on any portion of the Mortgaged
Property a sales office, management office and model, with such
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<PAGE>
other specific information with respect thereto as CIOA requires, (f) to the
extent permitted by CIOA and the terms of the Declaration on the date of
execution of this Deed of Trust, maintain the existence of the period of
declarant control and the right to exercise all retained powers, (g) not
initiate, request, consent to or join in any application, petition or other
action to merge or consolidate CICs with respect to the Mortgaged Property, (h)
to the extent permitted by CIOA and the terms of the Declaration on the date of
execution of this Deed of Trust, prevent the applicable Association from
encumbering or conveying any interest to real property, granting easements,
leases, licenses and concessions through or over the Common Elements, and
assigning its right to future income, (i) not initiate, request, consent to or
join in any application, petition or other action to amend the Declaration or
Bylaws, and (j) comply with all requirements of the Declaration and CIOA
applicable to Mortgagor and the Mortgaged Property. Mortgagor agrees that
Mortgagee may, at the expense of Mortgagor and from time to time, apply to the
Association applicable to the Mortgaged Property for a statement of unpaid
assessments.
(d) Entire Agreement. THIS MORTGAGE AND THE OTHER LOAN DOCUMENTS
----------------
EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY
AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS,
WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND
MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO
ORAL AGREEMENTS AMONG THE PARTIES HERETO.
(e) Notice of Indemnification. MORTGAGOR ACKNOWLEDGES THAT THIS
-------------------------
MORTGAGE PROVIDES FOR INDEMNIFICATION OF MORTGAGEE BY MORTGAGOR PURSUANT TO
SECTIONS 21 AND 33.
- ----------- --
(f) Compliance with Colorado Escrow Laws. The provisions of Section 5
------------------------------------ ---------
of this Mortgage are not intended to contravene C.R.S. (S)39-1-119 or any other
------------------
applicable requirements of the laws of the State of Colorado, and from time to
time the provisions of Section 5 shall be deemed modified as necessary to be in
---------
conformance with the laws of the State of Colorado (provided that the provisions
of Section 5 shall be controlling to the extent any contrary provisions of
---------
Colorado law may be waived, and Mortgagor hereby waives any such contrary
provisions to the fullest extent permitted by Colorado law).
(g) Survival of Powers of Attorney. All powers of attorney granted
------------------------------
Mortgagee under this Mortgage and the other Loan Documents shall survive any
dissolution or disability of the principal and shall remain in force and effect
thereafter.
(h) Ex Parte Appointment of Receiver. Any appointment of a receiver
--------------------------------
under Section 25(g) may be secured by Mortgagee pursuant to an ex parte
------------- --------
application to a court of competent jurisdiction, without any notice thereof to
Mortgagor (any rights of notice with respect thereto being specifically waived
by Mortgagor), and with or without the commencement of a
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<PAGE>
foreclosure. All expenses and costs incurred by the receiver or its agent shall
constitute a part of the obligations secured by this Mortgage and the other Loan
Documents.
(i) Scope of Waivers. The waivers and releases by Mortgagor set forth
----------------
herein shall be enforceable only to the fullest extent permitted by applicable
law.
(j) Survival of Rights and Obligations. The liens, security interest,
----------------------------------
assignment, rights and remedies granted hereunder and under the other Loan
Documents to Mortgagee, and the covenants, representations, warranties,
obligations and agreements of Mortgagor which are not satisfied or discharged by
any foreclosure of the Mortgaged Property, shall survive such foreclosure and
remain in force and effect thereafter, it being acknowledged and agreed that all
obligations of Mortgagor and rights and remedies of Mortgagee set forth herein
and in the other Loan Documents, and all such liens, assignments, security
interests and other security provided to Mortgagee hereunder and under the other
Loan Documents (but excluding the lien against the Mortgaged Property or
portions thereof that are foreclosed), shall not be extinguished by the subject
foreclosure.
(k) Tenant Subordinations. The estoppel certificates required under
---------------------
Section 13(c) hereof shall contain, at Mortgagee's election, a confirmation from
the tenant that the rights and interests of the tenant under its lease are
subordinate to the lien of this Mortgage (provided that in the case of any
tenant whose lease pre-dates the recordation of this Mortgage, such tenant may
require, in consideration of such subordination, that the Mortgagee provide a
customary non-disturbance agreement which applies so long as the tenant is not
in default under its lease).
(l) Possession of Cash. As part of Mortgagee's remedies under Section
------------------ -------
25 hereof, Mortgagee may take possession of any and all rents and other proceeds
- --
of the Mortgaged Property and any cash or cash equivalents of any nature serving
as security for the Debt that may have been collected by or on behalf of
Mortgagor and that remain in the possession or control of Mortgagor as of the
occurrence of the event or circumstance which gives rise to the pertinent Event
of Default, whether or not commingled with other funds of Mortgagor, and
together with any bank or similar accounts in which such rents, proceeds or
other cash sources may be deposited or held.
(m) Priority Over Special Districts. Mortgagor shall not, without the
-------------------------------
prior written consent of Mortgagee, which may be withheld in Mortgagee's
discretion, consent to or allow the creation of any so-called special districts,
special improvement districts, benefit assessment districts, or similar
districts of any nature, or any other body or entity of any type, nor support or
acquiesce to any other additional taxes, assessments or other monetary
obligations or burdens on the Mortgaged Property, and this provision shall
serve as RECORD NOTICE to any such district or districts or any governmental
-------------
entity under whose authority such district or districts exist or are being
formed that, should Mortgagor or any other person or entity include all or any
portion of the Mortgaged Property in such district or districts, whether formed
or in the process of formation, without first obtaining Mortgagee's express
written consent, then the
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<PAGE>
lien of this Mortgage and the rights and interests in the Mortgaged Property
arising by virtue of this Mortgage in favor of Mortgagee or its successors in
interest (which term shall include, without limitation, any foreclosure
purchaser or purchaser acquiring by deed in lieu of foreclosure, and any
transferee of the Mortgaged Property following completion of foreclosure or deed
in lieu thereof) shall be senior and superior to any taxes or liens of any
nature (whether statutory, contractual or otherwise) levied or imposed upon the
Mortgaged Property or any portion thereof as a result of the inclusion of the
Mortgaged Property in such district or districts.
(n) Under Section 43, any provisions which are unenforceable in part
----------
or as applied to particular circumstances shall remain in force and effect and
be applied with respect to the balance of its provisions which are enforceable,
and with respect to all other circumstances for which they are enforceable, it
being intended that all the provisions of this Mortgage be enforceable and
enforced to the fullest extent permitted by law.
58. Limitation of Liability. Reference hereby is made to the Note for
-----------------------
certain terms and provisions limiting the liability and obligations of Mortgagor
under the Note and the other Loan Documents.
(The balance of this page is intentionally left blank.)
-43-
<PAGE>
Mortgagor has executed this instrument the day and year first above written.
MORTGAGOR:
AIP PROPERTIES #1 L.P.,
a Delaware limited partnership
BY: AIP TAMARAC, INC.,
a Texas corporation
General Partner
By:/s/ DAVID B. WARNER
-----------------------------------
David B. Warner, Vice President
STATE OF TEXAS (S)
(S)
COUNTY OF DALLAS (S)
The foregoing instrument was ACKNOWLEDGED before me this 15 day of
November, 1994, by David B. Warner, Vice President of AIP TAMARAC, INC., a Texas
corporation, on behalf of said corporation as the General Partner of AIP
PROPERTIES #1 L.P., a Delaware limited partnership, on behalf of said
partnership.
Witness my hand and official seal.
My commission expires: 11-5-98
-------------------------
/s/ KEITH MULLEN
-----------------------------------------
Notary Public
-44-
<PAGE>
EXHIBIT A
---------
Legal Description
-----------------
-45-
<PAGE>
EXHIBIT B
---------
Permitted Exceptions
--------------------
-46-
<PAGE>
EXHIBIT 99.3
Loan No. 32027
NOTE
$2,250,000.00 November 15, 1994
FOR VALUE RECEIVED AIP PROPERTIES #2 L.P., a Delaware limited partnership
(hereinafter referred to as "Maker"), promises to pay to the order of AMRESCO
-----
CAPITAL CORPORATION, a Texas corporation, its successors and assigns
(hereinafter referred to as "Payee"), at the office of Payee or its agent,
-----
designee, or assignee at 1845 Woodall Rodgers Freeway, Suite 1700, Dallas, Texas
75201, or at such place as Payee or its agent, designee, or assignee may from
time to time designate in writing, the principal sum of Two Million Two Hundred
Fifty Thousand and No/100 Dollars ($2,250,000.00) in lawful money of the United
States of America, with interest thereon to be computed on the unpaid principal
balance from time to time outstanding at the Applicable Interest Rate
(hereinafter defined), and to be paid in installments as follows:
1. A payment of interest only on the first day of December, 1994;
2. On the first day of January, 1995 and on the first day of each
calendar month thereafter up to and including the first day of
December, 2001, a payment in an amount that would fully amortize the
Debt (hereinafter defined), both principal and interest, at the
Applicable Interest Rate as of the first day of the month immediately
preceding the payment due date, in equal monthly installments over a
period, decreasing each month by one month and ending on a fixed date
twenty-five (25) years after the date of this Note; provided that
notwithstanding such date, the actual Maturity Date (hereinafter
defined) shall be as provided below;
and the balance of said principal sum, together with accrued and unpaid interest
and any other amounts due under this Note shall be due and payable on the first
day of December, 2001 or upon earlier maturity hereof whether by acceleration or
otherwise (the "Maturity Date"). Interest on the principal sum of this Note
-------------
shall be calculated on the basis of a three hundred sixty (360) day year
composed of twelve (12) months of thirty (30) days each, except that interest
due and payable for a period less than a full month shall be calculated by
multiplying the actual number of days elapsed in such period by a daily rate
based on said 360 day year. Payments under this Note shall be applied first, to
the payment of interest and other costs and charges due in connection with this
Note or the Debt (as hereinafter defined), as Payee may determine in its sole
-1-
<PAGE>
discretion, and the balance shall be applied toward the reduction of the
principal sum. All amounts due under this Note shall be payable without setoff,
counterclaim or any other deduction whatsoever.
The term "Applicable Interest Rate" means from the date of this Note
------------------------
through and including the Maturity Date, a rate equal to the lesser of (a) the
maximum rate permitted by applicable law, (b) eleven and three-eights percent
(11.375%) per annum (the "Cap Rate") or (c) an adjustable rate calculated each
--------
month by an upward adjustment to the nearest one-eighth (1/8th) of one percent
(1%) per annum of the sum of (i) three and fifteen one-hundredths percent
(3.15%) per annum (the "Adjustable Interest Rate Spread"), plus (ii) the 30-Day
------------------------------- ----
LIBOR, as defined below. As used herein, "LIBOR" or "30-Day LIBOR" shall mean a
----- ------------
per annum interest rate as quoted at Telerate Page 3750 for U.S. dollar deposits
for a 30-day period in the London interbank market in an amount approximately
equal to the amount of the Debt. The 30-Day LIBOR used in calculating the first
monthly interest payment on the Debt shall be 5.4375% per annum and, subject to
the limitations of subparagraphs (a) and (b) above of this paragraph, the
-------------------------
Applicable Interest Rate used in calculating such first monthly interest payment
on the Debt shall be 8.5875% per annum. Subject to the limitations of
subparagraphs (a) and (b) above of this paragraph, the Applicable Interest Rate
- -------------------------
shall be adjusted on the day that the first interest payment is due and on the
first day of each calendar month thereafter during the term of the Debt in
accordance with any change in the 30-Day LIBOR as of each such date. In the
event Telerate ceases to be available or ceases to display the 30-Day LIBOR,
Payee shall select a comparable publication or service to determine the 30-Day
LIBOR and shall provide notice thereof to Maker. If Payee at any time
determines, in the sole but reasonable exercise of its discretion, that it has
miscalculated the amount of the monthly payment of principal and interest
(whether because of a miscalculation of the Applicable Interest Rate or
otherwise), Payee shall give notice to Maker of the corrected amount of such
monthly payment (and the corrected LIBOR, if applicable) and (a) if the
corrected amount of such monthly payment represents an increase thereof, then
Maker shall, within ten (10) calendar days thereafter, pay to Payee any sums
that Maker would have otherwise been obligated to pay to Payee had the amount of
such monthly payment not been miscalculated, or (b) if the corrected amount of
such monthly payment represents a decrease thereof and Maker is not otherwise in
breach or default under any of the terms and provisions of this Note or the
other Loan Documents (hereinafter defined), then Maker shall within ten (10)
calendar days thereafter be paid the sums that Maker would not have otherwise
been obligated to pay to Payee had the amount of such monthly payment not been
miscalculated.
This Note is secured by the Mortgage, Assignment, Environmental Agreement,
the Closing Certificate and the other Loan Documents (hereinafter defined). The
term "Mortgage" means the Mortgage, Deed of Trust and Security Agreement dated
--------
the date hereof given by Maker for the use and benefit of Payee covering the fee
estate of Maker in certain premises as more particularly described therein (the
"Mortgaged Property"). The term "Assignment" means the Assignment of Leases and
------------------ ----------
Rents of even date herewith executed by Maker in favor of Payee. The term
"Environmental Agreement" means the Environmental Liabilities Agreement of even
- ------------------------
date
-2-
<PAGE>
herewith executed by Maker in favor of Payee. The term "Loan Documents"
--------------
refers collectively to this Note, the Mortgage, the Assignment, the
Environmental Agreement and any and all other documents executed in connection
with this Note or now or hereafter executed by Maker and/or others and by or in
favor of Payee, which wholly or partially secure or guarantee payment of this
Note including, but not limited to, the Term Loan Commitment issued by Payee on
October 12, 1994 and accepted by Maker (the "Commitment").
----------
If any installment payable under this Note (except the final installment
due on the Maturity Date) is not paid within ten (10) days after the date on
which it is due (without regard to any applicable cure and/or notice period),
Maker shall pay to Payee upon demand an amount equal to the lesser of five
percent (5%) of such unpaid sum or the maximum amount permitted by applicable
law to defray the expenses incurred by Payee in handling and processing such
delinquent payment and to compensate Payee for the loss of the use of such
delinquent payment, and such amount shall be secured by the Loan Documents. If
an Event of Default (as defined in the Mortgage) shall occur, other than a
failure to pay any part of the Debt, which Event of Default is not cured within
a period of twenty (20) days after the date on which the Event of Default first
occurs, Maker shall pay to Payee an amount equal to the lesser of five percent
(5%) of the next installment due under this Note (except the final installment
due on the Maturity Date) or the maximum amount permitted by applicable law to
defray the expenses incurred by Payee in its efforts to obtain the cure of the
Event of Default by Maker or otherwise incurred by Payee in relation to the
Event of Default. The term "Debt" means, collectively, (i) the unpaid principal
----
balance of and the accrued but unpaid interest on this Note, (ii) all other sums
due, payable or reimbursable to Maker under the Loan Documents, and (iii) any
and all other liabilities and obligations of Maker under this Note or the other
Loan Documents.
Upon the occurrence of an Event of Default, Payee may, at its option,
without notice or demand, declare the Debt immediately due and payable,
foreclose all liens and security interests securing payment hereof, pursue any
and all other rights, remedies and recourses available to Payee or pursue any
combination of the foregoing. All remedies hereunder, under the Loan Documents
and at law or in equity shall be cumulative. In the event that it should become
necessary to employ counsel to collect the Debt or to protect or foreclose the
security for the Debt or to defend against any claims asserted by Maker arising
from or related to the Loan Documents, Maker also agrees to pay to Payee on
demand all costs of collection or defense incurred by Payee, including
reasonable attorneys' fees for the services of counsel whether or not suit be
brought.
Upon the occurrence of an Event of Default Maker shall pay interest on the
entire unpaid principal sum and any other amounts due at the rate equal to the
lesser of (a) the maximum rate permitted by applicable law, or (b) the greater
of (i) five percent (5%) above the Applicable Interest Rate or (ii) 8% per annum
above the 30-Day LIBOR, as hereinabove defined (the "Default Rate"). The
------------
Default Rate shall be computed from the occurrence of the Event of Default until
the actual receipt and collection of the Debt and shall not be limited by the
Cap Rate
-3-
<PAGE>
defined above. This charge shall be added to the Debt, and shall be deemed
secured by the Loan Documents. This clause, however, shall not be construed as
an agreement or privilege to extend the date of the payment of the Debt, nor as
a waiver of any other right or remedy accruing to Payee by reason of the
occurrence of any Event of Default.
The principal balance of this Note may not be prepaid in whole or in part
(except with respect to the application of casualty or condemnation proceeds)
prior to the first day of the third (3rd) Loan Year (as hereinafter defined).
During the third (3rd) Loan Year or at anytime thereafter, provided no Event of
Default exists, the principal balance of this Note may be prepaid, in whole but
not in part (except with respect to the application of casualty or condemnation
proceeds), on any scheduled payment date under this Note upon not less than
thirty (30) days prior written notice to Payee specifying the scheduled payment
date on which prepayment is to be made (the "Prepayment Date") and upon payment
---------------
of (a) interest accrued and unpaid on the principal balance of this Note to and
including the Prepayment Date, (b) all other sums then due under this Note, and
the other Loan Documents, and (c) a prepayment consideration in an amount equal
to the following percentage of the principal balance of the Debt outstanding on
the Prepayment Date during the following Loan Years:
<TABLE>
<CAPTION>
Loan Year Percentage
----------
<S> <C>
3 5%
4 4%
5 3%
6 2%
</TABLE>
plus, if the cost of the agreement relating to the Cap Rate (the "Rate Cap
- ---- --------
Agreement") was amortized and included in the Adjustable Interest Rate Spread,
- ---------
then an amount sufficient to pay the unamortized cost of the Rate Cap Agreement
which would have been paid during the remainder of the original term of the
Debt. Notwithstanding the foregoing, Maker shall have the additional privilege
to prepay the entire principal balance of this Note on any date during the
twelve (12) months preceding the Maturity Date without any fee or consideration
for such privilege. If any such notice of prepayment is given, the principal
balance of this Note and the other sums required under this paragraph shall be
due and payable on the Prepayment Date. Payee shall not be obligated to accept
any prepayment of the principal balance of this Note unless it is accompanied by
the prepayment consideration due in connection therewith. The term "Loan Year"
---------
for purposes of this paragraph means each complete 365-day period (366 days in a
leap year) after the date of this Note.
If following the occurrence of any Event of Default, Maker shall tender
payment of an amount sufficient to satisfy the Debt at any time prior to a sale
of the Mortgaged Property, either through foreclosure or the exercise of the
other remedies available to Payee under the Mortgage, such tender by Maker shall
be deemed to be a voluntary prepayment under this Note in the
-4-
<PAGE>
amount tendered. If at the time of such tender, prepayment of the principal
balance of this Note is not permitted, Maker shall, in addition to the entire
Debt, also pay to Payee a sum equal to interest which would have accrued on the
principal balance of this Note at the Applicable Interest Rate from the date of
such tender to the earlier of (i) the Maturity Date, or (ii) the first day of
the period during which prepayment of the principal balance of this Note would
have been permitted, together with a prepayment consideration equal to the
prepayment consideration which would have been payable as of the first day of
the period during which prepayment would have been permitted. If at the time of
such tender, prepayment of the principal balance of this Note is permitted,
Maker shall, in addition to the entire Debt, also pay to Payee the applicable
prepayment consideration specified in this Note. If the prepayment results from
the application to the Debt of the casualty or condemnation proceeds from the
Mortgaged Property, no prepayment consideration will be imposed. Partial
prepayments of principal resulting from the application of casualty or insurance
proceeds to the Debt shall not change the amounts of subsequent monthly
installments nor change the dates on which such installments are due, unless
Payee shall otherwise agree in writing.
It is expressly stipulated and agreed to be the intent of Maker and Payee
at all times to comply with applicable state law or applicable United States
federal law (to the extent that it permits Payee to contract for, charge, take,
reserve or receive a greater amount of interest than under state law) and that
this section shall control every other covenant and agreement in this Note and
the other Loan Documents. If the applicable law (state or federal) is ever
judicially interpreted so as to render usurious any amount called for under this
Note or under any of the other Loan Documents, or contracted for, charged,
taken, reserved or received with respect to the indebtedness evidenced by this
Note and the other Loan Documents, or if Payee's exercise of the option to
accelerate the maturity of this Note, or if any prepayment by Maker results in
Maker having paid any interest in excess of that permitted by applicable law,
then it is Maker's and Payee's express intent that all excess amounts
theretofore collected by Payee be credited on the principal balance of this Note
(or, if this Note has been or would thereby be paid in full, refunded to Maker),
and the provisions of this Note and the other Loan Documents immediately be
deemed reformed and the amounts thereafter collectible hereunder and thereunder
reduced, without the necessity of the execution of any new document, so as to
comply with the applicable law, but so as to permit the recovery of the fullest
amount otherwise called for hereunder and thereunder. All sums paid or agreed
to be paid to Payee for the use, forbearance and detention of the indebtedness
evidenced hereby and by the other Loan Documents shall, to the extent permitted
by applicable law, be amortized, prorated, allocated and spread throughout the
full term of such indebtedness until payment in full so that the rate or amount
of interest on account of such indebtedness does not exceed the maximum rate
permitted under applicable law from time to time in effect and applicable to the
indebtedness evidenced hereby for so long as such indebtedness remains
outstanding. Notwithstanding anything to the contrary contained herein or in
any of the other Loan Documents, it is not the intention of Payee to accelerate
the maturity of any interest that has not accrued at the time of such
acceleration or to collect unearned interest at the time of such acceleration.
-5-
<PAGE>
Except as specifically provided in the Loan Documents, Maker and any
endorsers, sureties or guarantors hereof jointly and severally waive presentment
and demand for payment, notice of intent to accelerate maturity, notice of
acceleration of maturity, protest and notice of protest and non-payment, all
applicable exemption rights, valuation and appraisement, notice of demand, and
all other notices in connection with the delivery, acceptance, performance,
default or enforcement of the payment of this Note and the bringing of suit and
diligence in taking any action to collect any sums owing hereunder or in
proceeding against any of the rights and collateral securing payment hereof.
Maker and any surety, endorser or guarantor hereof agree (i) that the time for
any payments hereunder may be extended from time to time without notice and
consent, (ii) to the acceptance of further collateral, (iii) the release of any
existing collateral for the payment of this Note, (iv) to any and all renewals,
waivers or modifications that may be granted by Payee with respect to the
payment or other provisions of this Note, and/or (v) that additional makers,
endorsers, guarantors or sureties may become parties hereto all without notice
to them and without in any manner affecting their liability under or with
respect to this Note. No extension of time for the payment of this Note or any
installment hereof shall affect the liability of Maker under this Note or any
endorser or guarantor hereof even though the Maker or such endorser or guarantor
is not a party to such agreement.
Failure of Payee to exercise any of the options granted herein to Payee
upon the happening of one or more of the events giving rise to such options
shall not constitute a waiver of the right to exercise the same or any other
option at any subsequent time in respect to the same or any other event. The
acceptance by Payee of any payment hereunder that is less than payment in full
of all amounts due and payable at the time of such payment shall not constitute
a waiver of the right to exercise any of the options granted herein to Payee at
that time or at any subsequent time or nullify any prior exercise of any such
option without the express written acknowledgment of the Payee.
Subject to the exception and qualifications below in this paragraph, Payee
shall not enforce the liability and obligation of Maker, to perform and observe
the obligations contained in this Note, or the other Loan Documents by any
action or proceeding wherein a money judgment shall be sought against Maker,
except that Payee may bring a foreclosure action, an action for specific
performance or any other appropriate action or proceeding to enable Payee to
enforce and realize upon this Note and the other Loan Documents, and the
interests in the Mortgaged Property and any other collateral given to Payee
pursuant to the Loan Documents; provided, however, that, except as specifically
provided in this paragraph, any judgment in any such action or proceeding shall
be enforceable against Maker only to the extent of Maker's interest in the
Mortgaged Property and in any other collateral given to Payee. Payee, by
accepting this Note and the other Loan Documents, agrees that it shall not sue
for, seek or demand any deficiency judgment against Maker, in any such action or
proceeding, under or by reason of or under or in connection with the Loan
Documents or this Note. In the event (i) of fraud or material misrepresentation
by Maker or guarantors in connection with the loan evidenced by this Note and
(ii) the first full monthly payment on the Note is not paid when due, the
-6-
<PAGE>
foregoing sentence will be void, ab initio, and this Note shall be with full
---------
recourse to Maker. The provisions of this paragraph shall not, however, (a)
constitute a waiver, release or impairment of any obligation evidenced or
secured by the Loan Documents or this Note; (b) impair the right of Payee to
name Maker as a party defendant in any action or suit for foreclosure and sale
under the Mortgage; (c) affect the validity or enforceability of any guaranty
made in connection with the Loan Documents; (d) impair the right of Payee to
obtain the appointment of a receiver; (e) impair the enforcement of any of the
Loan Documents; or (f) constitute a waiver of the right of Payee to enforce the
liability and obligation of Maker, by money judgment or otherwise, to the extent
of any loss, damage, cost, expense, liability, claim or other obligation
(including reasonable attorneys' fees) incurred by Payee arising out of or in
connection with the following:
A. the gross negligence, willful misconduct of Maker, its agents or
employees, or physical waste of the Mortgaged Property and any failure to
maintain, repair or restore any part of the Mortgaged Property as may be
required by the Mortgage or any of the other Loan Documents;
B. the breach of provisions in the Environmental Agreement, including
the indemnification provision contained therein;
C. the removal or disposal of any portion of the Mortgaged Property
after an Event of Default under the Loan Documents (other than trade
fixtures owned by tenants and removed in accordance with its lease) to the
extent such Mortgaged Property is not replaced by like property of
equivalent value, function and design;
D. the misapplication or conversion by Maker of (i) any insurance
proceeds paid by reason of any loss, damage or destruction to the Mortgaged
Property, (ii) any awards or other amounts received in connection with the
condemnation of all or a portion of the Mortgaged Property, or (iii) rents,
issues, profits, proceeds, accounts, or other amounts received by Maker
that Payee is otherwise entitled to receive pursuant to the terms of the
Loan Documents and utilized for purposes other than the payment of
legitimate operating expenses of the Mortgaged Property in accordance with
the Loan Documents;
E. the costs (including reasonable attorneys' fees) incurred by Payee
in connection with the collection or enforcement of the Debt, including but
not limited to any costs incurred by Payee arising from or relating to the
filing of a petition under the U.S. Bankruptcy Code by or against Maker,
provided, however, that Payee shall only be entitled to recover its costs
(including reasonable attorneys' fees) incurred as a result of any
litigation not involving a bankruptcy in which Payee is the prevailing
party or otherwise adjudicated as being entitled to recover its costs;
-7-
<PAGE>
F. failure to pay in accordance with the provisions of the Mortgage
taxes and insurance premiums (provided that the liability of Maker shall be
only for amounts in excess of the amount held by Payee in the Tax and
Insurance Escrow maintained pursuant to the provisions of the Mortgage),
assessments, charges for labor or materials or other charges that can
create liens on any portion of the Mortgaged Property;
G. any indemnification of Payee set forth in the Loan Documents;
H. any loss, damage, expense or liability incurred by Payee arising
out of (i) Maker's failure to permit on-site inspections of the Mortgaged
Property or to provide financial reports and information pertaining to the
Mortgaged Property as required by the Mortgage; (ii) Maker's failure to
obtain Payee's prior written consent to any subordinate financing or any
other encumbrance on the Mortgage Property; and (iii) Maker's failure to
obtain Payee's prior written consent to any transfer of the Mortgaged
Property as provided in the Mortgage;
I. the failure to deliver any security deposits collected with
respect to the Mortgaged Property to Payee or any other party entitled to
receive such security deposits under the Loan Documents following an Event
of Default; and
J. seizure or forfeiture of the Mortgaged Property, or any portion
thereof, or Payee's interest therein, resulting from criminal wrongdoing or
other unlawful actions of Maker or its affiliates under any federal, state
or local law.
Nothing herein shall be deemed to be a waiver of 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 Debt secured by the
Loan Documents or to require that all collateral shall continue to secure all of
the Debt owing to Payee in accordance with this Note and the other Loan
Documents.
Maker (and the undersigned representative of Maker, if any) represents that
Maker has full power, authority and legal right to execute, deliver and perform
its obligations pursuant to this Note and the other Loan Documents and that this
Note and the other Loan Documents constitute legal, valid and binding
obligations of Maker. Maker further represents that the loan evidenced by the
Loan Documents was made for business or commercial purposes and not for
personal, family or household use.
All notices or other communications required or permitted to be given
pursuant hereto shall be given in the manner and be effective as specified in
the Mortgage, directed to the parties at their respective addresses as provided
therein.
-8-
<PAGE>
Payee shall have the unrestricted right at any time or from time to time to
sell this Note and the loan evidenced by this Note and the Loan Documents or
participation interests therein. Maker shall execute, acknowledge and deliver
any and all instruments requested by Payee to satisfy such purchasers or
participants that the unpaid indebtedness evidenced by this Note is outstanding
upon the terms and provisions set out in this Note and the other Loan Documents
(provided, however, in no event shall such instruments add additional terms and
provisions to such documents). To the extent, if any specified in such
assignment or participation, such assignee(s) or participant(s) shall have the
rights and benefits with respect to this Note and the other Loan Documents as
such assignee(s) or participant(s) would have if they were the Payee hereunder.
MAKER HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF
RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT
ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS NOTE OR THE
OTHER LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN
CONNECTION THEREWITH INCLUDING, BUT NOT LIMITED TO THOSE RELATING TO (A)
ALLEGATIONS THAT A PARTNERSHIP EXISTS BETWEEN PAYEE AND MAKER; (B) USURY OR
PENALTIES OR DAMAGES THEREFOR; (C) ALLEGATIONS OF UNCONSCIONABLE ACTS, DECEPTIVE
TRADE PRACTICE, LACK OF GOOD FAITH OR FAIR DEALING, LACK OF COMMERCIAL
REASONABLENESS, OR SPECIAL RELATIONSHIPS (SUCH AS FIDUCIARY, TRUST OR
CONFIDENTIAL RELATIONSHIP); (D) ALLEGATIONS OF DOMINION, CONTROL, ALTER EGO,
INSTRUMENTALITY, FRAUD, REAL ESTATE FRAUD, MISREPRESENTATION, DURESS, COERCION,
UNDUE INFLUENCE, INTERFERENCE OR NEGLIGENCE; (E) ALLEGATIONS OF TORTIOUS
INTERFERENCE WITH PRESENT OR PROSPECTIVE BUSINESS RELATIONSHIPS OR OF ANTITRUST;
OR (F) SLANDER, LIBEL OR DAMAGE TO REPUTATION. THIS WAIVER OF RIGHT TO TRIAL BY
JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY MAKER, AND IS INTENDED TO ENCOMPASS
INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY
JURY WOULD OTHERWISE ACCRUE. PAYEE IS HEREBY AUTHORIZED TO FILE A COPY OF THIS
PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY MAKER.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE IN WHICH THE REAL PROPERTY ENCUMBERED BY THE MORTGAGE IS LOCATED
(WITHOUT REGARD TO ANY CONFLICT OF LAWS PRINCIPLES) AND THE APPLICABLE LAWS OF
THE UNITED STATES OF AMERICA. MAKER HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY COURT OF COMPETENT JURISDICTION LOCATED IN THE STATE IN
WHICH THE MORTGAGED PROPERTY IS LOCATED IN CONNECTION WITH ANY PROCEEDING OUT OF
OR RELATING TO THIS NOTE.
-9-
<PAGE>
THE PROVISIONS OF THIS NOTE AND THE LOAN DOCUMENTS MAY BE AMENDED OR
REVISED ONLY BY AN INSTRUMENT IN WRITING SIGNED BY THE MAKER AND PAYEE. THIS
NOTE AND ALL THE OTHER LOAN DOCUMENTS EMBODY THE FINAL, ENTIRE AGREEMENT OF
MAKER AND PAYEE AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS
OF MAKER AND PAYEE. THERE ARE NO ORAL AGREEMENTS BETWEEN MAKER AND PAYEE.
MAKER:
AIP PROPERTIES #2 L.P.,
a Delaware limited partnership
BY: AIP NORTHVIEW, INC.,
a Texas corporation,
General Partner
By:/s/ DAVID B. WARNER
--------------------------------------
David B. Warner, Vice President
-10-
<PAGE>
Exhibit 99.4
Loan No. 32027
RETURN TO:
- ---------
- -------------------------------
- -------------------------------
- -------------------------------
- -------------------------------
MORTGAGE, DEED OF TRUST AND
SECURITY AGREEMENT
THIS MORTGAGE, DEED OF TRUST AND SECURITY AGREEMENT, (as the same may from
time to time be extended, renewed or modified, the "Mortgage"), is made
--------
November 15, 1994, by AIP PROPERTIES #2 L.P., a Delaware limited partnership
("Mortgagor"), having its principal place of business at 6210 North Beltline,
---------
Suite 90, Irving, Texas 75063 to Mark L. Morganfield (the "Trustee"), the
-------
trustee hereunder to the extent that this Mortgage operates as a deed of trust,
and to AMRESCO CAPITAL CORPORATION, a Texas corporation ("Mortgagee"), having
---------
its principal place of business at 1845 Woodall Rodgers Freeway, Suite 1700,
Dallas, Texas 75201, Attn: Paul Nauschutz, the mortgagee hereunder to the
extent that this Mortgage operates as a mortgage, the grantee hereunder to the
extent that this Mortgage operates as a deed to secure debt and the beneficiary
hereunder to the extent that this Mortgage operates as a deed of trust.
To secure (i) the payment of an indebtedness in the original principal sum
of Two Million Two Hundred Fifty Thousand and No/100 Dollars ($2,250,000.00),
lawful money of the United States of America, to be paid with interest according
to a certain note dated the date hereof made by Mortgagor to Mortgagee (the note
together with all extensions, renewals or modifications thereof being
hereinafter collectively called the "Note"), and all other sums, liabilities and
----
obligations constituting the Debt (as defined in the Note), (ii) the payment of
all sums advanced or incurred by Mortgagee contemplated hereby, and (iii) the
performance of the obligations and covenants herein contained, Mortgagor has
mortgaged, given, granted, bargained, sold, alienated, enfeoffed, conveyed,
confirmed, warranted, pledged, assigned, and hypothecated and by these presents
does hereby mortgage, give, grant, bargain, sell, alien, enfeoff, convey,
confirm, warrant, pledge, assign and hypothecate unto Mortgagee and/or Trustee,
the real property described in Exhibit A attached hereto (the "Premises") and
--------- --------
the buildings, structures, fixtures, additions, enlargements, extensions,
modifications, repairs, replacements and improvements now or hereafter located
thereon (the "Improvements");
------------
-1-
<PAGE>
TOGETHER WITH: all right, title, interest and estate of Mortgagor now owned, or
hereafter acquired, in and to the following property, rights, interests and
estates (the Premises, the Improvements together with the following property,
rights, interests and estates being hereinafter described are collectively
referred to herein as the "Mortgaged Property"):
------------------
(a) all easements, rights-of-way, strips and gores of land, streets, ways,
alleys, passages, sewer rights, water, water courses, water rights and powers,
air rights and development rights, and all estates, rights, titles, interests,
privileges, liberties, tenements, hereditaments and appurtenances of any nature
whatsoever, in any way belonging, relating or pertaining to the Premises and the
Improvements and the reversion and reversions, remainder and remainders, and all
land lying in the bed of any street, road or avenue, opened or proposed, in
front of or adjoining the Premises, to the center line thereof and all the
estates, rights, titles, interests, dower and rights of dower, curtesy and
rights of curtesy, property, possession, claim and demand whatsoever, both at
law and in equity, of Mortgagor of, in and to the Premises and the Improvements
and every part and parcel thereof, with the appurtenances thereto;
(b) all machinery, furnishings, equipment, fixtures (including but not
limited to all heating, air conditioning, plumbing, lighting, communications and
elevator fixtures) and other property of every kind and nature (hereinafter
collectively called the "Equipment"), whether tangible or intangible, whatsoever
---------
owned by Mortgagor, or in which Mortgagor has or shall have an interest, now or
hereafter located upon the Premises and the Improvements, or appurtenant
thereto, and usable in connection with the present or future operation and
occupancy of the Premises and the Improvements and all building equipment,
materials and supplies of any nature whatsoever owned by Mortgagor, or in which
Mortgagor has or shall have an interest, now or hereafter located upon the
Premises and the Improvements, or appurtenant thereto, or usable in connection
with the present or future operation, enjoyment and occupancy of the Premises
and the Improvements, including the proceeds of any sale or transfer of the
foregoing, and the right, title and interest of Mortgagor in and to any of the
Equipment which may be subject to any security interests, as defined in the
Uniform Commercial Code, as adopted and enacted by the State or States where any
of the Mortgaged Property is located (the "Uniform Commercial Code") superior in
-----------------------
lien to the lien of this Mortgage;
(c) all awards or payments, including interest thereon, which may
heretofore and hereafter be made with respect to the Premises and the
Improvements, whether from the exercise of the right of eminent domain or
condemnation (including but not limited to any transfer made in lieu of or in
anticipation of the exercise of said rights), or for a change of grade, or for
any other injury to or decrease in the value of the Premises and Improvements;
(d) all leases, subleases and other agreements affecting the use, enjoyment
or occupancy of the Premises and the Improvements heretofore or hereafter
entered into (including, without limitation, any and all security interests,
contractual liens and security deposits) (the
-2-
<PAGE>
"Leases") and all income, rents, issues, profits and revenues (including all oil
------
and gas or other mineral royalties and bonuses) from the Premises and the
Improvements (the "Rents") and all proceeds from the sale or other disposition
-----
of the Leases and the right to receive and apply the Rents to the payment of the
Debt;
(e) all proceeds of and any unearned premiums on any insurance policies
covering the Mortgaged Property, including, without limitation, the right to
receive and apply the proceeds of any insurance, judgments, or settlements made
in lieu thereof, for damage to the Mortgaged Property;
(f) the right, in the name and on behalf of Mortgagor, to appear in and
defend any action or proceeding brought with respect to the Mortgaged Property
and to commence any action or proceeding to protect the interest of Mortgagee in
the Mortgaged Property;
(g) all accounts, escrows, documents, instruments, chattel paper, claims,
deposits and general intangibles, as the foregoing terms are defined in the
Uniform Commercial Code, and all contract rights, franchises, books, records,
plans, specifications, permits, licenses (to the extent assignable), approvals,
actions, and causes of action which now or hereafter relate to, are derived from
or are used in connection with the Premises, or the use, operation, maintenance,
occupancy or enjoyment thereof or the conduct of any business or activities
thereon (hereinafter collectively called the "Intangibles"); and
-----------
(h) any and all proceeds and products of any of the foregoing and any and
all other security and collateral of any nature whatsoever, now or hereafter
given for the repayment of the Debt and the performance of Mortgagor's
obligations under the Loan Documents (as defined in the Note), including
(without limitation) the Tax and Insurance Escrow (hereinafter defined) and the
Replacement Escrow Fund (hereinafter defined).
TO HAVE AND TO HOLD the above granted and described Mortgaged Property unto
and to the use and benefit of Mortgagee and/or Trustee, and their successors and
assigns, forever (subject, however, to the matters referred to on Exhibit B
---------
attached hereto and hereby made a part hereof for all purposes [the "Permitted
---------
Exceptions"]).
- ----------
PROVIDED, HOWEVER, these presents are upon the express condition that, if
Mortgagor shall well and truly pay to Mortgagee the Debt at the time and in the
manner provided in the Note and this Mortgage and shall well and truly abide by
and comply with each and every covenant and condition set forth herein, in the
Note and in the other Loan Documents in a timely manner, these presents and the
estate hereby granted shall cease, terminate and be void;
AND Mortgagor represents and warrants to and covenants and agrees with
Mortgagee as follows:
-3-
<PAGE>
1. Payment of Debt and Incorporation of Covenants, Conditions and
--------------------------------------------------------------
Agreements. Mortgagor will pay the Debt at the time and in the manner provided
- ----------
in the Note and in this Mortgage. Mortgagor will duly and punctually perform
all of the covenants, conditions and agreements contained in the Note, this
Mortgage and the other Loan Documents all of which covenants, conditions and
agreements are hereby made a part of this Mortgage to the same extent and with
the same force as if fully set forth herein.
2. Warranty of Title. Mortgagor warrants that Mortgagor is the sole owner
-----------------
of and has good, legal, indefeasible and insurable fee simple title to the
Mortgaged Property (subject, however, to the Permitted Exceptions) and has the
full power, authority and right to execute, deliver and perform its obligations
under this Mortgage and to encumber, mortgage, give, grant, bargain, sell,
alienate, enfeoff, convey, confirm, pledge, assign and hypothecate the same and
that Mortgagor possesses an unencumbered fee estate in the Premises and the
Improvements and that it owns the Mortgaged Property free and clear of all
liens, encumbrances and charges whatsoever except for those exceptions shown in
the title insurance policy insuring the lien of this Mortgage and that this
Mortgage is and will remain a valid and enforceable first lien on and security
interest in the Mortgaged Property, subject only to the Permitted Exceptions.
Mortgagor shall forever warrant, defend and preserve such title and the validity
and priority of the lien of this Mortgage and shall forever warrant and defend
the same to Mortgagee and/or Trustee against the claims of all persons
whomsoever.
3. Insurance. (a) Mortgagor, at its sole cost and expense, will keep the
---------
Mortgaged Property insured during the entire term of this Mortgage for the
mutual benefit of Mortgagor and Mortgagee against loss or damage by fire and
against loss or damage by other risks and hazards covered by a standard extended
coverage insurance policy and included within the classification "All Risks of
Physical Loss" including, but not limited to, riot and civil commotion,
vandalism, malicious mischief, burglary and theft. Such insurance shall be in
an amount (i) equal to the greater of the then full replacement cost of the
Improvements and Equipment, without deduction for physical depreciation, or the
outstanding amount of the Debt, and (ii) with extended coverage in amounts
sufficient such that the insurer would not deem Mortgagor a co-insurer under
said policies. The policies of insurance carried in accordance with this
paragraph shall be paid annually in advance and shall contain the "Replacement
Cost Endorsement" with a waiver of depreciation.
(b) Mortgagor, at its sole cost and expense, for the mutual benefit of
Mortgagor and Mortgagee, shall also obtain and maintain during the entire term
of this Mortgage the following policies of insurance:
(i) Flood insurance if any part of the Mortgaged Property is
located in an area identified by the Federal Emergency Management Agency as
an area having special flood hazards and in which flood insurance has been
made available under the National Flood
-4-
<PAGE>
Insurance Act of 1968 (and any amendment or successor act thereto) in an
amount at least equal to the outstanding principal amount of the Note or
the maximum limit of coverage available with respect to the Improvements
and Equipment under said Act, whichever is less.
(ii) Comprehensive public liability insurance, including broad form
property damage, blanket contractual and personal injuries (including death
resulting therefrom) coverages and containing minimum limits per occurrence
of $1,000,000.00 for the Improvements and the Premises, with
excess/umbrella coverage in an amount of at least $5,000,000.00 arising out
of any one occurrence.
(iii) Rental loss insurance in an amount equal to the aggregate
annual amount of all rents and additional rents payable by all of the
tenants under the Leases (whether or not such Leases are terminable in the
event of a fire or casualty), such rental loss insurance to cover rental
losses for a period of at least one year after the date of the fire or
casualty in question. The amount of such rental loss insurance shall be
increased from time to time during the term of this Mortgage as and when
new Leases and renewal Leases are entered into (or as and when existing
Leases expire and/or are terminated) in accordance with the terms of this
Mortgage and the other Loan Documents, to reflect all increased rent and
increased additional rent payable by all of the tenants under such renewal
Leases and all rent and additional rent payable by all of the tenants under
such Leases.
(iv) Insurance against loss or damage from (1) leakage of sprinkler
systems, and (2) explosion of steam boilers, air conditioning equipment,
high pressure piping, machinery and equipment, pressure vessels or similar
apparatus now or hereafter installed in the Improvements and including
broad form boiler and machinery insurance (without exclusion for explosion)
covering all boilers or other pressure vessels, machinery and equipment
located in, on, or about the Premises and the Improvements.
(v) If the Mortgaged Property includes commercial property,
worker's compensation insurance with respect to any employees of Mortgagor,
as required by any governmental authority or legal requirement.
(vi) Such other insurance as may from time to time be reasonably
required by Mortgagee in order to protect its interests.
(c) All policies of insurance (the "Policies") required pursuant to Section
-------- -------
3: (i) shall contain a standard noncontributory mortgagee clause naming
- -
Mortgagee as the person to which all payments made by such insurance company
shall be paid, (ii) shall be maintained throughout the term of this Mortgage
without cost to Mortgagee, (iii) shall be assigned and delivered to
-5-
<PAGE>
Mortgagee, (iv) shall contain such provisions as Mortgagee deems reasonably
necessary or desirable to protect its interest including, without limitation,
endorsements providing that neither Mortgagor, Mortgagee nor any other party
shall be a co-insurer under said Policies and that Mortgagee shall receive at
least thirty (30) days prior written notice of any modification, reduction or
cancellation, (v) shall be for a term of not less than one year, (vi) shall be
issued by an insurer licensed in the state in which the Mortgaged Property is
located, (vii) shall provide that Mortgagee may, but shall not be obligated to,
make premium payments to prevent any cancellation, endorsement, alteration or
reissuance, and such payments shall be accepted by the insurer to prevent same,
and (viii) shall be satisfactory in form and substance to Mortgagee and shall be
approved by Mortgagee as to amounts, form, risk coverage, deductibles, loss
payees and insureds. All Policies required pursuant to subsections 3(a) and
--------------------
3(b)(i), (ii) [and] (iii) [and (vi)] shall be issued by an insurer with a claims
- ------------- --- ----- --------
paying ability rating of "A" or better by Standard & Poor's Corporation plus an
equivalent rating as established by Moody's and/or Duff & Phelps and the
Policies as required in subsections 3(b)(iv) and (v) shall be issued by an
----------------------------
insurer having a claims paying ability rating of "A" or better by Standard &
Poor's Corporation plus an equivalent rating as established by one other
nationally recognized statistical rating organization satisfactory to Mortgagee.
Mortgagor shall pay the premiums for such Policies (the "Insurance Premiums") as
------------------
the same become due and payable. Not later than thirty (30) days prior to the
expiration date of each of the Policies, Mortgagor will deliver to Mortgagee
satisfactory evidence of the renewal of each Policy. If Mortgagor receives from
any insurer any written notification or threat of any actions or proceedings
regarding the non-compliance or non-conformity of the Mortgaged Property with
any insurance requirements, Mortgagor shall give prompt notice thereof to
Mortgagee.
(d) In the event of the entry of a judgment of foreclosure, sale of the
Mortgaged Property by non-judicial foreclosure sale, or delivery of a deed in
lieu of foreclosure, Mortgagee hereby is authorized (without the consent of
Mortgagor) to assign any and all Policies to the purchaser or transferee
thereunder, or to take such other steps as Mortgagee may deem advisable to cause
the interest of such transferee or purchaser to be protected by any of the
Policies without credit or allowance to Mortgagor for prepaid premiums thereon.
(e) If the Mortgaged Property shall be damaged or destroyed, in whole or in
part, by fire or other casualty, Mortgagor shall give prompt notice thereof to
Mortgagee.
(i) In case of loss covered by Policies, Mortgagee may either (1)
settle and adjust any claim without the consent of Mortgagor, or (2) allow
Mortgagor to agree with the insurance company or companies on the amount to
be paid upon the loss; provided, that Mortgagor may adjust losses
aggregating not in excess of $100,000.00 if such adjustment is carried out
in a competent and timely manner, and provided that in any case Mortgagee
shall and is hereby authorized to collect and receipt for any such
insurance proceeds; and the expenses incurred by Mortgagee in the
adjustment and collection of
-6-
<PAGE>
insurance proceeds shall become part of the Debt and be secured hereby and
shall be reimbursed by Mortgagor to Mortgagee upon demand.
(ii) In the event of any insured damage to or destruction of the
Mortgaged Property or any part thereof (herein called an "Insured
-------
Casualty") where the loss is in an aggregate amount less than twenty-five
percent (25%) of the original principal balance of the Note, and if, in the
reasonable judgment of Mortgagee, the Mortgaged Property can be restored
within six (6) months to an economic unit not less valuable (including an
assessment of the impact of the termination of any Leases due to such
Insured Casualty) and not less useful than the same was prior to the
Insured Casualty, and after such restoration will adequately secure the
outstanding balance of the Debt, then, if no Event of Default (hereinafter
defined) shall have occurred and be then continuing, the proceeds of
insurance shall be applied to reimburse Mortgagor for the cost of
restoring, repairing, replacing or rebuilding the Mortgaged Property or
part thereof subject to Insured Casualty, as provided for below; and
Mortgagor hereby covenants and agrees forthwith to commence and diligently
to prosecute such restoring, repairing, replacing or rebuilding; provided
always, that Mortgagor shall pay all costs (and if required by Mortgagee,
Mortgagor shall deposit the total thereof with Mortgagee in advance) of
such restoring, repairing, replacing or rebuilding in excess of the net
proceeds of insurance made available pursuant to the terms hereof.
(iii) Except as provided above, the proceeds of insurance collected
upon any Insured Casualty shall, at the option of Mortgagee in its sole
discretion, be applied to the payment of the Debt or applied to reimburse
Mortgagor for the cost of restoring, repairing, replacing or rebuilding the
Mortgaged Property or part thereof subject to the Insured Casualty, in the
manner set forth below. Any such application to the Debt shall be
considered a voluntary prepayment requiring payment of the prepayment
consideration provided in the Note, but shall not reduce or postpone any
payments otherwise required pursuant to the Note, other than the final
payment on the Note.
(iv) In the event that proceeds of insurance, if any, shall be made
available to Mortgagor for the restoring, repairing, replacing or
rebuilding of the Mortgaged Property, Mortgagor hereby covenants to
restore, repair, replace or rebuild the same to be of at least equal value
and of substantially the same character as prior to such damage or
destruction, all to be effected in accordance with applicable law and plans
and specifications approved in advance by Mortgagee.
(v) In the event Mortgagor is entitled to reimbursement out of
insurance proceeds held by Mortgagee, such proceeds shall be disbursed from
time to time upon Mortgagee being furnished with (1) evidence satisfactory
to it of the estimated cost of completion of the restoration, repair,
replacement and rebuilding, (2) funds, or, at
-7-
<PAGE>
Mortgagee's option, assurances satisfactory to Mortgagee that such funds
are available, sufficient in addition to the proceeds of insurance to
complete the proposed restoration, repair, replacement and rebuilding, and
(3) such architect's certificates, waivers of lien, contractor's sworn
statements, title insurance endorsements, bonds, plats of survey and such
other evidences of cost, payment and performance as Mortgagee may
reasonably require and approve; and Mortgagee may, in any event, require
that all plans and specifications for such restoration, repair, replacement
and rebuilding be submitted to and approved by Mortgagee prior to
commencement of work. With respect to disbursements to be made by
Mortgagee: (A) no payment made prior to the final completion of the
restoration, repair, replacement and rebuilding shall exceed ninety percent
(90%) of the value of the work performed from time to time; (B) funds other
than proceeds of insurance shall be disbursed prior to disbursement of such
proceeds; and (C) at all times, the undisbursed balance of such proceeds
remaining in the hands of Mortgagee, together with funds deposited for that
purpose or irrevocably committed to the satisfaction of Mortgagee by or on
behalf of Mortgagor for that purpose, shall be at least sufficient in the
reasonable judgment of Mortgagee to pay for the cost of completion of the
restoration, repair, replacement or rebuilding, free and clear of all liens
or claims for lien. Any surplus which may remain out of insurance proceeds
held by Mortgagee after payment of such costs of restoration, repair,
replacement or rebuilding shall be paid to any party entitled thereto.
4. Payment of Taxes, etc. Mortgagor shall pay all taxes, assessments,
---------------------
water rates and sewer rents, now or hereafter levied or assessed or imposed
against the Mortgaged Property or any part thereof (the "Taxes") and all ground
-----
rents, maintenance charges, other governmental impositions, and other charges,
including without limitation vault charges and license fees for the use of
vaults, chutes and similar areas adjoining the Premises, now or hereafter levied
or assessed or imposed against the Mortgaged Property or any part thereof (the
"Other Charges") as the same become due and payable. Mortgagor will deliver to
- --------------
Mortgagee evidence satisfactory to Mortgagee that the Taxes and Other Charges
have been so paid or are not then delinquent no later than thirty (30) days
following the date on which the Taxes and/or Other Charges would otherwise be
delinquent if not paid. Mortgagor shall not suffer and shall promptly cause to
be paid and discharged any lien or charge whatsoever which may be or become a
lien or charge against the Mortgaged Property, and shall promptly pay for all
utility services provided to the Mortgaged Property.
5. Tax and Insurance Escrow Fund. Mortgagor shall pay to Mortgagee on
-----------------------------
the first day of each calendar month (a) one-twelfth of an amount which would be
sufficient to pay the Taxes payable, or estimated by Mortgagee to be payable,
during the next ensuing twelve (12) months, and (b) one-twelfth of an amount
which would be sufficient to pay the Insurance Premiums due for the renewal of
the coverage afforded by the Policies upon the expiration thereof (said amounts
in [a] and [b] above hereinafter called the "Tax and Insurance Escrow
------------------------
-8-
<PAGE>
Fund"). The Tax and Insurance Escrow Fund and the payments of interest or
- ----
principal or both, payable pursuant to the Note, shall be added together and
shall be paid as an aggregate sum by Mortgagor to Mortgagee. Mortgagor hereby
pledges to Mortgagee any and all monies now or hereafter deposited in the Tax
and Insurance Escrow Fund as additional security for the payment of the Debt.
Mortgagee will apply the Tax and Insurance Escrow Fund to payments of Taxes and
Insurance Premiums required to be made by Mortgagor pursuant to Sections 3 and 4
----------------
hereof. If the amount of the Tax and Insurance Escrow Fund shall exceed the
amounts due for Taxes and Insurance Premiums pursuant to Sections 3 and 4
----------------
hereof, Mortgagee shall, in its discretion, return any excess to Mortgagor or
credit such excess against future payments to be made to the Tax and Insurance
Escrow Fund. In allocating such excess, Mortgagee may deal with the person
shown on the records of Mortgagee to be the owner of the Mortgaged Property. If
the Tax and Insurance Escrow Fund is not sufficient to pay the items set forth
in (a) and (b) above, Mortgagor shall promptly pay to Mortgagee, upon demand, an
amount which Mortgagee shall estimate as sufficient to make up the deficiency.
Upon the occurrence of an Event of Default, Mortgagee shall be entitled to
exercise both the rights of setoff and banker's lien, if applicable, against the
interest of Mortgagor in the Tax and Insurance Escrow Fund to the full extent of
the outstanding balance of the Debt, application of any such sums to the Debt to
be in any order in its sole discretion. Until expended or applied as above
provided, any amounts in the Tax and Insurance Escrow Fund shall constitute
additional security for the Debt. The Tax and Insurance Escrow Fund shall not
constitute a trust fund and may be commingled with other escrow monies held by
Mortgagee. No earnings or interest on the Tax and Insurance Escrow Fund shall
be payable to Mortgagor.
6. Replacement Escrow Fund. Mortgagor shall pay to Mortgagee on the
-----------------------
first day of each calendar month one-twelfth of the amount reasonably estimated
by Mortgagee to be due for replacements and capital repairs required to be made
to the Mortgaged Property during each calendar year (the "Replacement Escrow
------------------
Fund"). Mortgagor hereby pledges to Mortgagee any and all monies now or
- ----
hereafter deposited in the Replacement Escrow Fund as additional security for
the payment of the Debt. At least thirty (30) days prior to the end of each
calendar year, Mortgagor shall deliver to Mortgagee for Mortgagee's review and
approval, a capital expenditure budget (the "Budget") itemizing the replacements
------
and capital repairs which are anticipated to be made to the Mortgaged Property
during the next immediately succeeding calendar year. Mortgagee may, upon
notice to Mortgagor, adjust the monthly amounts required to be deposited into
the Replacement Escrow Fund to a monthly amount equal to one-twelfth of the
total amount specified in each approved Budget. Mortgagee shall make
disbursements from the Replacement Escrow Fund for items specified in each
approved Budget on a quarterly basis in increments of no less than $5,000.00
upon delivery by Mortgagor of Mortgagee's standard form of draw request
accompanied by copies of paid invoices for the amounts requested and, if
required by Mortgagee, lien waivers and releases from all parties furnishing
materials and/or services in connection with the requested payment and
reimbursement of all out-of-pocket inspection fees incurred by Mortgagee.
Mortgagee may require an inspection of the Mortgaged Property prior to making a
-9-
<PAGE>
quarterly disbursement in order to verify completion of replacements and
repairs. The Replacement Escrow Fund shall be held in an interest bearing
account in Mortgagee's name at a financial institution selected by Mortgagee in
its sole discretion. Upon the occurrence of an Event of Default, Mortgagee may
apply any sums then present in the Replacement Escrow Fund to the payment of the
Debt in any order in its sole discretion. Until expended or applied as above
provided, the Replacement Escrow Fund shall constitute additional security for
the Debt. The Replacement Escrow Fund shall not constitute a trust fund and may
be commingled with other monies held by Mortgagee. All earnings or interest on
the Replacement Escrow Fund shall be and become part of such Replacement Escrow
Fund and shall be disbursed as provided in this section.
7. Condemnation. Mortgagor shall promptly give Mortgagee written notice
------------
of the actual or threatened commencement of any condemnation or eminent domain
proceeding and shall deliver to Mortgagee copies of any and all papers served in
connection with such proceedings. Mortgagee is hereby irrevocably appointed as
Mortgagor's attorney-in-fact, coupled with an interest, with exclusive power to
collect, receive and retain any award or payment for said condemnation or
eminent domain and to make any compromise or settlement in connection with such
proceeding, subject to the provisions of this Mortgage. Notwithstanding any
taking by any public or quasi-public authority through eminent domain or
otherwise (including but not limited to any transfer made in lieu of or in
anticipation of the exercise of such taking), Mortgagor shall continue to pay
the Debt at the time and in the manner provided for its payment in the Note, in
this Mortgage and the other Loan Documents and the Debt shall not be reduced
until any award or payment therefor shall have been actually received after
expenses of collection and applied by Mortgagee to the discharge of the Debt.
Mortgagee shall not be limited to the interest paid on the award by the
condemning authority but shall be entitled to receive out of the award interest
at the rate or rates provided in the Note. Mortgagor shall cause the award or
payment made in any condemnation or eminent domain proceeding, which is payable
to Mortgagor, to be paid directly to Mortgagee. Mortgagee may apply any such
award or payment to the reduction or discharge of the Debt whether or not then
due and payable (such application to be at the reduced prepayment consideration
provided in the Note, except that if an Event of Default, or an event with
notice and/or the passage of time, or both, would constitute an Event of
Default, has occurred, then such application shall be subject to the full
prepayment consideration computed in accordance with the Note). If the
Mortgaged Property is sold, through foreclosure or otherwise, prior to the
receipt by Mortgagee of such award or payment, Mortgagee shall have the right,
whether or not a deficiency judgment on the Note shall have been sought,
recovered or denied, to receive said award or payment, or a portion thereof
sufficient to pay the Debt.
8. Representations Concerning Loan. Mortgagor represents, warrants and
-------------------------------
covenants as follows:
-10-
<PAGE>
(a) Neither Mortgagor nor any guarantor of the Debt or any part thereof (a
"Guarantor") has any defense to the payment in full of the Debt that arises from
---------
applicable local, state or federal laws, regulations or other requirements.
None of the Loan Documents are subject to any right of rescission, set-off,
abatement, diminution, counterclaim or defense, including the defense of usury,
nor will the operation of any of the terms of any such Loan Documents, or the
exercise of any right thereunder, render any Loan Documents unenforceable, in
whole or in part, or subject to any right of rescission, set-off, abatement,
diminution, counterclaim or defense, including the defense of usury, and no such
right of rescission, set-off, abatement, diminution, counterclaim or defense has
been, or will be, asserted with respect thereto.
(b) All certifications, permits and approvals, including, without
limitation, certificates of completion and occupancy permits required for the
legal use and occupancy of the Mortgaged Property, have been obtained and are in
full force and effect. The Mortgaged Property is in good repair, good order and
good condition and free and clear of any damage that would affect materially and
adversely the value of the Mortgaged Property as security for the Debt and the
Mortgaged Property has not been materially damaged by fire, wind or other
casualty or physical condition (including, without limitation, any soil or
geological condition), which damage has not been fully repaired. There are no
proceedings pending or threatened for the partial or total condemnation of the
Mortgaged Property.
(c) Except as disclosed on the survey delivered by Mortgagor to Mortgagee,
all of the Improvements which were included in determining the appraised value
of the Mortgaged Property lie wholly within the boundaries and building
restriction lines of the Mortgaged Property, and no improvements on adjoining
properties encroach upon the Mortgaged Property, and no easements or other
encumbrances upon the Premises encroach upon any of the Improvements, so as to
affect the value or marketability of the Mortgaged Property except for
immaterial encroachments which do not adversely affect the security intended to
be provided by this Mortgage or the use, enjoyment, value or marketability of
the Mortgaged Property. All of the Improvements comply with all material
requirements of any applicable zoning and subdivision laws and ordinances.
(d) The Mortgaged Property is not subject to any leases or operating
agreements other than the leases and the operating agreements, if any, described
in the rent roll delivered to Mortgagee in connection with this Mortgage, and
all such leases and agreements are in full force and effect. No person has any
possessory interest in the Mortgaged Property or right to occupy the same except
under and pursuant to the provisions of the leases and any such operating
agreements.
(e) All financial data, including, without limitation, statements of cash
flow and income and operating expenses, delivered to Mortgagee by, or on behalf
of Mortgagor are (i) true and correct in all material respects; (ii) accurately
represent the financial condition of Mortgagor or the Mortgaged Property as of
the date thereof in all material respects; and (iii) to the extent
-11-
<PAGE>
reviewed by an independent certified public accounting firm,
have been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods covered.
(f) The survey of the Mortgaged Property delivered to Mortgagee in
connection with this Mortgage, has been performed by a person purporting to be a
duly licensed surveyor or registered professional engineer in the jurisdiction
in which the Mortgaged Property is situated, and, to the knowledge of Mortgagor,
does not fail to reflect any material matter affecting the Mortgaged Property or
the title thereto.
(g) To the knowledge of Mortgagor, the loan evidenced by the Loan Documents
complies with, or is exempt from, applicable state or federal laws, regulations
and other requirements pertaining to usury and any and all other requirements of
any federal, state or local law.
(h) The Mortgaged Property is located on a dedicated, all-weather road, or
has access to an irrevocable easement permitting ingress and egress which are
adequate in relation to the premises and location on which the Mortgaged
Property is located.
(i) The Mortgaged Property is served by public utilities and services in
the surrounding community, including police and fire protection, public
transportation, refuse removal, public education, and enforcement of safety
codes which are adequate in relation to the premises and location on which the
Mortgaged Property is located.
(j) The Mortgaged Property is serviced by public water and sewer systems
which are adequate in relation to the premises and location on which the
Mortgaged Property is located.
(k) The Mortgaged Property has parking and other amenities necessary and
adequate for the operation of the business currently conducted thereon.
(l) The Mortgaged Property is a contiguous parcel and a separate tax
parcel, and there are no delinquent Taxes or other outstanding charges adversely
affecting the Mortgaged Property.
(m) The Mortgaged Property is not relied upon by, and does not rely upon,
any building or improvement not part of the Mortgaged Property to fulfill any
zoning, building code or other governmental or municipal requirement for
structural support or the furnishing of any essential building systems or
utilities, except to the extent of any valid and existing reciprocal easement
agreements shown in the title insurance policy insuring the lien of this
Mortgage.
(n) No action, omission, misrepresentation, negligence, fraud or similar
occurrence has taken place on the part of any person that would reasonably be
expected to result in the failure
-12-
<PAGE>
or impairment of full and timely coverage under any insurance policies providing
coverage for the Mortgaged Property.
(o) There are no defaults by Mortgagor beyond any applicable grace period
under any contract or agreement (other than this Mortgage and the other Loan
Documents) that binds Mortgagor and/or the Mortgaged Property, including any
management, service, supply, security, maintenance or similar contracts; and
Mortgagor has no knowledge of any such default for which notice has not yet been
given; and no such agreement is in effect with respect to the Mortgaged Property
that is not capable of being terminated by Mortgagor on less than thirty (30)
days notice except as previously disclosed to Mortgagee by a delivery of a copy
of all such agreements.
(p) The representations and warranties contained in the Closing Certificate
executed by Mortgagor in connection with the Note (which certificate constitutes
one of the Loan Documents) are true and correct and Mortgagee shall observe the
covenants contained therein.
9. Single Purpose Entity/Separateness. Mortgagor represents, warrants
----------------------------------
and covenants as follows:
(a) Mortgagor does not own and will not own any encumbered asset or
property other than (i) the Mortgaged Property, and (ii) incidental personal
property necessary for the ownership or operation of the Mortgaged Property.
(b) Mortgagor will not engage in any business other than the ownership,
management and operation of the Mortgaged Property and Mortgagor will conduct
and operate its business as presently conducted and operated.
(c) Mortgagor will not enter into any contract or agreement with any
Guarantor or any party which is directly or indirectly controlling, controlled
by or under common control with Borrower or Guarantor (an "Affiliate"), except
---------
upon terms and conditions that are intrinsically fair and substantially similar
to those that would be available on an arms-length basis with third parties
other than any Guarantor or Affiliate.
(d) Mortgagor has not incurred and will not incur any indebtedness, secured
or unsecured, direct or indirect, absolute or contingent (including guaranteeing
any obligation), other than (i) the Debt, and (ii) trade and operational debt
incurred in the ordinary course of business with trade creditors and in amounts
as are normal and reasonable under the circumstances. No indebtedness other
than the Debt may be secured (subordinate or pari passu) by the Mortgaged
---- -----
Property.
(e) Mortgagor has not made and will not make any loans or advances to any
third party (including Guarantor or any Affiliate).
-13-
<PAGE>
(f) Mortgagor is and will remain solvent and Mortgagor will pay its debts
from its assets as the same shall become due.
(g) Mortgagor has done or caused to be done and will do all things
necessary, to preserve its existence, and Mortgagor will not modify or otherwise
change the partnership certificate, partnership agreement, articles of
incorporation and bylaws, trust or other organizational documents of Mortgagor
in a manner which would adversely affect the Mortgagor's existence as a single
purpose entity.
(h) Mortgagor will maintain books and records and bank accounts separate
from those of its Affiliates and Mortgagor will file its own tax returns.
(i) Mortgagor will preserve and keep in full force and effect its
existence, good standing and qualification to do business in the state in which
the Mortgaged Property is located and will be, and at all times will hold itself
out to the public as, a legal entity separate and distinct from any other entity
(including any Affiliate or any Guarantor).
(j) Mortgagor will maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in light of
its contemplated business operations.
(k) Mortgagor will not seek the dissolution or winding up, in whole or in
part, of the Mortgagor nor will Mortgagor merge with or be consolidated into any
other entity.
(l) Mortgagor will not commingle the funds and other assets of Mortgagor
with those of any Affiliate, any Guarantor or any other person.
(m) Mortgagor has and will maintain its assets in such a manner that it
will not be costly or difficult to segregate, ascertain or identify its
individual assets from those of any Affiliate, Guarantor or any other person.
(n) Mortgagor does not and will not hold itself out to be responsible for
the debts or obligations of any other person.
(o) Mortgagor shall obtain and maintain in full force and effect, and abide
by and satisfy the material terms and conditions of, all material permits,
licenses, registrations and other authorizations with or granted by any
governmental authorities that may be required from time to time with respect to
the performance of its obligations under this Mortgage.
10. Maintenance of Mortgaged Property. Mortgagor shall cause the
---------------------------------
Mortgaged Property to be operated and maintained in a good and safe condition
and repair and in keeping
-14-
<PAGE>
with the condition and repair of properties of a similar use, value, age, nature
and construction. Mortgagor shall not use, maintain or operate the Mortgaged
Property in any manner which constitutes a public or private nuisance or which
makes void, voidable, or cancelable, or increases the premium of, any insurance
then in force with respect thereto. The Improvements and the Equipment shall
not be removed, demolished or materially altered (except for normal replacement
of the Equipment and for trade fixtures owned by tenants and removed in
accordance with its lease) without the consent of Mortgagee. Mortgagor shall
promptly comply with all laws, orders and ordinances affecting the Mortgaged
Property, or the use thereof. Mortgagor shall promptly repair, replace or
rebuild any part of the Mortgaged Property which may be destroyed by any
casualty, or become damaged, worn or dilapidated or which may be affected by any
proceeding of the character referred to in Section 7 hereof and shall complete
---------
and pay for any structure at any time in the process of construction or repair
on the Premises (subject, however, to Section 3(e) with respect to damage or
------------
destruction of the Mortgaged Property, in whole or in part, by fire or other
casualty).
11. Use of Mortgaged Property. Mortgagor shall not initiate, join in,
-------------------------
acquiesce in, or consent to any change in any private restrictive covenant,
zoning law or other public or private restriction, limiting or defining the uses
which may be made of the Mortgaged Property or any part thereof. If under
applicable zoning provisions the use of all or any portion of the Mortgaged
Property is or shall become a nonconforming use, Mortgagor will not cause or
permit such nonconforming use to be discontinued or abandoned without the
express written consent of Mortgagee. Mortgagor shall not permit or suffer to
occur any waste on or to the Mortgaged Property or to any portion thereof and
shall not take any steps whatsoever to convert the Mortgaged Property, or any
portion thereof, to a condominium or cooperative form of management. Mortgagor
will not install or permit to be installed on the Premises any underground
storage tank.
12. Transfer or Encumbrance of the Mortgaged Property. (a) Mortgagor
-------------------------------------------------
acknowledges that Mortgagee has examined and relied on the creditworthiness and
experience of Mortgagor in owning and operating properties such as the Mortgaged
Property in agreeing to make the loan secured hereby, and that Mortgagee will
continue to rely on Mortgagor's ownership of the Mortgaged Property as a means
of maintaining the value of the Mortgaged Property as security for repayment of
the Debt. Mortgagor acknowledges that Mortgagee has a valid interest in
maintaining the value of the Mortgaged Property so as to ensure that, should
Mortgagor default in the repayment of the Debt, Mortgagee can recover the Debt
by a sale of the Mortgaged Property. Mortgagor shall not, without the prior
written consent of Mortgagee, sell, convey, alienate, mortgage, encumber, pledge
or otherwise transfer the Mortgaged Property or any part thereof, or permit the
Mortgaged Property or any part thereof to be sold, conveyed, alienated,
mortgaged, encumbered, pledged or otherwise transferred; provided, however,
Mortgagee may, in its sole discretion, give such written consent (but shall have
no obligation to do so) to any such sale, conveyance, alienation, mortgage,
encumbrance, pledge or other transfer, and any such
-15-
<PAGE>
consent may be conditioned upon one or more of the following conditions
precedent as Mortgagee may require: the grantee's integrity, reputation,
character, creditworthiness and management ability are satisfactory to Lender in
its sole judgment, the grantee's single purpose and bankruptcy remote character
being satisfactory to Mortgagee in its sole judgment, the grantee executing
(prior to such sale or transfer) a written assumption agreement containing such
terms as Mortgagee may require, a principal paydown on the Note, an increase in
the rate of interest payable on the Note, a transfer fee, payment by Mortgagor
of Mortgagee's costs and expenses associated with the transaction (including
reasonable attorneys' fees), and a the satisfaction of any conditions imposed by
any national rating agency for Certificates, together with such modifications
of the Loan Documents and such legal opinions, certifications and similar
matters that Mortgagee may require.
(b) A sale, conveyance, alienation, mortgage, encumbrance, pledge or
transfer within the meaning of this paragraph shall not include transfers made
by devise or descent or by operation of law upon the death of a joint tenant,
partner or shareholder or otherwise by operation of law in the event of a
bankruptcy, but shall be deemed to include (i) an installment sales agreement
wherein Mortgagor agrees to sell the Mortgaged Property or any part thereof for
a price to be paid in installments; (ii) an agreement by Mortgagor leasing all
or a substantial part of the Mortgaged Property for other than actual occupancy
by a space tenant thereunder or a sale, assignment or other transfer of, or the
grant of a security interest in, Mortgagor's right, title and interest in and to
any Leases or any Rents; (iii) if Mortgagor, Guarantor, or any general partner
of Mortgagor or Guarantor is a corporation, any merger, consolidation or the
voluntary or involuntary sale, conveyance or transfer of such corporation's
stock (or the stock of any corporation directly or indirectly controlling such
corporation by operation of law or otherwise) or the creation or issuance of new
stock in one or a series of transactions by which an aggregate of more than 10%
of such corporation's stock shall be vested in a party or parties who are not
now stockholders (provided, however, in no event shall this subpart (iii) apply
-------------
to any Guarantor whose stock or shares are traded on a nationally recognized
stock exchange); (iv) if Mortgagor, Guarantor, or any general partner of
Mortgagor or Guarantor is a limited liability company or limited partnership,
the voluntary or involuntary sale, conveyance or transfer by which an aggregate
of more than fifty percent (50%) of the ownership interest in such limited
liability company or limited partnership shall be vested in parties not having
an ownership interest as of the date of this Mortgage within a two (2) year
period; and (v) if Mortgagor, any Guarantor or any general partner of Mortgagor
or any Guarantor is a limited or general partnership or joint venture, the
change, removal or resignation of a general partner, managing partner or joint
venturer or the transfer of all or any portion of the partnership interest of
any general partner, managing partner or joint venturer.
(c) Mortgagee may predicate its decision to grant or withhold consent
hereunder on Mortgagee's satisfaction with all relevant factors which shall
include, but not be limited to, the creditworthiness of the proposed transferee
and such proposed transferee's management
-16-
<PAGE>
experience, adjustment of the term of the Note or the interest rate of the Note,
and upon the execution of an assumption agreement in form and substance
acceptable to Mortgagee, the payment of an assumption fee equal to one percent
(1%) of the then unpaid principal balance of the Note and the payment of all
costs and expenses incurred by Mortgagee in connection with the assumption
including reasonable attorneys' fees. Mortgagee agrees not to unreasonably
withhold its consent to a sale or transfer of the Mortgaged Property. Mortgagee
shall be deemed to be reasonable in withholding its consent if a sale to the
proposed transferee receives unfavorable comment from a national rating agency
for Certificates (hereinafter defined). Mortgagee shall not be required to
demonstrate any actual impairment of its security or any increased risk of
default hereunder in order to declare the Debt immediately due and payable upon
Mortgagor's sale, conveyance, alienation, mortgage, encumbrance, pledge or
transfer of the Mortgaged Property without Mortgagee's consent. This provision
shall apply to every sale, conveyance, alienation, mortgage, encumbrance, pledge
or transfer of the Mortgaged Property regardless of whether voluntary or not, or
whether or not Mortgagee has consented to any previous sale, conveyance,
alienation, mortgage, encumbrance, pledge or transfer of the Mortgaged Property.
(d) Mortgagee's consent to one sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer of the Mortgaged Property shall not be deemed to
be a waiver of Mortgagee's right to require such consent to any future
occurrence of same. Any sale, conveyance, alienation, mortgage, encumbrance,
pledge or transfer of the Mortgaged Property made in contravention of this
paragraph shall be null and void and of no force and effect.
(e) Mortgagor agrees to bear and shall pay or reimburse Mortgagee on demand
for all reasonable expenses (including, without limitation, reasonable
attorney's fees and disbursements, title search costs and title insurance
endorsement premiums) incurred by Mortgagee in connection with the review,
approval and documentation of any such sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer.
13. Estoppel Certificates and No Default Affidavits.
-----------------------------------------------
(a) After request by Mortgagee, Mortgagor shall within ten (10) days
furnish Mortgagee with a statement, duly acknowledged and certified, setting
forth (i) the amount of the original principal amount of the Note, (ii) the
unpaid principal amount of the Note, (iii) the rate of interest of the Note,
(iv) the date installments of interest and/or principal were last paid, (v) any
defenses to the payment of the Debt, if any, and a confirmation that there are
no offsets against the Debt, and (vi) that the Note, this Mortgage and the other
Loan Documents are valid, legal and binding obligations and have not been
modified or if modified, giving particulars of such modification.
-17-
<PAGE>
(b) After request by Mortgagee, Mortgagor shall within ten (10) days
furnish Mortgagee with a certificate reaffirming all representations and
warranties of Mortgagor set forth herein and in the other Loan Documents as of
the date requested by Mortgagee or, to the extent of any changes to any such
representations and warranties, so stating such changes.
(c) If the Mortgaged Property includes commercial property, Mortgagor shall
deliver to Mortgagee upon request, tenant estoppel certificates from each
commercial tenant at the Mortgaged Property in form and substance reasonably
satisfactory to Mortgagee provided that Mortgagor shall not be required to
deliver such certificates more frequently than two (2) times in any calendar
year.
14. Changes in the Laws Regarding Taxation. If any law is amended,
--------------------------------------
enacted or adopted after the date of this Mortgage which deducts the Debt from
the value of the Mortgaged Property for the purpose of taxation or which imposes
a tax, either directly or indirectly, on the Debt or Mortgagee's interest in the
Mortgaged Property, Mortgagor will pay such tax, with interest and penalties
thereon, if any. In the event Mortgagee is advised by counsel chosen by it that
the payment of such tax or interest and penalties by Mortgagor would be unlawful
or taxable to Mortgagee or unenforceable or provide the basis for a defense of
usury, then in any such event, Mortgagee shall have the option, by written
notice of not less than forty-five (45) days, to declare the Debt immediately
due and payable.
15. No Credits on Account of the Debt. Mortgagor will not claim or demand
---------------------------------
or be entitled to any credit or credits on account of the Debt for any part of
the Taxes or Other Charges assessed against the Mortgaged Property, or any part
thereof, and no deduction shall otherwise be made or claimed from the assessed
value of the Mortgaged Property, or any part thereof, for real estate tax
purposes by reason of this Mortgage or the Debt. In the event such claim,
credit or deduction shall be required by law, Mortgagee shall have the option,
by written notice of not less than ninety (90) days, to declare the Debt
immediately due and payable.
16. Documentary Stamps. If at any time the United States of America, any
------------------
State thereof or any subdivision of any such State shall require revenue or
other stamps to be affixed to the Note or this Mortgage, or impose any other tax
or charge on the same, Mortgagor will pay for the same, with interest and
penalties thereon, if any.
17. Controlling Agreement. It is expressly stipulated and agreed to be
---------------------
the intent of Mortgagor, Trustee and Mortgagee at all times to comply with
applicable state law or applicable United States federal law (to the extent that
it permits Mortgagee to contract for, charge, take, reserve, or receive a
greater amount of interest than under state law) and that this section shall
control every other covenant and agreement in this Mortgage and the other Loan
Documents. If the applicable law (state or federal) is ever judicially
interpreted so as to render usurious any amount called for under the Note or
under any of the other Loan Documents, or contracted for,
-18-
<PAGE>
charged, taken, reserved, or received with respect to the Debt, or if
Mortgagee's exercise of the option to accelerate the maturity of the Note, or if
any prepayment by Mortgagor results in Mortgagor having paid any interest in
excess of that permitted by applicable law, then it is Mortgagor's, Trustee's
and Mortgagee's express intent that all excess amounts theretofore collected by
Mortgagee shall be credited on the principal balance of the Note and all other
Debt (or, if the Note and all other Debt have been or would thereby be paid in
full, refunded to Mortgagor), and the provisions of the Note and the other Loan
Documents immediately be deemed reformed and the amounts thereafter collectible
hereunder and thereunder reduced, without the necessity of the execution of any
new documents, so as to comply with the applicable law, but so as to permit the
recovery of the fullest amount otherwise called for hereunder or thereunder.
All sums paid or agreed to be paid to Mortgagee for the use, forbearance, or
detention of the Debt shall, to the extent permitted by applicable law, be
amortized, prorated, allocated, and spread throughout the full stated term of
the Debt until payment in full so that the rate or amount of interest on account
of the Debt does not exceed the maximum rate permitted under applicable law from
time to time in effect and applicable to the Debt for so long as the Debt is
outstanding. Notwithstanding anything to the contrary contained herein or in
any of the other Loan Documents, it is not the intention of Trustee and/or
Mortgagee to accelerate the maturity of any interest that has not accrued at the
time of such acceleration or to collect unearned interest at the time of such
acceleration.
18. Books and Records. Mortgagor will keep accurate books and records in
-----------------
accordance with sound accounting principles in which full, true and correct
entries shall be promptly made with respect to the Mortgaged Property and the
operation thereof, and will permit all such books and records (including without
limitation all contracts, statements, invoices, bills and claims for labor,
materials and services supplied for the construction, repair or operation of the
Improvements) to be inspected or audited and copies made by Mortgagee and its
representatives during normal business hours upon forty-eight (48) hours prior
notice to Mortgagor. Mortgagor represents that its chief executive office is as
set forth in the introductory paragraph of this Mortgage and that all books and
records pertaining to the Mortgaged Property are maintained at such location (or
at such other location as may be designated by Mortgagor in writing to
Mortgagee). Mortgagor will furnish, or cause to be furnished, to Mortgagee on
or before forty-five (45) days after June 30 and December 31 of each calendar
year the following items, each certified by Mortgagor as being true and correct:
(a) a written statement (rent roll) dated as of the last day of each reporting
period identifying each of the Leases by the term, space occupied, rental
required to be paid, security deposit paid, any rental concessions, and
identifying any defaults or payment delinquencies thereunder; (b) monthly and
year to date operating statements prepared for each calendar month during each
such reporting period; (c) a property balance sheet for each such reporting
period; and (d) a comparison of the budgeted income and expenses and the actual
income and expenses for each reporting period and year to date together, with a
detailed explanation of any variances between budgeted and actual amounts that
are greater than (i) $2,000.00, or (ii) five percent (5%) or more for each line
item therein . Within ninety
-19-
<PAGE>
(90) days following the end of each calendar year, Mortgagor shall
furnish a statement of the financial affairs and condition of the Mortgaged
Property including a statement of profit and loss for the Mortgaged Property in
such detail as Mortgagee may request, and setting forth the financial condition
and the income and expenses for the Mortgaged Property for the immediately
preceding calendar year prepared by an independent certified public accountant.
Mortgagor shall deliver to Mortgagee copies of all income tax returns, requests
for extension and other similar items contemporaneously with its delivery of
same to the Internal Revenue Service. On or before November 30 of each calendar
year, Mortgagor shall deliver to Mortgagee an itemized operating budget and
capital expenditure budget of the Mortgaged Property and a management plan for
the Mortgaged Property for the next succeeding calendar year in such detail as
Mortgagee may request. At any time and from time to time Mortgagor shall
deliver to Mortgagee or its agents such other financial data as Mortgagor
prepares for its own use and which Mortgagee or its agents shall request with
respect to the ownership, maintenance, use and operation of the Mortgaged
Property, including, but not limited to, schedules of gross sales for percentage
rents under Leases. Furthermore, in order to satisfy the guidelines,
requirements or directives of any national rating agency for Certificates,
Lender may require (pursuant to written notice thereof delivered on or before
October 31 for the applicable year) that all balance sheets and operating
statements be audited by independent certified public accountants of recognized
standing, selected by Mortgagor and approved by Mortgagee (which balance sheets
and operating statements shall be without qualification or exception other than
those approved by Mortgagee). Mortgagor will permit representatives appointed
by Mortgagee, including independent accountants, agents, attorneys, appraisers
and any other persons, to visit and inspect (at Mortgagee's cost) during its
normal business hours and at any other reasonable times (following forty-eight
[48] hours prior notice) any of the Mortgaged Property and to make photographs
thereof, and to write down and record any information such representatives
obtain, and shall permit Mortgagee or its representatives to investigate and
verify the accuracy of the information furnished to Mortgagee under or in
connection with this Mortgage or any of the other Loan Documents and to discuss
all such matters with its officers, employees and representatives. Mortgagor
will furnish to Mortgagee at Mortgagor's expense all evidence which Mortgagee
may from time to time reasonably request as to the accuracy and validity of or
compliance with all representations and warranties made by Mortgagor in the Loan
Documents and satisfaction of all conditions contained therein. Any inspection
or audit of the Mortgaged Property or the books and records of Mortgagor, or the
procuring of documents and financial and other information, by or on behalf of
Mortgagee, shall be for Mortgagee's protection only, and shall not constitute
any assumption of responsibility or liability by Mortgagee to Mortgagor or
anyone else with regard to the condition, construction, maintenance or operation
of the Mortgaged Property, nor Mortgagee's approval of any certification given
to Mortgagee nor relieve Mortgagor of any of Mortgagor's obligations.
-20-
<PAGE>
19. Performance of Other Agreements. Mortgagor shall observe and perform
-------------------------------
each and every term to be observed or performed by Mortgagor pursuant to the
terms of any agreement or recorded instrument affecting or pertaining to the
Mortgaged Property.
20. Further Acts, etc. (a) Mortgagor will, at the cost of Mortgagor, and
-----------------
without expense to Mortgagee, do, execute, acknowledge and deliver all and every
such further acts, deeds, conveyances, mortgages, assignments, notices of
assignment, Uniform Commercial Code financing statements or continuation
statements, transfers and assurances as Mortgagee shall, from time to time,
require, for the better assuring, conveying, assigning, transferring, and
confirming unto Mortgagee the property and rights hereby mortgaged, given,
granted, bargained, sold, alienated, enfeoffed, conveyed, confirmed, pledged,
assigned and hypothecated or intended now or hereafter so to be, or which
Mortgagor may be or may hereafter become bound to convey or assign to Mortgagee,
or for carrying out the intention or facilitating the performance of the terms
of this Mortgage or for filing, registering or recording this Mortgage.
Mortgagor, on demand, will execute and deliver and hereby authorizes Mortgagee
to execute in the name of Mortgagor or without the signature of Mortgagor to the
extent Mortgagee may lawfully do so, one or more financing statements, chattel
mortgages or other instruments, to evidence more effectively the security
interest of Mortgagee in the Mortgaged Property. Mortgagor grants to Mortgagee
an irrevocable power of attorney coupled with an interest for the purpose of
exercising and perfecting any and all rights and remedies available to Mortgagee
at law and in equity, including without limitation such rights and remedies
available to Mortgagee pursuant to this paragraph.
(b) Mortgagee (and its mortgage servicer) shall have the right to disclose
in confidence such financial information regarding Mortgagor, Guarantor or the
Mortgaged Property as may be necessary to complete any sale or attempted sale of
the Note or participations in the loan (or any transfer of the mortgage
servicing thereof) evidenced by the Note and the Loan Documents, including,
without limitation, all Loan Documents, financial statements, projections,
internal memoranda, audits, reports, payment history, appraisals and any and all
other information and documentation in the Mortgagee's files (and such
servicer's files) relating to the Mortgagor, any Guarantor and the Mortgaged
Property. This authorization shall be irrevocable in favor of the Mortgagee
(and its mortgage servicer), and Mortgagor and Guarantor waive any claims that
they may have against the Mortgagee, its mortgage servicer or the party
receiving information from the Mortgagee pursuant hereto regarding disclosure of
information in such files and further waive any alleged damages which they may
suffer as a result of such disclosure.
(c) The Mortgagor acknowledges that the Mortgagee intends to sell the loan
evidenced by the Note and the Loan Documents or a participation interest therein
to a party who may pool the loan with a number of other loans and to have the
holder of such loans (most likely a special purpose REMIC) issue one or more
classes of Mortgage Backed Pass-Through Certificates (the "Certificates"), which
------------
may be rated by one or more national rating agencies. The Mortgagee (and its
mortgage servicer) shall be permitted to share any of the information referred
to in
-21-
<PAGE>
subsection (b) above with the investment banking firms, rating agencies,
- --------------
accounting firms, custodians, successor mortgage servicers, law firms and other
third-party advisory firms involved with the loan evidenced by the Note and the
Loan Documents or the Certificates. It is understood that the information
provided by the Mortgagor to the Mortgagee (or its mortgage servicer) or
otherwise received by Mortgagee (or its mortgage servicer) in connection with
the loan evidenced by the Loan Documents may ultimately be incorporated into the
offering documents for the Certificates and thus various prospective investors
may also see some or all of the information. The Mortgagee (and its mortgage
servicer) and all of the aforesaid third-party advisors and professional firms
shall be entitled to rely on the information supplied by, or on behalf of, the
Mortgagor.
21. Recording of Mortgage, etc. Upon the execution and delivery of this
--------------------------
Mortgage and thereafter, from time to time, Mortgagor will cause this Mortgage,
and any security instrument creating a lien or security interest or evidencing
the lien hereof upon the Mortgaged Property and each instrument of further
assurance to be filed, registered or recorded in such manner and in such places
as may be required by any present or future law in order to publish notice of
and fully to protect the lien or security interest hereof upon, and the interest
of Mortgagee in, the Mortgaged Property. Mortgagor will pay all filing,
registration or recording fees, and all expenses (including Mortgagee's
attorneys' fees) incident to the preparation, execution and acknowledgment of
this Mortgage, any mortgage supplemental hereto, any security instrument with
respect to the Mortgaged Property and any instrument of further assurance, and
all federal, state, county and municipal, taxes, duties, imposts, assessments
and charges arising out of or in connection with the execution and delivery of
this Mortgage, any mortgage supplemental hereto, any security instrument with
respect to the Mortgaged Property or any instrument of further assurance, except
where prohibited by law so to do. Mortgagor shall hold harmless and indemnify
Mortgagee, its successors and assigns, against any liability incurred by reason
of the imposition of any tax on the making and recording of this Mortgage.
22. Reporting Requirements. Mortgagor agrees to give prompt notice to
----------------------
Mortgagee of the insolvency or bankruptcy filing of Mortgagor or the death,
insolvency or bankruptcy filing of any Guarantor.
23. Events of Default. The term "Event of Default" as used herein shall
----------------- ----------------
mean the occurrence or happening, at any time and from time to time, of any one
or more of the following:
(a) if any portion of the Debt is not paid within ten (10) days from the
date when the same is due;
(b) subject to Mortgagor's right to contest as provided herein, if any of
the Taxes or Other Charges are not paid when the same are due and payable;
-22-
<PAGE>
(c) if the Policies are not kept in full force and effect, or if the
Policies are not delivered to Mortgagee upon request;
(d) if Mortgagor sells, conveys, alienates, mortgages, encumbers, pledges
or otherwise transfers any portion of the Mortgaged Property or permits the
Mortgaged Property or any part thereof to be sold, conveyed, alienated,
mortgaged, encumbered, levied, pledged or otherwise transferred in violation of
Section 12 above;
- ----------
(e) if any representation or warranty of Mortgagor, or of any Guarantor,
made herein, in any Loan Document, any guaranty, or in any certificate, report,
financial statement or other instrument or document furnished to Mortgagee shall
have been false or misleading in any material respect when made;
(f) if Mortgagor or any Guarantor shall make an assignment for the benefit
of creditors or if Mortgagor or any Guarantor shall admit in writing its
inability to pay, or Mortgagor's or any Guarantor's failure to pay, debts
generally as the debts become due;
(g) if a receiver, liquidator or trustee of Mortgagor or of any Guarantor
shall be appointed or if Mortgagor or any Guarantor shall be adjudicated a
bankrupt or insolvent, or if any petition for bankruptcy, reorganization or
arrangement pursuant to federal bankruptcy law, or any similar federal or state
law, shall be filed by or against, consented to, or acquiesced in by, Mortgagor
or any Guarantor or if Mortgagor or any Guarantor shall admit in writing its
insolvency or bankruptcy or if any proceeding for the dissolution or liquidation
of Mortgagor or of any Guarantor shall be instituted; however, if such
appointment, adjudication, petition or proceeding was involuntary and not
consented to by Mortgagor or such Guarantor, upon the same not being discharged,
stayed or dismissed within sixty (60) days;
(h) subject to Mortgagor's right to contest as provided herein, if the
Mortgaged Property becomes subject to any mechanic's, materialman's, mortgage or
other lien except a lien for local real estate taxes and assessments not then
due and payable;
(i) if Mortgagor fails to cure properly any violations of laws or
ordinances affecting or which may be interpreted to affect the Mortgaged
Property;
(j) except as permitted in this Mortgage, the actual or threatened
alteration, improvement, demolition or removal of any of the Improvements
without the prior consent of Mortgagee;
(k) damage to the Mortgaged Property in any manner which is not covered by
insurance solely as a result of Mortgagor's failure to maintain insurance
required in accordance with this Mortgage;
-23-
<PAGE>
(l) if Mortgagor shall default under any term, covenant, or condition of
this Mortgage or any of the other Loan Documents other than as specified in any
of the above subparagraphs;
(m) if without Mortgagee's prior consent (i) the managing agent for the
Mortgaged Property resigns or is removed (provided, however, Mortgagor shall
have the right to designate a replacement of such managing agent provided the
designated agent has comparable business expertise and ability as such managing
agent and is reasonably satisfactory to Mortgagor), or (ii) the ownership,
management or control of such managing agent is transferred to a person or
entity other than the general partner or managing partner of the Mortgagor
(provided, however, Mortgagor shall have the right to designate a replacement of
such managing agent provided the designated agent has comparable business
expertise and ability as such managing agent and is reasonably satisfactory to
Mortgagor), or (iii) there is any material change in the property management
agreement for the Mortgaged Property;
(n) if all or a substantial part of Mortgagor's assets (other than the
Mortgaged Property) are attached, seized, subjected to a writ or distress
warrant or are levied upon (unless such attachment, seizure, writ, distress
warrant or levy is vacated within sixty [60] days following the date of the
same);
(o) entry of a judgment in excess of $100,000.00 and the expiration of any
appeal right rights or the dismissal or final adjudication of appeals against
Mortgagor or any Guarantor (unless such judgment is vacated within sixty [60]
days following the date of the same);
(p) the Mortgage shall cease to constitute a first-priority lien on the
Mortgaged Property (other than in accordance with its terms); and
(q) seizure or forfeiture of the Mortgaged Property, or any portion
thereof, or Mortgagor's interest therein, resulting from criminal wrongdoing or
other unlawful action of Mortgagor or its affiliates under any federal, state of
local law.
24. Notice and Cure. Notwithstanding the foregoing, Mortgagee agrees to
---------------
give to Mortgagor written notice of (a) Mortgagor's failure to pay any part of
the Debt when due (a "Monetary Default"), and (b) a default referred to in
----------------
subsections 23(b), (c), (h), (i), (l), (m) or (p) above (a "Nonmonetary
- ------------------------------------------------- -----------
Default"). Mortgagor shall have a period of ten (10) days from its receipt of
notice in which to cure a Monetary Default (which written notice period may run
concurrently with the ten [10] day period referred to in subsection 23[a]) and
----------------
shall have a period of twenty (20) days from its receipt of notice in which to
cure a Nonmonetary Default unless such Nonmonetary Default is not susceptible to
cure within such twenty (20) day period, in which case Mortgagor shall commence
to cure such Nonmonetary Default within twenty (20) days following notice and
diligently prosecute such cure to completion, provided, however, that Mortgagor
will provide Mortgagee with such information as Mortgagee may reasonably request
-24-
<PAGE>
concerning the status of any attempted cure and such cure must be completed to
the satisfaction of Mortgagee within one hundred and eighty (180) days of notice
in any case. Notwithstanding the foregoing, Mortgagor shall not be entitled to
notice of a Monetary Default more frequently than two times in any calendar
year. A Monetary Default and/or Nonmonetary Default shall nevertheless be an
Event of Default for all purposes under the Loan Documents except that the
acceleration of the Debt or other exercise of remedies shall not be prior to the
expiration of the applicable cure and/or grace periods provided in Section 23 or
----------
in this section.
25. Remedies. Upon the occurrence of an Event of Default and subject to
--------
any applicable cure period, Mortgagee may, at Mortgagee's option, and by or
through Trustee, by Mortgagee itself or otherwise, do any one or more of the
following:
(a) Right to Perform Mortgagor's Covenants. If Mortgagor has failed to
--------------------------------------
keep or perform any covenant whatsoever contained in this Mortgage or the other
Loan Documents, Mortgagee may, but shall not be obligated to any person to do
so, perform or attempt to perform said covenant; and any payment made or expense
incurred in the performance or attempted performance of any such covenant,
together with any sum expended by Mortgagee that is chargeable to Mortgagor or
subject to reimbursement by Mortgagor under the Loan Documents, shall be and
become a part of the "Debt," and Mortgagor promises, upon demand, to pay to
Mortgagee, at the place where the Note is payable, all sums so incurred, paid
or expended by Mortgagee, with interest from the date when paid, incurred or
expended by Mortgagee at the Default Rate as specified in the Note.
(b) Right of Entry. Mortgagee may, following an Event of Default and prior
--------------
or subsequent to the institution of any foreclosure proceedings, enter upon the
Mortgaged Property, or any part thereof, and take exclusive possession of the
Mortgaged Property and of all books, records, and accounts relating thereto and
to exercise without interference from Mortgagor any and all rights which
Mortgagor has with respect to the management, possession, operation, protection,
or preservation of the Mortgaged Property, including without limitation the
right to rent the same for the account of Mortgagor and to deduct from such
Rents all costs, expenses, and liabilities of every character incurred by the
Mortgagee in collecting such Rents and in managing, operating, maintaining,
protecting, or preserving the Mortgaged Property and to apply the remainder of
such Rents on the Debt in such manner as Mortgagee may elect. All such costs,
expenses, and liabilities incurred by the Mortgagee in collecting such Rents and
in managing, operating, maintaining, protecting, or preserving the Mortgaged
Property, if not paid out of Rents as hereinabove provided, shall constitute a
demand obligation owing by Mortgagor and shall bear interest from the date of
expenditure until paid at the Default Rate as specified in the Note, all of
which shall constitute a portion of the Debt. If necessary to obtain the
possession provided for above, the Mortgagee may invoke any and all legal
remedies to dispossess Mortgagor, including specifically one or more actions for
forcible entry and detainer, trespass to try title, and restitution. In
connection with any action taken by the Mortgagee pursuant to this subparagraph,
-25-
<PAGE>
the Mortgagee shall not be liable for any loss sustained by Mortgagor resulting
from any failure to let the Mortgaged Property, or any part thereof, or from any
other act or omission of the Mortgagee in managing the Mortgaged Property unless
such loss is caused by the willful misconduct or gross negligence of the
Mortgagee, nor shall the Mortgagee be obligated to perform or discharge any
obligation, duty, or liability under any Lease or under or by reason hereof or
the exercise of rights or remedies hereunder. Mortgagor shall and does hereby
agree to indemnify the Mortgagee for, and to hold the Mortgagee harmless from,
any and all liability, loss, or damage, which may or might be incurred by the
Mortgagee under any such Lease or under or by reason hereof or the exercise of
rights or remedies hereunder, and from any and all claims and demands whatsoever
which may be asserted against the Mortgagee by reason of any alleged obligations
or undertakings on its part to perform or discharge any of the terms, covenants,
or agreements contained in any such Lease. Should the Mortgagee incur any such
liability, the amount thereof, including without limitation costs, expenses, and
reasonable attorneys' fees, together with interest thereon from the date of
expenditure until paid at the Default Rate as specified in the Note, shall be
secured hereby, and Mortgagor shall reimburse the Mortgagee therefor immediately
upon demand. Nothing in this subsection shall impose any duty, obligation, or
responsibility upon the Mortgagee for the control, care, management, leasing, or
repair of the Mortgaged Property, nor for the carrying out of any of the terms
and conditions of any such Lease; nor shall it operate to make the Mortgagee
responsible or liable for any waste committed on the Mortgaged Property by the
tenants or by any other parties, or for any hazardous substances or
environmental conditions on or under the Mortgaged Property, or for any
dangerous or defective condition of the Mortgaged Property or for any negligence
in the management, leasing, upkeep, repair, or control of the Mortgaged Property
resulting in loss or injury or death to any tenant, licensee, employee, or
stranger. Mortgagor hereby assents to, ratifies, and confirms any and all
actions of the Mortgagee with respect to the Mortgaged Property taken under this
subparagraph.
(c) Right to Accelerate. Mortgagee may, without notice except as provided
-------------------
in Section 24 above, demand, presentment, notice of nonpayment or
----------
nonperformance, protest, notice of protest, notice of intent to accelerate,
notice of acceleration, or any other notice or any other action, all of which
are hereby waived by Mortgagor and all other parties obligated in any manner
whatsoever on the Debt, declare the entire unpaid balance of the Debt
immediately due and payable, and upon such declaration, the entire unpaid
balance of the Debt shall be immediately due and payable.
(d) Foreclosure-Power of Sale. Mortgagee may institute a proceeding or
-------------------------
proceedings, judicial, or nonjudicial, by advertisement or otherwise, for the
complete or partial foreclosure of this Mortgage or the complete or partial sale
of the Mortgaged Property under the power of sale contained herein or under any
applicable provision of law. Mortgagee may sell the Mortgaged Property, and all
estate, right, title, interest, claim and demand of Mortgagor therein, and all
rights of redemption thereof, at one or more sales, as an entirety or in
parcels, with such elements
-26-
<PAGE>
of real and/or personal property, and at such time and place and upon such terms
as it may deem expedient, or as may be required by applicable law, and in the
event of a sale, by foreclosure or otherwise, of less than all of the Mortgaged
Property, this Mortgage shall continue as a lien and security interest on the
remaining portion of the Mortgaged Property.
(e) Rights Pertaining to Sales. Subject to the requirements of applicable
--------------------------
law and except as otherwise provided herein, the following provisions shall
apply to any sale or sales of all or any portion of the Mortgaged Property under
or by virtue of subsection (d) above, whether made under the power of sale
herein granted or by virtue of judicial proceedings or of a judgment or decree
of foreclosure and sale:
(i) Trustee or Mortgagee may conduct any number of sales from time
to time. The power of sale set forth above shall not be exhausted by any
one or more such sales as to any part of the Mortgaged Property which shall
not have been sold, nor by any sale which is not completed or is defective
in Mortgagee's opinion, until the Debt shall have been paid in full.
(ii) Any sale may be postponed or adjourned by public announcement
at the time and place appointed for such sale or for such postponed or
adjourned sale without further notice.
(iii) After each sale, Mortgagee, Trustee or an officer of any
court empowered to do so shall execute and deliver to the purchaser or
purchasers at such sale a good and sufficient instrument or instruments
granting, conveying, assigning and transferring all right, title and
interest of Mortgagor in and to the property and rights sold and shall
receive the proceeds of said sale or sales and apply the same as specified
in the Note. Each of Trustee and Mortgagee is hereby appointed the true and
lawful attorney-in-fact of Mortgagor, which appointment is irrevocable and
shall be deemed to be coupled with an interest, in Mortgagor's name and
stead, to make all necessary conveyances, assignments, transfers and
deliveries of the property and rights so sold, Mortgagor hereby ratifying
and confirming all that said attorney or such substitute or substitutes
shall lawfully do by virtue thereof. Nevertheless, Mortgagor, if requested
by Trustee or Mortgagee, shall ratify and confirm any such sale or sales by
executing and delivering to Trustee, Mortgagee or such purchaser or
purchasers all such instruments as may be advisable, in Trustee's or
Mortgagee's judgment, for the purposes as may be designated in such
request.
(iv) Any and all statements of fact or other recitals made in any of
the instruments referred to in subparagraph (iii) of this subsection (e)
----------------- --------------
given by Trustee or Mortgagee shall be taken as conclusive and binding
against all persons as to evidence of the truth of the facts so stated and
recited.
-27-
<PAGE>
(v) Any such sale or sales shall operate to divest all of the
estate, right, title, interest, claim and demand whatsoever, whether at law
or in equity, of Mortgagor in and to the properties and rights so sold, and
shall be a perpetual bar both at law and in equity against Mortgagor and
any and all persons claiming or who may claim the same, or any part thereof
or any interest therein, by, through or under Mortgagor to the fullest
extent permitted by applicable law.
(vi) Upon any such sale or sales, Mortgagee may bid for and
acquire the Mortgaged Property and, in lieu of paying cash therefor, may
make settlement for the purchase price by crediting against the Debt the
amount of the bid made therefor, after deducting therefrom the expenses of
the sale, the cost of any enforcement proceeding hereunder, and any other
sums which Trustee or Mortgagee is authorized to deduct under the terms
hereof, to the extent necessary to satisfy such bid.
(vii) Upon any such sale, it shall not be necessary for Trustee,
Mortgagee or any public officer acting under execution or order of court to
have present or constructively in its possession any of the Mortgaged
Property.
(f) Mortgagee's Judicial Remedies. Mortgagee, or Trustee upon written
-----------------------------
request of Mortgagee, may proceed by suit or suits, at law or in equity, to
enforce the payment of the Debt to foreclose the liens and security interests of
this Mortgage as against all or any part of the Mortgaged Property, and to have
all or any part of the Mortgaged Property sold under the judgment or decree of a
court of competent jurisdiction. This remedy shall be cumulative of any other
nonjudicial remedies available to the Mortgagee under this Mortgage or the other
Loan Documents. Proceeding with a request or receiving a judgment for legal
relief shall not be or be deemed to be an election of remedies or bar any
available nonjudicial remedy of the Mortgagee.
(g) Mortgagee's Right to Appointment of Receiver. Mortgagee, as a matter of
--------------------------------------------
right and (i) without regard to the sufficiency of the security for repayment of
the Debt without notice to Mortgagor, (ii) without any showing of insolvency,
fraud, or mismanagement on the part of Mortgagor, (iii) without the necessity of
filing any judicial or other proceeding other than the proceeding for
appointment of a receiver, and (iv) without regard to the then value of the
Mortgaged Property, shall be entitled to the appointment of a receiver or
receivers for the protection, possession, control, management and operation of
the Mortgaged Property, including (without limitation), the power to collect the
Rents, enforce this Mortgage and, in case of a sale and deficiency, during the
full statutory period of redemption (if any), whether there be a redemption or
not, as well as during any further times when Mortgagor, except for the
intervention of such receiver, would be entitled to collection of such Rents.
Mortgagor hereby irrevocably consents to the appointment of a receiver or
receivers. Any receiver appointed
-28-
<PAGE>
pursuant to the provisions of this subsection shall have the usual powers and
duties of receivers in such matters.
(h) Mortgagee's Uniform Commercial Code Remedies. The Mortgagee may
--------------------------------------------
exercise its rights of enforcement under the Uniform Commercial Code in effect
in the state in which the Mortgaged Property is located.
(i) Other Rights. Mortgagee (i) may surrender the Policies maintained
------------
pursuant to this Mortgage or any part thereof, and upon receipt shall apply the
unearned premiums as a credit on the Debt, and, in connection therewith,
Mortgagor hereby appoints Mortgagee as agent and attorney-in-fact (which is
coupled with an interest and is therefore irrevocable) for Mortgagor to collect
such premiums; and (ii) may apply the Tax and Insurance Escrow Fund and/or the
Replacement Escrow Fund toward payment of the Debt; and (iii) shall have and may
exercise any and all other rights and remedies which Mortgagee may have at law
or in equity, or by virtue of any of the Loan Documents, or otherwise.
(j) Discontinuance of Remedies. In case Mortgagee shall have proceeded to
--------------------------
invoke any right, remedy, or recourse permitted under the Loan Documents and
shall thereafter elect to discontinue or abandon same for any reason, Mortgagee
shall have the unqualified right so to do and, in such event, Mortgagor and
Mortgagee shall be restored to their former positions with respect to the Debt,
the Loan Documents, the Mortgaged Property or otherwise, and the rights,
remedies, recourses and powers of Mortgagee shall continue as if same had never
been invoked.
(k) Remedies Cumulative. All rights, remedies, and recourses of Mortgagee
-------------------
granted in the Note, this Mortgage and the other Loan Documents, any other
pledge of collateral, or otherwise available at law or equity: (i) shall be
cumulative and concurrent; (ii) may be pursued separately, successively, or
concurrently against Mortgagor, the Mortgaged Property, or any one or more of
them, at the sole discretion of Mortgagee; (iii) may be exercised as often as
occasion therefor shall arise, it being agreed by Mortgagor that the exercise or
failure to exercise any of same shall in no event be construed as a waiver or
release thereof or of any other right, remedy, or recourse; (iv) shall be
nonexclusive; (v) shall not be conditioned upon Mortgagee exercising or pursuing
any remedy in relation to the Mortgaged Property prior to Mortgagee bringing
suit to recover the Debt; and (vi) in the event Mortgagee elects to bring suit
on the Debt and obtains a judgment against Mortgagor prior to exercising any
remedies in relation to the Mortgaged Property, all liens and security
interests, including the lien of this Mortgage, shall remain in full force and
effect and may be exercised thereafter at Mortgagee's option.
(l) Election of Remedies. Mortgagee may release, regardless of
--------------------
consideration, any part of the Mortgaged Property without, as to the remainder,
in any way impairing, affecting, subordinating, or releasing the lien or
security interests evidenced by this Mortgage or the other Loan Documents or
affecting the obligations of Mortgagor or any other party to pay the Debt.
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<PAGE>
For payment of the Debt, Mortgagee may resort to any collateral securing the
payment of the Debt in such order and manner as Mortgagee may elect. No
collateral taken by Mortgagee shall in any manner impair or affect the lien or
security interests given pursuant to the Loan Documents, and all collateral
shall be taken, considered, and held as cumulative.
(m) Waivers. Mortgagor hereby irrevocably and unconditionally waives and
-------
releases: (i) all benefits that might accrue to Mortgagor by virtue of any
present or future law exempting the Mortgaged Property from attachment, levy or
sale on execution or providing for any appraisement, valuation, stay of
execution, exemption from civil process, redemption, or extension of time for
payment; (ii) all notices of any Event of Default except as expressly provided
herein or of Trustee's exercise of any right, remedy, or recourse provided for
under the Loan Documents; and (iii) any right to a marshalling of assets, a sale
in inverse order of alienation or any other right to direct in any manner, the
order of sale of any of the Mortgaged Property.
(n) Waiver of Automatic or Supplemental Stay. In the event of the filing
----------------------------------------
of any voluntary or involuntary petition under the U.S. Bankruptcy Code (the
"Bankruptcy Code") by or against Mortgagor (other than an involuntary petition
- ----------------
filed by or joined in by Mortgagee), the Mortgagor shall not assert, or request
any other party to assert, that the automatic stay under (S) 362 of the
-------
Bankruptcy Code shall operate or be interpreted to stay, interdict, condition,
reduce or inhibit the ability of Mortgagee to enforce any rights it has by
virtue of this Mortgage, or any other rights that Mortgagor has, whether now or
hereafter acquired, against any guarantor of the Debt. Further, Mortgagee shall
not seek a supplemental stay or any other relief, whether injunctive or
otherwise, pursuant to (S) 105 of the Bankruptcy Code or any other provision
-------
therein to stay, interdict, condition, reduce or inhibit the ability of
Mortgagee to enforce any rights it has by virtue of this Mortgage against any
guarantor of the Debt. The waivers contained in this paragraph are a material
inducement to Mortgagee's willingness to enter into this Mortgage and Mortgagor
acknowledges and agrees that no grounds exits for equitable relief which would
bar, delay or impede the exercise by Mortgagee of Mortgagee's rights and
remedies against Mortgagor or any guarantor of the Debt.
(o) Bankruptcy Acknowledgement. In the event the Mortgaged Property or any
--------------------------
portion thereof or any interest therein becomes property of any bankruptcy
estate or subject to any state or federal insolvency proceeding, then Mortgagee
shall immediately become entitled, in addition to all other relief to which
Mortgagee may be entitled under this Mortgage, to obtain (i) an order from the
Bankruptcy Court or other appropriate court granting immediate relief from the
automatic stay pursuant to (S) 362 of the Bankruptcy Code so to permit Mortgagee
-------
to pursue its rights and remedies against Mortgagor as provided under this
Mortgage and all other rights and remedies of Mortgagee at law and in equity
under applicable state law, and (ii) an order from the Bankruptcy Court
prohibiting Mortgagor's use of all "cash collateral" as defined under (S) 363 of
-------
the Bankruptcy Code. In connection with such Bankruptcy Court orders, Mortgagor
shall not contend or allege in any pleading or petition filed in any court
proceeding that Mortgagee does
-30-
<PAGE>
not have sufficient grounds for relief from the automatic stay. Any bankruptcy
petition or other action taken by the Mortgagor to stay, condition, or inhibit
Mortgagee from exercising its remedies are hereby admitted by Mortgagor to be in
bad faith and Mortgagor further admits that Mortgagee would have just cause for
relief from the automatic stay in order to take such actions authorized under
state law.
(p) Application of Proceeds. The proceeds from any sale, lease, or other
-----------------------
disposition made pursuant to this Mortgage, or the proceeds from the surrender
of any insurance policies pursuant hereto, or any Rents collected by Mortgagee
from the Mortgaged Property, or the Tax and Insurance Escrow Fund or the
Replacement Escrow Fund or sums received pursuant to Section 7 hereof, or
---------
proceeds from insurance which Mortgagee elects to apply to the Debt pursuant to
Section 3 hereof, shall be applied by Trustee, or by Mortgagee, as the case may
- ---------
be, to the Debt in the following order and priority: (1) to the payment of all
expenses of advertising, selling, and conveying the Mortgaged Property or part
thereof, and/or prosecuting or otherwise collecting Rents, proceeds, premiums or
other sums including reasonable attorneys' fees and a reasonable fee or
commission to Trustee, not to exceed five percent of the proceeds thereof or
sums so received; (2) to that portion, if any, of the Debt with respect to which
no person or entity has personal or entity liability for payment (the
"Exculpated Portion"), and with respect to the Exculpated Portion as follows:
- -------------------
first, to accrued but unpaid interest, second, to matured principal, and third,
to unmatured principal in inverse order of maturity; (3) to the remainder of the
Debt as follows: first, to the remaining accrued but unpaid interest, second,
to the matured portion of principal of the Debt, and third, to prepayment of the
unmatured portion, if any, of principal of the Debt applied to installments of
principal in inverse order of maturity; (4) the balance, if any or to the extent
applicable, remaining after the full and final payment of the Debt to the holder
or beneficiary of any inferior liens covering the Mortgaged Property, if any, in
order of the priority of such inferior liens (Trustee and Mortgagee shall hereby
be entitled to rely exclusively on a commitment for title insurance issued to
determine such priority); and (5) the cash balance, if any, to the Mortgagor.
The application of proceeds of sale or other proceeds as otherwise provided
herein shall be deemed to be a payment of the Debt like any other payment. The
balance of the Debt remaining unpaid, if any, shall remain fully due and owing
in accordance with the terms of the Note and the other Loan Documents.
26. Right of Inspection. Mortgagee and its agents shall have the right to
-------------------
enter and inspect the Mortgaged Property during normal business hours upon
reasonable notice.
27. Security Agreement. This Mortgage is both a real property mortgage or
------------------
deed of trust and a "security agreement" within the meaning of the Uniform
Commercial Code. The Mortgaged Property includes both real and personal
property and all other rights and interests, whether tangible or intangible in
nature, of Mortgagor in the Mortgaged Property. Mortgagor by executing and
delivering this Mortgage has granted and hereby grants to Mortgagee, as
security for the Debt, a security interest in the Mortgaged Property to the full
extent that the
-31-
<PAGE>
Mortgaged Property may be subject to the Uniform Commercial Code (said portion
of the Mortgaged Property so subject to the Uniform Commercial Code being called
in this paragraph the "Collateral"). Mortgagor hereby agrees with Mortgagee to
----------
execute and deliver to Mortgagee, in form and substance satisfactory to
Mortgagee, such financing statements and such further assurances as Mortgagee
may from time to time, reasonably consider necessary to create, perfect, and
preserve Mortgagee's security interest herein granted. This Mortgage shall also
constitute a "fixture filing" for the purposes of the Uniform Commercial Code.
All or part of the Mortgaged Property are or are to become fixtures. Information
concerning the security interest herein granted may be obtained from the parties
at the addresses of the parties set forth in the first paragraph of this
Mortgage. If an Event of Default shall occur, Mortgagee, in addition to any
other rights and remedies which they may have, shall have and may exercise
immediately and without demand, any and all rights and remedies granted to a
secured party upon default under the Uniform Commercial Code, including, without
limiting the generality of the foregoing, the right to take possession of the
Collateral or any part thereof, and to take such other measures as Mortgagee may
deem necessary for the care, protection and preservation of the Collateral. Upon
request or demand of Mortgagee, Mortgagor shall at its expense assemble the
Collateral and make it available to Mortgagee at a convenient place acceptable
to Mortgagee. Mortgagor shall pay to Mortgagee on demand any and all expenses,
including legal expenses and attorneys' fees, incurred or paid by Mortgagee in
protecting the interest in the Collateral and in enforcing the rights hereunder
with respect to the Collateral. Any notice of sale, disposition or other
intended action by Mortgagee with respect to the Collateral sent to Mortgagor in
accordance with the provisions hereof at least ten (10) days prior to such
action, shall constitute commercially reasonable notice to Mortgagor. The
proceeds of any disposition of the Collateral, or any part thereof, may be
applied by Mortgagee to the payment of the Debt in such priority and proportions
as Mortgagee in its discretion shall deem proper. In the event of any change in
name, identity or structure of any Mortgagor, such Mortgagor shall notify
Mortgagee thereof and promptly after request shall execute, file and record such
Uniform Commercial Code forms as are necessary to maintain the priority of
Mortgagee's lien upon and security interest in the Collateral, and shall pay all
expenses and fees in connection with the filing and recording thereof. If
Mortgagee shall require the filing or recording of additional Uniform Commercial
Code forms or continuation statements, Mortgagor shall, promptly after request,
execute, file and record such Uniform Commercial Code forms or continuation
statements as Mortgagee shall deem necessary, and shall pay all expenses and
fees in connection with the filing and recording thereof, it being understood
and agreed, however, that no such additional documents shall increase
Mortgagor's obligations under the Note, this Mortgage and the other Loan
Documents. Mortgagor hereby irrevocably appoints Mortgagee as its attorney-in-
fact, coupled with an interest, to file with the appropriate public office on
its behalf any financing or other statements signed only by Mortgagee, as
Mortgagor's attorney-in-fact, in connection with the Collateral covered by this
Mortgage. Notwithstanding the foregoing, Mortgagor shall appear and defend in
any action or proceeding which affects or purports to affect the Mortgaged
Property and any interest or right therein, whether such proceeding affects
title or any other rights in the Mortgaged Property (and in
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<PAGE>
conjunction therewith, Mortgagor shall fully cooperate with Mortgagee in the
event Mortgagee is a party to such action or proceeding).
28. Actions and Proceedings. Mortgagee has the right to appear in and
-----------------------
defend any action or proceeding brought with respect to the Mortgaged Property
and to bring any action or proceeding, in the name and on behalf of Mortgagor,
which Mortgagee, in its discretion, decides should be brought to protect their
interest in the Mortgaged Property. Mortgagee shall, at its option, be
subrogated to the lien of any mortgage or other security instrument discharged
in whole or in part by the Debt, and any such subrogation rights shall
constitute additional security for the payment of the Debt.
29. Waiver of Setoff and Counterclaim. All amounts due under this
---------------------------------
Mortgage, the Note and the other Loan Documents shall be payable without setoff,
counterclaim or any deduction whatsoever. Mortgagor hereby waives the right to
assert a setoff, counterclaim or deduction in any action or proceeding in which
Mortgagee is a participant, or arising out of or in any way connected with this
Mortgage, the Note, any of the other Loan Documents, or the Debt.
30. Contest of Certain Claims. Notwithstanding the provisions of Sections
------------------------- --------
4 and 23(i) hereof, Mortgagor shall not be in default for failure to pay or
- -----------
discharge Taxes, Other Charges or mechanic's or materialman's lien asserted
against the Mortgaged Property if, and so long as, (a) Mortgagor shall have
notified Mortgagee of same within five (5) days of obtaining knowledge thereof;
(b) Mortgagor shall diligently and in good faith contest the same by appropriate
legal proceedings which shall operate to prevent the enforcement or collection
of the same and the sale of the Mortgaged Property or any part thereof, to
satisfy the same; (c) Mortgagor shall have furnished to Mortgagee a cash
deposit, or an indemnity bond satisfactory to Mortgagee with a surety
satisfactory to Mortgagee, in the amount of the Taxes, Other Charges or
mechanic's or materialman's lien claim, plus a reasonable additional sum to pay
all costs, interest and penalties that may be imposed or incurred in connection
therewith, to assure payment of the matters under contest and to prevent any
sale or forfeiture of the Mortgaged Property or any part thereof; (d) Mortgagor
shall promptly upon final determination thereof pay the amount of any such
Taxes, Other Charges or claim so determined, together with all costs, interest
and penalties which may be payable in connection therewith; (e) the failure to
pay the Taxes, Other Charges or mechanic's or materialman's lien claim does not
constitute a default under any other deed of trust, mortgage or security
interest covering or affecting any part of the Mortgaged Property; and (f)
notwithstanding the foregoing, Mortgagor shall immediately upon request of
Mortgagee pay (and if Mortgagor shall fail so to do, Mortgagee may, but shall
not be required to, pay or cause to be discharged or bonded against) any such
Taxes, Other Charges or claim notwithstanding such contest, if in the opinion of
Mortgagee, the Mortgaged Property or any part thereof or interest therein may be
in danger of being sold, forfeited, foreclosed, terminated, cancelled or lost.
-33-
<PAGE>
Mortgagee may pay over any such cash deposit or part thereof to the claimant
entitled thereto at any time when, in the judgment of Mortgagee, the entitlement
of such claimant is established.
31. Recovery of Sums Required to Be Paid. Mortgagee shall have the right
------------------------------------
from time to time to take action to recover any sum or sums which constitute a
part of the Debt as the same become due, without regard to whether or not the
balance of the Debt shall be due, and without prejudice to the right of
Mortgagee thereafter to bring an action of foreclosure, or any other action, for
a default or defaults by Mortgagor existing at the time such earlier action was
commenced.
32. Handicapped Access. (a) Mortgagor agrees that the Mortgaged Property
------------------
shall at all times strictly comply to the extent applicable with the
requirements of the Americans with Disabilities Act of 1990, the Fair Housing
Amendments Act of 1988, all state and local laws and ordinances related to
handicapped access and all rules, regulations, and orders issued pursuant
thereto including, without limitation, the Americans with Disabilities Act
Accessibility Guidelines for Buildings and Facilities (collectively "Access
------
Laws").
(b) Notwithstanding any provisions set forth herein or in any other
document regarding Mortgagee's approval of alterations of the Mortgaged
Property, Mortgagor shall not alter the Mortgaged Property in any manner which
would increase Mortgagor's responsibilities for compliance with the applicable
Access Laws without the prior written approval of Mortgagee. The foregoing
shall apply to tenant improvements constructed by Mortgagor or by any of its
tenants. Mortgagee may condition any such approval upon receipt of a
certificate from an architect, engineer, or other person acceptable to Mortgagee
of compliance with Access Laws.
(c) Mortgagor agrees to give prompt notice to Mortgagee of the receipt by
Mortgagor of any complaints related to violation of any Access Laws and of the
commencement of any proceedings or investigations which relate to compliance
with applicable Access Laws.
33. Indemnification. In addition to any other indemnifications provided
---------------
in any of the Loan Documents, Mortgagor shall protect, defend, indemnify and
save harmless Mortgagee, its subsidiaries, affiliates, persons controlling or
under common control with Mortgagee, their agents, officers, directors,
shareholders, employees, servants, consultants, representatives and their
respective successors and assigns and Trustee (collectively, the "Indemnified
-----------
Parties"), from and against all liabilities, obligations, claims, demands,
- -------
damages, penalties, causes of action, losses, fines, costs and expenses
(including without limitation reasonable attorneys' fees and expenses), imposed
upon or incurred by or asserted against any of the Indemnified Parties by reason
of (a) ownership of this Mortgage, the Mortgaged Property or any interest
therein or receipt of any Rents; (b) any accident, injury to or death of persons
or loss of or damage to property occurring in, on or about the Mortgaged
Property or any part thereof or on the adjoining sidewalks, curbs, adjacent
property or adjacent parking areas, streets or ways; (c) any use, nonuse or
condition in,
-34-
<PAGE>
on or about the Mortgaged Property or any part thereof or on adjoining
sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways;
(d) any failure on the part of Mortgagor to perform or comply with any of the
terms of Sections 2 through 50 of this Mortgage; (e) performance of any labor or
---------------------
services or the furnishing of any materials or other property in respect of the
Mortgaged Property or any part thereof; (f) any failure of the Mortgaged
Property to comply with any Access Laws; (g) any representation or warranty made
in the Note, this Mortgage or the other Loan Documents being false or misleading
in any respect as of the date such representation or warranty was made; (h) any
claim by brokers, finders or similar persons claiming to be entitled to a
commission in connection with any Lease or other transaction involving the
Mortgaged Property or any part thereof under any legal requirement or any
liability asserted against Mortgagee with respect thereto; and (i) the claims of
any lessee to any portion of the Mortgaged Property or any person acting through
or under any lessee or otherwise arising under or as a consequence of any Lease.
Any amounts payable to any of the Indemnified Parties by reason of the
application of this paragraph shall be secured by this Mortgage and shall become
immediately due and payable and shall bear interest at the Default Rate
specified in the Note from the date loss or damage is sustained by any of the
Indemnified Parties until paid. The obligations and liabilities of Mortgagor
under this subsection 33(i) shall survive for a period of one (1) year following
----------------
any release of this Mortgage executed by Mortgagee and satisfaction of the loan
evidenced by the Loan Documents, and (ii) shall survive the transfer or
assignment of this Mortgage, the entry of a judgment of foreclosure, sale of the
Mortgaged Property by nonjudicial foreclosure sale, or delivery of a deed in
lieu of foreclosure (including, without limitation, any transfer by Mortgagor of
any of its rights, title and interest in and to the Mortgaged Property to any
party, whether or not affiliated with Mortgagor).
34. Trustee. Trustee may resign by the giving of notice of such
-------
resignation in writing or verbally to Mortgagee. If Trustee shall die, resign,
or become disqualified from acting in the execution of this trust, or if, for
any reason, Mortgagee shall prefer to appoint a substitute trustee or multiple
substitute trustees, or successive substitute trustees or successive multiple
substitute trustees, to act instead of the aforenamed Trustee, Mortgagee shall
have full power to appoint a substitute trustee (or, if preferred, multiple
substitute trustees) in succession who shall succeed (and if multiple substitute
trustees are appointed, each of such multiple substitute trustees shall succeed)
to all the estates, rights, powers, and duties of the aforenamed Trustee. Such
appointment may be executed by any authorized agent of Mortgagee, and if such
Mortgagee be a corporation and such appointment be executed in its behalf by any
officer of such corporation, such appointment shall be conclusively presumed to
be executed with authority and shall be valid and sufficient without proof of
any action by the board of directors or any superior officer of the corporation.
Mortgagor hereby ratifies and confirms any and all acts which the aforenamed
Trustee, or his successor or successors in this trust, shall do lawfully by
virtue hereof. If multiple substitute Trustees are appointed, each of such
multiple substitute Trustees shall be empowered and authorized to act alone
without the necessity of the joinder of the other multiple substitute trustees,
whenever any action or undertaking of such substitute trustees is requested or
required
-35-
<PAGE>
under or pursuant to this Mortgage or applicable law. Any substitute Trustee
appointed pursuant to any of the provisions hereof shall, without any further
act, deed, or conveyance, become vested with all the estates, properties,
rights, powers, and trusts of its or his predecessor in the rights hereunder
with like effect as if originally named as Trustee herein; but nevertheless,
upon the written request of Mortgagee or of the substitute Trustee, the Trustee
ceasing to act shall execute and deliver any instrument transferring to such
substitute Trustee, upon the trusts herein expressed, all the estates,
properties, rights, powers, and trusts of the Trustee so ceasing to act, and
shall duly assign, transfer and deliver any of the property and moneys held by
such Trustee to the substitute Trustee so appointed in the Trustee's place. No
fees or expenses shall be payable to Trustee, except in connection with a
foreclosure of the Mortgaged Property or any part thereof or in connection with
the release of the Mortgaged Property following payment in full of the Debt.
35. Notices. Any notice, demand, statement, request or consent made
-------
hereunder shall be in writing and shall be deemed to be received by the
addressee on the day such notice is deposited with the United States postal
service first class certified mail, return receipt requested, addressed to the
address, as set forth above, of the party to whom such notice is to be given, or
to such other address as Mortgagor or Mortgagee, as the case may be, shall in
like manner designate in writing.
36. Authority. (a) Mortgagor (and the undersigned representative of
---------
Mortgagor, if any) has full power, authority and right to execute, deliver and
perform its obligations pursuant to this Mortgage, and to mortgage, give, grant,
bargain, sell, alien, enfeoff, convey, confirm, warrant, pledge, hypothecate and
assign the Mortgaged Property pursuant to the terms hereof and to keep and
observe all of the terms of this Mortgage on Mortgagor's part to be performed;
and (b) Mortgagor represents and warrants that Mortgagor is not a "foreign
person" within the meaning of Section 1445(f)(3) of the Internal Revenue Code of
------------------
1986, as amended and the related Treasury Department regulations.
37. Waiver of Notice. Mortgagor shall not be entitled to any notices of
----------------
any nature whatsoever from Mortgagee except with respect to matters for which
this Mortgage specifically and expressly provides for the giving of notice by
Mortgagee to Mortgagor and except with respect to matters for which Mortgagee is
required by applicable law to give notice, and Mortgagor hereby expressly waives
the right to receive any notice from Mortgagee with respect to any matter for
which this Mortgage does not specifically and expressly provide for the giving
of notice by Mortgagee to Mortgagor.
38. Remedies of Mortgagor. In the event that a claim or adjudication is
---------------------
made that Mortgagee has acted unreasonably or unreasonably delayed acting in any
case where by law or under the Note, this Mortgage or the other Loan Documents,
it has an obligation to act reasonably
-36-
<PAGE>
or promptly, Mortgagee shall not be liable for any monetary damages, and
Mortgagor's remedies shall be limited to injunctive relief or declaratory
judgment.
39. Sole Discretion of Mortgagee. Wherever pursuant to this Mortgage,
----------------------------
Mortgagee exercises any right given to it to approve or disapprove, or any
arrangement or term is to be satisfactory to Mortgagee, the decision of
Mortgagee to approve or disapprove or to decide that arrangements or terms are
satisfactory or not satisfactory shall be in the sole discretion of Mortgagee
and shall be final and conclusive, except as may be otherwise expressly and
specifically provided herein.
40. Non-Waiver. The failure of Mortgagee to insist upon strict
----------
performance of any term hereof shall not be deemed to be a waiver of any term of
this Mortgage. Mortgagor shall not be relieved of Mortgagor's obligations
hereunder by reason of (a) the failure of Mortgagee to comply with any request
of Mortgagor or Guarantor to take any action to foreclose this Mortgage or
otherwise enforce any of the provisions hereof or of the Note or other Loan
Documents, (b) the release, regardless of consideration, of the whole or any
part of the Mortgaged Property, or of any person liable for the Debt or any
portion thereof, or (c) any agreement or stipulation by Mortgagee extending the
time of payment or otherwise modifying or supplementing the terms of the Note,
this Mortgage, or the other Loan Documents. Mortgagee may resort for the
payment of the Debt to any other security held by Mortgagee in such order and
manner as Mortgagee, in its discretion, may elect. Mortgagee may take action to
recover the Debt, or any portion thereof, or to enforce any covenant hereof
without prejudice to the right of Mortgagee thereafter to foreclosure this
Mortgage. The rights and remedies of Mortgagee under this Mortgage shall be
separate, distinct and cumulative and none shall be given effect to the
exclusion of the others. No act of Mortgagee shall be construed as an election
to proceed under any one provision herein to the exclusion of any other
provision. Mortgagee shall not be limited exclusively to the rights and
remedies herein stated but shall be entitled to every right and remedy now or
hereafter afforded at law or in equity.
41. No Oral Change. This Mortgage may not be modified, amended, waived,
--------------
extended, changed, discharged or terminated orally or by any act or failure to
act on the part of Mortgagor or Mortgagee, but only by an agreement in writing
signed by the party against whom enforcement of any modification, amendment,
waiver, extension, change, discharge or termination is sought.
42. Liability. If Mortgagor consists of more than one person, the
---------
obligations and liabilities of each such person hereunder shall be joint and
several. Subject to the provisions hereof requiring Mortgagee's consent to any
transfer of the Mortgaged Property, this Mortgage shall be binding upon and
inure to the benefit of Mortgagor and Mortgagee and their respective successors
and assigns forever.
-37-
<PAGE>
43. Inapplicable Provisions. If any term, covenant or condition of this
-----------------------
Mortgage is held to be invalid, illegal or unenforceable in any respect, this
Mortgage shall be construed without such provision.
44. Headings, etc. The headings and captions of various paragraphs of
-------------
this Mortgage are for convenience of reference only and are not to be construed
as defining or limiting, in any way, the scope or intent of the provisions
hereof.
45. Counterparts. This Mortgage may be executed in any number of
------------
counterparts each of which shall be deemed to be an original but all of which
when taken together shall constitute one agreement.
46. Definitions. Unless the context clearly indicates a contrary intent
-----------
or unless otherwise specifically provided herein, words used in this Mortgage
may be used interchangeably in singular or plural form and the word "Mortgagor"
---------
shall mean "each Mortgagor and any subsequent owner or owners of the Mortgaged
Property or any part thereof or any interest therein," the word "Mortgagee"
---------
shall mean "Mortgagee and any subsequent holder of the Note," the word "Debt"
----
shall mean "the Note and any other evidence of indebtedness secured by this
Mortgage," the word "person" shall include an individual, corporation,
------
partnership, trust, unincorporated association, government, governmental
authority, and any other entity, and the words "Mortgaged Property" shall
------------------
include any portion of the Mortgaged Property and any interest therein and the
words "attorneys' fees" shall include any and all attorneys' fees, paralegal and
law clerk fees, including, but not limited to, fees at the pre-trial, trial and
appellate levels incurred or paid by Mortgagee in protecting its interest in the
Mortgaged Property and Collateral and enforcing its rights hereunder. Whenever
the context may require, any pronouns used herein shall include the
corresponding masculine, feminine or neuter forms, and the singular form of
nouns and pronouns shall include the plural and vice versa.
47. Homestead. Mortgagor hereby waives and renounces all homestead and
---------
exemption rights provided by the constitution and the laws of the United States
and of any state, in and to the Premises as against the collection of the Debt,
or any part hereof.
48. Assignments. Mortgagee shall have the right to assign or transfer its
-----------
rights under this Mortgage and the other Loan Documents without limitation,
including, without limitation, the right to assign or transfer its rights to a
servicing agent. Any assignee or transferee shall be entitled to all the
benefits afforded Mortgagee under this Mortgage and the other Loan Documents.
49. Survival of Obligations; Survival of Warrants and Representations.
-----------------------------------------------------------------
Each and all of the covenants and obligations of Mortgagor (other than
warranties and representations contained herein) shall survive the execution and
delivery of the Loan Documents and shall
-38-
<PAGE>
continue in full force and effect until the Debt shall have been paid in full;
provided, however, that nothing contained in this paragraph shall limit the
obligations of Mortgagor except as otherwise set forth herein. In addition, any
and all warranties and representations of Mortgagor contained herein shall
survive the execution and delivery of the Loan Documents and (i) shall continue
for a period of one (1) year following any release of this Mortgage executed by
Mortgagee and satisfaction of the loan evidenced by the Loan Documents, and (ii)
shall survive the transfer or assignment of this Mortgage, the entry of a
judgment of foreclosure, sale of the Mortgaged Property by non-judicial
foreclosure or deed in lieu of foreclosure (including, without limitation, any
transfer of the Mortgage by Mortgagee of any of its rights, title and interest
in and to the Mortgaged Property to any party, whether or not affiliated with
Mortgagee).
50. Covenants Running with the Land. All covenants, conditions,
-------------------------------
warranties, representations and other obligations contained in this Mortgage and
the other Loan Documents are intended by Mortgagor, Mortgagee and Trustee to be,
and shall be construed as, covenants running with the Mortgaged Property until
the lien of this Mortgage has been fully released by Mortgagee.
51. Governing Law; Jurisdiction. THIS MORTGAGE AND THE OTHER LOAN
---------------------------
DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE IN WHICH THE MORTGAGED PROPERTY IS LOCATED (WITHOUT REGARD TO ANY CONFLICT
OF LAWS PRINCIPLES) AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
MORTGAGOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY COURT OF
COMPETENT JURISDICTION LOCATED IN THE STATE IN WHICH THE MORTGAGED PROPERTY IS
LOCATED IN CONNECTION WITH ANY PROCEEDING OUT OF OR RELATING TO THIS MORTGAGE.
52. Time. Time is of the essence in this Mortgage and the other Loan
----
Documents.
53. No Third Party Beneficiaries. The provisions of this Mortgage and the
----------------------------
other Loan Documents are for the benefit of Mortgagor, Mortgagee and Trustee and
shall not inure to the benefit of any third party (other than any successor or
assignee of either Trustee or Mortgagee). This Mortgage and the other Loan
Documents shall not be construed as creating any rights, claims or causes of
action against Mortgagee or any of its officers, directors, agents or employees
in favor of any party other than Mortgagor including but not limited to any
claims to any sums held in the Tax and Insurance Escrow Fund or the Replacement
Escrow Fund.
54. Relationship of Parties. The relationship of Mortgagee and Mortgagor
-----------------------
is solely that of debtor and creditor, and Mortgagee has no fiduciary or other
special relationship with the Mortgagor, and no term or condition of any of the
Loan Documents shall be construed to be
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other than that of debtor and creditor. Mortgagor represents and acknowledges
that the Loan Documents do not provide for any shared appreciation rights or
other equity participation interest.
55. Trustee Provisions. In the event that this Mortgage operates as a
------------------
mortgage pursuant to the provisions of Section 57 below, the provisions of this
----------
Mortgage which pertain to the Trustee shall be of no force or effect.
56. Investigations. Any and all representations, warranties, covenants
--------------
and agreements made in this Mortgage (and/or in other Loan Documents) shall
survive any investigation or inspection made by or on behalf of Mortgagee.
57. Special State Provisions. Notwithstanding anything to the contrary
------------------------
contained herein, the following terms and provisions shall apply:
In the event of any conflict between the terms and provisions of this
section and any other provision of this Mortgage, the terms and provisions of
this section shall govern and control.
(a) This Mortgage shall be deemed to be and shall be enforceable as a deed
of trust, leasehold deed of trust, security agreement and financing statement.
(b) Upon the occurrence of any Event of Default, Mortgagee may request
Trustee to proceed with foreclosure under the power of sale which is hereby
conferred, such foreclosure to be accomplished in accordance with the following
provisions:
(i) Trustee is hereby authorized and empowered, and it shall be
Trustee's special duty, upon such request of Mortgagee, to sell the
Mortgaged Property, or any part thereof, at public auction to the highest
bidder for cash, with or without having taken possession of same. Any such
sale (including notice thereof) shall comply with the applicable
requirements, at the time of the sale, of Section 51.002 of the Texas
--------------
Property Code or, if and to the extent such statute is not then in force,
with the applicable requirements, at the time of the sale, of the successor
statute or statutes, if any, governing sales of Texas real property under
powers of sale conferred by deeds of trust. If there is no statute in force
at the time of the sale governing sales of Texas real property under powers
of sale conferred by deeds of trust, such sale shall comply with applicable
law, at the time of the sale, governing sales of Texas real property under
powers of sale conferred by deeds of trust.
(ii) At any time during the bidding, the Trustee may require a
bidding party (A) to disclose its full name, state and city of residence,
occupation, and specific business office location, and the name and address
of the principal the bidding party is representing (if applicable), and (B)
to demonstrate reasonable evidence of the bidding party's financial
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ability (or, if applicable, the financial ability of the principal of such
bidding party), as a condition to the bidding party submitting bids at the
foreclosure sale. If any such bidding party (the "Questioned Bidder")
-----------------
declines to comply with the Trustee's requirement in this regard, or if
such Questioned Bidder does respond but the Trustee, in Trustee's sole and
absolute discretion, deems the information or the evidence of the financial
ability of the Questioned Bidder (or, if applicable, the principal of such
bidding party) to be inadequate, then the Trustee may continue the bidding
with reservation; and in such event (1) the Trustee shall be authorized to
caution the Questioned Bidder concerning the legal obligations to be
incurred in submitting bids, and (2) if the Questioned Bidder is not the
highest bidder at the sale, or if having been the highest bidder the
Questioned Bidder fails to deliver the cash purchase price payment promptly
to the Trustee, all bids by the Questioned Bidder shall be null and void.
The Trustee may, in Trustee's sole and absolute discretion, determine that
a credit bid may be in the best interest of the Mortgagor and Mortgagee,
and elect to sell the Mortgaged Property for credit or for a combination of
cash and credit; provided, however, that the Trustee shall have no
obligation to accept any bid except an all cash bid. In the event the
Trustee requires a cash bid and cash is not delivered within a reasonable
time after conclusion of the bidding process, as specified by the Trustee,
but in no event later than 3:45 p.m. local time on the day of sale, then
said contingent sale shall be null and void, the bidding process may be
recommenced, and any subsequent bids or sale shall be made as if no prior
bids were made or accepted.
(iii) In addition to the rights and powers of sale granted under
the preceding provisions of this subsection, if default is made in the
payment of any installment of the Debt, Mortgagee may, at Mortgagee's
option, at once or at any time thereafter while any matured installment
remains unpaid, without declaring the entire Debt to be due and payable,
orally or in writing direct Trustee to enforce this trust and to sell the
Mortgaged Property subject to such unmatured Debt and to the rights,
powers, liens, security interests, and assignments securing or providing
recourse for payment of such unmatured Debt, in the same manner, all as
provided in the preceding provisions of this subsection. Sales made
without maturing the Debt may be made hereunder whenever there is a default
in the payment of any installment of the Debt, without exhausting the power
of sale granted hereby, and without affecting in any way the power of sale
granted under this subsection, the unmatured balance of the Debt or the
rights, powers, liens, security interests, and assignments securing or
providing recourse for payment of the Debt.
(iv) Sale of a part of the Mortgaged Property shall not exhaust the
power of sale, but sales may be made from time to time until the Debt is
paid in full. It is intended by each of the foregoing provisions of this
subsection that Trustee may, after any request or direction by Mortgagee,
sell not only the Premises and the Improvements, but also the Equipment and
other interests constituting a part of the Mortgaged Property or any part
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thereof, along with the Premises and the Improvements or any part
thereof, as a unit and as a part of a single sale, or may sell at any time
or from time to time any part or parts of the Mortgaged Property separately
from the remainder of the Mortgaged Property. It shall not be necessary to
have present or to exhibit at any sale any of the Mortgaged Property.
(v) After any sale under this subsection, Trustee shall make good
and sufficient deeds, assignments, and other conveyances to the purchaser
or purchasers thereunder in the name of Mortgagor, conveying the Mortgaged
Property or any part thereof so sold to the purchaser or purchasers with
general warranty of title by Mortgagor. It is agreed that in any deeds,
assignments or other conveyances given by Trustee, any and all statements
of fact or other recitals therein made as to the identity of Mortgagee, the
occurrence or existence of any Event of Default, the notice of intention to
accelerate, or acceleration of, the maturity of the Debt, the request to
sell, notice of sale, time, place, terms and manner of sale, and receipt,
distribution, and application of the money realized therefrom, the due and
proper appointment of a substitute trustee, and without being limited by
the foregoing, any other act or thing having been duly done by or on behalf
of Mortgagee or by or on behalf of Trustee, shall be taken by all courts of
law and equity as prima facie evidence that such statements or recitals
----- -----
state true, correct, and complete facts and are without further question to
be so accepted, and Mortgagor does hereby ratify and confirm any and all
acts that Trustee may lawfully do in the premises by virtue hereof.
(c) Mortgagee, as a matter of right and without regard to the sufficiency
of the security for repayment of the Debt and performance and discharge of the
obligations hereunder, without notice to Mortgagor and without any showing of
insolvency, fraud, or mismanagement on the part of Mortgagor, and without the
necessity of filing any judicial or other proceeding other than the proceeding
for appointment of a receiver, shall be entitled to the appointment of a
receiver or receivers of the Mortgaged Property or any part thereof, and of the
Rents, and Mortgagor hereby irrevocably consents to the appointment of a
receiver or receivers. Any receiver appointed pursuant to the provisions of
this subsection shall have the usual powers and duties of receivers in such
matters.
(d) In no event shall the provisions of Article 5069, ch. 15 of the Revised
--------------------
Civil Statutes of Texas (which regulates certain revolving credit loan accounts
and revolving tri-party accounts) apply to the loan evidenced by the Loan
Documents and/or secured hereby.
(e) THIS MORTGAGE AND THE OTHER LOAN DOCUMENTS EMBODY THE FINAL, ENTIRE
AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS,
AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL,
RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT
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BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL
AGREEMENTS AMONG THE PARTIES HERETO.
(f) MORTGAGOR ACKNOWLEDGES THAT THIS MORTGAGE PROVIDES FOR INDEMNIFICATION
OF MORTGAGEE BY MORTGAGOR PURSUANT TO SECTIONS 21, 25(b) AND 33.
58. Limitation of Liability. Reference hereby is made to the Note for
-----------------------
certain terms and provisions limiting the liability and obligations of Mortgagor
under the Note and the other Loan Documents.
[The balance of this page is intentionally left blank.]
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Mortgagor has executed this instrument the day and year first above written.
MORTGAGOR:
AIP PROPERTIES #2 L.P.,
a Delaware limited partnership
By: AIP NORTHVIEW, INC.,
a Texas corporation,
General Partner
By:/s/ DAVID B. WARNER
-------------------------------------
David B. Warner, Vice President
STATE OF TEXAS )
)
COUNTY OF DALLAS )
This instrument was acknowledged before me this 15 day of November, 1994,
by David B. Warner, Vice President of AIP Northview, Inc., a Texas corporation,
the General Partner of AIP PROPERTIES #2 L.P., a Delaware limited partnership,
on behalf of said limited partnership.
/s/ KEITH MULLEN
[S E A L] -------------------------------------
Notary Public - State of Texas
My Commission Expires:
11-5-98 -------------------------------------
- --------------------- Printed Name of Notary Public
DA943040278
111594cli1/chm2
167:A4777-00200-AIPP
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EXHIBIT A
---------
Legal Description
-----------------
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<PAGE>
EXHIBIT B
---------
Permitted Exceptions
--------------------
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