THIS DOCUMENT IS A COPY OF THE ANNUAL REPORT ON FORM 10-K FILED ON APRIL 1,
1997 PURSUANT TO A RULE 201 TEMPORARY HARDSHIP EXEMPTION.
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
---------------
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the fiscal year ended December 31, 1996
OR
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
Commission file number: 0-15796
CORPORATE REALTY INCOME FUND I, L.P.
(Exact name of registrant as specified in its charter)
Delaware 13-3311993
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
406 East 85th Street, NY, NY 10028
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 794-3292
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
- ------------------- ----------------
None Not Applicable
Securities registered pursuant to Section 12(g) of the Act:
Depositary Units of Limited Partnership Interest
(Title of Class)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes ____ No __X__
<PAGE>
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |X|
Documents Incorporated by Reference in Part IV of this Form 10-K
None.
<PAGE>
CORPORATE REALTY INCOME FUND I, L. P.
Annual Report on Form 10-K
December 31, 1996
Table of Contents
Page
----
PART I............................. 1
Item 1. Business........................................................ 1
Item 2. Properties...................................................... 9
Item 3. Legal Proceedings............................................... 13
Item 4. Submission of Matters to a Vote of Security-
Holders......................................................... 13
PART II............................ 14
Item 5. Market for Registrant's Securities and Related
Security-Holder Matters......................................... 14
Item 6. Selected Financial Data......................................... 15
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations................... 16
Item 8. Financial Statements and Supplementary Data..................... 18
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure............................. 18
PART III........................... 19
Item 10. Directors and Executive Officers of the
Registrant...................................................... 19
Item 11. Executive Compensation.......................................... 20
Item 12. Security Ownership of Certain Beneficial Owners
and Management.................................................. 21
Item 13. Certain Relationships and Related Transactions.................. 21
PART IV............................ 23
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K............................................. 23
<PAGE>
PART I
Item 1. Business.
General
Corporate Realty Income Fund I, L.P. ("Registrant") is a Delaware limited
partnership organized on November 25, 1985 pursuant to the Delaware Revised
Uniform Limited Partnership Act. The general partners of Registrant are 1345
Realty Corporation, a Delaware corporation (the "Corporate General Partner"),
and Robert F. Gossett, Jr. (the "Individual General Partner") (collectively, the
"General Partners"). The limited partners of Registrant are hereinafter
collectively referred to as the "Limited Partners."
Registrant's business consists of owning and leasing to others the
properties described in Item 2 below. Starting in September 1996, Registrant
leveraged its properties and used the financing proceeds to acquire additional
commercial properties, as described below.
On March 26, 1986, Registrant commenced an offering (the "Offering") of
$80,000,000 of depositary units of limited partnership interest (the "Units").
Registrant terminated the Offering in September 1987, having issued 3,200,000
Units ($80,000,000) and received net proceeds from the Offering (after deduction
for organization and offering expenses of $5,948,103) aggregating $74,051,897.
Since the Offering, Registrant has invested aggregate funds in excess of
$100,000,000 (including $40,000,000 of financing proceeds) in acquiring and
improving its properties, which currently number seven.
Rental revenue from the following tenants at Registrant's properties each
accounted for more than 10% of Registrant's total rental revenue for each of the
years ended December 31, 1994, 1995 and 1996:
a. For 1994, The Austin Company ("Austin") as a tenant in the Austin Place
Building (19%); James River Corporation of Nevada, Inc. ("James River") as a
tenant in the James River Warehouse (20%); and Mesa Operating Limited
Partnership ("Mesa") as assignee of Tenneco Oil Company ("Tenneco"), the tenant
under the original lease for the Marathon Oil Building (24%). In addition, in
1994, Registrant received cash in the aggregate amount of $3,657,374 from the
redemption and sale of securities issued by National Gypsum Company ("Gypsum"),
a tenant in the Austin Place Building, pursuant to Gypsum's bankruptcy
reorganization plan. Registrant realized gain on Gypsum securities in the amount
of $930,750, which amount, if included in rental revenue, would have
approximated 11% of total rental revenue.
b. For 1995, GTE Directories Corporation ("GTE") as tenant for the
Directory Building (16%); Austin as a tenant in the Austin Place Building (16%);
James River as tenant in the James River Warehouse (16%); and Mesa, the tenant
under the original lease to Tenneco for the Marathon Oil Building (20%).
<PAGE>
c. For 1996, GTE as tenant for the Directory Building (25%); Austin as a
tenant in the Austin Place Building (29%); and James River as tenant in the
James River Warehouse (16%).
In 1996, Registrant first extended and increased its secured, revolving
line of credit and then replaced such financing with a new first mortgage
line-of-credit loan, the proceeds of which were used to finance the purchase of
an office building in New York, New York. In February and March, 1997,
Registrant sold the James River Warehouse and used the proceeds from such sale
to purchase an office building in San Antonio, Texas.
In March 1996, Registrant obtained an extension of its secured credit line
from PNC Bank, N.A., to September 30, 1996, and a $2,000,000 increase in the
maximum principal amount of such credit facility (to $9,800,000). Registrant
paid a loan fee in the amount of $24,500 in connection with this transaction.
This loan bore interest at a variable rate equal to one-half percent (0.5%)
above the lender's prime rate and required monthly payments of interest only.
The PNC Bank loan was secured by a first mortgage lien on the GE Medical Systems
Office Building, the Directory Building, the Austin Place Building, and the
James River Warehouse and a negative pledge agreement (an agreement not to sell
or encumber without the lender's consent) with respect to the Flatiron Building
and the Marathon Oil Building.
475 Fifth Avenue
On December 6, 1996, Registrant purchased the land, building and other
improvements commonly known as 475 Fifth Avenue, and situated in New York, New
York, from Metropolitan Life Insurance Company ("Met Life"), pursuant to the
terms of a Sale Agreement dated as of November 13, 1996. The property contains a
multi-tenant office building comprised of approximately 240,000 square feet and
is located on the southeast corner of 41st Street and Fifth Avenue in New York
City; Registrant owns fee title to 475 Fifth Avenue, subject to the lien of the
Fleet Bank loan, described below.
475 Fifth Avenue is a 24-story office building with approximately 20,000
square feet of retail space on the first floor, 210,400 square feet of office
space, and 4,400 square feet of basement space. As of March 6, 1997,
approximately 86% of the rentable square footage in the building was leased
(including approximately 86% of the office space, 85% of the retail space, and
54% of the basement space), at an average current base rent of approximately
$24.55 per square foot (approximately $22.37 per square foot of office space and
$50.86 per square foot of retail space). Following is a schedule of the
expirations of such leases.
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================================================================================
Avg. Current
Expiration Approximate Base Rent/
Year Square Feet % of Total Sq. Ft.
- --------------------------------------------------------------------------------
1997 25,075 10.7% $23.90
- --------------------------------------------------------------------------------
1998 55,750 23.7% $18.02
- --------------------------------------------------------------------------------
1999 7,740 3.3% $16.47
- --------------------------------------------------------------------------------
2000 7,375 3.1% $23.34
- --------------------------------------------------------------------------------
2001 21,300 9.1% $27.31
- --------------------------------------------------------------------------------
2003 1,780 0.8% $32.00
- --------------------------------------------------------------------------------
2004 40,925 17.4% $27.66
- --------------------------------------------------------------------------------
2005 24,470 10.4% $34.71
- --------------------------------------------------------------------------------
2006 14,825 6.3% $24.95
- --------------------------------------------------------------------------------
2007 2,085 0.9% $23.00
- --------------------------------------------------------------------------------
================================================================================
Registrant intends to seek increases in rental income from 475 Fifth Avenue
by leasing vacant space, attempting to convert some office space to additional
retail space, and upgrading the building's facilities and appearance. Over the
next five years, Registrant expects to refurbish the lobby, upgrade the heating
and electrical systems, replace the windows, and repair the roof and exterior
facade. The cost of such improvements and necessary tenant improvements is
expected to aggregate approximately $2,000,000 over such five-year period.
Registrant expects to initially fund such improvements from working capital and
loan drawdowns, and eventually from anticipated increased rental income from the
building.
475 Fifth Avenue is situated in the Grand Central district of the New York
City midtown market. Such district includes 84 buildings with approximately
49,800,000 aggregate rentable square feet, of which approximately 13.6% is
currently vacant. Asking rents in this district average approximately $35.50 per
square foot. The entire midtown market includes 261 buildings with approximately
165,800,000 aggregate rentable square feet, an approximate 11.9% vacancy rate,
and average asking rents of approximately $37.40 per square foot. Registrant
expects asking rents of approximately $27.75 (including electric charges) per
square foot for 475 Fifth Avenue.
The purchase price paid by Registrant for 475 Fifth Avenue, including
capitalized closing and related costs, was $27,439,998. The purchase price was
paid as follows: (i) the sum of $3,000,000.00 was paid as a downpayment prior to
closing; (ii) the
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3
<PAGE>
amount of $77,025.00 was credited to the purchase price in consideration of
Registrant indemnifying Met Life against a pending action in New York Supreme
Court; and (iii) the balance of $24,362,973.00 was paid at closing. The purchase
price was financed from proceeds of a first mortgage loan from Fleet Bank,
National Association, as described below.
The $27,439,998 purchase price for 475 Fifth Avenue has been allocated
$5,488,000 to the land and $21,951,998 to the building and improvements.
Fleet Bank Loan
On September 26, 1996, Registrant obtained a first mortgage line-of-credit
loan (the "Loan") from Fleet Bank, National Association (the "Bank") in the
initial maximum amount of $24,000,000. On such date, Registrant borrowed
$11,200,000 under the Loan and simultaneously satisfied in full the existing
$9,800,000 secured, revolving line-of-credit loan made by PNC Bank, N.A. The
balance of proceeds borrowed by Registrant on such date were used to fund the
Bank's front-end fee, a broker's commission, and other closing costs and to
provide approximately $500,000 in working capital.
On November 13, 1996, Registrant borrowed an additional $3,000,000 under
the Loan to fund the downpayment made to Met Life upon execution of the Sale
Agreement for the purchase of 475 Fifth Avenue. On December 6, 1996, the terms
of the Loan were amended, including an increase in the maximum loan facility to
$44,000,000, and the amount borrowed was increased to $40,000,000 to fund
Registrant's purchase of 475 Fifth Avenue and to pay additional front-end fees,
broker's commission, and closing costs. On March 17, 1997, the terms of the Loan
were further amended to add the Alamo Towers in San Antonio, Texas as a project
securing the Loan (see "Alamo Towers" below in this Item 1). As of March 26,
1997, the outstanding principal balance of the Loan was $39,715,200.
The Loan is evidenced by a Secured Promissory Note, a Loan Agreement, an
Environmental Compliance and Indemnification Agreement, a First Amendment of
Loan Agreement and Note, and a Second Amendment of Loan Agreement (collectively,
the "Loan Agreements"). The Loan is secured by a first mortgage lien, an
assignment of rents, a security agreement, and a fixture filing on and from each
of Registrant's properties, including the improvements, equipment, furnishings,
proceeds, books and records, and all payments related thereto, which consists of
the following seven properties: the GE Medical Systems Office Building; the
Directory Building; the Austin Place Building; the Flatiron Building; the
Marathon Oil Building; 475 Fifth Avenue; and the Alamo Towers.
The Loan matures on September 24, 2000 and the Bank is not required to fund
any advances after September 30, 1999. The Loan requires payment of a front-end
fee in an amount equal to one and one-half percent (1.5%) of the amount of the
total loan commitment,
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4
<PAGE>
which amounts have aggregated $660,000 to date. In addition, commencing March
26, 1997 and thereafter for each six month period ending September 30 and March
31, Registrant must pay an unused loan commitment fee equal to one-half percent
(0.5%) of the difference between the average maximum loan commitment for the
period and the average outstanding principal balance of the Loan for such
period.
The Loan bears interest on each advance of funds from the date of such
advance at the Bank's Peg Rate, plus one-half percent (0.5%) per annum or, if
Registrant so chooses, at the LIBOR rate (offered rates for Eurodollar deposits)
or other market rate offered to the Bank (any such rate, a "Fixed Rate"), plus
two percent (2.0%) per annum. The Peg Rate is the rate announced from time to
time by the Bank as a means of pricing some of its loans to customers (not
necessarily the lowest rate actually charged to any customer class or category).
Registrant may elect to pay interest based on a Fixed Rate on the whole or a
portion of the outstanding principal amount, upon notice to the Bank, but only
in amounts of at least $1,000,000 and in additional integral multiples of
$100,000. As of March 26, 1997, the Peg Rate was 8.5% (interest using this rate
would be at 9.0%) and the 180-day Fixed Rate was 5.9% (interest using this rate
would be at 7.9%). The aggregate outstanding balance of the Loan as of March 26,
1997 bears interest at rates ranging from 7.4375% (on $28,627,200) to 8.0% (on
$10,950,000) to 9.0% (on $138,000), all but the last of which reflect
Registrant's election to base interest on LIBOR rates.
The Loan requires monthly payments of interest plus principal payments
equal to 1/500th of the then outstanding principal balance. The Loan may be
prepaid at any time, on notice, in whole or in part (a minimum of $1,000,000 and
additional integral multiples of $100,000). Any such prepayment will be without
premium or penalty with respect to funds bearing interest based on the Peg Rate
or, if the prepayment is made on the last day of the applicable interest period,
with respect to funds bearing interest based on a Fixed Rate; however, a
prepayment at any other time of funds bearing interest based on a Fixed Rate
will require payment of a breakage fee, which guarantees the Bank a fixed rate
yield maintenance tied to United States Treasury obligations for the period from
the date of prepayment to the end of the applicable interest period. Amounts
repaid to the Bank may be reborrowed by Registrant provided, however, that
amounts repaid in monthly amortization payments and amounts repaid on account of
475 Fifth Avenue may not be reborrowed.
Any payments not received by the Bank within 10 days after the due date
will incur a late charge equal to four percent (4%) of the amount of such
payment. Overdue amounts, whether at maturity, by acceleration, or otherwise
will bear interest at a rate equal to four percent (4%) above the otherwise
applicable interest rate.
The Loan Agreements contain continuing covenants regarding Registrant's
financial condition and the conduct of its operations. Registrant's debt service
coverage ratio (the ratio of cash from
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5
<PAGE>
operations to a constant loan amortization payment) cannot be less than 1.40 to
1.0 and its loan to value ratio (the ratio of the outstanding principal balance
of the Loan to the appraised value of its properties) cannot exceed fifty-five
percent (55%). In addition, Registrant must maintain a liquid net worth (cash,
short-term investments, and marketable securities) of at least $2,000,000. The
Loan Agreements also provide that Registrant may distribute to its partners up
to 90% of the sum of its operating net income plus depreciation and
amortization. Registrant must also obtain the Bank's consent, not to be
unreasonably withheld or delayed, to any lease of 10,000 or more rentable square
feet (5,000 square feet for 475 Fifth Avenue and Alamo Towers).
The Bank's mortgage lien against any of Registrant's properties will be
released only upon payment of an amount equal to 110% of the loan amount
allocated to such property. In addition, such lien will be released only if
Registrant's remaining properties satisfy the debt service coverage ratio and
loan to value ratio.
Upon the occurrence of an event of default under the Loan Agreements (which
includes the failure to make any payment within 10 days of the due date thereof
and a failure to comply with its financial covenants which continues for 60
days), the Bank may enforce one or more of its remedies, including the right to
(i) declare all principal and interest on the Loan to be due and payable
immediately, (ii) require any or all of Registrant's properties (including all
equipment, fixtures, agreements, and other rights and interests relating
thereto) to be sold at auction to the highest bidder, and (iii) collect any and
all rents from the properties.
Registrant has also agreed to indemnify and hold harmless the Bank and its
officers, directors, employees, agents, representatives, contractors and
subcontractors, and their respective successors and assigns from and against any
and all claims, liability, costs, and expenses arising out of the presence
and/or clean-up of hazardous materials on or affecting Registrant's properties.
James River Warehouse
On February 28, 1997, Registrant sold the land, buildings, and other
improvements commonly known as the James River Warehouse, and situated in
Woodland, California, to Pacific Gulf Properties, Inc., pursuant to the terms of
a Purchase and Sale Agreement dated as of February 5, 1997, as amended on
February 21, 1997. The James River Warehouse contains approximately 570,000 net
rentable square feet, is used for general warehousing, distribution, and office
purposes, and is net leased to James River Corporation of Nevada, Inc.
The sale price for the James River Warehouse was $12,875,000, exclusive of
closing costs and commissions aggregating approximately $225,313 which were paid
by Registrant. The purchase price was paid as follows: (i) the sum of
$300,000.00 was paid as
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an earnest money deposit prior to closing; (ii) the amount of $131,998.00 was
credited to the purchase price on account of deferred maintenance required for
the property; and (iii) the balance of $12,443,002.00 was paid at closing.
Registrant acquired the James River Warehouse in October 1987 for a
purchase price of approximately $14,551,456, inclusive of acquisition fees. At
the time of its sale, Registrant had a tax basis of approximately $11,500,000 in
this property and resulting gain for tax purposes of approxmately $1,000,000.
The net proceeds of the sale of the James River Warehouse have been reinvested
in the Alamo Towers property described below.
Alamo Towers
On March 17, 1997, Registrant purchased the land, building and other
improvements commonly known as the Alamo Towers, and situated in San Antonio,
Texas, from St. Paul Properties, Inc. pursuant to the terms of a Purchase and
Sale Agreement dated as of January 28, 1997 and amended on February 19, 1997.
The Alamo Towers contains a multi-tenant office building comprised of
approximately 196,000 square feet. Registrant owns fee title to the Alamo
Towers, subject to the lien of the Loan.
The Alamo Towers is a 9-story office building with approximately 195,000
square feet of office space and 900 square feet of basement space. As of
February 18, 1997, approximately 75% of the rentable square footage in the Alamo
Towers was leased, at an average current base rent of approximately $11.93 per
square foot. Additional space aggregating approximately 9% of the rentable
square footage was used by the prior owner as non-rented offices for its own
use, which space will be largely available to Registrant for leasing. Following
is a schedule of the expirations of such leases.
================================================================================
Avg. Current
Expiration Approximate Base Rent/
Year Square Feet % of Total Sq. Ft.
- --------------------------------------------------------------------------------
1997 28,632 14.6% $10.45
- --------------------------------------------------------------------------------
1998 11,824 6.0% $11.40
- --------------------------------------------------------------------------------
1999 41,860 21.4% $12.35
- --------------------------------------------------------------------------------
2000 29,167 14.9% $13.10
- --------------------------------------------------------------------------------
2001 29,045 14.8% $11.90
- --------------------------------------------------------------------------------
2004 6,889 3.5% $11.50
- --------------------------------------------------------------------------------
================================================================================
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Registrant does not expect the property to require significant expenditures
for capital improvements over the next five years.
The San Antonio office market includes approximately 18,300,000 aggregate
rentable square feet, of which approximately 12% is currently vacant. Asking
rents in this market range from approximately $12-$15 per square foot. The
north-central San Antonio market includes approximately 3,450,000 aggregate
rentable square feet, of which approximately 10% is vacant and for which asking
rents range from approxmately $13 to $15 per square foot.
The purchase price paid by Registrant for the Alamo Towers, including
capitalized closing and related costs, was $12,002,375. The purchase price was
paid as follows: (i) the sum of $200,000.00 was paid as a deposit prior to
closing; and (ii) the balance of $11,802,375.00 was paid at closing. The
purchase price was financed from proceeds of the sale of the James River
Warehouse, as described above.
The $12,002,375 purchase price for the Alamo Towers has been allocated
$2,840,000 to the land and $9,162,375 to the building and improvements.
Financing Policies
The General Partners expect to approximate Registrant's original intention
of a loan to value ratio of 50%. Accordingly, it is expected that Registrant's
total borrowings will approximate 50% of the sum of (i) the appraised values of
its five remaining original properties plus (ii) the purchase price of
additional properties acquired by Registrant. Registrant is not limited by its
Partnership Agreement as to borrowing for any individual property; the aggregate
borrowings on all properties may not exceed an amount equal to the sum of (x)
60% of the aggregate purchase price of all properties which are not refinanced
plus (y) 80% of the aggregate value of all refinanced properties. As of March
17, 1997, Registrant had a loan to value ratio of approximately 47% to 52%.
The Loan has enabled Registrant to acquire additional properties, but has
increased the risk of loss on its properties. To be profitable, Registrant's
properties must generate cash flow in amounts sufficient to not only cover
operating expenses but also to pay all financing costs.
Registrant's objectives in making its investments continue to be to (i)
preserve and protect Registrant's capital; (ii) provide long term capital
appreciation, generating long term capital gains for federal income tax purposes
upon sale of the properties; (iii) build up equity through the reduction of
mortgage loans encumbering the properties; and (iv) provide cash distributions
from operations which may be partially tax-sheltered. There is no assurance that
these objectives will be achieved.
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Competition
The Directory Building is fully leased to a single tenant on a net lease or
substantially equivalent basis and does not face competition from other
properties during the terms of such lease. The Austin Place Building and the
Flatiron Building are also currently fully leased. However, upon termination of
these and any other leases, and for any of Registrant's other properties,
Registrant does, and will continue to, compete with other properties for
tenants. Depending upon market conditions and occupancy rates at the time and
place of any vacancies in Registrant's properties, there is currently and there
may be, in the future, intense competition in obtaining tenants to fill such
vacancies. Furthermore, such competition has resulted and may result, because of
reduced rental rates and required concessions to tenants, in decreases in the
rental revenue received by Registrant and capital outlays necessary to fund
tenant improvements. See Item 2 - "Properties" for a discussion of market
conditions in the areas in which Registrant currently competes for tenants.
Employees
Registrant currently employs six persons, which number is expected to
increase to 14 within the next month as a result of the acquisition of the Alamo
Towers. The business of Registrant is managed by the General Partners. See Item
10 - "Directors and Executive Officers of the Registrant" and Item 13 - "Certain
Relationships and Related Transactions."
Item 2. Properties.
GE Medical Systems Office Building
On July 10, 1986, Registrant acquired the GE Medical Systems Office
Building, located in Monterey Park, California, for approximately $4,182,000,
inclusive of acquisition fees. Registrant owns fee title to the GE Building and
its 90,000 square feet of underlying land, subject to the lien of the Loan (See
Item 1. - "Business-Fleet Bank Loan"). The property was built in 1985 and
contains 20,250 net rentable square feet, of which approximately 60% is office
space and the remainder is warehouse space. General Electric Company ("GE")
leases 10,600 square feet in the building, on a net lease basis, until October
31, 2000. Annual net rent is $95,400 ($9.00 per square foot); GE also reimburses
Registrant for its proportionate share of operating expenses. In 1996,
Registrant reimbursed GE approximately $125,000 for tenant improvements
necessitated by GE's decision to vacate the other 9,650 square feet in the
building. Registrant is seeking a tenant for the vacant portion (47.7%) of the
property. The building contains an unusually high percentage of office space for
a mixed use property, but Registrant prefers to avoid reconfiguring the space,
both to avoid the construction cost and to obtain the higher rent for office
space.
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Market conditions in the Monterey Park area have improved recently but
still have declined from those prevailing at the time GE executed its initial
lease for the building. The vacancy rate for commercial properties in such area
approximates 17% to 18% for office buildings and 6% to 7% for industrial space.
The GE Building is situated next to a 200,000 square foot Public Storage
facility which, like the GE Building, consists of a front office with warehouse
space in the rear. Such facility is currently 92% occupied; rents approximate
$8.50 per square foot. Rents for mixed office/warehouse space in this area
generally approximate $7.50 to $8.25 per square foot. Registrant can expect to
fund tenant improvements and leasing commissions in connection with leasing any
vacant space in the GE Building. Such expenditures are expected to be funded out
of working capital or, if necessary, out of loan proceeds. See Item 7 -
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources."
The Directory Building (formerly, the IBM Building)
On October 27, 1986, Registrant acquired the Directory Building, located in
Las Colinas, Texas, for a purchase price of $24,580,375, inclusive of
acquisition fees. Registrant owns fee title to the Directory Building and its
6.67 acres of underlying land, subject to the lien of the Loan. The Directory
Building was built in 1982 and contains approximately 152,100 net rentable
square feet (reduced from 154,300 square feet during IBM's tenancy).
The building is 100% leased to GTE pursuant to a lease dated as of April
20, 1994, as subsequently amended by amendments dated as of July 29, 1994 and as
of February 22, 1995. The initial term of the lease expires on September 30,
2000, subject to a five-year renewal option at a rate equal to 95% of the then
market rate.
The amended lease requires approximate monthly rent of $167,500 through
August 31, 1997; and $173,800 from September 1, 1997 through September 30, 2000.
GTE must also pay additional rent equal to excess electric charges and operating
expenses over base levels.
In connection with the GTE lease, Registrant has expended approximately
$2,628,000 for tenant improvements.
The Las Colinas office market includes approximately 11,860,000 leasable
square feet, of which approximately 95% was leased as of December 31, 1996.
Weighted average rental rates for such properties approximate $19.50 per square
foot.
Austin Place Building
On December 30, 1986, Registrant acquired the Austin Place Building, a
two-wing office building located in South Plainfield, New Jersey, for a purchase
price of approximately $16,473,000, inclusive of acquisition fees. Registrant
owns fee title to the
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Austin Place Building and its underlying five acres of land, subject to the lien
of the Loan. The property was built in 1986 and contains approximately 105,000
net rentable square feet for use as a multi-tenant facility (reduced from
108,000 square feet as a single tenant facility).
As of March 15, 1997, the property is fully leased, with 45,700 square feet
leased to Austin (as discussed below) and the remainder at an average current
rent of approximately $17.20 per square foot. Such other leases expire on June
30, 1997 (approximately 4,100 square feet), February 1998 (approximately 17,300
square feet), December 2000 (approximately 17,900 square feet), and May 31, 2007
(approximately 21,650 square feet). South Plainfield is included in the Route
287 submarket (approximately 6,900,000 square feet of which 17% is vacant), the
Somerset County area (approximately 10,260,000 square feet, of which 15% is
vacant), and the Central New Jersey Profit Center (approximately 45,840,000
square feet, of which 15% is vacant). Average rents for office space in such
area approximate $17.50 to $18.45 per square foot. Registrant has expended
approximately $2,205,000, including approximately $10,000 in 1996, for tenant
improvements on the space originally leased to Gypsum.
Austin's lease is for 45,700 square feet and expires on December 31, 2001.
It requires monthly rent payments of $92,009, adjusted to reflect consumer price
index changes. Austin's lease also requires it to pay Registrant an amount equal
to the operating costs of its allocable share of the property. Austin has
vacated its space but has continued to make its lease payments in full. Austin
has approached Registrant to discuss terminating its lease; because Austin's
lease requires rent payments at a rate which is approximately 75% above
prevailing rates, Registrant would require a substantial payment from Austin to
terminate such lease. Any such payment would be used to fund tenant improvements
and offset lower rents from any replacement leases.
The James River Warehouse (formerly, the Crown Zellerbach Warehouse)
On February 28, 1997, Registrant sold the James River Warehouse (formerly,
the Crown Zellerbach Warehouse). See Item 1 - "Business-James River Warehouse."
Flatiron Building (formerly, the Cadnetix Building)
On January 5, 1988, Registrant acquired the Flatiron Building, located in
Flatiron Industrial Park, Boulder, Colorado, for $9,003,085, inclusive of
acquisition fees. Registrant owns fee title to the Flatiron Building and its 5
acres of underlying land, subject to the lien of the Loan. The property contains
approximately 96,070 net rentable square feet for use as a multi-tenant facility
(reduced from 102,000 square feet as a single tenant facility).
c:\crif\10-K.97
11
<PAGE>
As of March 15, 1997, Registrant has rented all available space in the
building to various tenants pursuant to leases providing for an average current
rent of approximately $9.05 per square foot (exclusive of expenses). Such leases
expire in 1997 (approximately 3,370 square feet), in 1998 (approximately 81,880
square feet), and in 2001 (approximately 10,820 square feet). Market conditions
in the Boulder area remain favorable for owners of commercial buildings. The
market for the Boulder area contains approximately 6.5 million square feet of
commercial space of which approximately 5% is vacant. Average rents for office
space in such area range from approximately $8.50 to $12.00 per square foot,
exclusive of expenses. Registrant has expended approximately $455,000, none of
which was in 1996, for tenant improvements for the Flatiron Building.
Marathon Oil Building (formerly, the Tenneco Building)
On March 21, 1988, Registrant acquired the Marathon Oil Building (formerly,
the Tenneco Building), an office building located in Oklahoma City, Oklahoma,
for approximately $10,736,200, inclusive of acquisition fees. Registrant owns
fee title to the Marathon Oil Building with its 6.1 acres of underlying land,
subject to the lien of the Loan. The property contains 90,925 net rentable
square feet on two floors, plus a 10,016 square foot basement.
Marathon and its affiliate, Delhi Gas Pipeline Corporation ("Delhi"), lease
62,625 square feet (including 4,344 in the basement) and 24,704 square feet
(including 567 in the basement), respectively, in the building. Marathon's lease
expires in 2001, subject to two five-year renewal options; Delhi's lease expires
in 1998, with an option to extend for three additional years.
Annual rent under such leases is approximately $750,600 ($8.75 per square
foot, plus $6.00 per square foot for basement space). Marathon and Delhi must
also pay additional rent equal to their proportionate share of any increases in
operating costs of the building after 1996. Registrant funded tenant
improvements of approximately $350,000 for Marathon and Delhi in 1996.
Registrant leased approximately an additional 5,600 square feet in the
building in January 1997 for a five-year term at a rent of $11.00 per square
foot. The remaining space (approximately 3.2% of the office space, plus
approximately 51% of the basement) is vacant and Registrant is seeking a tenant
for such space.
Market conditions in the northwest section of Oklahoma City have recently
improved, although they have declined from those prevailing at the time Tenneco
executed its lease for the building. Such market contains approximately 4.8
million square feet of commercial space of which approximately 8% is vacant.
Average rents for commercial space range from $9.00 to $17.00 per square foot.
Registrant has incurred tenant improvements of approximately $71,000 in 1997 and
can expect to fund tenant improvements and leasing commissions in connection
with leasing any remaining vacant
c:\crif\10-K.97
12
<PAGE>
space in the Marathon Oil Building. Such expenditures are expected to be funded
out of working capital or, if necessary, out of loan proceeds. See Item 7 -
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources."
475 Fifth Avenue
On December 6, 1996, Registrant acquired 475 Fifth Avenue in New York, New
York. See Item 1 - "Business - 475 Fifth Avenue."
Alamo Towers
On March 17, 1997, Registrant acquired the Alamo Towers in San Antonio,
Texas. See Item 1 - "Business-Alamo Towers."
Item 3. Legal Proceedings.
Registrant does not know of any material legal proceedings, other than
ordinary immaterial routine litigation incidental to its business, pending
against or involving Registrant or any of its properties.
Item 4. Submission of Matters to a Vote of Security-Holders.
There were no matters submitted to a vote of Limited Partners or
Unitholders and none were required to be submitted during the fourth quarter of
the fiscal year covered by this report through the solicitation of proxies or
otherwise.
c:\crif\10-K.97
13
<PAGE>
PART II
Item 5. Market for Registrant's Securities and Related Security- Holder Matters.
The Units of Registrant are not traded in any established public trading
market. Because of certain provisions of the Internal Revenue Code of 1986, as
amended (the "Code"), as described below, the General Partners have not applied
to include the Units for quotation or listing on any national or regional stock
exchange or any other established securities market.
The General Partners have adopted a Unit Repurchase Plan, pursuant to which
Registrant may, in its discretion, purchase outstanding Units. Any such
purchases are made at prices no higher than the lowest current independent offer
quotation. During 1996, Registrant repurchased 84,778 Units at a price of $10.75
per Unit.
Provisions found in Section 7704 of the Code have an adverse impact on
investors in a "publicly traded partnership" ("PTP"). A PTP is a partnership
whose interests are traded on an established securities market or readily
tradeable on a secondary market (or the substantial equivalent thereof). If
Registrant were classified as a PTP, (i) Registrant may be taxed as a
corporation or (ii) income derived from an investment in Registrant would be
treated as non-passive income.
The IRS has established alternative safe harbors that allow interests in a
partnership to be transferred or redeemed in certain circumstances without
causing the partnership to be characterized a PTP. Although the Units are not
listed or quoted for trading on an established securities market, it is possible
that transfers of Units could occur in a secondary market in sufficient amount
and frequency to cause Registrant to be treated as a PTP. To the extent that any
proposed transfer of Units in secondary market transactions would exceed a safe
harbor volume limitation, the proposed transfer will be restricted pursuant to a
policy adopted by Registrant. Such a restriction could impair the ability of an
investor to liquidate its investment quickly and thus, possibly prevent the
reclassification of Registrant as a corporation pursuant to Code Section 7704.
It is anticipated that Registrant's policy will remain in effect until such
time, if ever, as further clarification of Code Section 7704 permits Registrant
to lessen the scope of its policy.
The General Partners, if so authorized, will take such steps as are
necessary, if any, to prevent the reclassification of Registrant as a PTP.
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14
<PAGE>
As of March 25, 1997, there were 3,068 Unitholders of record.
The following represents per Unit cash distributions to investors for the
fiscal years ended December 31, 1996 and 1995.
Distribution
Quarter Ended Per Unit Payment Date
- ------------- -------- ------------
December 31, 1996 $ 0.30 February 1997
September 30, 1996 $ 0.30 November 1996
June 30, 1996 $ 0.30 August 1996
March 31, 1996 $ 0.30 May 1996
December 31, 1995 $ 0.30 February 1996
September 30, 1995 $ 0.30 November 1995
June 30, 1995 $ 0.30 August 1995
March 31, 1995 $ 0.30 May 1995
There are no material legal restrictions upon Registrant's present or
future ability to make distributions in accordance with the provisions of
Registrant's Agreement of Limited Partnership, as amended through the date of
this report. However, the Loan Agreements limit distributions to 90% of the sum
of cash from operations, depreciation and amortization. See, however, Item 7
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" for a discussion of economic conditions affecting Registrant's
ability to make distributions in the future.
Item 6. Selected Financial Data.
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31, December 31,
1996 1995 1994 1993 1992
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Operating
Revenues $ 9,142,369 $ 9,827,431 $ 8,957,620 $ 11,205,823 $ 9,989,266
Net Income $ 677,914 $ 2,008,688 $ 2,450,563 $ 5,060,250 $ 3,655,955
Net Income
per Unit (1) $ 0.22 $ 0.62 $ 0.76 $ 1.57 $ 1.13
Total Assets $102,983,279 $ 74,460,139 $ 76,388,992 $ 76,891,703 $ 76,939,783
Long-Term
Obligations $ 39,955,200 $ 7,800,000 $ 7,800,000 $ 7,800,000 $ 7,800,000
Distributions
per Unit
(1)(2) $ 1.20 $ 1.20 $ 1.00 $ 1.40 $ 1.90
- ---------
</TABLE>
c:\crif\10-K.97
15
<PAGE>
(1) Per Unit numbers are based on 3,200,000 Units for all years except 1996 and
1995, which use a weighted average number of Units of 3,087,170 and
3,184,222, respectively.
(2) Each year's distributions include funds distributed after the end of the
year which are attributable to that year.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Liquidity and Capital Resources
At December 31, 1996, Registrant had cash and receivables of approximately
$2,565,000 and a liquid net worth (excess of current assets over current
liabilities) of approximately $535,000. Registrant expects sufficient cash flow
to continue to be generated from operations to meet its current operating and
debt service requirements on a short-term and long-term basis. The Loan also
provides a source of additional capital should Registrant's working capital and
cash flow prove inadequate.
The expiration of the GE Medical Systems Office Building lease in October
1995 and the Marathon Oil Building lease in February 1996 placed additional
demands on Registrant's capital resources and liquidity. Registrant was obliged
to fund tenant improvements and leasing commissions to re-lease such buildings.
Registrant expended approximately $489,000 on tenant improvements during 1996
for such buildings. Registrant's acquisition of 475 Fifth Avenue and the Alamo
Towers provide the opportunity to increase rental revenues but at the cost of
tenant improvements and leasing commissions for new tenants. In addition,
Registrant expects to make significant capital improvements to 475 Fifth Avenue
over the next five years. See "Item 1. Business - 475 Fifth Avenue."
To date, Registrant has funded its capital requirements from the Loan and,
previously, out of working capital and through reductions in distributions to
partners. Registrant's quarterly distribution to partners for each of the four
quarters of 1996 was $0.30 per Unit. Registrant intends to maintain this level
of distributions through 1997 and, if possible, thereafter. However, to the
extent Registrant's sources of capital are inadequate for its requirements,
Registrant may need to reduce or suspend distributions to partners, incur
additional indebtedness, and/or dispose of one or more of its properties.
The Loan has provided Registrant with available capital to acquire
properties, fund improvements and leasing commissions, repurchase outstanding
Units, and otherwise fund capital requirements. The cost of such financing
ultimately must be offset by increased property revenues or Registrant's
operations and capital will be compromised. Upon maturity of the Loan in 2000,
Registrant anticipates satisfying the Loan out of the proceeds of a refinancing
or a sale of assets.
Registrant has used working capital reserves provided from the net proceeds
of the Offering, loan proceeds, and any undistributed
c:\crif\10-K.97
16
<PAGE>
cash from operations as its primary source of liquidity. Registrant generally
intends to distribute its distributable cash from operations to Unitholders.
However, such distributions are subject to suspension or reduction to meet
capital requirements and are also limited by the Loan Agreements to 90% of cash
from operations plus depreciation and amortization.
Results of Operations
1996 versus 1995
Rental revenues in 1996 decreased slightly from 1995 primarily as a result
of the expiration of Tenneco's original lease for the Marathon Oil Building in
February 1996 and the subsequent leasing of less than all of such space to
Marathon and Delhi at lower rents. Other income dropped significantly from 1995
to 1996, reflecting the receipt in 1995 of $227,000 of other income attributable
to Gypsum (a former tenant of the Austin Place Building) and Registrant's
receipt in 1995 of a large real estate tax refund attributable to the Austin
Place Building.
Interest expense in 1996 increased from 1995, primarily because of the
replacement of the PNC Bank loan with the greater amount of the Fleet Bank loan.
Depreciation increased because of additional tenant improvements made by
Registrant and the purchase in December 1996 of 475 Fifth Avenue. Amortization
increased in 1996 primarily due to financing costs incurred in connection with
the Fleet Bank loan. The acquisition of 475 Fifth Avenue in December 1996 is
largely responsible for the increase in property operation expenses.
Professional fees decreased in 1996 in comparison to the increased level of due
diligence investigations of possible property acquisitions in 1995. General and
administrative expenses increased in 1996 primarily due to significant due
diligence expenses incurred by Registrant in 1996 in investigating possible
property acquisitions which were not ultimately consummated.
Net income was $677,914 in 1996 as compared to $2,008,688 in 1995. After
adjusting for non-cash items (principally deferred revenue, depreciation, and
amortization), operations generated cash flows of approximately $3,620,000 in
1996 and $4,160,000 in 1995.
1995 versus 1994
Rental revenues in 1995 increased from 1994 primarily as a result of GTE's
full occupancy of the Directory Building in 1995 as contrasted to the vacancy
and partial occupancy of such building in 1994. Such increase in rental revenues
was partially offset by the recognition in 1994 of approximately $958,000 in
gain from Gypsum securities as compared to the receipt in 1995 of approximately
$227,000 of other income attributable to Gypsum.
Interest expense in 1995 increased over 1994, reflecting higher rates of
interest under the Loan. Depreciation increased because of additional tenant
improvements made by Registrant. Property operating expenses increased from 1994
to 1995 primarily
c:\crif\10-K.97
17
<PAGE>
because the Directory Building was not fully utilized in 1994. Management fees
increased in 1995, reflecting the increase in adjusted cash from operations and
the fees attributable to replacement leases. Professional fees increased in 1995
primarily as a result of due diligence investigations of possible property
acquisitions following Unitholder approval of Registrant's plan to acquire
additional properties. General and administrative expenses increased in 1995,
primarily reflecting inclusion of Registrant's employees for a full year in
1995.
Net income was $2,008,688 in 1995 as compared to $2,450,563 in 1994. After
adjusting for non-cash items (principally deferred revenue, depreciation, and
amortization), operations generated cash flows of approximately $4,160,000 in
1995 and $2,202,000 in 1994.
Inflation
In the past, inflation has not had a material impact on Registrant's
operations or financial condition, as certain leases of Registrant's properties
provide for increases in rents based on changes in the consumer price index, and
other leases provide lease payments that escalate over time. Registrant's
properties with performing leases are protected by arrangements whereby the
tenants pay to Registrant an amount equal to all or a portion of the operating
costs of the properties, with Registrant's share of expenses, if any, subject to
a predetermined limit. These arrangements help to insulate Registrant from the
effects of any increases in operating costs. However, to the extent that there
is vacant space or nonperforming leases at any of the Registrant's properties,
Registrant lacks this protection against inflation, particularly with regards to
increased expenses that are not reimbursed.
Item 8. Financial Statements and Supplementary Data.
See list of Financial Statements and Financial Statement Schedules at page
F-2, filed as part of this report.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
c:\crif\10-K.97
18
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant.
Registrant has no officers or directors. The General Partners manage and
control substantially all of Registrant's affairs and have general
responsibility and ultimate authority in all matters affecting Registrant's
business.
The Individual General Partner is Robert F. Gossett, Jr. The Corporate
General Partner is 1345 Realty Corporation. All of the outstanding capital stock
of 1345 Realty Corporation is owned by the Individual General Partner and his
wife.
The directors and executive officers of the Corporate General Partner are
as follows:
Officer/
Director
Name Age Position Since
---- --- -------- -----
Robert F. Gossett, Jr. 53 President, Treasurer
and Director 1994
Pauline G. Gossett 53 Secretary 1994
Information with respect to the Individual General Partner and with respect
to the above officers and directors is set forth below:
Robert F. Gossett, Jr., the Individual General Partner since 1985, is
Managing Director of Vance Capital Corporation (1981 to present), a real estate
management and finance company. Between 1978 and 1981, Mr. Gossett served as
Executive Vice President and Director of Loeb Capital Corporation. From 1974
until 1978, he was a Vice President of Oppenheimer Properties, Inc. and, between
1969 and 1974, was associated with the Investment Banking Division of Merrill,
Lynch, Pierce, Fenner & Smith, Inc. He received a B.A. degree from the
University of Texas, a J.D. degree from Georgetown University, and an M.B.A.
degree from the University of Pennsylvania. He is a member of the Texas Bar.
Pauline G. Gossett, the Secretary of the Corporate General Partner, is a
stockholder and Director of Vance Capital Corporation (1981 to present). Mrs.
Gossett received an Associate of Arts degree from Briarcliff College. Mrs.
Gossett is the wife of Robert F. Gossett, Jr.
Registrant employs the following employees who make significant
contributions to the business of Registrant:
Employee
Name Age Position Since
---- --- -------- -----
Howard F. Husum 47 Executive Director 1994
Madeline Matlak 31 Fund Administrator 1994
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19
<PAGE>
Howard F. Husum is the Executive Director of the Registrant. Mr. Husum
formerly practiced law in New York City and acted as General Counsel to Shaheen
Natural Resources Company, Inc., an independent international oil company (1981
through 1987), and as General Counsel and Vice President of Aeronautics and
Astronautics Services, Inc., an international aircraft leasing company (1990
through 1993). Mr. Husum was in private practice as an attorney from 1987 to
1990. He graduated cum laude from Harvard College and earned a law degree from
The University of Chicago Law School. He is a member of the New York Bar.
Madeline Matlak is the Fund Administrator of the Registrant. Mrs. Matlak
was formerly employed as a Fund Administrator in the Direct Investment
Department of Smith Barney, Inc. (1989 through 1994).
Based solely upon its review of copies of Forms 3 received by it during
1996, and written representations from reporting persons that no Forms 5 were
required for such persons for 1996, Registrant believes that all filing
requirements applicable to its General Partners and the directors and officers
of the Corporate General Partner pursuant to Section 16(a) of the Securities
Exchange Act of 1934, as amended, for 1996 and prior years were complied with on
a timely basis except as previously reported.
Item 11. Executive Compensation.
Registrant is not required to and did not pay remuneration to the officers
and directors of the Corporate General Partner. However, the General Partners
and/or their affiliates receive compensation for services performed for
Registrant.
Summary Compensation Table
<TABLE>
<CAPTION>
Share of
Adjusted Cash Management Leasing Expense
Name Year from Operations Fees Commissions Reimbursement
- ---- ---- --------------- ---- ----------- -------------
<S> <C> <C> <C> <C> <C>
Corporate General
Partner 1996 $ 30,071 $452,415 $ 88,467 $132,829
Individual General
Partner 1996 $ 7,518 $113,104 $ 22,117 $ 33,207
Corporate General
Partner 1995 $ 31,006 $445,625 $194,490 $106,714
Individual General
Partner 1995 $ 7,752 $111,406 $ 48,623 $ 26,679
Corporate General
Partner 1994 $ 25,859 $253,670 $613,355 $ 58,540
Individual General
Partner 1994 $ 6,465 $ 63,417 $153,339 $ 7,509
</TABLE>
See Item 13 - "Certain Relationships and Related Transactions" for a
discussion of the above compensation.
c:\crif\10-K.97
20
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management.
As of March 15, 1997 no person was known by Registrant to be the beneficial
owner of more than five percent (5%) of the outstanding Units of Registrant.
As of March 15, 1997, neither the Individual General Partner nor the
Corporate General Partner nor any of its directors or officers owned any Units
of Registrant.
Robert F. Gossett, Jr., the Individual General Partner and an officer and
director of the Corporate General Partner, and Pauline G. Gossett, an officer of
the Corporate General Partner, own all of the outstanding capital stock of the
Corporate General Partner.
Item 13. Certain Relationships and Related Transactions.
Registrant has and will continue to have certain relationships with the
General Partners and their affiliates as discussed below.
The General Partners received $37,589 ($30,071 to the Corporate General
Partner and $7,518 to the Individual General Partner) as their allocable share
(1%) of adjusted cash from operations with respect to the year ended December
31, 1996. For the year ended December 31, 1996, $6,779 (1%) of Registrant's net
income was allocated to the General Partners ($5,423 to the Corporate General
Partner and $1,356 to the Individual General Partner).
The General Partners or their affiliates are also entitled to receive: a
partnership management fee for managing the affairs of Registrant, equal to 7%
of adjusted cash from operations less the asset management fee; an asset
management fee for managing Registrant's funds which are not invested in
properties, equal to 0.5% per annum of the average amount of outstanding funds
during each calendar month which are not otherwise invested in properties; and a
property management fee for property management services for Registrant's
properties, equal to the normal and competitive fees customarily charged by
unaffiliated parties rendering similar services in the same geographic area, not
to exceed 1% of the annual gross revenues for leases with terms of ten years or
more or 6% of the annual gross revenues for replacement leases. During the year
ended December 31, 1996, the General Partners earned and were paid an aggregate
of $565,519 of such management fees ($452,415 to the Corporate General Partner
and $113,104 to the Individual General Partner). At December 31, 1996, all of
such fees had been paid.
The General Partners are also entitled to receive leasing commissions in
connection with leasing, releasing or leasing related services performed on
behalf of the Registrant in connection with the negotiation of tenant leases.
Such fees are
c:\crif\10-K.97
21
<PAGE>
computed at a rate equal to 3% of the gross revenue for the first five years of
each lease signed where the General Partners performed such leasing services.
During the year ended December 31, 1996, the General Partners were paid an
aggregate of $110,584 ($88,467 to the Corporate General Partner and $22,117 to
the Individual General Partner).
During the year ended December 31, 1996, the General Partners were also
entitled to reimbursement for expenses incurred in connection with Registrant's
operations aggregating $166,036 ($132,829 to the Corporate General Partner and
$33,207 to the Individual General Partner).
c:\crif\10-K.97
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<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a)(1), (2) See page F-2.
<TABLE>
<CAPTION>
Sequential
Page
Number
------
<S> <C>
(a)(3) Exhibits:
3. Certificate of Limited Partnership, incorporated by reference
to Exhibit 4 to Registration Statement No. 33-2258 (the
"Registration Statement").
4.(a) Amended and Restated Agreement of Limited Partnership dated as
of July 24, 1995, incorporated by reference to Exhibit 4 to
Registrant's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1995.
10.(a) Property Management Agreement, incorporated by reference to
Exhibit 10B to the Registration Statement.
(b) Lease for Los Angeles District Sales and Service Office,
Monterey Park, California, dated as of December 15, 1984
between James E. Pohrer & Associates and General Electric
Company, incorporated by reference to Exhibit 10(e) to Form 8,
Amendment No. 1 to Registrant's Current Report on Form 8-K
Dated July 10, 1986.
</TABLE>
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23
<PAGE>
<TABLE>
<CAPTION>
Sequential
Page
Number
------
<S> <C>
(c) Lease Amendment dated October 31, 1989 by and between
Registrant and General Electric Company, incorporated by
reference to Exhibit 10(c) to Registrant's Report on Form 10-K
for the year ended December 31, 1989.
(d) Lease dated as of December 30, 1986 by and between Registrant
and Austin, incorporated by reference to Exhibit 10(b) to
Registrant's Current Report on Form 8-K Dated December 30,
1986.
(e) Management Agreement dated January 5, 1988 by and between
Registrant and Colorado Management Group, incorporated by
reference to Exhibit 10(e) to Registrant's Current Report on
Form 8-K Dated January 5, 1988.
(f) Lease dated as of April 20, 1994 between Registrant and GTE.(1)
(g) Amendment No. 1 to Lease dated as of July 29, 1994 between
Registrant and GTE.(1)
</TABLE>
- --------
(1) Incorporated by reference to Exhibits 10(y), (z), and (aa) to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1994.
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<PAGE>
<TABLE>
<CAPTION>
Sequential
Page
Number
------
<S> <C>
(h) Amendment No. 2 to Lease dated as of February 22, 1995 between
Registrant and GTE.(1)
(i) Secured Promissory Note dated September 26, 1996, made by
Registrant.
(j) Loan Agreement dated as of September 26, 1996 between
Registrant and Fleet Bank, N.A.
(k) Environmental Compliance and Indemnification Agreement dated
__________, 1996, made by Registrant.
(l) First Amendment of Loan Agreement and Note dated December __,
1996 between Registrant and Fleet Bank, N.A.
(m) Deed of Trust, Assignment of Rents, Security Agreement and
Fixture Filing dated September 26, 1996, made by Registrant
with respect to the GE Medical Systems Office Building.
(n) First Amendment to Deed of Trust dated December __, 1996, made
by Registrant with respect to the GE Medical Systems Office
Building.
(o) Deed of Trust, Assignment of Rents, Security Agreement and
Fixture Filing dated September 26, 1996,
</TABLE>
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25
<PAGE>
<TABLE>
<CAPTION>
Sequential
Page
Number
------
<S> <C>
made by Registrant with respect to the Flatiron Building.
(p) First Amendment to Deed of Trust dated December __, 1996, made
by Registrant with respect to the Flatiron Building.
(q) Mortgage, Assignment of Leases and Rents and Security
Agreement dated September 26, 1996, made by Registrant with
respect to the Austin Place Building.
(r) First Amendment to Mortgage dated December __, 1996, made by
Registrant with respect to the Austin Place Building.
(s) Mortgage, Assignment of Leases and Rents and Security
Agreement dated December __, 1996, made by Registrant with
respect to 475 Fifth Avenue.
(t) Mortgage, Assignment of Leases and Rents, Security Agreement
and Fixture Filing dated September 26, 1996, made by
Registrant with respect to the Marathon Oil Building.
(u) First Amendment to Mortgage dated December __, 1996, made by
Registrant with respect to the Marathon Oil Building.
</TABLE>
c:\crif\10-K.97
26
<PAGE>
<TABLE>
<CAPTION>
Sequential
Page
Number
------
<S> <C>
(v) Deed of Trust, Assignment of Rents, Security Agreement and
Fixture Filing dated September 26, 1996, made by Registrant
with respect to the Directory Building.
(w) First Amendment to Deed of Trust dated December __, 1996, made
by Registrant with respect to the Directory Building.
(x) Sale Agreement dated as of November 13, 1996 between
Metropolitan Life Insurance Company and Registrant with
respect to 475 Fifth Avenue, including as Exhibits:
(i) Bargain and Sale Deed;
(ii) Form of Assignment of Leases;
(iii) Form of Assignment of Contracts.
(y) Purchase and Sale Agreement dated as of February 5, 1997
between Registrant and Pacific Gulf Properties Inc. with
respect to the James River Warehouse, including as Exhibits:
(i) Assignment and Assumption Agreement;
(ii) Form of Deed.
(z) First Amendment to Purchase and Sale Agreement dated February
21, 1997 with respect to the James River Warehouse.
</TABLE>
c:\crif\10-K.97
27
<PAGE>
<TABLE>
<CAPTION>
Sequential
Page
Number
------
<S> <C>
(aa) Purchase and Sale Agreement dated as of January 28, 1997
between St. Paul Properties, Inc. and Registrant with respect
to the Alamo Towers, including as Exhibits:
(i) Bill of Sale;
(ii) Assignment and Assumption Agreement;
(iii) Form of Deed.
(bb) First Amendment to Purchase and Sale Agreement dated February
19, 1997 with respect to the Alamo Towers.
(cc) Second Amendment of Loan Agreement dated March 17, 1997 among
Fleet Bank, First American Bank Texas SSB, and Registrant.
27. Financial Data Schedule.
(b) Reports on Form 8-K: No reports on Form 8-K were filed during the last
quarter of the period covered by this report.
</TABLE>
c:\crif\10-K.97
28
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
CORPORATE REALTY INCOME FUND I, L.P.
(Registrant)
By: 1345 REALTY CORPORATION
as Corporate General Partner
Dated: March 27, 1997 By: /s/ Robert F. Gossett, Jr.
--------------------------
ROBERT F. GOSSETT, JR.,
President
Dated: March 27, 1997 By: /s/ ROBERT F. GOSSETT, JR.
--------------------------
ROBERT F. GOSSETT, JR.
Individual General Partner
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities (with respect to the Corporate General Partner)
and on the dates indicated.
1345 REALTY CORPORATION
Dated: March 27, 1997 By: /s/ ROBERT F. GOSSETT, JR.
--------------------------
Robert F. Gossett, Jr.
President, Director
Dated: March 27, 1997 By: /s/ PAULINE G. GOSSETT
----------------------
Pauline G. Gossett
Secretary
<PAGE>
ANNUAL REPORT ON FORM 10-K
ITEM 8, ITEM 14 (a) (1) and (2) AND ITEM 14 (d)
LIST OF FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES
FINANCIAL STATEMENTS
DECEMBER 31, 1996
CORPORATE REALTY INCOME FUND I, L.P.
F-1
<PAGE>
Form 10-K -- Item 14 (a) (1) and (2)
CORPORATE REALTY INCOME FUND I, L.P.
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
The following financial statements of Corporate Realty Income Fund I, L.P. are
included in Item 8:
Page
----
Independent Auditors' Report F-3
Financial Statements:
Balance Sheets at December 31, 1996 and 1995 F-4
Statements of Income for the years ended
December 31, 1996, 1995 and 1994 F-5
Statements of Changes in Partners' Capital
for the years ended December 31, 1996, 1995 and 1994 F-6
Statements of Cash Flows for the years ended
December 31, 1996, 1995 and 1994 F-7
Notes to Financial Statements F-8
Schedule III - Real Estate and Accumulated Depreciation F-15
All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission have been omitted since
(1) the information required is disclosed in the financial statements and notes
thereto; (2) the schedules are not required under the related instructions; or
(3) the schedules are inapplicable.
F-2
<PAGE>
Independent Auditors' Report
The Partners
Corporate Realty Income Fund I, L.P.:
We have audited the financial statements of Corporate Realty Income Fund I, L.P.
( a Delaware limited partnership) as listed in the accompanying index. In
connection with our audits of the financial statements, we also have audited the
financial statement schedule as listed in the accompanying index. These
financial statements and the financial statement schedule are the responsibility
of the Partnership's management. Our responsibility is to express an opinion on
these financial statements and the financial statement schedule based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Corporate Realty Income Fund I,
L.P. as of December 31, 1996 and 1995 and the results of its operations and its
cash flows for each of the years in the three-year period ended December 31,
1996, in conformity with generally accepted accounting principles. Also in our
opinion, the related financial statement schedule, when considered in relation
to the basic financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.
KPMG Peat Marwick LLP
New York, New York
February 5, 1997
F-3
<PAGE>
CORPORATE REALTY INCOME FUND I, L.P.
(A Delaware limited partnership)
BALANCE SHEETS
December 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
------------- -------------
<S> <C> <C>
ASSETS
Real estate, at cost:
Land $ 19,086,425 13,598,425
Buildings and improvements 93,885,121 71,444,155
------------- -------------
112,971,546 85,042,580
Less accumulated depreciation 18,553,069 15,974,431
------------- -------------
94,418,477 69,068,149
Cash and short-term investments at cost,
which approximates market value 2,025,925 397,432
Accounts receivable 431,889 437,191
Due from general partners 99,797 44,788
Note receivable 10,312 17,694
Step rent receivables 2,945,163 2,784,802
Deferred financing costs, net of accumulated amortization
of $180,636 in 1996 and $21,937 in 1995 1,395,740 7,313
Deposits 71,742 33,142
Lease commissions, net of accumulated amortization
of $1,400,260 in 1996 and $1,007,199 in 1995 1,545,245 1,628,004
Other assets 38,989 41,624
------------- -------------
Total assets $ 102,983,279 74,460,139
============= =============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and accrued expenses 1,198,537 1,457,029
Mortgage loan payable 39,955,200 7,800,000
Other liabilities 943,966 325,161
------------- -------------
Total liabilities 42,097,703 9,582,190
------------- -------------
Partners' capital:
General partners:
Capital contributions 1,000 1,000
Net income 380,135 373,356
Cash distributions (494,170) (456,581)
------------- -------------
(113,035) (82,225)
------------- -------------
Limited partners: ($25 per unit; 4,000,000 units
authorized, 3,043,106 and 3,127,884 issued and
outstanding in 1996 and 1995, respectively)
Capital contributions, net of offering costs 72,365,286 73,276,650
Net income 37,633,250 36,962,115
Cash distributions (48,999,925) (45,278,591)
------------- -------------
60,998,611 64,960,174
------------- -------------
Total partners' capital 60,885,576 64,877,949
------------- -------------
Total liabilities and partners' capital $ 102,983,279 74,460,139
============= =============
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE>
CORPORATE REALTY INCOME FUND I, L.P.
(a Delaware limited partnership)
STATEMENTS OF INCOME
For the years ended December 31, 1996, 1995 and 1994
1996 1995 1994
---------- ---------- ----------
Revenue:
Rental $9,101,611 9,127,768 7,917,328
Interest and other income 40,758 699,663 1,040,292
---------- ---------- ----------
9,142,369 9,827,431 8,957,620
---------- ---------- ----------
Expenses:
Interest 965,540 733,005 604,618
Depreciation 2,578,638 2,448,270 2,079,717
Amortization 551,760 381,533 472,776
Property operations 3,097,440 2,831,459 2,667,193
Management fees 565,519 557,031 317,087
Professional fees 207,379 543,573 155,703
General and administrative 498,179 323,872 209,963
---------- ---------- ----------
8,464,455 7,818,743 6,507,057
---------- ---------- ----------
Net income $ 677,914 2,008,688 2,450,563
========== ========== ==========
Net income allocated:
To the general partners 6,779 20,087 24,506
To the limited partners 671,135 1,988,601 2,426,057
---------- ---------- ----------
$ 677,914 2,008,688 2,450,563
========== ========== ==========
Net income per unit of
limited partnership interest $ 0.22 0.62 0.76
========== ========== ==========
See accompanying notes to financial statements.
F-5
<PAGE>
CORPORATE REALTY INCOME FUND I, L.P.
(A Delaware limited partnership)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the years ended December 31, 1996, 1995 and 1994
General Limited
Total Partners Partners
------------ ------------ ------------
Partners' capital at
December 31, 1993 $ 67,978,783 (58,971) 68,037,754
Cash distributions to partners (2,909,090) (29,091) (2,879,999)
Net income 2,450,563 24,506 2,426,057
------------ ------------ ------------
Partners' capital at
December 31, 1994 67,520,256 (63,556) 67,583,812
Redemptions of units (775,247) -- (775,247)
Cash distributions to partners (3,875,748) (38,756) (3,836,992)
Net income 2,008,688 20,087 1,988,601
------------ ------------ ------------
Partners' capital at
December 31, 1995 64,877,949 (82,225) 64,960,174
Redemption of units (911,364) -- (911,364)
Cash distributions to partners (3,758,923) (37,589) (3,721,334)
Net income 677,914 6,779 671,135
------------ ------------ ------------
Partners' capital at
December 31, 1996 $ 60,885,576 (113,035) 60,998,611
============ ============ ============
See accompanying notes to financial statements.
F-6
<PAGE>
CORPORATE REALTY INCOME FUND I, L.P.
(A Delaware limited partnership)
STATEMENTS OF CASH FLOWS
For the years ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 677,914 2,008,688 2,450,563
------------ ------------ ------------
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 3,130,398 2,829,803 2,552,493
Gain on sale of marketable securities -- (27,682) (930,750)
Unrealized gain on marketable securities -- -- (26,925)
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable 5,302 (391,910) 181,875
Increase in due from general partners (55,009) (116,673) (16,284)
Decrease in note receivable 7,382 7,093 6,818
Increase in step rent receivables (160,361) (543,871) (476,909)
Increase in deposits (38,600) -- (207)
Increase in lease commissions (310,302) (403,296) (1,500,030)
Decrease (increase) in other assets 2,635 12,139 (10,540)
Increase (decrease) in accounts payable
and accrued expenses (258,492) 757,925 (48,187)
Increase in other liabilities 618,805 27,414 20,287
------------ ------------ ------------
Total adjustments 2,941,758 2,150,942 (248,359)
------------ ------------ ------------
Net cash provided by
operating activities 3,619,672 4,159,630 2,202,204
------------ ------------ ------------
Cash flows from investing activities:
Proceeds from sale of marketable securities -- 128,579 3,657,374
Acquisition of real estate (27,928,966) (502,504) (2,461,326)
------------ ------------ ------------
Net cash provided by (used in)
investing activities (27,928,966) (373,925) 1,196,048
------------ ------------ ------------
Cash flows from financing activities:
Deferred loan costs (1,547,126) (29,250) (19,500)
Proceeds from loans payable 42,000,000 -- --
Repayments of loans payable (9,844,800) -- --
Redemption of units (911,364) (775,247) --
Cash distributions to partners (3,758,923) (3,875,748) (2,909,090)
------------ ------------ ------------
Net cash provided by (used in)
financing activities 25,937,787 (4,680,245) (2,928,590)
------------ ------------ ------------
Net increase (decrease) in cash
and short-term investments 1,628,493 (894,540) 469,662
Cash and short-term investments at beginning of year 397,432 1,291,972 822,310
------------ ------------ ------------
Cash and short-term investments at end of year $ 2,025,925 397,432 1,291,972
============ ============ ============
</TABLE>
See accompanying notes to financial statements.
F-7
<PAGE>
CORPORATE REALTY INCOME FUND I, L.P.
(A Delaware limited partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1996, 1995 and 1994
1. ORGANIZATION
Corporate Realty Income Fund I, L.P. (the "Partnership") was formed as a
limited partnership on November 25, 1985 under the laws of the State of
Delaware. The Partnership was formed for the purpose of acquiring and owning
income-producing commercial and industrial real estate properties for lease to
others. The Partnership will terminate on December 31, 2010 or sooner, in
accordance with the Partnership Agreement.
The general partners of the Partnership are 1345 Realty Corporation, the
corporate general partner, and Robert F. Gossett, Jr., the individual general
partner.
On November 30, 1994, all of the outstanding capital stock of the corporate
general partner was acquired by the individual general partner in a transaction
which was effective as of July 1, 1994. As a result of this acquisition, the
entire interest of the general partners is controlled by the individual general
partner.
The initial capital was $1,025 representing capital contributions of $1,000
by the general partners and $25 by the original limited partner. The Partnership
commenced operations on June 2, 1986 with the acceptance of subscriptions for
1,082,640 Depositary Units of limited partnership interests (the "Units"). The
Partnership has authorized the issuance of up to 4,000,000 Units. The
Partnership sold 3,200,000 Units, representing $80,000,000, which completed the
offering. Upon the first admittance of the additional limited partners and
unitholders, the original limited partner withdrew from the Partnership.
During 1996 and 1995, respectively, 84,778 and 72,116 units were redeemed
from limited partners and cancelled.
2. SIGNIFICANT ACCOUNTING POLICIES
The Partnership's records are maintained on the accrual basis of accounting
for financial reporting and tax reporting purposes.
Depreciation of buildings for financial reporting purposes is computed
under the straight-line method over an estimated economic useful life of forty
years. Depreciation of buildings for tax purposes is determined in accordance
with the Accelerated Cost Recovery System.
Acquisition fees in connection with investment properties acquired have
been capitalized as a cost of the property upon acquisition.
Deferred financing costs are being amortized using the straight-line method
over the term of the associated loan.
F-8
<PAGE>
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
In accordance with the Statement of Financial Accounting Standards No.
13 (SFAS No. 13), "Accounting for Leases," the Partnership recognizes rental
income on a straight-line basis over the fixed term of the lease period. Step
rent receivables represent unbilled future rentals. The following reconciles
rental income received in cash to rental income recognized:
1996 1995 1994
---------- ---------- ----------
Rental income billed to tenants $8,941,250 8,583,897 7,440,419
Step rent receivables 160,361 543,871 476,909
---------- ---------- ----------
Rental income recognized $9,101,611 9,127,768 7,917,328
========== ========== ==========
Offering costs are nonamortizable and have been deducted from limited
partners' capital.
No provision for income taxes has been made since all items of income or
losses and tax benefits are passed through to the individual partners. At
December 31, 1996, the net difference between the tax bases and the reported
amounts of assets and liabilities was $14,367,316.
The Partnership Agreement provides that net income shall be allocated to
each calendar month of the year and shall be apportioned on a monthly basis to
the holders of interests in the ratio in which the number of interests owned by
each limited partner or unitholder on the first day of the month bears to the
total number of interests owned by the limited partners and unitholders as of
that date.
The amount of net income per limited partnership unit was calculated using
the weighted average number of units outstanding of 3,087,170, 3,184,222 and
3,200,000 in 1996, 1995 and 1994, respectively.
Short-term investments, which consist principally of money market funds,
are carried at cost which approximates market value. For purposes of the
statements of cash flows, the Partnership considers short-term investments to be
cash equivalents.
SFAS No. 107, "Disclosures about Fair Value of Financial Instruments,"
defines fair value of a financial instrument as the amount at which the
instrument could be exchanged in a current transaction between willing parties.
The Partnership's cash and short-term investments, accounts receivable and notes
receivables, deposits, accounts payable and accrued expenses, interest payable
and mortgage loan payable are carried at cost, which approximates fair value.
The Partnership adopted the provisions of SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," on
January 1, 1996. This Statement requires that long-lived assets and certain
identifiable intangibles be reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future net cash flow expected
to be generated by the asset. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the carrying
amount of the assets exceeds the fair value. Assets to be disposed of are
reported at the lower of the carrying amount or fair value less costs to sell.
No impairment losses were required on any of the properties owned by the
Partnership.
F-9
<PAGE>
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
The general partners have made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these financial statements in
conformity with generally accepted accounting principles. Actual results could
differ from those estimates.
3. PARTNERSHIP AGREEMENT
The Partnership Agreement provides that profits, losses and distributions
shall be allocated 99% to the limited partners and 1% to the general partners.
Sale or refinancing proceeds will generally be distributed 99% to the
limited partners and 1% to the general partners until the limited partners have
received an amount which, when added to all prior distributions of cash, will
equal their original invested capital plus an 8% per annum cumulative
noncompounded return. Thereafter, after payment of the subordinated disposition
fee, proceeds will be distributed 75% to the limited partners and 25% to the
general partners.
Taxable income and tax loss generally will be allocated 99% to the limited
partners and 1% to the general partners.
4. INVESTMENTS IN REAL ESTATE
GE Medical Systems Office Building
On July 10, 1986, the Partnership purchased the GE Medical Systems Office
Building, an office building located in Monterey Park, California, and the
90,000 square feet of underlying land. The property contains approximately
20,250 square feet of net rentable area.
The terms of the agreement with the seller provided for a purchase price,
including acquisition fees, of $4,182,000.
The building was fully leased to GE through October 21, 1995. In October
1995, GE renewed its lease with respect to 52% of the rentable area of the
building for a term which expires in October 2000.
The Directory Building
On October 27, 1986, the Partnership purchased the Directory Building
(formerly the IBM Building), an office building located in Las Colinas, Texas,
and the 6.67 acres of underlying land. The property contains approximately
152,100 square feet of net rentable area.
The terms of the agreement with the seller provided for a purchase price,
including acquisition fees, of $24,580,375.
As of December 31, 1996, the building was 100% leased to GTE Directories
Corporation for a term which expires on September 30, 2000. Rent from the tenant
represented 25% of the Partnership's total rental income in 1996. In connection
with this lease, the Partnership expended $2,628,000 and $1,207,000 for tenant
improvements and leasing commissions, respectively.
F-10
<PAGE>
4. INVESTMENTS IN REAL ESTATE (continued)
Austin Place Building
On December 30, 1986, the Partnership purchased the Austin Place Building,
an office building located in South Plainfield, New Jersey, and the five acres
of underlying land. The property contains approximately 105,000 square feet of
net rentable area.
The terms of the agreement with the seller provided for a purchase price,
including acquisition fees, of $16,473,000.
As of December 31, 1996, the building had been fully leased to various
tenants under leases with terms ranging from four to fifteen years. The
Partnership has expended approximately $2,206,000 and $738,000 for tenant
improvements and leasing commissions, respectively, in connection with these
leases.
Rent from one of the tenants, The Austin Company, represented 29% of the
Partnership's total rental income in 1996.
In December 1993, the Partnership received a settlement from National
Gypsum Co., a former tenant, who filed for protection under Chapter 11 of the
U.S. Bankruptcy Code and terminated its lease. The settlement amounted to 77,476
shares of its common stock and $486,000 of 10%, ten-year debt. These securities
were recorded at their market value of $2,800,596 on the date of issuance.
During 1994, the debt securities were redeemed and 75,000 shares of the common
stock were sold at a gain of $930,750. During 1995, the remaining 2,476 shares
were sold at a gain of $27,682. The Partnership also received other income of
$227,222 in 1995 as part of the settlement.
James River Building
On October 16, 1987, the Partnership purchased the James River Building
(formerly the Crown Zellerbach building) located in Woodland, California (a
suburb of Sacramento), and the 21 acres of underlying land. The building
contains approximately 570,000 square feet of net rentable area.
The terms of the agreement with the seller provided for a purchase price,
including acquisition fees, of $14,551,456. The building is net leased to James
River Corporation of Nevada, Inc. for a term which expires in January, 2002.
Rent from the tenant, James River Corporation of Nevada, Inc., represented
16% of the Partnership's total rental income in 1996.
Flatiron Building
On January 5, 1988, the Partnership purchased the Flatiron Building
(formerly the Cadnetix Building) located in Boulder, Colorado, and the five
acres of underlying land. The building contains approximately 95,500 square feet
of net rentable area.
The terms of the agreement with the seller provided for a purchase price,
including acquisition fees, of $9,003,085.
F-11
<PAGE>
4. INVESTMENTS IN REAL ESTATE (continued)
As of December 31, 1996, 100% of the building was leased to various tenants
under leases with terms ranging from three to five years. The Partnership has
expended approximately $455,000 and $725,000 for tenant improvements and leasing
commissions, respectively, in connection with these leases.
Marathon Oil Building
On March 21, 1988, the Partnership purchased the Marathon Oil Building
(formerly the Tenneco Oil Building) located in Oklahoma City, Oklahoma, and the
6.1 acres of underlying land. The terms of the agreement with the seller
provided for a purchase price, including acquisition fees, of $10,736,200. The
building contains approximately 90,925 net rentable square feet plus a 10,016
square foot basement.
The building is net leased to Marathon Oil Company (Marathon) with respect
to 62,600 square feet of space pursuant to a five-year lease which expires in
February, 2001, and a two-year lease with an affiliate of Marathon with respect
to 24,700 square feet of space which expires in February, 1998. A lease for
approximately 5,600 square feet of the remaining space has been signed with
another tenant for a term of five years commencing in January, 1997.
475 Fifth Avenue
On December 6, 1996 the Partnership purchased an office building and the
underlying land located at 475 Fifth Avenue, New York, New York, for a purchase
price, including capitalized closing and related costs, of $27,439,998.
As of December 31, 1996, the building was 85% leased to various tenants
under operating leases with remaining terms ranging from one to eleven years.
The Partnership has expended approximately $76,000 for leasing commissions in
connection with these leases.
5. LEASES
Minimum future rentals from tenants under noncancellable operating leases
as of December 31, 1996 are approximately as follows:
Year ending December 31:
1997 $ 11,561,000
1998 10,473,000
1999 9,554,000
2000 8,811,000
2001 6,620,000
Thereafter 10,767,000
--------------
Total $ 57,786,000
==============
F-12
<PAGE>
5. LEASES (continued)
In addition to the minimum lease amounts, the leases provide for escalation
charges to the tenants for operating expenses and real estate taxes. For the
years ended December 31, 1996, 1995 and 1994 escalation charges amounting to
$1,765,433, $1,735,411 and $1,728,374, respectively, have been included in
rental income.
6. TRANSACTIONS WITH GENERAL PARTNERS AND AFFILIATES
The general partners or their affiliates receive a property management fee
equal to either 1% in the case of a long-term net lease or 6% for other types of
leases on the gross revenue from the property, and a partnership management fee
equal to 7% of adjusted cash from operations, as defined, and reimbursement of
administrative expenses. The general partners also receive leasing commissions
in connection with leasing, re-leasing or leasing related services performed on
behalf of the Partnership in connection with the negotiation of tenant leases.
Such commissions are computed at a rate equal to 3% of the gross revenues for
the first five years of each lease signed where the general partners have
performed such leasing services.
Following is a summary of the fees earned and reimbursable expenses for the
years ended December 31, 1996, 1995 and 1994:
1996 1995 1994
-------- -------- --------
Partnership management fees $263,577 $271,302 $203,636
Property management fees 301,942 285,729 113,451
Administrative expenses 166,036 133,393 66,049
======== ======== ========
In 1996 and 1995, respectively, leasing commissions of $110,584 and $243,113
were billed to the Partnership by the general partners and recorded by the
Partnership as deferred leasing commissions on the balance sheet.
7. LOAN PAYABLE
In March 1996, the Partnership extended the $7,800,000 line of credit from
PNC Bank, N.A. (the "Lender") for an additional six-month period which ended on
September 30, 1996. In connection with this extension, the structure of the
indebtedness was changed from a term loan to a secured revolving line of credit.
Interest only was payable monthly on the first day of each calendar month with
all unpaid interest and outstanding principal due on September 30, 1996. In
connection with the extension of the loan, the Partnership paid fees of $24,500.
The loan was secured by a deed of trust given with respect to the Directory,
James River, Austin Place and GE properties. In September 1996, this loan was
repaid with the proceeds of a new line of credit obtained from Fleet Bank.
On September 26, 1996, the Partnership entered into a loan agreement with Fleet
Bank, N.A. The purpose of the loan was to refinance the existing indebtedness to
PNC Bank, to provide working capital for tenant improvements and leasing
commissions with respect to the properties owned by the Partnership, and to
provide funds for the acquisition of additional properties.
F-13
<PAGE>
7. LOAN PAYABLE (continued)
The terms of the loan agreement, as amended, provide for a term of four years
and maximum gross borrowings of $44,000,000. Borrowings under the loan bear
interest monthly at a rate, selected at the option of the Partnership at the
time of the associated borrowing, based on (i) the lender's Peg Rate (as defined
in the loan agreement) plus .50% or (ii) the applicable LIBOR rate or other
market rate offered to the bank plus 2%. The loan requires monthly amortization
of principal in an amount equal to 1/500th of the outstanding principal amount
of the loan on the first day of the applicable month with a final payment of the
then outstanding balance at maturity. The loan may be prepaid at any time.
Borrowings under the loan agreement are secured by all of the properties of the
Partnership. Upon the sale of any property, the Partnership is required to repay
principal on the total indebtedness under the loan in an amount equal to 110% of
that portion of the outstanding balance of the loan attributable to the sold
property, as defined in the loan agreement.
Through December 31, 1996, the Partnership had borrowed $40,000,000 under the
loan, of which $39,955,200 was outstanding at December 31, 1996, at rates
ranging from 7.6% to 8.87%.
In connection with this loan, the Partnership incurred fees and expenses of
$1,522,626, which have been capitalized and are being amortized over the term of
the loan agreement.
8. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
1996 1995 1994
--------- --------- --------
Cash paid during the year for interest $ 789,306 $ 734,608 $604,618
========= ========= ========
F-14
<PAGE>
Schedule III
CORPORATE REALTY INCOME FUND I, L.P.
(a Delaware limited partnership)
Real Estate and Accumulated Depreciation
December 31, 1996
<TABLE>
<CAPTION>
Costs Capitalized
Subsequent to Gross Amount at which
Initial Costs (B) Acquisition Carried at Close of Period
------------------------ ------------ ----------------------------
Building and Building and
Description Encumbrances (A) Land Improvements Improvements Land Improvements
- ----------- ---------------- ---- ------------ ------------ ---- ------------
<S> <C> <C> <C> <C> <C> <C>
Office Building
Monterey Park, CA $ 639,300 $ 1,762,126 $ 2,459,141 $ 125,245 $ 1,762,126 $ 2,584,386
Office Building
Las Colinas, TX 5,074,300 4,925,745 19,702,979 2,627,999 4,925,745 22,330,978
Office Building
So. Plainfield, NJ 5,873,400 3,147,912 13,378,294 2,205,562 3,147,912 15,583,856
Distribution Center
Woodland, CA 6,472,700 1,618,579 12,989,498 -- 1,618,579 12,989,498
Office Building
Boulder, CO 4,035,500 1,080,369 7,922,716 455,415 1,080,369 8,378,131
Office Building
Oklahoma City, OK 1,198,700 1,063,694 9,713,348 352,926 1,063,694 10,066,274
Office Building
New York, New York 16,661,300 5,488,000 21,951,998 -- 5,488,000 21,951,998
----------- ----------- ----------- ----------- ----------- -----------
$39,955,200 $19,086,425 $88,117,974 $ 5,767,147 $19,086,425 $93,885,121
=========== =========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Life on Which
Depreciation in
Latest Income
Accumulated Date of Date Statement
Total Depreciation Construction Acquired is Computed
----- ------------ ------------ -------- -----------
<S> <C> <C> <C> <C> <C>
Office Building
Monterey Park, CA $ 4,346,512 $ 665,514 1985 July, 1986 40 years
Office Building
Las Colinas, TX 27,256,723 6,004,087 1982 October, 1986 40 years
Office Building
So. Plainfield, NJ 18,731,768 4,470,326 1986 December, 1986 40 years
Distribution Center
Woodland, CA 14,608,077 2,990,531 1987 October, 1987 40 years
Office Building
Boulder, CO 9,458,500 2,183,155 1988 January, 1988 40 years
Office Building
Oklahoma City, OK 11,129,968 2,193,723 1986 March, 1988 40 years
Office Building
New York, New York 27,439,998 45,733 1927 December, 1996 40 years
------------ -----------
$112,971,546 $18,553,069
============ ===========
</TABLE>
Notes:
(A) Encumbrances represent a loan secured by a deed of trust given with respect
to all of the properties of the Partnership.
(B) The initial cost to the Partnership represents the original purchase price
of the properties net of any purchase price adjustments, including amounts
incurred subsequent to acquisition which were contemplated. The initial
cost includes the purchase price paid by the Partnership and acquisition
fees and expenses. There is no difference between cost for financial
reporting purposes and cost for federal income tax purposes.
<TABLE>
<CAPTION>
(C) Reconciliation of real estate owned: 1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Balance at beginning of period $ 85,042,580 $ 84,585,569 $82,124,243
Additions during period:
Building improvements and land 27,928,966 502,504 2,461,326
Write-off of fully depreciated assets -- (45,493) --
------------ ------------ -----------
Balance at end of period $112,971,546 $ 85,042,580 $84,585,569
============ ============ ===========
(D) Reconciliation of accumulated depreciation:
Balance at beginning of period $15,974,431 13,571,654 $11,491,937
Depreciation expense 2,578,638 2,448,270 2,079,717
Write-off of fully depreciated assets -- (45,493) --
----------- ------------ -----------
Balance at end of period $18,553,069 $ 15,974,431 $13,571,654
=========== ============ ===========
</TABLE>
F-15
EXHIBIT B
SECURED PROMISSORY NOTE
Date of Note: September 26, 1996
Principal Amount: $24,000,000
Maturity Date: September 24, 2000
FOR VALUE RECEIVED, CORPORATE REALTY INCOME FUND I, L.P., a Delaware
limited partnership "Borrower"), does hereby covenant and promise to pay to the
order of FLEET BANK, NATIONAL ASSOCIATION, a national banking association, or
its successors and assigns ("Lender"), at 56 East 42nd Street, New York, New
York 10017, or at such other place as Lender may designate to Borrower in
writing from time to time, in lawful money of the United States of America and
in immediately available funds, the lesser of the Principal Amount stated above
and the aggregate unpaid amount of all advances made by Lender to Borrower
pursuant to the Loan Agreement (as hereinafter defined), together with interest
thereon in like money and funds as hereinafter provided.
1. Definitions. The following terms, as used in this Note, shall have the
meanings indicated opposite them and terms capitalized herein and not otherwise
defined herein but defined in the Loan Agreement shall have the meaning set
forth in the Loan Agreement:
"Applicable Rate" - means, during the period from the date hereof through
the Maturity Date, (a) the Peg Rate plus one-half of one (.50%) percent per
annum or (b) the LIBOR Rate in effect with respect to the applicable Interest
Period pursuant to the terms hereof plus two and one-quarter (2.25%) percent per
annum or (c) the Cost of Funds Rate in effect with respect to the applicable
Interest Period pursuant to the terms hereof plus two and one-quarter (2.25%)
percent per annum.
"Authorized Representative" - means Robert F. Gossett, Jr. or any other
person or persons designated by Borrower, in a writing delivered to Lender, as
an Authorized Representative.
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"Business Day" - means a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
close.
"Cost of Funds Rate" - means, for the applicable Interest Period, the
annualized rate at which funds approximately equal to the then outstanding
Principal Amount, or the portion hereof which is to bear interest at the Cost of
Funds Rate for the applicable Interest Period, were offered to Lender (i) in
such markets as Lender may determine, (ii) on the date on which the applicable
Interest Period is to commence for a period equal to the applicable Interest
Period, and (iii) by reference to such factors and considerations (including
without limitation any reserve requirements or the effect of any scheduled
amortization payments) as Lender may deem relevant.
"Cost of Funds Rate Advance" - means the whole or any portion of the
Principal Amount which bears interest at a rate based upon the Cost of Funds
Rate, but such portion of the Principal Amount shall be in an integral multiple
of $100,000 but in no event less than $1,000,000.
"Default" - means any act or condition which with the giving of notice or
the lapse of time, or both, could become an Event of Default.
"Event of Default" - means any act or event described as a "Default" in the
Loan Agreement.
"Fixed Rate" shall mean either the LIBOR Rate or the Cost of Funds Rate.
"Fixed Rate Acceptance Notice" - shall have the meaning assigned to such
term in PARAGRAPH 4(b) hereof.
"Fixed Rate Advance" - shall mean either a LIBOR Advance or a Cost of Funds
Rate Advance.
"Fixed Rate Notice" - means Borrower's telephonic notice immediately
confirmed in writing, which writing may be delivered by telecopier, stating that
Borrower, subject to delivery by it of a Fixed Rate Acceptance Notice, elects to
pay interest at the Fixed Rate and specifying the portion of the Principal
Amount which is to bear interest at the LIBOR Rate or the Cost of Funds Rate,
the applicable Interest Period for the Fixed Rate Advance and the Business Day
on which such Interest Period is to begin.
"Interest Period" - means a period of 30, 60, 90 or 180 days or of one year
or of such other periods as Lender, following Borrower's request, may elect to
offer to
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Borrower, in each case as elected by Borrower in the Fixed Rate Notice,
provided, however, that no such period shall extend beyond the Maturity Date.
Any Interest Period which terminates on a non-Business Day shall be deemed, for
purposes hereof, to terminate on the next succeeding Business Day.
"LIBOR Advance" - means the whole or any portion of the Principal Amount
which bears interest at a rate based upon the LIBOR Rate, but such portion of
the Principal Amount shall be in an integral multiple of $100,000 but in no
event less than $1,000,000.
"LIBOR Rate" - means, for the applicable Interest Period, the rate per
annum determined by Lender (any such determination to be conclusive, absent
manifest error) on the basis of the offered rates for Eurodollar deposits in an
amount equal to that portion of the outstanding Principal Amount which is to
bear interest based on the LIBOR Rate and having a maturity equal to the
proposed Interest Period appearing on the Telerate Screen page 5 (or the
successor page reference thereto) as of approximately 11:00 AM (London time) two
Business Days before the date on which such Interest Period shall commence. If
at least two such offered rates appear on the Telerate Screen page 5 or
associated pages, the rate in respect of such Interest Period will be the
arithmetic mean (rounded up to the nearest 1/16) of such offered rates. If no
such rate appears, the rate in respect of such Interest Period will be the rate
specified as LIBOR on the Reuters Screen LIBOR page as of such date for such
Interest Period.
"Loan" - means the loan in the Principal Amount made to Borrower by Lender
and evidenced hereby.
"Loan Agreement" - means the Loan Agreement dated as of the date hereof
between Borrower and Lender, as the same may be amended or otherwise modified
from time to time.
"Mortgage" - means all of the "Mortgages" described on EXHIBIT A to the
Loan Agreement and any other "Mortgages" hereafter encumbering an "Additional
Property" or a "Project", as any of the same may be amended or otherwise
modified from time to time.
"Note" - this Secured Promissory Note, as the same may be amended or
otherwise modified from time to time.
"Peg Rate" - means the rate which Lender publicly announces from time to
time as its Peg Rate. The Peg Rate shall be adjusted from time to time when and
as the Peg Rate shall change. The Peg Rate is determined from time to time
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by Lender as a means of pricing some loans to its customers and is neither tied
to any external rate of interest or index, nor does it necessarily reflect the
lowest rate of interest actually charged by Lender to any customer class or
category of its customers. Lender may make commercial or other loans at rates of
interest at, above or below the Peg Rate. Any change resulting from a change in
the Peg Rate shall become effective as of the date on which Lender makes a
change in such rate.
"Peg Rate Advance" - means the whole or any portion of the Principal Amount
which bears interest at a rate based upon the Peg Rate.
"Regulation D" - Regulation D of the Board of Governors of the Federal
Reserve System from time to time in effect, including any successor or other
regulation or official interpretation of said Board of Governors relating to
reserve requirements applicable to member banks of the Federal Reserve System.
"Reserve Percentage" - the maximum aggregate reserve requirement
(including, without limitation, all basic, marginal, emergency, supplemental,
special or other reserves and taking into account any transitional requirements)
as specified in Regulation D that Lender determines would be applicable on that
day to new nonpersonal time deposits in the United States in an amount equal to
or in excess of $100,000 with a maturity approximately equal to that of the
applicable Interest Period. The Cost of Funds Rate and the LIBOR Rate shall be
adjusted automatically on and as of the effective date of any change in the
Reserve Percentage.
"Security Documents" - shall have the meaning assigned to such term in
PARAGRAPH 10 of this Note.
2. Interest; Loans; and Amortization. (a) Interest on the outstanding
Principal Amount shall accrue from and including the date of the Advance to but
excluding the date of any repayment or prepayment thereof and shall be payable
in arrears (i) on the first day of each calendar month, commencing with the
month after the month in which this Note is executed and delivered, except that
if the date hereof is on the sixteenth (16th) day or any later day of a month,
the first payment of interest shall be payable on the first day of the second
month after the month in which this Note is executed and delivered, subject, at
Lender's option, to collection of short-period interest upon the execution and
delivery hereof, (ii) on the date of any prepayment (on the amount prepaid),
(iii) on the Maturity Date, and (iv) after maturity (whether by acceleration or
otherwise),
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<PAGE>
on demand. All interest calculations provided for herein shall be made on the
basis of a 360-day year and the actual number of days elapsed; provided,
however, that to the extent the Applicable Rate is based upon the Cost of Funds
Rate or the LIBOR Rate, monthly payments shall be calculated on the basis of
thirty day months, but applied based on the actual number of days elapsed. All
payments shall be credited, when collected, first to interest and then to
principal.
(b) Notwithstanding anything herein or in the Loan Agreement to the
contrary, Lender shall have no obligation to make advances of the Loan at any
time after September 30, 1999.
3. Maturity Date. The outstanding principal of, and all accrued interest
on, the Loan shall be due and payable on September 24, 2000.
4. Selection of Rate. (a) Except as provided in PARAGRAPHS 4(b) and 9, the
outstanding Principal Amount shall bear interest at a rate per annum equal to
the Peg Rate plus one-half of one (.50%) per annum.
(b) Provided there is no Default and/or Event of Default, Borrower may
elect to pay interest on the whole or any portion of the Principal Amount
(subject to the minimum amount limitations set forth herein and the requirements
set forth below) at a rate per annum equal to (i) the LIBOR Rate in effect at
any given time pursuant to the terms hereof plus two and one-quarter (2.25%)
percent per annum, and/or (ii) the Cost of Funds Rate in effect at any given
time pursuant to the terms hereof plus two and one-quarter (2.25%) percent per
annum, in each case applicable to the Interest Period elected by Borrower from
(and including) the first day of each Interest Period to (but not including) the
last day of such Interest Period. Borrower shall, subject to delivery by it of a
Fixed Rate Acceptance Notice, elect the Fixed Rate for the whole or any portion
of the outstanding Principal Amount pursuant to a Fixed Rate Notice. Lender must
receive such Fixed Rate Notice prior to 11:00 A.M., New York City time, on a
Business Day at least two (2) Business Days prior to:
(i) the last day of an Interest Period (in the case of an outstanding
Fixed Rate Advance); or
(ii) any Business Day elected by Borrower in its Fixed Rate Notice (in
the case of a conversion of a Peg Rate Advance to a Fixed Rate Advance) for
the commencement of the applicable Interest Period.
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If Borrower fails to give a Fixed Rate Notice at least two (2) Business Days
prior to the end of an Interest Period, then, on the last day of the Interest
Period, the outstanding Fixed Rate Advance shall convert to a Peg Rate Advance.
On the date specified in the Fixed Rate Notice as the date on which the
applicable Interest Period is to begin, Lender shall, by 11:00 a.m., New York
City time, notify Borrower's Authorized Representative by telephone (such notice
to be promptly confirmed in writing), which notice shall specify the date, the
proposed Fixed Rate and the period of time on such date during which such rate
is to be available. If Lender fails to specify the period for which such quoted
rate is available, then such rate shall be deemed to be available only for
thirty minutes from the time Lender, orally or in writing, notifies Borrower's
Authorized Representative of such rate. If Borrower then wishes to obtain such
Loan at such Fixed Rate, Borrower's Authorized Representative shall promptly
give notice to Lender to such effect (the "Fixed Rate Acceptance Notice"), which
notice shall be irrevocable and may be by telephone, promptly confirmed in
writing.
(c) Without in any way limiting Borrower's obligation to confirm in writing
any telephonic Fixed Rate Notice or Fixed Rate Acceptance Notice, Lender may,
prior to receipt of written confirmation, act without liability on the basis of
telephonic notice which it believes in good faith to be from Borrower and, in
any event, Lender may act without liability on the basis of telephonic or
written notice which it believes in good faith to be from Borrower.
5. Payment of Interest on and Number of Fixed Rate Advances. If a Fixed
Rate Advance is outstanding, then in addition to the monthly payments of
interest required under PARAGRAPH 2(a) hereof, all accrued and unpaid interest,
if any, on such Fixed Rate Advance shall be due and payable on the last day of
the Interest Period. In no event may there be more than an aggregate of four (4)
Interest Periods in effect at any one time hereunder.
6. Suspension of Fixed Rate. If Lender, in its sole discretion, determines
that Lender's making or maintaining of a Fixed Rate Advance is unlawful for any
reason, then Lender may suspend the availability of the Fixed Rate and
immediately convert the outstanding Fixed Rate Advance, if any, to a Peg Rate
Advance. Lender shall immediately notify Borrower of any such conversion and
Borrower shall pay to Lender, on demand, (i) all accrued and unpaid interest on
the Fixed Rate Advance to the date of such conversion, plus (ii) such amounts as
Lender shall require to compensate it for the costs of converting any such Fixed
Rate Advance to a Peg Rate Advance (except that
6
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no amounts shall be payable by Borrower under this clause (ii) if, at the
commencement of the applicable Interest Period, it was unlawful for Lender to
have made such Fixed Rate Advance). The certificate of Lender as to any amounts
payable pursuant to this PARAGRAPH shall, absent manifest error, be final,
conclusive and binding on Borrower. No Fixed Rate Notices shall be given by
Borrower thereafter until Lender determines that a Fixed Rate Advance would be
lawful.
7. Increases in Cost. In the event that at any time or from time to time
any domestic or foreign requirement of law, regulation, order or decree or any
change therein or in the interpretation or application thereof or compliance by
Lender with any request or directive (whether or not having the force of law)
from any governmental, fiscal, monetary or other authority (i) does or shall
subject Lender to any tax, duty, charge or withholding on or from payments due
from Borrower (excluding taxation of the income of Lender and excluding any such
taxes, duties or withholding already taken into account in calculating the Fixed
Rate); or (ii) does or shall impose, modify or hold applicable or change any
reserve (including, without limitation, basic, supplemental, marginal, special
or emergency reserves but not including reserve requirements already taken into
account in calculating the Fixed Rate), special deposit, compulsory deposit or
similar requirement with respect to assets of, deposits with or for the account
of, advances or loans by, or other credit extended by, or any other acquisition
of funds by Lender; or (iii) does or shall impose on Lender any other condition
or change therein and the result of any of the foregoing is to increase the cost
to Lender of making available to Borrower, converting from or to, or maintaining
Fixed Rate Advances, then, and in any such event, Lender shall notify Borrower
in writing of such occurrence setting forth in reasonable detail the basis for
and amounts of such increased costs, and Borrower shall pay to Lender, on
demand, such amounts as will compensate Lender for such increased costs. In such
event, Borrower shall have the option of converting (without an exchange of
funds) such Fixed Rate Advance to a Peg Rate Advance by notice to Lender and
payment to Lender of any sums (other than the principal so converted to a Peg
Rate Advance) which would be payable to Lender pursuant to PARAGRAPH 8 if such
conversion were a prepayment. The certificate of Lender as to any amounts
payable pursuant to this PARAGRAPH shall, absent manifest error, be final,
conclusive and binding on Borrower.
8. Prepayment. (a) At any time during the term hereof that the Applicable
Rate is based upon the Peg Rate or on a date which is the last day of an
Interest Period
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(with respect to the whole or any portion of the Principal Amount as to which
the Interest Period is ending), upon not less than ten (10) Business Days
written notice to Lender specifying the date on which prepayment is to be made,
Borrower shall have the privilege of prepaying the unpaid balance of the
Principal Amount of this Note, in whole or in part, on any Business Day, without
payment of a premium or penalty, provided that (i) any such prepayment shall be
in a minimum amount of not less than $1,000,000 and additional integral
multiples of $100,000, and (ii) together with any such prepayment, Borrower
shall also pay any accrued and unpaid interest on the portion of Principal
Amount of this Note being so repaid to the date of prepayment and all other sums
or charges, if any, then due and owing hereunder or under the Loan Documents.
(b) (i) At any time during the term hereof that the Applicable Rate is
based upon the Fixed Rate, Borrower shall have the privilege of prepaying the
unpaid balance of the Principal Amount or a portion thereof upon the applicable
notice and in the minimum amounts set forth in PARAGRAPH 8(a) hereof, except
that in addition to the payment of the whole or portion of the Principal Amount
so to be prepaid, all accrued and unpaid interest thereon and all other sums due
hereunder or under the Security Document(s), Borrower shall pay a breakage fee
based on the following formula:
(a) Upon such prepayment, Lender shall determine whether there is a
fixed rate yield maintenance premium due by subtracting the Redemption
Treasury Rate from the Fixed Rate (as such terms are defined below). If the
Redemption Treasury Rate is equal to or greater than the Fixed Rate, no
fixed rate yield maintenance fee will be due.
(b) However, if the Redemption Treasury Rate is less than the Fixed
Rate, a fixed rate yield maintenance fee will be computed by Lender as
follows:
(F-R) x P x D
-------------
360
(c) Lender shall discount the resulting number to the net present
value thereof, i.e., as if such sum were received in equal monthly
installments from the date of prepayment to the end of the applicable
Interest Period, at a rate reasonably determined by Lender. To determine
present value, the discount shall be calculated on
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the basis of a three hundred sixty-five (365) day year.
(d) For purposes of computing the fixed rate yield maintenance fee,
the following definitions govern:
-"F" or "Fixed Rate" means the applicable Fixed Rate plus two and
one-quarter (2.25%) percent.
-"R" or "Redemption Treasury Rate" means, at the time of prepayment,
the rate of interest per annum equal to the most recently published
quotations of yields to maturity of U.S. Treasury obligations (bills
on a discounted basis shall be converted to a bond equivalent), as
published weekly by the Federal Reserve Board in the Federal Reserve
Statistical release, trading closest to par value and with a maturity
date comparable to the end of the applicable Interest Period.
-"P" means the Principal Amount being repaid.
-"D" means the number of days remaining until the end of the
applicable Interest Period.
Absent manifest error, Lender's calculation of the fixed rate yield
maintenance premium shall be deemed conclusive.
(ii) Lender shall notify Borrower of the amount and basis of
determination of such breakage fees, it being agreed that (A) the
calculation of such breakage fees shall be based on the most recent
Redemption Treasury Rate available to Lender; and (B) Lender shall not be
obligated to have actually reinvested the prepaid amount in any such U.S.
Government Treasury Obligations as a condition precedent to receiving
breakage fees calculated pursuant to the provisions of this subparagraph
(b). Borrower, upon receipt of such notice and simultaneously with any such
prepayment, shall remit to Lender the breakage fees.
(c) Any acceleration of the Maturity Date pursuant to any provisions hereof
or of the Loan Documents shall be deemed a voluntary prepayment for the purposes
hereof, and if a Fixed Rate Advance is then outstanding, Borrower shall be
required, on demand, to pay the breakage fees premium, if any, calculated as
aforesaid.
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(d) Any payments of the Principal Amount received by Lender (whether
pursuant to the terms of this PARAGRAPH 8 or otherwise) shall be applied to this
Note in the following order of priority: (i) first, to any accrued interest
which is due and unpaid on this Note as of the date of such payment; and (ii)
second, to the outstanding Principal Amount of this Note in the inverse order of
maturity.
(e) Except as otherwise provided in SECTION 6.06 of the Loan Agreement, the
Loan and the advances hereunder are not revolving loans and, therefore, Borrower
may not borrow, repay and reborrow hereunder.
9. Involuntary Rate; Late Charge. Overdue principal and, to the extent
permitted by law, overdue interest and all other overdue amounts owing
hereunder, whether at maturity, upon acceleration or otherwise, shall bear
interest for each day that such amounts are overdue (whether or not any required
notice of default shall have been given) at a rate per annum equal to four
(4.0%) percent per annum in excess of the Applicable Rate in effect from time to
time (such rate the "Involuntary Rate"). In addition, any payment, whether of
principal or interest, not received by Lender within ten (10) days after the
date it is due shall be assessed a late charge of four (4.0%) percent of the
overdue payment (such charge, the "Late Charge"), and such Late Charge shall be
due on demand. Lender's right to receive interest at the Involuntary Rate and
any Late Charge pursuant to this PARAGRAPH shall be in addition to all other
rights and remedies provided herein or by law for the benefit of the holder
hereof upon a default; and the acceptance of the same by the holder hereof shall
not restrict such holder in any respect in the exercise of any other or further
right or remedy, nor shall the same be deemed to be, as to the holder hereof, a
waiver or release of Borrower from any of its obligations herein contained or
constitute an extension of the time for payments due hereunder.
10. Security. This Note is secured by the Mortgages and all other documents
or agreements or hazardous substance indemnities (including any amendment,
modification, extension or renewal thereof) now or hereafter executed in
connection herewith are collectively referred to herein as the "Security
Documents." This Note is entitled to the benefits of the Security Documents.
11. Acceleration. It is hereby expressly agreed that the entire unpaid
balance of the Principal Amount shall, at the option of the holder hereof,
become immediately due and payable without necessity for presentment and demand,
notice of protest, demand and dishonor or nonpayment
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of this Note, all of which are hereby expressly waived, upon the happening of
any Event of Default or any event by which, under the terms of the Security
Document(s), said unpaid balance may or shall become due and payable. Failure to
exercise any such option at any time shall not constitute a waiver of the right
of the holder hereof to exercise the same in the event of any subsequent default
or acceleration event.
12. Notices. Except as otherwise provided herein, any notice to be given
hereunder shall be given as provided in the Loan Agreement.
13. Funding Sources. Nothing contained herein shall be deemed to obligate
Lender to fund advances hereunder in any particular place or manner; and nothing
contained herein shall be deemed to constitute a representation by Lender that
it has funded or will fund advances in any particular place or manner.
14. Taxes and Attorneys' Fees. Borrower shall pay to Lender, immediately
upon demand, any and all taxes assessed against Lender by reason of its holding
of this Note and the receipt by it of interest payments hereunder (other than
income, franchise and other similar taxes assessed by the United States
Government, any state or any political subdivision of either thereof on such
interest payments), and any and all other sums and charges that may at any time
become due and payable under the Security Document(s).
15. No Partnership or Joint Venture. Nothing contained in this Note or
elsewhere shall be deemed or construed as creating a partnership or joint
venture between Lender and Borrower or between Lender and any other person, or
cause the holder hereof to be responsible in any way for the debts or
obligations of Borrower or any other person.
16. Waiver. Borrower hereby waives diligence, presentment, protest and
demand, notice of protest, dishonor and nonpayment of this Note, and expressly
agrees that, without in any way affecting the liability of Borrower hereunder,
Lender may extend the Maturity Date or the time for payment of any amount due
hereunder, accept additional security, release any party liable hereunder and
release any security now or hereafter securing this Note without in any other
way affecting the liability and obligation of Borrower or any other Person.
Borrower further waives, to the full extent permitted by law, the right to plead
any and all statutes of limitations as a defense to any demand on this Note,
under the Security Document(s), or on any other agreement now or hereafter
securing this Note.
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17. Interest Rate Limitation. Notwithstanding anything contained herein to
the contrary, the holder hereof shall never be entitled to receive, collect or
apply as interest on the obligation evidenced hereby any amount in excess of the
maximum rate of interest permitted to be charged by applicable law; and in the
event the holder hereof ever receives, collects or applies as interest any such
excess, such amount which would be excessive interest shall be applied to the
reduction of the Principal Amount; and if the Principal Amount is paid in full,
any remaining excess shall forthwith be paid to Borrower.
18. Severability. Every provision of this Note is intended to be severable.
In the event any term or provision hereof is declared by a court of competent
jurisdiction to be illegal or invalid for any reason whatsoever, such illegality
or invalidity shall not affect the balance of the terms and provision hereof,
which terms and provisions shall remain binding and enforceable.
19. Number and Gender. In this Note the singular shall include the plural
and the masculine shall include the feminine and neuter gender, and vice versa,
if the context so requires.
20. Headings. Headings at the beginning of each numbered paragraph of this
Note are intended solely for convenience of reference and are not to be deemed
or construed to be a part of this Note.
21. Governing Law; Submission to Jurisdiction; Waivers, Etc.
(a) This Note, together with the Loan Agreement and the Security
Documents, sets forth the entire understanding of Borrower and Lender with
respect to the subject matter hereof, and this Note and the Loan Agreement
shall be governed by and construed and enforced in accordance with the laws
(without giving effect to the conflict of law principles thereof) of the
State of New York.
(b) Borrower hereby irrevocably submits to the non-exclusive
jurisdiction of any New York State or Federal court sitting in New York
County over any suit, action or proceeding arising out of or relating to
this Note, and Borrower hereby agrees and consents that, in addition to any
methods of service of process provided for under applicable law, all
service of process in any such suit, action or proceeding in any New York
State or Federal court sitting in New York County may be made by certified
or registered mail, return receipt requested, directed to
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<PAGE>
Borrower at its address for notices under the Loan Agreement, and service
so made shall be complete five (5) days after the same shall have been so
mailed. Borrower also waives (a) the right to trial by jury in the event of
any litigation to which Lender and Borrower are parties in respect of any
matter arising under this Note, the Loan Agreement or any of the Security
Documents, whether or not such litigation has been commenced in respect of
this Note, the Loan Agreement or any of the Security Documents and whether
or not other persons are also parties thereto, (b) the right to interpose
any counterclaim therein (other than a mandatory counterclaim), (c) the
right to have the same consolidated with any other or separate suit, action
or proceeding, (d) any claim that New York County or such District is an
inconvenient forum and (e) any claim against Lender for consequential,
special or punitive damages respecting the Loan Documents. Lender, by its
acceptance hereof waives trial by jury in any suit, action or proceeding as
to which Borrower, pursuant to the preceding clause (a) has waived trial by
jury.
(c) No delay on the part of Lender in exercising any of its options,
powers or rights, or partial or single exercise thereof, whether arising
hereunder, under the Loan Agreement or under the Security Documents or
otherwise, shall constitute a waiver thereof or affect any right hereunder
or thereunder. No waiver of any of such rights and no modification,
amendment or discharge of this Note shall be deemed to be made unless the
same shall be in writing, duly signed by Lender and Borrower. Each such
waiver (if any) shall apply only with respect to the specific instance
involved and shall in no way impair the rights of Lender or the obligations
of Borrower hereunder in any other respect at any other time.
22. Set-off. Borrower agrees that, in addition to (and without limitation
of) any right of set-off, bankers' lien or counterclaim Lender may otherwise
have, Lender shall (to the extent permitted by applicable law) be entitled, at
its option, to offset balances held by it for the account of Borrower at any of
its offices, in lawful money of the United States of America or in any other
currency, against any principal of or interest on this Note, or any other
obligation of Borrower held by Lender, which is not paid when due (regardless of
whether such balances are then due to Borrower), in which case Lender agrees, by
acceptance of this Note, to promptly notify Borrower thereof, provided that
Lender's failure to give such notice shall not affect the validity of Lender's
right to offset such balances.
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<PAGE>
23. Grid Note. Borrower authorizes Lender to record on SCHEDULE I annexed
hereto the information with respect to the initial advance under this Note and
any payments and prepayments of the Principal Amount made by Borrower and such
notations shall be presumed to be correct and binding subject to rebuttal by
Borrower only by clear and convincing evidence; provided, however, that the
failure of Lender to make any such notation shall not limit or otherwise affect
the obligation of Borrower to repay the Principal Amount nor alter or impair any
of the other obligations of Borrower hereunder, under the Loan Agreement or
under the Security Documents.
24. Miscellaneous. (a) This Note may not be changed orally but only by an
agreement in writing signed by the party against whom enforcement of any waiver,
change, modification or discharge is sought.
(b) Should the indebtedness represented by this Note or any part thereof be
collected at law or in equity, or in bankruptcy, receivership or any other court
proceedings (whether at the trial or appellate level), or should this Note be
placed in the hands of attorneys for collection upon default, Borrower agrees to
pay, in addition to the principal, premium, interest and other sums due and
payable hereon, all costs of collection or attempting to collect this Note,
including reasonable attorneys' fees and expenses.
25. Limitation on Maker's Liability. The provisions of SECTION 6.16 of the
Loan Agreement are hereby incorporated herein by reference.
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<PAGE>
IN WITNESS WHEREOF, Borrower has executed and delivered this Note on the
day and year first above written.
CORPORATE REALTY INCOME FUND
I, L.P.
By: ________________________
Robert F. Gossett, Jr.,
General Partner
By: 1345 REALTY CORPORATION,
General Partner
By: ________________________
Robert F. Gossett, Jr.,
President
AGREED AND ACCEPTED:
FLEET BANK, NATIONAL ASSOCIATION
By:____________________________
Title: Vice President
This is to certify that this Note was executed in my presence on the date
hereof by the parties whose signatures appear above in the capacities indicated.
_________________________
Notary Public
My commission expires:
_________________________
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<PAGE>
SCHEDULE I
SECURED PROMISSORY NOTE
SCHEDULE OF PEG RATE, COST OF FUNDS RATE
AND LIBOR RATE LOANS AND PAYMENTS OR
CONVERSIONS OF PRINCIPAL MADE PURSUANT TO
THE SECURED PROMISSORY NOTE OF EVEN DATE HEREWITH
BY CORPORATE REALTY INCOME FUND I, L.P.
AS BORROWER,
TO FLEET BANK, NATIONAL ASSOCIATION, AS LENDER
<TABLE>
<CAPTION>
====================================================================================================================================
Character of Loan
(Peg Rate, Cost Last Day of Amount Paid -
of Funds Rate or Interest Period, Pre-paid or Unpaid Principal Notation
Date LIBOR Rate If Applicable Converted Balance Made By
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
====================================================================================================================================
</TABLE>
16
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LOAN AGREEMENT
between
CORPORATE REALTY INCOME FUND I, L.P.
as Borrower
AND
FLEET BANK, NATIONAL ASSOCIATION
as Lender
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C> <C>
ARTICLE I. THE LOAN............................................................................. 1
1.01 Loan................................................................................. 1
ARTICLE II. REPRESENTATIONS AND WARRANTIES....................................................... 1
2.01 Authority............................................................................ 1
2.02 Enforceability....................................................................... 1
2.03 No Violation......................................................................... 2
2.04 Financial Information................................................................ 2
2.05 Accuracy............................................................................. 2
2.06 Taxes................................................................................ 2
2.07 No Subordination..................................................................... 2
2.08 Permits, Franchises.................................................................. 3
2.09 ERISA................................................................................ 3
2.10 Other Obligations.................................................................... 3
ARTICLE III. CONDITIONS PRECEDENT........................................................ 3
3.01 Compliance........................................................................... 3
3.02 Documentation........................................................................ 3
3.03 Approval of Lender's Counsel......................................................... 3
3.04 Certain Covenants. ................................................................. 3
ARTICLE IV. COVENANTS................................................................... 4
4.01 Existence............................................................................ 4
4.02 Taxes and Other Liabilities.......................................................... 4
4.03 Notice............................................................................... 4
4.04 Accounting Records................................................................... 4
4.05 Facilities........................................................................... 4
ARTICLE V. DEFAULT.............................................................................. 5
5.01 Default.............................................................................. 5
(a) Payment..................................................................... 5
(b) Other Payments; Performance................................................. 5
(c) Attachment.................................................................. 5
(d) Performance of Other Obligations............................................ 5
(e) Representations and Warranties.............................................. 6
(f) Voluntary Bankruptcy; Insolvency;
Dissolution................................................................. 6
(g) Involuntary Bankruptcy...................................................... 6
(h) Loan Documents.............................................................. 6
(i) Transfers; Management....................................................... 7
5.02 Remedies............................................................................. 7
5.03 Right of Contest..................................................................... 7
ARTICLE VI. ADDITIONAL PROVISIONS................................................................ 8
6.01 Note................................................................................. 8
6.02 Purpose.............................................................................. 8
6.03 Maturity............................................................................. 8
6.04 Advances............................................................................. 8
6.05 Requests for Advances. .............................................................. 9
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
6.06 Borrowing and Repayment.............................................................. 9
6.07 Interest and Amortization............................................................ 10
6.08 Unused Loan Commitment Fee........................................................... 10
6.09 Expenses............................................................................. 10
6.10 Collateral; Release of Collateral.................................................... 11
6.11 Additional Properties................................................................ 11
6.12 Unsecured and Subordinate Financing.................................................. 12
6.13 Single Purpose Entity................................................................ 12
6.14 Property Information................................................................. 12
6.15 Operating Accounts................................................................... 13
6.16 Limitation on Borrower's Liability................................................... 13
6.17 Borrower's Distributions............................................................. 14
6.18 Borrower's Covenants................................................................. 14
6.19 Guaranties........................................................................... 16
6.20 Affiliate Properties................................................................. 16
6.21 Leasing Standards.................................................................... 16
ARTICLE VII. DEFINITIONS.......................................................................... 16
7.01 Defined Terms........................................................................ 16
7.02 Index of Defined Terms............................................................... 18
ARTICLE VIII. MISCELLANEOUS........................................................................ 19
8.01 Expenses............................................................................. 19
8.02 Amendments to Loan Documents......................................................... 19
8.03 Notices.............................................................................. 19
8.04 Relationship of Parties.............................................................. 19
8.05 Attorneys' Fees; Enforcement......................................................... 19
8.06 Disclosure of Information; Participations............................................ 20
8.07 Severability......................................................................... 20
8.08 No Waiver; Successors................................................................ 20
8.09 Miscellaneous........................................................................ 20
8.10 Integration.......................................................................... 21
8.11 Incorporation........................................................................ 21
8.12 Further Assurances................................................................... 21
8.13 Brokers.............................................................................. 21
8.14 WAIVER OF RIGHT TO TRIAL BY JURY..................................................... 21
EXHIBITS
A - Loan Documents
B - Secured Promissory Note
C - Loan Allocations for Additional Properties
D - Documentation Relating to Additional
Properties
SCHEDULES
2.03 - Litigation
2.06 - Taxes
</TABLE>
<PAGE>
LOAN AGREEMENT
LOAN AGREEMENT (as the same may be amended or otherwise modified from time
to time, this "Agreement") is made as of September 26, 1996, between CORPORATE
REALTY INCOME FUND I, L.P., a Delaware limited partnership ("Borrower"), and
FLEET BANK, NATIONAL ASSOCIATION, a national banking association ("Lender").
RECITAL
Borrower has requested from Lender, and Lender has agreed to provide to
Borrower, the extension of credit for which provision is made herein.
THEREFORE, Lender and Borrower agree as follows:
ARTICLE I.
THE LOAN
1.01 Loan. By and subject to the terms of this Agreement and each other
document identified on EXHIBIT A hereto as a Loan Document (this Agreement, such
other document(s), and such amendments thereto as may hereafter be made from
time to time, are herein collectively called the "Loan Documents"), Lender
agrees to loan Borrower up to the principal sum of TWENTY-FOUR MILLION AND
NO/100THS DOLLARS ($24,000,000) ("Loan").
ARTICLE II.
REPRESENTATIONS AND WARRANTIES
Borrower makes the following representations and warranties to Lender as of
the date hereof and continuing thereafter:
2.01 Authority. To the best of Borrower's knowledge, Borrower has complied
with all laws and regulations concerning its organization, existence and
transaction of business.
2.02 Enforceability. Borrower is authorized to execute, deliver and perform
its obligations under the Loan Documents, and the Loan Documents are the legal,
valid and binding obligations of Borrower, enforceable in accordance with their
respective terms, except as such enforceability may be limited by bankruptcy,
reorganization, insolvency or
<PAGE>
similar laws generally affecting the enforcement of creditor's rights and by
generally applicable principles of equity.
2.03 No Violation. To the best of Borrower's knowledge, Borrower's
undertakings under the Loan Documents do not violate any applicable statute,
law, regulation or ordinance or any order or ruling of any court or governmental
entity, or conflict with, or constitute a breach or default under, any agreement
by which Borrower, or any of its assets, is bound or regulated. To the best of
Borrower's knowledge, Borrower is not in violation of any statute, law,
regulation or ordinance, or of any order of any court or governmental entity.
There are no claims, actions or proceedings pending or, to Borrower's knowledge,
threatened against Borrower.
2.04 Financial Information. All financial information delivered to Lender
with respect to Borrower, including, without limitation, financial information
relating to the Projects, fairly and accurately represents Borrower's financial
condition and the financial condition of the Projects (in each instance as of
the date thereof) and, in the case of the annual financial statements of
Borrower, has been prepared in accordance with generally accepted accounting
principles consistently applied, unless otherwise noted in such information. No
material adverse change in such financial condition has occurred.
2.05 Accuracy. All reports, documents, instruments and information
delivered to Lender concerning the Loan, any of Borrower's assets or required by
the Loan Documents are accurate, correct and sufficiently complete to give
Lender true and accurate knowledge of their subject matter (in each instance as
of the date thereof), and do not contain any material misrepresentation or
material omission.
2.06 Taxes. Except as set forth on SCHEDULE 2.06, Borrower has filed all
required federal, state, county and municipal tax returns and has paid all taxes
owed and payable by it, and Borrower knows of no basis for additional assessment
with respect to any taxes.
2.07 No Subordination. There is no agreement, indenture, contract or
instrument to which Borrower is a party or by which Borrower or any of its
assets may be bound that requires the subordination (a) in right of payment of
any of Borrower's obligations under the Loan Documents to any other obligation
of Borrower and/or (b) in priority of lien of any of the Mortgages to any other
lien upon any of the assets of Borrower.
2
<PAGE>
2.08 Permits, Franchises. To the best of Borrower's knowledge, Borrower
possesses all permits, memberships, franchises, contracts and licenses required
and all trademark rights, trade names, trade name rights, patents, patent rights
and fictitious name rights necessary to enable it to conduct the business in
which it is engaged without conflict with the rights of others.
2.09 ERISA. To the best of Borrower's knowledge, Borrower is in compliance
in all material respects with all applicable provisions of the Employee
Retirement Income Security Act of 1974 (ERISA), and no Reportable Event, as
defined in said Act, has occurred and is continuing with respect to any Plan
initiated by Borrower thereunder.
2.10 Other Obligations. To the best of its knowledge, Borrower is not in
default on any obligation for borrowed money, any purchase money obligation or
any other material lease, commitment, contract, instrument or obligation.
ARTICLE III.
CONDITIONS PRECEDENT
Lender shall not be obligated to make any disbursement or take any other
action under the Loan Documents unless all of the following conditions precedent
are satisfied at the time of such disbursement or other action:
3.01 Compliance. The representations and warranties contained herein shall
be true on and as of the date of such disbursement or other action, with the
same effect as though such representations and warranties had been made on and
as of such date, and on such date no Default (as defined herein) shall exist and
be continuing.
3.02 Documentation. Prior to such disbursement or other action hereunder,
Borrower shall have delivered to Lender all Loan Documents and such other
documents, instruments, policies, forms of evidence and other materials as may
reasonably be required under the Loan Documents.
3.03 Approval of Lender's Counsel. All legal matters incidental to such
disbursement or other action shall be reasonably satisfactory to counsel of
Lender.
3.04 Certain Covenants. After giving effect to the proposed additional Loan
advance, Borrower shall, as reasonably calculated by Lender, remain in
compliance with the covenants set forth in SECTION 6.18(a)(A)(i) and (ii).
3
<PAGE>
ARTICLE IV.
COVENANTS
Borrower covenants that so long as any credit remains available under this
Agreement, and until payment in full of all amounts owing by Borrower under the
Loan Documents, Borrower will:
4.01 Existence. Preserve and maintain its existence and all of its rights,
privileges and franchises; comply with the requirements of all applicable laws,
rules, regulations and orders of any governmental authority; and not change its
name or, except in such a manner that will not violate SECTION 5.01(i),
organizational structure.
4.02 Taxes and Other Liabilities. Pay and discharge when due any and all
indebtedness, obligations, assessments and taxes, both real and personal, owed
by or relating to Borrower, any of the Projects or any of the Additional
Properties (including federal and state income taxes), except such as Borrower
may in good faith contest or as to which a bona fide dispute may arise, provided
provision is made to the reasonable satisfaction of Lender for eventual payment
thereof in the event that it is found that the same is an obligation of
Borrower.
4.03 Notice. Promptly give notice in writing to Lender of (1) any material
litigation pending or threatened against Borrower; (2) the occurrence of any
breach or default (beyond any applicable notice and cure period) in the payment
or performance of any material obligation owing by Borrower to any person or
entity, other than Lender; (3) any uninsured or partially uninsured loss
(relating to any of the Projects or any of the Additional Properties) occurring
as a result of fire, theft, liability or other casualty; or (4) any termination
or cancellation (without the simultaneous substitution of a replacement policy
meeting the requirements of the Loan Documents) of any insurance policy which
Borrower is required herein to maintain under the Loan Documents.
4.04 Accounting Records. Maintain adequate books and records in accordance
with generally accepted accounting principles consistently applied, and permit
any representative of Lender, at any reasonable time and upon reasonable notice
to Borrower, to inspect, audit and examine such books and records, to make
copies of the same, and to inspect the properties of Borrower.
4.05 Facilities. Keep all of Borrower's properties which are useful or
necessary to Borrower's business and which are encumbered by the Mortgages, or
any of them, in
4
<PAGE>
good repair and condition (reasonable wear and tear excepted), and from time to
time make necessary repairs, renewals and replacements thereto so that
Borrower's properties shall be fully and efficiently preserved and maintained.
ARTICLE V.
DEFAULT
5.01 Default. The following shall constitute a "Default" under the Loan
Documents:
(a) Payment. The failure of Borrower to pay (i) within ten (10) days after
the same becomes due, any sum payable on account of principal of the Loan and/or
interest thereon and/or (ii) within ten (10) days after written notice that such
fee has not been paid when due, the fee described in SECTION 6.08; or
(b) Other Payments; Performance. The failure of Borrower (i) to perform
when due any obligation of Borrower under the Loan Documents (other than an
obligation referred to in SECTION 5.01(a)), or (ii) to observe any covenant, the
performance or observance of which is required under any Loan Document; and such
failure described in the preceding clauses (i) or (ii) shall continue for a
period of at least thirty (30) business days after written notice thereof shall
have been given to Borrower by Lender; provided, however, that a Default shall
not be deemed to exist hereunder, if (w) such failure referred to in the
preceding clauses (i) or (ii) is reasonably capable of being cured within a
period of time Lender, in its reasonable discretion, advises Borrower that
Lender deems to be reasonable in the circumstances, which period of time shall
in no event be less than thirty (30) business days from the day of Lender's
notice, (x) Borrower promptly after receipt of a notice of default from Lender
commences and at all times diligently proceeds to cure such failure and (y)
within the time period so prescribed by Lender, Borrower does, in fact cure such
failure; or
(c) Attachment. The sequestration or attachment of, or any levy or
execution upon, any property of Borrower encumbered by the Mortgages, or any of
them, which is not released, expunged, bonded or dismissed prior to the earlier
of: thirty (30) days after such sequestration, attachment or execution and the
sale of the property affected thereby; or
(d) Performance of Other Obligations. Subject to Borrower's rights under
SECTION 5.03, the occurrence of a breach or default (beyond any applicable
notice and cure
5
<PAGE>
period) in the payment or performance of any obligation imposed by any
instrument or agreement (other than the Loan Documents) pursuant to which
Borrower has borrowed money (in excess of $250,000) from, or incurred liability
(in excess of $250,000) to, any person or entity including Lender; or
(e) Representations and Warranties. The failure of any representation or
warranty made by Borrower in any Loan Document to be true within fifteen (15)
days after written notice by Lender; provided, however, that a Default shall not
be deemed to exist if (i) such incorrectness is reasonably capable of being
cured within a period of time which Lender, in its sole but reasonable
discretion, advises Borrower that Lender deems to be reasonable in the
circumstances, which period of time shall in no event be less than thirty (30)
business days from the day of Lender's notice, (ii) Borrower promptly after
receipt of a notice of default from Lender commences and at all times diligently
proceeds to cure such default and (iii) within the time period prescribed by
Lender, Borrower does, in fact, cure such default; or
(f) Voluntary Bankruptcy; Insolvency; Dissolution. (i) Borrower's filing of
a petition for relief under the Bankruptcy Reform Act of 1978 (as amended or
recodified, the "Bankruptcy Code"), or under any other present or future state
or federal law regarding bankruptcy, reorganization or other relief to debtors
(collectively, "Debtor Relief Law"); or (ii) Borrower's filing any pleading in
any involuntary proceeding under the Bankruptcy Code or other Debtor Relief Law,
which admits the jurisdiction of the court or the petition's material
allegations regarding Borrower's insolvency; or (iii) Borrower's making a
general assignment for the benefit of creditors; or (iv) Borrower's applying
for, or the appointment of, a receiver, trustee, custodian or liquidator of
Borrower; or (v) the filing by or against Borrower of a petition seeking the
liquidation or dissolution of Borrower or the commencement of any other
procedure to liquidate or dissolve Borrower; or
(g) Involuntary Bankruptcy. Borrower's failure to effect a full dismissal
of any involuntary petition under the Bankruptcy Code or any other Debtor Relief
Law that is filed against Borrower or in any way restrains or limits Lender's
rights under the Loan Documents, prior to the earlier of the entry of any order
granting relief sought in the involuntary petition or sixty (60) days after the
date of filing of the petition; or
(h) Loan Documents. The occurrence of an "Event of Default" (as defined in
any Loan Document); or
6
<PAGE>
(i) Transfers; Management. (i) The direct or indirect sale, transfer,
conveyance or voluntary encumbrance (except for permitted leases and for
releases where Lender receives the required release price, it being understood
and agreed that,in the case of the Additional Properties, no release payment is
required) of any of the Projects or any part thereof of any of the Additional
Properties or any part thereof, except by reason of the transfer of equity
interests in Borrower (provided, however, that Robert F. Gossett, Jr. and
members of his immediate family (i.e., his spouse, children and grandchildren)
and trusts, corporations and other entities controlled by him or his immediate
family or for his benefit or the benefit of his immediate family shall, in the
aggregate, retain the equity interests in Borrower collectively held by such
persons and entities as of June 30, 1996) or (ii) Robert F. Gossett, Jr., other
than by reason of death or disability, ceases to be the managing general partner
of Borrower with substantially all of the management powers he presently
possesses.
5.02 Remedies. Upon the occurrence of a Default, Lender may, at its option,
declare all sums owing to Lender under the Loan Documents immediately due and
payable; provided, however, that upon the occurrence of a Default specified in
SECTIONS 5.01(f) or 5.01(g), or upon the occurrence of any other Default
specified in any Loan Document where provision is made for acceleration to occur
automatically as a consequence thereof, all sums owing to Lender under the Loan
Documents shall automatically become immediately due and payable. In addition,
upon the occurrence of any Default, (a) the obligation, if any, of Lender to
permit further borrowings under the Loan Documents shall immediately cease and
terminate, and (b) Lender shall have all rights, powers and remedies available
under the Loan Documents, or accorded by law, including without limitation, the
right to resort to any or all security for the Loan, and to exercise any or all
of the rights of a beneficiary or secured party pursuant to applicable law. All
rights, powers and remedies of Lender may be exercised at any time by Lender and
from time to time during the continuation of a Default. All rights, powers and
remedies of Lender in connection with each of the Loan Documents are cumulative
and not exclusive and shall be in addition to any other rights, powers or
remedies provided by law or equity.
5.03 Right of Contest. Borrower may contest in good faith any claim,
demand, levy or assessment by any person (other than Lender with respect to the
Loan Documents) which would constitute a Default, if (a) Borrower pursues the
contest diligently and in a manner which Lender reasonably determines will not
be prejudicial to Lender nor impair the rights of Lender under the Loan
Documents; and (b) Borrower
7
<PAGE>
deposits with Lender any funds or other forms of assurance which Lender in good
faith from time to time reasonably determines appropriate to protect Lender from
the consequences of the contest being unsuccessful. Borrower's compliance with
this SECTION 5.03 shall operate to prevent such claim, demand, levy or
assessment from becoming a Default.
ARTICLE VI.
ADDITIONAL PROVISIONS
6.01 Note. The Loan shall be evidenced by a promissory note (as the same
may be amended or otherwise modified from time to time, the "Note") in the form
of EXHIBIT B hereto.
6.02 Purpose. The proceeds of the Loan shall be used for the following
purposes and no others: (i) refinancing (concurrently with the execution and
delivery hereof) secured first mortgage indebtedness of Borrower existing as of
the date hereof in the approximate principal amount of $9,800,000, (ii)
redeeming outstanding equity interests in Borrower (but in no event may more
than $3,000,000 of the Loan be used for this purpose), (iii) paying for tenant
improvements and leasing commissions incurred by Borrower in connection with the
Projects or any of the Additional Properties or any of the Affiliate Properties,
(iv) acquiring Additional Properties in accordance with the requirements of
SECTIONS 6.11 below, (v) paying closing costs incurred by Borrower in connection
with (a) the closing of the Loan (including a commission to Lexham Capital
Partners), (b) the acquisition of Additional Properties by Borrower and (c) the
acquisition of an Affiliate Property by an Affiliate Property Owner, (vi) paying
other costs of owning and operating any of the Projects, the Additional
Properties and/or the Affiliate Properties, or (vii) making any equity
contribution to any Affiliate Property Owner.
6.03 Maturity. Subject to the limitations, terms and conditions contained
in the Loan Documents, the outstanding principal balance of the Loan, together
with all accrued and unpaid interest and any accrued and unpaid Unused Loan
Commitment Fee, shall be due and payable on September 30, 2000.
6.04 Advances. Subject to and in accordance with the provisions hereof, the
Loan will be disbursed in a series of advances ("Advances") to Borrower, from
time to time during the period commencing on the date hereof and ending on
September 30, 1999. Advances shall be in minimum amounts of $1,000,000 and
integral multiples of $100,000. The
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aggregate total of all Advances outstanding at any time shall never exceed the
principal amount of Twenty-Four Million Dollars ($24,000,000) less any permanent
Loan commitment reductions hereunder, and all borrowings shall otherwise be
subject to all the limitations, terms and conditions contained in the Loan
Documents. Reductions in the Loan Commitment shall occur as a result of the
provisions of SECTIONS 6.06(d) and 6.07(b).
6.05 Requests for Advances. Borrower shall make a request for each Advance
by completing, executing and delivering to Lender, not less than three (3)
business days prior to the date upon which Borrower wishes Lender to disburse
the Advance, a request for an Advance in form reasonably satisfactory to Lender.
Upon receipt of such a request for an Advance and such other information and
documents regarding the Advance or the purpose for the Advance as Lender may
reasonably request or as may be required hereby, Lender shall disburse such
Advance on the requested date.
6.06 Borrowing and Repayment. (a) Borrower may from time to time during the
term of the Loan borrow and partially or wholly repay its outstanding
borrowings, subject to all of the limitations, terms and conditions of the Loan
Documents.
(b) Reborrowings of the Loan must be secured by the Mortgages and, with
respect to such reborrowings, the Mortgages must continue as first priority
liens. Accordingly, as a condition to Borrower's right to borrow hereunder, the
title insurer of the liens of the Mortgages must have so insured that the
Mortgages will, on a first priority basis, secure the Loan. Subject to the
provisions of SECTIONS 6.06(d) and 6.07(b) and the other provisions of the Loan
Documents, Borrower may from time to time reborrow amounts which Borrower has
repaid.
(c) Advances (including Advances made pursuant to Borrower's right to
reborrow) shall also be conditioned on a clear continuation of title to the date
of each Advance, showing marketable title to the Projects and the Additional
Properties, if any, vested in Borrower, with no exceptions other than those
approved by Lender, and the issuance of such endorsements (if not previously
issued) to the mortgage title insurance policies insuring the continuing first
priority of the liens of the Mortgages as Lender may reasonably require.
Notwithstanding the foregoing, to the extent the mortgage title insurance
policies issued to Lender on the date hereof insure the first lien priority of
future advances without the requirement for a clean
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continuation of title, no such continuation of title shall be required.
(d) The Loan commitment shall be permanently reduced by required monthly
principal payments described in SECTION 6.07(b) and, at the election of
Borrower, by such amounts as Borrower shall elect by written notice to Lender.
If Borrower elects to reduce the Loan Commitment to an amount less than the
outstanding Loan, Borrower's notice making such an election must be accompanied
by a repayment of the Loan (in an amount such that the outstanding Loan does not
exceed the reduced Loan commitment) and by the payment of any amounts due under
PARAGRAPH 8 of the Note as a result of such prepayment.
6.07 Interest and Amortization. (a) Interest shall accrue upon the
outstanding principal balance of the Loan at the rate(s) provided in the Note,
and such interest shall be payable as required therein.
(b) Concurrently with each monthly payment of interest under the Loan,
Borrower shall make monthly principal payments to Lender in an amount equal to
the outstanding principal balance of the Loan on the payment date (i.e., on the
first day of each calendar month) divided by 500. Accordingly, the required
monthly principal payment will vary from month to month. Any monthly principal
payments shall reduce the Loan commitment by a like amount and may not be
reborrowed.
6.08 Unused Loan Commitment Fee. Commencing six (6) months after the date
hereof, Borrower shall pay to Lender a non-refundable unused Loan commitment fee
(the "Unused Loan Commitment Fee") at a rate equal to one-quarter percent (1/4%)
per annum of an amount equal to the average maximum Loan commitment for the
period then ended less the average outstanding principal balance of the Loan for
the period then ended. No Unused Loan Commitment Fee shall be payable in respect
of the six months immediately following the date hereof. The first payment on
account of the Unused Loan Commitment Fee shall be payable on October 1, 1997 in
respect of the period commencing six (6) months from the date hereof to
September 30, 1997, and each subsequent payment of the Unused Loan Commitment
Fee shall be due on the first day of April and October thereafter in respect of
the six-month period then ended.
6.09 Expenses. Without in any way limiting SECTION 8.01 of this Agreement,
Borrower shall pay Lender immediately upon demand all reasonable costs and
expenses incurred by Lender in connection with: (1) the preparation of any
commitment letter relating to the Loans and any and
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all Loan Documents; (2) the enforcement or satisfaction by Lender of any of
Borrower's obligations under this Agreement or under the other Loan Documents;
and (3) the negotiation, preparation and/or execution of any amendment, waiver,
supplement or modification to any of the Loan Documents and any other documents
and instruments prepared in connection therewith, and the consummation of the
transactions contemplated thereby, including, without limitation, the reasonable
fees and disbursements of counsel to Lender. For all purposes of this Agreement,
Lender's costs and expenses shall include, without limitation, all reasonable
legal fees, accounting fees, auditor fees and inspection fees.
6.10 Collateral; Release of Collateral. (a) The performance of all
obligations of Borrower to Lender under the Loan Documents shall be secured by
the Security Documents (as such term is defined in the Note).
(b) Lender agrees to release its liens and security interests from one or
more of the Projects if (i) no Default shall exist and no event or circumstance
shall have occurred or arisen (or would occur or arise as a result of such
release) which would constitute a Default but for any unsatisfied requirement
for the giving of notice or passage of time or both, (ii) Borrower pays to
Lender 110% of the Loan allocation for the Project to be released (as provided
for in SECTION 6.10(c)), and (iii) without limiting the foregoing, the remaining
Projects will, immediately after giving effect to the proposed release and any
repayment of the Loan as a result thereof, in the reasonable calculation of
Lender, satisfy the Loan to Value Ratio and Debt Service Coverage Ratio
covenants contained in SECTIONS 6.18. With respect to Additional Properties
which are subjected to the lien of a Mortgage, Lender, without receipt of any
release price, will release an Additional Property upon any bona-fide sale or
refinancing thereof or upon any transfer thereof to an Affiliate Property Owner.
(c) The Loan allocations for the initial Projects are set forth on EXHIBIT
C hereto. Only if, as and when an Additional Property becomes a Project will
Borrower and Lender adjust the Loan allocations for all of the then Projects on
a basis consistent with that used to establish the Loan allocations for the
initial Projects.
6.11 Additional Properties. If Borrower desires to use Loan proceeds to
acquire an additional property or an interest therein (an "Additional
Property"), such Additional Property must be reasonably acceptable to Lender.
Borrower's interest in an Affiliate Property Owner is not Additional Property.
Any Additional Property so acquired shall become part of the collateral securing
the Loan (and
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Borrower, at its sole cost and expense, shall execute and deliver to Lender such
Mortgages, security agreements and assignments as Lender may reasonably require
in order to subject the Additional Property to a lien in favor of Lender).
Additional Properties shall not be deemed to be "Projects" or be included in the
calculation of the Loan to Value Ratio or Debt Service Coverage Ratio covenants
contained in SECTION 6.18 unless Lender, in its sole and absolute discretion,
consents thereto in writing. In the event that an Additional Property shall, by
reason of such consent by Lender, become a "Project", then such Additional
Property shall be included in the calculation of the Loan to Value Ratio and
Debt Service Coverage Ratio. Upon any acquisition of an Additional Property,
whether or not such Additional Property is to become a Project, Borrower shall
at its cost also deliver to Lender with respect to the Additional Property a
survey, a mortgage title insurance policy and the other items described in
EXHIBIT D hereto. Borrower may transfer Additional Properties to Affiliate
Property Owners, and upon any such transfer the Additional Property so
transferred shall cease to be an Additional Property.
6.12 Unsecured and Subordinate Financing. Borrower shall not obtain any
unsecured or subordinate secured financing, except for current debt incurred in
the ordinary course of Borrower's business which would be characterized as an
unsecured trade account payable, and for these purposes Lender agrees that
tenant buildout expenses and leasing costs are unsecured trade accounts payable.
6.13 Single Purpose Entity. Borrower shall at all times remain a single
purpose entity owning only the Projects, any Additional Properties and any
Affiliate Property Owners.
6.14 Property Information. Borrower shall submit to Lender the following
information:
(a) Audited annual financial statements of Borrower prepared in accordance
with generally accepted accounting principles consistently applied (including a
detailed Balance Sheet, Income Statement and Cash Flow Statement), to be
submitted to Lender no later than 120 days after the end of each fiscal year of
Borrower.
(b) Quarterly unaudited financial statements of Borrower prepared in
accordance with generally accepted accounting principles consistently applied
(including a detailed Balance Sheet, Income Statement and Cash Flow Statement,
subject to normal year-end adjustments), to be submitted to Lender no later than
60 days after the end of
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each fiscal quarter of Borrower. Such quarterly statements shall be certified by
a general partner of Borrower to be true, correct and complete in all material
respects.
(c) Upon the request of Lender but not more often than quarterly, lease-up
schedules and/or updated rent rolls and operating statements for the Projects
and any Additional Properties.
(d) Such other information with respect to the Projects and any Additional
Properties as may be reasonably requested from time to time by Lender.
6.15 Operating Accounts. Borrower shall maintain all operating accounts for
the Projects and any Additional Properties at the New York Branch of Lender;
provided, however, that Borrower shall be permitted to maintain (other than with
Lender) accounts for the initial deposit of rent payments. On or about the
twentieth of each month, Borrower will transfer the collected rents to such
operating accounts.
6.16 Limitation on Borrower's Liability. Lender's recovery against Borrower
under the Loan Documents shall be limited solely to the collateral given to
Lender as security for Borrower's performance under the Loan Documents and to
the other assets of Borrower and is otherwise non-recourse to all partners
(limited and general) in Borrower, and such recovery shall not be a lien, or the
basis of a claim of lien or levy of execution, against the assets of any partner
(general or limited) of Borrower. Notwithstanding the foregoing, each general
partner of Borrower and the assets of each general partner of Borrower shall be
fully liable to Lender to the same extent that Borrower's general partner would
be liable absent the foregoing limitation of this paragraph for and to the
extent of any loss or damage suffered by Lender in connection with or as a
result of any of the following, but any such general partner shall only be so
liable for his or its own acts and then only to the extent of any actual loss
caused by such acts: (a) fraud and material misrepresentation; (b) intentional
damage to the Projects or Additional Properties; and (c) misapplication of any
insurance or condemnation proceeds or tenant security deposits or any other
funds maintained by Borrower for any purpose in connection with the Projects or
Additional Properties. The limitations hereof shall not be deemed to limit: (i)
any right Lender might otherwise have to obtain injunctive relief against
Borrower or Borrower's general partner; (ii) any suit or action in connection
with the preservation, enforcement or foreclosure of the liens, mortgages,
assignments and security interests now or at any time hereafter securing the
payment and performance of all
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sums and obligations under this Agreement or any of the other Loan Documents; or
(iii) subject to the Loan Documents, the collection of amounts which may become
owing or payable under or on account of insurance, condemnation awards or
damages for other public actions or surety bonds maintained or provided by
Borrower; provided, however, that the assertion by Lender of any such right,
suit, action or collection of amounts shall not result in any claim, demand or
liability against any general partner of Borrower or any claim or demand upon
the assets of any general partner of Borrower except as otherwise provided
herein.
6.17 Borrower's Distributions. Provided no Default shall exist and no event
or circumstance shall have occurred or arisen which would constitute a Default
but for any unsatisfied requirement for the giving of notice or passage of time
or both, Borrower may distribute to its partners up to ninety percent (90%) of
the sum of its operating net income (as shown on Borrower's financial statements
and calculated in a manner consistent with its statements for the period ending
December 31, 1995) plus depreciation and amortization.
6.18 Borrower's Covenants. (a) As of the end of each Accounting Period, (A)
the Projects encumbered by the Mortgages must have (i) a Debt Service Coverage
Ratio of not less than 1.40:1.0, and (ii) a Loan to Value Ratio not to exceed
55% (i.e., the appraised value of the Projects shall equal or exceed two hundred
and ten percent of the then outstanding principal balance of the Loan), (B)
Borrower must have a Liquid Net Worth of not less than $1,000,000, and (C)
Borrower's total liabilities (calculated in a manner consistent with Borrower's
financial statements for the period ending December 31, 1995, and including
accounts payable but excluding current unpaid real estate taxes) may not exceed
55% of the appraised value of the Projects and the Additional Properties (based
on appraisals by Lender or appraisals by Borrower approved by Lender). If
Borrower fails to comply with any of the foregoing covenants and such failure
continues for sixty (60) days after written notice thereof by Lender to
Borrower, such failure shall, subject (in the case of a failure by Borrower to
comply with a covenant in SECTION 6.18(a)(A)(i) or (ii) or SECTION 6.18(a)(C))
to the provisions of SECTION 6.18 (b), constitute a Default.
(b) Within sixty (60) days after Lender's written notice to Borrower of
non-compliance with the covenants contained in SECTION 6.18 (a)(A)(i) or (ii) or
SECTION 6.18(a)(C), Borrower shall have the option (x) in the case of a default
under SECTION 6.18(A)(i) or (ii), to remedy such failure by reducing the
outstanding principal balance
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of the Loan to a level such that Borrower is in compliance with such covenants
or (y) in the case of a default under SECTION 6.18(a)(C), to remedy such failure
by reducing Borrower's total liabilities (which may include reducing the
outstanding principal balance of the Loan) to a level such that Borrower is in
compliance with such covenant. Within sixty (60) days after Lender's written
notice to Borrower of non-compliance with the covenants contained in SECTION
6.18(a)(A)(ii) or SECTION 6.18(a)(C), Borrower shall have the option to remedy
such failure by providing cash collateral, a letter of credit and/or additional
collateral acceptable to Lender, in Lender's reasonable discretion, equal to the
amount needed so that Borrower is in compliance with such covenants, with such
additional collateral to be accompanied by such supporting documents, financial
statements and opinions of counsel as Lender may reasonably require; provided,
however, that in order to satisfy the requirements of this SECTION 6.18(b),
Lender must also be satisfied as to the solvency of the person or entity
pledging the additional collateral. If no Default shall exist and no event or
circumstance shall have occurred or arisen which would constitute a Default but
for any unsatisfied requirement for the giving of notice or the passage of time
or both, Borrower shall have the right to obtain a release of all or any portion
of the cash collateral, the letter of credit or other collateral provided
pursuant to this SECTION 6.18 (b), as applicable, upon Lender's receipt of
financial information and/or appraisals evidencing compliance (without the
benefit of such collateral) with the covenants referred to above.
(c) (i) Within sixty (60) days after each Accounting Period, Borrower shall
furnish to Lender detailed calculations applying the provisions of SECTION
6.18(a); and such calculations shall be certified as true and accurate, in a
manner acceptable to Lender, by a general partner of Borrower as having been
prepared under his supervision in accordance with the provisions hereof and that
he knows of no facts inconsistent with such calculations.
(ii) Compliance with the covenants in SECTION 6.18(a) shall be tested
as of the end of each Accounting Period.
(iii) For the purpose of calculating Borrower's cash from operations,
it shall be assumed that all leases of the Projects which are in Full Force
and Effect at the time Borrower's cash from operations is being calculated
were in Full Force and Effect at all times during the twelve month period
then ended and that all rent concessions had expired prior to the
commencement of such twelve month period.
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(iv) Borrower's cash from operations shall be determined without
regard to extraordinary items of income and of expense. Each lease, the
rental or other income from which was included in the calculations of
Borrower's cash from operations, must be in Full Force and Effect as of the
date Borrower's cash from operations is being calculated.
6.19 Guaranties. Borrower will not guarantee, endorse, become surety for,
assume or otherwise in any way become or be liable for, any obligation of any
other Person, whether by agreement to purchase the indebtedness of any other
Person or agreement for the furnishing of funds through the purchase of goods,
supplies or services (or by way of stock purchase, capital contribution, advance
or loan) or for the purpose of paying the indebtedness of any other Person, or
otherwise, directly or indirectly, except for endorsements of negotiable
instruments for collection in the ordinary course of its business. Nothing in
this SECTION 6.19 shall be construed to prevent Borrower from making equity
investments in Affiliate Property Owners so long as Borrower has no continuing
obligation which would violate the prohibitions set forth in this SECTION.
6.20 Affiliate Properties. Nothing herein shall limit Borrower's right to
acquire an Affiliate Property Owner or the right of any such Affiliate Property
Owner to acquire an Affiliate Property.
6.21 Leasing Standards. Borrower will not enter into any lease of 10,000 or
more rentable square feet at any one or more of the Projects unless Lender has
consented, in writing, to such lease, and Lender agrees not to unreasonably
withhold or delay its consent.
ARTICLE VII.
DEFINITIONS
7.01 Defined Terms. In addition to the terms elsewhere defined in the Loan
Documents, the following terms are used in the Loan Documents with the following
meanings:
"Accounting Period" - shall mean each twelve (12) month period ending on
each March 31, June 30, September 30 and December 31 in each year commencing
with the twelve (12) month period ending September 30, 1996.
"Affiliate" shall mean (a) if with respect to a corporation, (i) any
officer or director thereof and any person, trust, corporation, partnership,
venture or other entity who or which is, directly or indirectly, the legal or
beneficial owner of more than twenty percent (20%) of any
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class of shares or other equity security of such corporation, or (ii) any
person, trust, corporation, partnership, venture or other entity who or which,
directly or indirectly, controls or is controlled by or is under common control
with such corporation and (b) if with respect to a partnership or venture, any
(i) general partner, (ii) general partner of a general partner, (iii)
partnership with a common general partner, (iv) coventurer thereof or (v) any
person, trust, corporation, partnership, venture or other entity who or which,
directly or indirectly, controls or is controlled by or is under common control
with such partnership or venture, and if any general partner or general partner
of a general partner or coventurer is a corporation, any person, trust,
corporation, partnership, venture or other entity which is an Affiliate as
defined in clause (a) above of such corporation. "Controls" (including the
correlative meanings of "controlled by" and "under common control with") means
effective power, directly or indirectly, to direct or cause the direction of the
management and policies of such person, trust, corporation, partnership, venture
or other entity.
"Affiliate Property" shall mean an interest in real estate acquired by an
Affiliate Property Owner.
"Affiliate Property Owner" shall mean an Affiliate of Borrower which
acquires an Affiliate Property.
"Appraised Value" - shall mean the appraised value of a Project or of an
Additional Property, as determined by an independent appraiser selected by
Lender and reasonably acceptable to Borrower. Lender may require that such an
appraisal be performed at any time, but not more frequently than once in any
twelve month period. Appraised Value shall be determined utilizing an appraisal
method consistent with that used in determining the Appraised Value for Lender
in connection with this Loan. Borrower shall solely be responsible for the cost
of such appraisals.
"Debt Service Coverage Ratio" shall mean the cash from operations (as shown
on Borrower's financial statements and calculated in a manner consistent with
its statements for the period ending December 31, 1995 and this Agreement) from
the Projects (encumbered by the Mortgages at the time compliance with the
covenant is being tested) for the preceding twelve (12) consecutive calendar
months divided by a constant amortization (principal and interest) payment
assuming (i) the then outstanding principal balance of the Loan, (ii) a 300
month term and (iii) an annual interest rate equal to the sum of (a) the
prevailing yield
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on the then most recently issued United States Treasury obligations having a
maturity of five years and (b) 1.75%.
"Full Force and Effect" - shall mean, as to any lease, that such lease
shall be in full force and effect, there shall be no material default by the
tenant thereunder or material default by the landlord thereunder or other act or
condition or circumstance giving or which may give, without the giving of any
further notice, the tenant or the landlord the right to terminate any lease and,
if requested by Lender and required by its lease, the tenant shall have
delivered to Lender an estoppel certificate in the form required by such lease
or, if such lease does not provide a form of estoppel that the tenant is
required to deliver, then in form and substance reasonably satisfactory to
Lender.
"Liquid Net Worth" shall mean "cash and short term investments at cost" and
"investments in marketable securities" (which shall be marked to market) as
shown by Borrower's financial statements (calculated in a manner consistent with
the Borrower's statements for the period ending December 31, 1995) and/or Loan
availability (i.e., the amount of the then undisbursed Loan which Borrower would
be entitled to receive upon its request for an Advance).
"Loan to Value Ratio" shall mean the ratio of (i) the outstanding principal
balance of the Loan to (ii) the Appraised Value of the Projects encumbered by
the Mortgages at the time compliance with the covenant is being tested (based on
appraisals by Lender or appraisals by Borrower approved by Lender).
"Person" shall mean and include an individual, a partnership, a
corporation, a trust, an unincorporated association, a joint venture or any
other entity or a government or any agency or political subdivision thereof.
"Projects" shall mean each of the properties listed on EXHIBIT C hereto,
unless and until released from the lien of the Mortgage pursuant to SECTION
6.10(b), and any Additional Property, unless and until released from the lien of
the Mortgage pursuant to SECTION 6.10(b), which Lender agrees is to be treated
as a "Project."
7.02 Index of Defined Terms. The following is a listing of defined terms
used in this Agreement but not defined in SECTION 7.01, together with an index
of where such terms are defined.
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Additional Property 6.11
Advances 6.04
Agreement Recital
Bankruptcy Code 5.01(f)
Borrower Recital
Debtor Relief Laws 5.01(f)
Default 5.01
Lender Recital
Loan Article I
Loan Documents Article I
Mortgages Exhibit A
Note 6.01
Unused Loan Commitment Fee 6.08
ARTICLE VIII.
MISCELLANEOUS
8.01 Expenses. Borrower shall pay, within five (5) days of Lender's demand,
all reasonable expenses and charges of Lender incidental to making the Loan,
including, without limitation, attorneys' fees, appraisal fees, fees and charges
for surveys, examination of title to the Projects and mortgage title insurance
thereon, and hazard insurance.
8.02 Amendments to Loan Documents. The Loan Documents shall not be
modified, superseded or terminated in any respect, except in a writing signed by
the party to be charged.
8.03 Notices. All written notices and demands under the Loan Documents
shall be deemed served upon delivery (if given by hand or by overnight courier)
or, if mailed, upon the first to occur of receipt or the expiration of
seventy-two (72) hours after deposit in United States Postal Service, certified
mail, postage prepaid and addressed to the address of Borrower or Lender
appearing below. Notice of change of address may be given in the same manner,
provided Borrower's address is in the State of New York or the State where
Borrower's principal place of business is located.
8.04 Relationship of Parties. The relationship of Borrower and Lender under
the Loan Documents is, and shall at all times remain, solely that of borrower
and lender. No person other than Lender and Borrower and their permitted
successors and assigns shall have any rights or right of action hereunder.
8.05 Attorneys' Fees; Enforcement. If any attorney is engaged by Lender to
enforce or defend any provision of the Loan Documents, or as a consequence of
any Default under the Loan Documents, Borrower shall pay to Lender, immediately
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upon demand, the amount of all reasonable attorneys' fees and all costs incurred
by Lender in connection therewith, together with interest thereon from the date
of such demand until paid at the rate of interest applicable to the principal
balance of the Note as specified therein.
8.06 Disclosure of Information; Participations. Borrower understands and
agrees that Lender may elect, at any time, to sell, assign or participate all or
any part of Lender's interest in the Loan, and that any such sale, assignment or
participation may be to one or more financial institutions, private investors,
and/or other entities, at Lender's sole discretion. Borrower further agrees that
Lender may disseminate to any such potential purchaser(s), assignee(s) or
participant(s) all documents and information (including without limitation all
financial information) which has been or is hereafter provided to or known to
Lender with respect to: (a) any security for the Loan; (b) any party connected
with the Loan (including, without limitation, the Borrower or any general
partner of Borrower); and/or (c) any lending relationship other than the Loan
which Lender may have with any party connected with the Loan. Borrower hereby
understands and agrees that, as of the date hereof, Lender has not contacted
other lenders regarding their interest in participating in the Loan.
8.07 Severability. If any provision of the Loan Documents shall be
determined by a court of competent jurisdiction to be invalid, illegal or
unenforceable, that portion shall be deemed severed from the Loan Documents and
the remaining parts shall remain in full force as though the invalid, illegal,
or unenforceable portion had never been part thereof.
8.08 No Waiver; Successors. No waiver shall be implied from any failure of
Lender to take, or any delay by Lender in taking, action concerning any Default
or failure of condition, or from any previous waiver of any similar or unrelated
Default or failure of condition. Any waiver or approval hereunder must be in
writing and shall be limited to its specific terms. The terms and provisions
hereof shall be binding upon and inure to the benefit of the heirs, successors
and assigns of the parties.
8.09 Miscellaneous. All headings are for convenience only and shall be
disregarded in construing the Loan Documents. Except as may be otherwise
expressly provided, the Loan Documents shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York applicable to
contracts made and to be wholly performed in such State, except to the extent
preempted by Federal laws. Borrower hereby consents to the jurisdiction of any
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Federal or State Court within the State of New York having proper venue, and
also consents to service of process by any means authorized by New York or
Federal Law.
8.10 Integration. The Loan Documents contain or expressly incorporate by
reference the entire agreement of the parties with respect to the matters
contemplated therein and supersede all prior negotiations.
8.11 Incorporation. The schedules and exhibits attached hereto are by this
reference incorporated into and made a part of this Agreement.
8.12 Further Assurances. At Lender's request and at Borrower's expense,
Borrower shall execute, acknowledge and deliver any other reasonable instruments
and perform any other acts reasonably necessary, desirable or proper (as
reasonably determined by Lender) to carry out the purposes of the Loan Documents
or to perfect and preserve any liens created by the Loan Documents.
8.13 Brokers. Lender shall not be required to pay any brokerage fees or
commissions arising from the execution of this Agreement or the making of the
Loan and each party hereto represents to the other that it has not dealt with
any broker in connection with these transactions, other than Lexham Capital
Partners. Borrower hereby agrees to indemnify and hold harmless Lender from all
damages, loss, costs and expenses suffered or incurred by Lender in connection
with any claims made by a broker, including Lexham Capital Partners, or any
other person arising out of the execution of this Agreement by Lender or the
making of the Loan.
8.14 WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY TO THIS AGREEMENT HEREBY
EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION (a) ARISING UNDER THE LOAN DOCUMENTS, INCLUDING, WITHOUT
LIMITATION, ANY PRESENT OR FUTURE MODIFICATION THEREOF OR (b) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR
ANY OF THEM WITH RESPECT TO THE LOAN DOCUMENTS (AS NOW OR HEREAFTER MODIFIED) OR
ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER
NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR
OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A
JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A
COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
21
<PAGE>
CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
IN WITNESS WHEREOF, Borrower and Lender have executed this Agreement as of
the date first set forth above.
"Lender" "Borrower"
FLEET BANK, CORPORATE REALTY INCOME
NATIONAL ASSOCIATION FUND I, L.P., a Delaware
limited partnership
By:________________________ By: _______________________
Its:_______________________ Robert F. Gossett, Jr.,
general partner
By: 1345 Realty Corporation,
general partner
Lender's Address:
By:________________________
Fleet Bank, Robert F. Gossett, Jr.,
National Association President
56 East 42nd Street
New York, New York 10017
Attn: Mr. James E. Mirman, Borrower's Address:
Vice President
Corporate Realty Income
Fund I, L.P.
406 East 85th Street
New York, New York 10028
Attn: Mr. Robert F. Gossett, Jr.,
Managing Director
22
ENVIRONMENTAL COMPLIANCE AND
INDEMNIFICATION AGREEMENT
Agreement (as the same may be amended or otherwise modified from time to
time, the "Agreement") made and entered into as of this _____ day of __________,
1996, by CORPORATE REALTY INCOME FUND I, L.P., a Delaware limited partnership
("Indemnitor"), having an office at c/o Vance Capital Corporation, 406 East 85th
Street, New York, New York 10028, to and in favor of FLEET BANK, NATIONAL
ASSOCIATION, a national banking association ("Lender"), having an office at 56
East 42nd Street, New York, New York 10017.
RECITALS
WHEREAS, Indemnitor is the fee owner of certain parcels of real property,
and the improvements thereon, more particularly described in EXHIBIT A attached
hereto;
WHEREAS, Indemnitor has applied to Lender for a $24,000,000 loan (the
"Loan");
WHEREAS, the Loan will be evidenced by a Secured Promissory Note (as the
same may be amended or otherwise modified from time to time, the "Note") and
secured by one or more mortgages (or deeds of trust) and assignments of rents
(as the same may be amended or otherwise modified from time to time,
collectively, the "Mortgage"; the Note, Mortgage and related documents, as the
same may be amended or otherwise modified from time to time, being hereinafter
referred to collectively as the "Loan Documents");
WHEREAS, Lender is unwilling to make the Loan to Borrower unless Indemnitor
executes and delivers this Agreement, and Indemnitor, to induce Lender to make
the Loan, is willing to execute this Agreement.
NOW, THEREFORE, in order to induce Lender to make the Loan and for other
good and valuable consideration, Indemnitor hereby represents, warrants,
covenants and agrees with the Lender as follows:
I. DEFINITIONS: All capitalized terms used in this Agreement and not
heretofore defined herein, or in the Loan Agreement shall have the meanings
set forth below.
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"Environment" means any water or water vapor, any land including land
surface or subsurface, air, fish, wildlife, biota and all other natural
resources.
"Environmental Laws" means all federal, state and local environmental, land
use, zoning, health, chemical use, safety and sanitation, occupational
health and safety laws, statutes, ordinances and codes and the common law,
relating to pollution and/or the protection of the Environment and/or the
health and safety of any persons and/or governing the use, storage,
treatment, generation, transportation, processing, handling, production or
disposal of Hazardous Substances and the rules, regulations, policies,
guidelines, interpretations, decisions, orders and directives of federal,
state and local governmental agencies and authorities with respect thereto.
"Environmental Permits" means all permits, licenses, approvals,
authorizations, consents or registrations required by any applicable
Environmental Law.
"Hazardous Substance" means, without limitation, any flammables,
explosives, radon, radioactive materials, asbestos, urea formaldehyde foam
insulation, polychlorinated-biphenyls, petroleum and petroleum-based
products or by-products, methane, hazardous materials, medical waste,
hazardous wastes, hazardous or toxic substances or related materials, as
defined in the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended (49 U.S.C. Sections 9601, et seq), the
Hazardous Materials Transportation Act, as amended (49 U.S.C. Sections
1801, et seq), the Toxic Substances Control Act, as amended (15 U.S.C.
Sections 2601, et seq), or the laws (and any regulations promulgated
thereunder) of any State wherein one or more of the Premises are located.
The term "Hazardous Substance" does not include consumer products which are
packaged for, stored, and used by a consumer with reasonable care and for
their intended use.
"Improvements" mean the buildings, structures and other improvements now or
hereafter located on the Premises (or any of them).
"Indemnitee" means Lender, its present and future participants in the Loan,
if any, and all subsequent holders of any of the Loan Documents, their
respective officers, directors, employees, agents, representatives,
contractors and subcontractors, and each subsequent owner of the Premises
(or any of them)
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<PAGE>
who acquires title thereto from or through Lender, and the successors and
assigns of all the foregoing.
"Loan Agreement" means that certain Loan Agreement of even date herewith by
and between Lender and Borrower, as the same may be amended or otherwise
modified from time to time.
"Premises" means all those certain lots, pieces or parcels of land
described in EXHIBIT A annexed hereto and made a part hereof, including all
and singular the easements, rights, privileges, tenements, hereditaments
and appurtenances thereunto belonging or in any way appertaining, and the
reversion and remainder thereof; and all of the estate, right, title,
interest, claim or demand whatsoever of Indemnitor therein and in and to
any land lying in the bed of any street, road or avenue, open or proposed,
in front of, or adjoining or adjacent thereto, to the centerline thereof,
either in law or in possession or expectancy, now or hereafter acquired.
Each Additional Property shall, without further action by Lender or
Indemnitor, be included in the Premises, and such Additional Property shall
continue to be included in Premises if it becomes a Project.
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, or disposing
into the Environment, including the abandonment or discarding of barrels,
containers and other receptacles.
II. REPRESENTATIONS AND WARRANTIES: Except as otherwise shown on EXHIBIT B
attached hereto, Indemnitor represents and warrants to Lender that
Indemnitor has undertaken due and diligent inquiry and to the best of its
knowledge that:
A. No Premises (or any part thereof) nor any property adjacent to or
within the immediate vicinity of any Premises is being or has been
used for the storage, treatment, generation, transportation,
processing, handling, production or disposal of any Hazardous
Substance or as a landfill or other waste disposal site or for
military manufacturing or industrial purposes.
B. Underground storage tanks are not and have not been located on any
Premises.
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<PAGE>
C. The soil, subsoil, bedrock, surface water and groundwater of each
Premises are free of any Hazardous Substances.
D. There has been no Release nor is there the threat of a Release on, at
or from any Premises or any property adjacent to or within the
immediate vicinity of any Premises which through soil, subsoil,
bedrock, surface water or groundwater migration could come to be
located on any Premises, and Indemnitor has not received any form of
notice or inquiry from any federal, state or local governmental agency
or authority, any owner, operator, tenant, subtenant, licensee or
occupant of any Premises or any property adjacent to or within the
immediate vicinity of any Premises, or any other person with regard to
a Release or the threat of a Release on, at or from any Premises or
any property adjacent to or within the immediate vicinity of any
Premises.
E. All Environmental Permits relating to each of the Premises have been
obtained and are in full force and effect.
F. No event has occurred with respect to any Premises which, with the
passage of time or the giving of notice, or both, would constitute a
violation of any applicable Environmental Law or non-compliance with
any Environmental Permit. There are no liens, covenants, deed
restrictions or notice registration requirements based upon any
Environmental Laws.
G. There are no agreements, consent orders, decrees, judgments, license
or permit conditions or other orders or directives of any federal,
state or local court, governmental agency or authority relating to the
past, present or future ownership, use, operation, sale, transfer or
conveyance of any Premises which require any change in the present
condition of any Premises or any work, repairs, construction,
containment, clean up, investigations, studies, removal or other
remedial action or capital expenditures with respect to any Premises.
H. There are no actions, suits, claims or proceedings, pending or
threatened, which could cause the incurrence of expenses or costs of
any type or description or which seek money damages, injunctive
relief, remedial action or any other
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<PAGE>
remedy that arise out of, relate to or result from (i) a violation or
alleged violation of any applicable Environmental Law or
non-compliance or alleged non-compliance with any Environmental
Permit, or (ii) the Release or the presence of any Hazardous Substance
or nuisances of whatever kind to the extent the same arise from the
condition of any Premises or the ownership, use, operation, sale,
transfer or conveyance thereof.
III. COVENANTS Indemnitor represents to, and covenants and agrees with,
Lender as follows:
A. Indemnitor shall keep, and shall use diligent efforts to cause
all operators, tenants, subtenants, licensees and occupants of
the Premises (or any part thereof) to keep the same free of all
Hazardous Substances and shall not cause or permit the Premises
(or any part thereof) to be used for the storage, treatment,
generation, transportation, processing, handling, production or
disposal of any Hazardous Substances.
B. Indemnitor shall comply with, and shall use diligent efforts to
cause all operators, tenants, subtenants, licensees and occupants
of the Premises (or any part thereof) to comply with all
applicable Environmental Laws and all orders, decrees, or
directives by federal, state, or local courts or government
agencies relating thereto, and shall obtain and comply with, and
shall use diligent efforts to cause all operators, tenants,
subtenants, licensees and occupants of the Premises (or any part
thereof) to obtain and comply with all Environmental Permits.
C. Indemnitor shall not cause or permit any change to be made in the
present or intended use of the Premises (or any part thereof)
which would (i) involve the storage, treatment, generation,
transportation, processing, handling, production or disposal of
any Hazardous Substance or the use of the Premises (or any part
thereof) as a landfill or other waste disposal site or for
military, manufacturing or industrial purposes or for the storage
of petroleum or petroleum-based products, (ii) violate any
applicable Environmental Law, or (iii) constitute non-compliance
with any Environmental Permit.
D. Indemnitor shall promptly provide Lender with a copy and all
notifications it receives of an
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<PAGE>
alleged violation of any Environmental Law or Environmental
Permit and which it gives or receives with respect to any past or
present Release or the threat of a Release on, at or from any
Premises or any property adjacent to or within the immediate
vicinity of any Premises, and, in any event, will immediately
notify Lender of any such Release or threat of a Release once
Indemnitor has knowledge of such Release or threat of a Release.
E. If at any time Lender obtains any evidence or information which
suggest that potential environmental problems may exist at any
Premises, Lender may require that a full or supplemental
environmental inspection and audit report with respect to such
Premises of a scope and level of detail reasonably satisfactory
to Lender may be prepared by an environmental engineer or other
qualified person acceptable to Lender, at Indemnitor's reasonable
expense. Said audit may include a physical inspection of such
Premises, a visual inspection of any property adjacent to or
within the immediate vicinity of such Premises, personal
interviews with Indemnitor and its agents and representatives and
a review of all Environmental Permits. If Lender reasonably
requires, such inspection shall also include a records search
and/or substance testing for the presence of Hazardous Substances
in the Environment. If said audit report indicates the presence
of any Hazardous Substance or a Release or the material threat of
a Release on, at or from such Premises, such Indemnitor shall
promptly undertake and diligently pursue to completion all
legally required investigative, containment, removal, clean up
and other remedial actions, using methods reasonably recommended
by the engineer or other person who prepared said audit report.
Any action to be taken pursuant to this PARAGRAPH E shall be
subject to the rights of tenants of the Premises. With respect to
any access to the Premises described in this PARAGRAPH (E),
Indemnitor shall have the right to have a representative present
at the time of any such access or inspection or when any such
tests are being conducted. Lender shall indemnify Indemnitor from
and against any loss or damage to persons or property in or about
the Premises to the extent caused by Lender or its agents or
representative's actions pursuant to this PARAGRAPH (E).
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<PAGE>
F. Indemnitor agrees to reimburse Lender for any and all reasonable
expenses, costs and fees (including reasonable attorneys' fees
and disbursements) incurred in reasonably exercising any of
Lender's rights to inspect, investigate, audit, test or review
matters under this Agreement. Such costs shall be chargeable to
Indemnitor and shall be secured by the Loan Documents.
IV. INDEMNIFICATION PROVISIONS
A. Indemnitor hereby covenants and agrees, at its sole expense, to
indemnify, protect, defend and save harmless each and every
Indemnitee from and against any and all damages, losses,
liabilities, obligations, penalties, claims, litigations,
demands, defenses, judgments, suits, actions, proceedings, costs,
disbursements and/or expenses (including, without limitation,
reasonable attorneys', consultants' and experts' fees, expenses
and disbursements) of any kind or nature whatsoever by whomever
asserted which may at any time be imposed upon, incurred by or
asserted or awarded against any Indemnitee relating to, resulting
from or arising out of:
1. Use of the Premises (or any part thereof) for the storage,
treatment, generation, transportation, processing, handling,
production or disposal of any Hazardous Substance or as a
landfill or other waste disposal site or for military,
manufacturing or industrial purposes (or any part thereof);
2. Presence of any Hazardous Substances or a Release or the
threat of a release on, at or from the Premises (or any part
thereof);
3. Appropriate and legally required (as reasonably determined
by Lender) investigative, containment, removal, clean up and
other remedial actions with respect to a Release or the
threat of any Release on, at or from the Premises (or any
part thereof);
4. Human exposure to any Hazardous Substance to the extent the
same arise from the condition of the Premises (or any part
thereof) or the use or operation thereof;
5. Violation of any applicable Environmental Law;
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<PAGE>
6. Non-compliance with any Environmental Permit; and
7. Material misrepresentation or inaccuracy in any
representation or warranty or a material breach of or
failure to perform any covenant made by an Indemnitor in
this Agreement.
Notwithstanding anything in this Agreement to the contrary, Indemnitor's
liability in respect of the Indemnified Matters shall only arise to the extent
the Hazardous Substances, the presence of which gives rise to liability to an
Indemnitor, exist in or about the Premises during periods of Indemnitor's
ownership of the Premises. Everything in this PARAGRAPH A(1)-(7) is,
collectively, the "Indemnified Matters."
B. The liability of Indemnitor shall in no way be limited, abridged,
impaired or otherwise affected by:
1. Any amendment or modification of the Loan Documents;
2. Any extensions of time for payment or performance required
by any of the Loan Documents;
3. The release of any guarantor or any other person from the
performance or observance of any of the agreements,
covenant, terms or conditions contained in any of the Loan
Documents;
4. Any investigation or inquiry conducted by or on the behalf
of Lender or any other Indemnitee or any information which
Lender or any other Indemnitee may have or obtain with
respect to the environmental or ecological condition of the
Premises (or any part thereof);
5. The sale, assignment or foreclosure of the Note or the
Mortgage;
6. The sale, transfer, conveyance or lease of the Premises (or
any part thereof);
7. The dissolution or liquidation of any entity: and/or
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<PAGE>
8. Any other circumstances which constitutes a legal or
equitable release or discharge, in whole or in part, of
Indemnitor under this Agreement and as to which Indemnitor
may not lawfully waive the effect of such circumstance.
V. SURVIVAL
A. This Agreement shall survive repayment of the Loan, foreclosure
of the Mortgage and a deed in lieu of foreclosure.
B. However, if any Indemnitee becomes a mortgagee-in- possession or
appoints a receiver or takes title to the Premises (or any part
thereof) through foreclosure or deed in lieu of foreclosure or
otherwise, this Agreement shall not apply to any loss or costs
incurred by Indemnitee as a direct result of affirmative actions
or omissions of Indemnitee as owner or operator of such Premises
after Indemnitee has acquired title to such Premises or becomes a
mortgagee-in-possession thereof or appoints a receiver with
respect to such Premises
1. if such actions are the direct cause of damage resulting
from the introduction and initial release of a Hazardous
Substance at such Premises, or
2. to the extent arising from Indemnitee's negligent handling
or disposal of Hazardous Substances lawfully at such
Premises for use in the normal operation and maintenance of
such Premises.
C. Otherwise, this Agreement shall remain in full force and effect,
including, without limitation, with respect to Hazardous Substances
which are discovered or released at the Premises (or any part thereof)
by Indemnitee after the date Indem- nitee becomes a
mortgagee-in-possession or appoints a receiver or acquires title to
such Premises, but which were not actually introduced or permitted to
be introduced at such Premises by Indemnitee, and with respect to the
continuing migration or release of any Hazardous Substances previously
introduced at such Premises. Notwithstanding anything in this
Agreement to the contrary, the indemnity provided for in this
Agreement shall not apply to the extent any
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<PAGE>
liability of Indemnitor arises hereunder as a result of the gross
negligence or willful misconduct of Indemnitee.
VI. SUCCESSORS AND ASSIGNS: This Agreement shall be binding upon
Indemnitor, its successors and assigns, and shall inure to the benefit
of each Indemnitee.
VII. NO WAIVER: No delay on any Indemnitee's part in exercising any right,
power, or privilege under any of the Loan Documents shall operate as a
waiver of any such privilege, power, or right.
VIII. NOTICES
A. All notices, demands and other communications hereunder shall be
in writing, and,
1. if sent to Indemnitor, will be mailed (by certified or
registered mail, return receipt requested) or delivered
(which delivery may be by overnight courier) to Indemnitor
at its address first set forth above, or
2. if sent to Lender will be mailed (by certified or registered
mail, return receipt requested) or delivered to Lender its
address first set forth above.
By notice given to the other party in the manner provided for
herein, a party may designate another address to which notice,
demands and other communications hereunder are thereafter to be
given.
B. Notices given in the manner aforesaid shall be effective
1. if hand-delivered, at the time of delivery to the address
specified in this ARTICLE, or
2. if given by mail on the third business day following the
time of mailing in the manner aforesaid, or
3. if given by overnight courier, on the business day next
following delivery of the Notice to the overnight courier.
IX. RIGHTS OF INSURERS: No issuer of property or casualty insurance policy
with respect to the Premises (or any portion thereof) shall have any
right of subrogation to
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the rights created in favor of any Indemnitee by this Agreement;
provided however, this provision shall not affect any rights of
subrogation of any such insurer which would exist in the absence of
this Agreement.
X. GOVERNING LAW; LOAN DOCUMENTS: This Agreement shall be governed and
construed in accordance with the laws of the State of New York
applicable to contracts made and to be wholly performed with such
State, without regard to choice or conflicts of laws rules. This
Agreement is a Loan Document.
XI. LITIGATION
A. In the event any Indemnitee brings any action, suit or other
proceeding in any court of record of New York State or in the
United States District Court for the Southern District of New
York to enforce any or all liabilities of Indemnitor hereunder,
service of any summons, complaint, writ, judgment or other legal
process or notice may be made upon Indemnitor by mailing a copy
of the summons or other process to Indemnitor by certified or
registered mail, return receipt requested, at the address set
forth herein for nature to Indemnitor.
B. Indemnitor hereby irrevocably submits and consents to the
jurisdiction of any such court over the person of Indemnitor.
C. Indemnitor hereby waives
1. TRIAL BY JURY IN ANY SUCH ACTION, SUIT OR PROCEEDING BY ANY
INDEMNITEE;
2. Any claim against any Indemnitee for punitive, consequential
or special damages; and
3. Any claim that any such court is an incon- venient forum and
any objection to the laying of venue in any such court.
D. In any action, suit or proceeding brought by any Indemnitee,
Indemnitor agrees not to interpose any counterclaims or setoffs
of any nature, unless the failure to assert the same would cause
the permanent loss of such counterclaims or setoffs.
E. Acceptance of this Agreement by Lender shall be deemed to
constitute a waiver by Lender of the
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right to trial by jury in the event of any litigation in which
Indemnitor has waived trial by jury hereunder.
F. Nothing herein shall (i) preclude any Indemnitee from initiating
any such action, suit or proceeding in any other appropriate
forum or jurisdictions, whether concurrently or not, or (ii)
preclude any other method of effecting service of process.
XII. COSTS
A. In any action brought to enforce the terms of this Agreement, the
party substantially prevailing in such action shall be entitled
to recover from the other party the prevailing party's reasonable
expenses of such action (including reasonable attorneys' fees and
disbursements).
B. All amounts payable under this Agreement shall be due and payable
on demand and to the extent that any such amount shall represent
a reimbursement for funds at any time expended by any Indemnitee
shall bear interest, from the date of such demand, at a rate
equal to the Peg Rate (as such term is defined in the Loan
Documents) plus 6.5%.
XIII. LIMITED LIABILITY: The provisions of SECTION 6.16 of the Loan
Agreement are hereby incorporated herein by reference.
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IN WITNESS WHEREOF, the Indemnitor has caused this Agreement to be duly
executed as of the day and year first above written.
CORPORATE REALTY INCOME
FUND I, L.P.
By:
----------------------------
Robert F. Gossett, Jr.,
general partner
By: 1345 Realty Corporation,
general partner
By:
----------------------
Robert F. Gossett,
Jr., President
AGREED AND ACCEPTED:
FLEET BANK, NATIONAL
ASSOCIATION
By:
------------------------------
Title:
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<PAGE>
EXHIBIT A
Premises
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EXHIBIT B
---------
Disclosure Schedule
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FIRST AMENDMENT OF LOAN AGREEMENT AND NOTE
FIRST AMENDMENT OF LOAN AGREEMENT AND NOTE (as the same may be amended or
otherwise modified from time to time, the "Amendment"), dated as of the day of
December, 1996, between FLEET BANK, NATIONAL ASSOCIATION, a national banking
association, having an office at 56 East 42nd Street, New York, New York 10017
("Lender"), and CORPORATE REALTY INCOME FUND I, L.P., a Delaware limited
partnership, having an office at 406 East 85th, New York, New York 10028
("Borrower").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Loan Agreement dated as of September 26,
1996 between Lender and Borrower (as the same may be amended or otherwise
modified from time to time, the "Loan Agreement"), Lender made a loan to
Borrower in the original principal amount of up to Twenty-Four Million and
00/100 ($24,000,000.00) Dollars (the "Loan");
WHEREAS, the Loan is evidenced by that certain promissory note of even date
with the Loan Agreement (as the same may be amended or otherwise modified from
time to time, the "Note") made by Borrower payable to the order of Lender;
WHEREAS, the Loan is secured by, among other things, the Mortgages; and
WHEREAS, Lender and Borrower desire to modify and amend the terms and
provisions of the Loan Agreement and the Note as hereinafter provided.
NOW, THEREFORE, in consideration of the covenants set forth herein and for
other good and valuable consideration, the receipt and legal sufficiency of
which is hereby acknowledged, Lender and Borrower hereby agree as follows:
1. Definitions. All capitalized terms used herein without definition and which
are defined in the Loan Agreement are used herein with the meanings
assigned to such terms in the Loan Agreement.
2. Amendments to Loan Agreement. The Loan Agreement is hereby modified as
follows:
a. SECTION 1.01 is hereby modified to delete the reference to a principal
sum of "TWENTY-FOUR
<PAGE>
MILLION AND NO/1OOTHS DOLLARS ($24,000,000)" and, to substitute in
lieu thereof, a reference to a principal sum of "FORTY-FOUR MILLION
AND NO/100THS DOLLARS ($44,000,000)".
b. With respect to SECTION 2.03, Lender understands that Borrower has
assumed the defense in the action entitled Lister - Butler, Inc. v.
Metropolitan Life Insurance Company and currently pending in the New
York Supreme Court, New York County.
c. SECTION 6.04 is hereby amended to delete the reference to a principal
sum of "Twenty-Four Million Dollars ($24,000,000)" and, to substitute
in lieu thereof, a reference to a principal sum of "Forty-Four Million
Dollars ($44,000,000)".
d. SECTION 6.06 is hereby amended to add the following thereto as a new
SECTION 6.06(e):
"(e) Borrower has executed and delivered to Lender a Mortgage
encumbering the Project commonly known as 475 Fifth Avenue, New York,
New York (the "New York Project"). The principal amount of the Loan
allocated to the New York Project is $18,370,000 (the "New York
Advance") and, to account for the difference between the allocated
Loan amount and the release price, the principal amount of the Loan to
be secured by the New York Project shall initially be $20,207,000
(such portion of the Loan, the "New York Tranche"). Notwithstanding
anything in the Loan Documents to the contrary, neither the New York
Advance nor the New York Tranche shall be a revolving loan, and any
repayments of the New York Advance or the New York Tranche may not be
reborrowed, but this provision shall not limit Borrower's right to
receive an Advance to the extent that Advances are otherwise
available.
e. SECTION 6.07 is hereby restated to read, in its entirety, as follows:
"Concurrently with each monthly payment of interest under the Loan,
Borrower shall make monthly principal payments to Lender in an amount
equal to the sum of the following: the initial principal amount of
each advance of the Loan divided by 500, with such calculation to be
made separately for each advance and the monthly payment shall be sum
of such separate calculations. In the event of any repayments of
2
<PAGE>
the Loan (other than as a result of the required monthly
amortization), Lender shall allocate such repayment to one or more of
the Loan advances and recalculate the required monthly principal
amortization with respect to such advance and the aggregate required
monthly amortization payment, but Lender shall not allocate such
repayment to the New York Advance unless (i) the only portion of the
Loan outstanding is the New York Advance or (ii) Borrower, in writing,
directs Lender to apply such repayment to the New York Advance.
Notwithstanding the provisions of this Agreement allowing Borrower to
reborrow amounts previously repaid, any monthly principal payments
pursuant to this SECTION 6.07 shall reduce the Loan commitment by a
like amount and may not be reborrowed."
f. SECTION 6.08 is hereby amended to delete the reference to "one-quarter
percent (1/4%)" and to substitute, in lieu thereof, a reference to
"one-half of one percent (1/2%)".
g. SECTION 6.09 is hereby amended to delete the language commencing with
"(3) the negotiation" and ending with "counsel to Lender" and to
substitute, in lieu thereof, the following: " (3)(i) the negotiation,
preparation and/or execution of any amendment, waiver, supplement or
modification to any of the Loan Documents and any other documents and
instruments prepared in connection therewith and the consummation of
the transactions contemplated thereby, and (ii) the negotiation,
preparation and/or execution (x) of any participation, intercreditor,
agency and other agreements whereby Lender sells an interest in the
Loans and the execution and delivery of all instruments and documents
related thereto and (y) of any amendments, waivers, supplements or
modifications thereto, including, in the event of costs or expenses
referred to in the preceding clauses (1), (2) and/or (3), the
reasonable fees and disbursements of counsel to Lender."
h. EXHIBIT C (which is referred to in SECTION 6.10(c) of the Loan
Agreement), is hereby amended to provide for new Loan allocations for
the Projects. Such revised Loan allocations are as follows:
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REVISED LOAN ALLOCATIONS FOR PROJECTS
(i) 21.15 acre site located in the Ventura Industrial Park in the
city of Woodland, Yolo County, California -- $7,123,600.
(ii) 2.06 acre site in the Los Angeles Corporate Center, located in
Monterey Park, California -- $695,200.
(iii) 6.1 acre site at 7301 Northwest Highway, Oklahoma City, Oklahoma
-- $1,337,600.
(iv) 4.96 acre site in the Flatiron Industrial Park in the city of
Boulder, Colorado -- $4,452,800.
(v) 6.75 acre site in the Las Colinas Office Center, Irving, Texas --
$5,566,000.
(vi) 5 acre site at 1001 Durham Avenue, South Plainfield, New Jersey
-- $6,454,800.
(vii) 475 Fifth Avenue, New York, New York -- $18,370,000.
i. For the purposes of testing compliance with the provisions of SECTION
6.18(a)(A)(ii) and SECTION 6.18(a)(C), the value attributable to the
New York Project shall be the lesser of (i) the Appraised Value of the
New York Project (as it may change from time to time in accordance
with the provisions of the Loan Agreement); and (ii) 182% of the
outstanding principal amount of the New York Advance.
j. SECTION 6.18(a) of the Loan Agreement is hereby amended to delete the
reference to "two hundred and ten percent" and to substitute in lieu
thereof a reference to "one hundred and eighty two percent" in SECTION
6.18(a)(A)(ii) and to delete the reference to "$1,000,000" and to
substitute in lieu thereof a reference to "$2,000,000" in SECTION
6.18(a)(B).
k. SECTION 6.21 is hereby amended to add the following at the end
thereof:
"Provided, however, that with respect to the New York Project,
such 10,000 rentable square foot number shall be 5,000 rentable square
feet. Any lease which Borrower is to enter into must be on
commercially reasonable terms and conditions.
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l. With respect to the definition of "Debt Service Coverage Ratio" in
SECTION 7.01 of the Loan Agreement (i) such definition is hereby
modified to delete the reference to "1.75%" and to substitute, in lieu
thereof, a reference to "1.50%" and (ii) in calculating Borrower's
cash from operations, fees paid by Borrower to its general partners
shall not be treated as expenses.
3. Amendments to Note. The Note is hereby modified as follows:
a. The reference on the first page of the Note to a "Principal
Amount" of $24,000,000 is hereby amended to be a reference to a
"Principal Amount" of $44,000,000.
b. Effective as of September 26, 1996, all references in the Note to
two and one-quarter percent (2.25%) shall be deemed to be
references to two percent (2.0%). Lender will allow Borrower an
appropriate credit in its next interest payment to adjust for
this retroactive reduction in the interest rate.
4. Confirmation Regarding Environmental Compliance and Indemnification
Agreement. Borrower hereby confirms and agrees that, from and after
the date hereof, the New York Project is and shall be considered part
of the Premises (as such term is defined in the Environmental
Compliance and Indemnification Agreement).
5. Outstanding Loans. Borrower represents and warrants to Lender that
there are no offsets, defenses or counterclaims to its obligations
under the Loan Documents and to the extent that any such offsets,
defenses or counterclaims exist without its knowledge, the same are
hereby waived to the fullest extent permitted by law. Except as
modified by this Amendment and by amendments to the other Loan
Documents being executed and delivered concurrently herewith, the
terms and provisions of the Loan Documents are hereby ratified and
confirmed in all respects and continue in full force and effect.
6. Modifications. No provision of this Amendment may be waived, amended
or supplemented except by a written instrument executed by Borrower
and Lender.
7. Successors and Assigns. This Amendment, which sets forth the entire
understanding of the parties hereto
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with respect to the subject matter hereof, inures to the benefit of,
and shall be binding upon, the parties hereto and their respective
successors and assigns.
8. Severability. In the event that any one or more of the provisions
contained in this Amendment shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision of
this Amendment, but this Amendment shall be construed as if such
invalid, illegal or unenforceable provision had never been contained
herein.
9. Captions. Captions used in this Amendment are for convenience of
reference only and shall not be deemed a part of this Amendment nor
used in the construction of its meaning.
IN WITNESS WHEREOF, Borrower and Lender have duly executed this Amendment,
as of the date and year first above
CORPORATE REALTY INCOME FUND
I, L.P.
By: ________________________
Robert F. Gossett, Jr.,
General Partner
By: 1345 REALTY CORPORATION,
General Partner
By: ________________________
Robert F. Gossett, Jr.,
President
FLEET BANK, NATIONAL ASSOCIATION
By:________________________
Title:
6
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Loeb & Loeb LLP
345 Park Avenue
New York, New York 10154
Attn: Kenneth Freeman, Esq.
- -----------------SPACE ABOVE THIS LINE FOR RECORDER'S USE ONLY------------------
[Corporate Center]
DEED OF TRUST, ASSIGNMENT OF RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
THIS DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND FIXTURE FILING
SECURES REVOLVING CREDIT INDEBTEDNESS. THE INDEBTEDNESS SECURED HEREBY IS
COMPOSED OF REVOLVING CREDIT TYPE INDEBTEDNESS, THE OUTSTANDING BALANCE OF WHICH
CAN FLUCTUATE UP OR DOWN ACCORDING TO PAYMENTS MADE ON THE INDEBTEDNESS AND
SUBSEQUENT ADVANCES.
THIS DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND FIXTURE
FILING, made as of the 26th day of September, 1996, by CORPORATE REALTY INCOME
FUND I, L.P., Delaware limited partnership (the "Trustor"), having an office at
406 East 85th Street, New York, New York 10028, to CHICAGO TITLE COMPANY, having
an office at 700 South Flower Street, Los Angeles, California 90017 (the
"Trustee"), for the benefit of FLEET BANK, NATIONAL ASSOCIATION, a national
banking association (the "Beneficiary"), having an office at 56 East 42nd
Street, New York, New York 10017.
W I T N E S S E T H:
WHEREAS, the Trustor is the owner of the fee estate in those certain
parcels of real property described in EXHIBIT A annexed hereto (together with
the improvements now or hereafter located thereon, collectively, the
"Premises"), and desires to convey the Premises in trust, to secure, among other
obligations, a certain loan being made concurrently herewith by the Beneficiary
to the Trustor, pursuant to the terms of a Loan Agreement of even date
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herewith between Trustor and Beneficiary (as the same may be amended or
otherwise modified from time to time, the "Loan Agreement"); and
WHEREAS, the indebtedness secured hereby is evidenced by that certain
Secured Promissory Note of even date herewith in the principal amount of
$24,000,000 (as the same may be amended or otherwise modified from time to time,
the "Note") made by the Trustor to the Beneficiary, which Note provides for a
variable rate of interest.
NOW, THEREFORE,
FOR THE PURPOSE OF SECURING payment of all of the liabilities and
obligations of the Trustor to the Beneficiary evidenced by the Note, plus
interest thereon and all sums necessary to protect the Beneficiary under this
Trust Deed or under the other Security Documents (as hereinafter defined), and
all other sums due and payable under the Security Documents, and all of the
other Obligations (as hereinafter defined), the Trustor does hereby grant,
transfer, assign, bargain, sell and convey, and by these presents does hereby
irrevocably grant, transfer, assign, bargain, sell and convey, in trust, unto
Trustee, and the Trustee's successors and assigns, in trust, with power of sale
and right of entry and possession, all of the Trustor's estate, right, title and
interest in and to the Premises; and
TOGETHER with all and singular the easements, rights of way, air rights,
reservations, privileges, choses in action, options, tenements, hereditaments
and appurtenances thereunto belonging or in any way appertaining, including,
without limitation, all off-street parking rights and spaces, if any, and the
reversion and remainder of any or all of the foregoing; and all of the estate,
right, title, interest, claim or demand whatsoever of the Trustor therein and in
and to the Premises and/or the improvements thereon, and in and to all strips
and gores, and all alleys adjoining the land and in and to any land lying in the
bed of any street, road or avenue, open or proposed, in front of, or adjoining
or adjacent to the Premises, to the center line thereof, either in law or in
possession or expectancy, now or hereafter acquired;
TOGETHER with all of the right, title and interest of the Trustor in and to
(i) all buildings, vaults, and other improvements and additions thereto now
erected or hereafter constructed or placed upon the Premises or any part thereof
(the "Improvements"); (ii) to the extent
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permitted by law, the name or names, if any, as may now or hereafter be used for
each Improvement and the good will associated therewith, as well as the trade
names of the Improvements; and (iii) all machinery, devices, fixtures,
apparatus, interior improvements, appurtenances and equipment of every kind and
nature whatsoever now or hereafter attached to or placed in or upon the Premises
or the Improvements, or any part thereof, or used or procured for use in
connection with the operation of the Premises or any business conducted thereon
(except for fixtures and personal property that are at any time the property of
Space Tenants, as defined in SECTION 1.16, or independent contractors employed
at the Premises), all of the foregoing, except as aforesaid, hereinafter
collectively called "Building Service Equipment";
TOGETHER with all the right, title and interest of the Trustor in and to
all furniture, furnishings, decorations, chattels and other personal property
now or hereafter in, on or at said Premises (except for trade fixtures and
personal property that are at any time the property of Space Tenants), all of
the foregoing, except as aforesaid, hereinafter collectively called
"Furnishings;"
TOGETHER with all right, title and interest of the Trustor in and to all
insurance or other proceeds for damage done to the Improvements, Building
Service Equipment or Furnishings and all awards heretofore made or hereafter to
be made to or for the account of the Trustor for the permanent or temporary
taking by eminent domain of the whole or any part of the Premises, the
Improvements, the Building Service Equipment and the Furnishings or any lesser
estate in, or easement appurtenant to, the Premises (including, without
limitation, any awards for change of grade of streets), all of which proceeds
and awards are hereby assigned to the Beneficiary, subject to the further
provisions of this Trust Deed;
TOGETHER with all of the rents, issues, income, revenues, royalties,
proceeds, benefits and profits of the Mortgaged Premises (as hereinafter
defined), including amounts payable under all Space Leases (as hereinafter
defined), now in effect or hereafter entered into covering any part of the
Mortgaged Premises, as well as all rights and interest of the Trustor as
landlord thereunder, all of which are hereby assigned to the Beneficiary,
subject, however, to the right of the Trustor, as licensee, to receive and use
the same unless and until an Event of Default shall occur;
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TOGETHER with all of the records and books of account now or hereafter
maintained by the Trustor in connection with the operation of the Mortgaged
Premises;
TOGETHER with all water, water rights, shares of stock evidencing the same,
mineral rights, ditches, ditch rights, reservoirs and reservoir rights
appurtenant to, located on or used in connection with the Premises or the
Improvements, whether existing now or hereafter acquired;
TOGETHER with all deposits made with or other security given to utility
companies or governmental branches or agencies by the Trustor with respect to
the Mortgaged Premises, and all advance payments of insurance premiums made by
the Trustor with respect thereto;
TOGETHER with all licenses (including, but not limited to, any operating
licenses or similar matters), contracts, management agreements, franchise
agreements, permits, authorities or certificates required, used or useful in
connection with the use, enjoyment, occupancy, management or operation of the
Mortgaged Premises, except where the assignment or pledge of any such licenses,
permits or other rights is prohibited by applicable statute or by any applicable
issuing governmental agency; and
TOGETHER with any and all of the Trustor's rights in and to any and all
cash payments, reimbursements or other intangible rights arising in connection
with the development, operation or maintenance of the Mortgaged Premises,
including, without limitation, any tax appeal refunds, municipal reimbursements,
governmental subsidy payments and governmentally-registered credits (such as
emissions and reduction credits) (collectively, the "Payments and Intangibles");
TOGETHER with all proceeds and products of the foregoing.
All of the foregoing estates, rights, privileges, interests and franchises
hereby granted and released, assigned, transferred, set over and mortgaged, or
intended so to be, being hereinafter collectively referred to as the "Mortgaged
Premises".
TO HAVE AND TO HOLD the Mortgaged Premises, now or hereafter owned
absolutely or in fee by the Trustor, together with all rights, hereditaments and
appurtenances in any way appertaining or belonging thereto, unto the Trustee,
the successors and assigns of the Trustee, forever for the
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uses set forth herein, in trust, to secure the payment to the Beneficiary of the
principal and of interest on the Note at the maturity thereof (whether by
acceleration or otherwise), all other sums due under the Note or under this
Trust Deed or under the Loan Agreement, the performance of all covenants and
agreements in the Security Documents and all other obligations, whereupon this
Trust Deed shall cease and be void and the Mortgaged Premises shall be released
at the cost of the Trustor.
ARTICLE I.
Certain Definitions
In addition to other definitions contained herein, the following terms
shall have the meanings set forth below, unless the context of this Trust Deed
otherwise requires:
1.1. "Affiliate" - shall mean (a) if with respect to a corporation, (i) any
officer or director thereof and any person or entity who or which is, directly
or indirectly, the legal or beneficial owner of more than ten (10%) percent of
any class of shares or other equity security of such corporation, or (ii) any
person or entity who or which, directly or indirectly, controls or is controlled
by or is under common control with such corporation and (b) if with respect to a
partnership or venture, any (i) general partner, (ii) general partner of a
general partner, (iii) partnership with a common general partner, (iv)
coventurer thereof, or (v) any person, trust, corporation, partnership, venture
or other entity who or which, directly or indirectly, controls or is controlled
by or is under common control with such partnership; and if any general partner
or general partner of a general partner or coventurer is a corporation, any
person or entity which is an Affiliate as defined in clause (a) above of such
corporation. "Controls" (including the correlative meanings of "controlled by"
and "under common control with") means effective power, directly or indirectly,
to direct or cause the direction of the management and policies of such person
or entity.
1.2. "Backlease" means a sublease to the Trustor or its Affiliate made by a
lessee under a Space Lease.
1.3. "Beneficiary" shall mean the Beneficiary herein named or at any given
time the holder or holders of this Trust Deed and the Note.
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1.4. "Due and payable" when used with reference to the principal of, or
premium or interest on, or when referring to any and all other sums secured by
this Trust Deed or any other of the Security Documents shall mean due and
payable, whether at the monthly or other date of payment or at the date of
maturity specified in the Note, this Trust Deed or the other Security Documents;
or by acceleration or call for payment as provided in the Note, hereunder or in
the other Security Documents, or, in the case of Impositions, the last day upon
which any charge may be paid without penalty and/or interest.
1.5. "Default Rate" shall mean the Involuntary Rate (as such term is
defined in the Note).
1.6. "Event of Default" shall have the meaning assigned to such term in the
Note.
1.7. "Governmental Authorities" shall mean all federal, state, county,
municipal and local governments and all departments, commissions, boards,
bureaus and offices thereof, having or claiming jurisdiction over the Mortgaged
Premises or any part thereof.
1.8. "Impositions" shall mean all duties, taxes, water and sewer rents,
rates and charges, assessments (including, but not limited to, all assessments
for public improvements or benefit), charges for public utilities, excises,
levies, license and permit fees and other charges, ordinary or extraordinary,
whether foreseen or unforeseen, of any kind and nature whatsoever, which prior
to or during the term of this Trust Deed will have been or may be laid, levied,
assessed or imposed upon or become due and payable out of or in respect of, and
become a lien on the Premises, the Improvements, Building Service Equipment,
Furnishings or any other property or rights included in the Mortgaged Premises,
or any part thereof or appurtenances thereto, or which are levied or assessed
against the rent and income received by the Trustor from the Space Leases (as
defined in SECTION 1.15) by virtue of any present or future law, order or
ordinance of the United States of America or of any state, county or local
government or of any department, office or bureau thereof or of any other
Governmental Authority.
1.9. "Legal Requirements" shall mean all present and future laws,
ordinances, rules, regulations and requirements of all Governmental Authorities,
and all orders, rules and regulations of any national or local board
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of fire underwriters or other body exercising similar functions, foreseen or
unforeseen, ordinary or extraordinary, which may be applicable to the Mortgaged
Premises or any part thereof, or to the sidewalks, alleyways, passageways, curbs
and vaults adjoining the same, or to the use or manner of use of any of the
foregoing, or to the owners, tenants, or occupants thereof, whether or not any
such law, ordinance, order, rule, regulation or requirement shall necessitate
structural changes or improvements or shall interfere with the use or enjoyment
of any of the foregoing, and shall also mean and include all requirements of the
policies of public liability, fire and all other insurance at any time in force
with respect to any of the foregoing.
1.10. "Obligations" shall mean the (a) aggregate unpaid principal amount
of, and accrued and unpaid interest on, the Note, plus (b) any and all
indebtedness, obligations and other liabilities of the Trustor to the
Beneficiary arising out of or in connection with or otherwise relating to the
Note, the Loan Agreement or any of the Security Documents, and/or any
agreement(s) of the Trustor with the Beneficiary pertaining thereto; in each
case whether now or hereafter existing, direct or indirect, absolute or
contingent, joint, several or independent, due or to become due, liquidated or
unliquidated, held or to be held by the Beneficiary and whether created directly
or acquired by assignment or otherwise.
1.11. "Peg Rate" - shall have the meaning assigned to such term in the
Note.
1.12. "Permitted Encumbrances" shall mean each of the exceptions to
coverage set forth in SCHEDULE B, PART I of that certain Preliminary Title
Report dated September 26, 1996, issued by Chicago Title Insurance Company, to
and accepted by the Beneficiary with respect to the Premises, and such other
items as the Beneficiary, in its sole discretion, may approve in writing.
1.13. "Person" shall mean and include any individual, corporation,
partnership, unincorporated association, trust, governmental agency or authority
or other entity.
1.14. "Security Documents" shall have the meaning assigned to such term in
the Note.
1.15. "Space Lease" shall mean any and all leases, subleases, licenses,
concession agreements or any other form of agreement, however denominated
(written or verbal, now or hereafter in effect), in which the Trustor (or any
predecessor in interest as owner of the Mortgaged Premises in the case of
existing Space Leases) now or here-
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after grants a possessory interest in and to, or the right to use and occupy the
Mortgaged Premises, or any portion thereof, and all renewals, extensions,
modifications, amendments and other agreements affecting the same.
1.16. "Space Tenant" shall mean the tenant or other user or occupant of
part or all of the Mortgaged Premises under any Space Lease.
1.17. "State" shall mean the State of California.
1.18. "to the best of the Trustor's knowledge" shall mean the actual
knowledge of Robert F. Gossett, Jr., after reasonable inquiry and investigation.
1.19. "Trust Deed" shall mean this instrument as originally executed or, if
hereafter amended, modified or supplemented, as so amended, modified or
supplemented.
1.20. "Trustee" shall mean the Trustee herein named or any successor
trustee designated pursuant hereto from time to time.
1.21. "Trustor" shall mean the Trustor herein named, any subsequent owner
or owners of the Mortgaged Premises, and its or their respective heirs,
executors, administrators, successors and assigns, but this provision shall not
be construed to limit the terms of SECTION 2.8 hereof.
ARTICLE II.
Particular Covenants of the Trustor
The Trustor covenants and agrees as follows:
2.1. Payment of Indebtedness. The Trustor shall duly and punctually pay to
the Beneficiary, as and when due and payable, the indebtedness evidenced by the
Note and the other Obligations secured hereby. As used in this SECTION 2.1 and
elsewhere in this Trust Deed, the term "indebtedness" shall mean and include the
principal amount of the Note together with all interest thereon, any other
payments due to the Beneficiary under the Loan Agreement and/or any of the
Security Documents, all costs of collection provided for in the Note, the Loan
Agreement or any of the Security Documents, and all other sums and charges at
any time due under or otherwise secured by this Trust Deed.
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2.2. Warranty of Title. The Trustor warrants that, to the best of the
Trustor's knowledge (a) the Mortgaged Premises are free and clear of all liens
and encumbrances other than the Permitted Encumbrances; (b) it owns the Building
Service Equipment and Furnishings free and clear of all liens and claims other
than in favor of the Beneficiary; (c) this Trust Deed is and will remain a valid
and enforceable first lien deed of trust on the Mortgaged Premises, subject only
to the Permitted Encumbrances; and (d) the Trustor has the right and lawful
authority to mortgage and convey the Mortgaged Premises in the manner and form
herein provided. The Trustor represents and warrants to the Beneficiary, to the
best of the Trustor's knowledge, and covenants for the benefit of the
Beneficiary, as follows:
(i) that the Trustor is lawfully seized and possessed of a fee in the
Premises and that the Trustor holds good legal and marketable title thereto
and to the rest of the Mortgaged Premises, subject only to the Permitted
Encumbrances; and
(ii) that the Mortgaged Premises are now free and clear of all liens
and encumbrances whatsoever, other than the Permitted Encumbrances, that
the Trustor has good right and lawful authority to mortgage and convey the
same in the manner and form herein provided and that the Trustor will
warrant and defend title to the Mortgaged Premises against all claims and
demands whatsoever.
2.3. To Maintain Priority of Lien.
2.3.1. This Trust Deed is and will be maintained as a valid first lien deed
of trust on the Mortgaged Premises, and the Trustor will not, directly or
indirectly, create or suffer or permit to be created, or to stand against the
Mortgaged Premises or any portion thereof, or against the rents, issues and
profits therefrom, and will promptly discharge, any lien or charge prior to or
upon a parity with or junior to the lien of this Trust Deed other than the
Permitted Encumbrances; provided, however, that the Trustor shall not be
required to pay any Imposition prior to the time it shall become due and payable
subject to the provisions of SECTION 2.4.1 hereof, and nothing herein contained
shall prevent the Trustor from contesting the validity of any such Imposition in
accordance with the provisions of SECTION 2.4.4. The Trustor will keep and
maintain the Mortgaged Premises, and every part thereof, free from all liens or
lien notices, of Persons supplying labor and/or materials in connection with any
construction, alteration, repair, improvement or replacement of the Improvements
or of the Building Service Equipment and Furnishings. If any such lien shall be
filed against the Mortgaged Premises, or any part thereof, the Trustor
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promptly shall discharge the lien of record, by bonding or otherwise. The
Trustor shall exhibit to the Beneficiary, upon request, appropriate receipts or
other satisfactory evidence of the payment of the Impositions or any other item
which may, if not paid, give rise to a lien against the Mortgaged Premises.
2.4. To Pay Impositions.
2.4.1. The Trustor will pay or cause to be paid, as and when due and
payable, all Impositions levied upon the Mortgaged Premises or any part thereof.
However, if by law, any Imposition may at the option of the taxpayer be paid in
installments (whether or not interest shall accrue on the unpaid balance
thereof), the Trustor shall have the right to exercise such option and to pay
such Imposition, or cause it to be paid (together with any accrued interest on
the unpaid balance) in installments as they fall due and before any fine,
penalty, further interest or cost may be added thereto.
2.4.2. If an Event of Default shall occur and be continuing, then upon
demand of the Beneficiary, the Trustor shall deposit with the Beneficiary a sum
which bears the same relation to the annual insurance premiums for all insurance
required by the terms hereof and real estate taxes and assessments assessed
against the Mortgaged Premises for the insurance period or tax year then in
effect, as the case may be, as the number of months elapsed as of the date of
such demand since the last preceding installment of said premiums or taxes or
assessments shall have become due and payable bears to twelve (12). For the
purpose of this computation, the month in which such last preceding installment
of premiums or real estate taxes or assessments became due and payable and the
month in which such demand is given shall be included and deemed to have
elapsed. On the first day of the month next succeeding the month in which such
demand is given, and thereafter on the first day of each and every month during
the term of this Trust Deed, the Trustor shall deposit with the Beneficiary a
sum equal to one-twelfth of such insurance premiums and such taxes and
assessments for the then-current insurance period and tax year, so that as each
installment of such premiums and taxes and assessments shall become due and
payable, the Trustor shall have deposited with the Beneficiary a sum sufficient
to pay the same. All such deposits shall be received and held as part of such
deposit by the Beneficiary (all such deposits to be held in an account without
interest thereon) and shall be applied to the payment of each installment of
such premiums and taxes and assessments as they shall become
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due and payable. The Beneficiary shall, upon demand, furnish evidence to the
Trustor of the making of each such payment. If the amount of such premiums and
taxes and assessments has not been definitely ascertained at the time when any
such monthly deposits are required to be made, the Trustor shall make such
deposits based upon the amount of such premiums and taxes and assessments for
the preceding year, subject to adjustment as and when the amount of such
premiums and taxes and assessments are ascertained. If at any time when any
installment of such premiums and such taxes and assessments becomes due and
payable the Trustor shall not have deposited a sum sufficient to pay the same,
the Trustor shall, within five (5) days after demand, deposit any deficiency
with the Beneficiary. Upon payment in full of the indebtedness secured by this
Trust Deed, any remaining amount on deposit with the Beneficiary shall be repaid
to the Person lawfully entitled thereto. If an Event of Default shall occur and
be continuing, the Beneficiary may, at its option, apply all or any portion of
the amounts then on deposit with the Beneficiary pursuant to this SECTION 2.4.2
first to the payment of any premiums, taxes or assessments then due, and any
remaining amounts may be applied to the payment of the indebtedness. The Trustor
shall deliver to the Beneficiary all insurance and tax bills promptly following
receipt during any period when such monthly deposits are to be made with the
Beneficiary.
2.4.3. The Trustor will pay all taxes and other governmental charges
(including, without limitation, stamp taxes), except income or franchise taxes
or similar taxes based upon or measured by income, assessed by the United States
government or any state or local governmental authority and imposed on the
Beneficiary, its successors by reason of the ownership of this Trust Deed or the
Note or the receipt of the interest or other sums payable thereunder or payable
by either the Trustor or the Beneficiary upon any increase in the indebtedness
secured hereby, or any modification, amendment, extension or consolidation of
this Trust Deed. Without limiting the foregoing and subject to the limitations
set forth above, the Trustor will also pay the whole of any tax imposed,
directly or indirectly, on this Trust Deed or the Note or the receipt of any
portion of the Indebtedness in lieu of a tax on the Mortgaged Premises or the
Improvements and Building Service Equipment, whether by reason of (a) the
passage after the date of this Trust Deed of any law of the State deducting from
the value of real property for the purposes of taxation any lien thereon; (b)
any change in the laws for the taxation of Trust Deeds or debts secured by trust
deeds for state or local purposes; (c) a change in the means of collection of
any such tax or
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otherwise; or (d) any tax, whether or not now existing, assessed against, or
withheld from, interest or other payments made by the Trustor or assessed
against this Trust Deed and which are assessed or levied by the government of
any foreign nation or political subdivision thereof, provided such tax liability
shall not result from the ownership of this Trust Deed by a Person not a citizen
of, or an entity not formed under the laws of, the United States or any state.
Within a reasonable time after payment of any such tax or governmental charge,
the Trustor will deliver to the Beneficiary satisfactory proof of payment
thereof, subject, however, to the right of the Trustor to contest Impositions as
hereinafter set forth. If the Trustor shall fail to pay such tax or charge
within fifteen (15) days after written notice, or if under applicable law the
Trustor's payment or agreement to pay the same shall be unenforceable, the
Beneficiary shall have the right to declare the entire unpaid indebtedness and
all accrued and unpaid interest thereon due and payable on a date specified by
the Beneficiary, but, in any event, not less than thirty (30) days after written
notice to the Trustor.
2.4.4. The Trustor shall have the right to contest the amount or validity,
in whole or in part, of any Imposition, or to seek a reduction in the valuation
of the Mortgaged Premises, or any part thereof, as assessed for real estate or
personal property tax purposes by appropriate proceedings diligently conducted
in good faith, but only after payment of such Imposition, unless such payment
would operate as a bar to such contest or materially adversely interfere with
the prosecution thereof, in which event the Trustor may postpone or defer
payment of such Imposition (but not the payment of any monthly deposits pursuant
to SECTION 2.4.2 hereof); and upon request by the Trustor, the Beneficiary shall
postpone or defer payment of such Imposition; provided, however, that if at any
time the Mortgaged Premises, the Building Service Equipment, the Furnishings, or
any part thereof would, in the Beneficiary's reasonable judgment, by reason of
such postponement or deferment be in imminent danger of being forfeited or lost,
or if the Beneficiary might be subjected to any civil or criminal liability or
other sanction, then the Trustor, on demand, shall immediately pay or cause to
be paid the amount so contested and unpaid, together with all interest and
penalties in connection therewith.
2.4.5. The certificate, advice or bill of the appropriate official
designated by law to make or issue the same or to receive payment of any
Imposition indicating the nonpayment of such Imposition shall be prima facie
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evidence that such Imposition is due and payable but unpaid at the time of the
making or issuance thereof.
2.5. Insurance; Restoration Following Casualty.
2.5.1. Until the indebtedness secured hereby is paid in full, the Trustor
shall at its own expense at all times maintain or cause to be maintained on all
of the Mortgaged Premises (a) comprehensive general liability insurance,
including umbrella liability insurance, covering all claims for bodily injury,
including death, and property damage occurring on, in or about the Mortgaged
Premises in an aggregate amount of not less than Five Million Dollars
($5,000,000) per occurrence, and a single limit of not less than Two Million
Dollars ($2,000,000) per person and per occurrence for personal injury, bodily
injury and property damage; the policy shall have no deductible or self insured
retention requirements; the policy limits of such insurance, if requested by the
Beneficiary, shall be increased from time to time to reflect what a reasonably
prudent owner or lessee of buildings or improvements similar in type and
locality to the Mortgaged Premises would carry; during any period of substantial
alterations or improvements in, on or to the Mortgaged Premises, the Trustor
will cause the comprehensive general liability insurance, including umbrella
liability insurance, endorsed to provide owners' and contractors' protective
liability coverage, including completed operations liability coverage; (b)
physical damage insurance (all risk non-reporting property insurance, including
earthquake insurance, with the Beneficiary named as loss payee), covering the
Mortgaged Premises for loss or damages resulting from the perils of fire,
lightning, earthquake, and such other risks and hazards as are provided under
the current standard "Extended Coverage Endorsement" and vandalism and malicious
mischief coverage, for the full replacement value of the Mortgaged Premises on a
stipulated and agreed-amount basis; (c) if the Mortgaged Premises is in an area
identified as a flood hazard area by the Secretary of Housing and Urban
Development, flood insurance, to the extent obtainable, in an amount equal to
the lesser of the full replacement value of the Mortgaged Premises or the
maximum amount available under the Federal flood insurance program; (d) boiler
and machinery insurance covering all boilers, machinery, air conditioning,
pressure vessels, and similar type equipment commonly covered under a broad-form
boiler and machinery policy, in an amount satisfactory to the Beneficiary; (e)
insurance against such other risks of damage, hazards, casualties and
contingencies in such amounts as the Beneficiary shall from time to time
reasonably require, provided that insurance against such
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other risks, hazards, casualties or contingencies shall then be commonly carried
by prudent owners or lessees of building or improvements in the locality similar
in character, construction, use and occupancy to the Improvements, Building
Service Equipment and Furnishings on, or constituting a part of, the Mortgaged
Premises; and (f) loss of rents/business interruption coverage in an amount
sufficient to pay all Impositions, insurance premiums, interest and principal
installments and all other amounts due under the Note and the Loan Agreement and
the normal operating expenses of the Mortgaged Premises, all for a period of one
(1) year. Furthermore, the Beneficiary reserves the right to require additional
insurance and/or higher policy limits than heretofore specified if such
additional insurance and/or higher policy limits are commercially reasonable for
similar properties, which right may be exercised by written notice to the
Trustor, and, as soon thereafter as practicable, but in any event within thirty
(30) days of the receipt thereof, the Trustor agrees to obtain insurance
coverage complying with such notice. The proceeds of all such insurance (except
the insurance specified in SECTION 2.5.1(a)) shall be paid solely to the
Beneficiary and be held, applied or disbursed by the Beneficiary as provided in
SECTIONS 2.5.7 and 2.5.8.
2.5.2. All insurance required in SECTION 2.5.1 shall be evidenced by valid
and enforceable policies, in form and substance as shall be required by the
Beneficiary from time to time, and issued by and distributed among insurers of
recognized responsibility having an A.M. Best's Guide of A:XII or better, a
financial size category of Class XI or above, and the total limit of liability
shall not exceed ten percent (10%) of the total policyholders' surplus. Such
insurers shall be authorized to do business in the State and in all other
respects shall be reasonably satisfactory to the Beneficiary. The originals of
all such policies, or duplicate copies or certificates thereof, shall be
delivered to the Beneficiary concurrently with the execution and delivery of
this Trust Deed. Thereafter, all renewal or replacement policies, or duplicate
copies or certificates thereof, shall be delivered to the Beneficiary not less
than thirty (30) days prior to the expiration date of the policy or policies to
be renewed or replaced, in each case accompanied by evidence reasonably
satisfactory to the Beneficiary that all premiums currently payable with respect
to such policies have been paid in full by or at the direction of the Trustor.
2.5.3. All such insurance policies shall (a) except for any liability
policy required hereunder,
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contain a standard noncontributory form of mortgagee clause (in favor of and
entitling the Beneficiary to collect any and all proceeds payable under such
insurance), as well as a standard waiver of subrogation endorsement, all to be
in form and substance reasonably satisfactory to the Beneficiary; (b) provide
that such policies may not be cancelled or amended without at least thirty (30)
days prior written notice to the Beneficiary; and (c) provide that no act,
omission or negligence of the Trustor, or its agents, servants or employees, or
of any Space Tenant under any Space Lease, which might otherwise result in a
forfeiture of such insurance or any part thereof, shall in any way affect the
validity or enforceability of such insurance insofar as the Beneficiary is
concerned. The Trustor shall not carry separate insurance, concurrent in kind or
form or contributing in the event of loss with any insurance required under this
SECTION 2.5. All losses under such insurance policies shall be adjusted by the
Trustor in the case of any single instance of such damage or destruction not
exceeding $200,000, by the Trustor and the Beneficiary in the case of any such
single instance of damage or destruction exceeding such amount, provided that in
no event shall the Trustor approve or consent to any final adjustment in any
amount exceeding the amount specified above in this sentence without obtaining
the Beneficiary's prior approval (which approval shall not be unreasonably
withheld) of the amount of such adjustment, and solely by the Beneficiary in the
case when an Event of Default exists and is continuing.
2.5.4. The Trustor, at its expense, will furnish to the Beneficiary, within
ninety (90) days after written demand, but in no event, except for reasonable
cause, more frequently than annually, proof of the then full replacement value
of each of the Improvements and the Building Service Equipment and Furnishings
therein, such proof to be by appraisals reasonably satisfactory in form and
substance to the Beneficiary and prepared by an appraiser (who may be an
appraiser for the insurance company insuring such property) designated and paid
for by the Trustor and approved by the Beneficiary, which approval shall not be
unreasonably withheld or delayed.
2.5.5. If the Beneficiary shall, by any means, acquire the title or estate
of the Trustor in or to any portion of the Mortgaged Premises, it shall
thereupon become the sole and absolute owner of all insurance policies affecting
such portion of the Mortgaged Premises held by, or required hereunder to be
delivered to, the Beneficiary, with the sole right to collect and retain all
unearned premiums thereon; and the Trustor shall be entitled only to a credit
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in reduction of the then outstanding indebtedness secured hereby in the amount
of the short rate cancellation refund, when and if received by Beneficiary. The
Trustor agrees, immediately upon demand, to execute and deliver such assignments
or other authorizations or instruments as may, in the reasonable opinion of the
Beneficiary, be reasonably necessary or desirable to effectuate any of the
provisions of this SECTION 2.5.5.
2.5.6. If any of the Improvements, Building Service Equipment or
Furnishings shall be damaged or destroyed, in whole or in part, by fire or other
casualty, the Trustor shall give prompt notice thereof to the Beneficiary, and,
without regard to the availability or adequacy of insurance proceeds, shall
promptly following receipt of any insurance proceeds or the date when any such
proceeds are made available to the Trustor in accordance with the terms hereof,
commence to restore, replace, rebuild or alter the same as nearly as possible to
the condition, character and value thereof existing immediately prior to such
damage or destruction. Any insurance proceeds in respect of such damage or
destruction, or any Award (as defined in SECTION 3.2) for a partial taking which
is not a substantial or total taking, as such terms are referred to in ARTICLE
III hereof, at the option of the Beneficiary, may either (i) be applied as a
prepayment of the unpaid balance of the principal of the Note and of accrued and
unpaid interest thereon and as a payment of any other sums due and owing under
the Note, the Loan Agreement and the Security Documents, or (ii) be made
available to pay or reimburse costs incurred for restoration, replacement or
rebuilding necessitated as a result of such damage or destruction, or as a
result of such taking, as the case may be, or (iii) be used for any other
purpose or object deemed appropriate by the Beneficiary in connection with the
Mortgaged Premises, provided, however, that the Beneficiary may not elect either
option (i) or (iii) above if, and for so long as all of the following conditions
(collectively, the "Insurance or Award Conditions" have been and remain
satisfied: (a) no Event of Default has occurred and is continuing or would occur
as a result of such casualty or taking and no event has occurred that with the
passage of time or the giving of notice, or both, would constitute an Event of
Default; (b) the balance of the insurance proceeds or such Award either
initially paid to the Beneficiary or deposited with the Depository (as
hereinafter defined) or remaining from time to time, shall be sufficient, in the
Beneficiary's reasonable judgment, to complete the restoration, replacement or
rebuilding, or the Trustor shall have deposited such sufficient funds with the
Beneficiary or the Depository; and (c) the Beneficiary
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determines, in its reasonable discretion, that (i) the Loan to Value Ratio (as
defined in the Loan Agreement, and taking into consideration the value of all of
the Projects, as defined in the Loan Agreement) is not greater than 55%, and
(ii) the Debt Service Coverage Ratio (as defined in the Loan Agreement, and
taking into consideration the loss of income resulting from such damage or
destruction as projected by the Beneficiary in its reasonable discretion) is not
less than 1.40:1.0. Notwithstanding the foregoing, if an event has occurred and
is continuing that with the passage of time or the giving of notice, or both,
would constitute an Event of Default but the same has not yet matured into an
Event of Default, then, if the conditions set forth in the foregoing clauses (b)
and (c) have been or will be, in the Beneficiary's reasonable judgment,
satisfied, the Beneficiary shall not elect either option (i) or (iii) unless
such event shall have matured into an Event of Default and, unless and until
such event shall have so matured into an Event of Default or such event has been
cured or shall otherwise cease to exist, the Beneficiary (or the Depository)
shall not release any such insurance proceeds or Award and the same shall be
held until an Event of Default occurs or the Default has been cured or shall
otherwise cease to exist.
2.5.7. Any such insurance proceeds (other than the proceeds of the rent
insurance policy, which shall be paid as provided in SECTION 2.5.8 below) or
Award which are to be applied to restoration, replacement or rebuilding of the
Mortgaged Premises shall, after payment or reimbursement to the Beneficiary of
all reasonable costs and expenses of the Beneficiary in collecting such proceeds
or Award, be applied upon satisfaction of the following provisions and
conditions:
(a) If the damage be of such nature as to require the Trustor to
construct a replacement for, or to alter in any material or substantial
way, the damaged or destroyed items, the Trustor shall, before commencing
any such work, submit copies of the plans and specifications therefor to
the Beneficiary for the Beneficiary's approval, such approval to not be
unreasonably withheld or delayed.
(b) If after payment or reimbursement to the Beneficiary of all costs
and expenses of the Beneficiary in collecting such insurance proceeds or
Award, the aggregate insurance proceeds or Award received by reason of any
single instance of such damage or destruction or condemnation, as the case
may
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be, shall be $200,000 or less such insurance proceeds or Award shall be
paid to the Trustor, which shall hold all amounts so received in trust for
application first to pay the entire cost of restoring, repairing,
rebuilding or replacing the damaged or destroyed items, before any portion
of such proceeds may be used or applied for any other purpose. If the
aggregate net insurance proceeds or Award by reason of any single instance
of such damage or destruction or condemnation, as the case may be, shall be
more than $200,000 such sums shall be held and disbursed by Fleet Bank,
National Association or, if this Trust Deed is held by another financial
institution, by such financial institution or, if this Trust Deed is not
held by a financial institution, by a financial institution selected by the
then Beneficiary (the holder of such monies, the "Depository") in
accordance with the following provisions of this SECTION 2.5.7.
(c) The Beneficiary shall have received as to each such disbursement a
certificate of the Trustor (i) requesting the payment of a specified amount
of such insurance or condemnation proceeds; (ii) describing in reasonable
detail the work and materials applied to the restoration, replacement or
rebuilding of the damaged, destroyed or taken Improvement, or Building
Service Equipment and/or Furnishings located therein, since the date of the
last such certificate; (iii) stating that the requested amount does not
exceed the cost of such work and materials; and (iv) stating that a request
for payment for such work and materials has not previously been made,
accompanied by:
1. a certificate of an independent engineer or architect
designated by the Trustor, who shall have been approved in writing by
the Beneficiary (such approval not to be unreasonably withheld),
stating (i) that the work and materials described in the accompanying
certificate of the Trustor were satisfactorily performed and furnished
and were necessary, appropriate or desirable to the restoration,
replacement or rebuilding of the damaged, destroyed or taken
Improvement, or Building Service Equipment and/or Furnishings; (ii)
that the amount specified in such certificate of the Trustor does not
exceed the reasonable cost of such work and materials; and (iii) the
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additional amount, if any, required to complete the restoration,
replacement or rebuilding of the damaged, destroyed or taken
Improvement, Building Service Equipment and/or Furnishings; and
2. evidence reasonably satisfactory to the Beneficiary (i) that
there exists no filed or recorded lien, or lien notice, or encumbrance
or charge in respect of all or any part of the Mortgaged Premises that
is prior to or on a parity with the lien of this Trust Deed, except as
may be permitted in the Permitted Encumbrances; (ii) that neither the
Mortgaged Premises nor any part thereof is subject to any recorded or
filed mechanic's, laborer's, materialman's or any similar lien,
encumbrance or charge; and (iii) that none of the Building Service
Equipment and Furnishings provided in connection with such
restoration, replacement or rebuilding is subject to any security
interest other than in favor of the Beneficiary;
Upon satisfaction of the conditions set forth herein, the Beneficiary shall
pay to the Trustor the amount of such insurance or condemnation proceeds
requested in such certificate of the Trustor or consent to the Depository's
payment thereof, as the case may be; provided, however, that in no event shall
the balance of insurance or condemnation proceeds held by the Beneficiary and
the Depository be reduced below the amount specified in such certificate of the
independent engineer or architect as the amount required to complete the
restoration, replacement or rebuilding of the damaged, destroyed or taken
Improvement, Building Service Equipment and/or Furnishings. Each such payment,
whether made by the Beneficiary or the Depository, shall be held by the Trustor
in trust and shall be used solely for the payment of the cost of the work and
materials described in the certificate of the Trustor, or if such cost or any
part thereof has theretofore been paid by the Trustor out of its own funds, then
for the reimbursement to the Trustor of any such cost or part thereof paid by
it. Any balance of insurance or condemnation proceeds held by the Beneficiary
after the completion of the restoration, replacement or rebuilding and payment
of all costs incurred in connection therewith, to be evidenced by a certificate
to such effect of such independent engineer or architect delivered to the
Beneficiary, shall, if no Event of Default shall have occurred and be
continuing, be released to the Person lawfully entitled thereto. Notwithstanding
the foregoing,
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if the Trustor needs to make deposits with or payments to contractors prior to
the work being performed, if the Beneficiary is otherwise obligated to allow
funds to be used to rebuild or restore, the Beneficiary agrees that it will not
unreasonably withhold or delay its consent to the Trustor's request that such
deposits or advances payments be allowed.
2.5.8. All proceeds of rent insurance payable as a result of the occurrence
of any fire or other casualty which affects the Mortgaged Premises, or any part
thereof, shall be paid to the Beneficiary or, if the Beneficiary is not a
financial institution, the Depository. The Beneficiary or the Depository, as the
case may be, if it shall receive such proceeds, shall hold such proceeds in
trust if permitted under law, and in an account bearing interest (payable to or
for account of the Trustor), and shall apply or cause such proceeds (including
any net interest thereon) to be applied to the payment of those items referred
to in SECTION 2.5.1(f) which become, and as they become, due and payable from
and after the date of the occurrence of such damage or loss, until the
completion of the necessary restoration or replacement by the Trustor or until
the exhaustion of such proceeds (including any interest thereon), whichever
first occurs. Upon completion of such restoration or replacement, any balance of
such rent insurance proceeds, together with the interest thereon, if any, not
theretofore applied as provided herein, in the hands of the Beneficiary or the
Depository, as the case may be, shall, provided that no Event of Default shall
have occurred and be continuing, be paid to the Person lawfully entitled
thereto.
2.5.9. Nothing in this SECTION 2.5 contained shall (i) relieve the Trustor
of its duty to repair, restore, rebuild or replace the Improvements, Building
Service Equipment and/or Furnishings following damage or destruction by fire or
other casualty or taking in the event that no Award or an inadequate Award or
that no or inadequate proceeds of insurance are available to defray the cost of
such repairing, restoring, rebuilding or replacement (provided, however, the
Trustor shall be permitted to receive the insurance proceeds upon satisfaction
of the conditions set forth herein provided, in addition, that all of the
Insurance or Award Conditions have been and remain satisfied), or (ii) relieve
the Trustor of its obligation to pay principal and interest and to make all
other payments required by the Note, the Loan Agreement and this Trust Deed
subsequent to the occurrence of any fire or other casualty, or taking, except
if, and to the extent that, any proceeds
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of rent insurance are applied by the Beneficiary in accordance with SECTION
2.5.8 to such required payments.
2.5.10. If, while any insurance proceeds or Award is being held by the
Beneficiary or the Depository, an Event of Default shall occur and be
continuing, the Beneficiary shall be entitled to receive and apply all such
insurance proceeds or Award in reduction of the indebtedness and other
obligations secured by this Trust Deed, in such order and respective amounts, as
the Beneficiary in its discretion shall determine.
2.6. To Comply with Laws.
2.6.1. The Trustor, at its own expense, will promptly cure all violations
of law affecting the Mortgaged Premises, or any part thereof, and/or the use and
operation thereof and will promptly comply, or cause to be complied with, all
present and future Legal Requirements. However, the Trustor shall have the
right, after prior notice to the Beneficiary, to contest by appropriate legal
proceedings, diligently conducted in good faith, the validity or application of
any Legal Requirement if and so long as the Trustor shall promptly furnish to
the Beneficiary a certificate to such effect showing the steps taken to comply
with such provisions, provided that:
(a) if by the terms of any such Legal Requirement, compliance
therewith pending the prosecution of any such proceeding may be delayed
legally without incurring any lien, charge or liability of any kind against
the Mortgaged Premises, or any part thereof, and without subjecting the
Trustor or the Beneficiary to any liability, civil or criminal, for failure
so to comply therewith, the Trustor may delay compliance therewith until
the final determination of any such proceeding; and
(b) if any lien, charge or civil liability would be incurred by reason
of any such delay, the Trustor nevertheless, on the prior written consent
of the Beneficiary, such consent not to be unreasonably withheld, may
contest and delay compliance with the Legal Requirement, provided that such
delay would not subject the Beneficiary to criminal liability and the
Trustor (i) furnishes to the Beneficiary security reasonably satisfactory
to the Beneficiary against loss or injury by reason of such contest or
delay and (ii) prosecutes the contest with due diligence.
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2.6.2. Notwithstanding the provisions of SECTION 2.6.1, if any delay in
compliance with any Legal Requirement shall, in the reasonable judgment of the
Beneficiary, place all or any part of the Mortgaged Premises in imminent danger
of being forfeited or lost, the Trustor shall, upon written notice from the
Beneficiary, immediately comply with such Legal Requirement.
2.6.3. The Trustor will use and permit the use of the Mortgaged Premises
only in accordance with the material requirements of any applicable licenses and
permits issued by Governmental Authorities.
2.6.4. The Trustor will procure, pay for and maintain (or cause to be
procured, paid and maintained) all permits, licenses and other authorizations
required to be procured and maintained by the owners and operators of the
Mortgaged Premises for any then use of all or any part of the Mortgaged Premises
then being made and for the lawful and proper operation and maintenance thereof.
2.7. Limitation on Alterations and Demolition.
2.7.1. The Trustor shall not voluntarily demolish, replace or alter the
Mortgaged Premises, or any part thereof, or voluntarily make any addition
thereto, or voluntarily construct any additional improvements thereon, or suffer
any of the same to occur, whether structural or otherwise (collectively,
"change"), without the prior written consent of the Beneficiary, which consent
shall not be unreasonably withheld or delayed; provided, however, that if no
Event of Default is continuing and such change involves an estimated cost of
less than $100,000 and is non-structural or if no Event of Default is continuing
and such change is non-structural and is being made to prepare space for a Space
Tenant pursuant to a Space Lease entered into in accordance with the Loan
Agreement, then, in either of such events, the Beneficiary's consent shall not
be required; provided, further, however, that if any such change is required by
law, the Trustor may make such change with the prior written consent of the
Beneficiary, which consent the Beneficiary will not unreasonably withhold or
delay. As a condition to any consent under this SECTION 2.7.1, the Beneficiary
may require (a) that plans and specifications for the proposed work, prepared by
a reputable architect reasonably satisfactory to the Beneficiary, be submitted
to the Beneficiary for approval, and (b) that the Trustor obtain a payment and
performance bond or other security reasonably satisfactory to the Beneficiary in
form and amount reasonably satisfactory to the Beneficiary from the
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contractor or subcontractor performing the work unless such work amounts to less
than $200,000 in aggregate total cost. All work performed by or on behalf of the
Trustor shall be completed with all reasonable diligence and continuity, in a
good and workmanlike manner, and in compliance with all applicable Legal
Requirements. Unless, and to the extent that, the provisions of SECTION 2.7.2 be
applicable, no Building Service Equipment or Furnishings shall be removed from
the Mortgaged Premises during the course of any such work without prior
notification to the Beneficiary and unless provision is made for return or
replacement on or prior to the completion of the work. The provisions of this
SECTION 2.7.1. shall apply to any change made or required to be made by the
Trustor in the course of complying with any other of the provisions of this
Trust Deed. A duplicate set of all plans and specifications required to be filed
with any Governmental Authority prior to, or at any time in connection with, any
such alteration, demolition or new construction shall be furnished to the
Beneficiary. The Trustor will pay on demand the reasonable expenses incurred by
the Beneficiary in the review of plans and specifications provided for in this
Trust Deed.
2.7.2. The Trustor shall have the right, at any time and from time to time,
to remove and dispose of any item of Building Service Equipment or Furnishings
which may have become obsolete or unfit for use or which is no longer useful in
the operation of the Improvements, provided that the Trustor promptly replaces
such item with other Building Service Equipment or Furnishings, free of superior
title, liens or claims (other than in favor of the Beneficiary) unless consent
of the Beneficiary is first obtained, not necessarily of the same character but
of at least equal quality, value and usefulness in connection with the operation
and maintenance of the Mortgaged Premises, provided, further, however, no
removal of any item of Building Service Equipment or Furnishings then having a
fair market value of $50,000 or more shall be made without the prior written
consent of the Beneficiary, which consent will not be unreasonably withheld or
delayed. However, if by reason of technological or other developments in the
operation and maintenance of buildings and other improvements of the general
character of the Improvements or a change in the use of the Mortgaged Premises
or any part thereof, no replacement of the Building Service Equipment or
Furnishings so removed would be necessary or desirable for the proper operation
or maintenance of the Improvements, the Trustor shall not be required to replace
the item so removed.
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2.8. Limitation on Disposition of the Mortgaged Premises.
2.8.1. Except as expressly set forth in this Trust Deed or the Loan
Agreement (including, without limitation, SECTIONS 5.01 and 6.21 of the Loan
Agreement), the Trustor shall not directly or indirectly sell, assign, mortgage,
alienate, pledge or otherwise transfer or further encumber the Mortgaged
Premises or any part thereof or any interest therein or in any of the rents,
profits or income generated thereby, whether voluntarily, involuntarily, by
operation of law or otherwise, or lease all or any portion thereof or an
undivided interest therein, without the prior written consent of the
Beneficiary. The foregoing events are hereinafter referred as a "Transfer". Any
transfer without prior written the consent of the Beneficiary is an Event of
Default.
2.8.2. If there shall be a violation of the terms and provisions of SECTION
2.8.1, whether by the Trustor or any other person, in addition to all other
rights and remedies available to the Beneficiary under this Trust Deed, the
Beneficiary shall have the option, by the giving of notice to the Trustor, of
declaring the entire unpaid principal balance of the Note, together with all
accrued and unpaid interest and all other sums and charges evidenced thereby or
payable pursuant to the Loan Agreement, immediately due and payable.
2.9. Maintenance of Mortgaged Premises; Covenant Against Waste; Inspection
by the Beneficiary. The Trustor will not commit or permit waste on the Mortgaged
Premises and, at its expense, will keep and maintain the Improvements, the
Building Service Equipment and Furnishings in its (or their) present state of
repair and condition, reasonable wear and tear excepted, and, if improved, in
such improved state of repair and condition, reasonable wear and tear excepted;
provided, that this shall not limit the Trustor's other obligations hereunder,
such as compliance with laws. The Trustor shall do or cause to be done all
maintenance and make or cause to be made all repairs as may be required by the
landlord under any Space Lease. The Trustor will neither do nor permit to be
done anything to the Mortgaged Premises that may materially impair the value
thereof or which may violate any covenant, condition or restriction affecting
the Mortgaged Premises, or any part thereof, or which would effect any material
change therein or in the condition thereof that would increase the danger of
fire or other hazard arising out of the operation of the Mortgaged Premises.
Subject to the rights of Space Tenants, the
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Beneficiary, and its representatives and agents, may enter and inspect the
Mortgaged Premises at any time after reasonable notice (which may be oral)
during usual business hours, and the Trustor shall, within thirty (30) days
after demand by the Beneficiary (or immediately upon demand in case of
emergency), make such repairs, replacements, renewals or additions, or perform
such items of maintenance, to the Mortgaged Premises as the Beneficiary may
reasonably require in order to cause the Mortgaged Premises to comply with the
standards established in this SECTION 2.9.
2.10. To Furnish Certificates; Other Reporting Requirements.
2.10.1. The Trustor will, at its own expense, deliver to the Beneficiary,
within fifteen (15) days after written request, but no more frequently than once
per six (6) month period, a written statement executed by the Trustor, in
recordable form, setting forth to the best of the Trustor's knowledge, the
amount then unpaid upon the Note and secured by this Trust Deed and stating
whether any offsets or defenses exist against the indebtedness secured hereby;
and, if any such offsets or defenses are alleged to exist, then the factual
basis and amount of such claimed offsets or defenses.
2.10.2. The Trustor will, if requested by the Beneficiary, deliver to the
Beneficiary a certificate of an officer of the general partner of the Trustor or
of such general partner's general partner, to the effect that he is familiar
with this Trust Deed and the other Security Documents, has reviewed the affairs
of the Trustor, and to the best of his knowledge and belief there exists no
Event of Default and no act or event has occurred or exists which with notice or
lapse of time or both could become such an Event of Default, or if any such
event or Event of Default exists, specifying it and what action the Trustor is
taking to cause it to be remedied.
2.11. After-Acquired Property. All right, title and interest of the Trustor
in and to all improvements, betterments, renewals, substitutes and replacements
of, and all additions and appurtenances to, the Mortgaged Premises hereafter
acquired, constructed, assembled or placed on the Mortgaged Premises,
immediately upon such acquisition, construction, assembly or placement, as the
case may be, and in each such case without any further mortgage, conveyance or
assignment or other act of the Trustor, shall become subject to the lien of this
Trust Deed as fully and completely, and with the same effect, as though now
owned by
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the Trustor and specifically described in the granting clauses hereof; and at
any time and from time to time the Trustor, on demand, will execute, acknowledge
and deliver to the Beneficiary any and all such further assurances, mortgages,
conveyances or assignments as the Beneficiary may reasonably require to further
evidence, confirm and perfect the provisions of this SECTION 2.11.
2.12. Further Assurances. The Trustor shall, at its sole cost and without
expense to the Beneficiary, on demand, do, execute, acknowledge and deliver all
and every such further acts, deeds, conveyances, mortgages, assignments, notices
of assignment, transfers and assurances as the Beneficiary shall from time to
time reasonably require for better assuring, conveying, assigning, transferring
and confirming unto the Beneficiary the property and rights hereby mortgaged or
assigned or intended now or hereafter so to be, or which the Trustor may be or
may hereafter become bound to convey, mortgage or assign to the Beneficiary, or
for carrying out the intention or facilitating the performance of the terms of
this Trust Deed, or for filing, registering or recording this Trust Deed.
2.13. Recorded Instruments. The Trustor will promptly perform and observe,
or cause to be performed and observed, all of the terms, covenants and
conditions of all instruments of record affecting the Mortgaged Premises (other
than non-consensual encumbrances hereafter affecting the Mortgaged Premises, the
validity or enforceability of which the Trustor is contesting in accordance with
this Trust Deed) where non-compliance therewith affects the security of this
Trust Deed or imposes any duty or obligation upon the Trustor or any Space
Tenant. The Trustor shall do or cause to be done all things reasonably required
to preserve intact and unimpaired and to renew any and all rights-of-way,
easements, grants, appurtenances, privileges, licenses, franchises and other
interests and rights in favor of or constituting any portion of the Mortgaged
Premises. The Trustor will not, without the prior written consent of the
Beneficiary, which consent shall not be unreasonably withheld or delayed,
initiate, join in or consent to any private restrictive covenant or other public
or private restriction as to the use of all or any portion of the Mortgaged
Premises. The Trustor will, however, comply with all lawful restrictive
covenants and zoning ordinances and other public or private restrictions
affecting all or any portion of the Mortgaged Premises.
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ARTICLE III.
Condemnation
3.1. Notice of Taking. The Trustor shall promptly notify the Beneficiary if
the Trustor receives notice of the institution of any proceeding or negotiations
for the taking of the Mortgaged Premises, or any part thereof, whether for
permanent or temporary use and occupancy in condemnation or by the exercise of
the power of eminent domain or by agreement of interested parties in lieu of
such condemnation (all the foregoing called a "taking"); shall keep the
Beneficiary currently advised, in detail, as to the status of such proceedings
or negotiations and will promptly give to the Beneficiary copies of all notices,
pleadings, judgments, determinations and other papers received or delivered by
the Trustor in connection with any such proceedings. The Beneficiary shall have
the right to appear and participate in such proceedings and may be represented
by counsel. The Trustor will not, without the Beneficiary's prior written
consent, which consent shall not be unreasonably withheld or delayed, enter into
any agreement for the taking of the Mortgaged Premises, or any part thereof,
with anyone authorized to acquire the Mortgaged Premises by eminent domain or in
condemnation.
3.2. Condemnation Award. If the Mortgaged Premises shall be the subject of
a taking the Beneficiary shall be entitled to and shall receive the total of
such portion of all awards made that shall be allowed to the Trustor with
respect to all the right, title and interest of the Trustor in and to the
Mortgaged Premises (the award made in any total, partial or temporary taking is
herein called the "Award"), provided that the obligations of the Trustor to
perform the terms, covenants and conditions of this Trust Deed, if any, affected
by such taking shall continue unimpaired until the actual vesting of title in
such proceeding and the actual receipt by the Beneficiary of the Trustor's share
of the entire Award resulting from such taking.
3.3. Application of Award. The Beneficiary shall have the option of
treating a total taking or a substantial taking (as hereinafter defined) as an
Event of Default and of accelerating the entire indebtedness secured hereby, in
which event it shall apply the Trustor's entire Award in reduction of such
indebtedness (including principal, interest and other sums secured hereby, in
such order as the Beneficiary may determine) and shall turn over any balance
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remaining, if any, to the Person lawfully entitled thereto; or if the
Beneficiary shall not so elect to accelerate the indebtedness and apply the
Award thereto, then the total Award shall, regardless of amount, be deposited
with the Beneficiary or with the Depository, the Trustor hereby agreeing to
elect that such proceeds be held and disbursed by the Depository in accordance
with SECTIONS 2.5.6, 2.5.7, 2.5.8, 2.5.9 and 2.5.10 hereof for restoration
required to be made by the Trustor. If there be a partial taking, the net
proceeds of the Award shall be deposited with the Beneficiary and applied by the
Beneficiary in accordance with the provisions of SECTIONS 2.5.6, 2.5.7, 2.5.9
and 2.5.10. Any Award remaining after the completion of such restoration,
replacement or rebuilding shall be applied in reduction of the indebtedness
(including principal, interest and other sums secured hereby) in such order as
the Beneficiary shall determine. A partial taking is substantial only if it
materially decreases the fair market value of the Mortgaged Premises and the
remainder of the Mortgaged Premises cannot be restored to an economically viable
whole.
3.4. Temporary Taking. If any Award payable to the Trustor on account of a
taking for temporary use or occupancy is made in a lump sum or is payable other
than in equal monthly installments, the Trustor shall pay over such Award to the
Depository and such Award shall be applied to installments of Impositions and of
principal and interest and all other charges secured by this Trust Deed or due
under the Note, the Loan Agreement, or the other Security Documents as and when
the same become due and payable. Any unapplied portion of such Award held by the
Depository when such taking ceases or expires (if no Event of Default has then
occurred and is continuing), or after the indebtedness secured by this Trust
Deed or due under the Loan and Security Documents shall have been paid in full,
shall be paid to the Person lawfully entitled thereto.
3.5. The Trustor's Obligation to Restore. If all available proceeds of the
Award are made available to the Trustor for restoration, replacement or
rebuilding pursuant hereto, the Trustor shall be obligated promptly to restore,
replace, rebuild or alter any Improvements or Building Service Equipment
affected by a taking so as to restore the Mortgaged Premises to an economically
viable whole, all without regard to the adequacy of the proceeds of an Award, if
any, made available to the Trustor.
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ARTICLE IV.
Assignment of Space Leases, Rents, Profits
and Other Income as Further Security, Etc.
4.1. Assignment of Space Leases, Rents, Issues and Profits. Subject to the
Trustor's rights herein, including those set forth in SECTION 4.3.2 below, the
Trustor hereby absolutely, presently and irrevocably transfers, assigns and sets
over unto the Beneficiary all right, title and interest of the Trustor in and to
all Space Leases, if any, now or hereafter entered into with respect to all or
any part of the Mortgaged Premises, and all renewals, extensions, subleases or
assignments thereof, and all other occupancy agreements (written or oral), by
concession, license or otherwise, together with all of the rents, income,
receipts, revenues, issues and profits arising therefrom (the "Collateral").
4.2. The Trustor's Covenants Regarding Space Leases.
4.2.1. Without the prior consent and approval of the Beneficiary in each
instance, the Trustor will not (a) assign, pledge, hypothecate or otherwise
encumber any of the Space Leases or the rents, income, issue and profits of the
Mortgaged Premises; or (b) enter into any Space Leases affecting the Mortgaged
Premises or any part thereof, unless such Space Lease is expressly subordinate
to the lien of this Trust Deed and to any consolidation, extension, renewal,
recasting or refinancing hereof and the Space Lease provides, in substance, that
in the event of enforcement by the Beneficiary of the remedies provided for by
law or by this Trust Deed, each Space Tenant shall, at the option of the
Beneficiary, enter into a agreement with the Beneficiary which shall provide,
among other things, that (i) such Space Tenant shall attorn to any person
succeeding to the interest of the Trustor as a result of such enforcement and
shall recognize such successor in interest as landlord under such Space Lease
without change in the terms or other provisions thereof, (ii) such successor
shall not be bound by any payment of rent or additional rent for more than one
(1) month in advance or any amendment or modification of any such Space Lease
made without the Beneficiary's written consent, and (iii) such successor shall
not disturb the possession of the Space Tenant provided certain conditions (as
determined by the Beneficiary) have been satisfied, including, without
limitation, that the Space Tenant shall not be in default
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under the terms of the Space Lease; or (c) enter into any Space Leases without
the prior written consent of the Beneficiary unless permitted in SECTION 6.21 of
the Loan Agreement.
4.2.2. The Trustor further represents, warrants, covenants and agrees that:
(a) To the best of its knowledge, each Space Lease is (or, when
executed, will be) a valid and legally enforceable obligation of the
parties thereto, in full force and effect.
(b) With respect to each Space Lease and the Space Tenant security
deposits thereunder, any and/or all of such security deposits shall be held
as required by the Space Lease but in no event in a manner other than that
required by law.
(c) The Trustor shall, at its sole cost and expense, keep, observe,
perform and discharge, duly and punctually, all and singular the material
obligations, terms, covenants, conditions, representations and warranties
of each Space Lease on the part of the Trustor to be kept, observed,
performed and discharged.
(d) (i) Except as herein in this clause (i) expressly provided, the
Trustor shall, at its sole cost and expense, maintain the Space Leases in
full force and effect; the Trustor will not waive its rights under or
materially modify, change, supplement, alter or amend ("Change"), nor shall
the Trustor surrender (whether partial or total), terminate, cancel or
subordinate, any of the Space Leases or enter into any Backlease (whether
through an Affiliate or otherwise), and any such attempted Change,
surrender, termination, cancellation or subordination or Backlease shall be
void, unless, in each case, the prior written consent thereto of the
Beneficiary shall have been obtained. Notwithstanding the foregoing, the
Trustor may (x) terminate any Space Lease under 10,000 rentable square feet
as a result of a default by the tenant under such Space Lease and/or (y)
consent to any sublease or assignment of any Space Lease under 10,000
rentable square feet provided (aa) such termination or consent is being
effected in the ordinary course of the Trustor's business, (bb) no Event of
Default then exists and no event has occurred that with the passage of time
or the giving of notice or both would
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constitute an Event of Default, and (cc) the Beneficiary determines, in
its reasonable discretion, that upon the effectiveness of such
termination, assignment or sublease (i) the Loan to Value Ratio (as
defined in the Loan Agreement, and taking into consideration the value of
all of the Projects, as defined in the Loan Agreement) is not greater than
55%, and (ii) the Debt Service Coverage Ratio (as defined in the Loan
Agreement, and taking into consideration the loss of income resulting from
such termination, assignment or sublease, as projected by the Beneficiary
in its reasonable discretion) is not less than 1.40:1.0. A material Change
shall include but not be limited to any material Change in the amount or
time of payment of the rent or additional rent, the length of term or
square footage of the premises under any Space Lease or any other Change
which would materially adversely affect the Trustor's rights under the
Space Lease, or would affect the Beneficiary's rights under the Space
Lease or the value of the Space Lease as collateral security for the
indebtedness.
(ii) The Trustor shall, at its sole cost and expense, enforce the
Space Leases in accordance with their terms; and shall appear in and
defend any action or proceeding arising to which it is a party under
or in any manner connected with any of the Space Leases.
(e) The Trustor shall deliver to the Beneficiary a copy of each notice
of default sent or received by it relating in any way to any Space Lease
promptly upon, but in any event within five (5) business days after, its
sending or receipt thereof.
4.3. The Trustor's Rights and Powers.
4.3.1. The Trustor hereby irrevocably, in the name of the Trustor or
otherwise, authorizes and empowers the Beneficiary, and assigns and transfers
unto the Beneficiary, and constitutes and appoints the Beneficiary its true and
lawful attorney-in-fact, coupled with an interest and as its agent, irrevocably,
with full power or substitution for it and in its name, but solely for the
following purposes: (i) to exercise and enforce every right, power, remedy,
authority, option and privilege of the Trustor under the Space Leases, and as
such attorney-in-fact, the Beneficiary may subordinate, terminate, cancel or
modify the Space Leases, accept the surrender of the Space Leases, give any
notice, take any
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action resulting in such subordination, termination, cancellation, modification
or surrender, give any authorization, furnish any information, make any demands,
execute any instruments and take any and all other action on behalf of and in
the name of the Trustor which in the opinion of the Beneficiary may be necessary
or appropriate to be given, furnished, made, exercised or taken by the Trustor
under the Space Leases in order to comply therewith, to perform the conditions
thereof or to prevent or remedy any default by the Trustor thereunder or to
enforce any of the Trustor's rights and remedies thereunder, and (ii) to ask,
require, demand, receive and collect and give acquittances for the Income (as
hereinafter defined), and on nonpayment thereof to sue for, recover and receive
the same, and on payment thereof to give sufficient releases, receipts,
discharges and acquittances thereof; to endorse any checks or other instruments
or orders in connection therewith and to file any claims or take any action or
institute any proceedings which the Beneficiary may deem to be necessary or
advisable; provided, however, that the power provided for in this sentence may
not be exercised by the Beneficiary unless an Event of Default shall have
occurred and be continuing. "Income" shall mean all deposits, rents, issues,
profits, revenues, royalties, and other revenue producing arrangements, whether
written or oral, and all monetary benefits of, and/or derived from, and/or sums
payable under and by virtue of the Space Leases and/or the Premises.
4.3.2. So long as there shall not have occurred and then be continuing any
Event of Default and until such right of the Trustor is terminated by the
Beneficiary as provided in SECTION 4.3.3, the Beneficiary will not exercise its
rights pursuant to SECTION 4.3.1, and, notwithstanding anything in SECTION 4.3.1
to the contrary, the Trustor shall have the right (but limited as hereinafter
provided) to exercise all of its rights under the Space Leases, including,
without limitation, to collect and receive all rents, income, receipts,
revenues, issues and profits arising therefrom, provided that the Trustor shall
at all times comply with, observe and perform, in the exercise of such right,
all of the provisions of this Trust Deed and the other Security Documents
applicable to the Space Leases; provided, further, that no action shall be taken
or failed to be taken by the Trustor which would impair the Collateral or any
other collateral security for the Obligations provided for in the Security
Documents.
4.3.3. The Beneficiary, upon the occurrence and during the continuance of
an Event of
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Default, at its option and upon written notice to the Trustor, shall have the
right to terminate the right of the Trustor to exercise its rights under the
Space Leases, and, thereupon, in addition, the Beneficiary, at any time
thereafter, at its option, shall have the complete right, power and authority
hereunder to exercise and enforce all rights, powers, remedies, authority,
options and privileges of the Trustor under the Space Leases in the name of the
Trustor or the Beneficiary, to enforce all obligations of the other parties to
the Space Leases and to exercise and enforce all of its rights and remedies
hereunder and under law not exercisable prior to an Event of Default.
4.3.4. The Trustor does hereby direct each and all of the Space Tenants
under the Space Leases and all contractual obligors of the Trustor to pay any
Income to the Beneficiary upon written demand for payment thereof by the
Beneficiary without further inquiry. It is understood and agreed, however, that
no such demand shall be made unless an Event of Default shall have occurred and
be continuing. No such Space Tenant or obligor shall be obliged to account to
the Trustor for any amounts paid to the Beneficiary by reason of any payment
made to the Beneficiary pursuant to such demand and, upon any such payment to
the Beneficiary, shall be pro tanto released from their obligations to the
Trustor with respect to such payment. Each Space Tenant shall be permitted to
rely on any communication from the Beneficiary pursuant hereto, and under no
circumstances shall such Space Tenant be obligated to the Trustor for any
payments made to the Beneficiary hereunder. Until such demand is made, the
Trustor is authorized to collect or enforce or continue collecting or enforcing
such Income in accordance with the provisions of this Trust Deed.
4.3.5. The Beneficiary shall not have any duty as to the collection or
protection of the Collateral or any income thereon or payments with respect
thereto, or as to the preservation of any rights pertaining thereto beyond the
safe custody of any thereof actually in its possession. In no instance shall the
Beneficiary be responsible to lessees for payment of interest upon, or return
of, any lease security deposits, except as provided by law or as provided in the
leases and then only if and to the extent that such deposits are received by the
Beneficiary. The Trustor hereby waives notice of acceptance hereof, and except
as otherwise specifically provided herein or required by provision of law which
may not be waived, hereby waives any and all notices or demands with respect to
any exercise by the Beneficiary of any rights or powers which it may have
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or to which it may be entitled with respect to the Collateral.
4.3.6. The Trustor hereby irrevocably constitutes and appoints the
Beneficiary as the true and lawful attorney-in-fact of the Trustor, which
appointment is coupled with an interest, with full power of substitution, to
proceed from time to time in the Trustor's name in any statutory or
non-statutory proceeding affecting the Trustor or any Collateral, and the
Beneficiary or its nominee may (i) execute and file proof of claim for the full
amount of any Collateral and vote such claims for the full amount thereof (A)
for or against any proposal or resolution, (B) for a trustee or trustees or for
a receiver or receivers or for a committee of creditors and/or (C) for the
acceptance or rejection of any proposed arrangement, plan of reorganization,
composition or extension, and the Beneficiary or its nominee may receive any
payment or distribution and give acquittance therefor and may exchange or
release Collateral; (ii) endorse any draft or other instrument for the payment
of money, execute releases and negotiate and enter into settlements; and (iii)
execute all such other documents or instruments as may be necessary or expedient
to be executed by the Trustor for any of the purposes of this Trust Deed;
provided, however, that the power provided for in this sentence may be exercised
by the Beneficiary only while an Event of Default is continuing. The Beneficiary
shall have no duty to exercise any of the aforesaid rights, privileges or
options and shall not be responsible for any failure to do so or delay in so
doing.
4.4. Remedies and Entry Upon Default.
4.4.1. So long as no Event of Default shall have occurred and be
continuing, the Trustor shall have the right to collect (but not more than one
(1) month in advance) and retain all of the rents, gross receipts and other
payments, if any, from the Space Leases and from the Mortgaged Premises
generally, and the Beneficiary agrees that customary initial rent payments,
security deposits and reimbursements by a Space Tenant to the Trustor on account
of alterations made by the Trustor for the benefit of the Space Tenant are
permissible advance payments by the Space Tenant.
4.4.2. Upon any Event of Default, the Beneficiary may, but shall not be
obligated to:
(a) terminate the rights of the Trustor referred to in SECTION 4.3
hereof and exercise all of
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the powers, rights and remedies provided for in SECTION 4.3 hereof,
including those to be exercised only from and after an Event of Default;
(b) at any time and from time to time, without notice to, or assent
by, the Trustor or any other Person, but without affecting any of the
Obligations, in the name of the Trustor or in the name of the Beneficiary,
notify the account debtors and obligors on any or all of the Space Leases
to make payment and performance directly to the Beneficiary, and demand,
collect, receive, compound and give acquittance for the Space Leases or any
part thereof; extend the time of payment and performance of, compromise or
settle for cash, credit or otherwise, upon any terms and conditions, any of
the Space Leases; endorse to the order of the Beneficiary checks, drafts or
other orders or instruments for the payment of moneys payable to the
Trustor which shall be issued in respect of any of the Space Leases; file
any claims, commence, maintain or discontinue any actions, suits or other
proceedings deemed by the Beneficiary necessary or advisable for the
purpose of collecting upon or enforcing any of the Space Leases; and
execute any instrument and do all other things deemed necessary and proper
by the Beneficiary to protect and preserve and realize upon the Space
Leases and/or the other rights contemplated hereby; the Trustor hereby
irrevocably constitutes and appoints the Beneficiary as such the Trustor's
lawful attorney-in-fact, coupled with an interest, and its agent for the
foregoing purposes;
(c) demand, collect, sue for, attach, levy, recover, receive,
compromise and adjust, and make, execute and deliver receipts and releases
for all Income that may then be or may thereafter become due, owing or
payable with respect to the Premises or any part or parts thereof from any
present or future lessees, tenants, subtenants or occupants thereof or from
any present or future contract obligors; and/or
(d) pay, in such order as the Beneficiary in its sole discretion shall
determine, from and out of the Income collected in connection with the
Premises and/or the Collateral or any part or parts thereof or from or out
of any other funds (less the expense of collection, including reasonable
attorneys' fees and disbursements), any taxes, assessments, water rates,
sewer rates, or other government or other charges levied, assessed or
imposed against the
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Premises or any part or part thereof, and also any and all other charges,
costs and expenses which the Beneficiary deems necessary or advisable to
pay in respect of the management or operation of the Premises, including,
without limitation, the costs of insurance policies, repairs and
alterations, commissions for renting the Premises or any part or parts
thereof, legal expenses in enforcing claims, preparing papers or procuring
any other services that may be required and any amounts payable under or
pursuant to any Lease; all amounts so paid and expended shall be payable on
demand, together with interest at the Involuntary Rate from the date
incurred until paid, and be deemed to be included within the Obligations
and secured by this Trust Deed; the provisions of this ARTICLE and the
rights given to the Beneficiary hereby shall inure to the benefit of the
Beneficiary even though the Beneficiary does not enter and take possession
of the Premises; any balance remaining after the indebtedness secured
hereby and the other obligations of the Trustor under the Loan and Security
Documents shall have been paid in full shall be turned over to the Person
lawfully entitled thereto. Neither the entry upon and taking possession of
the Mortgaged Premises, nor the collection and application of the rents,
gross receipts or other charges thereof, nor any other action taken by the
Beneficiary in connection therewith, shall cure or waive any default
hereunder or waive or modify any notice thereof or notice of acceleration
of the Note theretofore given by the Beneficiary.
4.4.3. If an Event of Default shall have occurred and be continuing, a
notice in writing by the Beneficiary to the Space Tenants under the Space Leases
advising them that the Trustor has defaulted hereunder and requesting that all
future payments of rent, additional rent or other charges under the Space Leases
be made to the Beneficiary (or its agent) shall be construed as conclusive
authority to such Space Tenants that such payments are to be made to the
Beneficiary (or its agent). Each Space Tenant shall be fully protected in making
such payments to the Beneficiary (or its agent) and be given full credit against
its obligations under the applicable Space Lease to the extent of payments made
to the Beneficiary (or its agent) pursuant to any such notice; and the Trustor
hereby irrevocably constitutes and appoints the Beneficiary the attorney-in-fact
and agent of the Trustor, coupled with an interest, for the purpose of endorsing
the consent of the Trustor on any such notice.
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4.5. No Obligation of Beneficiary.
4.5.1. The Beneficiary shall not be obligated to perform or discharge any
obligation of the Trustor as a result of the assignment hereby effected, and the
Trustor hereby agrees to indemnify and hold the Beneficiary harmless from and
against any and all liability, loss or damage which the Beneficiary may incur by
reason of any act of the Beneficiary under this Trust Deed, other than as a
result of the Beneficiary's willful misconduct or gross negligence and other
than as a result of the Beneficiary's misconduct or negligence after the
Beneficiary has taken possession of the Premises. Should the Beneficiary (i)
incur any such liability, loss or damage by reason of this Trust Deed and which
is covered by the foregoing indemnity, or in defense against any such claims or
demands, or (ii) perform any acts or covenants on the part of the Trustor to be
performed under the Space Leases, or (iii) pay for the account of the Trustor
(other than from Income or from funds delivered to the Beneficiary by the
Trustor to be held in trust for such purpose), any and all sums, costs and
expenses for the discharge of taxes, assessments, water rents or other liens
against the Collateral or any part thereof, or on account of insurance premiums
or repairs, and also any amounts and expenses necessary to perform any covenants
and conditions to be performed on the part of the Trustor under the Space
Leases, the amount thereof, including costs, expenses and reasonable attorneys'
fees, together with interest thereon at the Involuntary Rate from the date such
expenses were paid by the Beneficiary to the date of payment to the Beneficiary
by the Trustor, shall be included in the Obligations secured by this Trust Deed,
and the Trustor shall reimburse the Beneficiary therefor upon demand.
4.5.2. The acceptance by the Beneficiary of this Trust Deed, with all the
rights, powers, privileges and authority so created, shall not at any time or in
any event obligate the Beneficiary to appear in or defend any action or
proceeding relating to the Collateral, or to take any action hereunder or
thereunder, or to expend any money or incur any expenses or perform or discharge
any obligation, duty or liability under the Collateral.
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ARTICLE V.
Security Agreement Under Uniform Commercial Code
5.1. This Trust Deed shall constitute a security agreement and a fixture
filing within the meaning of the Uniform Commercial Code of the State (the
"Code"), and the Beneficiary shall be deemed to be the "secured party" (as that
term is defined in the Code). The Trustor hereby grants to the Beneficiary, as
additional collateral for the obligations under the Note and the other
Obligations secured hereby, a security interest in and to all of the Mortgaged
Premises which are considered or as shall be determined to be personal property
or "fixtures" (as defined in the Code), including, without limitation, the
Building Service Equipment, the Furnishings, the Payments and Intangibles, all
books, records, licenses and certificates of the Trustor relating to the
Mortgaged Premises, together with all replacements thereof, substitutions
therefor or additions thereto (said property being sometimes hereinafter
referred to as the "Personal Property"). The Trustor agrees that a security
interest shall attach to the Personal Property for the benefit of the
Beneficiary to secure the indebtedness evidenced by the Note and the other
Obligations secured by this Trust Deed and all other sums and charges which may
become due hereunder, thereunder or under any of the other Security Documents.
The Trustor hereby authorizes the Beneficiary to file financing and continuation
statements with respect to the Personal Property without the signature of the
Trustor, if permitted by the Code. In any event the Trustor covenants to execute
such financing and continuation statements as the Beneficiary may reasonably
request. If an Event of Default shall occur and be continuing, the Beneficiary,
pursuant to the appropriate provisions of the Code, shall have the option of
proceeding as to both real and personal property in accordance with its rights
and remedies in respect of real property under this Trust Deed and the law of
the State, in which event the default provisions of the Code shall not apply.
The Trustor agrees that, in the event the Beneficiary shall elect to proceed
with respect to the Personal Property separately from the real property, unless
a greater period shall then be mandated by the Code, five (5) days notice of the
sale of the Personal Property shall be reasonable notice. The expenses of
retaking, holding, preparing for sale and selling incurred by the Beneficiary
shall be assessed against the Trustor and shall include, but not be limited to,
the reasonable legal expenses incurred by Beneficiary. The Trustor agrees that
it will not remove or permit to be removed from the Mortgaged Premises any of
the Personal
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Property without the prior written consent of the Beneficiary except as set
forth in SECTION 2.7.2. All replacements, renewals and additions to the Personal
Property shall be and become immediately subject to the security interest of
this Trust Deed and the provisions of this ARTICLE V. The Trustor warrants and
represents that all Personal Property now is free and clear of all liens,
encumbrances or security interests other than the Permitted Encumbrances, and
that all replacements of the Personal Property, substitutions therefor or
additions thereto, unless the Beneficiary otherwise consents, will be, free and
clear of liens, encumbrances or security interests of others.
ARTICLE VI.
Events of Default and Remedies
6.1. Events of Default. The whole of the outstanding Principal Amount (as
defined in the Note) and accrued interest evidenced by the Note shall, at the
option of the Beneficiary, become due upon the happening of an Event of Default;
provided, however, that upon the occurrence of a default specified in SECTIONS
5.01(f) or 5.01(g) of the Loan Agreement, or upon the occurrence of any other
default specified in any Loan Document (as defined in the Loan Agreement) where
provision is made for acceleration to occur automatically as a consequence
thereof, all sums owing to the Beneficiary thereunder shall automatically become
immediately due and payable.
6.2. Remedies. If an Event of Default shall occur and be continuing, the
Beneficiary, at its option, may:
6.2.1. by notice to the Trustor, declare the entire principal amount of the
Note then outstanding and all accrued and unpaid interest thereon and all
obligations of the Trustor to the Beneficiary to be immediately due and payable,
and upon such declaration such principal and interest and all obligations of the
Trustor to the Beneficiary shall become and be immediately due and payable,
anything in the Note, the Loan Agreement or in this Trust Deed or in any of the
other Security Documents to the contrary notwithstanding;
6.2.2. as a matter of right and without notice to the Trustor or anyone
claiming under the Trustor,
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and without regard to the then value of the Mortgaged Premises or the interest
of the Trustor therein, to apply to any court having jurisdiction to appoint a
receiver or receivers of the Mortgaged Premises, and the Trustor hereby
irrevocable consents to such appointment and waives notice of any application
therefor; any such receiver or receivers shall have all the usual powers and
duties of receivers in like or similar cases and all the powers and duties of
the Beneficiary in case of entry as provided in this Trust Deed, and shall
continue as such and exercise all such powers until the later of (i) the date of
confirmation of sale of the Mortgaged Premises, (ii) the disbursement of all
proceeds of the Mortgaged Premises collected by such receiver and the payment of
all expenses incurred in connection therewith, and (iii) the termination of such
receivership with the consent of the Beneficiary or pursuant to an order by a
court of competent jurisdiction;
6.2.3. exercise any and all remedies available to a secured party under the
UCC in such order and in such manner as the Beneficiary in its sole discretion
may determine; provided, however, that the expenses of retaking, holding,
preparing for sale or the like, shall include reasonable attorneys' fees and
other expenses of the Beneficiary and the Trustee and be secured by this Trust
Deed;
6.2.4. bring an action in any court of competent jurisdiction to foreclose
this Trust Deed or enforce any of the terms, covenants and conditions hereof or
contained in any other Security Document;
6.2.5. elect to cause the Mortgaged Premises or any part thereof to be sold
as follows:
(a) deliver to the Trustee a written declaration of default and demand
for sale, and a written notice of default and election to cause the
Trustor's interest in the Mortgaged Premises, or any portion thereof, to be
sold, which notice the Trustee or the Beneficiary shall cause to be duly
filed for record in the Official Records of the County in which the
Mortgaged Premises is located;
(b) upon receipt of such notice from the Beneficiary, the Trustee
shall cause to be recorded, published and delivered to the Trustor, such
Notice of Default and Election to Sell as then required by law and by this
Trust Deed, the Trustee shall, without demand on the Trustor, after lapse
of such time as may then be required by
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law, and after recordation of such Notice of Default and after Notice of
Sale having been given as required by law, sell the Mortgaged Premises at
the time and place of sale fixed by it in said Notice of Sale, either as a
whole, or in separate lots or parcels or items as the Beneficiary shall
deem expedient, and in such order as the Beneficiary may determine, at
public auction to the highest bidder for cash in lawful money of the United
States payable at the time of sale; the Trustor hereby expressly waives any
right which it may have to direct the order in which any of the Mortgaged
Premises may be sold when it consists of more than one lot or parcel, and
such order of sale, whether in a single sale or in multiple sales held on
different days or at different times, shall be at the sole discretion of
the Beneficiary; the Trustee shall deliver to such purchaser or purchasers
thereof its good and sufficient deed or deeds conveying the property so
sold, but without any covenant or warranty, express or implied; the
recitals in such deed of any matters or facts shall be conclusive proof of
the truthfulness thereof; and any Person, including, without limitation,
the Trustor, the Trustee or the Beneficiary, may purchase at such sale;
(c) after deducting all costs, fees and expenses of the Trustee,
including costs of evidence of title and attorneys' fees of the Trustee and
the Beneficiary in connection with such sale, the Trustee shall apply, in
the following priority, the proceeds of sale to payment of: (i) first, all
sums expended under the terms hereof, not then repaid, with interest
thereon at the Involuntary Rate, (ii) second, all other sums then secured
hereby, in such order of priority and in such proportion as the Beneficiary
in its sole discretion may elect, and (iii) the remainder, if any, to the
Person lawfully entitled thereto;
(d) subject to applicable law, the Trustee may postpone the sale of
all or any portion of the Mortgaged Premises, by public announcement at the
time and place of such sale, and from time to time thereafter may postpone
such sale by public announcement at the time fixed by the preceding
postponement or subsequently noticed sale, and without further notice make
such sale at the time fixed by the last postponement, or may, in its
discretion, give a new notice of sale;
6.2.6. exercise any or all of its other rights and remedies provided
herein, in any of the Security Documents, or other document or agreement now or
hereafter securing all or any portion of the Obligations secured
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hereby, or as provided by law, in such order of priority as the Beneficiary
shall determine in its sole discretion.
6.3. Sale; No Marshalling of Assets.
6.3.1. In case of a foreclosure sale, all of the Mortgaged Premises may be
sold in one parcel even though the proceeds of such sale exceed or may exceed
the indebtedness secured hereby. The Beneficiary shall not be required to
exercise any rights under this Trust Deed before proceeding against any other
security, shall not be required to proceed against other security before
proceeding under this Trust Deed, and shall not be precluded from proceeding
against any or all of any security held by the Beneficiary for any or all of the
indebtedness secured hereby in any order or at the same time.
6.3.2. The Trustor agrees, to the full extent that it may lawfully do so,
that in any foreclosure or other action brought by the Beneficiary to enforce
this Trust Deed, it will not at any time insist upon or plead or in any way take
advantage of any appraisement, valuation, stay, marshalling of assets,
extension, redemption or moratorium law now or hereafter in force and effect so
as to prevent, hinder, delay or otherwise affect the enforcement of the
provisions of this Trust Deed or any rights or remedies the Beneficiary may have
hereunder or by law.
6.3.3. If the Beneficiary shall elect to accelerate the indebtedness
secured hereby following the occurrence of an Event of Default, the Trustor,
within five (5) days after demand, will pay to the Beneficiary, or any receiver
appointed in connection with the foreclosure of this Trust Deed, any and all
amounts then held as security deposits under all Space Leases; and the
Beneficiary or such receiver shall be deemed to indemnify the Trustor against
all claims of tenants in respect of the security deposits so paid following such
demand.
6.4. Legal Expenses of the Beneficiary.
6.4.1. The Trustor will pay to the Beneficiary or the Trustee, as the case
may be, on demand, all costs, charges and expenses (including, without
limitation, reasonable attorneys' fees and disbursements) incurred or paid at
any time by the Beneficiary or the Trustee (i) in connection with any action or
proceeding to foreclose this Trust Deed or to recover or collect all, or any
portion of the indebtedness secured hereby; and (ii) in connection with any
modification or amendment or assignment
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of this Trust Deed or the other Security Documents, together with interest on
each such payment made by the Beneficiary at the Involuntary Rate from the date
of the Beneficiary's demand for such payment to the date of reimbursement by the
Trustor.
6.4.2. If any action or proceeding be commenced in which the Beneficiary or
the Trustee is made a party, or in which it becomes necessary to defend or
uphold the lien of this Trust Deed, all reasonable sums paid by the Beneficiary
for the expense of any litigation to prosecute or defend the title, rights and
lien created by this Trust Deed (including, without limitation, reasonable
attorneys' fees) shall be paid by the Trustor, together with interest thereon at
the Involuntary Rate from the date of the Beneficiary's demand for such payment
to the date of reimbursement by the Trustor.
6.5. Remedies Cumulative; No Waiver; Etc.
6.5.1. No remedy in this Trust Deed conferred upon or reserved to the
Beneficiary is intended to be exclusive of any other remedy or remedies, and
each and every such remedy shall be cumulative, and shall be in addition to
every other remedy given hereunder or now or hereafter existing at law or in
equity. No delay or omission by the Beneficiary in exercising any right or power
arising upon any Event of Default shall impair any such right or power, or shall
be construed to be a waiver of or acquiescence in any such Event of Default; and
every power and remedy given by this Trust Deed to the Beneficiary may be
exercised from time to time as often as the Beneficiary may determine it is
appropriate to do so.
6.5.2. A waiver in one or more instances of compliance with any of the
terms, covenants, conditions or provisions of the Note, the Loan Agreement or of
the Security Documents shall apply to the particular instance or instances and
at the particular time or times only, and no such waiver shall be deemed a
continuing waiver. In any event, no waiver shall be effective, or be asserted by
the Trustor as having been made, unless set forth in a writing signed by the
Beneficiary.
6.5.3. The Trustor waives and renounces all homestead and similar exemption
rights with respect to the Mortgaged Premises provided for by the Constitution
and laws of the United States and of the State as against the collection of the
Security Documents, or any part thereof.
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6.5.4. TRUSTOR HEREBY EXPRESSLY (1) WAIVES ANY RIGHTS IT MAY HAVE UNDER
CALIFORNIA CIVIL CODE SECTION 2954.10 TO PREPAY THE NOTE, IN WHOLE OR IN PART,
WITHOUT PENALTY EXCEPT AS PROVIDED IN THE NOTE, UPON ACCELERATION OF THE
MATURITY DATE OF THE NOTE, AND (2) AGREES THAT IF, FOR ANY REASON, A PREPAYMENT
OF ANY OR ALL OF THE NOTE IS MADE, WHETHER VOLUNTARILY, OR UPON OR AFTER ANY
ACCELERATION OF THE MATURITY DATE OF THE NOTE BY THE BENEFICIARY ON ACCOUNT OF
ANY DEFAULT BY THE TRUSTOR UNDER THE NOTE, THIS DEED OF TRUST OR ANY OF THE
OTHER SECURITY DOCUMENTS, INCLUDING, BUT NOT LIMITED TO, ANY TRANSFER OR
DISPOSITION AS PROHIBITED OR RESTRICTED BY THE PROVISIONS OF THIS DEED OF TRUST,
THEN THE TRUSTOR SHALL BE OBLIGATED TO PAY, CONCURRENTLY THEREWITH, ANY
"BREAKAGE FEES" WHICH MAY THEN BE DUE UNDER THE NOTE. BY SIGNING THIS PROVISION
IN THE SPACE PROVIDED BELOW, THE TRUSTOR AGREES THAT THE BENEFICIARY'S AGREEMENT
TO ENTER INTO THE LOAN AGREEMENT CONSTITUTES ADEQUATE CONSIDERATION FOR THIS
WAIVER AND AGREEMENT.
-----------
INITIALS OF
THE TRUSTOR
6.6. No Merger. It is the intention of the parties to this Trust Deed that
if the Beneficiary or the Trustee shall at any time hereafter acquire title to
all or any portion of the Mortgaged Premises, then, and until the indebtedness
secured hereby has been paid in full, the interest of the Beneficiary hereunder
and the lien of this Trust Deed shall not merge or become merged in or with the
estate and interest of the Beneficiary or the Trustee as the holder and owner of
title to all or any portion of the Mortgaged Premises and that, until such
payment, the estate of the Beneficiary or the Trustee in the Mortgaged Premises
and the lien of this Trust Deed and the interest of the Beneficiary hereunder
shall continue in full force and effect to the same extent as if the Beneficiary
or the Trustee had not acquired title to all or any portion of the Mortgaged
Premises.
ARTICLE VII.
Provisions of General Application
7.1. Modifications. No change, amendment, termination, modification or
cancellation of this Trust Deed, or of any part hereof, shall be valid unless
set forth in a writing signed by the Trustor and the Beneficiary,
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except that only the Beneficiary need sign any satisfaction of this Trust Deed.
7.2. Notices. All notices, demands, requests, consents, approvals or other
communications (each, a "Notice") given or required to be given hereunder shall
be sent to the addresses and in the manner required by the Loan Agreement.
7.3. The Beneficiary's Rights to Perform the Trustor's Covenants. If the
Trustor shall fail to pay or cause payment to be paid to the Beneficiary in
accordance with the terms of the Security Documents, or to perform or observe
any other term, covenant, condition or obligation required to be performed or
observed by the Trustor under this Trust Deed or the other Security Documents,
without limiting any other provision of this Trust Deed, and without waiving or
releasing the Trustor from any obligation or default hereunder, after giving any
notice to the Trustor required hereunder and after the passage of any applicable
cure periods (or without such notice in the event of an emergency), the
Beneficiary (or any receiver of the Mortgaged Premises) shall have the right,
but not the obligation, to make any such payment, or to perform any other act or
take any appropriate action, including, without limitation, entry on the
Mortgaged Premises and performance of work thereat, as it, in its sole
discretion, may deem necessary to cause such other term, covenant, condition or
obligation to be promptly performed or observed on behalf of the Trustor or to
protect the security of this Trust Deed. All amounts advanced by, or on behalf
of, the Beneficiary in exercising its rights under this SECTION 7.3 (including,
but not limited to, legal expenses and disbursements incurred in connection
therewith), together with interest thereon at the Involuntary Rate from the date
of the Beneficiary's demand upon the Trustor for reimbursement of such sums
until reimbursement by the Trustor, shall be payable by the Trustor to the
Beneficiary upon demand and shall be secured by this Trust Deed.
7.4. Additional Sums Payable by the Trustor. All sums which, by the terms
of this Trust Deed or any of the other Security Documents (excluding however the
principal indebtedness evidenced by the Note), are payable by the Trustor to the
Beneficiary shall, together with the interest thereon provided for herein or in
the Note or such other Security Documents, be added to and deemed part of the
indebtedness secured by the lien of this Trust Deed whether or not the provision
which obligates the Trustor to make any such payment to the Beneficiary
specifically so states.
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7.5. Captions. The captions used in this Trust Deed are inserted only as a
matter of convenience and for reference, and in no way define, limit, enlarge or
describe the scope or intent of this Trust Deed or in any other way affect this
Trust Deed or the construction of any provision hereof.
7.6. Successors and Assigns. The covenants and agreements contained in this
Trust Deed shall run with the land and bind the Trustor, the successors and
assigns of the Trustor and all subsequent owners, encumbrances and Space Tenants
of the Mortgaged Premises, or any part thereof; and shall inure to the benefit
of the Beneficiary, its successors and assigns and all subsequent beneficial
owners of this Trust Deed.
7.7. Gender and Number. Wherever the context of this Trust Deed so
requires, the neuter gender includes the masculine and/or feminine gender and
the singular number includes the plural.
7.8. Severability. If any one or more of the provisions contained in this
Trust Deed shall for any reason be held to be invalid, illegal, or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provisions of this Trust Deed; and this Trust Deed shall, in such
event, be construed as if such invalid, illegal or unenforceable provision had
never been included.
7.9. Usury. Anything in the Note, the Loan Agreement, this Trust Deed or
the other Security Documents to the contrary notwithstanding, the Beneficiary
shall never be entitled to receive, collect or apply as interest on the
principal amount of the Note or any other of the obligations secured hereby any
amount in excess of the maximum rate of interest permitted to be charged by
applicable law. In the event the Beneficiary ever receives, collects or applies
as interest any such excess, the amount which would be excessive interest shall
be applied to the reduction of the principal amount of said obligations; and if
said principal amount shall have been paid in full, shall be remitted to the
Person lawfully entitled thereto. In determining whether or not the interest
paid or payable in any specific instance shall exceed the highest lawful rate,
the Trustor and the Beneficiary shall to the maximum extent permitted by
applicable law (i) characterize any non-principal payment as an expense, fee or
premium rather than as interest, (ii) exclude voluntary prepayments and the
effects thereof and (iii) "spread" the total amount of interest throughout the
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entire contemplated terms of the obligations so that the interest rate is
uniform throughout the entire said term.
7.10. Controlling Law. This Trust Deed shall be governed by, and construed
and enforced in accordance with, the laws of the State of California applicable
to contracts made and to be wholly performed within such state.
7.11. Entire Agreement. This Trust Deed, together with the Note, the Loan
Agreement and the other Security Documents, embodies the entire agreement and
understanding between the parties relating to the subject matter hereof.
ARTICLE VIII.
Particular Provisions
The foregoing ARTICLES of this Trust Deed are subject to the following
further provisions set forth in this ARTICLE VIII.
8.1. Limited Recourse. The provisions of PARAGRAPH 6.16 of the Loan
Agreement are hereby incorporated herein by reference.
8.2. Environmental Representations and Warranties. The Trustor hereby makes
the following representations and warranties to the Beneficiary with respect to
the Mortgaged Premises:
8.2.1. Compliance with Environmental Laws. To the best of the Trustor's
knowledge based on all appropriate and thorough inquiry, (i) the Mortgaged
Premises (including surface and subsurface soil and water and areas leased to
tenants, if any), and the use and operation thereof, have been and are currently
in compliance with all Environmental Laws (as hereinafter defined), (ii) all
required permits are in effect, and the Trustor is in compliance therewith, and
(iii) all Hazardous Materials (as hereinafter defined) generated or handled on
the Mortgaged Premises have been disposed of in a lawful manner.
8.2.2. No Hazardous Materials. To the best of the Trustor's knowledge based
on all appropriate and thorough inquiry (a) no Hazardous Release (as hereinafter
defined) or other Hazardous Activity (as hereinafter defined) has occurred or is
occurring on or from the
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Mortgaged Premises except in compliance with Environmental Laws and as has been
disclosed in writing to the Beneficiary ("Disclosed Material"), (b) all
Hazardous Materials used, treated, stored, transported to or from, generated or
handled on the Mortgaged Premises have been disposed of on or off the Mortgaged
Premises in a lawful manner, (c) no environmental or public health or safety
hazards currently exist with respect to the Mortgaged Premises or the business
or operations conducted thereon, (d) no underground storage tanks (including but
not limited to petroleum or heating oil storage tanks) are present on or under
the Mortgaged Premises or have been on or under the Mortgaged Premises, except
as has been disclosed in writing to the Beneficiary, and (e) no changes have
been made to or discovered regarding the operations, use or environmental
conditions on the Mortgaged Premises since the date of the most recent written
environmental assessment provided to the Beneficiary.
8.2.3. No Environmental Actions. To the best of the Trustor's knowledge and
based on all appropriate and thorough inquiry, the Mortgaged Premises is not
listed on any local, state and/or federal lists of potentially contaminated
sites, including, but not limited to, the National Priorities List,
Comprehensive Environmental Response, Compensation and Liability Information
System or any state or federal hazardous waste site or leaking underground
storage tank lists, and there have been no past and there are no pending or
threatened Environmental Actions (as hereinafter defined) to which the Trustor
is a party or which relate to the Mortgaged Premises. The Trustor has not
received any notice of any Environmental Action respecting Trustor, the
Mortgaged Premises or any off-site facility to which has been sent any Hazardous
Material for purposes of any Hazardous Activity.
8.2.4. Mortgaged Premises Not Border Zone. To the best of the Trustor's
knowledge, the Mortgaged Premises has not been designated as "border zone
property" under the provisions of California Health and Safety Code Sections
25220 et seq., or any regulation adopted in accordance therewith, and there has
been no occurrence or condition on any real property adjoining or in the
vicinity of the Mortgaged Premises that could cause the Mortgaged Premises or
any part thereof to be designated as "border zone property", except as has been
previously disclosed in writing to the Beneficiary.
8.2.5. Definitions. For purposes of this Trust Deed, the following
capitalized terms shall have the meanings set forth below:
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"Environmental Action" shall mean:
(a) any notice of violation, complaint, claim, citation, demand,
inquiry, report, action, assertion of potential responsibility, lien,
encumbrance, or proceeding regarding the Mortgaged Premises, whether formal
or informal, absolute or contingent, matured or unmatured, brought or
issued by any governmental unit, agency, or body, or any person or entity
respecting:
(1) any Environmental Law;
(2) the environmental condition of the Mortgaged Premises, or any
portion thereof, or any property near the Mortgaged Premises,
including actual or alleged damage or injury to humans, public health,
wildlife, biota, air, surface or subsurface soil or water, or other
natural resources; or
(3) any Hazardous Activity on the Mortgaged Premises or off-site;
(b) any violation or claim of violation by the Trustor of any
Environmental Law whether or not involving the Mortgaged Premises;
(c) any lien for damages caused by, or the recovery of any costs
incurred by any person or entity, including any governmental entity, for
the investigation, remediation or cleanup of any Hazardous Release or
threatened Hazardous Release on the Mortgaged Premises; or
(d) the destruction or loss of use of property, or the injury, illness
or death of any officer, director, employee, agent, representative, tenant
or invitee of the Trustor or any other person alleged to be or possibly to
be arising from or caused by the environmental condition of the Mortgaged
Premises or any Hazardous Activity on the Mortgaged Premises.
"Environmental Laws" shall mean:
(a) any present or future federal statute, law, code, rule,
regulation, ordinance, order, standard, permit, license, guidance document
or requirement (including consent decrees, judicial decisions and
administrative orders) together with all related amendments, implementing
regulations and reauthorizations, pertaining to the protection,
preservation, conservation or regulation of the environment, including, but
not limited to: the
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Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended by the Superfund Amendments and Reauthorization Act, 42
U.S.C. Sections 9601 et seq. ("CERCLA"); the Resource Conservation and
Recovery Act of 1976, 42 U.S.C. Sections 6901 et seq. ("RCRA"); the Toxic
Substances Control Act, 15 U.S.C. Sections 2601 et seq. ("TOSCA"); the
Clean Air Act, 42 U.S.C. Sections 7401 et seq.; the Clean Water Act, 33
U.S.C. Sections 1251 et seq.; the Hazardous Materials Transportation Act,
49 U.S.C. Sections 1801 et seq. ("HMTA"); the Emergency Planning and
Community Right-to-Know Act, 42 U.S.C. Sections 11011 et seq.; the Federal
Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. Sections 136 et seq.;
and the Atomic Energy Act, 42 U.S.C. Sections 2011 et seq.
(b) any present or future state or local statute, law, code, rule,
regulation, ordinance, order, standard, permit, license or requirement
(including consent decrees, judicial decisions and administrative orders)
together with all related amendments, implementing regulations and
reauthorizations, pertaining to the protection, preservation, conservation
or regulation of the environment.
"Hazardous Activity" shall mean any use, exposure, Hazardous Release,
generation, manufacture, sale, transport, handling, storage, treatment,
reuse, presence, decontamination, clean-up or recycling of any Hazardous
Material.
"Hazardous Materials" shall mean (a) all substances defined as
"hazardous substances", "hazardous materials", "toxic substances",
"hazardous wastes" or "solid waste" in CERCLA, RCRA, TOSCA or HMTA; (b)
those substances listed in the United States Department of Transportation
Table (49 C.F.R. 172.101 and amendments thereto) or by the Environmental
Protection Agency (or any successor agency) as "hazardous substances" (40
C.F.R. Part 302 and amendments thereto); those substances defined as
"hazardous wastes" in Section 25117 of the California Health and Safety
Code or as "hazardous substances" in Section 25316 of the California Health
and Safety Code, and in the regulations adopted and publications
promulgated pursuant to said laws or which otherwise are or become
regulated by any governmental authority, agency, department, commission,
board or instrumentality of the United States of America, the State of
California or any political subdivision thereof; (d) any hazardous,
dangerous or toxic chemical, material, waste, pollutant, contaminant or
substance (collectively, "Pollutants") within the meaning of any
Environmental Law prohibiting, limiting or otherwise regulating any
Hazardous
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Activity relating to any such Pollutant; (e) any petroleum, crude oil, or
fraction or by-product thereof; (f) any radioactive material, including any
source, special nuclear or by-product material as defined at 42 U.S.C.
Sections 2011 et seq., as amended or hereafter amended, and in the
regulations adopted and publications promulgated pursuant to said law; (g)
asbestos-containing materials in any form or condition; and (h)
polychlorinated biphenyls in any form or condition.
"Hazardous Release" shall mean the release of Hazardous Materials into
the environment by any means whatsoever, including but not limited to any
spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping removing or disposing (including the
abandonment or discarding of barrels, containers and other receptacles
containing any Hazardous Material).
ARTICLE IX.
Trustee
9.1. Concerning the Trustee.
9.1.1. The Trustee, by its acceptance hereof, covenants faithfully to
perform and fulfill the trusts herein created, being liable, however, only for
negligence or willful misconduct, and hereby waives any statutory fee and agrees
to accept reasonable compensation (payable by the Trustor) in lieu thereof for
any services rendered by it in accordance with the terms hereof.
9.1.2. The Trustee may resign at any time upon giving thirty (30) days'
notice in writing to the Beneficiary and the Trustor.
9.1.3. The Beneficiary, without cause may remove the Trustee at any time
and select a successor Trustee. In the event of the removal, resignation,
refusal to act, or inability to act of the Trustee, or in its sole discretion
for any reason whatsoever the Beneficiary may, without notice and without
specifying any reason therefore and without applying to any court, select and
appoint a successor Trustee; and all powers, rights, duties and authority of the
Trustee, as aforesaid, shall thereupon become vested in such successor. Such
successor Trustee shall not be required to give bond for the faithful
performance of its duties unless required to do so by the
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Beneficiary. Each such appointment and substitution shall be by written
instrument executed by the Beneficiary containing reference to this Trust Deed
sufficient to identify it, which, when recorded in the office of the county
clerk of the court or counties in which the Mortgaged Premises is situated,
shall be conclusive proof of proper appointment of the successor trustee. The
recital or statements in any instrument executed by the Trustee, in pursuance of
any of said trusts of the due authorization of any agent of the Trustee
executing the same shall for all purposes be conclusive proof of such
authorization.
9.1.4. The Trustee, at any time, upon request of the Beneficiary, may
reconvey to the Trustor or the Trustor's successors or assigns, any portion of
the Mortgaged Premises without affecting the personal liability of any person
for the payment of any said indebtedness, or the lien of this Trust Deed upon
the remainder of the Mortgaged Premises not reconveyed.
9.1.5. The Trustor forthwith upon request, at any and all times hereafter,
at the expense of the Trustor, will cause to be made, executed, acknowledged and
delivered to the Trustee, any and every deed or assurance in law which the
Trustee or counsel of the Trustee shall reasonably require for the more sure,
effectual and
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satisfactory granting and confirming of the Mortgaged Premises unto the Trustee.
IN WITNESS WHEREOF, the Trustor has executed this Trust Deed as of the day
and year first above written.
"Trustor"
CORPORATE REALTY INCOME
FUND I, L.P., a Delaware
limited partnership
By: _______________________
Robert F. Gossett, Jr.,
general partner
By: 1345 Realty Corporation,
general partner
By: ________________________
Robert F. Gossett, Jr.,
President
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State of _____________________ )
County of ____________________ )
On ________________ before me, ________________________________________________
Date
_______________________________________________________________________________,
NAME, TITLE OF OFFICER-E.G., "JANE DOE, NOTARY PUBLIC"
personally appeared ___________________________________________________________
NAME(S) OF SIGNER(S)
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.
WITNESS my hand and official seal.
Signature_______________________________ (Seal)
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<PAGE>
EXHIBIT A
PREMISES
PARCEL 5, IN THE CITY OF MONTEREY PARK, COUNTY OF LOS ANGELES, STATE OF
CALIFORNIA, AS SHOWN ON PARCEL MAP NO. 16386, FILED IN BOOK 175 PAGES 36 TO 40
INCLUSIVE OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
EXCEPTING FROM THAT PORTION OF SAID PARCEL 5, LYING WITHIN THAT PORTION OF THE
NORTHWEST QUARTER OF SECTION 32, TOWNSHIP 1 SOUTH, RANGE 12 WEST, SAN BERNARDINO
MERIDIAN, DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT IN THE NORTHERLY LINE OF SAID SECTION 32, SAID POINT BEING
466.52 FEET EASTERLY OF THE NORTHWEST CORNER OF SAID SECTION 32; THENCE
SOUTHERLY ALONG A LINE PARALLEL WITH THE WESTERLY LINE OF SAID SECTION 32, 500
FEET TO A POINT; THENCE EASTERLY ALONG A LINE PARALLEL WITH THE NORTHERLY LINE
OF SAID SECTION 32, TO ITS INTERSECTION WITH THE EASTERLY LINE OF THE NORTHWEST
QUARTER OF THE NORTHWEST QUARTER OF SAID SECTION 32; THENCE NORTHERLY ALONG SAID
EASTERLY LINE OF THE NORTHWEST QUARTER OF THE NORTHWEST QUARTER OF SAID SECTION
32, 500 FEET TO THE NORTHERLY LINE OF SAID SECTION; THENCE WESTERLY ALONG THE
NORTHERLY LINE OF SAID SECTION TO THE POINT OF BEGINNING, ALL OIL, ASPHALTUM,
PETROLEUM AND NATURAL GAS, TAR OR OTHER HYDROCARBON SUBSTANCES AND PRODUCTS,
FROM UNDER OR UPON THE SAID LANDS, WITH THE RIGHT TO REMOVE AND STORE AND SELL
SUCH SUBSTANCES AND PRODUCTS THEREFROM, TOGETHER WITH ALL RIGHTS FOR THE PURPOSE
OF MINING, EXCAVATING, BORING, DRILLING, SINKING OR OTHERWISE COLLECTING AND
DEVELOPING SAID MINERAL SUBSTANCES AND THE RIGHT TO DEVELOP, STORE AND USE WATER
FOR SUCH OPERATIONS AND DEVELOPMENT, AS RESERVED IN DEED FROM HUNTINGTON LAND
IMPROVEMENT COMPANY, A CALIFORNIA CORPORATION, RECORDED OCTOBER 25, 1918 IN BOOK
6707 PAGE 300 OF DEEDS.
ALL OF WHICH RIGHTS WERE LIMITED TO THAT PORTION LYING BELOW A DEPTH OF 500
FEET, MEASURED FROM THE SURFACE OF SAID LAND, BY DEED EXECUTED BY SECURITY
PACIFIC NATIONAL BANK, A NATIONAL BANKING ASSOCIATION, SUCCESSOR BY MERGER TO
SECURITY FIRST NATIONAL BANK OF LOS ANGELES, AS TRUSTEE UNDER THE WILL OF HENRY
E. HUNTINGTON, DECEASED (TRUST NO. 2-018442-0), RECORDED DECEMBER 17, 1980 AS
INSTRUMENT NO. 80-1264035.
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FIRST AMENDMENT TO DEED OF TRUST, ASSIGNMENT OF RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
FIRST AMENDMENT TO DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND
FIXTURE FILING dated as of December __, 1996 (as the same may be amended or
otherwise modified from time to time, this "Amendment") by and between CORPORATE
REALTY INCOME FUND I, L.P., a Delaware limited partnership (the "Trustor"),
having an office at 406 East 85th Street, New York, New York 10028, and FLEET
BANK, NATIONAL ASSOCIATION, a national banking association (the "Beneficiary"),
having an office at 56 East 42nd Street, New York, New York 10017.
W I T N E S S E T H:
WHEREAS, the Trustor executed and delivered to CHICAGO TITLE INSURANCE
COMPANY (the "Trustee"), for the benefit of the Beneficiary, that certain Deed
of Trust, Assignment of Rents, Security Agreement and Fixture Filing dated
September 26, 1996 (as the same may be amended or otherwise modified from time
to time, the "Trust Deed") covering all of the Trustor's estate in and to all
that tract or parcel of land situate, lying and being in the County of Yolo,
State of California, and more particularly described in EXHIBIT A annexed to and
made a part of this Amendment;
WHEREAS, the Trust Deed was recorded by the Yolo County Recorder's Office
on October 1, 1996 as Document 96-0024112-00;
WHEREAS, the Trustor and the Beneficiary are also parties to a Loan
Agreement dated as of September 26, 1996 (as the same may be amended or
otherwise modified from time to time, (the "Loan Agreement") and, pursuant to
the Loan Agreement, the Beneficiary has agreed to lend up to $24,000,000 to the
Trustor, and, to evidence such loans, the Trustor executed and delivered to the
Beneficiary the Note;
WHEREAS, payment of the indebtedness of the Trustor evidenced by the Note
is secured by the Trust Deed;
WHEREAS, the Trustor and Beneficiary are simultaneously herewith entering
into a First Amendment to Loan Agreement and Note for the purpose, among others,
of increasing the principal amount of the Note from $24,000,000 to $44,000,000;
and
WHEREAS, it is a condition precedent to the effectiveness of the First
Amendment to Loan Agreement and Note that each of the parties hereto shall have
executed and delivered
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this Amendment, thereby amending the Trust Deed and each of the parties hereto
is willing to do so.
NOW, THEREFORE, the parties to this Amendment hereby agree as follows:
1. All capitalized terms used herein without definition and which are
defined in the Trust Deed are used herein with the meanings assigned to such
terms in the Trust Deed.
2. The description in the Trust Deed to the Note being in the principal
amount of $24,000,000 are hereby amended so that all of such references shall be
to a Note in the principal amount of $44,000,000.
3. The granting clauses of the Trust Deed are hereby restated in their
entirety and incorporated herein and the Trustor hereby ratifies and restates
such granting clauses as incorporated herein.
4. The Trust Deed, as modified by this Amendment, and all covenants of the
Trustor made in the Trust Deed are hereby ratified and confirmed by the Trustor
in all respects, and the Trust Deed, as so modified, shall continue in full
force and effect in accordance with its terms.
2
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IN WITNESS WHEREOF, each of the parties has caused these presents to be
signed and attested, all as of the day and year first above written.
ATTEST: CORPORATE REALTY INCOME FUND I, L.P.
_____________________ By:__________________________________
Robert F. Gossett, Jr.,
General Partner
By: 1345 Realty Corporation,
General Partner
By:________________________________
Robert F. Gossett, Jr.,President
ATTEST: FLEET BANK, NATIONAL ASSOCIATION
____________________ By:_______________________________
Title:
3
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<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the ___ day of December, 1996, before me personally came ROBERT F.
GOSSETT, JR., to me known, who, being by me duly sworn, did depose and say that
he resides at 406 East 85th Street, New York, New York 10028; that he is the
President of 1345 Realty Corporation, the corporation described in and which
executed the foregoing instrument as a general partner of Corporate Realty
Income Fund I, L.P.; and that he signed his name thereto by order of the board
of directors of said corporation and as and for the act and deed of said
corporation and partnership.
______________________________________
NOTARY PUBLIC
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the ____day of December, 1996, before me personally came ROBERT F.
GOSSETT, JR., to me known, who, being by me duly sworn, did depose and say that
he resides at 406 East 85th Street, New York, New York 10028; that he is a
general partner of Corporate Realty Fund I, L.P., as described in the foregoing
instrument; and that he signed his name thereto as and for the act and deed of
said partnership.
______________________________________
NOTARY PUBLIC
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<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the ____day of December, 1996, before me personally came James Mirman,
to me known, who, being by me duly sworn, did depose and say that he resides at
56 East 42nd Street, New York, New York 10017; that he is a Vice President of
Fleet Bank, National Association; and that he signed his name thereto as and for
the act and deed of Fleet Bank, National Association.
______________________________________
NOTARY PUBLIC
5
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<PAGE>
SECTION:
BLOCK:
LOTS:
COUNTY: Yolo
Date: As of December __, 1996
FIRST AMENDMENT TO DEED OF TRUST, ASSIGNMENT OF RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
by and between
CORPORATE REALTY INCOME FUND I, L.P.
("Trustor")
having an office at
406 East 85th Street
New York, New York 10028
and
FLEET BANK, NATIONAL ASSOCIATION
having its principal office at
56 East 42nd Street
New York, New York 10017
("Beneficiary")
This instrument prepared by, and after recording please return to:
Loeb & Loeb LLP
345 Park Avenue
New York, New York 10154-0037
Attention: Kenneth D. Freeman, Esq.
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RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Loeb & Loeb LLP
345 Park Avenue
New York, New York 10154
Attn: Kenneth Freeman, Esq.
- ------------------SPACE ABOVE THIS LINE FOR RECORDER'S USE ONLY-----------------
[Flatiron Industrial Park]
COLORADO
DEED OF TRUST, ASSIGNMENT OF RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
THIS DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND FIXTURE FILING
SECURES REVOLVING CREDIT INDEBTEDNESS. THE INDEBTEDNESS SECURED HEREBY IS
COMPOSED OF REVOLVING CREDIT TYPE INDEBTEDNESS, THE OUTSTANDING BALANCE OF WHICH
CAN FLUCTUATE UP OR DOWN ACCORDING TO PAYMENTS MADE ON THE INDEBTEDNESS AND
SUBSEQUENT ADVANCES.
THIS DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND FIXTURE
FILING, made as of the 26th day of September, 1996, by CORPORATE REALTY INCOME
FUND I, L.P., Delaware limited partnership (the "Trustor"), having an office at
406 East 85th Street, New York, New York 10028, to the PUBLIC TRUSTEE OF BOULDER
COUNTY, COLORADO (the "Trustee"), for the benefit of FLEET BANK, NATIONAL
ASSOCIATION, a national banking association (the "Beneficiary"), having an
office at 56 East 42nd Street, New York, New York 10017.
W I T N E S S E T H:
WHEREAS, the Trustor is the owner of the fee estate in those certain
parcels of real property described in EXHIBIT A annexed hereto (together with
the improvements now or hereafter located thereon, collectively, the
"Premises"), and desires to convey the Premises in trust, to secure, among other
obligations, a certain loan being made concurrently herewith by the Beneficiary
to the Trustor, pursuant to the terms of a Loan Agreement of even date
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herewith between Trustor and Beneficiary (as the same may be amended or
otherwise modified from time to time, the "Loan Agreement"); and
WHEREAS, the indebtedness secured hereby is evidenced by that certain
Secured Promissory Note of even date herewith in the principal amount of
$24,000,000 (as the same may be amended or otherwise modified from time to time,
the "Note") made by the Trustor to the Beneficiary, which Note provides for a
variable rate of interest.
NOW, THEREFORE,
FOR THE PURPOSE OF SECURING payment of all of the liabilities and
obligations of the Trustor to the Beneficiary evidenced by the Note, plus
interest thereon and all sums necessary to protect the Beneficiary under this
Trust Deed or under the other Security Documents (as hereinafter defined), and
all other sums due and payable under the Security Documents, and all of the
other Obligations (as hereinafter defined), the Trustor does hereby grant,
transfer, assign, bargain, sell and convey, and by these presents does hereby
irrevocably grant, transfer, assign, bargain, sell and convey, in trust, unto
Trustee, in trust, with power of sale and right of entry and possession, all of
the Trustor's estate, right, title and interest in and to the Premises; and
TOGETHER with all and singular the easements, rights of way, air rights,
reservations, privileges, choses in action, options, tenements, hereditaments
and appurtenances thereunto belonging or in any way appertaining, including,
without limitation, all off-street parking rights and spaces, if any, and the
reversion and remainder of any or all of the foregoing; and all of the estate,
right, title, interest, claim or demand whatsoever of the Trustor therein and in
and to the Premises and/or the improvements thereon, and in and to all strips
and gores, and all alleys adjoining the land and in and to any land lying in the
bed of any street, road or avenue, open or proposed, in front of, or adjoining
or adjacent to the Premises, to the center line thereof, either in law or in
possession or expectancy, now or hereafter acquired;
TOGETHER with all of the right, title and interest of the Trustor in and to
(i) all buildings, vaults, and other improvements and additions thereto now
erected or hereafter constructed or placed upon the Premises or any part thereof
(the "Improvements"); (ii) to the extent permitted by law, the name or names, if
any, as may now or
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hereafter be used for each Improvement and the good will associated therewith,
as well as the trade names of the Improvements; and (iii) all machinery,
devices, fixtures, apparatus, interior improvements, appurtenances and equipment
of every kind and nature whatsoever now or hereafter attached to or placed in or
upon the Premises or the Improvements, or any part thereof, or used or procured
for use in connection with the operation of the Premises or any business
conducted thereon (except for fixtures and personal property that are at any
time the property of Space Tenants, as defined in SECTION 1.16, or independent
contractors employed at the Premises), all of the foregoing, except as
aforesaid, hereinafter collectively called "Building Service Equipment";
TOGETHER with all the right, title and interest of the Trustor in and to
all furniture, furnishings, decorations, chattels and other personal property
now or hereafter in, on or at said Premises (except for trade fixtures and
personal property that are at any time the property of Space Tenants), all of
the foregoing, except as aforesaid, hereinafter collectively called
"Furnishings;"
TOGETHER with all right, title and interest of the Trustor in and to all
insurance or other proceeds for damage done to the Improvements, Building
Service Equipment or Furnishings and all awards heretofore made or hereafter to
be made to or for the account of the Trustor for the permanent or temporary
taking by eminent domain of the whole or any part of the Premises, the
Improvements, the Building Service Equipment and the Furnishings or any lesser
estate in, or easement appurtenant to, the Premises (including, without
limitation, any awards for change of grade of streets), all of which proceeds
and awards are hereby assigned to the Beneficiary, subject to the further
provisions of this Trust Deed;
TOGETHER with all of the rents, issues, income, revenues, royalties,
proceeds, benefits and profits of the Mortgaged Premises (as hereinafter
defined), including amounts payable under all Space Leases (as hereinafter
defined), now in effect or hereafter entered into covering any part of the
Mortgaged Premises, as well as all rights and interest of the Trustor as
landlord thereunder, all of which are hereby assigned to the Beneficiary,
subject, however, to the right of the Trustor, as licensee, to receive and use
the same unless and until an Event of Default shall occur;
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TOGETHER with all of the records and books of account now or hereafter
maintained by the Trustor in connection with the operation of the Mortgaged
Premises;
TOGETHER with all water, water rights, shares of stock evidencing the same,
mineral rights, ditches, ditch rights, wells, well rights, well permits,
springs, spring rights, reservoirs and reservoir rights appurtenant to, located
on, used or historically used in connection with the Premises or the
Improvements and all of the Trustor's rights and interests under applicable
state or federal law to all water, and to use or consent to use all water,
contained in or available from any part of the water-bearing formations
underlying the Premises, together with all associated easements and
rights-of-way, whether existing now or hereafter acquired;
TOGETHER with all deposits made with or other security given to utility
companies or governmental branches or agencies by the Trustor with respect to
the Mortgaged Premises, and all advance payments of insurance premiums made by
the Trustor with respect thereto;
TOGETHER with all development rights associated with the Premises, now
existing or hereafter transferred to the Premises from other real property;
TOGETHER with all licenses (including, but not limited to, any operating
licenses or similar matters), contracts, management agreements, franchise
agreements, permits, authorities or certificates required, used or useful in
connection with the use, enjoyment, occupancy, management or operation of the
Mortgaged Premises, except where the assignment or pledge of any such licenses,
permits or other rights is prohibited by applicable statute or by any applicable
issuing governmental agency; and
TOGETHER with any and all of the Trustor's rights in and to any and all
cash payments, reimbursements or other intangible rights arising in connection
with the development, operation or maintenance of the Mortgaged Premises,
including, without limitation, any tax appeal refunds, municipal reimbursements,
governmental subsidy payments and governmentally-registered credits (such as
emissions and reduction credits) (collectively, the "Payments and Intangibles");
TOGETHER with all proceeds and products of the foregoing.
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All of the foregoing estates, rights, privileges, interests and franchises
hereby granted and released, assigned, transferred, set over and mortgaged, or
intended so to be, being hereinafter collectively referred to as the "Mortgaged
Premises".
TO HAVE AND TO HOLD the Mortgaged Premises, now or hereafter owned
absolutely or in fee by the Trustor, together with all rights, hereditaments and
appurtenances in any way appertaining or belonging thereto, unto the Trustee,
forever for the uses set forth herein, in trust, and Trustor hereby mortgages
and grants to the Beneficiary a security interest in the Mortgaged Premises, to
secure the payment to the Beneficiary of the principal and of interest on the
Note at the maturity thereof (whether by acceleration or otherwise), all other
sums due under the Note or under this Trust Deed or under the Loan Agreement,
the performance of all covenants and agreements in the Security Documents and
all other obligations, whereupon this Trust Deed shall cease and be void and the
Mortgaged Premises shall be released at the cost of the Trustor.
ARTICLE I.
Certain Definitions
In addition to other definitions contained herein, the following terms
shall have the meanings set forth below, unless the context of this Trust Deed
otherwise requires:
1.1. "Affiliate" - shall mean (a) if with respect to a corporation, (i) any
officer or director thereof and any person or entity who or which is, directly
or indirectly, the legal or beneficial owner of more than ten (10%) percent of
any class of shares or other equity security of such corporation, or (ii) any
person or entity who or which, directly or indirectly, controls or is controlled
by or is under common control with such corporation and (b) if with respect to a
partnership or venture, any (i) general partner, (ii) general partner of a
general partner, (iii) partnership with a common general partner, (iv)
coventurer thereof, or (v) any person, trust, corporation, partnership, venture
or other entity who or which, directly or indirectly, controls or is controlled
by or is under common control with such partnership; and if any general partner
or general partner of a general partner or coventurer is a corporation, any
person or entity which is an Affiliate as defined in clause (a) above of such
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corporation. "Controls" (including the correlative meanings of "controlled by"
and "under common control with") means effective power, directly or indirectly,
to direct or cause the direction of the management and policies of such person
or entity.
1.2. "Backlease" means a sublease to the Trustor or its Affiliate made by a
lessee under a Space Lease.
1.3. "Beneficiary" shall mean the Beneficiary herein named or at any given
time the holder or holders of this Trust Deed and the Note.
1.4. "Due and payable" when used with reference to the principal of, or
premium or interest on, or when referring to any and all other sums secured by
this Trust Deed or any other of the Security Documents shall mean due and
payable, whether at the monthly or other date of payment or at the date of
maturity specified in the Note, this Trust Deed or the other Security Documents;
or by acceleration or call for payment as provided in the Note, hereunder or in
the other Security Documents, or, in the case of Impositions, the last day upon
which any charge may be paid without penalty and/or interest.
1.5. "Default Rate" shall mean the Involuntary Rate (as such term is
defined in the Note).
1.6. "Event of Default" shall have the meaning assigned to such term in the
Note.
1.7. "Governmental Authorities" shall mean all federal, state, county,
municipal and local governments and all departments, commissions, boards,
bureaus and offices thereof, having or claiming jurisdiction over the Mortgaged
Premises or any part thereof.
1.8. "Impositions" shall mean all duties, taxes, water and sewer rents,
rates and charges, assessments (including, but not limited to, all assessments
for public improvements or benefit), charges for public utilities, excises,
levies, license and permit fees and other charges, ordinary or extraordinary,
whether foreseen or unforeseen, of any kind and nature whatsoever, which prior
to or during the term of this Trust Deed will have been or may be laid, levied,
assessed or imposed upon or become due and payable out of or in respect of, and
become a lien on the Premises, the Improvements, Building Service Equipment,
Furnishings or any other property or rights included in the Mortgaged
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Premises, or any part thereof or appurtenances thereto, or which are levied or
assessed against the rent and income received by the Trustor from the Space
Leases (as defined in SECTION 1.15) by virtue of any present or future law,
order or ordinance of the United States of America or of any state, county or
local government or of any department, office or bureau thereof or of any other
Governmental Authority.
1.9. "Legal Requirements" shall mean all present and future laws,
ordinances, rules, regulations and requirements of all Governmental Authorities,
and all orders, rules and regulations of any national or local board of fire
underwriters or other body exercising similar functions, foreseen or unforeseen,
ordinary or extraordinary, which may be applicable to the Mortgaged Premises or
any part thereof, or to the sidewalks, alleyways, passageways, curbs and vaults
adjoining the same, or to the use or manner of use of any of the foregoing, or
to the owners, tenants, or occupants thereof, whether or not any such law,
ordinance, order, rule, regulation or requirement shall necessitate structural
changes or improvements or shall interfere with the use or enjoyment of any of
the foregoing, and shall also mean and include all requirements of the policies
of public liability, fire and all other insurance at any time in force with
respect to any of the foregoing.
1.10. "Obligations" shall mean the (a) aggregate unpaid principal amount
of, and accrued and unpaid interest on, the Note, plus (b) any and all
indebtedness, obligations and other liabilities of the Trustor to the
Beneficiary arising out of or in connection with or otherwise relating to the
Note, the Loan Agreement or any of the Security Documents, and/or any
agreement(s) of the Trustor with the Beneficiary pertaining thereto; in each
case whether now or hereafter existing, direct or indirect, absolute or
contingent, joint, several or independent, due or to become due, liquidated or
unliquidated, held or to be held by the Beneficiary and whether created directly
or acquired by assignment or otherwise.
1.11. "Peg Rate" - shall have the meaning assigned to such term in the
Note.
1.12. "Permitted Encumbrances" shall mean each of the exceptions to
coverage set forth in SCHEDULE B, PART I of that certain Preliminary Title
Report dated September 26, 1996, issued by Chicago Title Insurance Company, to
and accepted by the Beneficiary with respect to the Premises,
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and such other items as the Beneficiary, in its sole discretion, may approve in
writing.
1.13. "Person" shall mean and include any individual, corporation,
partnership, unincorporated association, trust, governmental agency or authority
or other entity.
1.14. "Security Documents" shall have the meaning assigned to such term in
the Note.
1.15. "Space Lease" shall mean any and all leases, subleases, licenses,
concession agreements or any other form of agreement, however denominated
(written or verbal, now or hereafter in effect), in which the Trustor (or any
predecessor in interest as owner of the Mortgaged Premises in the case of
existing Space Leases) now or hereafter grants a possessory interest in and to,
or the right to use and occupy the Mortgaged Premises, or any portion thereof,
and all renewals, extensions, modifications, amendments and other agreements
affecting the same.
1.16. "Space Tenant" shall mean the tenant or other user or occupant of
part or all of the Mortgaged Premises under any Space Lease.
1.17. "State" shall mean the State of Colorado.
1.18. "to the best of the Trustor's knowledge" shall mean the actual
knowledge of Robert F. Gossett, Jr., after reasonable inquiry and investigation.
1.19. "Trust Deed" shall mean this instrument as originally executed or, if
hereafter amended, modified or supplemented, as so amended, modified or
supplemented.
1.20. "Trustee" shall mean the Public Trustee of Boulder County, Colorado.
1.21. "Trustor" shall mean the Trustor herein named, any subsequent owner
or owners of the Mortgaged Premises, and its or their respective heirs,
executors, administrators, successors and assigns, but this provision shall not
be construed to limit the terms of SECTION 2.8 hereof.
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ARTICLE II.
Particular Covenants of the Trustor
The Trustor covenants and agrees as follows:
2.1. Payment of Indebtedness. The Trustor shall duly and punctually pay to
the Beneficiary, as and when due and payable, the indebtedness evidenced by the
Note and the other Obligations secured hereby. As used in this SECTION 2.1 and
elsewhere in this Trust Deed, the term "indebtedness" shall mean and include the
principal amount of the Note together with all interest thereon, any other
payments due to the Beneficiary under the Loan Agreement and/or any of the
Security Documents, all costs of collection provided for in the Note, the Loan
Agreement or any of the Security Documents, and all other sums and charges at
any time due under or otherwise secured by this Trust Deed.
2.2. Warranty of Title. The Trustor warrants that, to the best of the
Trustor's knowledge (a) the Mortgaged Premises are free and clear of all liens
and encumbrances other than the Permitted Encumbrances; (b) it owns the Building
Service Equipment and Furnishings free and clear of all liens and claims other
than in favor of the Beneficiary; (c) this Trust Deed is and will remain a valid
and enforceable first lien deed of trust on the Mortgaged Premises, subject only
to the Permitted Encumbrances; and (d) the Trustor has the right and lawful
authority to mortgage and convey the Mortgaged Premises in the manner and form
herein provided. The Trustor represents and warrants to the Beneficiary, to the
best of the Trustor's knowledge, and covenants for the benefit of the
Beneficiary, as follows:
(i) that the Trustor is lawfully seized and possessed of a fee in the
Premises and that the Trustor holds good legal and marketable title thereto
and to the rest of the Mortgaged Premises, subject only to the Permitted
Encumbrances; and
(ii) that the Mortgaged Premises are now free and clear of all liens
and encumbrances whatsoever, other than the Permitted Encumbrances, that
the Trustor has good right and lawful authority to mortgage and convey the
same in the manner and form herein provided and that the Trustor will
warrant and
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defend title to the Mortgaged Premises against all claims and demands
whatsoever.
2.3. To Maintain Priority of Lien.
2.3.1. This Trust Deed is and will be maintained as a valid first lien deed
of trust on the Mortgaged Premises, and the Trustor will not, directly or
indirectly, create or suffer or permit to be created, or to stand against the
Mortgaged Premises or any portion thereof, or against the rents, issues and
profits therefrom, and will promptly discharge, any lien or charge prior to or
upon a parity with or junior to the lien of this Trust Deed other than the
Permitted Encumbrances; provided, however, that the Trustor shall not be
required to pay any Imposition prior to the time it shall become due and payable
subject to the provisions of SECTION 2.4.1 hereof, and nothing herein contained
shall prevent the Trustor from contesting the validity of any such Imposition in
accordance with the provisions of SECTION 2.4.4. The Trustor will keep and
maintain the Mortgaged Premises, and every part thereof, free from all liens or
lien notices, of Persons supplying labor and/or materials in connection with any
construction, alteration, repair, improvement or replacement of the Improvements
or of the Building Service Equipment and Furnishings. If any such lien shall be
filed against the Mortgaged Premises, or any part thereof, the Trustor promptly
shall discharge the lien of record, by bonding or otherwise. The Trustor shall
exhibit to the Beneficiary, upon request, appropriate receipts or other
satisfactory evidence of the payment of the Impositions or any other item which
may, if not paid, give rise to a lien against the Mortgaged Premises.
2.4. To Pay Impositions.
2.4.1. The Trustor will pay or cause to be paid, as and when due and
payable, all Impositions levied upon the Mortgaged Premises or any part thereof.
However, if by law, any Imposition may at the option of the taxpayer be paid in
installments (whether or not interest shall accrue on the unpaid balance
thereof), the Trustor shall have the right to exercise such option and to pay
such Imposition, or cause it to be paid (together with any accrued interest on
the unpaid balance) in installments as they fall due and before any fine,
penalty, further interest or cost may be added thereto.
2.4.2. If an Event of Default shall occur and be continuing, then upon
demand of the Beneficiary, the
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Trustor shall deposit with the Beneficiary a sum which bears the same relation
to the annual insurance premiums for all insurance required by the terms hereof
and real estate taxes and assessments assessed against the Mortgaged Premises
for the insurance period or tax year then in effect, as the case may be, as the
number of months elapsed as of the date of such demand since the last preceding
installment of said premiums or taxes or assessments shall have become due and
payable bears to twelve (12). For the purpose of this computation, the month in
which such last preceding installment of premiums or real estate taxes or
assessments became due and payable and the month in which such demand is given
shall be included and deemed to have elapsed. On the first day of the month next
succeeding the month in which such demand is given, and thereafter on the first
day of each and every month during the term of this Trust Deed, the Trustor
shall deposit with the Beneficiary a sum equal to one-twelfth of such insurance
premiums and such taxes and assessments for the then-current insurance period
and tax year, so that as each installment of such premiums and taxes and
assessments shall become due and payable, the Trustor shall have deposited with
the Beneficiary a sum sufficient to pay the same. All such deposits shall be
received and held as part of such deposit by the Beneficiary (all such deposits
to be held in an account without interest thereon) and shall be applied to the
payment of each installment of such premiums and taxes and assessments as they
shall become due and payable. The Beneficiary shall, upon demand, furnish
evidence to the Trustor of the making of each such payment. If the amount of
such premiums and taxes and assessments has not been definitely ascertained at
the time when any such monthly deposits are required to be made, the Trustor
shall make such deposits based upon the amount of such premiums and taxes and
assessments for the preceding year, subject to adjustment as and when the amount
of such premiums and taxes and assessments are ascertained. If at any time when
any installment of such premiums and such taxes and assessments becomes due and
payable the Trustor shall not have deposited a sum sufficient to pay the same,
the Trustor shall, within five (5) days after demand, deposit any deficiency
with the Beneficiary. Upon payment in full of the indebtedness secured by this
Trust Deed, any remaining amount on deposit with the Beneficiary shall be repaid
to the Person lawfully entitled thereto. If an Event of Default shall occur and
be continuing, the Beneficiary may, at its option, apply all or any portion of
the amounts then on deposit with the Beneficiary pursuant to this SECTION 2.4.2
first to the payment of any premiums, taxes or assessments then due, and any
remaining amounts may be applied to the payment of the indebtedness. The Trustor
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shall deliver to the Beneficiary all insurance and tax bills promptly following
receipt during any period when such monthly deposits are to be made with the
Beneficiary.
2.4.3. The Trustor will pay all taxes and other governmental charges
(including, without limitation, stamp taxes), except income or franchise taxes
or similar taxes based upon or measured by income, assessed by the United States
government or any state or local governmental authority and imposed on the
Beneficiary, its successors by reason of the ownership of this Trust Deed or the
Note or the receipt of the interest or other sums payable thereunder or payable
by either the Trustor or the Beneficiary upon any increase in the indebtedness
secured hereby, or any modification, amendment, extension or consolidation of
this Trust Deed. Without limiting the foregoing and subject to the limitations
set forth above, the Trustor will also pay the whole of any tax imposed,
directly or indirectly, on this Trust Deed or the Note or the receipt of any
portion of the Indebtedness in lieu of a tax on the Mortgaged Premises or the
Improvements and Building Service Equipment, whether by reason of (a) the
passage after the date of this Trust Deed of any law of the State deducting from
the value of real property for the purposes of taxation any lien thereon; (b)
any change in the laws for the taxation of Trust Deeds or debts secured by trust
deeds for state or local purposes; (c) a change in the means of collection of
any such tax or otherwise; or (d) any tax, whether or not now existing, assessed
against, or withheld from, interest or other payments made by the Trustor or
assessed against this Trust Deed and which are assessed or levied by the
government of any foreign nation or political subdivision thereof, provided such
tax liability shall not result from the ownership of this Trust Deed by a Person
not a citizen of, or an entity not formed under the laws of, the United States
or any state. Within a reasonable time after payment of any such tax or
governmental charge, the Trustor will deliver to the Beneficiary satisfactory
proof of payment thereof, subject, however, to the right of the Trustor to
contest Impositions as hereinafter set forth. If the Trustor shall fail to pay
such tax or charge within fifteen (15) days after written notice, or if under
applicable law the Trustor's payment or agreement to pay the same shall be
unenforceable, the Beneficiary shall have the right to declare the entire unpaid
indebtedness and all accrued and unpaid interest thereon due and payable on a
date specified by the Beneficiary, but, in any event, not less than thirty (30)
days after written notice to the Trustor.
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2.4.4. The Trustor shall have the right to contest the amount or validity,
in whole or in part, of any Imposition, or to seek a reduction in the valuation
of the Mortgaged Premises, or any part thereof, as assessed for real estate or
personal property tax purposes by appropriate proceedings diligently conducted
in good faith, but only after payment of such Imposition, unless such payment
would operate as a bar to such contest or materially adversely interfere with
the prosecution thereof, in which event the Trustor may postpone or defer
payment of such Imposition (but not the payment of any monthly deposits pursuant
to SECTION 2.4.2 hereof); and upon request by the Trustor, the Beneficiary shall
postpone or defer payment of such Imposition; provided, however, that if at any
time the Mortgaged Premises, the Building Service Equipment, the Furnishings, or
any part thereof would, in the Beneficiary's reasonable judgment, by reason of
such postponement or deferment be in imminent danger of being forfeited or lost,
or if the Beneficiary might be subjected to any civil or criminal liability or
other sanction, then the Trustor, on demand, shall immediately pay or cause to
be paid the amount so contested and unpaid, together with all interest and
penalties in connection therewith.
2.4.5. The certificate, advice or bill of the appropriate official
designated by law to make or issue the same or to receive payment of any
Imposition indicating the nonpayment of such Imposition shall be prima facie
evidence that such Imposition is due and payable but unpaid at the time of the
making or issuance thereof.
2.5. Insurance; Restoration Following Casualty.
2.5.1. Until the indebtedness secured hereby is paid in full, the Trustor
shall at its own expense at all times maintain or cause to be maintained on all
of the Mortgaged Premises (a) comprehensive general liability insurance,
including umbrella liability insurance, covering all claims for bodily injury,
including death, and property damage occurring on, in or about the Mortgaged
Premises in an aggregate amount of not less than Five Million Dollars
($5,000,000) per occurrence, and a single limit of not less than Two Million
Dollars ($2,000,000) per person and per occurrence for personal injury, bodily
injury and property damage; the policy shall have no deductible or self insured
retention requirements; the policy limits of such insurance, if requested by the
Beneficiary, shall be increased from time to time to reflect what a reasonably
prudent owner or lessee of buildings or improvements similar in type and
locality to the Mortgaged Premises would carry; during any
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period of substantial alterations or improvements in, on or to the Mortgaged
Premises, the Trustor will cause the comprehensive general liability insurance,
including umbrella liability insurance, endorsed to provide owners' and
contractors' protective liability coverage, including completed operations
liability coverage; (b) physical damage insurance (all risk non-reporting
property insurance, including earthquake insurance, with the Beneficiary named
as loss payee), covering the Mortgaged Premises for loss or damages resulting
from the perils of fire, lightning, earthquake, and such other risks and hazards
as are provided under the current standard "Extended Coverage Endorsement" and
vandalism and malicious mischief coverage, for the full replacement value of the
Mortgaged Premises on a stipulated and agreed-amount basis; (c) if the Mortgaged
Premises is in an area identified as a flood hazard area by the Secretary of
Housing and Urban Development, flood insurance, to the extent obtainable, in an
amount equal to the lesser of the full replacement value of the Mortgaged
Premises or the maximum amount available under the Federal flood insurance
program; (d) boiler and machinery insurance covering all boilers, machinery, air
conditioning, pressure vessels, and similar type equipment commonly covered
under a broad-form boiler and machinery policy, in an amount satisfactory to the
Beneficiary; (e) insurance against such other risks of damage, hazards,
casualties and contingencies in such amounts as the Beneficiary shall from time
to time reasonably require, provided that insurance against such other risks,
hazards, casualties or contingencies shall then be commonly carried by prudent
owners or lessees of building or improvements in the locality similar in
character, construction, use and occupancy to the Improvements, Building Service
Equipment and Furnishings on, or constituting a part of, the Mortgaged Premises;
and (f) loss of rents/business interruption coverage in an amount sufficient to
pay all Impositions, insurance premiums, interest and principal installments and
all other amounts due under the Note and the Loan Agreement and the normal
operating expenses of the Mortgaged Premises, all for a period of one (1) year.
Furthermore, the Beneficiary reserves the right to require additional insurance
and/or higher policy limits than heretofore specified if such additional
insurance and/or higher policy limits are commercially reasonable for similar
properties, which right may be exercised by written notice to the Trustor, and,
as soon thereafter as practicable, but in any event within thirty (30) days of
the receipt thereof, the Trustor agrees to obtain insurance coverage complying
with such notice. The proceeds of all such insurance (except the insurance
specified in SECTION 2.5.1(a)) shall be paid solely to the
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Beneficiary and be held, applied or disbursed by the Beneficiary as provided in
SECTIONS 2.5.7 and 2.5.8.
2.5.2. All insurance required in SECTION 2.5.1 shall be evidenced by valid
and enforceable policies, in form and substance as shall be required by the
Beneficiary from time to time, and issued by and distributed among insurers of
recognized responsibility having an A.M. Best's Guide of A:XII or better, a
financial size category of Class XI or above, and the total limit of liability
shall not exceed ten percent (10%) of the total policyholders' surplus. Such
insurers shall be authorized to do business in the State and in all other
respects shall be reasonably satisfactory to the Beneficiary. The originals of
all such policies, or duplicate copies or certificates thereof, shall be
delivered to the Beneficiary concurrently with the execution and delivery of
this Trust Deed. Thereafter, all renewal or replacement policies, or duplicate
copies or certificates thereof, shall be delivered to the Beneficiary not less
than thirty (30) days prior to the expiration date of the policy or policies to
be renewed or replaced, in each case accompanied by evidence reasonably
satisfactory to the Beneficiary that all premiums currently payable with respect
to such policies have been paid in full by or at the direction of the Trustor.
2.5.3. All such insurance policies shall (a) except for any liability
policy required hereunder, contain a standard noncontributory form of mortgagee
clause (in favor of and entitling the Beneficiary to collect any and all
proceeds payable under such insurance), as well as a standard waiver of
subrogation endorsement, all to be in form and substance reasonably satisfactory
to the Beneficiary; (b) provide that such policies may not be cancelled or
amended without at least thirty (30) days prior written notice to the
Beneficiary; and (c) provide that no act, omission or negligence of the Trustor,
or its agents, servants or employees, or of any Space Tenant under any Space
Lease, which might otherwise result in a forfeiture of such insurance or any
part thereof, shall in any way affect the validity or enforceability of such
insurance insofar as the Beneficiary is concerned. The Trustor shall not carry
separate insurance, concurrent in kind or form or contributing in the event of
loss with any insurance required under this SECTION 2.5. All losses under such
insurance policies shall be adjusted by the Trustor in the case of any single
instance of such damage or destruction not exceeding $200,000, by the Trustor
and the Beneficiary in the case of any such single instance of damage or
destruction exceeding such amount, provided that in no event
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shall the Trustor approve or consent to any final adjustment in any amount
exceeding the amount specified above in this sentence without obtaining the
Beneficiary's prior approval (which approval shall not be unreasonably withheld)
of the amount of such adjustment, and solely by the Beneficiary in the case when
an Event of Default exists and is continuing.
2.5.4. The Trustor, at its expense, will furnish to the Beneficiary, within
ninety (90) days after written demand, but in no event, except for reasonable
cause, more frequently than annually, proof of the then full replacement value
of each of the Improvements and the Building Service Equipment and Furnishings
therein, such proof to be by appraisals reasonably satisfactory in form and
substance to the Beneficiary and prepared by an appraiser (who may be an
appraiser for the insurance company insuring such property) designated and paid
for by the Trustor and approved by the Beneficiary, which approval shall not be
unreasonably withheld or delayed.
2.5.5. If the Beneficiary shall, by any means, acquire the title or estate
of the Trustor in or to any portion of the Mortgaged Premises, it shall
thereupon become the sole and absolute owner of all insurance policies affecting
such portion of the Mortgaged Premises held by, or required hereunder to be
delivered to, the Beneficiary, with the sole right to collect and retain all
unearned premiums thereon; and the Trustor shall be entitled only to a credit in
reduction of the then outstanding indebtedness secured hereby in the amount of
the short rate cancellation refund, when and if received by Beneficiary. The
Trustor agrees, immediately upon demand, to execute and deliver such assignments
or other authorizations or instruments as may, in the reasonable opinion of the
Beneficiary, be reasonably necessary or desirable to effectuate any of the
provisions of this SECTION 2.5.5.
2.5.6. If any of the Improvements, Building Service Equipment or
Furnishings shall be damaged or destroyed, in whole or in part, by fire or other
casualty, the Trustor shall give prompt notice thereof to the Beneficiary, and,
without regard to the availability or adequacy of insurance proceeds, shall
promptly following receipt of any insurance proceeds or the date when any such
proceeds are made available to the Trustor in accordance with the terms hereof,
commence to restore, replace, rebuild or alter the same as nearly as possible to
the condition, character and value thereof existing immediately prior to such
damage or destruction. Any insurance proceeds in respect of such damage or
destruction, or any Award (as
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defined in SECTION 3.2) for a partial taking which is not a substantial or total
taking, as such terms are referred to in ARTICLE III hereof, at the option of
the Beneficiary, may either (i) be applied as a prepayment of the unpaid balance
of the principal of the Note and of accrued and unpaid interest thereon and as a
payment of any other sums due and owing under the Note, the Loan Agreement and
the Security Documents, or (ii) be made available to pay or reimburse costs
incurred for restoration, replacement or rebuilding necessitated as a result of
such damage or destruction, or as a result of such taking, as the case may be,
or (iii) be used for any other purpose or object deemed appropriate by the
Beneficiary in connection with the Mortgaged Premises, provided, however, that
the Beneficiary may not elect either option (i) or (iii) above if, and for so
long as all of the following conditions (collectively, the "Insurance or Award
Conditions" have been and remain satisfied: (a) no Event of Default has occurred
and is continuing or would occur as a result of such casualty or taking and no
event has occurred that with the passage of time or the giving of notice, or
both, would constitute an Event of Default; (b) the balance of the insurance
proceeds or such Award either initially paid to the Beneficiary or deposited
with the Depository (as hereinafter defined) or remaining from time to time,
shall be sufficient, in the Beneficiary's reasonable judgment, to complete the
restoration, replacement or rebuilding, or the Trustor shall have deposited such
sufficient funds with the Beneficiary or the Depository; and (c) the Beneficiary
determines, in its reasonable discretion, that (i) the Loan to Value Ratio (as
defined in the Loan Agreement, and taking into consideration the value of all of
the Projects, as defined in the Loan Agreement) is not greater than 55%, and
(ii) the Debt Service Coverage Ratio (as defined in the Loan Agreement, and
taking into consideration the loss of income resulting from such damage or
destruction as projected by the Beneficiary in its reasonable discretion) is not
less than 1.40:1.0. Notwithstanding the foregoing, if an event has occurred and
is continuing that with the passage of time or the giving of notice, or both,
would constitute an Event of Default but the same has not yet matured into an
Event of Default, then, if the conditions set forth in the foregoing clauses (b)
and (c) have been or will be, in the Beneficiary's reasonable judgment,
satisfied, the Beneficiary shall not elect either option (i) or (iii) unless
such event shall have matured into an Event of Default and, unless and until
such event shall have so matured into an Event of Default or such event has been
cured or shall otherwise cease to exist, the Beneficiary (or the Depository)
shall not release any such insurance proceeds or Award and the same shall be
held until an Event
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of Default occurs or the Default has been cured or shall otherwise cease to
exist.
2.5.7. Any such insurance proceeds (other than the proceeds of the rent
insurance policy, which shall be paid as provided in SECTION 2.5.8 below) or
Award which are to be applied to restoration, replacement or rebuilding of the
Mortgaged Premises shall, after payment or reimbursement to the Beneficiary of
all reasonable costs and expenses of the Beneficiary in collecting such proceeds
or Award, be applied upon satisfaction of the following provisions and
conditions:
(a) If the damage be of such nature as to require the Trustor to
construct a replacement for, or to alter in any material or substantial
way, the damaged or destroyed items, the Trustor shall, before commencing
any such work, submit copies of the plans and specifications therefor to
the Beneficiary for the Beneficiary's approval, such approval to not be
unreasonably withheld or delayed.
(b) If after payment or reimbursement to the Beneficiary of all costs
and expenses of the Beneficiary in collecting such insurance proceeds or
Award, the aggregate insurance proceeds or Award received by reason of any
single instance of such damage or destruction or condemnation, as the case
may be, shall be $200,000 or less such insurance proceeds or Award shall be
paid to the Trustor, which shall hold all amounts so received in trust for
application first to pay the entire cost of restoring, repairing,
rebuilding or replacing the damaged or destroyed items, before any portion
of such proceeds may be used or applied for any other purpose. If the
aggregate net insurance proceeds or Award by reason of any single instance
of such damage or destruction or condemnation, as the case may be, shall be
more than $200,000 such sums shall be held and disbursed by Fleet Bank,
National Association or, if this Trust Deed is held by another financial
institution, by such financial institution or, if this Trust Deed is not
held by a financial institution, by a financial institution selected by the
then Beneficiary (the holder of such monies, the "Depository") in
accordance with the following provisions of this SECTION 2.5.7.
(c) The Beneficiary shall have received as to each such disbursement a
certificate of the Trustor (i) requesting the payment of a specified
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amount of such insurance or condemnation proceeds; (ii) describing in
reasonable detail the work and materials applied to the restoration,
replacement or rebuilding of the damaged, destroyed or taken Improvement,
or Building Service Equipment and/or Furnishings located therein, since the
date of the last such certificate; (iii) stating that the requested amount
does not exceed the cost of such work and materials; and (iv) stating that
a request for payment for such work and materials has not previously been
made, accompanied by:
1. a certificate of an independent engineer or architect
designated by the Trustor, who shall have been approved in writing by
the Beneficiary (such approval not to be unreasonably withheld),
stating (i) that the work and materials described in the accompanying
certificate of the Trustor were satisfactorily performed and furnished
and were necessary, appropriate or desirable to the restoration,
replacement or rebuilding of the damaged, destroyed or taken
Improvement, or Building Service Equipment and/or Furnishings; (ii)
that the amount specified in such certificate of the Trustor does not
exceed the reasonable cost of such work and materials; and (iii) the
additional amount, if any, required to complete the restoration,
replacement or rebuilding of the damaged, destroyed or taken
Improvement, Building Service Equipment and/or Furnishings; and
2. evidence reasonably satisfactory to the Beneficiary (i) that
there exists no filed or recorded lien, or lien notice, or encumbrance
or charge in respect of all or any part of the Mortgaged Premises that
is prior to or on a parity with the lien of this Trust Deed, except as
may be permitted in the Permitted Encumbrances; (ii) that neither the
Mortgaged Premises nor any part thereof is subject to any recorded or
filed mechanic's, laborer's, materialman's or any similar lien,
encumbrance or charge; and (iii) that none of the Building Service
Equipment and Furnishings provided in connection with such
restoration, replacement or rebuilding is subject to any security
interest other than in favor of the Beneficiary;
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Upon satisfaction of the conditions set forth herein, the Beneficiary shall
pay to the Trustor the amount of such insurance or condemnation proceeds
requested in such certificate of the Trustor or consent to the Depository's
payment thereof, as the case may be; provided, however, that in no event shall
the balance of insurance or condemnation proceeds held by the Beneficiary and
the Depository be reduced below the amount specified in such certificate of the
independent engineer or architect as the amount required to complete the
restoration, replacement or rebuilding of the damaged, destroyed or taken
Improvement, Building Service Equipment and/or Furnishings. Each such payment,
whether made by the Beneficiary or the Depository, shall be held by the Trustor
in trust and shall be used solely for the payment of the cost of the work and
materials described in the certificate of the Trustor, or if such cost or any
part thereof has theretofore been paid by the Trustor out of its own funds, then
for the reimbursement to the Trustor of any such cost or part thereof paid by
it. Any balance of insurance or condemnation proceeds held by the Beneficiary
after the completion of the restoration, replacement or rebuilding and payment
of all costs incurred in connection therewith, to be evidenced by a certificate
to such effect of such independent engineer or architect delivered to the
Beneficiary, shall, if no Event of Default shall have occurred and be
continuing, be released to the Person lawfully entitled thereto. Notwithstanding
the foregoing, if the Trustor needs to make deposits with or payments to
contractors prior to the work being performed, if the Beneficiary is otherwise
obligated to allow funds to be used to rebuild or restore, the Beneficiary
agrees that it will not unreasonably withhold or delay its consent to the
Trustor's request that such deposits or advances payments be allowed.
2.5.8. All proceeds of rent insurance payable as a result of the occurrence
of any fire or other casualty which affects the Mortgaged Premises, or any part
thereof, shall be paid to the Beneficiary or, if the Beneficiary is not a
financial institution, the Depository. The Beneficiary or the Depository, as the
case may be, if it shall receive such proceeds, shall hold such proceeds in
trust if permitted under law, and in an account bearing interest (payable to or
for account of the Trustor), and shall apply or cause such proceeds (including
any net interest thereon) to be applied to the payment of those items referred
to in SECTION 2.5.1(f) which become, and as they become, due and payable from
and after the date of the occurrence of such damage or loss, until the
completion of the necessary restoration or replacement by the Trustor or
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until the exhaustion of such proceeds (including any interest thereon),
whichever first occurs. Upon completion of such restoration or replacement, any
balance of such rent insurance proceeds, together with the interest thereon, if
any, not theretofore applied as provided herein, in the hands of the Beneficiary
or the Depository, as the case may be, shall, provided that no Event of Default
shall have occurred and be continuing, be paid to the Person lawfully entitled
thereto.
2.5.9. Nothing in this SECTION 2.5 contained shall (i) relieve the Trustor
of its duty to repair, restore, rebuild or replace the Improvements, Building
Service Equipment and/or Furnishings following damage or destruction by fire or
other casualty or taking in the event that no Award or an inadequate Award or
that no or inadequate proceeds of insurance are available to defray the cost of
such repairing, restoring, rebuilding or replacement (provided, however, the
Trustor shall be permitted to receive the insurance proceeds upon satisfaction
of the conditions set forth herein provided, in addition, that all of the
Insurance or Award Conditions have been and remain satisfied), or (ii) relieve
the Trustor of its obligation to pay principal and interest and to make all
other payments required by the Note, the Loan Agreement and this Trust Deed
subsequent to the occurrence of any fire or other casualty, or taking, except
if, and to the extent that, any proceeds of rent insurance are applied by the
Beneficiary in accordance with SECTION 2.5.8 to such required payments.
2.5.10. If, while any insurance proceeds or Award is being held by the
Beneficiary or the Depository, an Event of Default shall occur and be
continuing, the Beneficiary shall be entitled to receive and apply all such
insurance proceeds or Award in reduction of the indebtedness and other
obligations secured by this Trust Deed, in such order and respective amounts, as
the Beneficiary in its discretion shall determine.
2.6. To Comply with Laws.
2.6.1. The Trustor, at its own expense, will promptly cure all violations
of law affecting the Mortgaged Premises, or any part thereof, and/or the use and
operation thereof and will promptly comply, or cause to be complied with, all
present and future Legal Requirements. However, the Trustor shall have the
right, after prior notice to the Beneficiary, to contest by appropriate legal
proceedings, diligently conducted in good faith, the validity or application of
any Legal Requirement if and so
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long as the Trustor shall promptly furnish to the Beneficiary a certificate to
such effect showing the steps taken to comply with such provisions, provided
that:
(a) if by the terms of any such Legal Requirement, compliance
therewith pending the prosecution of any such proceeding may be delayed
legally without incurring any lien, charge or liability of any kind against
the Mortgaged Premises, or any part thereof, and without subjecting the
Trustor or the Beneficiary to any liability, civil or criminal, for failure
so to comply therewith, the Trustor may delay compliance therewith until
the final determination of any such proceeding; and
(b) if any lien, charge or civil liability would be incurred by reason
of any such delay, the Trustor nevertheless, on the prior written consent
of the Beneficiary, such consent not to be unreasonably withheld, may
contest and delay compliance with the Legal Requirement, provided that such
delay would not subject the Beneficiary to criminal liability and the
Trustor (i) furnishes to the Beneficiary security reasonably satisfactory
to the Beneficiary against loss or injury by reason of such contest or
delay and (ii) prosecutes the contest with due diligence.
2.6.2. Notwithstanding the provisions of SECTION 2.6.1, if any delay in
compliance with any Legal Requirement shall, in the reasonable judgment of the
Beneficiary, place all or any part of the Mortgaged Premises in imminent danger
of being forfeited or lost, the Trustor shall, upon written notice from the
Beneficiary, immediately comply with such Legal Requirement.
2.6.3. The Trustor will use and permit the use of the Mortgaged Premises
only in accordance with the material requirements of any applicable licenses and
permits issued by Governmental Authorities.
2.6.4. The Trustor will procure, pay for and maintain (or cause to be
procured, paid and maintained) all permits, licenses and other authorizations
required to be procured and maintained by the owners and operators of the
Mortgaged Premises for any then use of all or any part of the Mortgaged Premises
then being made and for the lawful and proper operation and maintenance thereof.
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2.7. Limitation on Alterations and Demolition.
2.7.1. The Trustor shall not voluntarily demolish, replace or alter the
Mortgaged Premises, or any part thereof, or voluntarily make any addition
thereto, or voluntarily construct any additional improvements thereon, or suffer
any of the same to occur, whether structural or otherwise (collectively,
"change"), without the prior written consent of the Beneficiary, which consent
shall not be unreasonably withheld or delayed; provided, however, that if no
Event of Default is continuing and such change involves an estimated cost of
less than $100,000 and is non-structural or if no Event of Default is continuing
and such change is non-structural and is being made to prepare space for a Space
Tenant pursuant to a Space Lease entered into in accordance with the Loan
Agreement, then, in either of such events, the Beneficiary's consent shall not
be required; provided, further, however, that if any such change is required by
law, the Trustor may make such change with the prior written consent of the
Beneficiary, which consent the Beneficiary will not unreasonably withhold or
delay. As a condition to any consent under this SECTION 2.7.1, the Beneficiary
may require (a) that plans and specifications for the proposed work, prepared by
a reputable architect reasonably satisfactory to the Beneficiary, be submitted
to the Beneficiary for approval, and (b) that the Trustor obtain a payment and
performance bond or other security reasonably satisfactory to the Beneficiary in
form and amount reasonably satisfactory to the Beneficiary from the contractor
or subcontractor performing the work unless such work amounts to less than
$200,000 in aggregate total cost. All work performed by or on behalf of the
Trustor shall be completed with all reasonable diligence and continuity, in a
good and workmanlike manner, and in compliance with all applicable Legal
Requirements. Unless, and to the extent that, the provisions of SECTION 2.7.2 be
applicable, no Building Service Equipment or Furnishings shall be removed from
the Mortgaged Premises during the course of any such work without prior
notification to the Beneficiary and unless provision is made for return or
replacement on or prior to the completion of the work. The provisions of this
SECTION 2.7.1. shall apply to any change made or required to be made by the
Trustor in the course of complying with any other of the provisions of this
Trust Deed. A duplicate set of all plans and specifications required to be filed
with any Governmental Authority prior to, or at any time in connection with, any
such alteration, demolition or new construction shall be furnished to the
Beneficiary. The Trustor will pay on demand the reasonable expenses incurred
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by the Beneficiary in the review of plans and specifications provided for in
this Trust Deed.
2.7.2. The Trustor shall have the right, at any time and from time to time,
to remove and dispose of any item of Building Service Equipment or Furnishings
which may have become obsolete or unfit for use or which is no longer useful in
the operation of the Improvements, provided that the Trustor promptly replaces
such item with other Building Service Equipment or Furnishings, free of superior
title, liens or claims (other than in favor of the Beneficiary) unless consent
of the Beneficiary is first obtained, not necessarily of the same character but
of at least equal quality, value and usefulness in connection with the operation
and maintenance of the Mortgaged Premises, provided, further, however, no
removal of any item of Building Service Equipment or Furnishings then having a
fair market value of $50,000 or more shall be made without the prior written
consent of the Beneficiary, which consent will not be unreasonably withheld or
delayed. However, if by reason of technological or other developments in the
operation and maintenance of buildings and other improvements of the general
character of the Improvements or a change in the use of the Mortgaged Premises
or any part thereof, no replacement of the Building Service Equipment or
Furnishings so removed would be necessary or desirable for the proper operation
or maintenance of the Improvements, the Trustor shall not be required to replace
the item so removed.
2.8. Limitation on Disposition of the Mortgaged Premises.
2.8.1. Except as expressly set forth in this Trust Deed or the Loan
Agreement (including, without limitation, SECTIONS 5.01 and 6.21 of the Loan
Agreement), the Trustor shall not directly or indirectly sell, assign, mortgage,
alienate, pledge or otherwise transfer or further encumber the Mortgaged
Premises or any part thereof or any interest therein or in any of the rents,
profits or income generated thereby, whether voluntarily, involuntarily, by
operation of law or otherwise, or lease all or any portion thereof or an
undivided interest therein, without the prior written consent of the
Beneficiary. The foregoing events are hereinafter referred as a "Transfer". Any
transfer without prior written the consent of the Beneficiary is an Event of
Default.
2.8.2. If there shall be a violation of the terms and provisions of SECTION
2.8.1, whether by the
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Trustor or any other person, in addition to all other rights and remedies
available to the Beneficiary under this Trust Deed, the Beneficiary shall have
the option, by the giving of notice to the Trustor, of declaring the entire
unpaid principal balance of the Note, together with all accrued and unpaid
interest and all other sums and charges evidenced thereby or payable pursuant to
the Loan Agreement, immediately due and payable.
2.9. Maintenance of Mortgaged Premises; Covenant Against Waste; Inspection
by the Beneficiary. The Trustor will not commit or permit waste on the Mortgaged
Premises and, at its expense, will keep and maintain the Improvements, the
Building Service Equipment and Furnishings in its (or their) present state of
repair and condition, reasonable wear and tear excepted, and, if improved, in
such improved state of repair and condition, reasonable wear and tear excepted;
provided, that this shall not limit the Trustor's other obligations hereunder,
such as compliance with laws. The Trustor shall do or cause to be done all
maintenance and make or cause to be made all repairs as may be required by the
landlord under any Space Lease. The Trustor will neither do nor permit to be
done anything to the Mortgaged Premises that may materially impair the value
thereof or which may violate any covenant, condition or restriction affecting
the Mortgaged Premises, or any part thereof, or which would effect any material
change therein or in the condition thereof that would increase the danger of
fire or other hazard arising out of the operation of the Mortgaged Premises.
Subject to the rights of Space Tenants, the Beneficiary, and its representatives
and agents, may enter and inspect the Mortgaged Premises at any time after
reasonable notice (which may be oral) during usual business hours, and the
Trustor shall, within thirty (30) days after demand by the Beneficiary (or
immediately upon demand in case of emergency), make such repairs, replacements,
renewals or additions, or perform such items of maintenance, to the Mortgaged
Premises as the Beneficiary may reasonably require in order to cause the
Mortgaged Premises to comply with the standards established in this SECTION 2.9.
2.10. To Furnish Certificates; Other Reporting Requirements.
2.10.1. The Trustor will, at its own expense, deliver to the Beneficiary,
within fifteen (15) days after written request, but no more frequently than once
per six (6) month period, a written statement executed by the Trustor, in
recordable form, setting forth to the best of the Trustor's knowledge, the
amount then unpaid upon the
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Note and secured by this Trust Deed and stating whether any offsets or defenses
exist against the indebtedness secured hereby; and, if any such offsets or
defenses are alleged to exist, then the factual basis and amount of such claimed
offsets or defenses.
2.10.2. The Trustor will, if requested by the Beneficiary, deliver to the
Beneficiary a certificate of an officer of the general partner of the Trustor or
of such general partner's general partner, to the effect that he is familiar
with this Trust Deed and the other Security Documents, has reviewed the affairs
of the Trustor, and to the best of his knowledge and belief there exists no
Event of Default and no act or event has occurred or exists which with notice or
lapse of time or both could become such an Event of Default, or if any such
event or Event of Default exists, specifying it and what action the Trustor is
taking to cause it to be remedied.
2.11. After-Acquired Property. All right, title and interest of the Trustor
in and to all improvements, betterments, renewals, substitutes and replacements
of, and all additions and appurtenances to, the Mortgaged Premises hereafter
acquired, constructed, assembled or placed on the Mortgaged Premises,
immediately upon such acquisition, construction, assembly or placement, as the
case may be, and in each such case without any further mortgage, conveyance or
assignment or other act of the Trustor, shall become subject to the lien of this
Trust Deed as fully and completely, and with the same effect, as though now
owned by the Trustor and specifically described in the granting clauses hereof;
and at any time and from time to time the Trustor, on demand, will execute,
acknowledge and deliver to the Beneficiary any and all such further assurances,
mortgages, conveyances or assignments as the Beneficiary may reasonably require
to further evidence, confirm and perfect the provisions of this SECTION 2.11.
2.12. Further Assurances. The Trustor shall, at its sole cost and without
expense to the Beneficiary, on demand, do, execute, acknowledge and deliver all
and every such further acts, deeds, conveyances, mortgages, assignments, notices
of assignment, transfers and assurances as the Beneficiary shall from time to
time reasonably require for better assuring, conveying, assigning, transferring
and confirming unto the Beneficiary the property and rights hereby mortgaged or
assigned or intended now or hereafter so to be, or which the Trustor may be or
may hereafter become bound to convey, mortgage or assign to the Beneficiary, or
for carrying out the intention or facilitating the
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performance of the terms of this Trust Deed, or for filing, registering or
recording this Trust Deed.
2.13. Recorded Instruments. The Trustor will promptly perform and observe,
or cause to be performed and observed, all of the terms, covenants and
conditions of all instruments of record affecting the Mortgaged Premises (other
than non-consensual encumbrances hereafter affecting the Mortgaged Premises, the
validity or enforceability of which the Trustor is contesting in accordance with
this Trust Deed) where non-compliance therewith affects the security of this
Trust Deed or imposes any duty or obligation upon the Trustor or any Space
Tenant. The Trustor shall do or cause to be done all things reasonably required
to preserve intact and unimpaired and to renew any and all rights-of-way,
easements, grants, appurtenances, privileges, licenses, franchises and other
interests and rights in favor of or constituting any portion of the Mortgaged
Premises. The Trustor will not, without the prior written consent of the
Beneficiary, which consent shall not be unreasonably withheld or delayed,
initiate, join in or consent to any private restrictive covenant or other public
or private restriction as to the use of all or any portion of the Mortgaged
Premises. The Trustor will, however, comply with all lawful restrictive
covenants and zoning ordinances and other public or private restrictions
affecting all or any portion of the Mortgaged Premises.
ARTICLE III.
Condemnation
3.1. Notice of Taking. The Trustor shall promptly notify the Beneficiary if
the Trustor receives notice of the institution of any proceeding or negotiations
for the taking of the Mortgaged Premises, or any part thereof, whether for
permanent or temporary use and occupancy in condemnation or by the exercise of
the power of eminent domain or by agreement of interested parties in lieu of
such condemnation (all the foregoing called a "taking"); shall keep the
Beneficiary currently advised, in detail, as to the status of such proceedings
or negotiations and will promptly give to the Beneficiary copies of all notices,
pleadings, judgments, determinations and other papers received or delivered by
the Trustor in connection with any such proceedings. The Beneficiary shall have
the right to appear and participate in such proceedings and may be represented
by counsel. The Trustor will not, without the
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Beneficiary's prior written consent, which consent shall not be unreasonably
withheld or delayed, enter into any agreement for the taking of the Mortgaged
Premises, or any part thereof, with anyone authorized to acquire the Mortgaged
Premises by eminent domain or in condemnation.
3.2. Condemnation Award. If the Mortgaged Premises shall be the subject of
a taking the Beneficiary shall be entitled to and shall receive the total of
such portion of all awards made that shall be allowed to the Trustor with
respect to all the right, title and interest of the Trustor in and to the
Mortgaged Premises (the award made in any total, partial or temporary taking is
herein called the "Award"), provided that the obligations of the Trustor to
perform the terms, covenants and conditions of this Trust Deed, if any, affected
by such taking shall continue unimpaired until the actual vesting of title in
such proceeding and the actual receipt by the Beneficiary of the Trustor's share
of the entire Award resulting from such taking.
3.3. Application of Award. The Beneficiary shall have the option of
treating a total taking or a substantial taking (as hereinafter defined) as an
Event of Default and of accelerating the entire indebtedness secured hereby, in
which event it shall apply the Trustor's entire Award in reduction of such
indebtedness (including principal, interest and other sums secured hereby, in
such order as the Beneficiary may determine) and shall turn over any balance
remaining, if any, to the Person lawfully entitled thereto; or if the
Beneficiary shall not so elect to accelerate the indebtedness and apply the
Award thereto, then the total Award shall, regardless of amount, be deposited
with the Beneficiary or with the Depository, the Trustor hereby agreeing to
elect that such proceeds be held and disbursed by the Depository in accordance
with SECTIONS 2.5.6, 2.5.7, 2.5.8, 2.5.9 and 2.5.10 hereof for restoration
required to be made by the Trustor. If there be a partial taking, the net
proceeds of the Award shall be deposited with the Beneficiary and applied by the
Beneficiary in accordance with the provisions of SECTIONS 2.5.6, 2.5.7, 2.5.9
and 2.5.10. Any Award remaining after the completion of such restoration,
replacement or rebuilding shall be applied in reduction of the indebtedness
(including principal, interest and other sums secured hereby) in such order as
the Beneficiary shall determine. A partial taking is substantial only if it
materially decreases the fair market value of the Mortgaged Premises and the
remainder of the Mortgaged Premises cannot be restored to an economically viable
whole.
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3.4. Temporary Taking. If any Award payable to the Trustor on account of a
taking for temporary use or occupancy is made in a lump sum or is payable other
than in equal monthly installments, the Trustor shall pay over such Award to the
Depository and such Award shall be applied to installments of Impositions and of
principal and interest and all other charges secured by this Trust Deed or due
under the Note, the Loan Agreement, or the other Security Documents as and when
the same become due and payable. Any unapplied portion of such Award held by the
Depository when such taking ceases or expires (if no Event of Default has then
occurred and is continuing), or after the indebtedness secured by this Trust
Deed or due under the Loan and Security Documents shall have been paid in full,
shall be paid to the Person lawfully entitled thereto.
3.5. The Trustor's Obligation to Restore. If all available proceeds of the
Award are made available to the Trustor for restoration, replacement or
rebuilding pursuant hereto, the Trustor shall be obligated promptly to restore,
replace, rebuild or alter any Improvements or Building Service Equipment
affected by a taking so as to restore the Mortgaged Premises to an economically
viable whole, all without regard to the adequacy of the proceeds of an Award, if
any, made available to the Trustor.
ARTICLE IV.
Assignment of Space Leases, Rents, Profits
and Other Income as Further Security, Etc.
4.1. Assignment of Space Leases, Rents, Issues and Profits. Subject to the
Trustor's rights herein, including those set forth in SECTION 4.3.2 below, the
Trustor hereby absolutely, presently and irrevocably transfers, assigns and sets
over unto the Beneficiary all right, title and interest of the Trustor in and to
all Space Leases, if any, now or hereafter entered into with respect to all or
any part of the Mortgaged Premises, and all renewals, extensions, subleases or
assignments thereof, and all other occupancy agreements (written or oral), by
concession, license or otherwise, together with all of the rents, income,
receipts, revenues, issues and profits arising therefrom (the "Collateral").
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4.2. The Trustor's Covenants Regarding Space Leases.
4.2.1. Without the prior consent and approval of the Beneficiary in each
instance, the Trustor will not (a) assign, pledge, hypothecate or otherwise
encumber any of the Space Leases or the rents, income, issue and profits of the
Mortgaged Premises; or (b) enter into any Space Leases affecting the Mortgaged
Premises or any part thereof, unless such Space Lease is expressly subordinate
to the lien of this Trust Deed and to any consolidation, extension, renewal,
recasting or refinancing hereof and the Space Lease provides, in substance, that
in the event of enforcement by the Beneficiary of the remedies provided for by
law or by this Trust Deed, each Space Tenant shall, at the option of the
Beneficiary, enter into a agreement with the Beneficiary which shall provide,
among other things, that (i) such Space Tenant shall attorn to any person
succeeding to the interest of the Trustor as a result of such enforcement and
shall recognize such successor in interest as landlord under such Space Lease
without change in the terms or other provisions thereof, (ii) such successor
shall not be bound by any payment of rent or additional rent for more than one
(1) month in advance or any amendment or modification of any such Space Lease
made without the Beneficiary's written consent, and (iii) such successor shall
not disturb the possession of the Space Tenant provided certain conditions (as
determined by the Beneficiary) have been satisfied, including, without
limitation, that the Space Tenant shall not be in default under the terms of the
Space Lease; or (c) enter into any Space Leases without the prior written
consent of the Beneficiary unless permitted in SECTION 6.21 of the Loan
Agreement.
4.2.2. The Trustor further represents, warrants, covenants and agrees that:
(a) To the best of its knowledge, each Space Lease is (or, when
executed, will be) a valid and legally enforceable obligation of the
parties thereto, in full force and effect.
(b) With respect to each Space Lease and the Space Tenant security
deposits thereunder, any and/or all of such security deposits shall be held
as required by the Space Lease but in no event in a manner other than that
required by law.
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(c) The Trustor shall, at its sole cost and expense, keep, observe,
perform and discharge, duly and punctually, all and singular the material
obligations, terms, covenants, conditions, representations and warranties
of each Space Lease on the part of the Trustor to be kept, observed,
performed and discharged.
(d) (i) Except as herein in this clause (i) expressly provided, the
Trustor shall, at its sole cost and expense, maintain the Space Leases in
full force and effect; the Trustor will not waive its rights under or
materially modify, change, supplement, alter or amend ("Change"), nor shall
the Trustor surrender (whether partial or total), terminate, cancel or
subordinate, any of the Space Leases or enter into any Backlease (whether
through an Affiliate or otherwise), and any such attempted Change,
surrender, termination, cancellation or subordination or Backlease shall be
void, unless, in each case, the prior written consent thereto of the
Beneficiary shall have been obtained. Notwithstanding the foregoing, the
Trustor may (x) terminate any Space Lease under 10,000 rentable square feet
as a result of a default by the tenant under such Space Lease and (y)
consent to any sublease or assignment of any Space Lease under 10,000
rentable square feet provided (aa) such termination is being effected in
the ordinary course of the Trustor's business, (bb) no Event of Default
then exists and no event has occurred that with the passage of time or the
giving of notice or both would constitute an Event of Default, and (cc) the
Beneficiary determines, in its reasonable discretion, that upon the
effectiveness of such termination, assignment or sublease (i) the Loan to
Value Ratio (as defined in the Loan Agreement, and taking into
consideration the value of all of the Projects, as defined in the Loan
Agreement) is not greater than 55%, and (ii) the Debt Service Coverage
Ratio (as defined in the Loan Agreement, and taking into consideration the
loss of income resulting from such termination, assignment or sublease, as
projected by the Beneficiary in its reasonable discretion) is not less than
1.40:1.0. A material Change shall include but not be limited to any
material Change in the amount or time of payment of the rent or additional
rent, the length of term or square footage of the premises under any Space
Lease or any other Change which would materially adversely affect the
Trustor's rights under the Space Lease, or would affect the Beneficiary's
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rights under the Space Lease or the value of the Space Lease as collateral
security for the indebtedness.
(ii) The Trustor shall, at its sole cost and expense, enforce the
Space Leases in accordance with their terms; and shall appear in and
defend any action or proceeding arising to which it is a party under
or in any manner connected with any of the Space Leases.
(e) The Trustor shall deliver to the Beneficiary a copy of each notice
of default sent or received by it relating in any way to any Space Lease
promptly upon, but in any event within five (5) business days after, its
sending or receipt thereof.
4.3. The Trustor's Rights and Powers.
4.3.1. The Trustor hereby irrevocably, in the name of the Trustor or
otherwise, authorizes and empowers the Beneficiary, and assigns and transfers
unto the Beneficiary, and constitutes and appoints the Beneficiary its true and
lawful attorney-in-fact, coupled with an interest and as its agent, irrevocably,
with full power or substitution for it and in its name, but solely for the
following purposes: (i) to exercise and enforce every right, power, remedy,
authority, option and privilege of the Trustor under the Space Leases, and as
such attorney-in-fact, the Beneficiary may subordinate, terminate, cancel or
modify the Space Leases, accept the surrender of the Space Leases, give any
notice, take any action resulting in such subordination, termination,
cancellation, modification or surrender, give any authorization, furnish any
information, make any demands, execute any instruments and take any and all
other action on behalf of and in the name of the Trustor which in the opinion of
the Beneficiary may be necessary or appropriate to be given, furnished, made,
exercised or taken by the Trustor under the Space Leases in order to comply
therewith, to perform the conditions thereof or to prevent or remedy any default
by the Trustor thereunder or to enforce any of the Trustor's rights and remedies
thereunder, and (ii) to ask, require, demand, receive and collect and give
acquittances for the Income (as hereinafter defined), and on nonpayment thereof
to sue for, recover and receive the same, and on payment thereof to give
sufficient releases, receipts, discharges and acquittances thereof; to endorse
any checks or other instruments or orders in connection therewith and to file
any claims or take any action or institute any proceedings which the Beneficiary
may deem to
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be necessary or advisable; provided, however, that the power provided for in
this sentence may not be exercised by the Beneficiary unless an Event of Default
shall have occurred and be continuing. "Income" shall mean all deposits, rents,
issues, profits, revenues, royalties, and other revenue producing arrangements,
whether written or oral, and all monetary benefits of, and/or derived from,
and/or sums payable under and by virtue of the Space Leases and/or the Premises.
4.3.2. So long as there shall not have occurred and then be continuing any
Event of Default and until such right of the Trustor is terminated by the
Beneficiary as provided in SECTION 4.3.3, the Beneficiary will not exercise its
rights pursuant to SECTION 4.3.1, and, notwithstanding anything in SECTION 4.3.1
to the contrary, the Trustor shall have the right (but limited as hereinafter
provided) to exercise all of its rights under the Space Leases, including,
without limitation, to collect and receive all rents, income, receipts,
revenues, issues and profits arising therefrom, provided that the Trustor shall
at all times comply with, observe and perform, in the exercise of such right,
all of the provisions of this Trust Deed and the other Security Documents
applicable to the Space Leases; provided, further, that no action shall be taken
or failed to be taken by the Trustor which would impair the Collateral or any
other collateral security for the Obligations provided for in the Security
Documents.
4.3.3. The Beneficiary, upon the occurrence and during the continuance of
an Event of Default, at its option and upon written notice to the Trustor, shall
have the right to terminate the right of the Trustor to exercise its rights
under the Space Leases, and, thereupon, in addition, the Beneficiary, at any
time thereafter, at its option, shall have the complete right, power and
authority hereunder to exercise and enforce all rights, powers, remedies,
authority, options and privileges of the Trustor under the Space Leases in the
name of the Trustor or the Beneficiary, to enforce all obligations of the other
parties to the Space Leases and to exercise and enforce all of its rights and
remedies hereunder and under law not exercisable prior to an Event of Default.
4.3.4. The Trustor does hereby direct each and all of the Space Tenants
under the Space Leases and all contractual obligors of the Trustor to pay any
Income to the Beneficiary upon written demand for payment thereof by the
Beneficiary without further inquiry. It is understood and agreed, however, that
no such demand shall be made unless an
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Event of Default shall have occurred and be continuing. No such Space Tenant or
obligor shall be obliged to account to the Trustor for any amounts paid to the
Beneficiary by reason of any payment made to the Beneficiary pursuant to such
demand and, upon any such payment to the Beneficiary, shall be pro tanto
released from their obligations to the Trustor with respect to such payment.
Each Space Tenant shall be permitted to rely on any communication from the
Beneficiary pursuant hereto, and under no circumstances shall such Space Tenant
be obligated to the Trustor for any payments made to the Beneficiary hereunder.
Until such demand is made, the Trustor is authorized to collect or enforce or
continue collecting or enforcing such Income in accordance with the provisions
of this Trust Deed.
4.3.5. The Beneficiary shall not have any duty as to the collection or
protection of the Collateral or any income thereon or payments with respect
thereto, or as to the preservation of any rights pertaining thereto beyond the
safe custody of any thereof actually in its possession. In no instance shall the
Beneficiary be responsible to lessees for payment of interest upon, or return
of, any lease security deposits, except as provided by law or as provided in the
leases and then only if and to the extent that such deposits are received by the
Beneficiary. The Trustor hereby waives notice of acceptance hereof, and except
as otherwise specifically provided herein or required by provision of law which
may not be waived, hereby waives any and all notices or demands with respect to
any exercise by the Beneficiary of any rights or powers which it may have or to
which it may be entitled with respect to the Collateral.
4.3.6. The Trustor hereby irrevocably constitutes and appoints the
Beneficiary as the true and lawful attorney-in-fact of the Trustor, which
appointment is coupled with an interest, with full power of substitution, to
proceed from time to time in the Trustor's name in any statutory or
non-statutory proceeding affecting the Trustor or any Collateral, and the
Beneficiary or its nominee may (i) execute and file proof of claim for the full
amount of any Collateral and vote such claims for the full amount thereof (A)
for or against any proposal or resolution, (B) for a trustee or trustees or for
a receiver or receivers or for a committee of creditors and/or (C) for the
acceptance or rejection of any proposed arrangement, plan of reorganization,
composition or extension, and the Beneficiary or its nominee may receive any
payment or distribution and give acquittance therefor and may exchange or
release Collateral; (ii) endorse any draft or other
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instrument for the payment of money, execute releases and negotiate and enter
into settlements; and (iii) execute all such other documents or instruments as
may be necessary or expedient to be executed by the Trustor for any of the
purposes of this Trust Deed; provided, however, that the power provided for in
this sentence may be exercised by the Beneficiary only while an Event of Default
is continuing. The Beneficiary shall have no duty to exercise any of the
aforesaid rights, privileges or options and shall not be responsible for any
failure to do so or delay in so doing.
4.4. Remedies and Entry Upon Default.
4.4.1. So long as no Event of Default shall have occurred and be
continuing, the Trustor shall have the right to collect (but not more than one
(1) month in advance) and retain all of the rents, gross receipts and other
payments, if any, from the Space Leases and from the Mortgaged Premises
generally, and the Beneficiary agrees that customary initial rent payments,
security deposits and reimbursements by a Space Tenant to the Trustor on account
of alterations made by the Trustor for the benefit of the Space Tenant are
permissible advance payments by the Space Tenant.
4.4.2. Upon any Event of Default, the Beneficiary may, but shall not be
obligated to:
(a) terminate the rights of the Trustor referred to in SECTION 4.3
hereof and exercise all of the powers, rights and remedies provided for in
SECTION 4.3 hereof, including those to be exercised only from and after an
Event of Default;
(b) at any time and from time to time, without notice to, or assent
by, the Trustor or any other Person, but without affecting any of the
Obligations, in the name of the Trustor or in the name of the Beneficiary,
notify the account debtors and obligors on any or all of the Space Leases
to make payment and performance directly to the Beneficiary, and demand,
collect, receive, compound and give acquittance for the Space Leases or any
part thereof; extend the time of payment and performance of, compromise or
settle for cash, credit or otherwise, upon any terms and conditions, any of
the Space Leases; endorse to the order of the Beneficiary checks, drafts or
other orders or instruments for the payment of moneys payable to the
Trustor which shall be issued in respect of any of the Space Leases; file
any claims,
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commence, maintain or discontinue any actions, suits or other proceedings
deemed by the Beneficiary necessary or advisable for the purpose of
collecting upon or enforcing any of the Space Leases; and execute any
instrument and do all other things deemed necessary and proper by the
Beneficiary to protect and preserve and realize upon the Space Leases
and/or the other rights contemplated hereby; the Trustor hereby irrevocably
constitutes and appoints the Beneficiary as such the Trustor's lawful
attorney-in-fact, coupled with an interest, and its agent for the foregoing
purposes;
(c) demand, collect, sue for, attach, levy, recover, receive,
compromise and adjust, and make, execute and deliver receipts and releases
for all Income that may then be or may thereafter become due, owing or
payable with respect to the Premises or any part or parts thereof from any
present or future lessees, tenants, subtenants or occupants thereof or from
any present or future contract obligors; and/or
(d) pay, in such order as the Beneficiary in its sole discretion shall
determine, from and out of the Income collected in connection with the
Premises and/or the Collateral or any part or parts thereof or from or out
of any other funds (less the expense of collection, including reasonable
attorneys' fees and disbursements), any taxes, assessments, water rates,
sewer rates, or other government or other charges levied, assessed or
imposed against the Premises or any part or part thereof, and also any and
all other charges, costs and expenses which the Beneficiary deems necessary
or advisable to pay in respect of the management or operation of the
Premises, including, without limitation, the costs of insurance policies,
repairs and alterations, commissions for renting the Premises or any part
or parts thereof, legal expenses in enforcing claims, preparing papers or
procuring any other services that may be required and any amounts payable
under or pursuant to any Lease; all amounts so paid and expended shall be
payable on demand, together with interest at the Involuntary Rate from the
date incurred until paid, and be deemed to be included within the
Obligations and secured by this Trust Deed; the provisions of this ARTICLE
and the rights given to the Beneficiary hereby shall inure to the benefit
of the Beneficiary even though the Beneficiary does not enter and take
possession of the Premises; any balance remaining after the indebtedness
secured hereby and the other obligations of the Trustor
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under the Loan and Security Documents shall have been paid in full shall be
turned over to the Person lawfully entitled thereto. Neither the entry upon
and taking possession of the Mortgaged Premises, nor the collection and
application of the rents, gross receipts or other charges thereof, nor any
other action taken by the Beneficiary in connection therewith, shall cure
or waive any default hereunder or waive or modify any notice thereof or
notice of acceleration of the Note theretofore given by the Beneficiary.
4.4.3. If an Event of Default shall have occurred and be continuing, a
notice in writing by the Beneficiary to the Space Tenants under the Space Leases
advising them that the Trustor has defaulted hereunder and requesting that all
future payments of rent, additional rent or other charges under the Space Leases
be made to the Beneficiary (or its agent) shall be construed as conclusive
authority to such Space Tenants that such payments are to be made to the
Beneficiary (or its agent). Each Space Tenant shall be fully protected in making
such payments to the Beneficiary (or its agent) and be given full credit against
its obligations under the applicable Space Lease to the extent of payments made
to the Beneficiary (or its agent) pursuant to any such notice; and the Trustor
hereby irrevocably constitutes and appoints the Beneficiary the attorney-in-fact
and agent of the Trustor, coupled with an interest, for the purpose of endorsing
the consent of the Trustor on any such notice.
4.5. No Obligation of Beneficiary.
4.5.1. The Beneficiary shall not be obligated to perform or discharge any
obligation of the Trustor as a result of the assignment hereby effected, and the
Trustor hereby agrees to indemnify and hold the Beneficiary harmless from and
against any and all liability, loss or damage which the Beneficiary may incur by
reason of any act of the Beneficiary under this Trust Deed, other than as a
result of the Beneficiary's willful misconduct or gross negligence and other
than as a result of the Beneficiary's misconduct or negligence after the
Beneficiary has taken possession of the Premises. Should the Beneficiary (i)
incur any such liability, loss or damage by reason of this Trust Deed and which
is covered by the foregoing indemnity, or in defense against any such claims or
demands, or (ii) perform any acts or covenants on the part of the Trustor to be
performed under the Space Leases, or (iii) pay for the account of the Trustor
(other than from Income or from funds delivered to the Beneficiary by the
Trustor to be held in
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trust for such purpose), any and all sums, costs and expenses for the discharge
of taxes, assessments, water rents or other liens against the Collateral or any
part thereof, or on account of insurance premiums or repairs, and also any
amounts and expenses necessary to perform any covenants and conditions to be
performed on the part of the Trustor under the Space Leases, the amount thereof,
including costs, expenses and reasonable attorneys' fees, together with interest
thereon at the Involuntary Rate from the date such expenses were paid by the
Beneficiary to the date of payment to the Beneficiary by the Trustor, shall be
included in the Obligations secured by this Trust Deed, and the Trustor shall
reimburse the Beneficiary therefor upon demand.
4.5.2. The acceptance by the Beneficiary of this Trust Deed, with all the
rights, powers, privileges and authority so created, shall not at any time or in
any event obligate the Beneficiary to appear in or defend any action or
proceeding relating to the Collateral, or to take any action hereunder or
thereunder, or to expend any money or incur any expenses or perform or discharge
any obligation, duty or liability under the Collateral.
ARTICLE V.
Security Agreement Under Uniform Commercial Code
5.1. This Trust Deed shall constitute a security agreement and a fixture
filing within the meaning of the Uniform Commercial Code of the State (the
"Code"), and the Beneficiary shall be deemed to be the "secured party" (as that
term is defined in the Code). The Trustor hereby grants to the Beneficiary, as
additional collateral for the obligations under the Note and the other
Obligations secured hereby, a security interest in and to all of the Mortgaged
Premises which are considered or as shall be determined to be personal property
or "fixtures" (as defined in the Code), including, without limitation, the
Building Service Equipment, the Furnishings, the Payments and Intangibles, all
books, records, licenses and certificates of the Trustor relating to the
Mortgaged Premises, together with all replacements thereof, substitutions
therefor or additions thereto (said property being sometimes hereinafter
referred to as the "Personal Property"). The Trustor agrees that a security
interest shall attach to the Personal Property for the benefit of the
Beneficiary to secure the indebtedness evidenced by the Note and the other
Obligations secured by this Trust Deed and all other sums and charges which may
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become due hereunder, thereunder or under any of the other Security Documents.
The Trustor hereby authorizes the Beneficiary to file financing and continuation
statements with respect to the Personal Property without the signature of the
Trustor, if permitted by the Code. In any event the Trustor covenants to execute
such financing and continuation statements as the Beneficiary may reasonably
request. If an Event of Default shall occur and be continuing, the Beneficiary,
pursuant to the appropriate provisions of the Code, shall have the option of
proceeding as to both real and personal property in accordance with its rights
and remedies in respect of real property under this Trust Deed and the law of
the State, in which event the default provisions of the Code shall not apply.
The Trustor agrees that, in the event the Beneficiary shall elect to proceed
with respect to the Personal Property separately from the real property, unless
a greater period shall then be mandated by the Code, five (5) days notice of the
sale of the Personal Property shall be reasonable notice. The expenses of
retaking, holding, preparing for sale and selling incurred by the Beneficiary
shall be assessed against the Trustor and shall include, but not be limited to,
the reasonable legal expenses incurred by Beneficiary. The Trustor agrees that
it will not remove or permit to be removed from the Mortgaged Premises any of
the Personal Property without the prior written consent of the Beneficiary
except as set forth in SECTION 2.7.2. All replacements, renewals and additions
to the Personal Property shall be and become immediately subject to the security
interest of this Trust Deed and the provisions of this ARTICLE V. The Trustor
warrants and represents that all Personal Property now is free and clear of all
liens, encumbrances or security interests other than the Permitted Encumbrances,
and that all replacements of the Personal Property, substitutions therefor or
additions thereto, unless the Beneficiary otherwise consents, will be, free and
clear of liens, encumbrances or security interests of others.
ARTICLE VI.
Events of Default and Remedies
6.1. Events of Default. The whole of the outstanding Principal Amount (as
defined in the Note) and accrued interest evidenced by the Note shall, at the
option of the Beneficiary, become due upon the happening of an Event of Default;
provided, however, that upon the
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occurrence of a default specified in SECTIONS 5.01(f) or 5.01(g) of the Loan
Agreement, or upon the occurrence of any other default specified in any Loan
Document (as defined in the Loan Agreement) where provision is made for
acceleration to occur automatically as a consequence thereof, all sums owing to
the Beneficiary thereunder shall automatically become immediately due and
payable.
6.2. Remedies. If an Event of Default shall occur and be continuing, the
Beneficiary, at its option, may:
6.2.1. by notice to the Trustor, declare the entire principal amount of the
Note then outstanding and all accrued and unpaid interest thereon and all
obligations of the Trustor to the Beneficiary to be immediately due and payable,
and upon such declaration such principal and interest and all obligations of the
Trustor to the Beneficiary shall become and be immediately due and payable,
anything in the Note, the Loan Agreement or in this Trust Deed or in any of the
other Security Documents to the contrary notwithstanding;
6.2.2. as a matter of right and without notice to the Trustor or anyone
claiming under the Trustor, and without regard to the then value of the
Mortgaged Premises or the interest of the Trustor therein, to apply to any court
having jurisdiction to appoint a receiver or receivers of the Mortgaged
Premises, and the Trustor hereby irrevocable consents to such appointment and
waives notice of any application therefor; any such receiver or receivers shall
have all the usual powers and duties of receivers in like or similar cases and
all the powers and duties of the Beneficiary in case of entry as provided in
this Trust Deed, and shall continue as such and exercise all such powers until
the later of (i) the date of confirmation of sale of the Mortgaged Premises,
(ii) the disbursement of all proceeds of the Mortgaged Premises collected by
such receiver and the payment of all expenses incurred in connection therewith,
and (iii) the termination of such receivership with the consent of the
Beneficiary or pursuant to an order by a court of competent jurisdiction;
6.2.3. exercise any and all remedies available to a secured party under the
UCC in such order and in such manner as the Beneficiary in its sole discretion
may determine; provided, however, that the expenses of retaking, holding,
preparing for sale or the like, shall include reasonable attorneys' fees and
other expenses of the
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Beneficiary and the Trustee and be secured by this Trust Deed;
6.2.4. bring an action in any court of competent jurisdiction to foreclose
this Trust Deed or enforce any of the terms, covenants and conditions hereof or
contained in any other Security Document;
6.2.5. elect to commence foreclosure proceedings as follows:
(a) by way of a trustee's sale pursuant to the provisions of Title 38,
Article 38, Colorado Revised Statutes, 1973, as amended, or in any other
manner then permitted by law, upon such notice as may then be required by
law; and
(b) after deducting all costs, fees and expenses of the Trustee,
including costs of evidence of title and attorneys' fees of the Trustee and
the Beneficiary in connection with such sale, the Trustee shall apply, in
the following priority, the proceeds of sale to payment of: (i) first, all
sums expended under the terms hereof, not then repaid, with interest
thereon at the Involuntary Rate, (ii) second, all other sums then secured
hereby, in such order of priority and in such proportion as the Beneficiary
in its sole discretion may elect, and (iii) the remainder, if any, to the
Person lawfully entitled thereto.
6.2.6. exercise any or all of its other rights and remedies provided
herein, in any of the Security Documents, or other document or agreement now or
hereafter securing all or any portion of the Obligations secured hereby, or as
provided by law, in such order of priority as the Beneficiary shall determine in
its sole discretion.
6.3. Sale; No Marshalling of Assets.
6.3.1. In case of a foreclosure sale, all of the Mortgaged Premises may be
sold in one parcel even though the proceeds of such sale exceed or may exceed
the indebtedness secured hereby. The Beneficiary shall not be required to
exercise any rights under this Trust Deed before proceeding against any other
security, shall not be required to proceed against other security before
proceeding under this Trust Deed, and shall not be precluded from proceeding
against any or all of any security held by the Beneficiary for any or all of the
indebtedness secured hereby in any order or at the same time.
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6.3.2. The Trustor agrees, to the full extent that it may lawfully do so,
that in any foreclosure or other action brought by the Beneficiary to enforce
this Trust Deed, it will not at any time insist upon or plead or in any way take
advantage of any appraisement, valuation, stay, marshalling of assets,
extension, redemption or moratorium law now or hereafter in force and effect so
as to prevent, hinder, delay or otherwise affect the enforcement of the
provisions of this Trust Deed or any rights or remedies the Beneficiary may have
hereunder or by law.
6.3.3. If the Beneficiary shall elect to accelerate the indebtedness
secured hereby following the occurrence of an Event of Default, the Trustor,
within five (5) days after demand, will pay to the Beneficiary, or any receiver
appointed in connection with the foreclosure of this Trust Deed, any and all
amounts then held as security deposits under all Space Leases; and the
Beneficiary or such receiver shall be deemed to indemnify the Trustor against
all claims of tenants in respect of the security deposits so paid following such
demand.
6.4. Legal Expenses of the Beneficiary.
6.4.1. The Trustor will pay to the Beneficiary or the Trustee, as the case
may be, on demand, all costs, charges and expenses (including, without
limitation, reasonable attorneys' fees and disbursements) incurred or paid at
any time by the Beneficiary or the Trustee (i) in connection with any action or
proceeding to foreclose this Trust Deed or to recover or collect all, or any
portion of the indebtedness secured hereby; and (ii) in connection with any
modification or amendment or assignment of this Trust Deed or the other Security
Documents, together with interest on each such payment made by the Beneficiary
at the Involuntary Rate from the date of the Beneficiary's demand for such
payment to the date of reimbursement by the Trustor.
6.4.2. If any action or proceeding be commenced in which the Beneficiary or
the Trustee is made a party, or in which it becomes necessary to defend or
uphold the lien of this Trust Deed, all reasonable sums paid by the Beneficiary
for the expense of any litigation to prosecute or defend the title, rights and
lien created by this Trust Deed (including, without limitation, reasonable
attorneys' fees) shall be paid by the Trustor, together with interest thereon at
the Involuntary Rate from the date of the Beneficiary's demand for such payment
to the date of reimbursement by the Trustor.
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6.5. Remedies Cumulative; No Waiver; Etc.
6.5.1. No remedy in this Trust Deed conferred upon or reserved to the
Beneficiary is intended to be exclusive of any other remedy or remedies, and
each and every such remedy shall be cumulative, and shall be in addition to
every other remedy given hereunder or now or hereafter existing at law or in
equity. No delay or omission by the Beneficiary in exercising any right or power
arising upon any Event of Default shall impair any such right or power, or shall
be construed to be a waiver of or acquiescence in any such Event of Default; and
every power and remedy given by this Trust Deed to the Beneficiary may be
exercised from time to time as often as the Beneficiary may determine it is
appropriate to do so.
6.5.2. A waiver in one or more instances of compliance with any of the
terms, covenants, conditions or provisions of the Note, the Loan Agreement or of
the Security Documents shall apply to the particular instance or instances and
at the particular time or times only, and no such waiver shall be deemed a
continuing waiver. In any event, no waiver shall be effective, or be asserted by
the Trustor as having been made, unless set forth in a writing signed by the
Beneficiary.
6.5.3. The Trustor waives and renounces all homestead and similar exemption
rights with respect to the Mortgaged Premises provided for by the Constitution
and laws of the United States and of the State as against the collection of the
Security Documents, or any part thereof.
6.6. No Merger. It is the intention of the parties to this Trust Deed that
if the Beneficiary or the Trustee shall at any time hereafter acquire title to
all or any portion of the Mortgaged Premises, then, and until the indebtedness
secured hereby has been paid in full, the interest of the Beneficiary hereunder
and the lien of this Trust Deed shall not merge or become merged in or with the
estate and interest of the Beneficiary or the Trustee as the holder and owner of
title to all or any portion of the Mortgaged Premises and that, until such
payment, the estate of the Beneficiary or the Trustee in the Mortgaged Premises
and the lien of this Trust Deed and the interest of the Beneficiary hereunder
shall continue in full force and effect to the same extent as if the Beneficiary
or the Trustee had not acquired title to all or any portion of the Mortgaged
Premises.
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ARTICLE VII.
Provisions of General Application
7.1. Modifications. No change, amendment, termination, modification or
cancellation of this Trust Deed, or of any part hereof, shall be valid unless
set forth in a writing signed by the Trustor and the Beneficiary, except that
only the Beneficiary need sign any satisfaction of this Trust Deed.
7.2. Notices. All notices, demands, requests, consents, approvals or other
communications (each, a "Notice") given or required to be given hereunder shall
be sent to the addresses and in the manner required by the Loan Agreement.
7.3. The Beneficiary's Rights to Perform the Trustor's Covenants. If the
Trustor shall fail to pay or cause payment to be paid to the Beneficiary in
accordance with the terms of the Security Documents, or to perform or observe
any other term, covenant, condition or obligation required to be performed or
observed by the Trustor under this Trust Deed or the other Security Documents,
without limiting any other provision of this Trust Deed, and without waiving or
releasing the Trustor from any obligation or default hereunder, after giving any
notice to the Trustor required hereunder and after the passage of any applicable
cure periods (or without such notice in the event of an emergency), the
Beneficiary (or any receiver of the Mortgaged Premises) shall have the right,
but not the obligation, to make any such payment, or to perform any other act or
take any appropriate action, including, without limitation, entry on the
Mortgaged Premises and performance of work thereat, as it, in its sole
discretion, may deem necessary to cause such other term, covenant, condition or
obligation to be promptly performed or observed on behalf of the Trustor or to
protect the security of this Trust Deed. All amounts advanced by, or on behalf
of, the Beneficiary in exercising its rights under this SECTION 7.3 (including,
but not limited to, legal expenses and disbursements incurred in connection
therewith), together with interest thereon at the Involuntary Rate from the date
of the Beneficiary's demand upon the Trustor for reimbursement of such sums
until reimbursement by the Trustor, shall be payable by the Trustor to the
Beneficiary upon demand and shall be secured by this Trust Deed.
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7.4. Additional Sums Payable by the Trustor. All sums which, by the terms
of this Trust Deed or any of the other Security Documents (excluding however the
principal indebtedness evidenced by the Note), are payable by the Trustor to the
Beneficiary shall, together with the interest thereon provided for herein or in
the Note or such other Security Documents, be added to and deemed part of the
indebtedness secured by the lien of this Trust Deed whether or not the provision
which obligates the Trustor to make any such payment to the Beneficiary
specifically so states.
7.5. Captions. The captions used in this Trust Deed are inserted only as a
matter of convenience and for reference, and in no way define, limit, enlarge or
describe the scope or intent of this Trust Deed or in any other way affect this
Trust Deed or the construction of any provision hereof.
7.6. Successors and Assigns. The covenants and agreements contained in this
Trust Deed shall run with the land and bind the Trustor, the successors and
assigns of the Trustor and all subsequent owners, encumbrances and Space Tenants
of the Mortgaged Premises, or any part thereof; and shall inure to the benefit
of the Beneficiary, its successors and assigns and all subsequent beneficial
owners of this Trust Deed.
7.7. Gender and Number. Wherever the context of this Trust Deed so
requires, the neuter gender includes the masculine and/or feminine gender and
the singular number includes the plural.
7.8. Severability. If any one or more of the provisions contained in this
Trust Deed shall for any reason be held to be invalid, illegal, or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provisions of this Trust Deed; and this Trust Deed shall, in such
event, be construed as if such invalid, illegal or unenforceable provision had
never been included.
7.9. Usury. Anything in the Note, the Loan Agreement, this Trust Deed or
the other Security Documents to the contrary notwithstanding, the Beneficiary
shall never be entitled to receive, collect or apply as interest on the
principal amount of the Note or any other of the obligations secured hereby any
amount in excess of the maximum rate of interest permitted to be charged by
applicable law. In the event the Beneficiary ever receives, collects or applies
as interest any such excess, the amount which would be
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excessive interest shall be applied to the reduction of the principal amount of
said obligations; and if said principal amount shall have been paid in full,
shall be remitted to the Person lawfully entitled thereto. In determining
whether or not the interest paid or payable in any specific instance shall
exceed the highest lawful rate, the Trustor and the Beneficiary shall to the
maximum extent permitted by applicable law (i) characterize any non-principal
payment as an expense, fee or premium rather than as interest, (ii) exclude
voluntary prepayments and the effects thereof and (iii) "spread" the total
amount of interest throughout the entire contemplated terms of the obligations
so that the interest rate is uniform throughout the entire said term.
7.10. Controlling Law. This Trust Deed shall be governed by, and construed
and enforced in accordance with, the laws of the State of Colorado applicable to
contracts made and to be wholly performed within such state.
7.11. Entire Agreement. This Trust Deed, together with the Note, the Loan
Agreement and the other Security Documents, embodies the entire agreement and
understanding between the parties relating to the subject matter hereof.
7.12. Construction Trust Deed. This Trust Deed secures indebtedness for
construction purposes as described in Section 4-9-313, Colorado Revised Statutes
(1973), as amended.
ARTICLE VIII.
Particular Provisions
The foregoing ARTICLES of this Trust Deed are subject to the following
further provisions set forth in this ARTICLE VIII.
8.1. Limited Recourse. The provisions of PARAGRAPH 6.16 of the Loan
Agreement are hereby incorporated herein by reference.
8.2. Environmental Representations and Warranties. The Trustor hereby makes
the following representations and warranties to the Beneficiary with respect to
the Mortgaged Premises:
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8.2.1. Compliance with Environmental Laws. To the best of the Trustor's
knowledge based on all appropriate and thorough inquiry, (i) the Mortgaged
Premises (including surface and subsurface soil and water and areas leased to
tenants, if any), and the use and operation thereof, have been and are currently
in compliance with all Environmental Laws (as hereinafter defined), (ii) all
required permits are in effect, and the Trustor is in compliance therewith, and
(iii) all Hazardous Materials (as hereinafter defined) generated or handled on
the Mortgaged Premises have been disposed of in a lawful manner.
8.2.2. No Hazardous Materials. To the best of the Trustor's knowledge based
on all appropriate and thorough inquiry (a) no Hazardous Release (as hereinafter
defined) or other Hazardous Activity (as hereinafter defined) has occurred or is
occurring on or from the Mortgaged Premises except in compliance with
Environmental Laws and as has been disclosed in writing to the Beneficiary
("Disclosed Material"), (b) all Hazardous Materials used, treated, stored,
transported to or from, generated or handled on the Mortgaged Premises have been
disposed of on or off the Mortgaged Premises in a lawful manner, (c) no
environmental or public health or safety hazards currently exist with respect to
the Mortgaged Premises or the business or operations conducted thereon, (d) no
underground storage tanks (including but not limited to petroleum or heating oil
storage tanks) are present on or under the Mortgaged Premises or have been on or
under the Mortgaged Premises, except as has been disclosed in writing to the
Beneficiary, and (e) no changes have been made to or discovered regarding the
operations, use or environmental conditions on the Mortgaged Premises since the
date of the most recent written environmental assessment provided to the
Beneficiary.
8.2.3. No Environmental Actions. To the best of the Trustor's knowledge and
based on all appropriate and thorough inquiry, the Mortgaged Premises is not
listed on any local, state and/or federal lists of potentially contaminated
sites, including, but not limited to, the National Priorities List,
Comprehensive Environmental Response, Compensation and Liability Information
System or any state or federal hazardous waste site or leaking underground
storage tank lists, and there have been no past and there are no pending or
threatened Environmental Actions (as hereinafter defined) to which the Trustor
is a party or which relate to the Mortgaged Premises. The Trustor has not
received any notice of any Environmental Action respecting Trustor, the
Mortgaged Premises or any off-site facility to
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which has been sent any Hazardous Material for purposes of any Hazardous
Activity.
8.2.4. Intentionally Deleted.
8.2.5. Definitions. For purposes of this Trust Deed, the following
capitalized terms shall have the meanings set forth below:
"Environmental Action" shall mean:
(a) any notice of violation, complaint, claim, citation, demand,
inquiry, report, action, assertion of potential responsibility, lien,
encumbrance, or proceeding regarding the Mortgaged Premises, whether formal
or informal, absolute or contingent, matured or unmatured, brought or
issued by any governmental unit, agency, or body, or any person or entity
respecting:
(1) any Environmental Law;
(2) the environmental condition of the Mortgaged Premises, or any
portion thereof, or any property near the Mortgaged Premises,
including actual or alleged damage or injury to humans, public health,
wildlife, biota, air, surface or subsurface soil or water, or other
natural resources; or
(3) any Hazardous Activity on the Mortgaged Premises or off-site;
(b) any violation or claim of violation by the Trustor of any
Environmental Law whether or not involving the Mortgaged Premises;
(c) any lien for damages caused by, or the recovery of any costs
incurred by any person or entity, including any governmental entity, for
the investigation, remediation or cleanup of any Hazardous Release or
threatened Hazardous Release on the Mortgaged Premises; or
(d) the destruction or loss of use of property, or the injury, illness
or death of any officer, director, employee, agent, representative, tenant
or invitee of the Trustor or any other person alleged to be or possibly to
be arising from or caused by the environmental condition of the Mortgaged
Premises or any Hazardous Activity on the Mortgaged Premises.
"Environmental Laws" shall mean:
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(a) any present or future federal statute, law, code, rule,
regulation, ordinance, order, standard, permit, license, guidance document
or requirement (including consent decrees, judicial decisions and
administrative orders) together with all related amendments, implementing
regulations and reauthorizations, pertaining to the protection,
preservation, conservation or regulation of the environment, including, but
not limited to: the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act, 42 U.S.C. Sections 9601 et seq. ("CERCLA"); the
Resource Conservation and Recovery Act of 1976, 42 U.S.C. Sections 6901 et
seq. ("RCRA"); the Toxic Substances Control Act, 15 U.S.C. Sections 2601 et
seq. ("TOSCA"); the Clean Air Act, 42 U.S.C. Sections 7401 et seq.; the
Clean Water Act, 33 U.S.C. Sections 1251 et seq.; the Hazardous Materials
Transportation Act, 49 U.S.C. Sections 1801 et seq. ("HMTA"); the Emergency
Planning and Community Right-to-Know Act, 42 U.S.C. Sections 11011 et seq.;
the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. Sections
136 et seq.; and the Atomic Energy Act, 42 U.S.C. Sections 2011 et seq.
(b) any present or future state or local statute, law, code, rule,
regulation, ordinance, order, standard, permit, license or requirement
(including consent decrees, judicial decisions and administrative orders)
together with all related amendments, implementing regulations and
reauthorizations, pertaining to the protection, preservation, conservation
or regulation of the environment.
"Hazardous Activity" shall mean any use, exposure, Hazardous Release,
generation, manufacture, sale, transport, handling, storage, treatment,
reuse, presence, decontamination, clean-up or recycling of any Hazardous
Material.
"Hazardous Materials" shall mean (a) all substances defined as
"hazardous substances", "hazardous materials", "toxic substances",
"hazardous wastes" or "solid waste" in CERCLA, RCRA, TOSCA or HMTA; (b)
those substances listed in the United States Department of Transportation
Table (49 C.F.R. 172.101 and amendments thereto) or by the Environmental
Protection Agency (or any successor agency) as "hazardous substances" (40
C.F.R. Part 302 and amendments thereto); those substances defined as
"hazardous wastes" or as "hazardous substances" in the regulations adopted
and publications promulgated pursuant to said laws or which otherwise are
or become regulated by any governmental authority, agency, department,
commission, board or
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instrumentality of the United States of America, the State of Colorado or
any political subdivision thereof; (d) any hazardous, dangerous or toxic
chemical, material, waste, pollutant, contaminant or substance
(collectively, "Pollutants") within the meaning of any Environmental Law
prohibiting, limiting or otherwise regulating any Hazardous Activity
relating to any such Pollutant; (e) any petroleum, crude oil, or fraction
or by-product thereof; (f) any radioactive material, including any source,
special nuclear or by-product material as defined at 42 U.S.C. Sections
2011 et seq., as amended or hereafter amended, and in the regulations
adopted and publications promulgated pursuant to said law; (g)
asbestos-containing materials in any form or condition; and (h)
polychlorinated biphenyls in any form or condition.
"Hazardous Release" shall mean the release of Hazardous Materials into
the environment by any means whatsoever, including but not limited to any
spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping removing or disposing
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(including the abandonment or discarding of barrels, containers and other
receptacles containing any Hazardous Material).
IN WITNESS WHEREOF, the Trustor has executed this Trust Deed as of the day
and year first above written.
"Trustor"
CORPORATE REALTY INCOME
FUND I, L.P., a Delaware
limited partnership
By: _______________________
Robert F. Gossett, Jr.,
general partner
By: 1345 Realty Corporation,
general partner
By: ________________________
Robert F. Gossett, Jr.,
President
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State of _____________________ )
County of ____________________ )
On ________________ before me, _______________________________________________
Date
______________________________________________________________________________,
NAME, TITLE OF OFFICER-E.G., "JANE DOE, NOTARY PUBLIC"
personally appeared __________________________________________________________
NAME(S) OF SIGNER(S)
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.
WITNESS my hand and official seal.
Signature_______________________________ (Seal)
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EXHIBIT A
---------
PREMISES
LOTS 2 AND 3,
FLATIRON INDUSTRIAL PARK FILING NO. 5,
COUNTY OF BOULDER,
STATE OF COLORADO,
AND PART OF LOT 4, FLATIRON INDUSTRIAL PARK FILING NO. 5,
DESCRIBED AS FOLLOWS:
BEGINNING AT THE SOUTHWEST CORNER OF LOT 4, FLATIRON INDUSTRIAL PARK FILING NO.
5, A SUBDIVISION OF A PART OF THE WEST ONE-HALF OF SECTION 27, TOWNSHIP 1 NORTH,
RANGE 70 WEST OF THE 6TH P.M, BOULDER COUNTY, COLORADO; THENCE NORTHEASTERLY
38.78 FEET ALONG THE ARC OF A CURVE TO THE LEFT AND ALONG THE WEST LINE OF SAID
LOT 4, AND THE EASTERLY RIGHT-OF-WAY LINE OF CENTRAL AVENUE, TO A POINT OF
NON-TANGENCY, SAID ARC OF CURVATURE BEING CONCAVE WESTERLY AND HAVING A RADIUS
OF 665.50 FEET. A CENTRAL ANGLE OF 03 DEGREES 20 MINUTES 19 SECONDS AND A CHORD
WHICH BEARS NORTH 21 DEGREES 47 MINUTES 48 SECONDS EAST 38.77 FEET; THENCE SOUTH
90 DEGREES 00 MINUTES 00 SECONDS EAST 335.64 FEET TO THE EAST LINE OF SAID LOT
4; THENCE SOUTH 00 DEGREES 00 MINUTES 00 SECONDS WEST 36.00 FEET ALONG SAID EAST
LINE TO THE SOUTHEAST CORNER OF SAID LOT 4, AND THE MOST NORTHEASTERLY CORNER OF
LOT 3, FLATIRON INDUSTRIAL PARK FILING NO. 5; THENCE NORTH 90 DEGREES 00 MINUTES
00 SECONDS WEST 350.04 FEET ALONG THE SOUTH LINE OF SAID LOT 4 AND THE NORTH
LINE OF SAID LOT 3 TO THE POINT OF BEGINNING, AS SET FORTH AND APPROVED IN CITY
REVIEW CERTIFICATION RECORDED MAY 19, 1987 IN FILM 1475 AT RECEPTION NO. 850261.
COUNTY OF BOULDER,
STATE OF COLORADO
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FIRST AMENDMENT TO DEED OF TRUST, ASSIGNMENT OF RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
FIRST AMENDMENT TO DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND
FIXTURE FILING dated as of December __, 1996 (as the same may be amended or
otherwise modified from time to time, this "Amendment") by and between CORPORATE
REALTY INCOME FUND I, L.P., a Delaware limited partnership (the "Trustor"),
having an office at 406 East 85th Street, New York, New York 10028, and FLEET
BANK, NATIONAL ASSOCIATION, a national banking association (the "Beneficiary"),
having an office at 56 East 42nd Street, New York, New York 10017.
W I T N E S S E T H:
WHEREAS, the Trustor executed and delivered to the PUBLIC TRUSTEE OF
BOULDER COUNTY, COLORADO (the "Trustee"), for the benefit of the Beneficiary,
that certain Deed of Trust, Assignment of Rents, Security Agreement and Fixture
Filing dated September 26, 1996 (as the same may be amended or otherwise
modified from time to time, the "Trust Deed") covering all of the Trustor's
estate in and to all that tract or parcel of land situate, lying and being in
the County of Boulder, State of Colorado, and more particularly described in
EXHIBIT A annexed to and made a part of this Amendment;
WHEREAS, the Trust Deed was recorded by the Boulder County Recorder on
September 30, 1996 as Document # 01646373, Real Estate Records F 2159;
WHEREAS, the Trustor and the Beneficiary are also parties to a Loan
Agreement dated as of September 26, 1996 (as the same may be amended or
otherwise modified from time to time, (the "Loan Agreement") and, pursuant to
the Loan Agreement, the Beneficiary has agreed to lend up to $24,000,000 to the
Trustor, and, to evidence such loans, the Trustor executed and delivered to the
Beneficiary the Note;
WHEREAS, payment of the indebtedness of the Trustor evidenced by the Note
is secured by the Trust Deed;
WHEREAS, the Trustor and Beneficiary are simultaneously herewith entering
into a First Amendment to Loan Agreement and Note for the purpose, among others,
of increasing the principal amount of the Note from $24,000,000 to $44,000,000;
and
WHEREAS, it is a condition precedent to the effectiveness of the First
Amendment to Loan Agreement and Note
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that each of the parties hereto shall have executed and delivered this
Amendment, thereby amending the Trust Deed and each of the parties hereto is
willing to do so.
NOW, THEREFORE, the parties to this Amendment hereby agree as follows:
1. All capitalized terms used herein without definition and which are
defined in the Trust Deed are used herein with the meanings assigned to such
terms in the Trust Deed.
2. The description in the Trust Deed to the Note being in the principal
amount of $24,000,000 are hereby amended so that all of such references shall be
to a Note in the principal amount of $44,000,000.
3. The granting clauses of the Trust Deed are hereby restated in their
entirety and incorporated herein and the Trustor hereby ratifies and restates
such granting clauses as incorporated herein.
4. The Trust Deed, as modified by this Amendment, and all covenants of the
Trustor made in the Trust Deed are hereby ratified and confirmed by the Trustor
in all respects, and the Trust Deed, as so modified, shall continue in full
force and effect in accordance with its terms.
2
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IN WITNESS WHEREOF, each of the parties has caused these presents to be
signed and attested, all as of the day and year first above written.
ATTEST: CORPORATE REALTY INCOME FUND I, L.P.
_____________________ By:__________________________________
Robert F. Gossett, Jr.,
General Partner
By: 1345 Realty Corporation,
General Partner
By:________________________________
Robert F. Gossett, Jr.,President
ATTEST: FLEET BANK, NATIONAL ASSOCIATION
____________________ By:_______________________________
Title:
3
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STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the ___ day of December, 1996, before me personally came ROBERT F.
GOSSETT, JR., to me known, who, being by me duly sworn, did depose and say that
he resides at 406 East 85th Street, New York, New York 10028; that he is the
President of 1345 Realty Corporation, the corporation described in and which
executed the foregoing instrument as a general partner of Corporate Realty
Income Fund I, L.P.; and that he signed his name thereto by order of the board
of directors of said corporation and as and for the act and deed of said
corporation and partnership.
___________________________________
NOTARY PUBLIC
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the ____day of December, 1996, before me personally came ROBERT F.
GOSSETT, JR., to me known, who, being by me duly sworn, did depose and say that
he resides at 406 East 85th Street, New York, New York 10028; that he is a
general partner of Corporate Realty Fund I, L.P., as described in the foregoing
instrument; and that he signed his name thereto as and for the act and deed of
said partnership.
___________________________________
NOTARY PUBLIC
4
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STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the ____day of December, 1996, before me personally came James Mirman,
to me known, who, being by me duly sworn, did depose and say that he resides at
56 East 42nd Street, New York, New York 10017; that he is a Vice President of
Fleet Bank, National Association; and that he signed his name thereto as and for
the act and deed of Fleet Bank, National Association.
___________________________________
NOTARY PUBLIC
5
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SECTION:
BLOCK:
LOTS: 2 and 3
COUNTY: Boulder
Date: As of December __, 1996
FIRST AMENDMENT TO DEED OF TRUST, ASSIGNMENT OF RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
by and between
CORPORATE REALTY INCOME FUND I, L.P.
("Trustor")
having an office at
406 East 85th Street
New York, New York 10028
and
FLEET BANK, NATIONAL ASSOCIATION
having its principal office at
56 East 42nd Street
New York, New York 10017
("Beneficiary")
This instrument prepared by, and after recording please return to:
Loeb & Loeb LLP
345 Park Avenue
New York, New York 10154-0037
Attention: Kenneth D. Freeman, Esq.
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BLOCK: 550
LOTS: 4.01
Date: September 26, 1996
MORTGAGE, ASSIGNMENT OF LEASES
AND RENTS AND SECURITY AGREEMENT
(as the same may be amended or
otherwise modified from time
to time, this "Mortgage")
FROM
CORPORATE REALTY INCOME FUND I, L.P.,
a Delaware limited partnership. dba
CORPORATE REALTY INCOME FUND, LIMITED PARTNERSHIP
("Mortgagor")
Address: 406 East 85th Street
New York, New York 10028
TO
FLEET BANK, NATIONAL ASSOCIATION,
having its principal office at
56 East 42nd Street
New York, New York 10017
("Mortgagee")
Mortgage Amount: $24,000,000
This instrument prepared by, and after recording please
return to:
Loeb & Loeb LLP
345 Park Avenue
New York, New York 10154-0037
Attention: Kenneth D. Freeman, Esq.
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THE AMOUNT OF THIS MORTGAGE IS $24,000,000
THIS MORTGAGE SECURES REVOLVING CREDIT INDEBTEDNESS. THE INDEBTEDNESS SECURED
HEREBY IS COMPOSED OF REVOLVING CREDIT TYPE INDEBTEDNESS, THE OUTSTANDING
BALANCE OF WHICH CAN FLUCTUATE UP OR DOWN ACCORDING TO PAYMENTS MADE ON THE
INDEBTEDNESS AND SUBSEQUENT ADVANCES.
WHEREAS, the Mortgagor is the owner of the fee estate in those certain
parcels of real property described in EXHIBIT A annexed hereto (together with
the improvements now or hereafter located thereon, collectively, the
"Premises"), and desires to convey the Premises to secure, among other
obligations, a certain loan being made concurrently herewith by the Mortgagee to
the Mortgagor, pursuant to the terms of a Loan Agreement of even date herewith
between Mortgagor and Mortgagee (as the same may be amended or otherwise
modified from time to time, the "Loan Agreement"); and
WHEREAS, the indebtedness secured hereby is evidenced by that certain
Secured Promissory Note of even date herewith in the principal amount of
$24,000,000 (as the same may be amended or otherwise modified from time to time,
the "Note") made by the Mortgagor to the Mortgagee, which Note provides for a
variable rate of interest.
NOW, THEREFORE,
FOR THE PURPOSE OF SECURING payment of all of the liabilities and
obligations of the Mortgagor to the Mortgagee evidenced by the Note, plus
interest thereon and all sums necessary to protect the Mortgagee under this
Mortgage or under the other Security Documents (as hereinafter defined), and all
other sums due and payable under the Security Documents, and all of the other
Obligations (as hereinafter defined), the Mortgagor does hereby give, grant,
warrant, alien, releases, mortgage, hypothecate, deposit, pledge, transfer,
assign, bargain, sell, convey, set over and confirm unto the Mortgagee, its
successors and assigns, all of the Mortgagor's estate, right, title and interest
now owned or hereafter acquired in and to the Premises; and
TOGETHER with all and singular the easements, rights of way, air rights,
reservations, privileges, choses in action, options, tenements, hereditaments
and appurtenances thereunto belonging or in any way appertaining, including,
without limitation, all off-street parking rights and spaces, if any, and the
reversion and
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remainder of any or all of the foregoing; and all of the estate, right, title,
interest, claim or demand whatsoever of the Mortgagor therein and in and to the
Premises and/or the improvements thereon, and in and to all strips and gores,
and all alleys adjoining the land and in and to any land lying in the bed of any
street, road or avenue, open or proposed, in front of, or adjoining or adjacent
to the Premises, to the center line thereof, either in law or in possession or
expectancy, now or hereafter acquired;
TOGETHER with all of the right, title and interest of the Mortgagor in and
to (i) all buildings, vaults, and other improvements and additions thereto now
erected or hereafter constructed or placed upon the Premises or any part thereof
(the "Improvements"); (ii) to the extent permitted by law, the name or names, if
any, as may now or hereafter be used for each Improvement and the good will
associated therewith, as well as the trade names of the Improvements; and (iii)
all machinery, devices, fixtures, apparatus, interior improvements,
appurtenances and equipment of every kind and nature whatsoever now or hereafter
attached to or placed in or upon the Premises or the Improvements, or any part
thereof, or used or procured for use in connection with the operation of the
Premises or any business conducted thereon (except for fixtures and personal
property that are at any time the property of Space Tenants, as defined in
SECTION 1.18, or independent contractors employed at the Premises), all of the
foregoing, except as aforesaid, hereinafter collectively called "Building
Service Equipment";
TOGETHER with all the right, title and interest of the Mortgagor in and to
all furniture, furnishings, decorations, chattels and other personal property
now or hereafter in, on or at said Premises (except for trade fixtures and
personal property that are at any time the property of Space Tenants), all of
the foregoing, except as aforesaid, hereinafter collectively called
"Furnishings;"
TOGETHER with all right, title and interest of the Mortgagor in and to all
insurance or other proceeds for damage done to the Improvements, Building
Service Equipment or Furnishings and all awards heretofore made or hereafter to
be made to or for the account of the Mortgagor for the permanent or temporary
taking by eminent domain of the whole or any part of the Premises, the
Improvements, the Building Service Equipment and the Furnishings or any lesser
estate in, or easement appurtenant to, the Premises (including, without
limitation, any awards for change of grade of streets), all of which proceeds
and awards are hereby
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assigned to the Mortgagee, subject to the further provisions of this Mortgage;
TOGETHER with all of the rents, issues, income, revenues, royalties,
proceeds, benefits and profits of the Mortgaged Premises (as hereinafter
defined), including amounts payable under all Space Leases (as hereinafter
defined), now in effect or hereafter entered into covering any part of the
Mortgaged Premises, as well as all rights and interest of the Mortgagor as
landlord thereunder, all of which are hereby assigned to the Mortgagee, subject,
however, to the right of the Mortgagor, as licensee, to receive and use the same
unless and until an Event of Default shall occur;
TOGETHER with all of the records and books of account now or hereafter
maintained by the Mortgagor in connection with the operation of the Mortgaged
Premises;
TOGETHER with all water, water rights, shares of stock evidencing the same,
mineral rights, ditches, ditch rights, reservoirs and reservoir rights
appurtenant to, located on or used in connection with the Premises or the
Improvements, whether existing now or hereafter acquired;
TOGETHER with all deposits made with or other security given to utility
companies or governmental branches or agencies by the Mortgagor with respect to
the Mortgaged Premises, and all advance payments of insurance premiums made by
the Mortgagor with respect thereto;
TOGETHER with all licenses (including, but not limited to, any operating
licenses or similar matters), contracts, management agreements, franchise
agreements, permits, authorities or certificates required, used or useful in
connection with the use, enjoyment, occupancy, management or operation of the
Mortgaged Premises, except where the assignment or pledge of any such licenses,
permits or other rights is prohibited by applicable statute or by any applicable
issuing governmental agency; and
TOGETHER with any and all of the Mortgagor's rights in and to any and all
cash payments, reimbursements or other intangible rights arising in connection
with the development, operation or maintenance of the Mortgaged Premises,
including, without limitation, any tax appeal refunds, municipal reimbursements,
governmental subsidy payments and governmentally-registered credits (such as
emissions and reduction credits) (collectively, the "Payments and Intangibles");
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TOGETHER with all proceeds and products of the foregoing.
All of the foregoing estates, rights, privileges, interests and franchises
hereby granted and released, assigned, transferred, set over and mortgaged, or
intended so to be, being hereinafter collectively referred to as the "Mortgaged
Premises".
TO HAVE AND TO HOLD unto the Mortgagee, its successors and assigns forever,
together with all rights, hereditaments and appurtenances in any way
appertaining or belonging thereto, unto the Mortgagee, the successors and
assigns of the Mortgagee, forever for the uses set forth herein, to secure the
payment to the Mortgagee of the principal and of interest on the Note at the
maturity thereof (whether by acceleration or otherwise), all other sums due
under the Note or under this Mortgage or under the Loan Agreement, the
performance of all covenants and agreements in the Security Documents and all
other obligations, whereupon this Mortgage shall cease and be void and the
Mortgaged Premises shall be released at the cost of the Mortgagor.
ARTICLE I.
Certain Definitions
In addition to other definitions contained herein, the following terms
shall have the meanings set forth below, unless the context of this Mortgage
otherwise requires:
1.1. "Affiliate" - shall mean (a) if with respect to a corporation, (i) any
officer or director thereof and any person or entity who or which is, directly
or indirectly, the legal or beneficial owner of more than ten (10%) percent of
any class of shares or other equity security of such corporation, or (ii) any
person or entity who or which, directly or indirectly, controls or is controlled
by or is under common control with such corporation and (b) if with respect to a
partnership or venture, any (i) general partner, (ii) general partner of a
general partner, (iii) partnership with a common general partner, (iv)
coventurer thereof, or (v) any person, trust, corporation, partnership, venture
or other entity who or which, directly or indirectly, controls or is controlled
by or is under common control with such partnership; and if any general partner
or general partner of a general partner or
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coventurer is a corporation, any person or entity which is an Affiliate as
defined in clause (a) above of such corporation. "Controls" (including the
correlative meanings of "controlled by" and "under common control with") means
effective power, directly or indirectly, to direct or cause the direction of the
management and policies of such person or entity.
1.2. "Backlease" means a sublease to the Mortgagor or its Affiliate made by
a lessee under a Space Lease.
1.3. "Default Rate" shall mean the Involuntary Rate (as such term is
defined in the Note).
1.4. "Due and payable" when used with reference to the principal of, or
premium or interest on, or when referring to any and all other sums secured by
this Mortgage or any other of the Security Documents shall mean due and payable,
whether at the monthly or other date of payment or at the date of maturity
specified in the Note, this Mortgage or the other Security Documents; or by
acceleration or call for payment as provided in the Note, hereunder or in the
other Security Documents, or, in the case of Impositions, the last day upon
which any charge may be paid without penalty and/or interest.
1.5. "Event of Default" shall have the meaning assigned to such term in the
Note.
1.6. "Governmental Authorities" shall mean all federal, state, county,
municipal and local governments and all departments, commissions, boards,
bureaus and offices thereof, having or claiming jurisdiction over the Mortgaged
Premises or any part thereof.
1.7. "Impositions" shall mean all duties, taxes, water and sewer rents,
rates and charges, assessments (including, but not limited to, all assessments
for public improvements or benefit), charges for public utilities, excises,
levies, license and permit fees and other charges, ordinary or extraordinary,
whether foreseen or unforeseen, of any kind and nature whatsoever, which prior
to or during the term of this Mortgage will have been or may be laid, levied,
assessed or imposed upon or become due and payable out of or in respect of, and
become a lien on the Premises, the Improvements, Building Service Equipment,
Furnishings or any other property or rights included in the Mortgaged Premises,
or any part thereof or appurtenances thereto, or which are levied or assessed
against the rent and income
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received by the Mortgagor from the Space Leases (as defined in SECTION 1.17) by
virtue of any present or future law, order or ordinance of the United States of
America or of any state, county or local government or of any department, office
or bureau thereof or of any other Governmental Authority.
1.8. "Legal Requirements" shall mean all present and future laws,
ordinances, rules, regulations and requirements of all Governmental Authorities,
and all orders, rules and regulations of any national or local board of fire
underwriters or other body exercising similar functions, foreseen or unforeseen,
ordinary or extraordinary, which may be applicable to the Mortgaged Premises or
any part thereof, or to the sidewalks, alleyways, passageways, curbs and vaults
adjoining the same, or to the use or manner of use of any of the foregoing, or
to the owners, tenants, or occupants thereof, whether or not any such law,
ordinance, order, rule, regulation or requirement shall necessitate structural
changes or improvements or shall interfere with the use or enjoyment of any of
the foregoing, and shall also mean and include all requirements of the policies
of public liability, fire and all other insurance at any time in force with
respect to any of the foregoing.
1.9. "Mortgage" shall mean this instrument as originally executed or, if
hereafter amended, modified or supplemented, as so amended, modified or
supplemented.
1.10. "Mortgagee" shall mean the Mortgagee herein named or at any given
time the holder or holders of this Mortgage and the Note.
1.11. "Mortgagor" shall mean the Mortgagor herein named, any subsequent
owner or owners of the Mortgaged Premises, and its or their respective heirs,
executors, administrators, successors and assigns, but this provision shall not
be construed to limit the terms of SECTION 2.8 hereof.
1.12. "Obligations" shall mean the (a) aggregate unpaid principal amount
of, and accrued and unpaid interest on, the Note, plus (b) any and all
indebtedness, obligations and other liabilities of the Mortgagor to the
Mortgagee arising out of or in connection with or otherwise relating to the
Note, the Loan Agreement or any of the Security Documents, and/or any
agreement(s) of the Mortgagor with the Mortgagee pertaining thereto; in each
case whether now or hereafter existing, direct or indirect, absolute or
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contingent, joint, several or independent, due or to become due, liquidated or
unliquidated, held or to be held by the Mortgagee and whether created directly
or acquired by assignment or otherwise.
1.13. "Peg Rate" - shall have the meaning assigned to such term in the
Note.
1.14. "Permitted Encumbrances" shall mean each of the exceptions to
coverage set forth in SCHEDULE B, PART I of that certain Preliminary Title
Report dated September 26, 1996, issued by Chicago Title Insurance Company, to
and accepted by the Mortgagee with respect to the Premises, and such other items
as the Mortgagee, in its sole discretion, may approve in writing.
1.15. "Person" shall mean and include any individual, corporation,
partnership, unincorporated association, trust, governmental agency or authority
or other entity.
1.16. "Security Documents" shall have the meaning assigned to such term in
the Note.
1.17. "Space Lease" shall mean any and all leases, subleases, licenses,
concession agreements or any other form of agreement, however denominated
(written or verbal, now or hereafter in effect), in which the Mortgagor (or any
predecessor in interest as owner of the Mortgaged Premises in the case of
existing Space Leases) now or hereafter grants a possessory interest in and to,
or the right to use and occupy the Mortgaged Premises, or any portion thereof,
and all renewals, extensions, modifications, amendments and other agreements
affecting the same.
1.18. "Space Tenant" shall mean the tenant or other user or occupant of
part or all of the Mortgaged Premises under any Space Lease.
1.19. "State" shall mean the State of New Jersey.
1.20. "to the best of the Mortgagor's knowledge" shall mean the actual
knowledge of Robert F. Gossett, Jr., after reasonable inquiry and investigation.
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ARTICLE II.
Particular Covenants of the Mortgagor
The Mortgagor covenants and agrees as follows:
2.1. Payment of Indebtedness. The Mortgagor shall duly and punctually pay
to the Mortgagee, as and when due and payable, the indebtedness evidenced by the
Note and the other Obligations secured hereby. As used in this SECTION 2.1 and
elsewhere in this Mortgage, the term "indebtedness" shall mean and include the
principal amount of the Note together with all interest thereon, any other
payments due to the Mortgagee under the Loan Agreement and/or any of the
Security Documents, all costs of collection provided for in the Note, the Loan
Agreement or any of the Security Documents, and all other sums and charges at
any time due under or otherwise secured by this Mortgage.
2.2. Warranty of Title. The Mortgagor warrants that, to the best of the
Mortgagor's knowledge (a) the Mortgaged Premises are free and clear of all liens
and encumbrances other than the Permitted Encumbrances; (b) it owns the Building
Service Equipment and Furnishings free and clear of all liens and claims other
than in favor of the Mortgagee; (c) this Mortgage is and will remain a valid and
enforceable first mortgage on the Mortgaged Premises, subject only to the
Permitted Encumbrances; and (d) the Mortgagor has the right and lawful authority
to mortgage and convey the Mortgaged Premises in the manner and form herein
provided. The Mortgagor represents and warrants to the Mortgagee, to the best of
the Mortgagor's knowledge, and covenants for the benefit of the Mortgagee, as
follows:
(i) that the Mortgagor is lawfully seized and possessed of a fee in
the Premises and that the Mortgagor holds good legal and marketable title
thereto and to the rest of the Mortgaged Premises, subject only to the
Permitted Encumbrances; and
(ii) that the Mortgaged Premises are now free and clear of all liens
and encumbrances whatsoever, other than the Permitted Encumbrances, that
the Mortgagor has good right and lawful authority to mortgage and convey
the same in the manner and form herein provided and that the Mortgagor will
warrant and defend title to the Mortgaged Premises against all claims and
demands whatsoever.
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2.3. To Maintain Priority of Lien.
2.3.1. This Mortgage is and will be maintained as a valid first mortgage on
the Mortgaged Premises, and the Mortgagor will not, directly or indirectly,
create or suffer or permit to be created, or to stand against the Mortgaged
Premises or any portion thereof, or against the rents, issues and profits
therefrom, and will promptly discharge, any lien or charge prior to or upon a
parity with or junior to this Mortgage other than the Permitted Encumbrances;
provided, however, that the Mortgagor shall not be required to pay any
Imposition prior to the time it shall become due and payable subject to the
provisions of SECTION 2.4.1 hereof, and nothing herein contained shall prevent
the Mortgagor from contesting the validity of any such Imposition in accordance
with the provisions of SECTION 2.4.4. The Mortgagor will keep and maintain the
Mortgaged Premises, and every part thereof, free from all liens or lien notices,
of Persons supplying labor and/or materials in connection with any construction,
alteration, repair, improvement or replacement of the Improvements or of the
Building Service Equipment and Furnishings. If any such lien shall be filed
against the Mortgaged Premises, or any part thereof, the Mortgagor promptly
shall discharge the lien of record, by bonding or otherwise. The Mortgagor shall
exhibit to the Mortgagee, upon request, appropriate receipts or other
satisfactory evidence of the payment of the Impositions or any other item which
may, if not paid, give rise to a lien against the Mortgaged Premises.
2.4. To Pay Impositions.
2.4.1. The Mortgagor will pay or cause to be paid, as and when due and
payable, all Impositions levied upon the Mortgaged Premises or any part thereof,
together with all filing, registration or recording fees and all expenses
incident to the execution and acknowledgement of this Mortgage, any mortgage
supplemental hereto, and will pay all federal, state, county and municipal stamp
taxes and other taxes, duties, imposts, assessments and charges arising out of
or in connection with the execution and delivery of the Note, this Mortgage, any
mortgage supplemental hereto, or any instrument of further assurance. However,
if by law, any Imposition may at the option of the taxpayer be paid in
installments (whether or not interest shall accrue on the unpaid balance
thereof), the Mortgagor shall have the right to exercise such option and to pay
such Imposition, or cause it to be paid (together with any accrued interest on
the unpaid balance) in installments as
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they fall due and before any fine, penalty, further interest or cost may be
added thereto.
2.4.2. If an Event of Default shall occur and be continuing, then upon
demand of the Mortgagee, the Mortgagor shall deposit with the Mortgagee a sum
which bears the same relation to the annual insurance premiums for all insurance
required by the terms hereof and real estate taxes and assessments assessed
against the Mortgaged Premises for the insurance period or tax year then in
effect, as the case may be, as the number of months elapsed as of the date of
such demand since the last preceding installment of said premiums or taxes or
assessments shall have become due and payable bears to twelve (12). For the
purpose of this computation, the month in which such last preceding installment
of premiums or real estate taxes or assessments became due and payable and the
month in which such demand is given shall be included and deemed to have
elapsed. On the first day of the month next succeeding the month in which such
demand is given, and thereafter on the first day of each and every month during
the term of this Mortgage, the Mortgagor shall deposit with the Mortgagee a sum
equal to one-twelfth of such insurance premiums and such taxes and assessments
for the then-current insurance period and tax year, so that as each installment
of such premiums and taxes and assessments shall become due and payable, the
Mortgagor shall have deposited with the Mortgagee a sum sufficient to pay the
same. All such deposits shall be received and held as part of such deposit by
the Mortgagee (all such deposits to be held in an account without interest
thereon) and shall be applied to the payment of each installment of such
premiums and taxes and assessments as they shall become due and payable. The
Mortgagee shall, upon demand, furnish evidence to the Mortgagor of the making of
each such payment. If the amount of such premiums and taxes and assessments has
not been definitely ascertained at the time when any such monthly deposits are
required to be made, the Mortgagor shall make such deposits based upon the
amount of such premiums and taxes and assessments for the preceding year,
subject to adjustment as and when the amount of such premiums and taxes and
assessments are ascertained. If at any time when any installment of such
premiums and such taxes and assessments becomes due and payable the Mortgagor
shall not have deposited a sum sufficient to pay the same, the Mortgagor shall,
within five (5) days after demand, deposit any deficiency with the Mortgagee.
Upon payment in full of the indebtedness secured by this Mortgage, any remaining
amount on deposit with the Mortgagee shall be repaid to the Person lawfully
entitled thereto. If an Event of Default shall occur and be continuing, the
Mortgagee may,
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at its option, apply all or any portion of the amounts then on deposit with the
Mortgagee pursuant to this SECTION 2.4.2 first to the payment of any premiums,
taxes or assessments then due, and any remaining amounts may be applied to the
payment of the indebtedness. The Mortgagor shall deliver to the Mortgagee all
insurance and tax bills promptly following receipt during any period when such
monthly deposits are to be made with the Mortgagee.
2.4.3. The Mortgagor will pay all taxes and other governmental charges
(including, without limitation, stamp taxes), except income or franchise taxes
or similar taxes based upon or measured by income, assessed by the United States
government or any state or local governmental authority and imposed on the
Mortgagee, its successors by reason of the ownership of this Mortgage or the
Note or the receipt of the interest or other sums payable thereunder or payable
by either the Mortgagor or the Mortgagee upon any increase in the indebtedness
secured hereby, or any modification, amendment, extension or consolidation of
this Mortgage. Without limiting the foregoing and subject to the limitations set
forth above, the Mortgagor will also pay the whole of any tax imposed, directly
or indirectly, on this Mortgage or the Note or the receipt of any portion of the
Indebtedness in lieu of a tax on the Mortgaged Premises or the Improvements and
Building Service Equipment, whether by reason of (a) the passage after the date
of this Mortgage of any law of the State deducting from the value of real
property for the purposes of taxation any lien thereon; (b) any change in the
laws for the taxation of Mortgages or debts secured by Mortgages for state or
local purposes; (c) a change in the means of collection of any such tax or
otherwise; or (d) any tax, whether or not now existing, assessed against, or
withheld from, interest or other payments made by the Mortgagor or assessed
against this Mortgage and which are assessed or levied by the government of any
foreign nation or political subdivision thereof, provided such tax liability
shall not result from the ownership of this Mortgage by a Person not a citizen
of, or an entity not formed under the laws of, the United States or any state.
Within a reasonable time after payment of any such tax or governmental charge,
the Mortgagor will deliver to the Mortgagee satisfactory proof of payment
thereof, subject, however, to the right of the Mortgagor to contest Impositions
as hereinafter set forth. If the Mortgagor shall fail to pay such tax or charge
within fifteen (15) days after written notice, or if under applicable law the
Mortgagor's payment or agreement to pay the same shall be unenforceable, the
Mortgagee shall have the right to declare the entire unpaid indebtedness and all
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accrued and unpaid interest thereon due and payable on a date specified by the
Mortgagee, but, in any event, not less than thirty (30) days after written
notice to the Mortgagor.
2.4.4. The Mortgagor shall have the right to contest the amount or
validity, in whole or in part, of any Imposition, or to seek a reduction in the
valuation of the Mortgaged Premises, or any part thereof, as assessed for real
estate or personal property tax purposes by appropriate proceedings diligently
conducted in good faith, but only after payment of such Imposition, unless such
payment would operate as a bar to such contest or materially adversely interfere
with the prosecution thereof, in which event the Mortgagor may postpone or defer
payment of such Imposition (but not the payment of any monthly deposits pursuant
to SECTION 2.4.2 hereof); and upon request by the Mortgagor, the Mortgagee shall
postpone or defer payment of such Imposition; provided, however, that if at any
time the Mortgaged Premises, the Building Service Equipment, the Furnishings, or
any part thereof would, in the Mortgagee's reasonable judgment, by reason of
such postponement or deferment be in imminent danger of being forfeited or lost,
or if the Mortgagee might be subjected to any civil or criminal liability or
other sanction, then the Mortgagor, on demand, shall immediately pay or cause to
be paid the amount so contested and unpaid, together with all interest and
penalties in connection therewith.
2.4.5. The certificate, advice or bill of the appropriate official
designated by law to make or issue the same or to receive payment of any
Imposition indicating the nonpayment of such Imposition shall be prima facie
evidence that such Imposition is due and payable but unpaid at the time of the
making or issuance thereof.
2.5. Insurance; Restoration Following Casualty.
2.5.1. Until the indebtedness secured hereby is paid in full, the Mortgagor
shall at its own expense at all times maintain or cause to be maintained on all
of the Mortgaged Premises (a) comprehensive general liability insurance,
including umbrella liability insurance, covering all claims for bodily injury,
including death, and property damage occurring on, in or about the Mortgaged
Premises in an aggregate amount of not less than Five Million Dollars
($5,000,000) per occurrence, and a single limit of not less than Two Million
Dollars ($2,000,000) per person and per occurrence for personal injury, bodily
injury and property damage; the policy shall have no deductible or self insured
retention requirements; the policy limits of
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such insurance, if requested by the Mortgagee, shall be increased from time to
time to reflect what a reasonably prudent owner or lessee of buildings or
improvements similar in type and locality to the Mortgaged Premises would carry;
during any period of substantial alterations or improvements in, on or to the
Mortgaged Premises, the Mortgagor will cause the comprehensive general liability
insurance, including umbrella liability insurance, endorsed to provide owners'
and contractors' protective liability coverage, including completed operations
liability coverage; (b) physical damage insurance (all risk non-reporting
property insurance, including earthquake insurance, with the Mortgagee named as
loss payee), covering the Mortgaged Premises for loss or damages resulting from
the perils of fire, lightning, earthquake, and such other risks and hazards as
are provided under the current standard "Extended Coverage Endorsement" and
vandalism and malicious mischief coverage, for the full replacement value of the
Mortgaged Premises on a stipulated and agreed-amount basis; (c) if the Mortgaged
Premises is in an area identified as a flood hazard area by the Secretary of
Housing and Urban Development, flood insurance, to the extent obtainable, in an
amount equal to the lesser of the full replacement value of the Mortgaged
Premises or the maximum amount available under the Federal flood insurance
program; (d) boiler and machinery insurance covering all boilers, machinery, air
conditioning, pressure vessels, and similar type equipment commonly covered
under a broad-form boiler and machinery policy, in an amount satisfactory to the
Mortgagee; (e) insurance against such other risks of damage, hazards, casualties
and contingencies in such amounts as the Mortgagee shall from time to time
reasonably require, provided that insurance against such other risks, hazards,
casualties or contingencies shall then be commonly carried by prudent owners or
lessees of building or improvements in the locality similar in character,
construction, use and occupancy to the Improvements, Building Service Equipment
and Furnishings on, or constituting a part of, the Mortgaged Premises; and (f)
loss of rents/business interruption coverage in an amount sufficient to pay all
Impositions, insurance premiums, interest and principal installments and all
other amounts due under the Note and the Loan Agreement and the normal operating
expenses of the Mortgaged Premises, all for a period of one (1) year.
Furthermore, the Mortgagee reserves the right to require additional insurance
and/or higher policy limits than heretofore specified if such additional
insurance and/or higher policy limits are commercially reasonable for similar
properties, which right may be exercised by written notice to the Mortgagor,
and, as soon thereafter as practicable, but in any event within
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thirty (30) days of the receipt thereof, the Mortgagor agrees to obtain
insurance coverage complying with such notice. The proceeds of all such
insurance (except the insurance specified in SECTION 2.5.1(a)) shall be paid
solely to the Mortgagee and be held, applied or disbursed by the Mortgagee as
provided in SECTIONS 2.5.7 and 2.5.8.
2.5.2. All insurance required in SECTION 2.5.1 shall be evidenced by valid
and enforceable policies, in form and substance as shall be required by the
Mortgagee from time to time, and issued by and distributed among insurers of
recognized responsibility having an A.M. Best's Guide of A:XII or better, a
financial size category of Class XI or above, and the total limit of liability
shall not exceed ten percent (10%) of the total policyholders' surplus. Such
insurers shall be authorized to do business in the State and in all other
respects shall be reasonably satisfactory to the Mortgagee. The originals of all
such policies, or duplicate copies or certificates thereof, shall be delivered
to the Mortgagee concurrently with the execution and delivery of this Mortgage.
Thereafter, all renewal or replacement policies, or duplicate copies or
certificates thereof, shall be delivered to the Mortgagee not less than thirty
(30) days prior to the expiration date of the policy or policies to be renewed
or replaced, in each case accompanied by evidence reasonably satisfactory to the
Mortgagee that all premiums currently payable with respect to such policies have
been paid in full by or at the direction of the Mortgagor.
2.5.3. All such insurance policies shall (a) except for any liability
policy required hereunder, contain a standard noncontributory form of mortgagee
clause (in favor of and entitling the Mortgagee to collect any and all proceeds
payable under such insurance), as well as a standard waiver of subrogation
endorsement, all to be in form and substance reasonably satisfactory to the
Mortgagee; (b) provide that such policies may not be cancelled or amended
without at least thirty (30) days prior written notice to the Mortgagee; and (c)
provide that no act, omission or negligence of the Mortgagor, or its agents,
servants or employees, or of any Space Tenant under any Space Lease, which might
otherwise result in a forfeiture of such insurance or any part thereof, shall in
any way affect the validity or enforceability of such insurance insofar as the
Mortgagee is concerned. The Mortgagor shall not carry separate insurance,
concurrent in kind or form or contributing in the event of loss with any
insurance required under this SECTION 2.5. All losses under such insurance
policies shall be adjusted by the Mortgagor in the
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case of any single instance of such damage or destruction not exceeding
$200,000, by the Mortgagor and the Mortgagee in the case of any such single
instance of damage or destruction exceeding such amount, provided that in no
event shall the Mortgagor approve or consent to any final adjustment in any
amount exceeding the amount specified above in this sentence without obtaining
the Mortgagee's prior approval (which approval shall not be unreasonably
withheld) of the amount of such adjustment, and solely by the Mortgagee in the
case when an Event of Default exists and is continuing.
2.5.4. The Mortgagor, at its expense, will furnish to the Mortgagee, within
ninety (90) days after written demand, but in no event, except for reasonable
cause, more frequently than annually, proof of the then full replacement value
of each of the Improvements and the Building Service Equipment and Furnishings
therein, such proof to be by appraisals reasonably satisfactory in form and
substance to the Mortgagee and prepared by an appraiser (who may be an appraiser
for the insurance company insuring such property) designated and paid for by the
Mortgagor and approved by the Mortgagee, which approval shall not be
unreasonably withheld or delayed.
2.5.5. If the Mortgagee shall, by any means, acquire the title or estate of
the Mortgagor in or to any portion of the Mortgaged Premises, it shall thereupon
become the sole and absolute owner of all insurance policies affecting such
portion of the Mortgaged Premises held by, or required hereunder to be delivered
to, the Mortgagee, with the sole right to collect and retain all unearned
premiums thereon; and the Mortgagor shall be entitled only to a credit in
reduction of the then outstanding indebtedness secured hereby in the amount of
the short rate cancellation refund, when and if received by Mortgagee. The
Mortgagor agrees, immediately upon demand, to execute and deliver such
assignments or other authorizations or instruments as may, in the reasonable
opinion of the Mortgagee, be reasonably necessary or desirable to effectuate any
of the provisions of this SECTION 2.5.5.
2.5.6. If any of the Improvements, Building Service Equipment or
Furnishings shall be damaged or destroyed, in whole or in part, by fire or other
casualty, the Mortgagor shall give prompt notice thereof to the Mortgagee, and,
without regard to the availability or adequacy of insurance proceeds, shall
promptly following receipt of any insurance proceeds or the date when any such
proceeds are made available to the Mortgagor in accordance
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with the terms hereof, commence to restore, replace, rebuild or alter the same
as nearly as possible to the condition, character and value thereof existing
immediately prior to such damage or destruction. Any insurance proceeds in
respect of such damage or destruction, or any Award (as defined in SECTION 3.2)
for a partial taking which is not a substantial or total taking, as such terms
are referred to in ARTICLE III hereof, at the option of the Mortgagee, may
either (i) be applied as a prepayment of the unpaid balance of the principal of
the Note and of accrued and unpaid interest thereon and as a payment of any
other sums due and owing under the Note, the Loan Agreement and the Security
Documents, or (ii) be made available to pay or reimburse costs incurred for
restoration, replacement or rebuilding necessitated as a result of such damage
or destruction, or as a result of such taking, as the case may be, or (iii) be
used for any other purpose or object deemed appropriate by the Mortgagee in
connection with the Mortgaged Premises, provided, however, that the Mortgagee
may not elect either option (i) or (iii) above if, and for so long as all of the
following conditions (collectively, the "Insurance or Award Conditions" have
been and remain satisfied: (a) no Event of Default has occurred and is
continuing or would occur as a result of such casualty or taking and no event
has occurred that with the passage of time or the giving of notice, or both,
would constitute an Event of Default; (b) the balance of the insurance proceeds
or such Award either initially paid to the Mortgagee or deposited with the
Depository (as hereinafter defined) or remaining from time to time, shall be
sufficient, in the Mortgagee's reasonable judgment, to complete the restoration,
replacement or rebuilding, or the Mortgagor shall have deposited such sufficient
funds with the Mortgagee or the Depository; and (c) the Mortgagee determines, in
its reasonable discretion, that (i) the Loan to Value Ratio (as defined in the
Loan Agreement, and taking into consideration the value of all of the Projects,
as defined in the Loan Agreement) is not greater than 55%, and (ii) the Debt
Service Coverage Ratio (as defined in the Loan Agreement, and taking into
consideration the loss of income resulting from such damage or destruction as
projected by the Mortgagee in its reasonable discretion) is not less than
1.40:1.0. Notwithstanding the foregoing, if an event has occurred and is
continuing that with the passage of time or the giving of notice, or both, would
constitute an Event of Default but the same has not yet matured into an Event of
Default, then, if the conditions set forth in the foregoing clauses (b) and (c)
have been or will be, in the Mortgagee's reasonable judgment, satisfied, the
Mortgagee shall not elect either option (i) or (iii) unless such event shall
have matured into an Event of Default and, unless and until
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such event shall have so matured into an Event of Default or such event has been
cured or shall otherwise cease to exist, the Mortgagee (or the Depository) shall
not release any such insurance proceeds or Award and the same shall be held
until an Event of Default occurs or the Default has been cured or shall
otherwise cease to exist.
2.5.7. Any such insurance proceeds (other than the proceeds of the rent
insurance policy, which shall be paid as provided in SECTION 2.5.8 below) or
Award which are to be applied to restoration, replacement or rebuilding of the
Mortgaged Premises shall, after payment or reimbursement to the Mortgagee of all
reasonable costs and expenses of the Mortgagee in collecting such proceeds or
Award, be applied upon satisfaction of the following provisions and conditions:
(a) If the damage be of such nature as to require the Mortgagor to
construct a replacement for, or to alter in any material or substantial
way, the damaged or destroyed items, the Mortgagor shall, before commencing
any such work, submit copies of the plans and specifications therefor to
the Mortgagee for the Mortgagee's approval, such approval to not be
unreasonably withheld or delayed.
(b) If after payment or reimbursement to the Mortgagee of all costs
and expenses of the Mortgagee in collecting such insurance proceeds or
Award, the aggregate insurance proceeds or Award received by reason of any
single instance of such damage or destruction or condemnation, as the case
may be, shall be $200,000 or less such insurance proceeds or Award shall be
paid to the Mortgagor, which shall hold all amounts so received in trust
for application first to pay the entire cost of restoring, repairing,
rebuilding or replacing the damaged or destroyed items, before any portion
of such proceeds may be used or applied for any other purpose. If the
aggregate net insurance proceeds or Award by reason of any single instance
of such damage or destruction or condemnation, as the case may be, shall be
more than $200,000 such sums shall be held and disbursed by Fleet Bank,
National Association or, if this Mortgage is held by another financial
institution, by such financial institution or, if this Mortgage is not held
by a financial institution, by a financial institution selected by the then
Mortgagee (the holder of such monies, the "Depository") in accordance with
the following provisions of this SECTION 2.5.7.
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(c) The Mortgagee shall have received as to each such disbursement a
certificate of the Mortgagor (i) requesting the payment of a specified
amount of such insurance or condemnation proceeds; (ii) describing in
reasonable detail the work and materials applied to the restoration,
replacement or rebuilding of the damaged, destroyed or taken Improvement,
or Building Service Equipment and/or Furnishings located therein, since the
date of the last such certificate; (iii) stating that the requested amount
does not exceed the cost of such work and materials; and (iv) stating that
a request for payment for such work and materials has not previously been
made, accompanied by:
1. a certificate of an independent engineer or architect
designated by the Mortgagor, who shall have been approved in writing
by the Mortgagee (such approval not to be unreasonably withheld),
stating (i) that the work and materials described in the accompanying
certificate of the Mortgagor were satisfactorily performed and
furnished and were necessary, appropriate or desirable to the
restoration, replacement or rebuilding of the damaged, destroyed or
taken Improvement, or Building Service Equipment and/or Furnishings;
(ii) that the amount specified in such certificate of the Mortgagor
does not exceed the reasonable cost of such work and materials; and
(iii) the additional amount, if any, required to complete the
restoration, replacement or rebuilding of the damaged, destroyed or
taken Improvement, Building Service Equipment and/or Furnishings; and
2. evidence reasonably satisfactory to the Mortgagee (i) that
there exists no filed or recorded lien, or lien notice, or encumbrance
or charge in respect of all or any part of the Mortgaged Premises that
is prior to or on a parity with the lien of this Mortgage, except as
may be permitted in the Permitted Encumbrances; (ii) that neither the
Mortgaged Premises nor any part thereof is subject to any recorded or
filed mechanic's, laborer's, materialman's or any similar lien,
encumbrance or charge; and
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(iii) that none of the Building Service Equipment and Furnishings
provided in connection with such restoration, replacement or
rebuilding is subject to any security interest other than in favor of
the Mortgagee;
Upon satisfaction of the conditions set forth herein, the Mortgagee shall
pay to the Mortgagor the amount of such insurance or condemnation proceeds
requested in such certificate of the Mortgagor or consent to the Depository's
payment thereof, as the case may be; provided, however, that in no event shall
the balance of insurance or condemnation proceeds held by the Mortgagee and the
Depository be reduced below the amount specified in such certificate of the
independent engineer or architect as the amount required to complete the
restoration, replacement or rebuilding of the damaged, destroyed or taken
Improvement, Building Service Equipment and/or Furnishings. Each such payment,
whether made by the Mortgagee or the Depository, shall be held by the Mortgagor
in trust and shall be used solely for the payment of the cost of the work and
materials described in the certificate of the Mortgagor, or if such cost or any
part thereof has theretofore been paid by the Mortgagor out of its own funds,
then for the reimbursement to the Mortgagor of any such cost or part thereof
paid by it. Any balance of insurance or condemnation proceeds held by the
Mortgagee after the completion of the restoration, replacement or rebuilding and
payment of all costs incurred in connection therewith, to be evidenced by a
certificate to such effect of such independent engineer or architect delivered
to the Mortgagee, shall, if no Event of Default shall have occurred and be
continuing, be released to the Person lawfully entitled thereto. Notwithstanding
the foregoing, if the Mortgagor needs to make deposits with or payments to
contractors prior to the work being performed, if the Mortgagee is otherwise
obligated to allow funds to be used to rebuild or restore, the Mortgagee agrees
that it will not unreasonably withhold or delay its consent to the Mortgagor's
request that such deposits or advances payments be allowed.
2.5.8. All proceeds of rent insurance payable as a result of the occurrence
of any fire or other casualty which affects the Mortgaged Premises, or any part
thereof, shall be paid to the Mortgagee or, if the Mortgagee is not a financial
institution, the Depository. The Mortgagee or the Depository, as the case may
be, if it shall receive such proceeds, shall hold such proceeds in trust if
permitted under law, and in an account bearing interest
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(payable to or for account of the Mortgagor), and shall apply or cause such
proceeds (including any net interest thereon) to be applied to the payment of
those items referred to in SECTION 2.5.1(f) which become, and as they become,
due and payable from and after the date of the occurrence of such damage or
loss, until the completion of the necessary restoration or replacement by the
Mortgagor or until the exhaustion of such proceeds (including any interest
thereon), whichever first occurs. Upon completion of such restoration or
replacement, any balance of such rent insurance proceeds, together with the
interest thereon, if any, not theretofore applied as provided herein, in the
hands of the Mortgagee or the Depository, as the case may be, shall, provided
that no Event of Default shall have occurred and be continuing, be paid to the
Person lawfully entitled thereto.
2.5.9. Nothing in this SECTION 2.5 contained shall (i) relieve the
Mortgagor of its duty to repair, restore, rebuild or replace the Improvements,
Building Service Equipment and/or Furnishings following damage or destruction by
fire or other casualty or taking in the event that no Award or an inadequate
Award or that no or inadequate proceeds of insurance are available to defray the
cost of such repairing, restoring, rebuilding or replacement (provided, however,
the Mortgagor shall be permitted to receive the insurance proceeds upon
satisfaction of the conditions set forth herein provided, in addition, that all
of the Insurance or Award Conditions have been and remain satisfied), or (ii)
relieve the Mortgagor of its obligation to pay principal and interest and to
make all other payments required by the Note, the Loan Agreement and this
Mortgage subsequent to the occurrence of any fire or other casualty, or taking,
except if, and to the extent that, any proceeds of rent insurance are applied by
the Mortgagee in accordance with SECTION 2.5.8 to such required payments.
2.5.10. If, while any insurance proceeds or Award is being held by the
Mortgagee or the Depository, an Event of Default shall occur and be continuing,
the Mortgagee shall be entitled to receive and apply all such insurance proceeds
or Award in reduction of the indebtedness and other obligations secured by this
Mortgage, in such order and respective amounts, as the Mortgagee in its
discretion shall determine.
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2.6. To Comply with Laws.
2.6.1. The Mortgagor, at its own expense, will promptly cure all violations
of law affecting the Mortgaged Premises, or any part thereof, and/or the use and
operation thereof and will promptly comply, or cause to be complied with, all
present and future Legal Requirements. However, the Mortgagor shall have the
right, after prior notice to the Mortgagee, to contest by appropriate legal
proceedings, diligently conducted in good faith, the validity or application of
any Legal Requirement if and so long as the Mortgagor shall promptly furnish to
the Mortgagee a certificate to such effect showing the steps taken to comply
with such provisions, provided that:
(a) if by the terms of any such Legal Requirement, compliance
therewith pending the prosecution of any such proceeding may be delayed
legally without incurring any lien, charge or liability of any kind against
the Mortgaged Premises, or any part thereof, and without subjecting the
Mortgagor or the Mortgagee to any liability, civil or criminal, for failure
so to comply therewith, the Mortgagor may delay compliance therewith until
the final determination of any such proceeding; and
(b) if any lien, charge or civil liability would be incurred by reason
of any such delay, the Mortgagor nevertheless, on the prior written consent
of the Mortgagee, such consent not to be unreasonably withheld, may contest
and delay compliance with the Legal Requirement, provided that such delay
would not subject the Mortgagee to criminal liability and the Mortgagor (i)
furnishes to the Mortgagee security reasonably satisfactory to the
Mortgagee against loss or injury by reason of such contest or delay and
(ii) prosecutes the contest with due diligence.
2.6.2. Notwithstanding the provisions of SECTION 2.6.1, if any delay in
compliance with any Legal Requirement shall, in the reasonable judgment of the
Mortgagee, place all or any part of the Mortgaged Premises in imminent danger of
being forfeited or lost, the Mortgagor shall, upon written notice from the
Mortgagee, immediately comply with such Legal Requirement.
2.6.3. The Mortgagor will use and permit the use of the Mortgaged Premises
only in accordance with
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the material requirements of any applicable licenses and permits issued by
Governmental Authorities.
2.6.4. The Mortgagor will procure, pay for and maintain (or cause to be
procured, paid and maintained) all permits, licenses and other authorizations
required to be procured and maintained by the owners and operators of the
Mortgaged Premises for any then use of all or any part of the Mortgaged Premises
then being made and for the lawful and proper operation and maintenance thereof.
2.7. Limitation on Alterations and Demolition.
2.7.1. The Mortgagor shall not voluntarily demolish, replace or alter the
Mortgaged Premises, or any part thereof, or voluntarily make any addition
thereto, or voluntarily construct any additional improvements thereon, or suffer
any of the same to occur, whether structural or otherwise (collectively,
"change"), without the prior written consent of the Mortgagee, which consent
shall not be unreasonably withheld or delayed; provided, however, that if no
Event of Default is continuing and such change involves an estimated cost of
less than $100,000 and is non-structural or if no Event of Default is continuing
and such change is non-structural and is being made to prepare space for a Space
Tenant pursuant to a Space Lease entered into in accordance with the Loan
Agreement, then, in either of such events, the Mortgagee's consent shall not be
required; provided, further, however, that if any such change is required by
law, the Mortgagor may make such change with the prior written consent of the
Mortgagee, which consent the Mortgagee will not unreasonably withhold or delay.
As a condition to any consent under this SECTION 2.7.1, the Mortgagee may
require (a) that plans and specifications for the proposed work, prepared by a
reputable architect reasonably satisfactory to the Mortgagee, be submitted to
the Mortgagee for approval, and (b) that the Mortgagor obtain a payment and
performance bond or other security reasonably satisfactory to the Mortgagee in
form and amount reasonably satisfactory to the Mortgagee from the contractor or
subcontractor performing the work unless such work amounts to less than $200,000
in aggregate total cost. All work performed by or on behalf of the Mortgagor
shall be completed with all reasonable diligence and continuity, in a good and
workmanlike manner, and in compliance with all applicable Legal Requirements.
Unless, and to the extent that, the provisions of SECTION 2.7.2 be applicable,
no Building Service Equipment or Furnishings shall be removed from the Mortgaged
Premises during the course of any such work without prior notification to the
Mortgagee and unless
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provision is made for return or replacement on or prior to the completion of the
work. The provisions of this SECTION 2.7.1. shall apply to any change made or
required to be made by the Mortgagor in the course of complying with any other
of the provisions of this Mortgage. A duplicate set of all plans and
specifications required to be filed with any Governmental Authority prior to, or
at any time in connection with, any such alteration, demolition or new
construction shall be furnished to the Mortgagee. The Mortgagor will pay on
demand the reasonable expenses incurred by the Mortgagee in the review of plans
and specifications provided for in this Mortgage.
2.7.2. The Mortgagor shall have the right, at any time and from time to
time, to remove and dispose of any item of Building Service Equipment or
Furnishings which may have become obsolete or unfit for use or which is no
longer useful in the operation of the Improvements, provided that the Mortgagor
promptly replaces such item with other Building Service Equipment or
Furnishings, free of superior title, liens or claims (other than in favor of the
Mortgagee) unless consent of the Mortgagee is first obtained, not necessarily of
the same character but of at least equal quality, value and usefulness in
connection with the operation and maintenance of the Mortgaged Premises,
provided, further, however, no removal of any item of Building Service Equipment
or Furnishings then having a fair market value of $50,000 or more shall be made
without the prior written consent of the Mortgagee, which consent will not be
unreasonably withheld or delayed. However, if by reason of technological or
other developments in the operation and maintenance of buildings and other
improvements of the general character of the Improvements or a change in the use
of the Mortgaged Premises or any part thereof, no replacement of the Building
Service Equipment or Furnishings so removed would be necessary or desirable for
the proper operation or maintenance of the Improvements, the Mortgagor shall not
be required to replace the item so removed.
2.8. Limitation on Disposition of the Mortgaged Premises.
2.8.1. Except as expressly set forth in this Mortgage or the Loan Agreement
(including, without limitation, SECTIONS 5.01 and 6.21 of the Loan Agreement),
the Mortgagor shall not directly or indirectly sell, assign, mortgage, alienate,
pledge or otherwise transfer or further encumber the Mortgaged Premises or any
part thereof or any interest therein or in any of the rents, profits or income
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generated thereby, whether voluntarily, involuntarily, by operation of law or
otherwise, or lease all or any portion thereof or an undivided interest therein,
without the prior written consent of the Mortgagee. The foregoing events are
hereinafter referred as a "Transfer". Any transfer without prior written the
consent of the Mortgagee is an Event of Default.
2.8.2. If there shall be a violation of the terms and provisions of SECTION
2.8.1, whether by the Mortgagor or any other person, in addition to all other
rights and remedies available to the Mortgagee under this Mortgage, the
Mortgagee shall have the option, by the giving of notice to the Mortgagor, of
declaring the entire unpaid principal balance of the Note, together with all
accrued and unpaid interest and all other sums and charges evidenced thereby or
payable pursuant to the Loan Agreement, immediately due and payable.
2.9. Maintenance of Mortgaged Premises; Covenant Against Waste; Inspection
by the Mortgagee. The Mortgagor will not commit or permit waste on the Mortgaged
Premises and, at its expense, will keep and maintain the Improvements, the
Building Service Equipment and Furnishings in its (or their) present state of
repair and condition, reasonable wear and tear excepted, and, if improved, in
such improved state of repair and condition, reasonable wear and tear excepted;
provided, that this shall not limit the Mortgagor's other obligations hereunder,
such as compliance with laws. The Mortgagor shall do or cause to be done all
maintenance and make or cause to be made all repairs as may be required by the
landlord under any Space Lease. The Mortgagor will neither do nor permit to be
done anything to the Mortgaged Premises that may materially impair the value
thereof or which may violate any covenant, condition or restriction affecting
the Mortgaged Premises, or any part thereof, or which would effect any material
change therein or in the condition thereof that would increase the danger of
fire or other hazard arising out of the operation of the Mortgaged Premises.
Subject to the rights of Space Tenants, the Mortgagee, and its representatives
and agents, may enter and inspect the Mortgaged Premises at any time after
reasonable notice (which may be oral) during usual business hours, and the
Mortgagor shall, within thirty (30) days after demand by the Mortgagee (or
immediately upon demand in case of emergency), make such repairs, replacements,
renewals or additions, or perform such items of maintenance, to the Mortgaged
Premises as the Mortgagee may reasonably require in order to cause the Mortgaged
Premises to comply with the standards established in this SECTION 2.9.
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2.10. To Furnish Certificates; Other Reporting Requirements.
2.10.1. The Mortgagor will, at its own expense, deliver to the Mortgagee,
within fifteen (15) days after written request, but no more frequently than once
per six (6) month period, a written statement executed by the Mortgagor, in
recordable form, setting forth to the best of the Mortgagor's knowledge, the
amount then unpaid upon the Note and secured by this Mortgage and stating
whether any offsets or defenses exist against the indebtedness secured hereby;
and, if any such offsets or defenses are alleged to exist, then the factual
basis and amount of such claimed offsets or defenses.
2.10.2. The Mortgagor will, if requested by the Mortgagee, deliver to the
Mortgagee a certificate of an officer of the general partner of the Mortgagor or
of such general partner's general partner, to the effect that he is familiar
with this Mortgage and the other Security Documents, has reviewed the affairs of
the Mortgagor, and to the best of his knowledge and belief there exists no Event
of Default and no act or event has occurred or exists which with notice or lapse
of time or both could become such an Event of Default, or if any such event or
Event of Default exists, specifying it and what action the Mortgagor is taking
to cause it to be remedied.
2.11. After-Acquired Property. All right, title and interest of the
Mortgagor in and to all improvements, betterments, renewals, substitutes and
replacements of, and all additions and appurtenances to, the Mortgaged Premises
hereafter acquired, constructed, assembled or placed on the Mortgaged Premises,
immediately upon such acquisition, construction, assembly or placement, as the
case may be, and in each such case without any further mortgage, conveyance or
assignment or other act of the Mortgagor, shall become subject to the lien of
this Mortgage as fully and completely, and with the same effect, as though now
owned by the Mortgagor and specifically described in the granting clauses
hereof; and at any time and from time to time the Mortgagor, on demand, will
execute, acknowledge and deliver to the Mortgagee any and all such further
assurances, mortgages, conveyances or assignments as the Mortgagee may
reasonably require to further evidence, confirm and perfect the provisions of
this SECTION 2.11.
2.12. Further Assurances. The Mortgagor shall, at its sole cost and without
expense to the Mortgagee, on demand, do, execute, acknowledge and deliver all
and every
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such further acts, deeds, conveyances, mortgages, assignments, notices of
assignment, transfers and assurances as the Mortgagee shall from time to time
reasonably require for better assuring, conveying, assigning, transferring and
confirming unto the Mortgagee the property and rights hereby mortgaged or
assigned or intended now or hereafter so to be, or which the Mortgagor may be or
may hereafter become bound to convey, mortgage or assign to the 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.
2.13. Recorded Instruments. The Mortgagor will promptly perform and
observe, or cause to be performed and observed, all of the terms, covenants and
conditions of all instruments of record affecting the Mortgaged Premises (other
than non-consensual encumbrances hereafter affecting the Mortgaged Premises, the
validity or enforceability of which the Mortgagor is contesting in accordance
with this Mortgage) where non-compliance therewith affects the security of this
Mortgage or imposes any duty or obligation upon the Mortgagor or any Space
Tenant. The Mortgagor shall do or cause to be done all things reasonably
required to preserve intact and unimpaired and to renew any and all
rights-of-way, easements, grants, appurtenances, privileges, licenses,
franchises and other interests and rights in favor of or constituting any
portion of the Mortgaged Premises. The Mortgagor will not, without the prior
written consent of the Mortgagee, which consent shall not be unreasonably
withheld or delayed, initiate, join in or consent to any private restrictive
covenant or other public or private restriction as to the use of all or any
portion of the Mortgaged Premises. The Mortgagor will, however, comply with all
lawful restrictive covenants and zoning ordinances and other public or private
restrictions affecting all or any portion of the Mortgaged Premises.
ARTICLE III.
Condemnation
3.1. Notice of Taking. The Mortgagor shall promptly notify the Mortgagee if
the Mortgagor receives notice of the institution of any proceeding or
negotiations for the taking of the Mortgaged Premises, or any part thereof,
whether for permanent or temporary use and occupancy in condemnation or by the
exercise of the power of eminent domain or by agreement of interested parties in
lieu
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of such condemnation (all the foregoing called a "taking"); shall keep the
Mortgagee currently advised, in detail, as to the status of such proceedings or
negotiations and will promptly give to the Mortgagee copies of all notices,
pleadings, judgments, determinations and other papers received or delivered by
the Mortgagor in connection with any such proceedings. The Mortgagee shall have
the right to appear and participate in such proceedings and may be represented
by counsel. The Mortgagor will not, without the Mortgagee's prior written
consent, which consent shall not be unreasonably withheld or delayed, enter into
any agreement for the taking of the Mortgaged Premises, or any part thereof,
with anyone authorized to acquire the Mortgaged Premises by eminent domain or in
condemnation.
3.2. Condemnation Award. If the Mortgaged Premises shall be the subject of
a taking the Mortgagee shall be entitled to and shall receive the total of such
portion of all awards made that shall be allowed to the Mortgagor with respect
to all the right, title and interest of the Mortgagor in and to the Mortgaged
Premises (the award made in any total, partial or temporary taking is herein
called the "Award"), provided that the obligations of the Mortgagor to perform
the terms, covenants and conditions of this Mortgage, if any, affected by such
taking shall continue unimpaired until the actual vesting of title in such
proceeding and the actual receipt by the Mortgagee of the Mortgagor's share of
the entire Award resulting from such taking.
3.3. Application of Award. The Mortgagee shall have the option of treating
a total taking or a substantial taking (as hereinafter defined) as an Event of
Default and of accelerating the entire indebtedness secured hereby, in which
event it shall apply the Mortgagor's entire Award in reduction of such
indebtedness (including principal, interest and other sums secured hereby, in
such order as the Mortgagee may determine) and shall turn over any balance
remaining, if any, to the Person lawfully entitled thereto; or if the Mortgagee
shall not so elect to accelerate the indebtedness and apply the Award thereto,
then the total Award shall, regardless of amount, be deposited with the
Mortgagee or with the Depository, the Mortgagor hereby agreeing to elect that
such proceeds be held and disbursed by the Depository in accordance with
SECTIONS 2.5.6, 2.5.7, 2.5.8, 2.5.9 and 2.5.10 hereof for restoration required
to be made by the Mortgagor. If there be a partial taking, the net proceeds of
the Award shall be deposited with the Mortgagee and applied by the Mortgagee in
accordance with the provisions of SECTIONS 2.5.6, 2.5.7, 2.5.9 and 2.5.10.
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Any Award remaining after the completion of such restoration, replacement or
rebuilding shall be applied in reduction of the indebtedness (including
principal, interest and other sums secured hereby) in such order as the
Mortgagee shall determine. A partial taking is substantial only if it materially
decreases the fair market value of the Mortgaged Premises and the remainder of
the Mortgaged Premises cannot be restored to an economically viable whole.
3.4. Temporary Taking. If any Award payable to the Mortgagor on account of
a taking for temporary use or occupancy is made in a lump sum or is payable
other than in equal monthly installments, the Mortgagor shall pay over such
Award to the Depository and such Award shall be applied to installments of
Impositions and of principal and interest and all other charges secured by this
Mortgage or due under the Note, the Loan Agreement, or the other Security
Documents as and when the same become due and payable. Any unapplied portion of
such Award held by the Depository when such taking ceases or expires (if no
Event of Default has then occurred and is continuing), or after the indebtedness
secured by this Mortgage or due under the Loan and Security Documents shall have
been paid in full, shall be paid to the Person lawfully entitled thereto.
3.5. The Mortgagor's Obligation to Restore. If all available proceeds of
the Award are made available to the Mortgagor for restoration, replacement or
rebuilding pursuant hereto, the Mortgagor shall be obligated promptly to
restore, replace, rebuild or alter any Improvements or Building Service
Equipment affected by a taking so as to restore the Mortgaged Premises to an
economically viable whole, all without regard to the adequacy of the proceeds of
an Award, if any, made available to the Mortgagor.
ARTICLE IV.
Assignment of Space Leases, Rents, Profits
and Other Income as Further Security, Etc.
4.1. Assignment of Space Leases, Rents, Issues and Profits. Subject to the
Mortgagor's rights herein, including those set forth in SECTION 4.3.2 below, the
Mortgagor hereby absolutely, presently and irrevocably transfers, assigns and
sets over unto the Mortgagee all right, title and interest of the Mortgagor in
and to all Space Leases, if any, now or hereafter entered into with
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respect to all or any part of the Mortgaged Premises, and all renewals,
extensions, subleases or assignments thereof, and all other occupancy agreements
(written or oral), by concession, license or otherwise, together with all of the
rents, income, receipts, revenues, issues and profits arising therefrom (the
"Collateral").
4.2. The Mortgagor's Covenants Regarding Space Leases.
4.2.1. Without the prior consent and approval of the Mortgagee in each
instance, the Mortgagor will not (a) assign, pledge, hypothecate or otherwise
encumber any of the Space Leases or the rents, income, issue and profits of the
Mortgaged Premises; or (b) enter into any Space Leases affecting the Mortgaged
Premises or any part thereof, unless such Space Lease is expressly subordinate
to the lien of this Mortgage and to any consolidation, extension, renewal,
recasting or refinancing hereof and the Space Lease provides, in substance, that
in the event of enforcement by the Mortgagee of the remedies provided for by law
or by this Mortgage, each Space Tenant shall, at the option of the Mortgagee,
enter into a agreement with the Mortgagee which shall provide, among other
things, that (i) such Space Tenant shall attorn to any person succeeding to the
interest of the Mortgagor as a result of such enforcement and shall recognize
such successor in interest as landlord under such Space Lease without change in
the terms or other provisions thereof, (ii) such successor shall not be bound by
any payment of rent or additional rent for more than one (1) month in advance or
any amendment or modification of any such Space Lease made without the
Mortgagee's written consent, and (iii) such successor shall not disturb the
possession of the Space Tenant provided certain conditions (as determined by the
Mortgagee) have been satisfied, including, without limitation, that the Space
Tenant shall not be in default under the terms of the Space Lease; or (c) enter
into any Space Leases without the prior written consent of the Mortgagee unless
permitted in SECTION 6.21 of the Loan Agreement.
4.2.2. The Mortgagor further represents, warrants, covenants and agrees
that:
(a) To the best of its knowledge, each Space Lease is (or, when
executed, will be) a valid and legally enforceable obligation of the
parties thereto, in full force and effect.
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(b) With respect to each Space Lease and the Space Tenant security
deposits thereunder, any and/or all of such security deposits shall be held
as required by the Space Lease but in no event in a manner other than that
required by law.
(c) The Mortgagor shall, at its sole cost and expense, keep, observe,
perform and discharge, duly and punctually, all and singular the material
obligations, terms, covenants, conditions, representations and warranties
of each Space Lease on the part of the Mortgagor to be kept, observed,
performed and discharged.
(d) (i) Except as herein in this clause (i) expressly provided, the
Mortgagor shall, at its sole cost and expense, maintain the Space Leases in
full force and effect; the Mortgagor will not waive its rights under or
materially modify, change, supplement, alter or amend ("Change"), nor shall
the Mortgagor surrender (whether partial or total), terminate, cancel or
subordinate, any of the Space Leases or enter into any Backlease (whether
through an Affiliate or otherwise), and any such attempted Change,
surrender, termination, cancellation or subordination or Backlease shall be
void, unless, in each case, the prior written consent thereto of the
Mortgagee shall have been obtained. Notwithstanding the foregoing, the
Mortgagor may (x) terminate any Space Lease under 10,000 rentable square
feet as a result of a default by the tenant under such Space Lease and (y)
consent to any sublease or assignment of any Space Lease under 10,000
rentable square feet provided (aa) such termination is being effected in
the ordinary course of the Mortgagor's business, (bb) no Event of Default
then exists and no event has occurred that with the passage of time or the
giving of notice or both would constitute an Event of Default, and (cc) the
Mortgagee determines, in its reasonable discretion, that upon the
effectiveness of such termination, assignment or sublease (i) the Loan to
Value Ratio (as defined in the Loan Agreement, and taking into
consideration the value of all of the Projects, as defined in the Loan
Agreement) is not greater than 55%, and (ii) the Debt Service Coverage
Ratio (as defined in the Loan Agreement, and taking into consideration the
loss of income resulting from such termination, assignment or sublease, as
projected by the Mortgagee in its reasonable discretion) is not less than
1.40:1.0. A material Change shall include but not be limited to any
material Change in the amount
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or time of payment of the rent or additional rent, the length of term or
square footage of the premises under any Space Lease or any other Change
which would materially adversely affect the Mortgagor's rights under the
Space Lease, or would affect the Mortgagee's rights under the Space Lease
or the value of the Space Lease as collateral security for the
indebtedness.
(ii) The Mortgagor shall, at its sole cost and expense, enforce
the Space Leases in accordance with their terms; and shall appear in
and defend any action or proceeding arising to which it is a party
under or in any manner connected with any of the Space Leases.
(e) The Mortgagor shall deliver to the Mortgagee a copy of each notice
of default sent or received by it relating in any way to any Space Lease
promptly upon, but in any event within five (5) business days after, its
sending or receipt thereof.
4.3. The Mortgagor's Rights and Powers.
4.3.1. The Mortgagor hereby irrevocably, in the name of the Mortgagor or
otherwise, authorizes and empowers the Mortgagee, and assigns and transfers unto
the Mortgagee, and constitutes and appoints the Mortgagee its true and lawful
attorney-in-fact, coupled with an interest and as its agent, irrevocably, with
full power or substitution for it and in its name, but solely for the following
purposes: (i) to exercise and enforce every right, power, remedy, authority,
option and privilege of the Mortgagor under the Space Leases, and as such
attorney-in-fact, the Mortgagee may subordinate, terminate, cancel or modify the
Space Leases, accept the surrender of the Space Leases, give any notice, take
any action resulting in such subordination, termination, cancellation,
modification or surrender, give any authorization, furnish any information, make
any demands, execute any instruments and take any and all other action on behalf
of and in the name of the Mortgagor which in the opinion of the Mortgagee may be
necessary or appropriate to be given, furnished, made, exercised or taken by the
Mortgagor under the Space Leases in order to comply therewith, to perform the
conditions thereof or to prevent or remedy any default by the Mortgagor
thereunder or to enforce any of the Mortgagor's rights and remedies there-under,
and (ii) to ask, require, demand, receive and collect and give acquittances for
the Income (as hereinafter defined), and on nonpayment thereof to sue for,
recover and receive the same, and on payment thereof to give sufficient
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releases, receipts, discharges and acquittances thereof; to endorse any checks
or other instruments or orders in connection therewith and to file any claims or
take any action or institute any proceedings which the Mortgagee may deem to be
necessary or advisable; provided, however, that the power provided for in this
sentence may not be exercised by the Mortgagee unless an Event of Default shall
have occurred and be continuing. "Income" shall mean all deposits, rents,
issues, profits, revenues, royalties, and other revenue producing arrangements,
whether written or oral, and all monetary benefits of, and/or derived from,
and/or sums payable under and by virtue of the Space Leases and/or the Premises.
4.3.2. So long as there shall not have occurred and then be continuing any
Event of Default and until such right of the Mortgagor is terminated by the
Mortgagee as provided in SECTION 4.3.3, the Mortgagee will not exercise its
rights pursuant to SECTION 4.3.1, and, notwithstanding anything in SECTION 4.3.1
to the contrary, the Mortgagor shall have the right (but limited as hereinafter
provided) to exercise all of its rights under the Space Leases, including,
without limitation, to collect and receive all rents, income, receipts,
revenues, issues and profits arising therefrom, provided that the Mortgagor
shall at all times comply with, observe and perform, in the exercise of such
right, all of the provisions of this Mortgage and the other Security Documents
applicable to the Space Leases; provided, further, that no action shall be taken
or failed to be taken by the Mortgagor which would impair the Collateral or any
other collateral security for the Obligations provided for in the Security
Documents.
4.3.3. The Mortgagee, upon the occurrence and during the continuance of an
Event of Default, at its option and upon written notice to the Mortgagor, shall
have the right to terminate the right of the Mortgagor to exercise its rights
under the Space Leases, and, thereupon, in addition, the Mortgagee, at any time
thereafter, at its option, shall have the complete right, power and authority
hereunder to exercise and enforce all rights, powers, remedies, authority,
options and privileges of the Mortgagor under the Space Leases in the name of
the Mortgagor or the Mortgagee, to enforce all obligations of the other parties
to the Space Leases and to exercise and enforce all of its rights and remedies
hereunder and under law not exercisable prior to an Event of Default.
4.3.4. The Mortgagor does hereby direct each and all of the Space Tenants
under the Space Leases and
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all contractual obligors of the Mortgagor to pay any Income to the Mortgagee
upon written demand for payment thereof by the Mortgagee without further
inquiry. It is understood and agreed, however, that no such demand shall be made
unless an Event of Default shall have occurred and be continuing. No such Space
Tenant or obligor shall be obliged to account to the Mortgagor for any amounts
paid to the Mortgagee by reason of any payment made to the Mortgagee pursuant to
such demand and, upon any such payment to the Mortgagee, shall be pro tanto
released from their obligations to the Mortgagor with respect to such payment.
Each Space Tenant shall be permitted to rely on any communication from the
Mortgagee pursuant hereto, and under no circumstances shall such Space Tenant be
obligated to the Mortgagor for any payments made to the Mortgagee hereunder.
Until such demand is made, the Mortgagor is authorized to collect or enforce or
continue collecting or enforcing such Income in accordance with the provisions
of this Mortgage.
4.3.5. The Mortgagee shall not have any duty as to the collection or
protection of the Collateral or any income thereon or payments with respect
thereto, or as to the preservation of any rights pertaining thereto beyond the
safe custody of any thereof actually in its possession. In no instance shall the
Mortgagee be responsible to lessees for payment of interest upon, or return of,
any lease security deposits, except as provided by law or as provided in the
leases and then only if and to the extent that such deposits are received by the
Mortgagee. The Mortgagor hereby waives notice of acceptance hereof, and except
as otherwise specifically provided herein or required by provision of law which
may not be waived, hereby waives any and all notices or demands with respect to
any exercise by the Mortgagee of any rights or powers which it may have or to
which it may be entitled with respect to the Collateral.
4.3.6. The Mortgagor hereby irrevocably constitutes and appoints the
Mortgagee as the true and lawful attorney-in-fact of the Mortgagor, which
appointment is coupled with an interest, with full power of substitution, to
proceed from time to time in the Mortgagor's name in any statutory or
non-statutory proceeding affecting the Mortgagor or any Collateral, and the
Mortgagee or its nominee may (i) execute and file proof of claim for the full
amount of any Collateral and vote such claims for the full amount thereof (A)
for or against any proposal or resolution, (B) for a trustee or trustees or for
a receiver or receivers or for a committee of creditors and/or (C) for the
acceptance or rejection of any proposed arrangement, plan of reorganization,
composition or extension, and the
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Mortgagee or its nominee may receive any payment or distribution and give
acquittance therefor and may exchange or release Collateral; (ii) endorse any
draft or other instrument for the payment of money, execute releases and
negotiate and enter into settlements; and (iii) execute all such other documents
or instruments as may be necessary or expedient to be executed by the Mortgagor
for any of the purposes of this Mortgage; provided, however, that the power
provided for in this sentence may be exercised by the Mortgagee only while an
Event of Default is continuing. The Mortgagee shall have no duty to exercise any
of the aforesaid rights, privileges or options and shall not be responsible for
any failure to do so or delay in so doing.
4.4. Remedies and Entry Upon Default.
4.4.1. So long as no Event of Default shall have occurred and be
continuing, the Mortgagor shall have the right to collect (but not more than one
(1) month in advance) and retain all of the rents, gross receipts and other
payments, if any, from the Space Leases and from the Mortgaged Premises
generally, and the Mortgagee agrees that customary initial rent payments,
security deposits and reimbursements by a Space Tenant to the Mortgagor on
account of alterations made by the Mortgagor for the benefit of the Space Tenant
are permissible advance payments by the Space Tenant.
4.4.2. Upon any Event of Default, the Mortgagee may, but shall not be
obligated to:
(a) terminate the rights of the Mortgagor referred to in SECTION 4.3
hereof and exercise all of the powers, rights and remedies provided for in
SECTION 4.3 hereof, including those to be exercised only from and after an
Event of Default;
(b) at any time and from time to time, without notice to, or assent
by, the Mortgagor or any other Person, but without affecting any of the
Obligations, in the name of the Mortgagor or in the name of the Mortgagee,
notify the account debtors and obligors on any or all of the Space Leases
to make payment and performance directly to the Mortgagee, and demand,
collect, receive, compound and give acquittance for the Space Leases or any
part thereof; extend the time of payment and performance of, compromise or
settle for cash, credit or otherwise, upon any terms and conditions, any of
the Space Leases; endorse to the order of the Mortgagee checks, drafts or
other orders
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or instruments for the payment of moneys payable to the Mortgagor which
shall be issued in respect of any of the Space Leases; file any claims,
commence, maintain or discontinue any actions, suits or other proceedings
deemed by the Mortgagee necessary or advisable for the purpose of
collecting upon or enforcing any of the Space Leases; and execute any
instrument and do all other things deemed necessary and proper by the
Mortgagee to protect and preserve and realize upon the Space Leases and/or
the other rights contemplated hereby; the Mortgagor hereby irrevocably
constitutes and appoints the Mortgagee as such the Mortgagor's lawful
attorney-in-fact, coupled with an interest, and its agent for the foregoing
purposes;
(c) demand, collect, sue for, attach, levy, recover, receive,
compromise and adjust, and make, execute and deliver receipts and releases
for all Income that may then be or may thereafter become due, owing or
payable with respect to the Premises or any part or parts thereof from any
present or future lessees, tenants, subtenants or occupants thereof or from
any present or future contract obligors; and/or
(d) pay, in such order as the Mortgagee in its sole discretion shall
determine, from and out of the Income collected in connection with the
Premises and/or the Collateral or any part or parts thereof or from or out
of any other funds (less the expense of collection, including reasonable
attorneys' fees and disbursements), any taxes, assessments, water rates,
sewer rates, or other government or other charges levied, assessed or
imposed against the Premises or any part or part thereof, and also any and
all other charges, costs and expenses which the Mortgagee deems necessary
or advisable to pay in respect of the management or operation of the
Premises, including, without limitation, the costs of insurance policies,
repairs and alterations, commissions for renting the Premises or any part
or parts thereof, legal expenses in enforcing claims, preparing papers or
procuring any other services that may be required and any amounts payable
under or pursuant to any Lease; all amounts so paid and expended shall be
payable on demand, together with interest at the Involuntary Rate from the
date incurred until paid, and be deemed to be included within the
Obligations and secured by this Mortgage; the provisions of this ARTICLE
and the rights given to the Mortgagee hereby shall inure to the benefit of
the Mortgagee even though the Mortgagee does not enter and
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take possession of the Premises; any balance remaining after the
indebtedness secured hereby and the other obligations of the Mortgagor
under the Loan and Security Documents shall have been paid in full shall be
turned over to the Person lawfully entitled thereto. Neither the entry upon
and taking possession of the Mortgaged Premises, nor the collection and
application of the rents, gross receipts or other charges thereof, nor any
other action taken by the Mortgagee in connection therewith, shall cure or
waive any default hereunder or waive or modify any notice thereof or notice
of acceleration of the Note theretofore given by the Mortgagee.
4.4.3. If an Event of Default shall have occurred and be continuing, a
notice in writing by the Mortgagee to the Space Tenants under the Space Leases
advising them that the Mortgagor has defaulted hereunder and requesting that all
future payments of rent, additional rent or other charges under the Space Leases
be made to the Mortgagee (or its agent) shall be construed as conclusive
authority to such Space Tenants that such payments are to be made to the
Mortgagee (or its agent). Each Space Tenant shall be fully protected in making
such payments to the Mortgagee (or its agent) and be given full credit against
its obligations under the applicable Space Lease to the extent of payments made
to the Mortgagee (or its agent) pursuant to any such notice; and the Mortgagor
hereby irrevocably constitutes and appoints the Mortgagee the attorney-in-fact
and agent of the Mortgagor, coupled with an interest, for the purpose of
endorsing the consent of the Mortgagor on any such notice.
4.5. No Obligation of Mortgagee.
4.5.1. The Mortgagee shall not be obligated to perform or discharge any
obligation of the Mortgagor as a result of the assignment hereby effected, and
the Mortgagor hereby agrees to indemnify and hold the Mortgagee harmless from
and against any and all liability, loss or damage which the Mortgagee may incur
by reason of any act of the Mortgagee under this Mortgage, other than as a
result of the Mortgagee's willful misconduct or gross negligence and other than
as a result of the Mortgagee's misconduct or negligence after the Mortgagee has
taken possession of the Premises. Should the Mortgagee (i) incur any such
liability, loss or damage by reason of this Mortgage and which is covered by the
foregoing indemnity, or in defense against any such claims or demands, or (ii)
perform any acts or covenants on the part of the Mortgagor
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to be performed under the Space Leases, or (iii) pay for the account of the
Mortgagor (other than from Income or from funds delivered to the Mortgagee by
the Mortgagor to be held in trust for such purpose), any and all sums, costs and
expenses for the discharge of taxes, assessments, water rents or other liens
against the Collateral or any part thereof, or on account of insurance premiums
or repairs, and also any amounts and expenses necessary to perform any covenants
and conditions to be performed on the part of the Mortgagor under the Space
Leases, the amount thereof, including costs, expenses and reasonable attorneys'
fees, together with interest thereon at the Involuntary Rate from the date such
expenses were paid by the Mortgagee to the date of payment to the Mortgagee by
the Mortgagor, shall be included in the Obligations secured by this Mortgage,
and the Mortgagor shall reimburse the Mortgagee therefor upon demand.
4.5.2. The acceptance by the Mortgagee of this Mortgage, with all the
rights, powers, privileges and authority so created, shall not at any time or in
any event obligate the Mortgagee to appear in or defend any action or proceeding
relating to the Collateral, or to take any action hereunder or thereunder, or to
expend any money or incur any expenses or perform or discharge any obligation,
duty or liability under the Collateral.
ARTICLE V.
Security Agreement Under Uniform Commercial Code
5.1. This Mortgage shall constitute a security agreement within the meaning
of the Uniform Commercial Code of the State (the "Code"), and the Mortgagee
shall be deemed to be the "secured party" (as that term is defined in the Code).
The Mortgagor hereby grants to the Mortgagee, as additional collateral for the
obligations under the Note and the other Obligations secured hereby, a security
interest in and to all of the Mortgaged Premises which are considered or as
shall be determined to be personal property or "fixtures" (as defined in the
Code), including, without limitation, the Building Service Equipment, the
Furnishings, the Payments and Intangibles, all books, records, licenses and
certificates of the Mortgagor relating to the Mortgaged Premises, together with
all replacements thereof, substitutions therefor or additions thereto (said
property being sometimes hereinafter referred to as the "Personal Property").
The Mortgagor agrees that a security interest shall attach to the Personal
Property for the benefit of the
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Mortgagee to secure the indebtedness evidenced by the Note and the other
Obligations secured by this Mortgage and all other sums and charges which may
become due hereunder, thereunder or under any of the other Security Documents.
The Mortgagor hereby authorizes the Mortgagee to file financing and continuation
statements with respect to the Personal Property without the signature of the
Mortgagor, if permitted by the Code. In any event the Mortgagor covenants to
execute such financing and continuation statements as the Mortgagee may
reasonably request. If an Event of Default shall occur and be continuing, the
Mortgagee, pursuant to the appropriate provisions of the Code, shall have the
option of proceeding as to both real and personal property in accordance with
its rights and remedies in respect of real property under this Mortgage and the
law of the State, in which event the default provisions of the Code shall not
apply. The Mortgagor agrees that, in the event the Mortgagee shall elect to
proceed with respect to the Personal Property separately from the real property,
unless a greater period shall then be mandated by the Code, five (5) days notice
of the sale of the Personal Property shall be reasonable notice. The expenses of
retaking, holding, preparing for sale and selling incurred by the Mortgagee
shall be assessed against the Mortgagor and shall include, but not be limited
to, the reasonable legal expenses incurred by Mortgagee. The Mortgagor agrees
that it will not remove or permit to be removed from the Mortgaged Premises any
of the Personal Property without the prior written consent of the Mortgagee
except as set forth in SECTION 2.7.2. All replacements, renewals and additions
to the Personal Property shall be and become immediately subject to the security
interest of this Mortgage and the provisions of this ARTICLE V. The Mortgagor
warrants and represents that all Personal Property now is free and clear of all
liens, encumbrances or security interests other than the Permitted Encumbrances,
and that all replacements of the Personal Property, substitutions therefor or
additions thereto, unless the Mortgagee otherwise consents, will be, free and
clear of liens, encumbrances or security interests of others.
ARTICLE VI.
Events of Default and Remedies
6.1. Events of Default. The whole of the outstanding Principal Amount (as
defined in the Note) and accrued interest evidenced by the Note shall, at the
option
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of the Mortgagee, become due upon the happening of an Event of Default;
provided, however, that upon the occurrence of a default specified in SECTIONS
5.01(f) or 5.01(g) of the Loan Agreement, or upon the occurrence of any other
default specified in any Loan Document (as defined in the Loan Agreement) where
provision is made for acceleration to occur automatically as a consequence
thereof, all sums owing to the Mortgagee thereunder shall automatically become
immediately due and payable.
6.2. Remedies.
6.2.1. If an Event of Default shall occur and be continuing, the Mortgagee,
at its option, may:
(1) by notice to the Mortgagor, declare the entire principal amount of
the Note then outstanding and all accrued and unpaid interest thereon and
all obligations of the Mortgagor to the Mortgagee to be immediately due and
payable, and upon such declaration such principal and interest and all
obligations of the Mortgagor to the Mortgagee shall become and be
immediately due and payable, anything in the Note, the Loan Agreement or in
this Mortgage or in any of the other Security Documents to the contrary
notwithstanding;
(2) during the continuance of any such Event of Default, Mortgagee
personally, or by its agents or attorneys, may enter into and upon all or
any part of the Premises, and each and every part thereof, and is hereby
given a right and license and appointed Mortgagor's attorney-in-fact and
exclusive agent to do so, and may exclude Mortgagor, its agents and
servants wholly therefrom; and having and holding the same, may use,
operate, manage and control the Mortgaged Premises and conduct the business
thereof, either personally or by its superintendents, managers, agents,
servants, attorneys or receivers; and upon every such entry, Mortgagee, at
the expense of the Mortgaged Premises, from time to time, either by
purchase, repairs or construction, may maintain and restore the Mortgaged
Premises whereof it shall become possessed as aforesaid, may complete the
construction of the Improvements and in the course of such completion may
make such changes in the contemplated Improvements as it may deem desirable
and may insure the same; and likewise, from time to time, at the expense of
the Mortgaged Premises, Mortgagee may make all necessary or proper repairs,
renewals and replacements and such useful alterations, additions,
betterments and
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improvements thereto and thereon as to it may seem advisable; and in every
such case Mortgagee shall have the right to manage and operate the
Mortgaged Premises and to carry on the business thereof and exercise all
rights and powers of Mortgagor with respect thereto either in the name of
Mortgagor or otherwise as it shall deem best; and Mortgagee shall be
entitled to collect and receive the rents, income, issue and profits of the
Mortgaged Premises, and every part thereof, all of which shall for all
purposes constitute property of Mortgagor; and in furtherance of such right
Mortgagee may collect the rents payable under all leases of the Mortgaged
Premises directly from the lessees thereunder upon notice to each such
lessee that an Event of Default exists hereunder accompanied by a demand on
such lessee for the payment to Mortgagee of all rents due and to become due
under its Space Lease, and Mortgagor FOR THE BENEFIT OF MORTGAGEE AND EACH
SUCH SPACE TENANT hereby covenants and agrees that the Space Tenant shall
be under no duty to question the accuracy of Mortgagee's statement of
default and shall unequivocally be authorized to pay said rents to
Mortgagee without regard to the truth of Mortgagee's statement of default
and notwithstanding notices from Mortgagor disputing the existence of an
Event of Default such that the payment of rent by the Space Tenant to
Mortgagee pursuant to such a demand shall constitute performance in full of
the Space Tenant's obligation under the Space Lease for the payment of
rents by the Space Tenant to Mortgagor; and after deducting the expenses of
conducting the business thereof and of all maintenance, repairs, renewals,
replacements, alterations, additions, betterments and improvements and
amounts necessary to pay for taxes, assessments, insurance and prior or
other proper charges upon the Mortgaged Premises or any part thereof, as
well as just and reasonable compensation for the services of Mortgagee and
for all attorneys, counsel, agents, clerks, servants and other employees by
it engaged and employed, Mortgagee shall apply the moneys arising as
aforesaid as provided below.
(3) with or without entry, personally or by its agents or attorneys,
insofar as applicable, may:
a. sell the Mortgaged Premises to the extent permitted and
pursuant to the procedures provided by law, and all estate, right,
title and interest, claim and demand
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therein, and right of redemption thereof, at one or more sales as an
entity or in parcels or parts, and at such time and place upon such
terms and after such notice thereof as may be required or permitted by
law; or
b. institute proceedings for the complete or partial foreclosure
of this Mortgage; or
c. take such steps to protect and enforce its rights whether by
action, suit or proceeding in equity or at law for the specific
performance of any covenant, condition or agreement in the Note or in
the Loan Agreement or in this Mortgage, or in aid of the execution of
any power herein granted, or for any foreclosure hereunder, or for the
enforcement of any other appropriate legal or equitable remedy or
otherwise as Mortgagee shall elect.
(4) exercise any and all remedies available to a secured party under
the UCC in such order and in such manner as the Mortgagee in its sole
discretion may determine; provided, however, that the expenses of retaking,
holding, preparing for sale or the like, shall include reasonable
attorneys' fees and other expenses of the Mortgagee and be secured by this
Mortgage;
(5) exercise any or all of its other rights and remedies provided
herein, in any of the Security Documents, or other document or agreement
now or hereafter securing all or any portion of the Obligations secured
hereby, or as provided by law, in such order of priority as the Mortgagee
shall determine in its sole discretion.
6.2.2. Mortgagee may adjourn from time to time any sale by it to be made
under or by virtue of this Mortgage by announcement at the time and place
appointed for such sale or for such adjourned sale or sales; and, except as
otherwise provided by any applicable provision of law, Mortgagee, without
further notice or publication, may make such sale at the time and place to which
the same shall be so adjourned.
6.2.3. Upon the completion of any sale or sales made by Mortgagee under or
by virtue of this SECTION 6.2, Mortgagee, or an officer of any court empowered
to do
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so, shall execute and deliver to the accepted purchaser or purchasers a good and
sufficient instrument or instruments conveying, assigning and transferring all
estate, right, title and interest in and to the property and rights sold.
Mortgagee is hereby irrevocably appointed the true and lawful attorney of
Mortgagor, in its name and stead, to make all necessary conveyances,
assignments, transfers and deliveries of the Mortgaged Premises and rights so
sold and for that purpose Mortgagee may execute all necessary instruments of
conveyance, assignment and transfer, and may substitute one or more persons with
like power, Mortgagor hereby ratifying and confirming all that its said attorney
or such substitute or substitutes shall lawfully do by virtue hereof.
Nevertheless, Mortgagor, if requested by Mortgagee, shall ratify and confirm any
such sale or sales by executing and delivering to Mortgagee or to such purchaser
or purchasers all such instruments as may be advisable, in the judgment of
Mortgagee, for the purpose, and as may be designated in such request. Any such
sale or sales made under or by virtue of this SECTION 6.2, whether made under
the power of sale herein granted or under or by virtue of judicial proceedings
or of a judgment or decree of foreclosure and sale, shall operate to divest all
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 against
any and all persons claiming or who may claim the same, or any part thereof
from, through or under Mortgagor.
6.2.4. In the event of any sale or sales made under or by virtue of this
SECTION 6.2 (whether made under the power of sale herein granted or under or by
virtue of judicial proceedings or of a judgment or decree of foreclosure and
sale), the entire principal of, and interest on, the Note, if not previously due
and payable, and all other sums required to be paid by Mortgagor pursuant to
this Mortgage, immediately thereupon shall, anything in the Note or in this
Mortgage to the contrary notwithstanding, become due and payable.
6.2.5. The purchase money, proceeds or avails of any sale or sales made
under or by virtue of this SECTION 6.2, together with any other sums which then
may be held by Mortgagee under this Mortgage, whether under the provisions of
this SECTION 6.2, or otherwise, shall be applied as follows:
First: To the payment of the costs and expenses of such sale,
including reasonable
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compensation to Mortgagee, its agents and counsel, and of any judicial
proceedings wherein the same may be made, and of all expenses, liabilities
and advances made or incurred by Mortgagee under this Mortgage, together
with interest at the Involuntary Rate on all advances made by Mortgagee,
and of all taxes, assessments or other charges, except any taxes,
assessments or other charges subject to which the Mortgaged Premises shall
have been sold.
Second: To the payment of the whole amount then due, owing or unpaid
upon the Note for principal and interest, with interest on the unpaid
principal at the Involuntary Rate from and after the happening of any Event
of Default from the due date of any such payment of principal until the
same is paid.
Third: To the payment of any other sums required to be paid by
Mortgagor pursuant to any provision of this Mortgage or of the Note.
Fourth: To the payment of the surplus, if any, to whomsoever may be
lawfully entitled to receive the same.
6.2.6. Upon any sale or sales made under or by virtue of this SECTION 6.2,
whether made under the power of sale herein granted or under or by virtue of
judicial proceedings or of a judgment or decree of foreclosure and sale,
Mortgagee may bid for and acquire the Mortgaged Premises or any part thereof and
in lieu of paying cash therefor may make settlement for the purchase price by
crediting upon the indebtedness secured by this Mortgage the net sales price
after deducting therefrom the expenses of the sale and the costs of the action
and any other sums which Mortgagee is authorized to deduct under this Mortgage.
6.2.7. In case an Event of Default shall have happened and be continuing,
then, upon written demand of Mortgagee, Mortgagor will pay to Mortgagee the
whole amount which then shall have become due and payable on the Note, for
principal or interest or both, as the case may be, and after the happening of
said Event of Default will also pay to Mortgagee interest at the Involuntary
Rate on the then unpaid principal of the Note, and the sums required to be paid
by Mortgagor pursuant to any provision of this Mortgage or the Note, and in
addition thereto such further amount as shall be sufficient to cover the costs
and expenses of collection, including reasonable compensation to
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Mortgagee, its agents and counsel and any expenses incurred by Mortgagee
hereunder. In the event Mortgagor shall fail forthwith to pay such amounts upon
such demand, Mortgagee shall be entitled and empowered to institute such action
or proceedings at law or in equity as may be advised by its counsel for the
collection of the sums so due and unpaid, and may prosecute any such action or
proceedings to judgment or final decree, and may enforce any such judgment or
final decree against Mortgagor and collect, out of the property of Mortgagor
wherever situated, as well as out of the Mortgaged Premises, in any manner
provided by law, moneys adjudged or decreed to be payable.
6.2.8. Mortgagee shall be entitled to recover judgment as aforesaid either
before, after or during the pendency of any proceedings for the enforcement of
the provisions of this Mortgage; and the right of Mortgagee to recover such
judgment shall not be affected by any entry or sale hereunder, or by the
exercise of any other right, power or remedy for the enforcement of the
provisions of this Mortgage, or the foreclosure of the lien hereof; and in the
event of a sale of the Mortgaged Premises and of the application of the proceeds
of sale, as in this Mortgage provided, to the payment of the debt hereby
secured, Mortgagee shall be entitled to enforce payment of, and to receive all
amounts then remaining due and unpaid upon, the Note, and to enforce payment of
all other charges, payments and costs due under this Mortgage, and shall be
entitled to recover judgment for any portion of the debt remaining unpaid, with
interest at the Involuntary Rate. In case of proceedings against Mortgagor in
insolvency or bankruptcy or any proceedings for its reorganization or involving
the liquidation of its assets, then Mortgagee shall be entitled to prove the
whole amount of principal and interest due upon the Note to the full amount
thereof, and all other payments, charges and costs due under this Mortgage and
the Note, without deducting therefrom any proceeds obtained from the sale of the
whole or any part of the Mortgaged Premises, provided, however, that in no case
shall Mortgagee receive a greater amount than such principal and interest and
such other payments, charges and costs from the aggregate amount of the proceeds
of the sale of the Mortgaged Premises and the distribution from the estate of
Mortgagor.
6.2.9. No recovery of any judgment by Mortgagee and no levy of an execution
under any judgment upon the Mortgaged Premises or upon any other property of
Mortgagor shall affect in any manner or to any extent, the lien of this Mortgage
upon the Mortgaged Premises or any part thereof, or any liens, rights, powers or
remedies of
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Mortgagee hereunder, but such liens, rights, powers and remedies of Mortgagee
shall continue unimpaired as before.
6.2.10. Any moneys thus collected by Mortgagee under this SECTION 6.2 shall
be applied by Mortgagee in accordance with the provisions of SECTION 6.2.5
hereof.
6.2.11. After the happening of any Event of Default and immediately upon
the commencement of any action, suit or other legal proceedings by Mortgagee to
obtain judgment for the principal of, or interest on, the Note and other sums
required to be paid by Mortgagor pursuant to any provision of this Mortgage or
the Note, or of any other nature in aid of the enforcement of the Note or of
this Mortgage, Mortgagor will (a) waive the issuance and service of process and
enter its voluntary appearance in such action, suit or proceeding and (b) if
required by Mortgagee, consent to the appointment of a receiver or receivers of
all or part of the Mortgaged Premises and of any or all of the rents, issues and
profits of the Mortgaged Premises in respect thereof. After the happening of any
Event of Default and during its continuance, or upon the commencement of any
proceedings to foreclose this Mortgage or to enforce the specific performance
hereof or in aid thereof or upon the commencement of any other judicial
proceeding to enforce any right of Mortgagee, Mortgagee shall be entitled, as a
matter of right, if it shall so elect, without the giving of notice to any other
party and without regard to the adequacy or inadequacy of any security for the
indebtedness secured hereby, forthwith either before or after declaring the
unpaid principal of the Note to be due and payable, to the appointment of such a
receiver or receivers.
6.2.12. Notwithstanding the appointment of any receiver, liquidator or
trustee of Mortgagor, or of any of its property, or of the Mortgaged Premises,
or any part thereof, Mortgagee shall be entitled to retain possession and
control of all property now or hereafter held under this Mortgage.
6.2.13. Mortgagor will not at any time insist upon, or plead, or in any
manner whatever claim or take any benefit or advantage of any stay or extension
or moratorium law, any exemption from execution or sale of the Mortgaged
Premises or any part thereof, wherever enacted, now or at any time hereafter in
force, which may affect the covenants and terms of performance of this Mortgage,
nor claim, take or insist upon any benefit or advantage of any
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law now or hereafter in force providing for the valuation or appraisal of the
Mortgaged Premises, or any part thereof, prior to any sale or sales thereof
which may be made pursuant to any provision herein, or pursuant to the decree,
judgment or order of any court of competent jurisdiction; nor, after any such
sale or sales, claim or exercise any right under any statute heretofore or
hereafter enacted to redeem the property so sold or any part thereof and
Mortgagor hereby expressly waives all benefit or advantage of any such law or
laws, and covenants not to hinder, delay or impede the execution of any power
herein granted or delegated to Mortgagee, but to suffer and permit the execution
of every power as though no such law or laws had been made or enacted.
6.2.14. During the continuance of any Event of Default and pending the
exercise by Mortgagee of its right to exclude Mortgagor from all or any part of
the Premises, Mortgagor agrees to pay the fair and reasonable rental value for
the use and occupancy of the Premises or any portion thereof which are in its
possession for such period and, upon default of any such payment, will vacate
and surrender possession of the Premises to Mortgagee or to a receiver, if any,
and in default thereof may be evicted by any summary action or proceeding for
the recovery of possession of premises for non-payment of rent, however
designated.
6.3. Sale; No Marshalling of Assets.
6.3.1. In case of a foreclosure sale, all of the Mortgaged Premises may be
sold in one parcel even though the proceeds of such sale exceed or may exceed
the indebtedness secured hereby. The Mortgagee shall not be required to exercise
any rights under this Mortgage before proceeding against any other security,
shall not be required to proceed against other security before proceeding under
this Mortgage, and shall not be precluded from proceeding against any or all of
any security held by the Mortgagee for any or all of the indebtedness secured
hereby in any order or at the same time.
6.3.2. The Mortgagor agrees, to the full extent that it may lawfully do so,
that in any foreclosure or other action brought by the Mortgagee to enforce this
Mortgage, it will not at any time insist upon or plead or in any way take
advantage of any appraisement, valuation, stay, marshalling of assets,
extension, redemption or moratorium law now or hereafter in force and effect so
as to prevent, hinder, delay or otherwise affect the enforcement of the
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provisions of this Mortgage or any rights or remedies the Mortgagee may have
hereunder or by law.
6.3.3. If the Mortgagee shall elect to accelerate the indebtedness secured
hereby following the occurrence of an Event of Default, the Mortgagor, within
five (5) days after demand, will pay to the Mortgagee, or any receiver appointed
in connection with the foreclosure of this Mortgage, any and all amounts then
held as security deposits under all Space Leases; and the Mortgagee or such
receiver shall be deemed to indemnify the Mortgagor against all claims of
tenants in respect of the security deposits so paid following such demand.
6.4. Legal Expenses of the Mortgagee.
6.4.1. The Mortgagor will pay to the Mortgagee, on demand, all costs,
charges and expenses (including, without limitation, reasonable attorneys' fees
and disbursements) incurred or paid at any time by the Mortgagee (i) in
connection with any action or proceeding to foreclose this Mortgage or to
recover or collect all, or any portion of the indebtedness secured hereby; and
(ii) in connection with any modification or amendment or assignment of this
Mortgage or the other Security Documents, together with interest on each such
payment made by the Mortgagee at the Involuntary Rate from the date of the
Mortgagee's demand for such payment to the date of reimbursement by the
Mortgagor.
6.4.2. If any action or proceeding be commenced in which the Mortgagee is
made a party, or in which it becomes necessary to defend or uphold the lien of
this Mortgage, all reasonable sums paid by the Mortgagee for the expense of any
litigation to prosecute or defend the title, rights and lien created by this
Mortgage (including, without limitation, reasonable attorneys' fees) shall be
paid by the Mortgagor, together with interest thereon at the Involuntary Rate
from the date of the Mortgagee's demand for such payment to the date of
reimbursement by the Mortgagor.
6.5. Remedies Cumulative; No Waiver; Etc.
6.5.1. No remedy in this Mortgage conferred upon or reserved to the
Mortgagee is intended to be exclusive of any other remedy or remedies, and each
and every such remedy shall be cumulative, and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law or in equity.
No delay or omission by the Mortgagee in exercising any right or power
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arising upon any Event of Default shall impair any such right or power, or shall
be construed to be a waiver of or acquiescence in any such Event of Default; and
every power and remedy given by this Mortgage to the Mortgagee may be exercised
from time to time as often as the Mortgagee may determine it is appropriate to
do so.
6.5.2. A waiver in one or more instances of compliance with any of the
terms, covenants, conditions or provisions of the Note, the Loan Agreement or of
the Security Documents shall apply to the particular instance or instances and
at the particular time or times only, and no such waiver shall be deemed a
continuing waiver. In any event, no waiver shall be effective, or be asserted by
the Mortgagor as having been made, unless set forth in a writing signed by the
Mortgagee.
6.5.3. The Mortgagor waives and renounces all homestead and similar
exemption rights with respect to the Mortgaged Premises provided for by the
Constitution and laws of the United States and of the State as against the
collection of the Security Documents, or any part thereof.
6.6. No Merger. It is the intention of the parties to this Mortgage that if
the Mortgagee shall at any time hereafter acquire title to all or any portion of
the Mortgaged Premises, then, and until the indebtedness secured hereby has been
paid in full, the interest of the Mortgagee hereunder and the lien of this
Mortgage shall not merge or become merged in or with the estate and interest of
the Mortgagee, as the holder and owner of title to all or any portion of the
Mortgaged Premises and that, until such payment, the estate of the Mortgagee in
the Mortgaged Premises and the lien of this Mortgage and the interest of the
Mortgagee hereunder shall continue in full force and effect to the same extent
as if the Mortgagee had not acquired title to all or any portion of the
Mortgaged Premises.
ARTICLE VII.
Provisions of General Application
7.1. Modifications. No change, amendment, termination, modification or
cancellation of this Mortgage, or of any part hereof, shall be valid unless set
forth in a writing signed by the Mortgagor and the Mortgagee, except that only
the Mortgagee need sign any satisfaction of this
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Mortgage. ANY AGREEMENT HEREAFTER MADE BY MORTGAGOR AND MORTGAGEE RELATING TO
THIS MORTGAGE SHALL BE SUPERIOR TO THE RIGHTS OF THE HOLDER OF ANY INTERVENING
OR SUBORDINATE LIEN OR ENCUMBRANCE.
7.2. Notices. All notices, demands, requests, consents, approvals or other
communications (each, a "Notice") given or required to be given hereunder shall
be sent to the addresses and in the manner required by the Loan Agreement.
7.3. The Mortgagee's Rights to Perform the Mortgagor's Covenants. If the
Mortgagor shall fail to pay or cause payment to be paid to the Mortgagee in
accordance with the terms of the Security Documents, or to perform or observe
any other term, covenant, condition or obligation required to be performed or
observed by the Mortgagor under this Mortgage or the other Security Documents,
without limiting any other provision of this Mortgage, and without waiving or
releasing the Mortgagor from any obligation or default hereunder, after giving
any notice to the Mortgagor required hereunder and after the passage of any
applicable cure periods (or without such notice in the event of an emergency),
the Mortgagee (or any receiver of the Mortgaged Premises) shall have the right,
but not the obligation, to make any such payment, or to perform any other act or
take any appropriate action, including, without limitation, entry on the
Mortgaged Premises and performance of work thereat, as it, in its sole
discretion, may deem necessary to cause such other term, covenant, condition or
obligation to be promptly performed or observed on behalf of the Mortgagor or to
protect the security of this Mortgage. All amounts advanced by, or on behalf of,
the Mortgagee in exercising its rights under this SECTION 7.3 (including, but
not limited to, legal expenses and disbursements incurred in connection
therewith), together with interest thereon at the Involuntary Rate from the date
of the Mortgagee's demand upon the Mortgagor for reimbursement of such sums
until reimbursement by the Mortgagor, shall be payable by the Mortgagor to the
Mortgagee upon demand and shall be secured by this Mortgage.
7.4. Additional Sums Payable by the Mortgagor. All sums which, by the terms
of this Mortgage or any of the other Security Documents (excluding however the
principal indebtedness evidenced by the Note), are payable by the Mortgagor to
the Mortgagee shall, together with the interest thereon provided for herein or
in the Note or such other Security Documents, be added to and deemed part of the
indebtedness secured by the lien of this Mortgage whether or
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not the provision which obligates the Mortgagor to make any such payment to the
Mortgagee specifically so states.
7.5. Captions. The captions used in this Mortgage are inserted only as a
matter of convenience and for reference, and in no way define, limit, enlarge or
describe the scope or intent of this Mortgage or in any other way affect this
Mortgage or the construction of any provision hereof.
7.6. Successors and Assigns. The covenants and agreements contained in this
Mortgage shall run with the land and bind the Mortgagor, the successors and
assigns of the Mortgagor and all subsequent owners, encumbrances and Space
Tenants of the Mortgaged Premises, or any part thereof; and shall inure to the
benefit of the Mortgagee, its successors and assigns and all subsequent
beneficial owners of this Mortgage.
7.7. Gender and Number. Wherever the context of this Mortgage so requires,
the neuter gender includes the masculine and/or feminine gender and the singular
number includes the plural.
7.8. Severability. If any one or more of the provisions contained in this
Mortgage shall for any reason be held to be invalid, illegal, or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provisions of this Mortgage; and this Mortgage shall, in such event,
be construed as if such invalid, illegal or unenforceable provision had never
been included.
7.9. Usury. Anything in the Note, the Loan Agreement, this Mortgage or the
other Security Documents to the contrary notwithstanding, the Mortgagee shall
never be entitled to receive, collect or apply as interest on the principal
amount of the Note or any other of the obligations secured hereby any amount in
excess of the maximum rate of interest permitted to be charged by applicable
law. In the event the Mortgagee ever receives, collects or applies as interest
any such excess, the amount which would be excessive interest shall be applied
to the reduction of the principal amount of said obligations; and if said
principal amount shall have been paid in full, shall be remitted to the Person
lawfully entitled thereto. In determining whether or not the interest paid or
payable in any specific instance shall exceed the highest lawful rate, the
Mortgagor and the Mortgagee shall to the maximum extent permitted by applicable
law (i) characterize any non-principal payment as
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an expense, fee or premium rather than as interest, (ii) exclude voluntary
prepayments and the effects thereof and (iii) "spread" the total amount of
interest throughout the entire contemplated terms of the obligations so that the
interest rate is uniform throughout the entire said term.
7.10. Controlling Law. This Mortgage shall be governed by, and construed
and enforced in accordance with, the laws of the State of New Jersey applicable
to contracts made and to be wholly performed within such state.
7.11. Entire Agreement. This Mortgage, together with the Note, the Loan
Agreement and the other Security Documents, embodies the entire agreement and
understanding between the parties relating to the subject matter hereof.
ARTICLE VIII.
Particular Provisions
The foregoing ARTICLES of this Mortgage are subject to the following
further provisions set forth in this ARTICLE VIII.
8.1. Limited Recourse. The provisions of PARAGRAPH 6.16 of the Loan
Agreement are hereby incorporated herein by reference.
8.2. Environmental Representations and Warranties. The Mortgagor hereby
makes the following representations and warranties to the Mortgagee with respect
to the Mortgaged Premises:
8.2.1. Compliance with Environmental Laws. To the best of the Mortgagor's
knowledge based on all appropriate and thorough inquiry, (i) the Mortgaged
Premises (including surface and subsurface soil and water and areas leased to
tenants, if any), and the use and operation thereof, have been and are currently
in compliance with all Environmental Laws (as hereinafter defined), (ii) all
required permits are in effect, and the Mortgagor is in compliance therewith,
and (iii) all Hazardous Materials (as hereinafter defined) generated or handled
on the Mortgaged Premises have been disposed of in a lawful manner.
8.2.2. No Hazardous Materials. To the best of the Mortgagor's knowledge
based on all appropriate and thorough inquiry (a) no Hazardous Release (as
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hereinafter defined) or other Hazardous Activity (as hereinafter defined) has
occurred or is occurring on or from the Mortgaged Premises except in compliance
with Environmental Laws and as has been disclosed in writing to the Mortgagee
("Disclosed Material"), (b) all Hazardous Materials used, treated, stored,
transported to or from, generated or handled on the Mortgaged Premises have been
disposed of on or off the Mortgaged Premises in a lawful manner, (c) no
environmental or public health or safety hazards currently exist with respect to
the Mortgaged Premises or the business or operations conducted thereon, (d) no
underground storage tanks (including but not limited to petroleum or heating oil
storage tanks) are present on or under the Mortgaged Premises or have been on or
under the Mortgaged Premises, except as has been disclosed in writing to the
Mortgagee, and (e) no changes have been made to or discovered regarding the
operations, use or environmental conditions on the Mortgaged Premises since the
date of the most recent written environmental assessment provided to the
Mortgagee.
8.2.3. No Environmental Actions. To the best of the Mortgagor's knowledge
and based on all appropriate and thorough inquiry, the Mortgaged Premises is not
listed on any local, state and/or federal lists of potentially contaminated
sites, including, but not limited to, the National Priorities List,
Comprehensive Environmental Response, Compensation and Liability Information
System or any state or federal hazardous waste site or leaking underground
storage tank lists, and there have been no past and there are no pending or
threatened Environmental Actions (as hereinafter defined) to which the Mortgagor
is a party or which relate to the Mortgaged Premises. The Mortgagor has not
received any notice of any Environmental Action respecting Mortgagor, the
Mortgaged Premises or any off-site facility to which has been sent any Hazardous
Material for purposes of any Hazardous Activity.
8.2.4. Intentionally Deleted.
8.2.5. Definitions. For purposes of this Mortgage, the following
capitalized terms shall have the meanings set forth below:
"Environmental Action" shall mean:
(a) any notice of violation, complaint, claim, citation, demand,
inquiry, report, action, assertion of potential responsibility, lien,
encumbrance, or proceeding regarding the Mortgaged Premises, whether formal
or
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informal, absolute or contingent, matured or unmatured, brought or issued
by any governmental unit, agency, or body, or any person or entity
respecting:
(1) any Environmental Law;
(2) the environmental condition of the Mortgaged Premises, or any
portion thereof, or any property near the Mortgaged Premises,
including actual or alleged damage or injury to humans, public health,
wildlife, biota, air, surface or subsurface soil or water, or other
natural resources; or
(3) any Hazardous Activity on the Mortgaged Premises or off-site;
(b) any violation or claim of violation by the Mortgagor of any
Environmental Law whether or not involving the Mortgaged Premises;
(c) any lien for damages caused by, or the recovery of any costs
incurred by any person or entity, including any governmental entity, for
the investigation, remediation or cleanup of any Hazardous Release or
threatened Hazardous Release on the Mortgaged Premises; or
(d) the destruction or loss of use of property, or the injury, illness
or death of any officer, director, employee, agent, representative, tenant
or invitee of the Mortgagor or any other person alleged to be or possibly
to be arising from or caused by the environmental condition of the
Mortgaged Premises or any Hazardous Activity on the Mortgaged Premises.
"Environmental Laws" shall mean:
(a) any present or future federal statute, law, code, rule,
regulation, ordinance, order, standard, permit, license, guidance document
or requirement (including consent decrees, judicial decisions and
administrative orders) together with all related amendments, implementing
regulations and reauthorizations, pertaining to the protection,
preservation, conservation or regulation of the environment, including, but
not limited to: the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act, 42 U.S.C. Sections 9601 et seq. ("CERCLA"); the
Resource Conservation and Recovery Act of 1976, 42 U.S.C. Sections 6901 et
seq. ("RCRA"); the Toxic Substances Control Act, 15 U.S.C. Sections 2601 et
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seq. ("TOSCA"); the Clean Air Act, 42 U.S.C. Sections 7401 et seq.; the
Clean Water Act, 33 U.S.C. Sections 1251 et seq.; the Hazardous Materials
Transportation Act, 49 U.S.C. Sections 1801 et seq. ("HMTA"); the Emergency
Planning and Community Right-to-Know Act, 42 U.S.C. Sections 11011 et seq.;
the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. Sections
136 et seq.; and the Atomic Energy Act, 42 U.S.C. Sections 2011 et seq.
(b) any present or future state or local statute, law, code, rule,
regulation, ordinance, order, standard, permit, license or requirement
(including consent decrees, judicial decisions and administrative orders)
together with all related amendments, implementing regulations and
reauthorizations, pertaining to the protection, preservation, conservation
or regulation of the environment.
"Hazardous Activity" shall mean any use, exposure, Hazardous Release,
generation, manufacture, sale, transport, handling, storage, treatment,
reuse, presence, decontamination, clean-up or recycling of any Hazardous
Material.
"Hazardous Materials" shall mean (a) all substances defined as
"hazardous substances", "hazardous materials", "toxic substances",
"hazardous wastes" or "solid waste" in CERCLA, RCRA, TOSCA or HMTA; (b)
those substances listed in the United States Department of Transportation
Table (49 C.F.R. 172.101 and amendments thereto) or by the Environmental
Protection Agency (or any successor agency) as "hazardous substances" (40
C.F.R. Part 302 and amendments thereto); those substances defined as
"hazardous wastes" or "hazardous substances" in the regulations adopted and
publications promulgated pursuant to said laws or which otherwise are or
become regulated by any governmental authority, agency, department,
commission, board or instrumentality of the United States of America, the
State of New Jersey, or any political subdivision thereof; (d) any
hazardous, dangerous or toxic chemical, material, waste, pollutant,
contaminant or substance (collectively, "Pollutants") within the meaning of
any Environmental Law prohibiting, limiting or otherwise regulating any
Hazardous Activity relating to any such Pollutant; (e) any petroleum, crude
oil, or fraction or by-product thereof; (f) any radioactive material,
including any source, special nuclear or by-product material as defined at
42 U.S.C. Sections 2011 et seq., as amended or hereafter amended, and in
the regulations adopted and publications promulgated pursuant to said law;
(g) asbestos-containing materials in any form or
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condition; and (h) polychlorinated biphenyls in any form or condition.
"Hazardous Release" shall mean the release of Hazardous Materials into
the environment by any means whatsoever, including but not limited to any
spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping removing or disposing (including the
abandonment or discarding of barrels, containers and other receptacles
containing any Hazardous Material).
IN WITNESS WHEREOF, the Mortgagor has executed this Mortgage as of the day
and year first above written.
"Mortgagor"
CORPORATE REALTY INCOME
FUND I, L.P., a Delaware
limited partnership, dba CORPORATE
REALTY INCOME FUND, LIMITED
PARTNERSHIP
By: _______________________
Robert F. Gossett, Jr.,
general partner
By: 1345 Realty Corporation,
general partner
By: ________________________
Robert F. Gossett, Jr.,
President
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STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the ______ day of September, 1996, before me personally
came ROBERT F. GOSSETT, JR., to me known, who, being by me duly sworn, did
depose and say that he resides at ________________________________________; that
he is the ______________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
the ___________________________________________ described in the foregoing
instrument; and that he signed his name thereto by order of the board of
directors of said corporation and as and for the act and deed of said
corporation.
___________________________________
Notary Public
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EXHIBIT A
PREMISES
LEGAL DESCRIPTION
ALL THAT CERTAIN TRACT, PARCEL AND LOT OF LAND LYING AND BEING SITUATE IN THE
BOROUGH OF SOUTH PLAINFIELD, COUNTY OF MIDDLESEX, STATE OF NEW JERSEY, BEING
MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT IN THE NEW EASTERLY SIDELINE OF DURHAM AVENUE (FORMERLY NEW
BROOKLYN TO NEW DURHAM ROAD) SAID POINT ALSO MARKING THE POINT OF INTERSECTION
OF THE NEW EASTERLY SIDELINE OF DURHAM AVENUE AND THE CENTERLINE OF KAVAZ AVENUE
(VACATED ORD., #512) SAID POINT BEING 40.00 FEET AT RIGHT ANGLES FROM THE
CENTERLINE OF DURHAM AVENUE, THENCE:
(1) NORTH 24 DEGREES 11 MINUTES 13 SECONDS WEST ALONG THE NEW RIGHT OF WAY LINE
OF DURHAM AVENUE, A DISTANCE OF 307.92 FEET TO A POINT; THENCE,
(2) NORTH 65 DEGREES 48 MINUTES 47 SECONDS EAST MAKING A NEW DIVISION LINE A
DISTANCE OF 350.00 FEET TO A POINT; THENCE,
(3) NORTH 24 DEGREES 11 MINUTES 13 SECONDS WEST STILL MAKING A NEW DIVISION LINE
A DISTANCE OF 65.00 FEET TO A POINT; THENCE,
(4) NORTH 30 DEGREES 55 MINUTES 21 SECONDS EAST STILL MAKING A NEW DIVISION LINE
A DISTANCE OF 256.52 FEET TO A POINT; THENCE,
(5) SOUTH 58 DEGREES 39 MINUTES 17 SECONDS EAST ALONG THE WESTERLY SIDELINE OF
ROUTE 287 A DISTANCE OF 428.00 FEET TO A POINT; THENCE,
(6) SOUTH 54 DEGREES 04 MINUTES 26 SECONDS WEST ALONG THE CENTERLINE OF KAVAZ
AVENUE ALSO THE DIVISION LINE WITH THE PRUDENTIAL INSURANCE CO. OF AMERICA A
DISTANCE OF 819.78 FEET TO THE POINT AND PLACE OF BEGINNING.
THE ABOVE DESCRIPTION IS IN ACCORDANCE WITH A SURVEY PREPARED BY SCHOOR DEPALMA,
INC., DATED JUNE 5, 1995.
BEING ALSO KNOWN AS (REPORTED FOR INFORMATIONAL PURPOSES ONLY):
LOT 4.01, BLOCK 550, ON THE OFFICIAL TAX MAP OF BOROUGH OF SOUTH PLAINFIELD.
PREMISES COMMONLY KNOWN AS 1001 DURHAM AVENUE.
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FIRST AMENDMENT TO MORTGAGE, ASSIGNMENT
OF LEASES AND RENT AND SECURITY AGREEMENT
FIRST AMENDMENT TO MORTGAGE, ASSIGNMENT OF LEASES AND RENT AND SECURITY
AGREEMENT dated as of _______ __, 1996 (as the same may be amended or otherwise
modified from time to time, this "Amendment") by and between CORPORATE REALTY
INCOME FUND I, L.P. (dba Corporate Realty Income Fund, Limited Partnership), a
Delaware limited partnership ("Mortgagor"), having an office at 406 East 85th
Street, New York, New York 10028, and FLEET BANK, NATIONAL ASSOCIATION, a
national banking association ("Mortgagee"), having an office at 56 East 42nd
Street, New York, New York 10017
W I T N E S S E T H:
WHEREAS, the Mortgagor executed and delivered to the Mortgagee that certain
Mortgage, Assignment of Leases and Rents and Security Agreement dated September
26, 1996 (as the same may be amended or otherwise modified from time to time,
the "Mortgage") covering all of the Mortgagor's estate in and to all that tract
or parcel of land situate, lying and being in the County of Middlesex, State of
New Jersey, and more particularly described in EXHIBIT A annexed to and made a
part of this Amendment;
WHEREAS, the Mortgage was recorded by the Recorder of Deeds of the
_______________on _______________, 1996 in Book __ at Page __;
WHEREAS, the Mortgagor and the Mortgagee are also parties to a Loan
Agreement dated as of September 26, 1996 (as the same may be amended or
otherwise modified from time to time, (the "Loan Agreement") and, pursuant to
the Loan Agreement, the Mortgagee has agreed to lend up to $24,000,000 to the
Mortgagor, and, to evidence such loans, the Mortgagor executed and delivered to
the Mortgagee the Note;
WHEREAS, payment of the indebtedness of the Mortgagor evidenced by the Note
is secured by the Mortgage;
WHEREAS, the Mortgagor and Mortgagee are simultaneously herewith entering
into a First Amendment to Loan Agreement and Note for the purpose, among others,
of increasing the principal amount of the Note from $24,000,000 to $44,000,000;
and
WHEREAS, it is a condition precedent to the effectiveness of the First
Amendment to Loan Agreement and Note that each of the parties hereto shall have
executed and delivered
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this Amendment, thereby amending the Mortgage; and each of the parties hereto is
willing to do so.
NOW, THEREFORE, the parties to this Amendment hereby agree as follows:
1. All capitalized terms used herein without definition and which are
defined in the Mortgage are used herein with the meanings assigned to such terms
in the Mortgage.
2. The description in the Mortgage to the Note being in the principal
amount of $24,000,000 are hereby amended so that all of such references shall be
to a Note in the principal amount of $44,000,000.
3. The granting clauses of the Mortgage are hereby restated in their
entirety and incorporated herein and the Mortgagor hereby ratifies and restates
such granting clauses as incorporated herein.
4. The Mortgage, as modified by this Amendment, and all covenants of the
Mortgagor made in the Mortgage are hereby ratified and confirmed by the
Mortgagor in all respects, and the Mortgage, as so modified, shall continue in
full force and effect in accordance with its terms.
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IN WITNESS WHEREOF, each of the parties has caused these presents to be
signed and attested, all as of the day and year first above written.
ATTEST: CORPORATE REALTY INCOME FUND I, L.P.
_____________________ By:__________________________________
Robert F. Gossett, Jr.,
General Partner
By: 1345 Realty Corporation,
General Partner
By:________________________________
Robert F. Gossett, Jr.,President
ATTEST: FLEET BANK, NATIONAL ASSOCIATION
____________________ By:_______________________________
Title:
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STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the ___ day of December, 1996, before me personally came ROBERT F.
GOSSETT, JR., to me known, who, being by me duly sworn, did depose and say that
he resides at 406 East 85th Street, New York, New York 10028; that he is the
President of 1345 Realty Corporation, the corporation described in and which
executed the foregoing instrument as a general partner of Corporate Realty
Income Fund I, L.P.; and that he signed his name thereto by order of the board
of directors of said corporation and as and for the act and deed of said
corporation and partnership.
___________________________________
NOTARY PUBLIC
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the ____day of December, 1996, before me personally came ROBERT F.
GOSSETT, JR., to me known, who, being by me duly sworn, did depose and say that
he resides at 406 East 85th Street, New York, New York 10028; that he is a
general partner of Corporate Realty Fund I, L.P., as described in the foregoing
instrument; and that he signed his name thereto as and for the act and deed of
said partnership.
___________________________________
NOTARY PUBLIC
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STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the ____day of December, 1996, before me personally came James Mirman,
to me known, who, being by me duly sworn, did depose and say that he resides at
56 East 42nd Street, New York, New York 10017; that he is a Vice President of
Fleet Bank, National Association; and that he signed his name thereto as and for
the act and deed of Fleet Bank, National Association.
___________________________________
NOTARY PUBLIC
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BLOCK: 550
LOTS: 4.01
COUNTY: Middlesex
Date: As of December ___, 1996
FIRST AMENDMENT TO MORTGAGE, ASSIGNMENT
OF LEASES AND RENT AND SECURITY AGREEMENT
by and between
CORPORATE REALTY INCOME FUND I, L.P.
(dba Corporate Realty Income Fund, Limited Partnership)
("Mortgagor")
having an office at
406 East 85th Street
New York, New York 10028
and
FLEET BANK, NATIONAL ASSOCIATION
having its principal office at
56 East 42nd Street
New York, New York 10017
("Mortgagee")
This instrument prepared by, and after recording please return to:
Loeb & Loeb LLP
345 Park Avenue
New York, New York 10154-0037
Attention: Kenneth D. Freeman, Esq.
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SECTION: 5
BLOCK: 1275
LOTS: 69
Date: December ___, 1996
MORTGAGE, ASSIGNMENT OF LEASES
AND RENTS AND SECURITY AGREEMENT
(as the same may be amended or
otherwise modified from time
to time, this "Mortgage")
FROM
CORPORATE REALTY INCOME FUND I, L.P.,
a Delaware limited partnership
("Mortgagor")
having an office at
406 East 85th Street
New York, New York 10028
TO
FLEET BANK, NATIONAL ASSOCIATION
("Mortgagee")
having its principal office at
56 East 42nd Street
New York, New York 10017
Mortgage Amount: $20,207,000
This instrument prepared by, and after recording please
return to:
Loeb & Loeb LLP
345 Park Avenue
New York, New York 10154-0037
Attention: Kenneth D. Freeman, Esq.
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THE MAXIMUM PRINCIPAL AMOUNT WHICH IS OR UNDER ANY CONTINGENCY MAY BE SECURED BY
THIS MORTGAGE IS $20,207,000.
WHEREAS, the Mortgagor is the owner of the fee estate in those certain
parcels of real property described in EXHIBIT A annexed hereto (together with
the improvements now or hereafter located thereon, collectively, the
"Premises"), and desires to mortgage the Premises to secure, among other
obligations, a certain loan made by the Mortgagee to the Mortgagor, pursuant to
the terms of a Loan Agreement dated as of September 26, 1996 between Mortgagor
and Mortgagee (as amended by a First Amendment to Loan Agreement and to Note of
even date herewith and as the same may further be amended or otherwise modified
from time to time, the "Loan Agreement"); and
WHEREAS, the indebtedness secured hereby is a portion of that evidenced by
that certain Secured Promissory Note dated as of September 26, 1996 in the
principal amount of $44,000,000 (as amended by a First Amendment to Loan
Agreement and to Note of even date herewith and as the same may further be
amended or otherwise modified from time to time, the "Note") made by the
Mortgagor to the Mortgagee, which Note provides for a variable rate of interest.
NOW, THEREFORE,
FOR THE PURPOSE OF SECURING payment of all of the liabilities and
obligations of the Mortgagor to the Mortgagee evidenced by the Note, plus
interest thereon and all sums necessary to protect the Mortgagee under this
Mortgage or under the other Security Documents (as hereinafter defined), and all
other sums due and payable under the Security Documents, and all of the other
Obligations (as hereinafter defined), the Mortgagor does hereby give, grant,
warrant, alien, releases, mortgage, hypothecate, deposit, pledge, transfer,
assign, bargain, sell, convey, set over and confirm unto the Mortgagee, its
successors and assigns, all of the Mortgagor's estate, right, title and interest
now owned or hereafter acquired in and to the Premises;
TOGETHER with all and singular the easements, rights of way, air rights,
reservations, privileges, choses in action, options, tenements, hereditaments
and appurtenances thereunto belonging or in any way appertaining, including,
without limitation, all off-street parking rights and spaces, if any, and the
reversion and remainder of any or all of the foregoing; and all of the estate,
right, title, interest, claim or demand whatsoever of the Mortgagor therein and
in and to the Premises and/or the improvements thereon, and in and to all strips
and
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gores, and all alleys adjoining the land and in and to any land lying in the bed
of any street, road or avenue, open or proposed, in front of, or adjoining or
adjacent to the Premises, to the center line thereof, either in law or in
possession or expectancy, now or hereafter acquired;
TOGETHER with all of the right, title and interest of the Mortgagor in and
to (i) all buildings, vaults, and other improvements and additions thereto now
erected or hereafter constructed or placed upon the Premises or any part thereof
(the "Improvements"); (ii) to the extent permitted by law, the name or names, if
any, as may now or hereafter be used for each Improvement and the good will
associated therewith, as well as the trade names of the Improvements; and (iii)
all machinery, devices, fixtures, apparatus, interior improvements,
appurtenances and equipment of every kind and nature whatsoever now or hereafter
attached to or placed in or upon the Premises or the Improvements, or any part
thereof, or used or procured for use in connection with the operation of the
Premises or any business conducted thereon (except for fixtures and personal
property that are at any time the property of Space Tenants, as defined in
SECTION 1.18, or independent contractors employed at the Premises), all of the
foregoing, except as aforesaid, hereinafter collectively called "Building
Service Equipment";
TOGETHER with all the right, title and interest of the Mortgagor in and to
all furniture, furnishings, decorations, chattels and other personal property
now or hereafter in, on or at said Premises (except for trade fixtures and
personal property that are at any time the property of Space Tenants), all of
the foregoing, except as aforesaid, hereinafter collectively called
"Furnishings";
TOGETHER with all right, title and interest of the Mortgagor in and to all
insurance or other proceeds for damage done to the Improvements, Building
Service Equipment or Furnishings and all awards heretofore made or hereafter to
be made to or for the account of the Mortgagor for the permanent or temporary
taking by eminent domain of the whole or any part of the Premises, the
Improvements, the Building Service Equipment and the Furnishings or any lesser
estate in, or easement appurtenant to, the Premises (including, without
limitation, any awards for change of grade of streets), all of which proceeds
and awards are hereby assigned to the Mortgagee, subject to the further
provisions of this Mortgage;
TOGETHER with all of the rents, issues, income, revenues, royalties,
proceeds, benefits and profits of the Mortgaged Premises (as hereinafter
defined), including
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amounts payable under all Space Leases (as hereinafter defined), now in effect
or hereafter entered into covering any part of the Mortgaged Premises, as well
as all rights and interest of the Mortgagor as landlord thereunder, all of which
are hereby assigned to the Mortgagee, subject, however, to the right of the
Mortgagor, as licensee, to receive and use the same unless and until an Event of
Default shall occur;
TOGETHER with all of the records and books of account now or hereafter
maintained by the Mortgagor in connection with the operation of the Mortgaged
Premises;
TOGETHER with all water, water rights, shares of stock evidencing the same,
mineral rights, ditches, ditch rights, reservoirs and reservoir rights
appurtenant to, located on or used in connection with the Premises or the
Improvements, whether existing now or hereafter acquired;
TOGETHER with all deposits made with or other security given to utility
companies or governmental branches or agencies by the Mortgagor with respect to
the Mortgaged Premises, and all advance payments of insurance premiums made by
the Mortgagor with respect thereto;
TOGETHER with all licenses (including, but not limited to, any operating
licenses or similar matters), contracts, management agreements, franchise
agreements, permits, authorities or certificates required, used or useful in
connection with the use, enjoyment, occupancy, management or operation of the
Mortgaged Premises, except where the assignment or pledge of any such licenses,
permits or other rights is prohibited by applicable statute or by any applicable
issuing governmental agency;
TOGETHER with any and all of the Mortgagor's rights in and to any and all
cash payments, reimbursements or other intangible rights arising in connection
with the development, operation or maintenance of the Mortgaged Premises,
including, without limitation, any tax appeal refunds, municipal reimbursements,
governmental subsidy payments and governmentally-registered credits (such as
emissions and reduction credits) (collectively, the "Payments and Intangibles");
and
TOGETHER with all proceeds and products of the foregoing.
All of the foregoing estates, rights, privileges, interests and franchises
hereby granted and released, assigned, transferred, set over and mortgaged, or
intended so to be,
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being hereinafter collectively referred to as the "Mortgaged Premises".
TO HAVE AND TO HOLD unto the Mortgagee, its successors and assigns forever,
together with all rights, hereditaments and appurtenances in any way
appertaining or belonging thereto, unto the Mortgagee, the successors and
assigns of the Mortgagee, forever for the uses set forth herein, to secure the
payment to the Mortgagee of the principal and of interest on the Note at the
maturity thereof (whether by acceleration or otherwise), all other sums due
under the Note or under this Mortgage or under the Loan Agreement, the
performance of all covenants and agreements in the Security Documents and all
other obligations, whereupon this Mortgage shall cease and be void and the
Mortgaged Premises shall be released at the cost of the Mortgagor; provided,
however, that the maximum principal amount which is or under any contingency may
be secured hereby is $20,207,000.
ARTICLE I.
Certain Definitions
In addition to other definitions contained herein, the following terms
shall have the meanings set forth below, unless the context of this Mortgage
otherwise requires:
1.1. "Affiliate" - shall mean (a) if with respect to a corporation, (i) any
officer or director thereof and any person or entity who or which is, directly
or indirectly, the legal or beneficial owner of more than ten (10%) percent of
any class of shares or other equity security of such corporation, or (ii) any
person or entity who or which, directly or indirectly, controls or is controlled
by or is under common control with such corporation and (b) if with respect to a
partnership or venture, any (i) general partner, (ii) general partner of a
general partner, (iii) partnership with a common general partner, (iv)
coventurer thereof, or (v) any person, trust, corporation, partnership, venture
or other entity who or which, directly or indirectly, controls or is controlled
by or is under common control with such partnership; and if any general partner
or general partner of a general partner or coventurer is a corporation, any
person or entity which is an Affiliate as defined in clause (a) above of such
corporation. "Controls" (including the correlative meanings of "controlled by"
and "under common control with") means effective power, directly or indirectly,
to direct or cause
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the direction of the management and policies of such person or entity.
1.2. "Backlease" means a sublease to the Mortgagor or its Affiliate made by
a lessee under a Space Lease.
1.3. "Default Rate" shall mean the Involuntary Rate (as such term is
defined in the Note).
1.4. "Due and payable" when used with reference to the principal of, or
premium or interest on, or when referring to any and all other sums secured by
this Mortgage or any other of the Security Documents shall mean due and payable,
whether at the monthly or other date of payment or at the date of maturity
specified in the Note, this Mortgage or the other Security Documents; or by
acceleration or call for payment as provided in the Note, hereunder or in the
other Security Documents, or, in the case of Impositions, the last day upon
which any charge may be paid without penalty and/or interest.
1.5. "Event of Default" shall have the meaning assigned to such term in the
Note.
1.6. "Governmental Authorities" shall mean all federal, state, county,
municipal and local governments and all departments, commissions, boards,
bureaus and offices thereof, having or claiming jurisdiction over the Mortgaged
Premises or any part thereof.
1.7. "Impositions" shall mean all duties, taxes, water and sewer rents,
rates and charges, assessments (including, but not limited to, all assessments
for public improvements or benefit), charges for public utilities, excises,
levies, license and permit fees and other charges, ordinary or extraordinary,
whether foreseen or unforeseen, of any kind and nature whatsoever, which prior
to or during the term of this Mortgage will have been or may be laid, levied,
assessed or imposed upon or become due and payable out of or in respect of, and
become a lien on the Premises, the Improvements, Building Service Equipment,
Furnishings or any other property or rights included in the Mortgaged Premises,
or any part thereof or appurtenances thereto, or which are levied or assessed
against the rent and income received by the Mortgagor from the Space Leases (as
defined in SECTION 1.17) by virtue of any present or future law, order or
ordinance of the United States of America or of any state, county or local
government or of any department, office or bureau thereof or of any other
Governmental Authority.
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1.8. "Legal Requirements" shall mean all present and future laws,
ordinances, rules, regulations and requirements of all Governmental Authorities,
and all orders, rules and regulations of any national or local board of fire
underwriters or other body exercising similar functions, foreseen or unforeseen,
ordinary or extraordinary, which may be applicable to the Mortgaged Premises or
any part thereof, or to the sidewalks, alleyways, passageways, curbs and vaults
adjoining the same, or to the use or manner of use of any of the foregoing, or
to the owners, tenants, or occupants thereof, whether or not any such law,
ordinance, order, rule, regulation or requirement shall necessitate structural
changes or improvements or shall interfere with the use or enjoyment of any of
the foregoing, and shall also mean and include all requirements of the policies
of public liability, fire and all other insurance at any time in force with
respect to any of the foregoing.
1.9. "Mortgage" shall mean this instrument as originally executed or, if
hereafter amended, modified or supplemented, as so amended, modified or
supplemented.
1.10. "Mortgagee" shall mean the Mortgagee herein named or at any given
time the holder or holders of this Mortgage and the Note.
1.11. "Mortgagor" shall mean the Mortgagor herein named, any subsequent
owner or owners of the Mortgaged Premises, and its or their respective heirs,
executors, administrators, successors and assigns, but this provision shall not
be construed to limit the terms of SECTION 2.8 hereof.
1.12. "Obligations" shall mean the (a) aggregate unpaid principal amount
of, and accrued and unpaid interest on, the Note, plus (b) any and all
indebtedness, obligations and other liabilities of the Mortgagor to the
Mortgagee arising out of or in connection with or otherwise relating to the
Note, the Loan Agreement or any of the Security Documents, and/or any
agreement(s) of the Mortgagor with the Mortgagee pertaining thereto; in each
case whether now or hereafter existing, direct or indirect, absolute or
contingent, joint, several or independent, due or to become due, liquidated or
unliquidated, held or to be held by the Mortgagee and whether created directly
or acquired by assignment or otherwise.
1.13. "Peg Rate" - shall have the meaning assigned to such term in the
Note.
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1.14. "Permitted Encumbrances" shall mean each of the exceptions to
coverage set forth in SCHEDULE B, PART I of that certain Preliminary Title
Report of even date herewith, issued by Commonwealth Land Title Insurance
Company, to and accepted by the Mortgagee with respect to the Premises, and such
other items as the Mortgagee, in its sole discretion, may approve in writing.
1.15. "Person" shall mean and include any individual, corporation,
partnership, unincorporated association, trust, governmental agency or authority
or other entity.
1.16. "Security Documents" shall have the meaning assigned to such term in
the Note.
1.17. "Space Lease" shall mean any and all leases, subleases, licenses,
concession agreements or any other form of agreement, however denominated
(written or verbal, now or hereafter in effect), in which the Mortgagor (or any
predecessor in interest as owner of the Mortgaged Premises in the case of
existing Space Leases) now or hereafter grants a possessory interest in and to,
or the right to use and occupy the Mortgaged Premises, or any portion thereof,
and all renewals, extensions, modifications, amendments and other agreements
affecting the same.
1.18. "Space Tenant" shall mean the tenant or other user or occupant of
part or all of the Mortgaged Premises under any Space Lease.
1.19. "State" shall mean the State of New York.
1.20. "to the best of the Mortgagor's knowledge" shall mean the actual
knowledge of Robert F. Gossett, Jr., after reasonable inquiry and investigation.
ARTICLE II.
Particular Covenants of the Mortgagor
The Mortgagor covenants and agrees as follows:
2.1. Payment of Indebtedness. The Mortgagor shall duly and punctually pay
to the Mortgagee, as and when due and payable, the indebtedness evidenced by the
Note and the other Obligations secured hereby. As used in this SECTION 2.1 and
elsewhere in this Mortgage, the term "indebtedness" shall mean and include the
principal amount of the Note together with all interest thereon, any other
payments due to the Mortgagee under the Loan Agreement
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and/or any of the Security Documents, all costs of collection provided for in
the Note, the Loan Agreement or any of the Security Documents, and all other
sums and charges at any time due under or otherwise secured by this Mortgage.
2.2. Warranty of Title. The Mortgagor warrants that, to the best of the
Mortgagor's knowledge (a) the Mortgaged Premises are free and clear of all liens
and encumbrances other than the Permitted Encumbrances; (b) it owns the Building
Service Equipment and Furnishings free and clear of all liens and claims other
than in favor of the Mortgagee; (c) this Mortgage is and will remain a valid and
enforceable first mortgage on the Mortgaged Premises, subject only to the
Permitted Encumbrances; and (d) the Mortgagor has the right and lawful authority
to mortgage and convey the Mortgaged Premises in the manner and form herein
provided. The Mortgagor represents and warrants to the Mortgagee, to the best of
the Mortgagor's knowledge, and covenants for the benefit of the Mortgagee, as
follows:
(i) that the Mortgagor is lawfully seized and possessed of a fee in
the Premises and that the Mortgagor holds good legal and marketable title
thereto and to the rest of the Mortgaged Premises, subject only to the
Permitted Encumbrances; and
(ii) that the Mortgaged Premises are now free and clear of all liens
and encumbrances whatsoever, other than the Permitted Encumbrances, that
the Mortgagor has good right and lawful authority to mortgage and convey
the same in the manner and form herein provided and that the Mortgagor will
warrant and defend title to the Mortgaged Premises against all claims and
demands whatsoever.
2.3. To Maintain Priority of Lien.
2.3.1. This Mortgage is and will be maintained as a valid first mortgage on
the Mortgaged Premises, and the Mortgagor will not, directly or indirectly,
create or suffer or permit to be created, or to stand against the Mortgaged
Premises or any portion thereof, or against the rents, issues and profits
therefrom, and will promptly discharge, any lien or charge prior to or upon a
parity with or junior to this Mortgage other than the Permitted Encumbrances;
provided, however, that the Mortgagor shall not be required to pay any
Imposition prior to the time it shall become due and payable subject to the
provisions of SECTION 2.4.1 hereof, and nothing herein contained shall prevent
the Mortgagor from contesting the validity of any such Imposition in accordance
with the
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provisions of SECTION 2.4.4. The Mortgagor will keep and maintain the Mortgaged
Premises, and every part thereof, free from all liens or lien notices, of
Persons supplying labor and/or materials in connection with any construction,
alteration, repair, improvement or replacement of the Improvements or of the
Building Service Equipment and Furnishings. If any such lien shall be filed
against the Mortgaged Premises, or any part thereof, the Mortgagor promptly
shall discharge the lien of record, by bonding or otherwise. The Mortgagor shall
exhibit to the Mortgagee, upon request, appropriate receipts or other
satisfactory evidence of the payment of the Impositions or any other item which
may, if not paid, give rise to a lien against the Mortgaged Premises.
2.4. To Pay Impositions.
2.4.1. The Mortgagor will pay or cause to be paid, as and when due and
payable, all Impositions levied upon the Mortgaged Premises or any part thereof,
together with all filing, registration or recording fees and all expenses
incident to the execution and acknowledgement of this Mortgage, any mortgage
supplemental hereto, and will pay all federal, state, county and municipal stamp
taxes and other taxes, duties, imposts, assessments and charges arising out of
or in connection with the execution and delivery of the Note, this Mortgage, any
mortgage supplemental hereto, or any instrument of further assurance. However,
if by law, any Imposition may at the option of the taxpayer be paid in
installments (whether or not interest shall accrue on the unpaid balance
thereof), the Mortgagor shall have the right to exercise such option and to pay
such Imposition, or cause it to be paid (together with any accrued interest on
the unpaid balance) in installments as they fall due and before any fine,
penalty, further interest or cost may be added thereto.
2.4.2. If an Event of Default shall occur and be continuing, then upon
demand of the Mortgagee, the Mortgagor shall deposit with the Mortgagee a sum
which bears the same relation to the annual insurance premiums for all insurance
required by the terms hereof and real estate taxes and assessments assessed
against the Mortgaged Premises for the insurance period or tax year then in
effect, as the case may be, as the number of months elapsed as of the date of
such demand since the last preceding installment of said premiums or taxes or
assessments shall have become due and payable bears to twelve (12). For the
purpose of this computation, the month in which such last preceding installment
of premiums or real estate taxes or assessments became due and payable and the
month in which such demand is given shall be included and deemed to have
elapsed. On the
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first day of the month next succeeding the month in which such demand is given,
and thereafter on the first day of each and every month during the term of this
Mortgage, the Mortgagor shall deposit with the Mortgagee a sum equal to
one-twelfth of such insurance premiums and such taxes and assessments for the
then-current insurance period and tax year, so that as each installment of such
premiums and taxes and assessments shall become due and payable, the Mortgagor
shall have deposited with the Mortgagee a sum sufficient to pay the same. All
such deposits shall be received and held as part of such deposit by the
Mortgagee (all such deposits to be held in an account without interest thereon)
and shall be applied to the payment of each installment of such premiums and
taxes and assessments as they shall become due and payable. The Mortgagee shall,
upon demand, furnish evidence to the Mortgagor of the making of each such
payment. If the amount of such premiums and taxes and assessments has not been
definitely ascertained at the time when any such monthly deposits are required
to be made, the Mortgagor shall make such deposits based upon the amount of such
premiums and taxes and assessments for the preceding year, subject to adjustment
as and when the amount of such premiums and taxes and assessments are
ascertained. If at any time when any installment of such premiums and such taxes
and assessments becomes due and payable the Mortgagor shall not have deposited a
sum sufficient to pay the same, the Mortgagor shall, within five (5) days after
demand, deposit any deficiency with the Mortgagee. Upon payment in full of the
indebtedness evidenced by the Note, any remaining amount on deposit with the
Mortgagee shall be repaid to the Person lawfully entitled thereto. If an Event
of Default shall occur and be continuing, the Mortgagee may, at its option,
apply all or any portion of the amounts then on deposit with the Mortgagee
pursuant to this SECTION 2.4.2 first to the payment of any premiums, taxes or
assessments then due, and any remaining amounts may be applied to the payment of
the indebtedness. The Mortgagor shall deliver to the Mortgagee all insurance and
tax bills promptly following receipt during any period when such monthly
deposits are to be made with the Mortgagee.
2.4.3. The Mortgagor will pay all taxes and other governmental charges
(including, without limitation, stamp taxes), except income or franchise taxes
or similar taxes based upon or measured by income, assessed by the United States
government or any state or local governmental authority and imposed on the
Mortgagee, its successors by reason of the ownership of this Mortgage or the
Note or the receipt of the interest or other sums payable thereunder or payable
by either the Mortgagor or the Mortgagee upon any increase in the indebtedness
secured hereby, or any modification, amendment, extension or
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consolidation of this Mortgage. Without limiting the foregoing and subject to
the limitations set forth above, the Mortgagor will also pay the whole of any
tax imposed, directly or indirectly, on this Mortgage or the Note or the receipt
of any portion of the indebtedness in lieu of a tax on the Mortgaged Premises or
the Improvements and Building Service Equipment, whether by reason of (a) the
passage after the date of this Mortgage of any law of the State deducting from
the value of real property for the purposes of taxation any lien thereon; (b)
any change in the laws for the taxation of Mortgages or debts secured by
Mortgages for state or local purposes; (c) a change in the means of collection
of any such tax or otherwise; or (d) any tax, whether or not now existing,
assessed against, or withheld from, interest or other payments made by the
Mortgagor or assessed against this Mortgage and which are assessed or levied by
the government of any foreign nation or political subdivision thereof, provided
such tax liability shall not result from the ownership of this Mortgage by a
Person not a citizen of, or an entity not formed under the laws of, the United
States or any state. Within a reasonable time after payment of any such tax or
governmental charge, the Mortgagor will deliver to the Mortgagee satisfactory
proof of payment thereof, subject, however, to the right of the Mortgagor to
contest Impositions as hereinafter set forth. If the Mortgagor shall fail to pay
such tax or charge within fifteen (15) days after written notice, or if under
applicable law the Mortgagor's payment or agreement to pay the same shall be
unenforceable, the Mortgagee shall have the right to declare the entire unpaid
indebtedness and all accrued and unpaid interest thereon due and payable on a
date specified by the Mortgagee, but, in any event, not less than thirty (30)
days after written notice to the Mortgagor.
2.4.4. The Mortgagor shall have the right to contest the amount or
validity, in whole or in part, of any Imposition, or to seek a reduction in the
valuation of the Mortgaged Premises, or any part thereof, as assessed for real
estate or personal property tax purposes by appropriate proceedings diligently
conducted in good faith, but only after payment of such Imposition, unless such
payment would operate as a bar to such contest or materially adversely interfere
with the prosecution thereof, in which event the Mortgagor may postpone or defer
payment of such Imposition (but not the payment of any monthly deposits pursuant
to SECTION 2.4.2 hereof); and upon request by the Mortgagor, the Mortgagee shall
postpone or defer payment of such Imposition; provided, however, that if at any
time the Mortgaged Premises, the Building Service Equipment, the Furnishings, or
any part thereof would, in the Mortgagee's reasonable judgment, by reason of
such postponement or deferment be in imminent danger of being forfeited or lost,
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or if the Mortgagee might be subjected to any civil or criminal liability or
other sanction, then the Mortgagor, on demand, shall immediately pay or cause to
be paid the amount so contested and unpaid, together with all interest and
penalties in connection therewith.
2.4.5. The certificate, advice or bill of the appropriate official
designated by law to make or issue the same or to receive payment of any
Imposition indicating the nonpayment of such Imposition shall be prima facie
evidence that such Imposition is due and payable but unpaid at the time of the
making or issuance thereof.
2.5. Insurance; Restoration Following Casualty.
2.5.1. Until the indebtedness secured hereby is paid in full, the Mortgagor
shall at its own expense at all times maintain or cause to be maintained on all
of the Mortgaged Premises (a) comprehensive general liability insurance,
including umbrella liability insurance, covering all claims for bodily injury,
including death, and property damage occurring on, in or about the Mortgaged
Premises in an aggregate amount of not less than Five Million Dollars
($5,000,000) per occurrence, and a single limit of not less than Two Million
Dollars ($2,000,000) per person and per occurrence for personal injury, bodily
injury and property damage; the policy shall have no deductible or self insured
retention requirements; the policy limits of such insurance, if requested by the
Mortgagee, shall be increased from time to time to reflect what a reasonably
prudent owner or lessee of buildings or improvements similar in type and
locality to the Mortgaged Premises would carry; during any period of substantial
alterations or improvements in, on or to the Mortgaged Premises, the Mortgagor
will cause the comprehensive general liability insurance, including umbrella
liability insurance, endorsed to provide owners' and contractors' protective
liability coverage, including completed operations liability coverage; (b)
physical damage insurance (all risk non-reporting property insurance, including
earthquake insurance, with the Mortgagee named as loss payee), covering the
Mortgaged Premises for loss or damages resulting from the perils of fire,
lightning, earthquake, and such other risks and hazards as are provided under
the current standard "Extended Coverage Endorsement" and vandalism and malicious
mischief coverage, for the full replacement value of the Mortgaged Premises on a
stipulated and agreed-amount basis; (c) if the Mortgaged Premises is in an area
identified as a flood hazard area by the Secretary of Housing and Urban
Development, flood insurance, to the extent obtainable, in an amount equal to
the lesser of the full replacement value of the Mortgaged Premises or the
maximum amount available
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under the Federal flood insurance program; (d) boiler and machinery insurance
covering all boilers, machinery, air conditioning, pressure vessels, and similar
type equipment commonly covered under a broad-form boiler and machinery policy,
in an amount satisfactory to the Mortgagee; (e) insurance against such other
risks of damage, hazards, casualties and contingencies in such amounts as the
Mortgagee shall from time to time reasonably require, provided that insurance
against such other risks, hazards, casualties or contingencies shall then be
commonly carried by prudent owners or lessees of building or improvements in the
locality similar in character, construction, use and occupancy to the
Improvements, Building Service Equipment and Furnishings on, or constituting a
part of, the Mortgaged Premises; and (f) loss of rents/business interruption
coverage in an amount sufficient to pay all Impositions, insurance premiums,
interest and principal installments and all other amounts due under the Note and
the Loan Agreement and the normal operating expenses of the Mortgaged Premises,
all for a period of one (1) year. Furthermore, the Mortgagee reserves the right
to require additional insurance and/or higher policy limits than heretofore
specified if such additional insurance and/or higher policy limits are
commercially reasonable for similar properties, which right may be exercised by
written notice to the Mortgagor, and, as soon thereafter as practicable, but in
any event within thirty (30) days of the receipt thereof, the Mortgagor agrees
to obtain insurance coverage complying with such notice. The proceeds of all
such insurance (except the insurance specified in SECTION 2.5.1(a)) shall be
paid solely to the Mortgagee and be held, applied or disbursed by the Mortgagee
as provided in SECTIONS 2.5.7 and 2.5.8.
2.5.2. All insurance required in SECTION 2.5.1 shall be evidenced by valid
and enforceable policies, in form and substance as shall be required by the
Mortgagee from time to time, and issued by and distributed among insurers of
recognized responsibility having an A.M. Best's Guide of A:XII or better, a
financial size category of Class XI or above, and the total limit of liability
shall not exceed ten percent (10%) of the total policyholders' surplus. Such
insurers shall be authorized to do business in the State and in all other
respects shall be reasonably satisfactory to the Mortgagee. The originals of all
such policies, or duplicate copies or certificates thereof, shall be delivered
to the Mortgagee concurrently with the execution and delivery of this Mortgage.
Thereafter, all renewal or replacement policies, or duplicate copies or
certificates thereof, shall be delivered to the Mortgagee not less than thirty
(30) days prior to the expiration date of the policy or policies to be renewed
or replaced, in each case accompanied by evidence reasonably satisfactory to the
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Mortgagee that all premiums currently payable with respect to such policies have
been paid in full by or at the direction of the Mortgagor.
2.5.3. All such insurance policies shall (a) except for any liability
policy required hereunder, contain a standard noncontributory form of mortgagee
clause (in favor of and entitling the Mortgagee to collect any and all proceeds
payable under such insurance), as well as a standard waiver of subrogation
endorsement, all to be in form and substance reasonably satisfactory to the
Mortgagee; (b) provide that such policies may not be cancelled or amended
without at least thirty (30) days prior written notice to the Mortgagee; and (c)
provide that no act, omission or negligence of the Mortgagor, or its agents,
servants or employees, or of any Space Tenant under any Space Lease, which might
otherwise result in a forfeiture of such insurance or any part thereof, shall in
any way affect the validity or enforceability of such insurance insofar as the
Mortgagee is concerned. The Mortgagor shall not carry separate insurance,
concurrent in kind or form or contributing in the event of loss with any
insurance required under this SECTION 2.5. All losses under such insurance
policies shall be adjusted by the Mortgagor in the case of any single instance
of such damage or destruction not exceeding $200,000, by the Mortgagor and the
Mortgagee in the case of any such single instance of damage or destruction
exceeding such amount, provided that in no event shall the Mortgagor approve or
consent to any final adjustment in any amount exceeding the amount specified
above in this sentence without obtaining the Mortgagee's prior approval (which
approval shall not be unreasonably withheld) of the amount of such adjustment,
and solely by the Mortgagee in the case when an Event of Default exists and is
continuing.
2.5.4. The Mortgagor, at its expense, will furnish to the Mortgagee, within
ninety (90) days after written demand, but in no event, except for reasonable
cause, more frequently than annually, proof of the then full replacement value
of each of the Improvements and the Building Service Equipment and Furnishings
therein, such proof to be by appraisals reasonably satisfactory in form and
substance to the Mortgagee and prepared by an appraiser (who may be an appraiser
for the insurance company insuring such property) designated and paid for by the
Mortgagor and approved by the Mortgagee, which approval shall not be
unreasonably withheld or delayed.
2.5.5. If the Mortgagee shall, by any means, acquire the title or estate of
the Mortgagor in or to any portion of the Mortgaged Premises, it shall thereupon
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become the sole and absolute owner of all insurance policies affecting such
portion of the Mortgaged Premises held by, or required hereunder to be delivered
to, the Mortgagee, with the sole right to collect and retain all unearned
premiums thereon; and the Mortgagor shall be entitled only to a credit in
reduction of the then outstanding indebtedness in the amount of the short rate
cancellation refund, when and if received by Mortgagee. The Mortgagor agrees,
immediately upon demand, to execute and deliver such assignments or other
authorizations or instruments as may, in the reasonable opinion of the
Mortgagee, be reasonably necessary or desirable to effectuate any of the
provisions of this SECTION 2.5.5.
2.5.6. If any of the Improvements, Building Service Equipment or
Furnishings shall be damaged or destroyed, in whole or in part, by fire or other
casualty, the Mortgagor shall give prompt notice thereof to the Mortgagee, and,
without regard to the availability or adequacy of insurance proceeds, shall
promptly following receipt of any insurance proceeds or the date when any such
proceeds are made available to the Mortgagor in accordance with the terms
hereof, commence to restore, replace, rebuild or alter the same as nearly as
possible to the condition, character and value thereof existing immediately
prior to such damage or destruction. Any insurance proceeds in respect of such
damage or destruction, or any Award (as defined in SECTION 3.2) for a partial
taking which is not a substantial or total taking, as such terms are referred to
in ARTICLE III hereof, at the option of the Mortgagee, may either (i) be applied
as a prepayment of the unpaid balance of the principal of the Note and of
accrued and unpaid interest thereon and as a payment of any other sums due and
owing under the Note, the Loan Agreement and the Security Documents, or (ii) be
made available to pay or reimburse costs incurred for restoration, replacement
or rebuilding necessitated as a result of such damage or destruction, or as a
result of such taking, as the case may be, or (iii) be used for any other
purpose or object deemed appropriate by the Mortgagee in connection with the
Mortgaged Premises, provided, however, that the Mortgagee may not elect either
option (i) or (iii) above if, and for so long as all of the following conditions
(collectively, the "Insurance or Award Conditions" have been and remain
satisfied: (a) no Event of Default has occurred and is continuing or would occur
as a result of such casualty or taking and no event has occurred that with the
passage of time or the giving of notice, or both, would constitute an Event of
Default; (b) the balance of the insurance proceeds or such Award either
initially paid to the Mortgagee or deposited with the Depository (as hereinafter
defined) or remaining from time to time, shall be sufficient, in the Mortgagee's
reasonable judgment, to
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complete the restoration, replacement or rebuilding, or the Mortgagor shall have
deposited such sufficient funds with the Mortgagee or the Depository; and (c)
the Mortgagee determines, in its reasonable discretion, that (i) the Loan to
Value Ratio (as defined in the Loan Agreement, and taking into consideration the
value of all of the Projects, as defined in the Loan Agreement) is not greater
than 55%, and (ii) the Debt Service Coverage Ratio (as defined in the Loan
Agreement, and taking into consideration the loss of income resulting from such
damage or destruction as projected by the Mortgagee in its reasonable
discretion) is not less than 1.40:1.0. Notwithstanding the foregoing, if an
event has occurred and is continuing that with the passage of time or the giving
of notice, or both, would constitute an Event of Default but the same has not
yet matured into an Event of Default, then, if the conditions set forth in the
foregoing clauses (b) and (c) have been or will be, in the Mortgagee's
reasonable judgment, satisfied, the Mortgagee shall not elect either option (i)
or (iii) unless such event shall have matured into an Event of Default and,
unless and until such event shall have so matured into an Event of Default or
such event has been cured or shall otherwise cease to exist, the Mortgagee (or
the Depository) shall not release any such insurance proceeds or Award and the
same shall be held until an Event of Default occurs or the Default has been
cured or shall otherwise cease to exist.
2.5.7. Any such insurance proceeds (other than the proceeds of the rent
insurance policy, which shall be paid as provided in SECTION 2.5.8 below) or
Award which are to be applied to restoration, replacement or rebuilding of the
Mortgaged Premises shall, after payment or reimbursement to the Mortgagee of all
reasonable costs and expenses of the Mortgagee in collecting such proceeds or
Award, be applied upon satisfaction of the following provisions and conditions:
(a) If the damage be of such nature as to require the Mortgagor to
construct a replacement for, or to alter in any material or substantial
way, the damaged or destroyed items, the Mortgagor shall, before commencing
any such work, submit copies of the plans and specifications therefor to
the Mortgagee for the Mortgagee's approval, such approval to not be
unreasonably withheld or delayed.
(b) If after payment or reimbursement to the Mortgagee of all costs
and expenses of the Mortgagee in collecting such insurance proceeds or
Award, the aggregate insurance proceeds or Award received by reason of any
single instance of such damage or destruction or condemnation, as the case
may
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be, shall be $200,000 or less such insurance proceeds or Award shall be
paid to the Mortgagor, which shall hold all amounts so received in trust
for application first to pay the entire cost of restoring, repairing,
rebuilding or replacing the damaged or destroyed items, before any portion
of such proceeds may be used or applied for any other purpose. If the
aggregate net insurance proceeds or Award by reason of any single instance
of such damage or destruction or condemnation, as the case may be, shall be
more than $200,000 such sums shall be held and disbursed by Fleet Bank,
National Association or, if this Mortgage is held by another financial
institution, by such financial institution or, if this Mortgage is not held
by a financial institution, by a financial institution selected by the then
Mortgagee (the holder of such monies, the "Depository") in accordance with
the following provisions of this SECTION 2.5.7.
(c) The Mortgagee shall have received as to each such disbursement a
certificate of the Mortgagor (i) requesting the payment of a specified
amount of such insurance or condemnation proceeds; (ii) describing in
reasonable detail the work and materials applied to the restoration,
replacement or rebuilding of the damaged, destroyed or taken Improvement,
or Building Service Equipment and/or Furnishings located therein, since the
date of the last such certificate; (iii) stating that the requested amount
does not exceed the cost of such work and materials; and (iv) stating that
a request for payment for such work and materials has not previously been
made, accompanied by:
1. a certificate of an independent engineer or architect
designated by the Mortgagor, who shall have been approved in writing
by the Mortgagee (such approval not to be unreasonably withheld),
stating (i) that the work and materials described in the accompanying
certificate of the Mortgagor were satisfactorily performed and
furnished and were necessary, appropriate or desirable to the
restoration, replacement or rebuilding of the damaged, destroyed or
taken Improvement, or Building Service Equipment and/or Furnishings;
(ii) that the amount specified in such certificate of the Mortgagor
does not exceed the reasonable cost of such work and materials; and
(iii) the additional amount, if any, required to complete the
restoration, replacement or rebuilding of the damaged, destroyed or
taken Improvement, Building Service Equipment and/or Furnishings; and
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2. evidence reasonably satisfactory to the Mortgagee (i) that
there exists no filed or recorded lien, or lien notice, or encumbrance
or charge in respect of all or any part of the Mortgaged Premises that
is prior to or on a parity with the lien of this Mortgage, except as
may be permitted in the Permitted Encumbrances; (ii) that neither the
Mortgaged Premises nor any part thereof is subject to any recorded or
filed mechanic's, laborer's, materialman's or any similar lien,
encumbrance or charge; and (iii) that none of the Building Service
Equipment and Furnishings provided in connection with such
restoration, replacement or rebuilding is subject to any security
interest other than in favor of the Mortgagee.
Upon satisfaction of the conditions set forth herein, the Mortgagee shall
pay to the Mortgagor the amount of such insurance or condemnation proceeds
requested in such certificate of the Mortgagor or consent to the Depository's
payment thereof, as the case may be; provided, however, that in no event shall
the balance of insurance or condemnation proceeds held by the Mortgagee and the
Depository be reduced below the amount specified in such certificate of the
independent engineer or architect as the amount required to complete the
restoration, replacement or rebuilding of the damaged, destroyed or taken
Improvement, Building Service Equipment and/or Furnishings. Each such payment,
whether made by the Mortgagee or the Depository, shall be held by the Mortgagor
in trust and shall be used solely for the payment of the cost of the work and
materials described in the certificate of the Mortgagor, or if such cost or any
part thereof has theretofore been paid by the Mortgagor out of its own funds,
then for the reimbursement to the Mortgagor of any such cost or part thereof
paid by it. Any balance of insurance or condemnation proceeds held by the
Mortgagee after the completion of the restoration, replacement or rebuilding and
payment of all costs incurred in connection therewith, to be evidenced by a
certificate to such effect of such independent engineer or architect delivered
to the Mortgagee, shall, if no Event of Default shall have occurred and be
continuing, be released to the Person lawfully entitled thereto. Notwithstanding
the foregoing, if the Mortgagor needs to make deposits with or payments to
contractors prior to the work being performed, if the Mortgagee is otherwise
obligated to allow funds to be used to rebuild or restore, the Mortgagee agrees
that it will not unreasonably withhold or delay its consent to the
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Mortgagor's request that such deposits or advances payments be allowed.
2.5.8. All proceeds of rent insurance payable as a result of the occurrence
of any fire or other casualty which affects the Mortgaged Premises, or any part
thereof, shall be paid to the Mortgagee or, if the Mortgagee is not a financial
institution, the Depository. The Mortgagee or the Depository, as the case may
be, if it shall receive such proceeds, shall hold such proceeds in trust if
permitted under law, and in an account bearing interest (payable to or for
account of the Mortgagor), and shall apply or cause such proceeds (including any
net interest thereon) to be applied to the payment of those items referred to in
SECTION 2.5.1(f) which become, and as they become, due and payable from and
after the date of the occurrence of such damage or loss, until the completion of
the necessary restoration or replacement by the Mortgagor or until the
exhaustion of such proceeds (including any interest thereon), whichever first
occurs. Upon completion of such restoration or replacement, any balance of such
rent insurance proceeds, together with the interest thereon, if any, not
theretofore applied as provided herein, in the hands of the Mortgagee or the
Depository, as the case may be, shall, provided that no Event of Default shall
have occurred and be continuing, be paid to the Person lawfully entitled
thereto.
2.5.9. Nothing in this SECTION 2.5 contained shall (i) relieve the
Mortgagor of its duty to repair, restore, rebuild or replace the Improvements,
Building Service Equipment and/or Furnishings following damage or destruction by
fire or other casualty or taking in the event that no Award or an inadequate
Award or that no or inadequate proceeds of insurance are available to defray the
cost of such repairing, restoring, rebuilding or replacement (provided, however,
the Mortgagor shall be permitted to receive the insurance proceeds upon
satisfaction of the conditions set forth herein provided, in addition, that all
of the Insurance or Award Conditions have been and remain satisfied), or (ii)
relieve the Mortgagor of its obligation to pay principal and interest and to
make all other payments required by the Note, the Loan Agreement and this
Mortgage subsequent to the occurrence of any fire or other casualty, or taking,
except if, and to the extent that, any proceeds of rent insurance are applied by
the Mortgagee in accordance with SECTION 2.5.8 to such required payments.
2.5.10. If, while any insurance proceeds or Award is being held by the
Mortgagee or the Depository, an Event of Default shall occur and be continuing,
the Mortgagee shall be entitled to receive and apply all such
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insurance proceeds or Award in reduction of the indebtedness and other
obligations secured by this Mortgage, in such order and respective amounts, as
the Mortgagee in its discretion shall determine.
2.6. To Comply with Laws.
2.6.1. The Mortgagor, at its own expense, will promptly cure all violations
of law affecting the Mortgaged Premises, or any part thereof, and/or the use and
operation thereof and will promptly comply, or cause to be complied with, all
present and future Legal Requirements. However, the Mortgagor shall have the
right, after prior notice to the Mortgagee, to contest by appropriate legal
proceedings, diligently conducted in good faith, the validity or application of
any Legal Requirement if and so long as the Mortgagor shall promptly furnish to
the Mortgagee a certificate to such effect showing the steps taken to comply
with such provisions, provided that:
(a) if by the terms of any such Legal Requirement, compliance
therewith pending the prosecution of any such proceeding may be delayed
legally without incurring any lien, charge or liability of any kind against
the Mortgaged Premises, or any part thereof, and without subjecting the
Mortgagor or the Mortgagee to any liability, civil or criminal, for failure
so to comply therewith, the Mortgagor may delay compliance therewith until
the final determination of any such proceeding; and
(b) if any lien, charge or civil liability would be incurred by reason
of any such delay, the Mortgagor nevertheless, on the prior written consent
of the Mortgagee, such consent not to be unreasonably withheld, may contest
and delay compliance with the Legal Requirement, provided that such delay
would not subject the Mortgagee to criminal liability and the Mortgagor (i)
furnishes to the Mortgagee security reasonably satisfactory to the
Mortgagee against loss or injury by reason of such contest or delay and
(ii) prosecutes the contest with due diligence.
2.6.2. Notwithstanding the provisions of SECTION 2.6.1, if any delay in
compliance with any Legal Requirement shall, in the reasonable judgment of the
Mortgagee, place all or any part of the Mortgaged Premises in imminent danger of
being forfeited or lost, the Mortgagor shall, upon written notice from the
Mortgagee, immediately comply with such Legal Requirement.
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2.6.3. The Mortgagor will use and permit the use of the Mortgaged Premises
only in accordance with the material requirements of any applicable licenses and
permits issued by Governmental Authorities.
2.6.4. The Mortgagor will procure, pay for and maintain (or cause to be
procured, paid and maintained) all permits, licenses and other authorizations
required to be procured and maintained by the owners and operators of the
Mortgaged Premises for any then use of all or any part of the Mortgaged Premises
then being made and for the lawful and proper operation and maintenance thereof.
2.7. Limitation on Alterations and Demolition.
2.7.1. The Mortgagor shall not voluntarily demolish, replace or alter the
Mortgaged Premises, or any part thereof, or voluntarily make any addition
thereto, or voluntarily construct any additional improvements thereon, or suffer
any of the same to occur, whether structural or otherwise (collectively,
"change"), without the prior written consent of the Mortgagee, which consent
shall not be unreasonably withheld or delayed; provided, however, that if no
Event of Default is continuing and such change involves an estimated cost of
less than $100,000 and is non-structural or if no Event of Default is continuing
and such change is non-structural and is being made to prepare space for a Space
Tenant pursuant to a Space Lease entered into in accordance with the Loan
Agreement, then, in either of such events, the Mortgagee's consent shall not be
required; provided, further, however, that if any such change is required by
law, the Mortgagor may make such change with the prior written consent of the
Mortgagee, which consent the Mortgagee will not unreasonably withhold or delay.
As a condition to any consent under this SECTION 2.7.1, the Mortgagee may
require (a) that plans and specifications for the proposed work, prepared by a
reputable architect reasonably satisfactory to the Mortgagee, be submitted to
the Mortgagee for approval, and (b) that the Mortgagor obtain a payment and
performance bond or other security reasonably satisfactory to the Mortgagee in
form and amount reasonably satisfactory to the Mortgagee from the contractor or
subcontractor performing the work unless such work amounts to less than $200,000
in aggregate total cost. All work performed by or on behalf of the Mortgagor
shall be completed with all reasonable diligence and continuity, in a good and
workmanlike manner, and in compliance with all applicable Legal Requirements.
Unless, and to the extent that, the provisions of SECTION 2.7.2 be applicable,
no Building Service Equipment or Furnishings shall be removed from the Mortgaged
Premises during the course of any such work without prior notification to the
Mortgagee and unless
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provision is made for return or replacement on or prior to the completion of the
work. The provisions of this SECTION 2.7.1. shall apply to any change made or
required to be made by the Mortgagor in the course of complying with any other
of the provisions of this Mortgage. A duplicate set of all plans and
specifications required to be filed with any Governmental Authority prior to, or
at any time in connection with, any such alteration, demolition or new
construction shall be furnished to the Mortgagee. The Mortgagor will pay on
demand the reasonable expenses incurred by the Mortgagee in the review of plans
and specifications provided for in this Mortgage.
2.7.2. The Mortgagor shall have the right, at any time and from time to
time, to remove and dispose of any item of Building Service Equipment or
Furnishings which may have become obsolete or unfit for use or which is no
longer useful in the operation of the Improvements, provided that the Mortgagor
promptly replaces such item with other Building Service Equipment or
Furnishings, free of superior title, liens or claims (other than in favor of the
Mortgagee) unless consent of the Mortgagee is first obtained, not necessarily of
the same character but of at least equal quality, value and usefulness in
connection with the operation and maintenance of the Mortgaged Premises,
provided, further, however, no removal of any item of Building Service Equipment
or Furnishings then having a fair market value of $50,000 or more shall be made
without the prior written consent of the Mortgagee, which consent will not be
unreasonably withheld or delayed. However, if by reason of technological or
other developments in the operation and maintenance of buildings and other
improvements of the general character of the Improvements or a change in the use
of the Mortgaged Premises or any part thereof, no replacement of the Building
Service Equipment or Furnishings so removed would be necessary or desirable for
the proper operation or maintenance of the Improvements, the Mortgagor shall not
be required to replace the item so removed.
2.8. Limitation on Disposition of the Mortgaged Premises.
2.8.1. Except as expressly set forth in this Mortgage or the Loan Agreement
(including, without limitation, SECTIONS 5.01 and 6.21 of the Loan Agreement),
the Mortgagor shall not directly or indirectly sell, assign, mortgage, alienate,
pledge or otherwise transfer or further encumber the Mortgaged Premises or any
part thereof or any interest therein or in any of the rents, profits or income
generated thereby, whether voluntarily, involuntarily, by operation of law or
otherwise, or lease all or any portion
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thereof or an undivided interest therein, without the prior written consent of
the Mortgagee. The foregoing events are hereinafter referred as a "Transfer".
Any Transfer without prior written the consent of the Mortgagee is an Event of
Default.
2.8.2. If there shall be a violation of the terms and provisions of SECTION
2.8.1, whether by the Mortgagor or any other person, in addition to all other
rights and remedies available to the Mortgagee under this Mortgage, the
Mortgagee shall have the option, by the giving of notice to the Mortgagor, of
declaring the entire unpaid principal balance of the Note, together with all
accrued and unpaid interest and all other sums and charges evidenced thereby or
payable pursuant to the Loan Agreement, immediately due and payable.
2.9. Maintenance of Mortgaged Premises; Covenant Against Waste; Inspection
by the Mortgagee. The Mortgagor will not commit or permit waste on the Mortgaged
Premises and, at its expense, will keep and maintain the Improvements, the
Building Service Equipment and Furnishings in its (or their) present state of
repair and condition, reasonable wear and tear excepted, and, if improved, in
such improved state of repair and condition, reasonable wear and tear excepted;
provided, that this shall not limit the Mortgagor's other obligations hereunder,
such as compliance with laws. The Mortgagor shall do or cause to be done all
maintenance and make or cause to be made all repairs as may be required by the
landlord under any Space Lease. The Mortgagor will neither do nor permit to be
done anything to the Mortgaged Premises that may materially impair the value
thereof or which may violate any covenant, condition or restriction affecting
the Mortgaged Premises, or any part thereof, or which would effect any material
change therein or in the condition thereof that would increase the danger of
fire or other hazard arising out of the operation of the Mortgaged Premises.
Subject to the rights of Space Tenants, the Mortgagee, and its representatives
and agents, may enter and inspect the Mortgaged Premises at any time after
reasonable notice (which may be oral) during usual business hours, and the
Mortgagor shall, within thirty (30) days after demand by the Mortgagee (or
immediately upon demand in case of emergency), make such repairs, replacements,
renewals or additions, or perform such items of maintenance, to the Mortgaged
Premises as the Mortgagee may reasonably require in order to cause the Mortgaged
Premises to comply with the standards established in this SECTION 2.9.
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2.10. To Furnish Certificates; Other Reporting Requirements.
2.10.1. The Mortgagor will, at its own expense, deliver to the Mortgagee,
within fifteen (15) days after written request, but no more frequently than once
per six (6) month period, a written statement executed by the Mortgagor, in
recordable form, setting forth to the best of the Mortgagor's knowledge, the
amount then unpaid upon the Note and secured by this Mortgage and stating
whether any offsets or defenses exist against the indebtedness; and, if any such
offsets or defenses are alleged to exist, then the factual basis and amount of
such claimed offsets or defenses.
2.10.2. The Mortgagor will, if requested by the Mortgagee, deliver to the
Mortgagee a certificate of an officer of the general partner of the Mortgagor or
of such general partner's general partner, to the effect that he is familiar
with this Mortgage and the other Security Documents, has reviewed the affairs of
the Mortgagor, and to the best of his knowledge and belief there exists no Event
of Default and no act or event has occurred or exists which with notice or lapse
of time or both could become such an Event of Default, or if any such event or
Event of Default exists, specifying it and what action the Mortgagor is taking
to cause it to be remedied.
2.11. After-Acquired Property. All right, title and interest of the
Mortgagor in and to all improvements, betterments, renewals, substitutes and
replacements of, and all additions and appurtenances to, the Mortgaged Premises
hereafter acquired, constructed, assembled or placed on the Mortgaged Premises,
immediately upon such acquisition, construction, assembly or placement, as the
case may be, and in each such case without any further mortgage, conveyance or
assignment or other act of the Mortgagor, shall become subject to the lien of
this Mortgage as fully and completely, and with the same effect, as though now
owned by the Mortgagor and specifically described in the granting clauses
hereof; and at any time and from time to time the Mortgagor, on demand, will
execute, acknowledge and deliver to the Mortgagee any and all such further
assurances, mortgages, conveyances or assignments as the Mortgagee may
reasonably require to further evidence, confirm and perfect the provisions of
this SECTION 2.11.
2.12. Further Assurances. The Mortgagor shall, at its sole cost and without
expense to the Mortgagee, on demand, do, execute, acknowledge and deliver all
and every such further acts, deeds, conveyances, mortgages, assignments, notices
of assignment, transfers and assurances as
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the Mortgagee shall from time to time reasonably require for better assuring,
conveying, assigning, transferring and confirming unto the Mortgagee the
property and rights hereby mortgaged or assigned or intended now or hereafter so
to be, or which the Mortgagor may be or may hereafter become bound to convey,
mortgage or assign to the 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.
2.13. Recorded Instruments. The Mortgagor will promptly perform and
observe, or cause to be performed and observed, all of the terms, covenants and
conditions of all instruments of record affecting the Mortgaged Premises (other
than non-consensual encumbrances hereafter affecting the Mortgaged Premises, the
validity or enforceability of which the Mortgagor is contesting in accordance
with this Mortgage) where non-compliance therewith affects the security of this
Mortgage or imposes any duty or obligation upon the Mortgagor or any Space
Tenant. The Mortgagor shall do or cause to be done all things reasonably
required to preserve intact and unimpaired and to renew any and all
rights-of-way, easements, grants, appurtenances, privileges, licenses,
franchises and other interests and rights in favor of or constituting any
portion of the Mortgaged Premises. The Mortgagor will not, without the prior
written consent of the Mortgagee, which consent shall not be unreasonably
withheld or delayed, initiate, join in or consent to any private restrictive
covenant or other public or private restriction as to the use of all or any
portion of the Mortgaged Premises. The Mortgagor will, however, comply with all
lawful restrictive covenants and zoning ordinances and other public or private
restrictions affecting all or any portion of the Mortgaged Premises.
ARTICLE III.
Condemnation
3.1. Notice of Taking. The Mortgagor shall promptly notify the Mortgagee if
the Mortgagor receives notice of the institution of any proceeding or
negotiations for the taking of the Mortgaged Premises, or any part thereof,
whether for permanent or temporary use and occupancy in condemnation or by the
exercise of the power of eminent domain or by agreement of interested parties in
lieu of such condemnation (all the foregoing called a "taking"); shall keep the
Mortgagee currently advised, in detail, as to the status of such proceedings or
negotiations and will promptly give to the Mortgagee copies of all notices,
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pleadings, judgments, determinations and other papers received or delivered by
the Mortgagor in connection with any such proceedings. The Mortgagee shall have
the right to appear and participate in such proceedings and may be represented
by counsel. The Mortgagor will not, without the Mortgagee's prior written
consent, which consent shall not be unreasonably withheld or delayed, enter into
any agreement for the taking of the Mortgaged Premises, or any part thereof,
with anyone authorized to acquire the Mortgaged Premises by eminent domain or in
condemnation.
3.2. Condemnation Award. If the Mortgaged Premises shall be the subject of
a taking the Mortgagee shall be entitled to and shall receive the total of such
portion of all awards made that shall be allowed to the Mortgagor with respect
to all the right, title and interest of the Mortgagor in and to the Mortgaged
Premises (the award made in any total, partial or temporary taking is herein
called the "Award"), provided that the obligations of the Mortgagor to perform
the terms, covenants and conditions of this Mortgage, if any, affected by such
taking shall continue unimpaired until the actual vesting of title in such
proceeding and the actual receipt by the Mortgagee of the Mortgagor's share of
the entire Award resulting from such taking.
3.3. Application of Award. The Mortgagee shall have the option of treating
a total taking or a substantial taking (as hereinafter defined) as an Event of
Default and of accelerating the entire indebtedness evidenced by the Note, in
which event it shall apply the Mortgagor's entire Award in reduction of such
indebtedness (including principal, interest and other sums secured hereby, in
such order as the Mortgagee may determine) and shall turn over any balance
remaining, if any, to the Person lawfully entitled thereto; or if the Mortgagee
shall not so elect to accelerate the indebtedness and apply the Award thereto,
then the total Award shall, regardless of amount, be deposited with the
Mortgagee or with the Depository, the Mortgagor hereby agreeing to elect that
such proceeds be held and disbursed by the Depository in accordance with
SECTIONS 2.5.6, 2.5.7, 2.5.8, 2.5.9 and 2.5.10 hereof for restoration required
to be made by the Mortgagor. If there be a partial taking, the net proceeds of
the Award shall be deposited with the Mortgagee and applied by the Mortgagee in
accordance with the provisions of SECTIONS 2.5.6, 2.5.7, 2.5.9 and 2.5.10. Any
Award remaining after the completion of such restoration, replacement or
rebuilding shall be applied in reduction of the indebtedness (including
principal, interest and other sums secured hereby) in such order as the
Mortgagee shall determine. A partial taking is substantial only if it materially
decreases the fair market
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value of the Mortgaged Premises and the remainder of the Mortgaged Premises
cannot be restored to an economically viable whole.
3.4. Temporary Taking. If any Award payable to the Mortgagor on account of
a taking for temporary use or occupancy is made in a lump sum or is payable
other than in equal monthly installments, the Mortgagor shall pay over such
Award to the Depository and such Award shall be applied to installments of
Impositions and of principal and interest and all other charges secured by this
Mortgage or due under the Note, the Loan Agreement, or the other Security
Documents as and when the same become due and payable. Any unapplied portion of
such Award held by the Depository when such taking ceases or expires (if no
Event of Default has then occurred and is continuing), or after the indebtedness
shall have been paid in full, shall be paid to the Person lawfully entitled
thereto.
3.5. The Mortgagor's Obligation to Restore. If all available proceeds of
the Award are made available to the Mortgagor for restoration, replacement or
rebuilding pursuant hereto, the Mortgagor shall be obligated promptly to
restore, replace, rebuild or alter any Improvements or Building Service
Equipment affected by a taking so as to restore the Mortgaged Premises to an
economically viable whole, all without regard to the adequacy of the proceeds of
an Award, if any, made available to the Mortgagor.
ARTICLE IV.
Assignment of Space Leases, Rents, Profits
and Other Income as Further Security, Etc.
4.1. Assignment of Space Leases, Rents, Issues and Profits. Subject to the
Mortgagor's rights herein, including those set forth in SECTION 4.3.2 below, the
Mortgagor hereby absolutely, presently and irrevocably transfers, assigns and
sets over unto the Mortgagee all right, title and interest of the Mortgagor in
and to all Space Leases, if any, now or hereafter entered into with respect to
all or any part of the Mortgaged Premises, and all renewals, extensions,
subleases or assignments thereof, and all other occupancy agreements (written or
oral), by concession, license or otherwise, together with all of the rents,
income, receipts, revenues, issues and profits arising therefrom (the
"Collateral").
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4.2. The Mortgagor's Covenants Regarding Space Leases.
4.2.1. Without the prior consent and approval of the Mortgagee in each
instance, the Mortgagor will not (a) assign, pledge, hypothecate or otherwise
encumber any of the Space Leases or the rents, income, issue and profits of the
Mortgaged Premises; or (b) enter into any Space Leases affecting the Mortgaged
Premises or any part thereof, unless such Space Lease is expressly subordinate
to the lien of this Mortgage and to any consolidation, extension, renewal,
recasting or refinancing hereof and the Space Lease provides, in substance, that
in the event of enforcement by the Mortgagee of the remedies provided for by law
or by this Mortgage, each Space Tenant shall, at the option of the Mortgagee,
enter into a agreement with the Mortgagee which shall provide, among other
things, that (i) such Space Tenant shall attorn to any person succeeding to the
interest of the Mortgagor as a result of such enforcement and shall recognize
such successor in interest as landlord under such Space Lease without change in
the terms or other provisions thereof, (ii) such successor shall not be bound by
any payment of rent or additional rent for more than one (1) month in advance or
any amendment or modification of any such Space Lease made without the
Mortgagee's written consent, and (iii) such successor shall not disturb the
possession of the Space Tenant provided certain conditions (as determined by the
Mortgagee) have been satisfied, including, without limitation, that the Space
Tenant shall not be in default under the terms of the Space Lease; or (c) enter
into any Space Leases without the prior written consent of the Mortgagee unless
permitted in SECTION 6.21 of the Loan Agreement.
4.2.2. The Mortgagor further represents, warrants, covenants and agrees
that:
(a) To the best of its knowledge, each Space Lease is (or, when
executed, will be) a valid and legally enforceable obligation of the
parties thereto, in full force and effect.
(b) With respect to each Space Lease and the Space Tenant security
deposits thereunder, any and/or all of such security deposits shall be held
as required by the Space Lease but in no event in a manner other than that
required by law.
(c) The Mortgagor shall, at its sole cost and expense, keep, observe,
perform and discharge, duly and punctually, all and singular the material
obligations, terms, covenants, conditions,
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representations and warranties of each Space Lease on the part of the
Mortgagor to be kept, observed, performed and discharged.
(d) (i) Except as herein in this clause (i) expressly provided, the
Mortgagor shall, at its sole cost and expense, maintain the Space Leases in
full force and effect; the Mortgagor will not waive its rights under or
materially modify, change, supplement, alter or amend ("Change"), nor shall
the Mortgagor surrender (whether partial or total), terminate, cancel or
subordinate, any of the Space Leases or enter into any Backlease (whether
through an Affiliate or otherwise), and any such attempted Change,
surrender, termination, cancellation or subordination or Backlease shall be
void, unless, in each case, the prior written consent thereto of the
Mortgagee shall have been obtained. Notwithstanding the foregoing, the
Mortgagor may (x) terminate any Space Lease under 10,000 rentable square
feet as a result of a default by the tenant under such Space Lease and (y)
consent to any sublease or assignment of any Space Lease under 10,000
rentable square feet provided (aa) such termination is being effected in
the ordinary course of the Mortgagor's business, (bb) no Event of Default
then exists and no event has occurred that with the passage of time or the
giving of notice or both would constitute an Event of Default, and (cc) the
Mortgagee determines, in its reasonable discretion, that upon the
effectiveness of such termination, assignment or sublease (i) the Loan to
Value Ratio (as defined in the Loan Agreement, and taking into
consideration the value of all of the Projects, as defined in the Loan
Agreement) is not greater than 55%, and (ii) the Debt Service Coverage
Ratio (as defined in the Loan Agreement, and taking into consideration the
loss of income resulting from such termination, assignment or sublease, as
projected by the Mortgagee in its reasonable discretion) is not less than
1.40:1.0. A material Change shall include but not be limited to any
material Change in the amount or time of payment of the rent or additional
rent, the length of term or square footage of the premises under any Space
Lease or any other Change which would materially adversely affect the
Mortgagor's rights under the Space Lease, or would affect the Mortgagee's
rights under the Space Lease or the value of the Space Lease as collateral
security for the indebtedness.
(ii) The Mortgagor shall, at its sole cost and expense, enforce
the Space Leases in accordance with their terms; and shall appear in
and defend any action or proceeding arising to which it is
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a party under or in any manner connected with any of the Space Leases.
(e) The Mortgagor shall deliver to the Mortgagee a copy of each notice
of default sent or received by it relating in any way to any Space Lease
promptly upon, but in any event within five (5) business days after, its
sending or receipt thereof.
4.3. The Mortgagor's Rights and Powers.
4.3.1. The Mortgagor hereby irrevocably, in the name of the Mortgagor or
otherwise, authorizes and empowers the Mortgagee, and assigns and transfers unto
the Mortgagee, and constitutes and appoints the Mortgagee its true and lawful
attorney-in-fact, coupled with an interest and as its agent, irrevocably, with
full power or substitution for it and in its name, but solely for the following
purposes: (i) to exercise and enforce every right, power, remedy, authority,
option and privilege of the Mortgagor under the Space Leases, and as such
attorney-in-fact, the Mortgagee may subordinate, terminate, cancel or modify the
Space Leases, accept the surrender of the Space Leases, give any notice, take
any action resulting in such subordination, termination, cancellation,
modification or surrender, give any authorization, furnish any information, make
any demands, execute any instruments and take any and all other action on behalf
of and in the name of the Mortgagor which in the opinion of the Mortgagee may be
necessary or appropriate to be given, furnished, made, exercised or taken by the
Mortgagor under the Space Leases in order to comply therewith, to perform the
conditions thereof or to prevent or remedy any default by the Mortgagor
thereunder or to enforce any of the Mortgagor's rights and remedies there-under,
and (ii) to ask, require, demand, receive and collect and give acquittances for
the Income (as hereinafter defined), and on nonpayment thereof to sue for,
recover and receive the same, and on payment thereof to give sufficient
releases, receipts, discharges and acquittances thereof; to endorse any checks
or other instruments or orders in connection therewith and to file any claims or
take any action or institute any proceedings which the Mortgagee may deem to be
necessary or advisable; provided, however, that the power provided for in this
sentence may not be exercised by the Mortgagee unless an Event of Default shall
have occurred and be continuing. "Income" shall mean all deposits, rents,
issues, profits, revenues, royalties, and other revenue producing arrangements,
whether written or oral, and all monetary benefits of, and/or derived from,
and/or sums payable under and by virtue of the Space Leases and/or the Premises.
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4.3.2. So long as there shall not have occurred and then be continuing any
Event of Default and until such right of the Mortgagor is terminated by the
Mortgagee as provided in SECTION 4.3.3, the Mortgagee will not exercise its
rights pursuant to SECTION 4.3.1, and, notwithstanding anything in SECTION 4.3.1
to the contrary, the Mortgagor shall have the right (but limited as hereinafter
provided) to exercise all of its rights under the Space Leases, including,
without limitation, to collect and receive all rents, income, receipts,
revenues, issues and profits arising therefrom, provided that the Mortgagor
shall at all times comply with, observe and perform, in the exercise of such
right, all of the provisions of this Mortgage and the other Security Documents
applicable to the Space Leases; provided, further, that no action shall be taken
or failed to be taken by the Mortgagor which would impair the Collateral or any
other collateral security for the Obligations provided for in the Security
Documents.
4.3.3. The Mortgagee, upon the occurrence and during the continuance of an
Event of Default, at its option and upon written notice to the Mortgagor, shall
have the right to terminate the right of the Mortgagor to exercise its rights
under the Space Leases, and, thereupon, in addition, the Mortgagee, at any time
thereafter, at its option, shall have the complete right, power and authority
hereunder to exercise and enforce all rights, powers, remedies, authority,
options and privileges of the Mortgagor under the Space Leases in the name of
the Mortgagor or the Mortgagee, to enforce all obligations of the other parties
to the Space Leases and to exercise and enforce all of its rights and remedies
hereunder and under law not exercisable prior to an Event of Default.
4.3.4. The Mortgagor does hereby direct each and all of the Space Tenants
under the Space Leases and all contractual obligors of the Mortgagor to pay any
Income to the Mortgagee upon written demand for payment thereof by the Mortgagee
without further inquiry. It is understood and agreed, however, that no such
demand shall be made unless an Event of Default shall have occurred and be
continuing. No such Space Tenant or obligor shall be obliged to account to the
Mortgagor for any amounts paid to the Mortgagee by reason of any payment made to
the Mortgagee pursuant to such demand and, upon any such payment to the
Mortgagee, shall be pro tanto released from their obligations to the Mortgagor
with respect to such payment. Each Space Tenant shall be permitted to rely on
any communication from the Mortgagee pursuant hereto, and under no circumstances
shall such Space Tenant be obligated to the Mortgagor for any payments made to
the Mortgagee hereunder. Until such demand is made, the Mortgagor is authorized
to collect or enforce or continue
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collecting or enforcing such Income in accordance with the provisions of this
Mortgage.
4.3.5. The Mortgagee shall not have any duty as to the collection or
protection of the Collateral or any income thereon or payments with respect
thereto, or as to the preservation of any rights pertaining thereto beyond the
safe custody of any thereof actually in its possession. In no instance shall the
Mortgagee be responsible to lessees for payment of interest upon, or return of,
any lease security deposits, except as provided by law or as provided in the
leases and then only if and to the extent that such deposits are received by the
Mortgagee. The Mortgagor hereby waives notice of acceptance hereof, and except
as otherwise specifically provided herein or required by provision of law which
may not be waived, hereby waives any and all notices or demands with respect to
any exercise by the Mortgagee of any rights or powers which it may have or to
which it may be entitled with respect to the Collateral.
4.3.6. The Mortgagor hereby irrevocably constitutes and appoints the
Mortgagee as the true and lawful attorney-in-fact of the Mortgagor, which
appointment is coupled with an interest, with full power of substitution, to
proceed from time to time in the Mortgagor's name in any statutory or
non-statutory proceeding affecting the Mortgagor or any Collateral, and the
Mortgagee or its nominee may (i) execute and file proof of claim for the full
amount of any Collateral and vote such claims for the full amount thereof (A)
for or against any proposal or resolution, (B) for a trustee or trustees or for
a receiver or receivers or for a committee of creditors and/or (C) for the
acceptance or rejection of any proposed arrangement, plan of reorganization,
composition or extension, and the Mortgagee or its nominee may receive any
payment or distribution and give acquittance therefor and may exchange or
release Collateral; (ii) endorse any draft or other instrument for the payment
of money, execute releases and negotiate and enter into settlements; and (iii)
execute all such other documents or instruments as may be necessary or expedient
to be executed by the Mortgagor for any of the purposes of this Mortgage;
provided, however, that the power provided for in this sentence may be exercised
by the Mortgagee only while an Event of Default is continuing. The Mortgagee
shall have no duty to exercise any of the aforesaid rights, privileges or
options and shall not be responsible for any failure to do so or delay in so
doing.
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4.4. Remedies and Entry Upon Default.
4.4.1. So long as no Event of Default shall have occurred and be
continuing, the Mortgagor shall have the right to collect (but not more than one
(1) month in advance) and retain all of the rents, gross receipts and other
payments, if any, from the Space Leases and from the Mortgaged Premises
generally, and the Mortgagee agrees that customary initial rent payments,
security deposits and reimbursements by a Space Tenant to the Mortgagor on
account of alterations made by the Mortgagor for the benefit of the Space Tenant
are permissible advance payments by the Space Tenant.
4.4.2. Upon any Event of Default, the Mortgagee may, but shall not be
obligated to:
(a) terminate the rights of the Mortgagor referred to in SECTION 4.3
hereof and exercise all of the powers, rights and remedies provided for in
SECTION 4.3 hereof, including those to be exercised only from and after an
Event of Default;
(b) at any time and from time to time, without notice to, or assent
by, the Mortgagor or any other Person, but without affecting any of the
Obligations, in the name of the Mortgagor or in the name of the Mortgagee,
notify the account debtors and obligors on any or all of the Space Leases
to make payment and performance directly to the Mortgagee, and demand,
collect, receive, compound and give acquittance for the Space Leases or any
part thereof; extend the time of payment and performance of, compromise or
settle for cash, credit or otherwise, upon any terms and conditions, any of
the Space Leases; endorse to the order of the Mortgagee checks, drafts or
other orders or instruments for the payment of moneys payable to the
Mortgagor which shall be issued in respect of any of the Space Leases; file
any claims, commence, maintain or discontinue any actions, suits or other
proceedings deemed by the Mortgagee necessary or advisable for the purpose
of collecting upon or enforcing any of the Space Leases; and execute any
instrument and do all other things deemed necessary and proper by the
Mortgagee to protect and preserve and realize upon the Space Leases and/or
the other rights contemplated hereby; the Mortgagor hereby irrevocably
constitutes and appoints the Mortgagee as such the Mortgagor's lawful
attorney-in-fact, coupled with an interest, and its agent for the foregoing
purposes;
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(c) demand, collect, sue for, attach, levy, recover, receive,
compromise and adjust, and make, execute and deliver receipts and releases
for all Income that may then be or may thereafter become due, owing or
payable with respect to the Premises or any part or parts thereof from any
present or future lessees, tenants, subtenants or occupants thereof or from
any present or future contract obligors; and/or
(d) pay, in such order as the Mortgagee in its sole discretion shall
determine, from and out of the Income collected in connection with the
Premises and/or the Collateral or any part or parts thereof or from or out
of any other funds (less the expense of collection, including reasonable
attorneys' fees and disbursements), any taxes, assessments, water rates,
sewer rates, or other government or other charges levied, assessed or
imposed against the Premises or any part or part thereof, and also any and
all other charges, costs and expenses which the Mortgagee deems necessary
or advisable to pay in respect of the management or operation of the
Premises, including, without limitation, the costs of insurance policies,
repairs and alterations, commissions for renting the Premises or any part
or parts thereof, legal expenses in enforcing claims, preparing papers or
procuring any other services that may be required and any amounts payable
under or pursuant to any Lease; all amounts so paid and expended shall be
payable on demand, together with interest at the Involuntary Rate from the
date incurred until paid, and be deemed to be included within the
Obligations and secured by this Mortgage; the provisions of this ARTICLE
and the rights given to the Mortgagee hereby shall inure to the benefit of
the Mortgagee even though the Mortgagee does not enter and take possession
of the Premises; any balance remaining after the indebtedness and the other
obligations of the Mortgagor under the Loan and Security Documents shall
have been paid in full shall be turned over to the Person lawfully entitled
thereto. Neither the entry upon and taking possession of the Mortgaged
Premises, nor the collection and application of the rents, gross receipts
or other charges thereof, nor any other action taken by the Mortgagee in
connection therewith, shall cure or waive any default hereunder or waive or
modify any notice thereof or notice of acceleration of the Note theretofore
given by the Mortgagee.
4.4.3. If an Event of Default shall have occurred and be continuing, a
notice in writing by the Mortgagee to the Space Tenants under the Space Leases
advising them that the Mortgagor has defaulted hereunder and
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requesting that all future payments of rent, additional rent or other charges
under the Space Leases be made to the Mortgagee (or its agent) shall be
construed as conclusive authority to such Space Tenants that such payments are
to be made to the Mortgagee (or its agent). Each Space Tenant shall be fully
protected in making such payments to the Mortgagee (or its agent) and be given
full credit against its obligations under the applicable Space Lease to the
extent of payments made to the Mortgagee (or its agent) pursuant to any such
notice; and the Mortgagor hereby irrevocably constitutes and appoints the
Mortgagee the attorney-in-fact and agent of the Mortgagor, coupled with an
interest, for the purpose of endorsing the consent of the Mortgagor on any such
notice.
4.5. No Obligation of Mortgagee.
4.5.1. The Mortgagee shall not be obligated to perform or discharge any
obligation of the Mortgagor as a result of the assignment hereby effected, and
the Mortgagor hereby agrees to indemnify and hold the Mortgagee harmless from
and against any and all liability, loss or damage which the Mortgagee may incur
by reason of any act of the Mortgagee under this Mortgage, other than as a
result of the Mortgagee's willful misconduct or gross negligence and other than
as a result of the Mortgagee's misconduct or negligence after the Mortgagee has
taken possession of the Premises. Should the Mortgagee (i) incur any such
liability, loss or damage by reason of this Mortgage and which is covered by the
foregoing indemnity, or in defense against any such claims or demands, or (ii)
perform any acts or covenants on the part of the Mortgagor to be performed under
the Space Leases, or (iii) pay for the account of the Mortgagor (other than from
Income or from funds delivered to the Mortgagee by the Mortgagor to be held in
trust for such purpose), any and all sums, costs and expenses for the discharge
of taxes, assessments, water rents or other liens against the Collateral or any
part thereof, or on account of insurance premiums or repairs, and also any
amounts and expenses necessary to perform any covenants and conditions to be
performed on the part of the Mortgagor under the Space Leases, the amount
thereof, including costs, expenses and reasonable attorneys' fees, together with
interest thereon at the Involuntary Rate from the date such expenses were paid
by the Mortgagee to the date of payment to the Mortgagee by the Mortgagor, shall
be included in the Obligations secured by this Mortgage, and the Mortgagor shall
reimburse the Mortgagee therefor upon demand.
4.5.2. The acceptance by the Mortgagee of this Mortgage, with all the
rights, powers, privileges and
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authority so created, shall not at any time or in any event obligate the
Mortgagee to appear in or defend any action or proceeding relating to the
Collateral, or to take any action hereunder or thereunder, or to expend any
money or incur any expenses or perform or discharge any obligation, duty or
liability under the Collateral.
ARTICLE V.
Security Agreement Under Uniform Commercial Code
5.1. This Mortgage shall constitute a security agreement within the meaning
of the Uniform Commercial Code of the State (the "Code"), and the Mortgagee
shall be deemed to be the "secured party" (as that term is defined in the Code).
The Mortgagor hereby grants to the Mortgagee, as additional collateral for the
obligations under the Note and the other Obligations secured hereby, a security
interest in and to all of the Mortgaged Premises which are considered or as
shall be determined to be personal property or "fixtures" (as defined in the
Code), including, without limitation, the Building Service Equipment, the
Furnishings, the Payments and Intangibles, all books, records, licenses and
certificates of the Mortgagor relating to the Mortgaged Premises, together with
all replacements thereof, substitutions therefor or additions thereto (said
property being sometimes hereinafter referred to as the "Personal Property").
The Mortgagor agrees that a security interest shall attach to the Personal
Property for the benefit of the Mortgagee to secure the indebtedness evidenced
by the Note and the other Obligations secured by this Mortgage and all other
sums and charges which may become due hereunder, thereunder or under any of the
other Security Documents. The Mortgagor hereby authorizes the Mortgagee to file
financing and continuation statements with respect to the Personal Property
without the signature of the Mortgagor, if permitted by the Code. In any event
the Mortgagor covenants to execute such financing and continuation statements as
the Mortgagee may reasonably request. If an Event of Default shall occur and be
continuing, the Mortgagee, pursuant to the appropriate provisions of the Code,
shall have the option of proceeding as to both real and personal property in
accordance with its rights and remedies in respect of real property under this
Mortgage and the law of the State, in which event the default provisions of the
Code shall not apply. The Mortgagor agrees that, in the event the Mortgagee
shall elect to proceed with respect to the Personal Property separately from the
real property, unless a greater period shall then be mandated by the Code, five
(5) days notice of the sale of the Personal Property shall be reasonable notice.
The expenses of retaking, holding,
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preparing for sale and selling incurred by the Mortgagee shall be assessed
against the Mortgagor and shall include, but not be limited to, the reasonable
legal expenses incurred by Mortgagee. The Mortgagor agrees that it will not
remove or permit to be removed from the Mortgaged Premises any of the Personal
Property without the prior written consent of the Mortgagee except as set forth
in SECTION 2.7.2. All replacements, renewals and additions to the Personal
Property shall be and become immediately subject to the security interest of
this Mortgage and the provisions of this ARTICLE V. The Mortgagor warrants and
represents that all Personal Property now is free and clear of all liens,
encumbrances or security interests other than the Permitted Encumbrances, and
that all replacements of the Personal Property, substitutions therefor or
additions thereto, unless the Mortgagee otherwise consents, will be, free and
clear of liens, encumbrances or security interests of others.
ARTICLE VI.
Events of Default and Remedies
6.1. Events of Default. The whole of the outstanding Principal Amount (as
defined in the Note) and accrued interest evidenced by the Note shall, at the
option of the Mortgagee, become due upon the happening of an Event of Default;
provided, however, that upon the occurrence of a default specified in SECTIONS
5.01(f) or 5.01(g) of the Loan Agreement, or upon the occurrence of any other
default specified in any Loan Document (as defined in the Loan Agreement) where
provision is made for acceleration to occur automatically as a consequence
thereof, all sums owing to the Mortgagee thereunder shall automatically become
immediately due and payable.
6.2. Remedies.
6.2.1. If an Event of Default shall occur and be continuing, the Mortgagee,
at its option, may:
(1) by notice to the Mortgagor, declare the entire principal amount of
the Note then outstanding and all accrued and unpaid interest thereon and
all obligations of the Mortgagor to the Mortgagee to be immediately due and
payable, and upon such declaration such principal and interest and all
obligations of the Mortgagor to the Mortgagee shall become and be
immediately due and payable, anything in the Note, the Loan Agreement or in
this Mortgage or in
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any of the other Security Documents to the contrary notwithstanding;
(2) during the continuance of any such Event of Default, Mortgagee
personally, or by its agents or attorneys, may enter into and upon all or
any part of the Premises, and each and every part thereof, and is hereby
given a right and license and appointed Mortgagor's attorney-in-fact and
exclusive agent to do so, and may exclude Mortgagor, its agents and
servants wholly therefrom; and having and holding the same, may use,
operate, manage and control the Mortgaged Premises and conduct the business
thereof, either personally or by its superintendents, managers, agents,
servants, attorneys or receivers; and upon every such entry, Mortgagee, at
the expense of the Mortgaged Premises, from time to time, either by
purchase, repairs or construction, may maintain and restore the Mortgaged
Premises whereof it shall become possessed as aforesaid, may complete the
construction of the Improvements and in the course of such completion may
make such changes in the contemplated Improvements as it may deem desirable
and may insure the same; and likewise, from time to time, at the expense of
the Mortgaged Premises, Mortgagee may make all necessary or proper repairs,
renewals and replacements and such useful alterations, additions,
betterments and improvements thereto and thereon as to it may seem
advisable; and in every such case Mortgagee shall have the right to manage
and operate the Mortgaged Premises and to carry on the business thereof and
exercise all rights and powers of Mortgagor with respect thereto either in
the name of Mortgagor or otherwise as it shall deem best; and Mortgagee
shall be entitled to collect and receive the rents, income, issue and
profits of the Mortgaged Premises, and every part thereof, all of which
shall for all purposes constitute property of Mortgagor; and in furtherance
of such right Mortgagee may collect the rents payable under all leases of
the Mortgaged Premises directly from the lessees thereunder upon notice to
each such lessee that an Event of Default exists hereunder accompanied by a
demand on such lessee for the payment to Mortgagee of all rents due and to
become due under its Space Lease, and Mortgagor FOR THE BENEFIT OF
MORTGAGEE AND EACH SUCH SPACE TENANT hereby covenants and agrees that the
Space Tenant shall be under no duty to question the accuracy of Mortgagee's
statement of default and shall unequivocally be authorized to pay said
rents to Mortgagee without regard to the truth of Mortgagee's statement of
default and notwithstanding notices from Mortgagor disputing the existence
of an Event of
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Default such that the payment of rent by the Space Tenant to Mortgagee
pursuant to such a demand shall constitute performance in full of the Space
Tenant's obligation under the Space Lease for the payment of rents by the
Space Tenant to Mortgagor; and after deducting the expenses of conducting
the business thereof and of all maintenance, repairs, renewals,
replacements, alterations, additions, betterments and improvements and
amounts necessary to pay for taxes, assessments, insurance and prior or
other proper charges upon the Mortgaged Premises or any part thereof, as
well as just and reasonable compensation for the services of Mortgagee and
for all attorneys, counsel, agents, clerks, servants and other employees by
it engaged and employed, Mortgagee shall apply the moneys arising as
aforesaid as provided below.
(3) with or without entry, personally or by its agents or attorneys,
insofar as applicable, may:
a. sell the Mortgaged Premises to the extent permitted and
pursuant to the procedures provided by law, and all estate, right,
title and interest, claim and demand therein, and right of redemption
thereof, at one or more sales as an entity or in parcels or parts, and
at such time and place upon such terms and after such notice thereof
as may be required or permitted by law; or
b. institute proceedings for the complete or partial foreclosure
of this Mortgage; or
c. take such steps to protect and enforce its rights whether by
action, suit or proceeding in equity or at law for the specific
performance of any covenant, condition or agreement in the Note or in
the Loan Agreement or in this Mortgage, or in aid of the execution of
any power herein granted, or for any foreclosure hereunder, or for the
enforcement of any other appropriate legal or equitable remedy or
otherwise as Mortgagee shall elect.
(4) exercise any and all remedies available to a secured party under
the UCC in such order and in such manner as the Mortgagee in its sole
discretion may determine; provided, however, that the expenses of retaking,
holding, preparing for sale or the like, shall include reasonable
attorneys' fees and
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other expenses of the Mortgagee and be secured by this Mortgage;
(5) exercise any or all of its other rights and remedies provided
herein, in any of the Security Documents, or other document or agreement
now or hereafter securing all or any portion of the Obligations secured
hereby, or as provided by law, in such order of priority as the Mortgagee
shall determine in its sole discretion.
6.2.2. Mortgagee may adjourn from time to time any sale by it to be made
under or by virtue of this Mortgage by announcement at the time and place
appointed for such sale or for such adjourned sale or sales; and, except as
otherwise provided by any applicable provision of law, Mortgagee, without
further notice or publication, may make such sale at the time and place to which
the same shall be so adjourned.
6.2.3. Upon the completion of any sale or sales made by Mortgagee under or
by virtue of this SECTION 6.2, Mortgagee, or an officer of any court empowered
to do so, shall execute and deliver to the accepted purchaser or purchasers a
good and sufficient instrument or instruments conveying, assigning and
transferring all estate, right, title and interest in and to the property and
rights sold. Mortgagee is hereby irrevocably appointed the true and lawful
attorney of Mortgagor, in its name and stead, to make all necessary conveyances,
assignments, transfers and deliveries of the Mortgaged Premises and rights so
sold and for that purpose Mortgagee may execute all necessary instruments of
conveyance, assignment and transfer, and may substitute one or more persons with
like power, Mortgagor hereby ratifying and confirming all that its said attorney
or such substitute or substitutes shall lawfully do by virtue hereof.
Nevertheless, Mortgagor, if requested by Mortgagee, shall ratify and confirm any
such sale or sales by executing and delivering to Mortgagee or to such purchaser
or purchasers all such instruments as may be advisable, in the judgment of
Mortgagee, for the purpose, and as may be designated in such request. Any such
sale or sales made under or by virtue of this SECTION 6.2 shall operate to
divest all 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 against any and all persons claiming or who may claim the same, or any part
thereof from, through or under Mortgagor.
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6.2.4. In the event of any sale or sales made under or by virtue of this
SECTION 6.2 (whether made under the power of sale herein granted or under or by
virtue of judicial proceedings or of a judgment or decree of foreclosure and
sale), the entire principal of, and interest on, the Note, if not previously due
and payable, and all other sums required to be paid by Mortgagor pursuant to
this Mortgage, immediately thereupon shall, anything in the Note or in this
Mortgage to the contrary notwithstanding, become due and payable.
6.2.5. The purchase money, proceeds or avails of any sale or sales made
under or by virtue of this SECTION 6.2, together with any other sums which then
may be held by Mortgagee under this Mortgage, whether under the provisions of
this SECTION 6.2, or otherwise, shall be applied as follows:
First: To the payment of the costs and expenses of such sale,
including reasonable compensation to Mortgagee, its agents and counsel, and
of any judicial proceedings wherein the same may be made, and of all
expenses, liabilities and advances made or incurred by Mortgagee under this
Mortgage, together with interest at the Involuntary Rate on all advances
made by Mortgagee, and of all taxes, assessments or other charges, except
any taxes, assessments or other charges subject to which the Mortgaged
Premises shall have been sold.
Second: To the payment of the whole amount then due, owing or unpaid
upon the Note for principal and interest, with interest on the unpaid
principal at the Involuntary Rate from and after the happening of any Event
of Default from the due date of any such payment of principal until the
same is paid.
Third: To the payment of any other sums required to be paid by
Mortgagor pursuant to any provision of this Mortgage or of the Note.
Fourth: To the payment of the surplus, if any, to whomsoever may be
lawfully entitled to receive the same.
6.2.6. Upon any sale or sales made under or by virtue of this SECTION 6.2,
Mortgagee may bid for and acquire the Mortgaged Premises or any part thereof and
in lieu of paying cash therefor may make settlement for the purchase price by
crediting upon the indebtedness secured by this Mortgage the net sales price
after deducting therefrom
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the expenses of the sale and the costs of the action and any other sums which
Mortgagee is authorized to deduct under this Mortgage.
6.2.7. In case an Event of Default shall have happened and be continuing,
then, upon written demand of Mortgagee, Mortgagor will pay to Mortgagee the
whole amount which then shall have become due and payable on the Note, for
principal or interest or both, as the case may be, and after the happening of
said Event of Default will also pay to Mortgagee interest at the Involuntary
Rate on the then unpaid principal of the Note, and the sums required to be paid
by Mortgagor pursuant to any provision of this Mortgage or the Note, and in
addition thereto such further amount as shall be sufficient to cover the costs
and expenses of collection, including reasonable compensation to Mortgagee, its
agents and counsel and any expenses incurred by Mortgagee hereunder. In the
event Mortgagor shall fail forthwith to pay such amounts upon such demand,
Mortgagee shall be entitled and empowered to institute such action or
proceedings at law or in equity as may be advised by its counsel for the
collection of the sums so due and unpaid, and may prosecute any such action or
proceedings to judgment or final decree, and may enforce any such judgment or
final decree against Mortgagor and collect, out of the property of Mortgagor
wherever situated, as well as out of the Mortgaged Premises, in any manner
provided by law, moneys adjudged or decreed to be payable.
6.2.8. Mortgagee shall be entitled to recover judgment as aforesaid either
before, after or during the pendency of any proceedings for the enforcement of
the provisions of this Mortgage; and the right of Mortgagee to recover such
judgment shall not be affected by any entry or sale hereunder, or by the
exercise of any other right, power or remedy for the enforcement of the
provisions of this Mortgage, or the foreclosure of the lien hereof; and in the
event of a sale of the Mortgaged Premises and of the application of the proceeds
of sale, as in this Mortgage provided, to the payment of the debt hereby
secured, Mortgagee shall be entitled to enforce payment of, and to receive all
amounts then remaining due and unpaid upon, the Note, and to enforce payment of
all other charges, payments and costs due under this Mortgage, and shall be
entitled to recover judgment for any portion of the debt remaining unpaid, with
interest at the Involuntary Rate. In case of proceedings against Mortgagor in
insolvency or bankruptcy or any proceedings for its reorganization or involving
the liquidation of its assets, then Mortgagee shall be entitled to prove the
whole amount of principal and interest due upon the Note to the full amount
thereof, and all other payments, charges and costs due under this Mortgage and
the Note,
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without deducting therefrom any proceeds obtained from the sale of the whole or
any part of the Mortgaged Premises, provided, however, that in no case shall
Mortgagee receive a greater amount than such principal and interest and such
other payments, charges and costs from the aggregate amount of the proceeds of
the sale of the Mortgaged Premises and the distribution from the estate of
Mortgagor.
6.2.9. No recovery of any judgment by Mortgagee and no levy of an execution
under any judgment upon the Mortgaged Premises or upon any other property of
Mortgagor shall affect in any manner or to any extent, the lien of this Mortgage
upon the Mortgaged Premises or any part thereof, or any liens, rights, powers or
remedies of Mortgagee hereunder, but such liens, rights, powers and remedies of
Mortgagee shall continue unimpaired as before.
6.2.10. Any moneys thus collected by Mortgagee under this SECTION 6.2 shall
be applied by Mortgagee in accordance with the provisions of SECTION 6.2.5
hereof.
6.2.11. After the happening of any Event of Default and immediately upon
the commencement of any action, suit or other legal proceedings by Mortgagee to
obtain judgment for the principal of, or interest on, the Note and other sums
required to be paid by Mortgagor pursuant to any provision of this Mortgage or
the Note, or of any other nature in aid of the enforcement of the Note or of
this Mortgage, Mortgagor will (a) waive the issuance and service of process and
enter its voluntary appearance in such action, suit or proceeding and (b) if
required by Mortgagee, consent to the appointment of a receiver or receivers of
all or part of the Mortgaged Premises and of any or all of the rents, issues and
profits of the Mortgaged Premises in respect thereof. After the happening of any
Event of Default and during its continuance, or upon the commencement of any
proceedings to foreclose this Mortgage or to enforce the specific performance
hereof or in aid thereof or upon the commencement of any other judicial
proceeding to enforce any right of Mortgagee, Mortgagee shall be entitled, as a
matter of right, if it shall so elect, without the giving of notice to any other
party and without regard to the adequacy or inadequacy of any security for the
indebtedness secured hereby, forthwith either before or after declaring the
unpaid principal of the Note to be due and payable, to the appointment of such a
receiver or receivers.
6.2.12. Notwithstanding the appointment of any receiver, liquidator or
trustee of Mortgagor, or of any of its property, or of the Mortgaged Premises,
or any part
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thereof, Mortgagee shall be entitled to retain possession and control of all
property now or hereafter held under this Mortgage.
6.2.13. Mortgagor will not at any time insist upon, or plead, or in any
manner whatever claim or take any benefit or advantage of any stay or extension
or moratorium law, any exemption from execution or sale of the Mortgaged
Premises or any part thereof, wherever enacted, now or at any time hereafter in
force, which may affect the covenants and terms of performance of this Mortgage,
nor claim, take or insist upon any benefit or advantage of any law now or
hereafter in force providing for the valuation or appraisal of the Mortgaged
Premises, or any part thereof, prior to any sale or sales thereof which may be
made pursuant to any provision herein, or pursuant to the decree, judgment or
order of any court of competent jurisdiction; nor, after any such sale or sales,
claim or exercise any right under any statute heretofore or hereafter enacted to
redeem the property so sold or any part thereof and Mortgagor hereby expressly
waives all benefit or advantage of any such law or laws, and covenants not to
hinder, delay or impede the execution of any power herein granted or delegated
to Mortgagee, but to suffer and permit the execution of every power as though no
such law or laws had been made or enacted.
6.2.14. During the continuance of any Event of Default and pending the
exercise by Mortgagee of its right to exclude Mortgagor from all or any part of
the Premises, Mortgagor agrees to pay the fair and reasonable rental value for
the use and occupancy of the Premises or any portion thereof which are in its
possession for such period and, upon default of any such payment, will vacate
and surrender possession of the Premises to Mortgagee or to a receiver, if any,
and in default thereof may be evicted by any summary action or proceeding for
the recovery of possession of premises for non-payment of rent, however
designated.
6.3. Sale; No Marshalling of Assets.
6.3.1. In case of a foreclosure sale, all of the Mortgaged Premises may be
sold in one parcel even though the proceeds of such sale exceed or may exceed
the indebtedness secured hereby. The Mortgagee shall not be required to exercise
any rights under this Mortgage before proceeding against any other security,
shall not be required to proceed against other security before proceeding under
this Mortgage, and shall not be precluded from proceeding against any or all of
any security held by the Mortgagee
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for any or all of the indebtedness secured hereby in any order or at the same
time.
6.3.2. The Mortgagor agrees, to the full extent that it may lawfully do so,
that in any foreclosure or other action brought by the Mortgagee to enforce this
Mortgage, it will not at any time insist upon or plead or in any way take
advantage of any appraisement, valuation, stay, marshalling of assets,
extension, redemption or moratorium law now or hereafter in force and effect so
as to prevent, hinder, delay or otherwise affect the enforcement of the
provisions of this Mortgage or any rights or remedies the Mortgagee may have
hereunder or by law.
6.3.3. If the Mortgagee shall elect to accelerate the indebtedness by
following the occurrence of an Event of Default, the Mortgagor, within five (5)
days after demand, will pay to the Mortgagee, or any receiver appointed in
connection with the foreclosure of this Mortgage, any and all amounts then held
as security deposits under all Space Leases; and the Mortgagee or such receiver
shall be deemed to indemnify the Mortgagor against all claims of tenants in
respect of the security deposits so paid following such demand.
6.4. Legal Expenses of the Mortgagee.
6.4.1. The Mortgagor will pay to the Mortgagee, on demand, all costs,
charges and expenses (including, without limitation, reasonable attorneys' fees
and disbursements) incurred or paid at any time by the Mortgagee (i) in
connection with any action or proceeding to foreclose this Mortgage or to
recover or collect all, or any portion of the indebtedness; and (ii) in
connection with any modification or amendment or assignment of this Mortgage or
the other Security Documents, together with interest on each such payment made
by the Mortgagee at the Involuntary Rate from the date of the Mortgagee's demand
for such payment to the date of reimbursement by the Mortgagor.
6.4.2. If any action or proceeding be commenced in which the Mortgagee is
made a party, or in which it becomes necessary to defend or uphold the lien of
this Mortgage, all reasonable sums paid by the Mortgagee for the expense of any
litigation to prosecute or defend the title, rights and lien created by this
Mortgage (including, without limitation, reasonable attorneys' fees) shall be
paid by the Mortgagor, together with interest thereon at the Involuntary Rate
from the date of the Mortgagee's demand for such payment to the date of
reimbursement by the Mortgagor.
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6.5. Remedies Cumulative; No Waiver; Etc.
6.5.1. No remedy in this Mortgage conferred upon or reserved to the
Mortgagee is intended to be exclusive of any other remedy or remedies, and each
and every such remedy shall be cumulative, and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law or in equity.
No delay or omission by the Mortgagee in exercising any right or power arising
upon any Event of Default shall impair any such right or power, or shall be
construed to be a waiver of or acquiescence in any such Event of Default; and
every power and remedy given by this Mortgage to the Mortgagee may be exercised
from time to time as often as the Mortgagee may determine it is appropriate to
do so.
6.5.2. A waiver in one or more instances of compliance with any of the
terms, covenants, conditions or provisions of the Note, the Loan Agreement or of
the Security Documents shall apply to the particular instance or instances and
at the particular time or times only, and no such waiver shall be deemed a
continuing waiver. In any event, no waiver shall be effective, or be asserted by
the Mortgagor as having been made, unless set forth in a writing signed by the
Mortgagee.
6.5.3. The Mortgagor waives and renounces all homestead and similar
exemption rights with respect to the Mortgaged Premises provided for by the
Constitution and laws of the United States and of the State as against the
collection of the Security Documents, or any part thereof.
6.6. No Merger. It is the intention of the parties to this Mortgage that if
the Mortgagee shall at any time hereafter acquire title to all or any portion of
the Mortgaged Premises, then, and until the indebtedness secured hereby has been
paid in full, the interest of the Mortgagee hereunder and the lien of this
Mortgage shall not merge or become merged in or with the estate and interest of
the Mortgagee, as the holder and owner of title to all or any portion of the
Mortgaged Premises and that, until such payment, the estate of the Mortgagee in
the Mortgaged Premises and the lien of this Mortgage and the interest of the
Mortgagee hereunder shall continue in full force and effect to the same extent
as if the Mortgagee had not acquired title to all or any portion of the
Mortgaged Premises.
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ARTICLE VII.
Provisions of General Application
7.1. Modifications. No change, amendment, termination, modification or
cancellation of this Mortgage, or of any part hereof, shall be valid unless set
forth in a writing signed by the Mortgagor and the Mortgagee, except that only
the Mortgagee need sign any satisfaction of this Mortgage. ANY AGREEMENT
HEREAFTER MADE BY MORTGAGOR AND MORTGAGEE RELATING TO THIS MORTGAGE SHALL BE
SUPERIOR TO THE RIGHTS OF THE HOLDER OF ANY INTERVENING OR SUBORDINATE LIEN OR
ENCUMBRANCE.
7.2. Notices. All notices, demands, requests, consents, approvals or other
communications (each, a "Notice") given or required to be given hereunder shall
be sent to the addresses and in the manner required by the Loan Agreement.
7.3. The Mortgagee's Rights to Perform the Mortgagor's Covenants. If the
Mortgagor shall fail to pay or cause payment to be paid to the Mortgagee in
accordance with the terms of the Security Documents, or to perform or observe
any other term, covenant, condition or obligation required to be performed or
observed by the Mortgagor under this Mortgage or the other Security Documents,
without limiting any other provision of this Mortgage, and without waiving or
releasing the Mortgagor from any obligation or default hereunder, after giving
any notice to the Mortgagor required hereunder and after the passage of any
applicable cure periods (or without such notice in the event of an emergency),
the Mortgagee (or any receiver of the Mortgaged Premises) shall have the right,
but not the obligation, to make any such payment, or to perform any other act or
take any appropriate action, including, without limitation, entry on the
Mortgaged Premises and performance of work thereat, as it, in its sole
discretion, may deem necessary to cause such other term, covenant, condition or
obligation to be promptly performed or observed on behalf of the Mortgagor or to
protect the security of this Mortgage. All amounts advanced by, or on behalf of,
the Mortgagee in exercising its rights under this SECTION 7.3 (including, but
not limited to, legal expenses and disbursements incurred in connection
therewith), together with interest thereon at the Involuntary Rate from the date
of the Mortgagee's demand upon the Mortgagor for reimbursement of such sums
until reimbursement by the Mortgagor, shall be payable by the Mortgagor to the
Mortgagee upon demand and shall be secured by this Mortgage.
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7.4. Additional Sums Payable by the Mortgagor. All sums which, by the terms
of this Mortgage or any of the other Security Documents (excluding however the
principal indebtedness evidenced by the Note), are payable by the Mortgagor to
the Mortgagee shall, together with the interest thereon provided for herein or
in the Note or such other Security Documents, be added to and deemed part of the
indebtedness secured by the lien of this Mortgage whether or not the provision
which obligates the Mortgagor to make any such payment to the Mortgagee
specifically so states.
7.5. Captions. The captions used in this Mortgage are inserted only as a
matter of convenience and for reference, and in no way define, limit, enlarge or
describe the scope or intent of this Mortgage or in any other way affect this
Mortgage or the construction of any provision hereof.
7.6. Successors and Assigns. The covenants and agreements contained in this
Mortgage shall run with the land and bind the Mortgagor, the successors and
assigns of the Mortgagor and all subsequent owners, encumbrances and Space
Tenants of the Mortgaged Premises, or any part thereof; and shall inure to the
benefit of the Mortgagee, its successors and assigns and all subsequent
beneficial owners of this Mortgage.
7.7. Gender and Number. Wherever the context of this Mortgage so requires,
the neuter gender includes the masculine and/or feminine gender and the singular
number includes the plural.
7.8. Severability. If any one or more of the provisions contained in this
Mortgage shall for any reason be held to be invalid, illegal, or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provisions of this Mortgage; and this Mortgage shall, in such event,
be construed as if such invalid, illegal or unenforceable provision had never
been included.
7.9. Usury. Anything in the Note, the Loan Agreement, this Mortgage or the
other Security Documents to the contrary notwithstanding, the Mortgagee shall
never be entitled to receive, collect or apply as interest on the principal
amount of the Note or any other of the obligations secured hereby any amount in
excess of the maximum rate of interest permitted to be charged by applicable
law. In the event the Mortgagee ever receives, collects or applies as interest
any such excess, the amount which would be excessive interest shall be applied
to the reduction of the principal amount of said obligations; and if said
principal
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amount shall have been paid in full, shall be remitted to the Person lawfully
entitled thereto. In determining whether or not the interest paid or payable in
any specific instance shall exceed the highest lawful rate, the Mortgagor and
the Mortgagee shall to the maximum extent permitted by applicable law (i)
characterize any non-principal payment as an expense, fee or premium rather than
as interest, (ii) exclude voluntary prepayments and the effects thereof and
(iii) "spread" the total amount of interest throughout the entire contemplated
terms of the obligations so that the interest rate is uniform throughout the
entire said term.
7.10. Controlling Law. This Mortgage shall be governed by, and construed
and enforced in accordance with, the laws of the State of New York applicable to
contracts made and to be wholly performed within such state.
7.11. Entire Agreement. This Mortgage, together with the Note, the Loan
Agreement and the other Security Documents, embodies the entire agreement and
understanding between the parties relating to the subject matter hereof.
ARTICLE VIII.
Particular Provisions
The foregoing ARTICLES of this Mortgage are subject to the following
further provisions set forth in this ARTICLE VIII.
8.1. Limited Recourse. The provisions of PARAGRAPH 6.16 of the Loan
Agreement are hereby incorporated herein by reference.
8.2. Environmental Representations and Warranties. The Mortgagor hereby
makes the following representations and warranties to the Mortgagee with respect
to the Mortgaged Premises:
8.2.1. Compliance with Environmental Laws. To the best of the Mortgagor's
knowledge based on all appropriate and thorough inquiry, (i) the Mortgaged
Premises (including surface and subsurface soil and water and areas leased to
tenants, if any), and the use and operation thereof, have been and are currently
in compliance with all Environmental Laws (as hereinafter defined), (ii) all
required permits are in effect, and the Mortgagor is in compliance therewith,
and (iii) all Hazardous Materials (as hereinafter defined) generated or handled
on the Mortgaged Premises have been disposed of in a lawful manner.
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8.2.2. No Hazardous Materials. To the best of the Mortgagor's knowledge
based on all appropriate and thorough inquiry (a) no Hazardous Release (as
hereinafter defined) or other Hazardous Activity (as hereinafter defined) has
occurred or is occurring on or from the Mortgaged Premises except in compliance
with Environmental Laws and as has been disclosed in writing to the Mortgagee
("Disclosed Material"), (b) all Hazardous Materials used, treated, stored,
transported to or from, generated or handled on the Mortgaged Premises have been
disposed of on or off the Mortgaged Premises in a lawful manner, (c) no
environmental or public health or safety hazards currently exist with respect to
the Mortgaged Premises or the business or operations conducted thereon, (d) no
underground storage tanks (including but not limited to petroleum or heating oil
storage tanks) are present on or under the Mortgaged Premises or have been on or
under the Mortgaged Premises, except as has been disclosed in writing to the
Mortgagee, and (e) no changes have been made to or discovered regarding the
operations, use or environmental conditions on the Mortgaged Premises since the
date of the most recent written environmental assessment provided to the
Mortgagee.
8.2.3. No Environmental Actions. To the best of the Mortgagor's knowledge
and based on all appropriate and thorough inquiry, the Mortgaged Premises is not
listed on any local, state and/or federal lists of potentially contaminated
sites, including, but not limited to, the National Priorities List,
Comprehensive Environmental Response, Compensation and Liability Information
System or any state or federal hazardous waste site or leaking underground
storage tank lists, and there have been no past and there are no pending or
threatened Environmental Actions (as hereinafter defined) to which the Mortgagor
is a party or which relate to the Mortgaged Premises. The Mortgagor has not
received any notice of any Environmental Action respecting Mortgagor, the
Mortgaged Premises or any off-site facility to which has been sent any Hazardous
Material for purposes of any Hazardous Activity.
8.2.4. Intentionally Deleted.
8.2.5. Definitions. For purposes of this Mortgage, the following
capitalized terms shall have the meanings set forth below:
"Environmental Action" shall mean:
(a) any notice of violation, complaint, claim, citation, demand,
inquiry, report, action, assertion of potential responsibility, lien,
encumbrance, or proceed-
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ing regarding the Mortgaged Premises, whether formal or informal, absolute
or contingent, matured or unmatured, brought or issued by any governmental
unit, agency, or body, or any person or entity respecting:
(1) any Environmental Law;
(2) the environmental condition of the Mortgaged Premises, or any
portion thereof, or any property near the Mortgaged Premises,
including actual or alleged damage or injury to humans, public health,
wildlife, biota, air, surface or subsurface soil or water, or other
natural resources; or
(3) any Hazardous Activity on the Mortgaged Premises or off-site;
(b) any violation or claim of violation by the Mortgagor of any
Environmental Law whether or not involving the Mortgaged Premises;
(c) any lien for damages caused by, or the recovery of any costs
incurred by any person or entity, including any governmental entity, for
the investigation, remediation or cleanup of any Hazardous Release or
threatened Hazardous Release on the Mortgaged Premises; or
(d) the destruction or loss of use of property, or the injury, illness
or death of any officer, director, employee, agent, representative, tenant
or invitee of the Mortgagor or any other person alleged to be or possibly
to be arising from or caused by the environmental condition of the
Mortgaged Premises or any Hazardous Activity on the Mortgaged Premises.
"Environmental Laws" shall mean:
(a) any present or future federal statute, law, code, rule,
regulation, ordinance, order, standard, permit, license, guidance document
or requirement (including consent decrees, judicial decisions and
administrative orders) together with all related amendments, implementing
regulations and reauthorizations, pertaining to the protection,
preservation, conservation or regulation of the environment, including, but
not limited to: the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act, 42 U.S.C. Sections 9601 et seq. ("CERCLA"); the
Resource Conservation and Recovery Act of 1976, 42 U.S.C. Sections 6901 et
seq. ("RCRA"); the Toxic Substances Control Act, 15 U.S.C. Sections 2601 et
seq. ("TOSCA"); the Clean Air Act, 42 U.S.C. Sections 7401
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et seq.; the Clean Water Act, 33 U.S.C. Sections 1251 et seq.; the
Hazardous Materials Transportation Act, 49 U.S.C. Sections 1801 et seq.
("HMTA"); the Emergency Planning and Community Right-to-Know Act, 42 U.S.C.
Sections 11011 et seq.; the Federal Insecticide, Fungicide and Rodenticide
Act, 7 U.S.C. Sections 136 et seq.; and the Atomic Energy Act, 42 U.S.C.
Sections 2011 et seq.
(b) any present or future state or local statute, law, code, rule,
regulation, ordinance, order, standard, permit, license or requirement
(including consent decrees, judicial decisions and administrative orders)
together with all related amendments, implementing regulations and
reauthorizations, pertaining to the protection, preservation, conservation
or regulation of the environment.
"Hazardous Activity" shall mean any use, exposure, Hazardous Release,
generation, manufacture, sale, transport, handling, storage, treatment,
reuse, presence, decontamination, clean-up or recycling of any Hazardous
Material.
"Hazardous Materials" shall mean (a) all substances defined as
"hazardous substances", "hazardous materials", "toxic substances",
"hazardous wastes" or "solid waste" in CERCLA, RCRA, TOSCA or HMTA; (b)
those substances listed in the United States Department of Transportation
Table (49 C.F.R. 172.101 and amendments thereto) or by the Environmental
Protection Agency (or any successor agency) as "hazardous substances" (40
C.F.R. Part 302 and amendments thereto); those substances defined as
"hazardous wastes" or "hazardous substances" in the regulations adopted and
publications promulgated pursuant to said laws or which otherwise are or
become regulated by any governmental authority, agency, department,
commission, board or instrumentality of the United States of America, the
State of New York, or any political subdivision thereof; (d) any hazardous,
dangerous or toxic chemical, material, waste, pollutant, contaminant or
substance (collectively, "Pollutants") within the meaning of any
Environmental Law prohibiting, limiting or otherwise regulating any
Hazardous Activity relating to any such Pollutant; (e) any petroleum, crude
oil, or fraction or by-product thereof; (f) any radioactive material,
including any source, special nuclear or by-product material as defined at
42 U.S.C. Sections 2011 et seq., as amended or hereafter amended, and in
the regulations adopted and publications promulgated pursuant to said law;
(g) asbestos-containing materials in any form or condition; and (h)
polychlorinated biphenyls in any form or condition.
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"Hazardous Release" shall mean the release of Hazardous Materials into
the environment by any means whatsoever, including but not limited to any
spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping removing or disposing (including the
abandonment or discarding of barrels, containers and other receptacles
containing any Hazardous Material).
8.3. Compliance with New York Lien Law. The Mortgagor will receive the
advances secured hereby and will hold the right to receive such advances as a
trust fund to be applied first for the purpose of paying the cost of any
improvement and will apply the same first to the payment of the cost of such
improvement before using any part of the total of the same for any other
purpose. The Mortgagor will strictly comply with SECTION 13 of the New York Lien
Law.
8.4. SECTION 291-f of New York Real Property Law. In accordance with
SECTION 291-f of New York Real Property Law, the Mortgagor shall not, without
the prior written consent of the Mortgagee or as otherwise permitted by this
Mortgage, (a) cancel, abridge or otherwise modify any Space Lease in existence
as of the date of this Mortgage so as to reduce any of the obligations of the
Space Tenant thereunder; or (b) accept prepayments for more than one (1) month
in advance of installments of rent to become due under any such Space Lease. The
Mortgagor covenants, promptly after the date hereof, to send notice to all Space
Tenants under existing Space Leases now having an unexpired term of five (5) or
more years of the existence of this Mortgage, together with a copy of the text
of this SECTION 8.4. The provisions of this SECTION 8.4 shall apply as well to
any Space Lease hereafter entered into by the Mortgagor. Any cancellation,
abridgement, modification or prepayment made by any Space Tenant under a Space
Lease after the written notice provided for herein without the consent of the
Mortgagee shall be voidable by the holder of the Note and this Mortgage, as such
holder may elect.
8.5. Statement Required by SECTION 274-a of New York Real Property Law. The
Mortgagee shall, when and if required by such SECTION, provide the Mortgagor
with the statement required by SECTION 274-a of New York Real Property Law when
and if required by such SECTION and, if no Event of Default then exists, the
Mortgagee shall, within fifteen (15) days after request, furnish such a
certificate further setting forth whether there are any Defaults known to the
Mortgagee and, if so, the basis for any such Default.
8.6. Statutory Clauses. Except as otherwise provided herein, the clauses
and covenants which are
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construed by SECTIONS 254, 271 and 272 of the Real Property Law of the State
shall be construed as provided in those Sections.
8.7. Spreading and Severance Agreements
8.7.1. Pursuant to one or more agreements between the Mortgagor and the
Mortgagee entered into at any time and from time to time on or after the date
hereof, the lien of this Mortgage may be spread to encumber one or more
additional parcels of property.
8.7.2. Pursuant to one or more agreements between the Mortgagor and the
Mortgagee entered into at any time and from time to time on or after the date
hereof, the lien of this Mortgage may be severed into two or more portions, each
of which shall be in such principal amounts as the Mortgagee and the Mortgagor
may agree and each of which shall secure a portion of the then unpaid principal
of the Note; provided, however, that the aggregate principal amount of all such
portions shall not exceed the then unpaid principal balance secured hereby. If
the Mortgagee and the Mortgagor agree to sever the lien of this Mortgage as
provided above, the then unpaid principal balance of the Note shall be severed
into portions and principal amounts corresponding to the portions and principal
amounts agreed upon by the Mortgagee and the Mortgagor, and two or more
substitute mortgages shall be issued, each of which shall secure a portion of
the severed indebtedness. The substitute mortgages are intended to secure the
same indebtedness secured by this Mortgage and are not intended to secure any
new or additional debt or obligation. Upon the recordation of the substitute
mortgages, the lien of this Mortgage shall be deemed transferred to the
substitute mortgages with the same effect as if the substitute mortgages were
originally recorded in lieu of this Mortgage and this Mortgage shall thereafter
be deemed superseded and replaced by the substitute mortgages.
8.7.3. Nothing herein express or implied, shall be construed as or shall
constitute the consent of the Mortgagee to any such spreading or severance or
shall require the Mortgagee to consent thereto, and the Mortgagee may give or
withhold such consent in its sole discretion.
8.8. Recording Statement. The real property is not principally improved by
a one or two family dwelling.
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IN WITNESS WHEREOF, the Mortgagor has executed this Mortgage as of the day
and year first above written.
CORPORATE REALTY INCOME
FUND I, L.P., a Delaware
limited partnership
By: _______________________
Robert F. Gossett, Jr.,
general partner
By: 1345 Realty Corporation,
general partner
By: ________________________
Robert F. Gossett, Jr.,
President
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STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the ____ day of December, 1996, before me personally came ROBERT F.
GOSSETT, JR., to me known, who, being by me duly sworn, did depose and say that
he resides at 406 East 85th Street, New York, New York 10028; that he is the
President of 1345 Realty Corporation, the corporation described in and which
executed the foregoing instrument as a general partner of Corporate Realty
Income Fund I, L.P.; and that he signed his name thereto by order of the board
of directors of said corporation and as and for the act and deed of said
corporation and partnership.
________________________________________
NOTARY PUBLIC
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the ____ day of December, 1996, before me personally came ROBERT F.
GOSSETT, JR., to me known, who, being by me duly sworn, did depose and say that
he resides at 406 East 85th Street, New York, New York 10028; that he is a
general partner of Corporate Realty Fund I, L.P. as described in the foregoing
instrument; and that he signed his name thereto as and for the act and deed of
said partnership.
________________________________________
NOTARY PUBLIC
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A POWER OF SALE HAS BEEN GRANTED IN THIS MORTGAGE, ASSIGNMENT OF LEASES AND
RENTS, SECURITY AGREEMENT AND FIXTURE FILING. A POWER OF SALE MAY ALLOW THE
MORTGAGEE TO TAKE THE MORTGAGED PREMISES AND SELL IT WITHOUT GOING TO COURT IN A
FORECLOSURE ACTION UPON DEFAULT OF THE MORTGAGOR UNDER THIS MORTGAGE, ASSIGNMENT
OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING.
MORTGAGE, ASSIGNMENT OF LEASES AND
RENTS, SECURITY AGREEMENT AND FIXTURE FILING
THE STATE OF OKLAHOMA ss.
ss.
COUNTY OF OKLAHOMA ss.
This INDENTURE (this "Mortgage") made this 26th day of September, 1996,
between CORPORATE REALTY INCOME FUND I, L.P., a Delaware limited partnership,
authorized to transact business in the State of Oklahoma, whose general partners
are 1345 REALTY CORPORATION, a Delaware corporation, and Robert F. Gossett, Jr.,
an individual, having their places of business at 406 East 85th Street, New
York, New York 10028, hereinafter with its successors and assigns called the
"Mortgagor", and FLEET BANK, NATIONAL ASSOCIATION, a national banking
association, having its principal office at 56 East 42nd Street, New York, New
York 10017, hereinafter with its successors and assigns called the "Mortgagee".
This instrument prepared by, and after recording please
return to:
Loeb & Loeb LLP
345 Park Avenue
New York, New York 10154-0037
Attention: Kenneth D. Freeman, Esq.
FRK11625.A05
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THE AMOUNT OF THIS MORTGAGE IS $24,000,000
THIS MORTGAGE SECURES REVOLVING CREDIT INDEBTEDNESS. THE INDEBTEDNESS SECURED
HEREBY IS COMPOSED OF REVOLVING CREDIT TYPE INDEBTEDNESS, THE OUTSTANDING
BALANCE OF WHICH CAN FLUCTUATE UP OR DOWN ACCORDING TO PAYMENTS MADE ON THE
INDEBTEDNESS AND SUBSEQUENT ADVANCES.
WHEREAS, the Mortgagor is the owner of the fee estate in those certain
parcels of real property described in EXHIBIT A annexed hereto (together with
the improvements now or hereafter located thereon, collectively, the
"Premises"), and desires to convey the Premises in trust, to secure, among other
obligations, a certain loan being made concurrently herewith by the Mortgagee to
the Mortgagor, pursuant to the terms of a Loan Agreement of even date herewith
between the Mortgagor and the Mortgagee (as the same may be amended or otherwise
modified from time to time, the "Loan Agreement"); and
WHEREAS, the indebtedness secured hereby is evidenced by that certain
Secured Promissory Note of even date herewith in the principal amount of
$24,000,000 (as the same may be amended or otherwise modified from time to time,
the "Note") made by the Mortgagor to the Mortgagee, which Note provides for a
variable rate of interest and which provides for a maturity date of September
24, 2000.
NOW, THEREFORE,
FOR THE PURPOSE OF SECURING payment of all of the liabilities and
obligations of the Mortgagor to the Mortgagee evidenced by the Note, plus
interest thereon and all sums necessary to protect the Mortgagee under this
Mortgage or under the other Security Documents (as hereinafter defined), and all
other sums due and payable under the Security Documents, and all of the other
Obligations (as hereinafter defined), the Mortgagor does hereby give, grant,
warrant, alien, release, mortgage, hypothecate, deposit, pledge, transfer,
assign, bargain, sell, convey, set over and confirm unto the Mortgagee, its
successors and assigns, all of the Mortgagor's estate, right, title and interest
now owned or hereafter acquired in and to the Premises; and
TOGETHER with all and singular the easements, rights of way, air rights,
reservations, privileges, choses in action, options, tenements, hereditaments
and
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appurtenances thereunto belonging or in any way appertaining, including, without
limitation, all off-street parking rights and spaces, if any, and the reversion
and remainder of any or all of the foregoing; and all of the estate, right,
title, interest, claim or demand whatsoever of the Mortgagor therein and in and
to the Premises and/or the improvements thereon, and in and to all strips and
gores, and all alleys adjoining the land and in and to any land lying in the bed
of any street, road or avenue, open or proposed, in front of, or adjoining or
adjacent to the Premises, to the center line thereof, either in law or in
possession or expectancy, now or hereafter acquired;
TOGETHER with all of the right, title and interest of the Mortgagor in and
to (i) all buildings, vaults, and other improvements and additions thereto now
erected or hereafter constructed or placed upon the Premises or any part thereof
(the "Improvements"); (ii) to the extent permitted by law, the name or names, if
any, as may now or hereafter be used for each Improvement and the good will
associated therewith, as well as the trade names of the Improvements; and (iii)
all machinery, devices, fixtures, apparatus, interior improvements,
appurtenances and equipment of every kind and nature whatsoever now or hereafter
attached to or placed in or upon the Premises or the Improvements, or any part
thereof, or used or procured for use in connection with the operation of the
Premises or any business conducted thereon (except for fixtures and personal
property that are at any time the property of Space Tenants, as defined in
SECTION 1.18, or independent contractors employed at the Premises), all of the
foregoing, except as aforesaid, hereinafter collectively called "Building
Service Equipment";
TOGETHER with all the right, title and interest of the Mortgagor in and to
all furniture, furnishings, decorations, chattels and other personal property
now or hereafter in, on or at said Premises (except for trade fixtures and
personal property that are at any time the property of Space Tenants), all of
the foregoing, except as aforesaid, hereinafter collectively called
"Furnishings;"
TOGETHER with all right, title and interest of the Mortgagor in and to all
insurance or other proceeds for damage done to the Improvements, Building
Service Equipment or Furnishings and all awards heretofore made or hereafter to
be made to or for the account of the Mortgagor for the permanent or temporary
taking by eminent domain of the whole or any part of the Premises, the
Improvements, the Building Service Equipment and the Furnishings or any lesser
estate
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in, or easement appurtenant to, the Premises (including, without limitation, any
awards for change of grade of streets), all of which proceeds and awards are
hereby assigned to the Mortgagee, subject to the further provisions of this
Mortgage;
TOGETHER with all of the rents, issues, income, revenues, royalties,
proceeds, benefits and profits of the Mortgaged Premises (as hereinafter
defined), including amounts payable under all Space Leases (as hereinafter
defined), now in effect or hereafter entered into covering any part of the
Mortgaged Premises, as well as all rights and interest of the Mortgagor as
landlord thereunder, all of which are hereby assigned to the Mortgagee, subject,
however, to the right of the Mortgagor, as licensee, to receive and use the same
unless and until an Event of Default shall occur;
TOGETHER with all of the records and books of account now or hereafter
maintained by the Mortgagor in connection with the operation of the Mortgaged
Premises;
TOGETHER with all water, water rights, shares of stock evidencing the same,
mineral rights, ditches, ditch rights, reservoirs and reservoir rights
appurtenant to, located on or used in connection with the Premises or the
Improvements, whether existing now or hereafter acquired;
TOGETHER with all deposits made with or other security given to utility
companies or governmental branches or agencies by the Mortgagor with respect to
the Mortgaged Premises, and all advance payments of insurance premiums made by
the Mortgagor with respect thereto;
TOGETHER with all licenses (including, but not limited to, any operating
licenses or similar matters), contracts, management agreements, franchise
agreements, permits, authorities or certificates required, used or useful in
connection with the use, enjoyment, occupancy, management or operation of the
Mortgaged Premises, except where the assignment or pledge of any such licenses,
permits or other rights is prohibited by applicable statute or by any applicable
issuing governmental agency; and
TOGETHER with any and all of the Mortgagor's rights in and to any and all
cash payments, reimbursements or other intangible rights arising in connection
with the development, operation or maintenance of the Mortgaged Premises,
including, without limitation, any tax appeal refunds, municipal reimbursements,
governmental subsidy
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payments and governmentally-registered credits (such as emissions and reduction
credits) (collectively, the "Payments and Intangibles");
TOGETHER with all proceeds and products of the foregoing.
All of the foregoing estates, rights, privileges, interests and franchises
hereby granted and released, assigned, transferred, set over and mortgaged, or
intended so to be, being hereinafter collectively referred to as the "Mortgaged
Premises".
TO HAVE AND TO HOLD unto the Mortgagee, its successors and assigns forever,
together with all rights, hereditaments and appurtenances in any way
appertaining or belonging thereto, unto the Mortgagee, the successors and
assigns of the Mortgagee, forever for the uses set forth herein, to secure the
payment to the Mortgagee of the principal and of interest on the Note at the
maturity thereof (whether by acceleration or otherwise), all other sums due
under the Note or under this Mortgage or under the Loan Agreement, the
performance of all covenants and agreements in the Security Documents and all
other obligations, whereupon this Mortgage shall cease and be void and the
Mortgaged Premises shall be released at the cost of the Mortgagor.
ARTICLE I.
Certain Definitions
In addition to other definitions contained herein, the following terms
shall have the meanings set forth below, unless the context of this Mortgage
otherwise requires:
1.1. "Affiliate" - shall mean (a) if with respect to a corporation, (i) any
officer or director thereof and any person or entity who or which is, directly
or indirectly, the legal or beneficial owner of more than ten (10%) percent of
any class of shares or other equity security of such corporation, or (ii) any
person or entity who or which, directly or indirectly, controls or is controlled
by or is under common control with such corporation and (b) if with respect to a
partnership or venture, any (i) general partner, (ii) general partner of a
general partner, (iii) partnership with a common general partner, (iv)
coventurer thereof, or (v) any person, trust,
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corporation, partnership, venture or other entity who or which, directly or
indirectly, controls or is controlled by or is under common control with such
partnership; and if any general partner or general partner of a general partner
or coventurer is a corporation, any person or entity which is an Affiliate as
defined in clause (a) above of such corporation. "Controls" (including the
correlative meanings of "controlled by" and "under common control with") means
effective power, directly or indirectly, to direct or cause the direction of the
management and policies of such person or entity.
1.2. "Backlease" means a sublease to the Mortgagor or its Affiliate made by
a lessee under a Space Lease.
1.3. "Default Rate" shall mean the Involuntary Rate (as such term is
defined in the Note).
1.4. "Due and payable" when used with reference to the principal of, or
premium or interest on, or when referring to any and all other sums secured by
this Mortgage or any other of the Security Documents shall mean due and payable,
whether at the monthly or other date of payment or at the date of maturity
specified in the Note, this Mortgage or the other Security Documents; or by
acceleration or call for payment as provided in the Note, hereunder or in the
other Security Documents, or, in the case of Impositions, the last day upon
which any charge may be paid without penalty and/or interest.
1.5. "Event of Default" shall have the meaning assigned to such term in the
Note.
1.6. "Governmental Authorities" shall mean all federal, state, county,
municipal and local governments and all departments, commissions, boards,
bureaus and offices thereof, having or claiming jurisdiction over the Mortgaged
Premises or any part thereof.
1.7. "Impositions" shall mean all duties, taxes, water and sewer rents,
rates and charges, assessments (including, but not limited to, all assessments
for public improvements or benefit), charges for public utilities, excises,
levies, license and permit fees and other charges, ordinary or extraordinary,
whether foreseen or unforeseen, of any kind and nature whatsoever, which prior
to or during the term of this Mortgage will have been or may be laid, levied,
assessed or imposed upon or become due and payable out of or in respect of, and
become a lien on the Premises,
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the Improvements, Building Service Equipment, Furnishings or any other property
or rights included in the Mortgaged Premises, or any part thereof or
appurtenances thereto, or which are levied or assessed against the rent and
income received by the Mortgagor from the Space Leases (as defined in SECTION
1.17) by virtue of any present or future law, order or ordinance of the United
States of America or of any state, county or local government or of any
department, office or bureau thereof or of any other Governmental Authority.
1.8. "Legal Requirements" shall mean all present and future laws,
ordinances, rules, regulations and requirements of all Governmental Authorities,
and all orders, rules and regulations of any national or local board of fire
underwriters or other body exercising similar functions, foreseen or unforeseen,
ordinary or extraordinary, which may be applicable to the Mortgaged Premises or
any part thereof, or to the sidewalks, alleyways, passageways, curbs and vaults
adjoining the same, or to the use or manner of use of any of the foregoing, or
to the owners, tenants, or occupants thereof, whether or not any such law,
ordinance, order, rule, regulation or requirement shall necessitate structural
changes or improvements or shall interfere with the use or enjoyment of any of
the foregoing, and shall also mean and include all requirements of the policies
of public liability, fire and all other insurance at any time in force with
respect to any of the foregoing.
1.9. "Mortgage" shall mean this instrument as originally executed or, if
hereafter amended, modified or supplemented, as so amended, modified or
supplemented.
1.10. "Mortgagee" shall mean the Mortgagee herein named or at any given
time the holder or holders of this Mortgage and the Note.
1.11. "Mortgagor" shall mean the Mortgagor herein named, any subsequent
owner or owners of the Mortgaged Premises, and its or their respective heirs,
executors, administrators, successors and assigns, but this provision shall not
be construed to limit the terms of SECTION 2.8 hereof.
1.12. "Obligations" shall mean the (a) aggregate unpaid principal amount
of, and accrued and unpaid interest on, the Note, plus (b) any and all
indebtedness, obligations and other liabilities of the Mortgagor to the
Mortgagee arising out of or in connection with or otherwise relating
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to the Note, the Loan Agreement or any of the Security Documents, and/or any
agreement(s) of the Mortgagor with the Mortgagee pertaining thereto; in each
case whether now or hereafter existing, direct or indirect, absolute or
contingent, joint, several or independent, due or to become due, liquidated or
unliquidated, held or to be held by the Mortgagee and whether created directly
or acquired by assignment or otherwise.
1.13. "Peg Rate" - shall have the meaning assigned to such term in the
Note.
1.14. "Permitted Encumbrances" shall mean each of the exceptions to
coverage set forth in SCHEDULE B, PART I of that certain Preliminary Title
Report dated September 26, 1996, issued by Chicago Title Insurance Company, to
and accepted by the Mortgagee with respect to the Premises, and such other items
as the Mortgagee, in its sole discretion, may approve in writing.
1.15. "Person" shall mean and include any individual, corporation,
partnership, unincorporated association, trust, governmental agency or authority
or other entity.
1.16. "Security Documents" shall have the meaning assigned to such term in
the Note.
1.17. "Space Lease" shall mean any and all leases, subleases, licenses,
concession agreements or any other form of agreement, however denominated
(written or verbal, now or hereafter in effect), in which the Mortgagor (or any
predecessor in interest as owner of the Mortgaged Premises in the case of
existing Space Leases) now or hereafter grants a possessory interest in and to,
or the right to use and occupy the Mortgaged Premises, or any portion thereof,
and all renewals, extensions, modifications, amendments and other agreements
affecting the same.
1.18. "Space Tenant" shall mean the tenant or other user or occupant of
part or all of the Mortgaged Premises under any Space Lease.
1.19. "State" shall mean the State of Oklahoma.
1.20. "to the best of the Mortgagor's knowledge" shall mean the actual
knowledge of Robert F. Gossett, Jr., after reasonable inquiry and investigation.
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ARTICLE II.
Particular Covenants of the Mortgagor
The Mortgagor covenants and agrees as follows:
2.1. Payment of Indebtedness. The Mortgagor shall duly and punctually pay
to the Mortgagee, as and when due and payable, the indebtedness evidenced by the
Note and the other Obligations secured hereby. As used in this SECTION 2.1 and
elsewhere in this Mortgage, the term "indebtedness" shall mean and include the
principal amount of the Note together with all interest thereon, any other
payments due to the Mortgagee under the Loan Agreement and/or any of the
Security Documents, all costs of collection provided for in the Note, the Loan
Agreement or any of the Security Documents, and all other sums and charges at
any time due under or otherwise secured by this Mortgage.
2.2. Warranty of Title. The Mortgagor warrants that, to the best of the
Mortgagor's knowledge (a) the Mortgaged Premises are free and clear of all liens
and encumbrances other than the Permitted Encumbrances; (b) it owns the Building
Service Equipment and Furnishings free and clear of all liens and claims other
than in favor of the Mortgagee; (c) this Mortgage is and will remain a valid and
enforceable first mortgage on the Mortgaged Premises, subject only to the
Permitted Encumbrances; and (d) the Mortgagor has the right and lawful authority
to mortgage and convey the Mortgaged Premises in the manner and form herein
provided. The Mortgagor represents and warrants to the Mortgagee, to the best of
the Mortgagor's knowledge, and covenants for the benefit of the Mortgagee, as
follows:
(i) that the Mortgagor is lawfully seized and possessed of a fee in
the Premises and that the Mortgagor holds good legal and marketable title
thereto and to the rest of the Mortgaged Premises, subject only to the
Permitted Encumbrances; and
(ii) that the Mortgaged Premises are now free and clear of all liens
and encumbrances whatsoever, other than the Permitted Encumbrances, that
the Mortgagor has good right and lawful authority to mortgage and convey
the same in the manner and form herein provided and that the Mortgagor will
warrant and defend title to the Mortgaged Premises against all claims and
demands whatsoever.
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2.3. To Maintain Priority of Lien.
2.3.1. This Mortgage is and will be maintained as a valid first mortgage on
the Mortgaged Premises, and the Mortgagor will not, directly or indirectly,
create or suffer or permit to be created, or to stand against the Mortgaged
Premises or any portion thereof, or against the rents, issues and profits
therefrom, and will promptly discharge, any lien or charge prior to or upon a
parity with or junior to this Mortgage other than the Permitted Encumbrances;
provided, however, that the Mortgagor shall not be required to pay any
Imposition prior to the time it shall become due and payable subject to the
provisions of SECTION 2.4.1 hereof, and nothing herein contained shall prevent
the Mortgagor from contesting the validity of any such Imposition in accordance
with the provisions of SECTION 2.4.4. The Mortgagor will keep and maintain the
Mortgaged Premises, and every part thereof, free from all liens or lien notices,
of Persons supplying labor and/or materials in connection with any construction,
alteration, repair, improvement or replacement of the Improvements or of the
Building Service Equipment and Furnishings. If any such lien shall be filed
against the Mortgaged Premises, or any part thereof, the Mortgagor promptly
shall discharge the lien of record, by bonding or otherwise. The Mortgagor shall
exhibit to the Mortgagee, upon request, appropriate receipts or other
satisfactory evidence of the payment of the Impositions or any other item which
may, if not paid, give rise to a lien against the Mortgaged Premises.
2.4. To Pay Impositions.
2.4.1. The Mortgagor will pay or cause to be paid, as and when due and
payable, all Impositions levied upon the Mortgaged Premises or any part thereof,
together with all filing, registration or recording fees and all expenses
incident to the execution and acknowledgement of this Mortgage, any mortgage
supplemental hereto, and will pay all federal, state, county and municipal stamp
taxes and other taxes, duties, imposts, assessments and charges arising out of
or in connection with the execution and delivery of the Note, this Mortgage, any
mortgage supplemental hereto, or any instrument of further assurance, except
Oklahoma mortgage taxes which shall be paid by the Mortgagee. However, if by
law, any Imposition may at the option of the taxpayer be paid in installments
(whether or not interest shall accrue on the unpaid balance thereof), the
Mortgagor shall have the right to exercise such option and to pay such
Imposition, or cause it to be paid (together
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with any accrued interest on the unpaid balance) in installments as they fall
due and before any fine, penalty, further interest or cost may be added thereto.
2.4.2. If an Event of Default shall occur and be continuing, then upon
demand of the Mortgagee, the Mortgagor shall deposit with the Mortgagee a sum
which bears the same relation to the annual insurance premiums for all insurance
required by the terms hereof and real estate taxes and assessments assessed
against the Mortgaged Premises for the insurance period or tax year then in
effect, as the case may be, as the number of months elapsed as of the date of
such demand since the last preceding installment of said premiums or taxes or
assessments shall have become due and payable bears to twelve (12). For the
purpose of this computation, the month in which such last preceding installment
of premiums or real estate taxes or assessments became due and payable and the
month in which such demand is given shall be included and deemed to have
elapsed. On the first day of the month next succeeding the month in which such
demand is given, and thereafter on the first day of each and every month during
the term of this Mortgage, the Mortgagor shall deposit with the Mortgagee a sum
equal to one-twelfth of such insurance premiums and such taxes and assessments
for the then-current insurance period and tax year, so that as each installment
of such premiums and taxes and assessments shall become due and payable, the
Mortgagor shall have deposited with the Mortgagee a sum sufficient to pay the
same. All such deposits shall be received and held as part of such deposit by
the Mortgagee (all such deposits to be held in an account without interest
thereon) and shall be applied to the payment of each installment of such
premiums and taxes and assessments as they shall become due and payable. The
Mortgagee shall, upon demand, furnish evidence to the Mortgagor of the making of
each such payment. If the amount of such premiums and taxes and assessments has
not been definitely ascertained at the time when any such monthly deposits are
required to be made, the Mortgagor shall make such deposits based upon the
amount of such premiums and taxes and assessments for the preceding year,
subject to adjustment as and when the amount of such premiums and taxes and
assessments are ascertained. If at any time when any installment of such
premiums and such taxes and assessments becomes due and payable the Mortgagor
shall not have deposited a sum sufficient to pay the same, the Mortgagor shall,
within five (5) days after demand, deposit any deficiency with the Mortgagee.
Upon payment in full of the indebtedness secured by this Mortgage, any remaining
amount on deposit with the Mortgagee shall be repaid to the Person lawfully
entitled thereto. If an Event
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of Default shall occur and be continuing, the Mortgagee may, at its option,
apply all or any portion of the amounts then on deposit with the Mortgagee
pursuant to this SECTION 2.4.2 first to the payment of any premiums, taxes or
assessments then due, and any remaining amounts may be applied to the payment of
the indebtedness. The Mortgagor shall deliver to the Mortgagee all insurance and
tax bills promptly following receipt during any period when such monthly
deposits are to be made with the Mortgagee.
2.4.3. The Mortgagor will pay all taxes and other governmental charges
(including, without limitation, stamp taxes), except income or franchise taxes
or similar taxes (other than Oklahoma mortgage tax), based upon or measured by
income, assessed by the United States government or any state or local
governmental authority and imposed on the Mortgagee, its successors by reason of
the ownership of this Mortgage or the Note or the receipt of the interest or
other sums payable thereunder or payable by either the Mortgagor or the
Mortgagee upon any increase in the indebtedness secured hereby, or any
modification, amendment, extension or consolidation of this Mortgage. Without
limiting the foregoing and subject to the limitations set forth above, the
Mortgagor will also pay the whole of any tax imposed, directly or indirectly, on
this Mortgage or the Note or the receipt of any portion of the Indebtedness in
lieu of a tax on the Mortgaged Premises or the Improvements and Building Service
Equipment, whether by reason of (a) the passage after the date of this Mortgage
of any law of the State deducting from the value of real property for the
purposes of taxation any lien thereon; (b) any change in the laws for the
taxation of Mortgages or debts secured by Mortgages for state or local purposes;
(c) a change in the means of collection of any such tax or otherwise; or (d) any
tax, whether or not now existing, assessed against, or withheld from, interest
or other payments made by the Mortgagor or assessed against this Mortgage and
which are assessed or levied by the government of any foreign nation or
political subdivision thereof, provided such tax liability shall not result from
the ownership of this Mortgage by a Person not a citizen of, or an entity not
formed under the laws of, the United States or any state. Within a reasonable
time after payment of any such tax or governmental charge, the the Mortgagor
will deliver to the Mortgagee satisfactory proof of payment thereof, subject,
however, to the right of the Mortgagor to contest Impositions as hereinafter set
forth. If the Mortgagor shall fail to pay such tax or charge within fifteen (15)
days after written notice, or if under applicable law the Mortgagor's payment or
agreement to pay
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the same shall be unenforceable, the Mortgagee shall have the right to declare
the entire unpaid indebtedness and all accrued and unpaid interest thereon due
and payable on a date specified by the Mortgagee, but, in any event, not less
than thirty (30) days after written notice to the Mortgagor.
2.4.4. The Mortgagor shall have the right to contest the amount or
validity, in whole or in part, of any Imposition, or to seek a reduction in the
valuation of the Mortgaged Premises, or any part thereof, as assessed for real
estate or personal property tax purposes by appropriate proceedings diligently
conducted in good faith, but only after payment of such Imposition, unless such
payment would operate as a bar to such contest or materially adversely interfere
with the prosecution thereof, in which event the Mortgagor may postpone or defer
payment of such Imposition (but not the payment of any monthly deposits pursuant
to SECTION 2.4.2 hereof); and upon request by the Mortgagor, the Mortgagee shall
postpone or defer payment of such Imposition; provided, however, that if at any
time the Mortgaged Premises, the Building Service Equipment, the Furnishings, or
any part thereof would, in the Mortgagee's reasonable judgment, by reason of
such postponement or deferment be in imminent danger of being forfeited or lost,
or if the Mortgagee might be subjected to any civil or criminal liability or
other sanction, then the Mortgagor, on demand, shall immediately pay or cause to
be paid the amount so contested and unpaid, together with all interest and
penalties in connection therewith.
2.4.5. The certificate, advice or bill of the appropriate official
designated by law to make or issue the same or to receive payment of any
Imposition indicating the nonpayment of such Imposition shall be prima facie
evidence that such Imposition is due and payable but unpaid at the time of the
making or issuance thereof.
2.5. Insurance; Restoration Following Casualty.
2.5.1. Until the indebtedness secured hereby is paid in full, the Mortgagor
shall at its own expense at all times maintain or cause to be maintained on all
of the Mortgaged Premises (a) comprehensive general liability insurance,
including umbrella liability insurance, covering all claims for bodily injury,
including death, and property damage occurring on, in or about the Mortgaged
Premises in an aggregate amount of not less than Five Million Dollars
($5,000,000) per occurrence, and a single limit of not less than Two Million
Dollars ($2,000,000) per person and per occurrence for personal injury, bodily
injury
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and property damage; the policy shall have no deductible or self insured
retention requirements; the policy limits of such insurance, if requested by the
Mortgagee, shall be increased from time to time to reflect what a reasonably
prudent owner or lessee of buildings or improvements similar in type and
locality to the Mortgaged Premises would carry; during any period of substantial
alterations or improvements in, on or to the Mortgaged Premises, the Mortgagor
will cause the comprehensive general liability insurance, including umbrella
liability insurance, endorsed to provide owners' and contractors' protective
liability coverage, including completed operations liability coverage; (b)
physical damage insurance (all risk non-reporting property insurance, including
earthquake insurance, with the Mortgagee named as loss payee), covering the
Mortgaged Premises for loss or damages resulting from the perils of fire,
lightning, earthquake, and such other risks and hazards as are provided under
the current standard "Extended Coverage Endorsement" and vandalism and malicious
mischief coverage, for the full replacement value of the Mortgaged Premises on a
stipulated and agreed-amount basis; (c) if the Mortgaged Premises is in an area
identified as a flood hazard area by the Secretary of Housing and Urban
Development, flood insurance, to the extent obtainable, in an amount equal to
the lesser of the full replacement value of the Mortgaged Premises or the
maximum amount available under the Federal flood insurance program; (d) boiler
and machinery insurance covering all boilers, machinery, air conditioning,
pressure vessels, and similar type equipment commonly covered under a broad-form
boiler and machinery policy, in an amount satisfactory to the Mortgagee; (e)
insurance against such other risks of damage, hazards, casualties and
contingencies in such amounts as the Mortgagee shall from time to time
reasonably require, provided that insurance against such other risks, hazards,
casualties or contingencies shall then be commonly carried by prudent owners or
lessees of building or improvements in the locality similar in character,
construction, use and occupancy to the Improvements, Building Service Equipment
and Furnishings on, or constituting a part of, the Mortgaged Premises; and (f)
loss of rents/business interruption coverage in an amount sufficient to pay all
Impositions, insurance premiums, interest and principal installments and all
other amounts due under the Note and the Loan Agreement and the normal operating
expenses of the Mortgaged Premises, all for a period of one (1) year.
Furthermore, the Mortgagee reserves the right to require additional insurance
and/or higher policy limits than heretofore specified if such additional
insurance and/or higher policy limits are commercially reasonable for similar
properties, which right
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may be exercised by written notice to the Mortgagor, and, as soon thereafter as
practicable, but in any event within thirty (30) days of the receipt thereof,
the Mortgagor agrees to obtain insurance coverage complying with such notice.
The proceeds of all such insurance (except the insurance specified in SECTION
2.5.1(a)) shall be paid solely to the Mortgagee and be held, applied or
disbursed by the Mortgagee as provided in SECTIONS 2.5.7 and 2.5.8.
2.5.2. All insurance required in SECTION 2.5.1 shall be evidenced by valid
and enforceable policies, in form and substance as shall be required by the
Mortgagee from time to time, and issued by and distributed among insurers of
recognized responsibility having an A.M. Best's Guide of A:XII or better, a
financial size category of Class XI or above, and the total limit of liability
shall not exceed ten percent (10%) of the total policyholders' surplus. Such
insurers shall be authorized to do business in the State and in all other
respects shall be reasonably satisfactory to the Mortgagee. The originals of all
such policies, or duplicate copies or certificates thereof, shall be delivered
to the Mortgagee concurrently with the execution and delivery of this Mortgage.
Thereafter, all renewal or replacement policies, or duplicate copies or
certificates thereof, shall be delivered to the Mortgagee not less than thirty
(30) days prior to the expiration date of the policy or policies to be renewed
or replaced, in each case accompanied by evidence reasonably satisfactory to the
Mortgagee that all premiums currently payable with respect to such policies have
been paid in full by or at the direction of the Mortgagor.
2.5.3. All such insurance policies shall (a) except for any liability
policy required hereunder, contain a standard noncontributory form of mortgagee
clause (in favor of and entitling the Mortgagee to collect any and all proceeds
payable under such insurance), as well as a standard waiver of subrogation
endorsement, all to be in form and substance reasonably satisfactory to the
Mortgagee; (b) provide that such policies may not be cancelled or amended
without at least thirty (30) days prior written notice to the Mortgagee; and (c)
provide that no act, omission or negligence of the Mortgagor, or its agents,
servants or employees, or of any Space Tenant under any Space Lease, which might
otherwise result in a forfeiture of such insurance or any part thereof, shall in
any way affect the validity or enforceability of such insurance insofar as the
Mortgagee is concerned. The Mortgagor shall not carry separate insurance,
concurrent in kind or form or contributing in the event of loss with any
insurance
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required under this SECTION 2.5. All losses under such insurance policies shall
be adjusted by the Mortgagor in the case of any single instance of such damage
or destruction not exceeding $200,000, by the Mortgagor and the Mortgagee in the
case of any such single instance of damage or destruction exceeding such amount,
provided that in no event shall the Mortgagor approve or consent to any final
adjustment in any amount exceeding the amount specified above in this sentence
without obtaining the Mortgagee's prior approval (which approval shall not be
unreasonably withheld) of the amount of such adjustment, and solely by the
Mortgagee in the case when an Event of Default exists and is continuing.
2.5.4. The Mortgagor, at its expense, will furnish to the Mortgagee, within
ninety (90) days after written demand, but in no event, except for reasonable
cause, more frequently than annually, proof of the then full replacement value
of each of the Improvements and the Building Service Equipment and Furnishings
therein, such proof to be by appraisals reasonably satisfactory in form and
substance to the Mortgagee and prepared by an appraiser (who may be an appraiser
for the insurance company insuring such property) designated and paid for by the
Mortgagor and approved by the Mortgagee, which approval shall not be
unreasonably withheld or delayed.
2.5.5. If the Mortgagee shall, by any means, acquire the title or estate of
the Mortgagor in or to any portion of the Mortgaged Premises, it shall thereupon
become the sole and absolute owner of all insurance policies affecting such
portion of the Mortgaged Premises held by, or required hereunder to be delivered
to, the Mortgagee, with the sole right to collect and retain all unearned
premiums thereon; and the Mortgagor shall be entitled only to a credit in
reduction of the then outstanding indebtedness secured hereby in the amount of
the short rate cancellation refund, when and if received by Mortgagee. The
Mortgagor agrees, immediately upon demand, to execute and deliver such
assignments or other authorizations or instruments as may, in the reasonable
opinion of the Mortgagee, be reasonably necessary or desirable to effectuate any
of the provisions of this SECTION 2.5.5.
2.5.6. If any of the Improvements, Building Service Equipment or
Furnishings shall be damaged or destroyed, in whole or in part, by fire or other
casualty, the Mortgagor shall give prompt notice thereof to the Mortgagee, and,
without regard to the availability or adequacy of insurance proceeds, shall
promptly following
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receipt of any insurance proceeds or the date when any such proceeds are made
available to the Mortgagor in accordance with the terms hereof, commence to
restore, replace, rebuild or alter the same as nearly as possible to the
condition, character and value thereof existing immediately prior to such damage
or destruction. Any insurance proceeds in respect of such damage or destruction,
or any Award (as defined in SECTION 3.2) for a partial taking which is not a
substantial or total taking, as such terms are referred to in ARTICLE III
hereof, at the option of the Mortgagee, may either (i) be applied as a
prepayment of the unpaid balance of the principal of the Note and of accrued and
unpaid interest thereon and as a payment of any other sums due and owing under
the Note, the Loan Agreement and the Security Documents, or (ii) be made
available to pay or reimburse costs incurred for restoration, replacement or
rebuilding necessitated as a result of such damage or destruction, or as a
result of such taking, as the case may be, or (iii) be used for any other
purpose or object deemed appropriate by the Mortgagee in connection with the
Mortgaged Premises, provided, however, that the Mortgagee may not elect either
option (i) or (iii) above if, and for so long as all of the following conditions
(collectively, the "Insurance or Award Conditions" have been and remain
satisfied: (a) no Event of Default has occurred and is continuing or would occur
as a result of such casualty or taking and no event has occurred that with the
passage of time or the giving of notice, or both, would constitute an Event of
Default; (b) the balance of the insurance proceeds or such Award either
initially paid to the Mortgagee or deposited with the Depository (as hereinafter
defined) or remaining from time to time, shall be sufficient, in the Mortgagee's
reasonable judgment, to complete the restoration, replacement or rebuilding, or
the Mortgagor shall have deposited such sufficient funds with the Mortgagee or
the Depository; and (c) the Mortgagee determines, in its reasonable discretion,
that (i) the Loan to Value Ratio (as defined in the Loan Agreement, and taking
into consideration the value of all of the Projects, as defined in the Loan
Agreement) is not greater than 55%, and (ii) the Debt Service Coverage Ratio (as
defined in the Loan Agreement, and taking into consideration the loss of income
resulting from such damage or destruction as projected by the Mortgagee in its
reasonable discretion) is not less than 1.40:1.0. Notwithstanding the foregoing,
if an event has occurred and is continuing that with the passage of time or the
giving of notice, or both, would constitute an Event of Default but the same has
not yet matured into an Event of Default, then, if the conditions set forth in
the foregoing clauses (b) and (c) have been or will be, in the Mortgagee's
reasonable judgment, satisfied, the Mortgagee shall not
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elect either option (i) or (iii) unless such event shall have matured into an
Event of Default and, unless and until such event shall have so matured into an
Event of Default or such event has been cured or shall otherwise cease to exist,
the Mortgagee (or the Depository) shall not release any such insurance proceeds
or Award and the same shall be held until an Event of Default occurs or the
Default has been cured or shall otherwise cease to exist.
2.5.7. Any such insurance proceeds (other than the proceeds of the rent
insurance policy, which shall be paid as provided in SECTION 2.5.8 below) or
Award which are to be applied to restoration, replacement or rebuilding of the
Mortgaged Premises shall, after payment or reimbursement to the Mortgagee of all
reasonable costs and expenses of the Mortgagee in collecting such proceeds or
Award, be applied upon satisfaction of the following provisions and conditions:
(a) If the damage be of such nature as to require the Mortgagor to
construct a replacement for, or to alter in any material or substantial
way, the damaged or destroyed items, the Mortgagor shall, before commencing
any such work, submit copies of the plans and specifications therefor to
the Mortgagee for the Mortgagee's approval, such approval to not be
unreasonably withheld or delayed.
(b) If after payment or reimbursement to the Mortgagee of all costs
and expenses of the Mortgagee in collecting such insurance proceeds or
Award, the aggregate insurance proceeds or Award received by reason of any
single instance of such damage or destruction or condemnation, as the case
may be, shall be $200,000 or less such insurance proceeds or Award shall be
paid to the Mortgagor, which shall hold all amounts so received in trust
for application first to pay the entire cost of restoring, repairing,
rebuilding or replacing the damaged or destroyed items, before any portion
of such proceeds may be used or applied for any other purpose. If the
aggregate net insurance proceeds or Award by reason of any single instance
of such damage or destruction or condemnation, as the case may be, shall be
more than $200,000 such sums shall be held and disbursed by Fleet Bank,
National Association or, if this Mortgage is held by another financial
institution, by such financial institution or, if this Mortgage is not held
by a financial institution, by a financial institution selected by the then
Mortgagee (the holder of such
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monies, the "Depository") in accordance with the following provisions of
this SECTION 2.5.7.
(c) The Mortgagee shall have received as to each such disbursement a
certificate of the Mortgagor (i) requesting the payment of a specified
amount of such insurance or condemnation proceeds; (ii) describing in
reasonable detail the work and materials applied to the restoration,
replacement or rebuilding of the damaged, destroyed or taken Improvement,
or Building Service Equipment and/or Furnishings located therein, since the
date of the last such certificate; (iii) stating that the requested amount
does not exceed the cost of such work and materials; and (iv) stating that
a request for payment for such work and materials has not previously been
made, accompanied by:
1. a certificate of an independent engineer or architect
designated by the Mortgagor, who shall have been approved in writing
by the Mortgagee (such approval not to be unreasonably withheld),
stating (i) that the work and materials described in the accompanying
certificate of the Mortgagor were satisfactorily performed and
furnished and were necessary, appropriate or desirable to the
restoration, replacement or rebuilding of the damaged, destroyed or
taken Improvement, or Building Service Equipment and/or Furnishings;
(ii) that the amount specified in such certificate of the Mortgagor
does not exceed the reasonable cost of such work and materials; and
(iii) the additional amount, if any, required to complete the
restoration, replacement or rebuilding of the damaged, destroyed or
taken Improvement, Building Service Equipment and/or Furnishings; and
2. evidence reasonably satisfactory to the Mortgagee (i) that
there exists no filed or recorded lien, or lien notice, or encumbrance
or charge in respect of all or any part of the Mortgaged Premises that
is prior to or on a parity with the lien of this Mortgage, except as
may be permitted in the Permitted Encumbrances; (ii) that neither the
Mortgaged Premises nor any part thereof is subject to any recorded or
filed mechanic's, laborer's, materialman's or any similar lien,
encumbrance or charge; and (iii) that none of the Building Service
Equipment and Furnishings provided in
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connection with such restoration, replacement or rebuilding is subject
to any security interest other than in favor of the Mortgagee;
Upon satisfaction of the conditions set forth herein, the Mortgagee shall
pay to the Mortgagor the amount of such insurance or condemnation proceeds
requested in such certificate of the Mortgagor or consent to the Depository's
payment thereof, as the case may be; provided, however, that in no event shall
the balance of insurance or condemnation proceeds held by the Mortgagee and the
Depository be reduced below the amount specified in such certificate of the
independent engineer or architect as the amount required to complete the
restoration, replacement or rebuilding of the damaged, destroyed or taken
Improvement, Building Service Equipment and/or Furnishings. Each such payment,
whether made by the Mortgagee or the Depository, shall be held by the Mortgagor
in trust and shall be used solely for the payment of the cost of the work and
materials described in the certificate of the the Mortgagor, or if such cost or
any part thereof has theretofore been paid by the Mortgagor out of its own
funds, then for the reimbursement to the Mortgagor of any such cost or part
thereof paid by it. Any balance of insurance or condemnation proceeds held by
the Mortgagee after the completion of the restoration, replacement or rebuilding
and payment of all costs incurred in connection therewith, to be evidenced by a
certificate to such effect of such independent engineer or architect delivered
to the Mortgagee, shall, if no Event of Default shall have occurred and be
continuing, be released to the Person lawfully entitled thereto. Notwithstanding
the foregoing, if the Mortgagor needs to make deposits with or payments to
contractors prior to the work being performed, if the Mortgagee is otherwise
obligated to allow funds to be used to rebuild or restore, the Mortgagee agrees
that it will not unreasonably withhold or delay its consent to the Mortgagor's
request that such deposits or advances payments be allowed.
2.5.8. All proceeds of rent insurance payable as a result of the occurrence
of any fire or other casualty which affects the Mortgaged Premises, or any part
thereof, shall be paid to the Mortgagee or, if the Mortgagee is not a financial
institution, the Depository. The Mortgagee or the Depository, as the case may
be, if it shall receive such proceeds, shall hold such proceeds in trust if
permitted under law, and in an account bearing interest (payable to or for
account of the Mortgagor), and shall apply or cause such proceeds (including any
net interest thereon) to be applied to the payment of those items
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referred to in SECTION 2.5.1(f) which become, and as they become, due and
payable from and after the date of the occurrence of such damage or loss, until
the completion of the necessary restoration or replacement by the Mortgagor or
until the exhaustion of such proceeds (including any interest thereon),
whichever first occurs. Upon completion of such restoration or replacement, any
balance of such rent insurance proceeds, together with the interest thereon, if
any, not theretofore applied as provided herein, in the hands of the Mortgagee
or the Depository, as the case may be, shall, provided that no Event of Default
shall have occurred and be continuing, be paid to the Person lawfully entitled
thereto.
2.5.9. Nothing in this SECTION 2.5 contained shall (i) relieve the
Mortgagor of its duty to repair, restore, rebuild or replace the Improvements,
Building Service Equipment and/or Furnishings following damage or destruction by
fire or other casualty or taking in the event that no Award or an inadequate
Award or that no or inadequate proceeds of insurance are available to defray the
cost of such repairing, restoring, rebuilding or replacement (provided, however,
the Mortgagor shall be permitted to receive the insurance proceeds upon
satisfaction of the conditions set forth herein provided, in addition, that all
of the Insurance or Award Conditions have been and remain satisfied), or (ii)
relieve the Mortgagor of its obligation to pay principal and interest and to
make all other payments required by the Note, the Loan Agreement and this
Mortgage subsequent to the occurrence of any fire or other casualty, or taking,
except if, and to the extent that, any proceeds of rent insurance are applied by
the Mortgagee in accordance with SECTION 2.5.8 to such required payments.
2.5.10. If, while any insurance proceeds or Award is being held by the
Mortgagee or the Depository, an Event of Default shall occur and be continuing,
the Mortgagee shall be entitled to receive and apply all such insurance proceeds
or Award in reduction of the indebtedness and other obligations secured by this
Mortgage, in such order and respective amounts, as the Mortgagee in its
discretion shall determine.
2.6. To Comply with Laws.
2.6.1. The Mortgagor, at its own expense, will promptly cure all violations
of law affecting the Mortgaged Premises, or any part thereof, and/or the use and
operation thereof and will promptly comply, or cause to be complied with, all
present and future Legal Requirements.
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However, the Mortgagor shall have the right, after prior notice to the
Mortgagee, to contest by appropriate legal proceedings, diligently conducted in
good faith, the validity or application of any Legal Requirement if and so long
as the Mortgagor shall promptly furnish to the Mortgagee a certificate to such
effect showing the steps taken to comply with such provisions, provided that:
(a) if by the terms of any such Legal Requirement, compliance
therewith pending the prosecution of any such proceeding may be delayed
legally without incurring any lien, charge or liability of any kind against
the Mortgaged Premises, or any part thereof, and without subjecting the
Mortgagor or the Mortgagee to any liability, civil or criminal, for failure
so to comply therewith, the Mortgagor may delay compliance therewith until
the final determination of any such proceeding; and
(b) if any lien, charge or civil liability would be incurred by reason
of any such delay, the Mortgagor nevertheless, on the prior written consent
of the Mortgagee, such consent not to be unreasonably withheld, may contest
and delay compliance with the Legal Requirement, provided that such delay
would not subject the Mortgagee to criminal liability and the Mortgagor (i)
furnishes to the Mortgagee security reasonably satisfactory to the
Mortgagee against loss or injury by reason of such contest or delay and
(ii) prosecutes the contest with due diligence.
2.6.2. Notwithstanding the provisions of SECTION 2.6.1, if any delay in
compliance with any Legal Requirement shall, in the reasonable judgment of the
Mortgagee, place all or any part of the Mortgaged Premises in imminent danger of
being forfeited or lost, the Mortgagor shall, upon written notice from the
Mortgagee, immediately comply with such Legal Requirement.
2.6.3. The Mortgagor will use and permit the use of the Mortgaged Premises
only in accordance with the material requirements of any applicable licenses and
permits issued by Governmental Authorities.
2.6.4. The Mortgagor will procure, pay for and maintain (or cause to be
procured, paid and maintained) all permits, licenses and other authorizations
required to be procured and maintained by the owners and operators of the
Mortgaged Premises for any then use of all or any part
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of the Mortgaged Premises then being made and for the lawful and proper
operation and maintenance thereof.
2.7. Limitation on Alterations and Demolition.
2.7.1. The Mortgagor shall not voluntarily demolish, replace or alter the
Mortgaged Premises, or any part thereof, or voluntarily make any addition
thereto, or voluntarily construct any additional improvements thereon, or suffer
any of the same to occur, whether structural or otherwise (collectively,
"change"), without the prior written consent of the Mortgagee, which consent
shall not be unreasonably withheld or delayed; provided, however, that if no
Event of Default is continuing and such change involves an estimated cost of
less than $100,000 and is non-structural or if no Event of Default is continuing
and such change is non-structural and is being made to prepare space for a Space
Tenant pursuant to a Space Lease entered into in accordance with the Loan
Agreement, then, in either of such events, the Mortgagee's consent shall not be
required; provided, further, however, that if any such change is required by
law, the Mortgagor may make such change with the prior written consent of the
Mortgagee, which consent the Mortgagee will not unreasonably withhold or delay.
As a condition to any consent under this SECTION 2.7.1, the Mortgagee may
require (a) that plans and specifications for the proposed work, prepared by a
reputable architect reasonably satisfactory to the Mortgagee, be submitted to
the Mortgagee for approval, and (b) that the Mortgagor obtain a payment and
performance bond or other security reasonably satisfactory to the Mortgagee in
form and amount reasonably satisfactory to the Mortgagee from the contractor or
subcontractor performing the work unless such work amounts to less than $200,000
in aggregate total cost. All work performed by or on behalf of the Mortgagor
shall be completed with all reasonable diligence and continuity, in a good and
workmanlike manner, and in compliance with all applicable Legal Requirements.
Unless, and to the extent that, the provisions of SECTION 2.7.2 be applicable,
no Building Service Equipment or Furnishings shall be removed from the Mortgaged
Premises during the course of any such work without prior notification to the
Mortgagee and unless provision is made for return or replacement on or prior to
the completion of the work. The provisions of this SECTION 2.7.1. shall apply to
any change made or required to be made by the Mortgagor in the course of
complying with any other of the provisions of this Mortgage. A duplicate set of
all plans and specifications required to be filed with any Governmental
Authority prior to, or at any time in connection with, any such alteration,
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tion shall be furnished to the Mortgagee. The Mortgagor will pay on demand the
reasonable expenses incurred by the Mortgagee in the review of plans and
specifications provided for in this Mortgage.
2.7.2. The Mortgagor shall have the right, at any time and from time to
time, to remove and dispose of any item of Building Service Equipment or
Furnishings which may have become obsolete or unfit for use or which is no
longer useful in the operation of the Improvements, provided that the Mortgagor
promptly replaces such item with other Building Service Equipment or
Furnishings, free of superior title, liens or claims (other than in favor of the
Mortgagee) unless consent of the Mortgagee is first obtained, not necessarily of
the same character but of at least equal quality, value and usefulness in
connection with the operation and maintenance of the Mortgaged Premises,
provided, further, however, no removal of any item of Building Service Equipment
or Furnishings then having a fair market value of $50,000 or more shall be made
without the prior written consent of the Mortgagee, which consent will not be
unreasonably withheld or delayed. However, if by reason of technological or
other developments in the operation and maintenance of buildings and other
improvements of the general character of the Improvements or a change in the use
of the Mortgaged Premises or any part thereof, no replacement of the Building
Service Equipment or Furnishings so removed would be necessary or desirable for
the proper operation or maintenance of the Improvements, the Mortgagor shall not
be required to replace the item so removed.
2.8. Limitation on Disposition of the Mortgaged Premises.
2.8.1. Except as expressly set forth in this Mortgage or the Loan Agreement
(including, without limitation, SECTIONS 5.01 and 6.21 of the Loan Agreement),
the Mortgagor shall not directly or indirectly sell, assign, mortgage, alienate,
pledge or otherwise transfer or further encumber the Mortgaged Premises or any
part thereof or any interest therein or in any of the rents, profits or income
generated thereby, whether voluntarily, involuntarily, by operation of law or
otherwise, or lease all or any portion thereof or an undivided interest therein,
without the prior written consent of the Mortgagee. The foregoing events are
hereinafter referred as a "Transfer". Any transfer without prior written the
consent of the Mortgagee is an Event of Default.
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2.8.2. If there shall be a violation of the terms and provisions of SECTION
2.8.1, whether by the Mortgagor or any other person, in addition to all other
rights and remedies available to the Mortgagee under this Mortgage, the
Mortgagee shall have the option, by the giving of notice to the Mortgagor, of
declaring the entire unpaid principal balance of the Note, together with all
accrued and unpaid interest and all other sums and charges evidenced thereby or
payable pursuant to the Loan Agreement, immediately due and payable.
2.9. Maintenance of Mortgaged Premises; Covenant Against Waste; Inspection
by the Mortgagee. The Mortgagor will not commit or permit waste on the Mortgaged
Premises and, at its expense, will keep and maintain the Improvements, the
Building Service Equipment and Furnishings in its (or their) present state of
repair and condition, reasonable wear and tear excepted, and, if improved, in
such improved state of repair and condition, reasonable wear and tear excepted;
provided, that this shall not limit the Mortgagor's other obligations hereunder,
such as compliance with laws. The Mortgagor shall do or cause to be done all
maintenance and make or cause to be made all repairs as may be required by the
landlord under any Space Lease. The Mortgagor will neither do nor permit to be
done anything to the Mortgaged Premises that may materially impair the value
thereof or which may violate any covenant, condition or restriction affecting
the Mortgaged Premises, or any part thereof, or which would effect any material
change therein or in the condition thereof that would increase the danger of
fire or other hazard arising out of the operation of the Mortgaged Premises.
Subject to the rights of Space Tenants, the Mortgagee, and its representatives
and agents, may enter and inspect the Mortgaged Premises at any time after
reasonable notice (which may be oral) during usual business hours, and the
Mortgagor shall, within thirty (30) days after demand by the Mortgagee (or
immediately upon demand in case of emergency), make such repairs, replacements,
renewals or additions, or perform such items of maintenance, to the Mortgaged
Premises as the Mortgagee may reasonably require in order to cause the Mortgaged
Premises to comply with the standards established in this SECTION 2.9.
2.10. To Furnish Certificates; Other Reporting Requirements.
2.10.1. The Mortgagor will, at its own expense, deliver to the Mortgagee,
within fifteen (15) days after written request, but no more frequently than once
per six (6) month period, a written statement executed by the
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Mortgagor, in recordable form, setting forth to the best of the Mortgagor's
knowledge, the amount then unpaid upon the Note and secured by this Mortgage and
stating whether any offsets or defenses exist against the indebtedness secured
hereby; and, if any such offsets or defenses are alleged to exist, then the
factual basis and amount of such claimed offsets or defenses.
2.10.2. The Mortgagor will, if requested by the Mortgagee, deliver to the
Mortgagee a certificate of an officer of the general partner of the Mortgagor or
of such general partner's general partner, to the effect that he is familiar
with this Mortgage and the other Security Documents, has reviewed the affairs of
the Mortgagor, and to the best of his knowledge and belief there exists no Event
of Default and no act or event has occurred or exists which with notice or lapse
of time or both could become such an Event of Default, or if any such event or
Event of Default exists, specifying it and what action the Mortgagor is taking
to cause it to be remedied.
2.11. After-Acquired Property. All right, title and interest of the
Mortgagor in and to all improvements, betterments, renewals, substitutes and
replacements of, and all additions and appurtenances to, the Mortgaged Premises
hereafter acquired, constructed, assembled or placed on the Mortgaged Premises,
immediately upon such acquisition, construction, assembly or placement, as the
case may be, and in each such case without any further mortgage, conveyance or
assignment or other act of the Mortgagor, shall become subject to the lien of
this Mortgage as fully and completely, and with the same effect, as though now
owned by the Mortgagor and specifically described in the granting clauses
hereof; and at any time and from time to time the Mortgagor, on demand, will
execute, acknowledge and deliver to the Mortgagee any and all such further
assurances, mortgages, conveyances or assignments as the Mortgagee may
reasonably require to further evidence, confirm and perfect the provisions of
this SECTION 2.11.
2.12. Further Assurances. The Mortgagor shall, at its sole cost and without
expense to the Mortgagee, on demand, do, execute, acknowledge and deliver all
and every such further acts, deeds, conveyances, mortgages, assignments, notices
of assignment, transfers and assurances as the Mortgagee shall from time to time
reasonably require for better assuring, conveying, assigning, transferring and
confirming unto the Mortgagee the property and rights hereby mortgaged or
assigned or intended now or hereafter so to be, or which the Mortgagor may be or
may hereafter become bound
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to convey, mortgage or assign to the 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.
2.13. Recorded Instruments. The Mortgagor will promptly perform and
observe, or cause to be performed and observed, all of the terms, covenants and
conditions of all instruments of record affecting the Mortgaged Premises (other
than non-consensual encumbrances hereafter affecting the Mortgaged Premises, the
validity or enforceability of which the Mortgagor is contesting in accordance
with this Mortgage) where non-compliance therewith affects the security of this
Mortgage or imposes any duty or obligation upon the Mortgagor or any Space
Tenant. The Mortgagor shall do or cause to be done all things reasonably
required to preserve intact and unimpaired and to renew any and all
rights-of-way, easements, grants, appurtenances, privileges, licenses,
franchises and other interests and rights in favor of or constituting any
portion of the Mortgaged Premises. The Mortgagor will not, without the prior
written consent of the Mortgagee, which consent shall not be unreasonably
withheld or delayed, initiate, join in or consent to any private restrictive
covenant or other public or private restriction as to the use of all or any
portion of the Mortgaged Premises. The Mortgagor will, however, comply with all
lawful restrictive covenants and zoning ordinances and other public or private
restrictions affecting all or any portion of the Mortgaged Premises.
ARTICLE III.
Condemnation
3.1. Notice of Taking. The Mortgagor shall promptly notify the Mortgagee if
the Mortgagor receives notice of the institution of any proceeding or
negotiations for the taking of the Mortgaged Premises, or any part thereof,
whether for permanent or temporary use and occupancy in condemnation or by the
exercise of the power of eminent domain or by agreement of interested parties in
lieu of such condemnation (all the foregoing called a "taking"); shall keep the
Mortgagee currently advised, in detail, as to the status of such proceedings or
negotiations and will promptly give to the Mortgagee copies of all notices,
pleadings, judgments, determinations and other papers received or delivered by
the Mortgagor in connection with any such proceedings. The Mortgagee shall have
the right to
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appear and participate in such proceedings and may be represented by counsel.
The Mortgagor will not, without the Mortgagee's prior written consent, which
consent shall not be unreasonably withheld or delayed, enter into any agreement
for the taking of the Mortgaged Premises, or any part thereof, with anyone
authorized to acquire the Mortgaged Premises by eminent domain or in
condemnation.
3.2. Condemnation Award. If the Mortgaged Premises shall be the subject of
a taking the Mortgagee shall be entitled to and shall receive the total of such
portion of all awards made that shall be allowed to the Mortgagor with respect
to all the right, title and interest of the Mortgagor in and to the Mortgaged
Premises (the award made in any total, partial or temporary taking is herein
called the "Award"), provided that the obligations of the Mortgagor to perform
the terms, covenants and conditions of this Mortgage, if any, affected by such
taking shall continue unimpaired until the actual vesting of title in such
proceeding and the actual receipt by the Mortgagee of the Mortgagor's share of
the entire Award resulting from such taking.
3.3. Application of Award. The Mortgagee shall have the option of treating
a total taking or a substantial taking (as hereinafter defined) as an Event of
Default and of accelerating the entire indebtedness secured hereby, in which
event it shall apply the Mortgagor's entire Award in reduction of such
indebtedness (including principal, interest and other sums secured hereby, in
such order as the Mortgagee may determine) and shall turn over any balance
remaining, if any, to the Person lawfully entitled thereto; or if the Mortgagee
shall not so elect to accelerate the indebtedness and apply the Award thereto,
then the total Award shall, regardless of amount, be deposited with the
Mortgagee or with the Depository, the Mortgagor hereby agreeing to elect that
such proceeds be held and disbursed by the Depository in accordance with
SECTIONS 2.5.6, 2.5.7, 2.5.8, 2.5.9 and 2.5.10 hereof for restoration required
to be made by the Mortgagor. If there be a partial taking, the net proceeds of
the Award shall be deposited with the Mortgagee and applied by the Mortgagee in
accordance with the provisions of SECTIONS 2.5.6, 2.5.7, 2.5.9 and 2.5.10.
Any Award remaining after the completion of such restoration, replacement or
rebuilding shall be applied in reduction of the indebtedness (including
principal, interest and other sums secured hereby) in such order as the
Mortgagee shall determine. A partial taking is substantial only if it materially
decreases the fair market value of the Mortgaged Premises and the remainder of
the Mortgaged
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Premises cannot be restored to an economically viable whole.
3.4. Temporary Taking. If any Award payable to the Mortgagor on account of
a taking for temporary use or occupancy is made in a lump sum or is payable
other than in equal monthly installments, the Mortgagor shall pay over such
Award to the Depository and such Award shall be applied to installments of
Impositions and of principal and interest and all other charges secured by this
Mortgage or due under the Note, the Loan Agreement, or the other Security
Documents as and when the same become due and payable. Any unapplied portion of
such Award held by the Depository when such taking ceases or expires (if no
Event of Default has then occurred and is continuing), or after the indebtedness
secured by this Mortgage or due under the Loan and Security Documents shall have
been paid in full, shall be paid to the Person lawfully entitled thereto.
3.5. The Mortgagor's Obligation to Restore. If all available proceeds of
the Award are made available to the Mortgagor for restoration, replacement or
rebuilding pursuant hereto, the Mortgagor shall be obligated promptly to
restore, replace, rebuild or alter any Improvements or Building Service
Equipment affected by a taking so as to restore the Mortgaged Premises to an
economically viable whole, all without regard to the adequacy of the proceeds of
an Award, if any, made available to the Mortgagor.
ARTICLE IV.
Assignment of Space Leases, Rents, Profits
and Other Income as Further Security, Etc.
4.1. Assignment of Space Leases, Rents, Issues and Profits. Subject to the
Mortgagor's rights herein, including those set forth in SECTION 4.3.2 below, the
Mortgagor hereby absolutely, presently and irrevocably transfers, assigns and
sets over unto the Mortgagee all right, title and interest of the Mortgagor in
and to all Space Leases, if any, now or hereafter entered into with respect to
all or any part of the Mortgaged Premises, and all renewals, extensions,
subleases or assignments thereof, and all other occupancy agreements (written or
oral), by concession, license or otherwise, together with all of the rents,
income, receipts, revenues, issues and profits arising therefrom (the
"Collateral").
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4.2. The Mortgagor's Covenants Regarding Space Leases.
4.2.1. Without the prior consent and approval of the Mortgagee in each
instance, the Mortgagor will not (a) assign, pledge, hypothecate or otherwise
encumber any of the Space Leases or the rents, income, issue and profits of the
Mortgaged Premises; or (b) enter into any Space Leases affecting the Mortgaged
Premises or any part thereof, unless such Space Lease is expressly subordinate
to the lien of this Mortgage and to any consolidation, extension, renewal,
recasting or refinancing hereof and the Space Lease provides, in substance, that
in the event of enforcement by the Mortgagee of the remedies provided for by law
or by this Mortgage, each Space Tenant shall, at the option of the Mortgagee,
enter into a agreement with the Mortgagee which shall provide, among other
things, that (i) such Space Tenant shall attorn to any person succeeding to the
interest of the Mortgagor as a result of such enforcement and shall recognize
such successor in interest as landlord under such Space Lease without change in
the terms or other provisions thereof, (ii) such successor shall not be bound by
any payment of rent or additional rent for more than one (1) month in advance or
any amendment or modification of any such Space Lease made without the
Mortgagee's written consent, and (iii) such successor shall not disturb the
possession of the Space Tenant provided certain conditions (as determined by the
Mortgagee) have been satisfied, including, without limitation, that the Space
Tenant shall not be in default under the terms of the Space Lease; or (c) enter
into any Space Leases without the prior written consent of the Mortgagee unless
permitted in SECTION 6.21 of the Loan Agreement.
4.2.2. The Mortgagor further represents, warrants, covenants and agrees
that:
(a) To the best of its knowledge, each Space Lease is (or, when
executed, will be) a valid and legally enforceable obligation of the
parties thereto, in full force and effect.
(b) With respect to each Space Lease and the Space Tenant security
deposits thereunder, any and/or all of such security deposits shall be held
as required by the Space Lease but in no event in a manner other than that
required by law.
(c) The Mortgagor shall, at its sole cost and expense, keep, observe,
perform and discharge,
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duly and punctually, all and singular the material obligations, terms,
covenants, conditions, representations and warranties of each Space Lease
on the part of the Mortgagor to be kept, observed, performed and
discharged.
(d) (i) Except as herein in this clause (i) expressly provided, the
Mortgagor shall, at its sole cost and expense, maintain the Space Leases in
full force and effect; the Mortgagor will not waive its rights under or
materially modify, change, supplement, alter or amend ("Change"), nor shall
the Mortgagor surrender (whether partial or total), terminate, cancel or
subordinate, any of the Space Leases or enter into any Backlease (whether
through an Affiliate or otherwise), and any such attempted Change,
surrender, termination, cancellation or subordination or Backlease shall be
void, unless, in each case, the prior written consent thereto of the
Mortgagee shall have been obtained. Notwithstanding the foregoing, the
Mortgagor may (x) terminate any Space Lease under 10,000 rentable square
feet as a result of a default by the tenant under such Space Lease and (y)
consent to any sublease or assignment of any Space Lease under 10,000
rentable square feet provided (aa) such termination is being effected in
the ordinary course of the Mortgagor's business, (bb) no Event of Default
then exists and no event has occurred that with the passage of time or the
giving of notice or both would constitute an Event of Default, and (cc) the
Mortgagee determines, in its reasonable discretion, that upon the
effectiveness of such termination, assignment or sublease (i) the Loan to
Value Ratio (as defined in the Loan Agreement, and taking into
consideration the value of all of the Projects, as defined in the Loan
Agreement) is not greater than 55%, and (ii) the Debt Service Coverage
Ratio (as defined in the Loan Agreement, and taking into consideration the
loss of income resulting from such termination, assignment or sublease, as
projected by the Mortgagee in its reasonable discretion) is not less than
1.40:1.0. A material Change shall include but not be limited to any
material Change in the amount or time of payment of the rent or additional
rent, the length of term or square footage of the premises under any Space
Lease or any other Change which would materially adversely affect the
Mortgagor's rights under the Space Lease, or would affect the Mortgagee's
rights under the Space Lease or the value of the Space Lease as collateral
security for the indebtedness.
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(ii) The Mortgagor shall, at its sole cost and expense, enforce
the Space Leases in accordance with their terms; and shall appear in
and defend any action or proceeding arising to which it is a party
under or in any manner connected with any of the Space Leases.
(e) The Mortgagor shall deliver to the Mortgagee a copy of each notice
of default sent or received by it relating in any way to any Space Lease
promptly upon, but in any event within five (5) business days after, its
sending or receipt thereof.
4.3. The Mortgagor's Rights and Powers.
4.3.1. The Mortgagor hereby irrevocably, in the name of the Mortgagor or
otherwise, authorizes and empowers the Mortgagee, and assigns and transfers unto
the Mortgagee, and constitutes and appoints the Mortgagee its true and lawful
attorney-in-fact, coupled with an interest and as its agent, irrevocably, with
full power or substitution for it and in its name, but solely for the following
purposes: (i) to exercise and enforce every right, power, remedy, authority,
option and privilege of the Mortgagor under the Space Leases, and as such
attorney-in-fact, the Mortgagee may subordinate, terminate, cancel or modify the
Space Leases, accept the surrender of the Space Leases, give any notice, take
any action resulting in such subordination, termination, cancellation,
modification or surrender, give any authorization, furnish any information, make
any demands, execute any instruments and take any and all other action on behalf
of and in the name of the Mortgagor which in the opinion of the Mortgagee may be
necessary or appropriate to be given, furnished, made, exercised or taken by the
Mortgagor under the Space Leases in order to comply therewith, to perform the
conditions thereof or to prevent or remedy any default by the Mortgagor
thereunder or to enforce any of the Mortgagor's rights and remedies there-under,
and (ii) to ask, require, demand, receive and collect and give acquittances for
the Income (as hereinafter defined), and on nonpayment thereof to sue for,
recover and receive the same, and on payment thereof to give sufficient
releases, receipts, discharges and acquittances thereof; to endorse any checks
or other instruments or orders in connection therewith and to file any claims or
take any action or institute any proceedings which the Mortgagee may deem to be
necessary or advisable; provided, however, that the power provided for in this
sentence may not be exercised by the Mortgagee unless an Event of Default shall
have occurred and be continuing. "Income" shall mean all
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deposits, rents, issues, profits, revenues, royalties, and other revenue
producing arrangements, whether written or oral, and all monetary benefits of,
and/or derived from, and/or sums payable under and by virtue of the Space Leases
and/or the Premises.
4.3.2. So long as there shall not have occurred and then be continuing any
Event of Default and until such right of the Mortgagor is terminated by the
Mortgagee as provided in SECTION 4.3.3, the Mortgagee will not exercise its
rights pursuant to SECTION 4.3.1, and, notwithstanding anything in SECTION 4.3.1
to the contrary, the Mortgagor shall have the right (but limited as hereinafter
provided) to exercise all of its rights under the Space Leases, including,
without limitation, to collect and receive all rents, income, receipts,
revenues, issues and profits arising therefrom, provided that the Mortgagor
shall at all times comply with, observe and perform, in the exercise of such
right, all of the provisions of this Mortgage and the other Security Documents
applicable to the Space Leases; provided, further, that no action shall be taken
or failed to be taken by the Mortgagor which would impair the Collateral or any
other collateral security for the Obligations provided for in the Security
Documents.
4.3.3. The Mortgagee, upon the occurrence and during the continuance of an
Event of Default, at its option and upon written notice to the Mortgagor, shall
have the right to terminate the right of the Mortgagor to exercise its rights
under the Space Leases, and, thereupon, in addition, the Mortgagee, at any time
thereafter, at its option, shall have the complete right, power and authority
hereunder to exercise and enforce all rights, powers, remedies, authority,
options and privileges of the Mortgagor under the Space Leases in the name of
the Mortgagor or the Mortgagee, to enforce all obligations of the other parties
to the Space Leases and to exercise and enforce all of its rights and remedies
hereunder and under law not exercisable prior to an Event of Default.
4.3.4. The Mortgagor does hereby direct each and all of the Space Tenants
under the Space Leases and all contractual obligors of the Mortgagor to pay any
Income to the Mortgagee upon written demand for payment thereof by the Mortgagee
without further inquiry. It is understood and agreed, however, that no such
demand shall be made unless an Event of Default shall have occurred and be
continuing. No such Space Tenant or obligor shall be obliged to account to the
Mortgagor for any amounts paid to the Mortgagee by reason of any payment made to
the Mortgagee pursuant to such
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demand and, upon any such payment to the Mortgagee, shall be pro tanto released
from their obligations to the Mortgagor with respect to such payment. Each Space
Tenant shall be permitted to rely on any communication from the Mortgagee
pursuant hereto, and under no circumstances shall such Space Tenant be obligated
to the Mortgagor for any payments made to the Mortgagee hereunder. Until such
demand is made, the Mortgagor is authorized to collect or enforce or continue
collecting or enforcing such Income in accordance with the provisions of this
Mortgage.
4.3.5. The Mortgagee shall not have any duty as to the collection or
protection of the Collateral or any income thereon or payments with respect
thereto, or as to the preservation of any rights pertaining thereto beyond the
safe custody of any thereof actually in its possession. In no instance shall the
Mortgagee be responsible to lessees for payment of interest upon, or return of,
any lease security deposits, except as provided by law or as provided in the
leases and then only if and to the extent that such deposits are received by the
Mortgagee. The Mortgagor hereby waives notice of acceptance hereof, and except
as otherwise specifically provided herein or required by provision of law which
may not be waived, hereby waives any and all notices or demands with respect to
any exercise by the Mortgagee of any rights or powers which it may have or to
which it may be entitled with respect to the Collateral.
4.3.6. The Mortgagor hereby irrevocably constitutes and appoints the
Mortgagee as the true and lawful attorney-in-fact of the Mortgagor, which
appointment is coupled with an interest, with full power of substitution, to
proceed from time to time in the Mortgagor's name in any statutory or
non-statutory proceeding affecting the Mortgagor or any Collateral, and the
Mortgagee or its nominee may (i) execute and file proof of claim for the full
amount of any Collateral and vote such claims for the full amount thereof (A)
for or against any proposal or resolution, (B) for a trustee or trustees or for
a receiver or receivers or for a committee of creditors and/or (C) for the
acceptance or rejection of any proposed arrangement, plan of reorganization,
composition or extension, and the Mortgagee or its nominee may receive any
payment or distribution and give acquittance therefor and may exchange or
release Collateral; (ii) endorse any draft or other instrument for the payment
of money, execute releases and negotiate and enter into settlements; and (iii)
execute all such other documents or instruments as may be necessary or expedient
to be executed by the Mortgagor for any of the purposes of this Mortgage;
provided, however, that the power
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provided for in this sentence may be exercised by the Mortgagee only while an
Event of Default is continuing. The Mortgagee shall have no duty to exercise any
of the aforesaid rights, privileges or options and shall not be responsible for
any failure to do so or delay in so doing.
4.4. Remedies and Entry Upon Default.
4.4.1. So long as no Event of Default shall have occurred and be
continuing, the Mortgagor shall have the right to collect (but not more than one
(1) month in advance) and retain all of the rents, gross receipts and other
payments, if any, from the Space Leases and from the Mortgaged Premises
generally, and the Mortgagee agrees that customary initial rent payments,
security deposits and reimbursements by a Space Tenant to the Mortgagor on
account of alterations made by the Mortgagor for the benefit of the Space Tenant
are permissible advance payments by the Space Tenant.
4.4.2. Upon any Event of Default, the Mortgagee may, but shall not be
obligated to:
(a) terminate the rights of the Mortgagor referred to in SECTION 4.3
hereof and exercise all of the powers, rights and remedies provided for in
SECTION 4.3 hereof, including those to be exercised only from and after an
Event of Default;
(b) at any time and from time to time, without notice to, or assent
by, the Mortgagor or any other Person, but without affecting any of the
Obligations, in the name of the Mortgagor or in the name of the Mortgagee,
notify the account debtors and obligors on any or all of the Space Leases
to make payment and performance directly to the Mortgagee, and demand,
collect, receive, compound and give acquittance for the Space Leases or any
part thereof; extend the time of payment and performance of, compromise or
settle for cash, credit or otherwise, upon any terms and conditions, any of
the Space Leases; endorse to the order of the Mortgagee checks, drafts or
other orders or instruments for the payment of moneys payable to the
Mortgagor which shall be issued in respect of any of the Space Leases; file
any claims, commence, maintain or discontinue any actions, suits or other
proceedings deemed by the Mortgagee necessary or advisable for the purpose
of collecting upon or enforcing any of the Space Leases; and execute any
instrument and do all other things deemed necessary and proper by the
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Mortgagee to protect and preserve and realize upon the Space Leases and/or
the other rights contemplated hereby; the Mortgagor hereby irrevocably
constitutes and appoints the Mortgagee as such the Mortgagor's lawful
attorney-in-fact, coupled with an interest, and its agent for the foregoing
purposes;
(c) demand, collect, sue for, attach, levy, recover, receive,
compromise and adjust, and make, execute and deliver receipts and releases
for all Income that may then be or may thereafter become due, owing or
payable with respect to the Premises or any part or parts thereof from any
present or future lessees, tenants, subtenants or occupants thereof or from
any present or future contract obligors; and/or
(d) pay, in such order as the Mortgagee in its sole discretion shall
determine, from and out of the Income collected in connection with the
Premises and/or the Collateral or any part or parts thereof or from or out
of any other funds (less the expense of collection, including reasonable
attorneys' fees and disbursements), any taxes, assessments, water rates,
sewer rates, or other government or other charges levied, assessed or
imposed against the Premises or any part or part thereof, and also any and
all other charges, costs and expenses which the Mortgagee deems necessary
or advisable to pay in respect of the management or operation of the
Premises, including, without limitation, the costs of insurance policies,
repairs and alterations, commissions for renting the Premises or any part
or parts thereof, legal expenses in enforcing claims, preparing papers or
procuring any other services that may be required and any amounts payable
under or pursuant to any Lease; all amounts so paid and expended shall be
payable on demand, together with interest at the Involuntary Rate from the
date incurred until paid, and be deemed to be included within the
Obligations and secured by this Mortgage; the provisions of this ARTICLE
and the rights given to the Mortgagee hereby shall inure to the benefit of
the Mortgagee even though the Mortgagee does not enter and take possession
of the Premises; any balance remaining after the indebtedness secured
hereby and the other obligations of the Mortgagor under the Loan and
Security Documents shall have been paid in full shall be turned over to the
Person lawfully entitled thereto. Neither the entry upon and taking
possession of the Mortgaged Premises, nor the collection and application of
the rents, gross receipts or other charges thereof,
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nor any other action taken by the Mortgagee in connection therewith, shall
cure or waive any default hereunder or waive or modify any notice thereof
or notice of acceleration of the Note theretofore given by the Mortgagee.
4.4.3. If an Event of Default shall have occurred and be continuing, a
notice in writing by the Mortgagee to the Space Tenants under the Space Leases
advising them that the Mortgagor has defaulted hereunder and requesting that all
future payments of rent, additional rent or other charges under the Space Leases
be made to the Mortgagee (or its agent) shall be construed as conclusive
authority to such Space Tenants that such payments are to be made to the
Mortgagee (or its agent). Each Space Tenant shall be fully protected in making
such payments to the Mortgagee (or its agent) and be given full credit against
its obligations under the applicable Space Lease to the extent of payments made
to the Mortgagee (or its agent) pursuant to any such notice; and the Mortgagor
hereby irrevocably constitutes and appoints the Mortgagee the attorney-in-fact
and agent of the Mortgagor, coupled with an interest, for the purpose of
endorsing the consent of the Mortgagor on any such notice.
4.5. No Obligation of The Mortgagee.
4.5.1. The Mortgagee shall not be obligated to perform or discharge any
obligation of the Mortgagor as a result of the assignment hereby effected, and
the Mortgagor hereby agrees to indemnify and hold the Mortgagee harmless from
and against any and all liability, loss or damage which the Mortgagee may incur
by reason of any act of the Mortgagee under this Mortgage, other than as a
result of the Mortgagee's willful misconduct or gross negligence and other than
as a result of the Mortgagee's misconduct or negligence after the Mortgagee has
taken possession of the Premises. Should the Mortgagee (i) incur any such
liability, loss or damage by reason of this Mortgage and which is covered by the
foregoing indemnity, or in defense against any such claims or demands, or (ii)
perform any acts or covenants on the part of the Mortgagor to be performed under
the Space Leases, or (iii) pay for the account of the Mortgagor (other than from
Income or from funds delivered to the Mortgagee by the Mortgagor to be held in
trust for such purpose), any and all sums, costs and expenses for the discharge
of taxes, assessments, water rents or other liens against the Collateral or any
part thereof, or on account of insurance premiums or repairs, and also any
amounts and expenses necessary to perform any
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covenants and conditions to be performed on the part of the Mortgagor under the
Space Leases, the amount thereof, including costs, expenses and reasonable
attorneys' fees, together with interest thereon at the Involuntary Rate from the
date such expenses were paid by the Mortgagee to the date of payment to the
Mortgagee by the Mortgagor, shall be included in the Obligations secured by this
Mortgage, and the Mortgagor shall reimburse the Mortgagee therefor upon demand.
4.5.2. The acceptance by the Mortgagee of this Mortgage, with all the
rights, powers, privileges and authority so created, shall not at any time or in
any event obligate the Mortgagee to appear in or defend any action or proceeding
relating to the Collateral, or to take any action hereunder or thereunder, or to
expend any money or incur any expenses or perform or discharge any obligation,
duty or liability under the Collateral.
ARTICLE V.
Security Agreement Under Uniform Commercial Code
5.1. This Mortgage shall constitute a security agreement and fixture filing
within the meaning of the Uniform Commercial Code of the State (the "Code"), and
the Mortgagee shall be deemed to be the "secured party" (as that term is defined
in the Code). The Mortgagor hereby grants to the Mortgagee, as additional
collateral for the obligations under the Note and the other Obligations secured
hereby, a security interest in and to all of the Mortgaged Premises which are
considered or as shall be determined to be personal property or "fixtures" (as
defined in the Code), including, without limitation, the Building Service
Equipment, the Furnishings, the Payments and Intangibles, all books, records,
licenses and certificates of the Mortgagor relating to the Mortgaged Premises,
together with all replacements thereof, substitutions therefor or additions
thereto (said property being sometimes hereinafter referred to as the "Personal
Property"). The Mortgagor agrees that a security interest shall attach to the
Personal Property for the benefit of the Mortgagee to secure the indebtedness
evidenced by the Note and the other Obligations secured by this Mortgage and all
other sums and charges which may become due hereunder, thereunder or under any
of the other Security Documents. The Mortgagor hereby authorizes the Mortgagee
to file financing and continuation statements with respect to the Personal
Property without the signature of the Mortgagor, if permitted by the Code. In
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any event the Mortgagor covenants to execute such financing and continuation
statements as the Mortgagee may reasonably request. If an Event of Default shall
occur and be continuing, the Mortgagee, pursuant to the appropriate provisions
of the Code, shall have the option of proceeding as to both real and personal
property in accordance with its rights and remedies in respect of real property
under this Mortgage and the law of the State, in which event the default
provisions of the Code shall not apply. The Mortgagor agrees that, in the event
the Mortgagee shall elect to proceed with respect to the Personal Property
separately from the real property, unless a greater period shall then be
mandated by the Code, five (5) days notice of the sale of the Personal Property
shall be reasonable notice. The expenses of retaking, holding, preparing for
sale and selling incurred by the Mortgagee shall be assessed against the
Mortgagor and shall include, but not be limited to, the reasonable legal
expenses incurred by the Mortgagee. The Mortgagor agrees that it will not remove
or permit to be removed from the Mortgaged Premises any of the Personal Property
without the prior written consent of the Mortgagee except as set forth in
SECTION 2.7.2. All replacements, renewals and additions to the Personal Property
shall be and become immediately subject to the security interest of this
Mortgage and the provisions of this ARTICLE V. The Mortgagor warrants and
represents that all Personal Property now is free and clear of all liens,
encumbrances or security interests other than the Permitted Encumbrances, and
that all replacements of the Personal Property, substitutions therefor or
additions thereto, unless the Mortgagee otherwise consents, will be, free and
clear of liens, encumbrances or security interests of others.
ARTICLE VI.
Events of Default and Remedies
6.1. Events of Default. The whole of the outstanding Principal Amount (as
defined in the Note) and accrued interest evidenced by the Note shall, at the
option of the Mortgagee, become due upon the happening of an Event of Default;
provided, however, that upon the occurrence of a default specified in SECTIONS
5.01(f) or 5.01(g) of the Loan Agreement, or upon the occurrence of any other
default specified in any Loan Document (as defined in the Loan Agreement) where
provision is made for acceleration to occur automatically as a consequence
thereof, all sums owing to
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the Mortgagee thereunder shall automatically become immediately due and payable.
6.2. Remedies.
6.2.1. If an Event of Default shall occur and be continuing, the Mortgagee,
at its option, may exercise any or all of the following rights:
(1) use the non-judicial Power of Sale which is hereby conferred under
the terms of this Mortgage. Such Power of Sale shall be exercised by giving
the Mortgagor Notice of Intent to Foreclose by Power of Sale and setting
forth among other things, the nature of the breach(es) or default(s) and
the action required to effect a cure thereof and the time period within
which such cure may be effected all in compliance with Title 46 Oklahoma
Statutes ss.ss. 40 et. seq. (Oklahoma Power of Sale Mortgage Foreclosure
Act) effective November 1, 1986, as the same may be amended from time to
time or other applicable statutory authority. If no cure is effected within
the statutory time limits, the Mortgagee may accelerate the Indebtedness
without further notice (the aforementioned statutory cure period shall run
concurrently with any contractual provision for notice and/or cure period
before acceleration of debt) and may then proceed in the manner and subject
to the conditions of the above referenced statutes to send to the Mortgagor
and other necessary parties a Notice of Sale and to sell and convey the
Mortgaged Premises in accordance with the above referenced statute. The
sale shall be made at one or more sales, as an entirety or in parcels, upon
such notice, at such time and places, subject to all conditions and with
the proceeds thereof to be applied all as provided in said Oklahoma Power
of Sale Mortgage Foreclosure Act. No action of the Mortgagee based upon the
provisions contained herein or contained in the Oklahoma Power of Sale
Mortgage Foreclosure Act, including, without limitation, the giving of the
Notice of Intent to Foreclose by Power of Sale or the Notice of Sale, shall
constitute an election of remedies which would preclude the Mortgagee from
pursuing judicial foreclosure before or at any time after commencement of
the power of sale foreclosure procedure.
(2) whether or not proceedings have commenced by the exercise of the
power of sale above given, the Mortgagee or the holder or holders of any of
the Indebtedness secured by the Mortgage, in
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lieu of proceeding with the power of sale, (or in the event of homestead
property where the Mortgagor has elected judicial foreclosure, as provided
in the above referenced statutes) may at its (their) option (after any
applicable contractual cure period has expired without such default being
cured) declare the whole amount of the Indebtedness secured by this
Mortgage remaining unpaid, immediately due and payable without notice, and
proceed by suit or suits in equity or at law to foreclose this Mortgage.
Appraisement of the Mortgaged Premises is hereby waived or not waived at
the option of the Mortgagee, such option to be exercised at or prior to the
time judgment is rendered in such judicial foreclosure. The Mortgaged
Premises may be sold as one parcel or in such parcels as the Mortgagee may
elect unless otherwise provided by law.
(3) enter upon the Mortgaged Premises and take exclusive possession
thereof and of all books, records and accounts relating thereto. If the
Mortgagor remains in possession of all or any part of the Mortgaged
Premises after an Event of Default and without the Mortgagee's prior
written consent thereto, the Mortgagee may invoke any and all legal
remedies to dispossess the Mortgagor, including specifically one or more
actions for forcible entry and detainer, trespass to try title and writ of
restitution. Nothing contained in the foregoing sentence shall, however, be
construed to impose any greater obligation or any prerequisites to
acquiring possession of the Mortgaged Premises after an Event of Default
than would have existed in the absence of such sentence;
(4) hold, lease, manage, operate or otherwise use or permit the use of
the Mortgaged Premises, either itself or by other persons, firms or
entities, in such manner, for such time and upon such other terms as the
Mortgagee may deem to be prudent and reasonable under the circumstances
(making such repairs, alterations, additions and improvements thereto and
taking any and all other action with reference thereto, from time to time,
as the Mortgagee shall deem necessary or desirable), and apply all rents,
issues, income and profits and other amounts collected by the Mortgagee in
connection therewith in accordance with the provisions set forth
hereinbelow;
(5) sell the Mortgaged Premises in the manner and form prescribed by
law through
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foreclosure of the lien created pursuant to this Mortgage;
(6) upon, or at any time after, commencement of foreclosure of the
lien and security interest provided for herein or any legal proceedings
hereunder, make application to a court of competent jurisdiction as a
matter of strict right and without notice to the Mortgagor other than as
specifically provided herein or in the other Security Documents or regard
to the adequacy of the Mortgaged Premises for the repayment of the
Indebtedness or to the solvency or insolvency of the Mortgagor, for
appointment of a receiver of the Mortgaged Premises, and the Mortgagor does
hereby irrevocably consent to such appointment. Any such receiver shall
have all the usual powers and duties of receivers in similar cases,
including the full power to rent, maintain and otherwise operate the
Mortgaged Premises upon such terms as may be approved by the court, and
shall apply such rents, issues, income and profits in accordance with the
provisions set forth hereinbelow;
(7) exercise any and all other rights, remedies and recourses granted
under the Security Documents or now or hereafter existing in equity, at
law, by virtue of statute or otherwise; and/or
(8) exercise any and all remedies available to a secured party under
the UCC in such order and in such manner as the Mortgagee in its sole
discretion may determine; provided, however, that the expenses of retaking,
holding, preparing for sale or the like, shall include reasonable
attorneys' fees and other expenses of the Mortgagee and be secured by this
Mortgage;
6.2.2. The Mortgagee may adjourn from time to time any sale by it to be
made under or by virtue of this Mortgage by announcement at the time and place
appointed for such sale or for such adjourned sale or sales; and, except as
otherwise provided by any applicable provision of law, the Mortgagee, without
further notice or publication, may make such sale at the time and place to which
the same shall be so adjourned.
6.2.3. Upon the completion of any sale or sales made by the Mortgagee under
or by virtue of this SECTION 6.2, the Mortgagee, or an officer of any court
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empowered to do so, shall execute and deliver to the accepted purchaser or
purchasers a good and sufficient instrument or instruments conveying, assigning
and transferring all estate, right, title and interest in and to the property
and rights sold. The Mortgagee is hereby irrevocably appointed the true and
lawful attorney of the Mortgagor, in its name and stead, to make all necessary
conveyances, assignments, transfers and deliveries of the Mortgaged Premises and
rights so sold and for that purpose the Mortgagee may execute all necessary
instruments of conveyance, assignment and transfer, and may substitute one or
more persons with like power, the Mortgagor hereby ratifying and confirming all
that its said attorney or such substitute or substitutes shall lawfully do by
virtue hereof. Nevertheless, the Mortgagor, if requested by the Mortgagee, shall
ratify and confirm any such sale or sales by executing and delivering to the
Mortgagee or to such purchaser or purchasers all such instruments as may be
advisable, in the judgment of the Mortgagee, for the purpose, and as may be
designated in such request. Any such sale or sales made under or by virtue of
this SECTION 6.2, whether made under the power of sale herein granted or under
or by virtue of judicial proceedings or of a judgment or decree of foreclosure
and sale, shall operate to divest all the estate, right, title, interest, claim
and demand whatsoever, whether at law or in equity, of the Mortgagor in and to
the properties and rights so sold, and shall be a perpetual bar both at law and
in equity against the Mortgagor and against any and all persons claiming or who
may claim the same, or any part thereof from, through or under the Mortgagor.
6.2.4. In the event of any sale or sales made under or by virtue of this
SECTION 6.2 (whether made under the power of sale herein granted or under or by
virtue of judicial proceedings or of a judgment or decree of foreclosure and
sale), the entire principal of, and interest on, the Note, if not previously due
and payable, and all other sums required to be paid by the Mortgagor pursuant to
this Mortgage, immediately thereupon shall, anything in the Note or in this
Mortgage to the contrary notwithstanding, become due and payable.
6.2.5. The purchase money, proceeds or avails of any sale or sales made
under or by virtue of this SECTION 6.2, together with any other sums which then
may be held by the Mortgagee under this Mortgage, whether under the provisions
of this SECTION 6.2, or otherwise, shall be applied as follows:
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First: To the payment of the costs and expenses of such sale,
including reasonable compensation to the Mortgagee, its agents and counsel,
and of any judicial proceedings wherein the same may be made, and of all
expenses, liabilities and advances made or incurred by the Mortgagee under
this Mortgage, together with interest at the Involuntary Rate on all
advances made by the Mortgagee, and of all taxes, assessments or other
charges, except any taxes, assessments or other charges subject to which
the Mortgaged Premises shall have been sold.
Second: To the payment of the whole amount then due, owing or unpaid
upon the Note for principal and interest, with interest on the unpaid
principal at the Involuntary Rate from and after the happening of any Event
of Default from the due date of any such payment of principal until the
same is paid.
Third: To the payment of any other sums required to be paid by the
Mortgagor pursuant to any provision of this Mortgage or of the Note.
Fourth: To the payment of the surplus, if any, to whomsoever may be
lawfully entitled to receive the same.
6.2.6. Upon any sale or sales made under or by virtue of this SECTION 6.2,
whether made under the power of sale herein granted or under or by virtue of
judicial proceedings or of a judgment or decree of foreclosure and sale, the
Mortgagee may bid for and acquire the Mortgaged Premises or any part thereof and
in lieu of paying cash therefor may make settlement for the purchase price by
crediting upon the indebtedness secured by this Mortgage the net sales price
after deducting therefrom the expenses of the sale and the costs of the action
and any other sums which the Mortgagee is authorized to deduct under this
Mortgage.
6.2.7. In case an Event of Default shall have happened and be continuing,
then, upon written demand of the Mortgagee, the Mortgagor will pay to the
Mortgagee the whole amount which then shall have become due and payable on the
Note, for principal or interest or both, as the case may be, and after the
happening of said Event of Default will also pay to the Mortgagee interest at
the Involuntary Rate on the then unpaid principal of the Note,
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and the sums required to be paid by the Mortgagor pursuant to any provision of
this Mortgage or the Note, and in addition thereto such further amount as shall
be sufficient to cover the costs and expenses of collection, including
reasonable compensation to the Mortgagee, its agents and counsel and any
expenses incurred by the Mortgagee hereunder. In the event the Mortgagor shall
fail forthwith to pay such amounts upon such demand, the Mortgagee shall be
entitled and empowered to institute such action or proceedings at law or in
equity as may be advised by its counsel for the collection of the sums so due
and unpaid, and may prosecute any such action or proceedings to judgment or
final decree, and may enforce any such judgment or final decree against the
Mortgagor and collect, out of the property of the Mortgagor wherever situated,
as well as out of the Mortgaged Premises, in any manner provided by law, moneys
adjudged or decreed to be payable.
6.2.8. Any moneys thus collected by the Mortgagee under this SECTION 6.2
shall be applied by the Mortgagee in accordance with the provisions of SECTION
6.2.5 hereof.
6.2.9. After the happening of any Event of Default and immediately upon the
commencement of any action, suit or other legal proceedings by the Mortgagee to
obtain judgment for the principal of, or interest on, the Note and other sums
required to be paid by the Mortgagor pursuant to any provision of this Mortgage
or the Note, or of any other nature in aid of the enforcement of the Note or of
this Mortgage, the Mortgagor will (a) waive the issuance and service of process
and enter its voluntary appearance in such action, suit or proceeding and (b) if
required by the Mortgagee, consent to the appointment of a receiver or receivers
of all or part of the Mortgaged Premises and of any or all of the rents, issues
and profits of the Mortgaged Premises in respect thereof. After the happening of
any Event of Default and during its continuance, or upon the commencement of any
proceedings to foreclose this Mortgage or to enforce the specific performance
hereof or in aid thereof or upon the commencement of any other judicial
proceeding to enforce any right of the Mortgagee, the Mortgagee shall be
entitled, as a matter of right, if it shall so elect, without the giving of
notice to any other party and without regard to the adequacy or inadequacy of
any security for the indebtedness secured hereby, forthwith either before or
after declaring the unpaid principal of the Note to be due and payable, to the
appointment of such a receiver or receivers.
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6.2.10. Notwithstanding the appointment of any receiver, liquidator or
trustee of the Mortgagor, or of any of its property, or of the Mortgaged
Premises, or any part thereof, the Mortgagee shall be entitled to retain
possession and control of all property now or hereafter held under this
Mortgage.
6.2.11. The Mortgagor will not at any time insist upon, or plead, or in any
manner whatever claim or take any benefit or advantage of any stay or extension
or moratorium law, any exemption from execution or sale of the Mortgaged
Premises or any part thereof, wherever enacted, now or at any time hereafter in
force, which may affect the covenants and terms of performance of this Mortgage,
nor claim, take or insist upon any benefit or advantage of any law now or
hereafter in force providing for the valuation or appraisal of the Mortgaged
Premises, or any part thereof, prior to any sale or sales thereof which may be
made pursuant to any provision herein, or pursuant to the decree, judgment or
order of any court of competent jurisdiction; nor, after any such sale or sales,
claim or exercise any right under any statute heretofore or hereafter enacted to
redeem the property so sold or any part thereof and the Mortgagor hereby
expressly waives all benefit or advantage of any such law or laws, and covenants
not to hinder, delay or impede the execution of any power herein granted or
delegated to the Mortgagee, but to suffer and permit the execution of every
power as though no such law or laws had been made or enacted.
6.2.12. During the continuance of any Event of Default and pending the
exercise by the Mortgagee of its right to exclude the Mortgagor from all or any
part of the Premises, the Mortgagor agrees to pay the fair and reasonable rental
value for the use and occupancy of the Premises or any portion thereof which are
in its possession for such period and, upon default of any such payment, will
vacate and surrender possession of the Premises to the Mortgagee or to a
receiver, if any, and in default thereof may be evicted by any summary action or
proceeding for the recovery of possession of premises for non-payment of rent,
however designated.
6.3. Sale; No Marshalling of Assets.
6.3.1. In case of a foreclosure sale, all of the Mortgaged Premises may be
sold in one parcel even though the proceeds of such sale exceed or may exceed
the indebtedness secured hereby. The Mortgagee shall not be required to exercise
any rights under this Mortgage before
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proceeding against any other security, shall not be required to proceed against
other security before proceeding under this Mortgage, and shall not be precluded
from proceeding against any or all of any security held by the Mortgagee for any
or all of the indebtedness secured hereby in any order or at the same time.
6.3.2. The Mortgagor agrees, to the full extent that it may lawfully do so,
that in any foreclosure or other action brought by the Mortgagee to enforce this
Mortgage, it will not at any time insist upon or plead or in any way take
advantage of any appraisement, valuation, stay, marshalling of assets,
extension, redemption or moratorium law now or hereafter in force and effect so
as to prevent, hinder, delay or otherwise affect the enforcement of the
provisions of this Mortgage or any rights or remedies the Mortgagee may have
hereunder or by law.
6.3.3. If the Mortgagee shall elect to accelerate the indebtedness secured
hereby following the occurrence of an Event of Default, the Mortgagor, within
five (5) days after demand, will pay to the Mortgagee, or any receiver appointed
in connection with the foreclosure of this Mortgage, any and all amounts then
held as security deposits under all Space Leases; and the Mortgagee or such
receiver shall be deemed to indemnify the Mortgagor against all claims of
tenants in respect of the security deposits so paid following such demand.
6.4. Legal Expenses of the Mortgagee.
6.4.1. The Mortgagor will pay to the Mortgagee, on demand, all costs,
charges and expenses (including, without limitation, reasonable attorneys' fees
and disbursements) incurred or paid at any time by the Mortgagee (i) in
connection with any action or proceeding to foreclose this Mortgage or to
recover or collect all, or any portion of the indebtedness secured hereby; and
(ii) in connection with any modification or amendment or assignment of this
Mortgage or the other Security Documents, together with interest on each such
payment made by the Mortgagee at the Involuntary Rate from the date of the
Mortgagee's demand for such payment to the date of reimbursement by the
Mortgagor.
6.4.2. If any action or proceeding be commenced in which the Mortgagee is
made a party, or in which it becomes necessary to defend or uphold the lien of
this Mortgage, all reasonable sums paid by the Mortgagee for the expense of any
litigation to prosecute or defend the
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title, rights and lien created by this Mortgage (including, without limitation,
reasonable attorneys' fees) shall be paid by the Mortgagor, together with
interest thereon at the Involuntary Rate from the date of the Mortgagee's demand
for such payment to the date of reimbursement by the Mortgagor.
6.5. Remedies Cumulative; No Waiver; Etc.
6.5.1. No remedy in this Mortgage conferred upon or reserved to the
Mortgagee is intended to be exclusive of any other remedy or remedies, and each
and every such remedy shall be cumulative, and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law or in equity.
No delay or omission by the Mortgagee in exercising any right or power arising
upon any Event of Default shall impair any such right or power, or shall be
construed to be a waiver of or acquiescence in any such Event of Default; and
every power and remedy given by this Mortgage to the Mortgagee may be exercised
from time to time as often as the Mortgagee may determine it is appropriate to
do so.
6.5.2. A waiver in one or more instances of compliance with any of the
terms, covenants, conditions or provisions of the Note, the Loan Agreement or of
the Security Documents shall apply to the particular instance or instances and
at the particular time or times only, and no such waiver shall be deemed a
continuing waiver. In any event, no waiver shall be effective, or be asserted by
the Mortgagor as having been made, unless set forth in a writing signed by the
Mortgagee.
6.5.3. The Mortgagor waives and renounces all homestead and similar
exemption rights with respect to the Mortgaged Premises provided for by the
Constitution and laws of the United States and of the State as against the
collection of the Security Documents, or any part thereof.
6.6. No Merger. It is the intention of the parties to this Mortgage that if
the Mortgagee shall at any time hereafter acquire title to all or any portion of
the Mortgaged Premises, then, and until the indebtedness secured hereby has been
paid in full, the interest of the Mortgagee hereunder and the lien of this
Mortgage shall not merge or become merged in or with the estate and interest of
the Mortgagee, as the holder and owner of title to all or any portion of the
Mortgaged Premises and that, until such payment, the estate of the Mortgagee in
the Mortgaged Premises and the lien of this Mortgage and the interest of the
Mortgagee hereunder shall continue in full force and
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effect to the same extent as if the Mortgagee had not acquired title to all or
any portion of the Mortgaged Premises.
ARTICLE VII.
Provisions of General Application
7.1. Modifications. No change, amendment, termination, modification or
cancellation of this Mortgage, or of any part hereof, shall be valid unless set
forth in a writing signed by the Mortgagor and the Mortgagee, except that only
the Mortgagee need sign any satisfaction of this Mortgage. ANY AGREEMENT
HEREAFTER MADE BY THE MORTGAGOR AND THE MORTGAGEE RELATING TO THIS MORTGAGE
SHALL BE SUPERIOR TO THE RIGHTS OF THE HOLDER OF ANY INTERVENING OR SUBORDINATE
LIEN OR ENCUMBRANCE.
7.2. Notices. All notices, demands, requests, consents, approvals or other
communications (each, a "Notice") given or required to be given hereunder shall
be sent to the addresses and in the manner required by the Loan Agreement.
7.3. The Mortgagee's Rights to Perform the Mortgagor's Covenants. If the
Mortgagor shall fail to pay or cause payment to be paid to the Mortgagee in
accordance with the terms of the Security Documents, or to perform or observe
any other term, covenant, condition or obligation required to be performed or
observed by the Mortgagor under this Mortgage or the other Security Documents,
without limiting any other provision of this Mortgage, and without waiving or
releasing the Mortgagor from any obligation or default hereunder, after giving
any notice to the Mortgagor required hereunder and after the passage of any
applicable cure periods (or without such notice in the event of an emergency),
the Mortgagee (or any receiver of the Mortgaged Premises) shall have the right,
but not the obligation, to make any such payment, or to perform any other act or
take any appropriate action, including, without limitation, entry on the
Mortgaged Premises and performance of work thereat, as it, in its sole
discretion, may deem necessary to cause such other term, covenant, condition or
obligation to be promptly performed or observed on behalf of the Mortgagor or to
protect the security of this Mortgage. All amounts advanced by, or on behalf of,
the Mortgagee in exercising its rights under this SECTION 7.3 (including, but
not limited to, legal expenses and disbursements incurred in
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connection therewith), together with interest thereon at the Involuntary Rate
from the date of the Mortgagee's demand upon the Mortgagor for reimbursement of
such sums until reimbursement by the Mortgagor, shall be payable by the
Mortgagor to the Mortgagee upon demand and shall be secured by this Mortgage.
7.4. Additional Sums Payable by the Mortgagor. All sums which, by the terms
of this Mortgage or any of the other Security Documents (excluding however the
principal indebtedness evidenced by the Note), are payable by the Mortgagor to
the Mortgagee shall, together with the interest thereon provided for herein or
in the Note or such other Security Documents, be added to and deemed part of the
indebtedness secured by the lien of this Mortgage whether or not the provision
which obligates the Mortgagor to make any such payment to the Mortgagee
specifically so states.
7.5. Captions. The captions used in this Mortgage are inserted only as a
matter of convenience and for reference, and in no way define, limit, enlarge or
describe the scope or intent of this Mortgage or in any other way affect this
Mortgage or the construction of any provision hereof.
7.6. Successors and Assigns. The covenants and agreements contained in this
Mortgage shall run with the land and bind the Mortgagor, the successors and
assigns of the Mortgagor and all subsequent owners, encumbrances and Space
Tenants of the Mortgaged Premises, or any part thereof; and shall inure to the
benefit of the Mortgagee, its successors and assigns and all subsequent
beneficial owners of this Mortgage.
7.7. Gender and Number. Wherever the context of this Mortgage so requires,
the neuter gender includes the masculine and/or feminine gender and the singular
number includes the plural.
7.8. Severability. If any one or more of the provisions contained in this
Mortgage shall for any reason be held to be invalid, illegal, or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provisions of this Mortgage; and this Mortgage shall, in such event,
be construed as if such invalid, illegal or unenforceable provision had never
been included.
7.9. Usury. Anything in the Note, the Loan Agreement, this Mortgage or the
other Security Documents to
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the contrary notwithstanding, the Mortgagee shall never be entitled to receive,
collect or apply as interest on the principal amount of the Note or any other of
the obligations secured hereby any amount in excess of the maximum rate of
interest permitted to be charged by applicable law. In the event the Mortgagee
ever receives, collects or applies as interest any such excess, the amount which
would be excessive interest shall be applied to the reduction of the principal
amount of said obligations; and if said principal amount shall have been paid in
full, shall be remitted to the Person lawfully entitled thereto. In determining
whether or not the interest paid or payable in any specific instance shall
exceed the highest lawful rate, the Mortgagor and the Mortgagee shall to the
maximum extent permitted by applicable law (i) characterize any non-principal
payment as an expense, fee or premium rather than as interest, (ii) exclude
voluntary prepayments and the effects thereof and (iii) "spread" the total
amount of interest throughout the entire contemplated terms of the obligations
so that the interest rate is uniform throughout the entire said term.
7.10. Controlling Law. This Mortgage shall be governed by, and construed
and enforced in accordance with the laws of the State of Oklahoma applicable to
contracts made and to be wholly performed within such state.
7.11. Entire Agreement. This Mortgage, together with the Note, the Loan
Agreement and the other Security Documents, embodies the entire agreement and
understanding between the parties relating to the subject matter hereof.
ARTICLE VIII.
Particular Provisions
The foregoing ARTICLES of this Mortgage are subject to the following
further provisions set forth in this ARTICLE VIII.
8.1. Limited Recourse. The provisions of PARAGRAPH 6.16 of the Loan
Agreement are hereby incorporated herein by reference.
8.2. Environmental Representations and Warranties. The Mortgagor hereby
makes the following representations and warranties to the Mortgagee with respect
to the Mortgaged Premises:
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8.2.1. Compliance with Environmental Laws. To the best of the Mortgagor's
knowledge based on all appropriate and thorough inquiry, (i) the Mortgaged
Premises (including surface and subsurface soil and water and areas leased to
tenants, if any), and the use and operation thereof, have been and are currently
in compliance with all Environmental Laws (as hereinafter defined), (ii) all
required permits are in effect, and the Mortgagor is in compliance therewith,
and (iii) all Hazardous Materials (as hereinafter defined) generated or handled
on the Mortgaged Premises have been disposed of in a lawful manner.
8.2.2. No Hazardous Materials. To the best of the Mortgagor's knowledge
based on all appropriate and thorough inquiry (a) no Hazardous Release (as
hereinafter defined) or other Hazardous Activity (as hereinafter defined) has
occurred or is occurring on or from the Mortgaged Premises except in compliance
with Environmental Laws and as has been disclosed in writing to the Mortgagee
("Disclosed Material"), (b) all Hazardous Materials used, treated, stored,
transported to or from, generated or handled on the Mortgaged Premises have been
disposed of on or off the Mortgaged Premises in a lawful manner, (c) no
environmental or public health or safety hazards currently exist with respect to
the Mortgaged Premises or the business or operations conducted thereon, (d) no
underground storage tanks (including but not limited to petroleum or heating oil
storage tanks) are present on or under the Mortgaged Premises or have been on or
under the Mortgaged Premises, except as has been disclosed in writing to the
Mortgagee, and (e) no changes have been made to or discovered regarding the
operations, use or environmental conditions on the Mortgaged Premises since the
date of the most recent written environmental assessment provided to the
Mortgagee.
8.2.3. No Environmental Actions. To the best of the Mortgagor's knowledge
and based on all appropriate and thorough inquiry, the Mortgaged Premises is not
listed on any local, state and/or federal lists of potentially contaminated
sites, including, but not limited to, the National Priorities List,
Comprehensive Environmental Response, Compensation and Liability Information
System or any state or federal hazardous waste site or leaking underground
storage tank lists, and there have been no past and there are no pending or
threatened Environmental Actions (as hereinafter defined) to which the Mortgagor
is a party or which relate to the Mortgaged Premises. The Mortgagor has not
received any notice of any Environmental Action respecting Mortgagor, the
Mortgaged
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Premises or any off-site facility to which has been sent any Hazardous Material
for purposes of any Hazardous Activity.
8.2.4. Intentionally Deleted.
8.2.5. Definitions. For purposes of this Mortgage, the following
capitalized terms shall have the meanings set forth below:
"Environmental Action" shall mean:
(a) any notice of violation, complaint, claim, citation, demand,
inquiry, report, action, assertion of potential responsibility, lien,
encumbrance, or proceeding regarding the Mortgaged Premises, whether formal
or informal, absolute or contingent, matured or unmatured, brought or
issued by any governmental unit, agency, or body, or any person or entity
respecting:
(1) any Environmental Law;
(2) the environmental condition of the Mortgaged Premises, or any
portion thereof, or any property near the Mortgaged Premises,
including actual or alleged damage or injury to humans, public health,
wildlife, biota, air, surface or subsurface soil or water, or other
natural resources; or
(3) any Hazardous Activity on the Mortgaged Premises or off-site;
(b) any violation or claim of violation by the Mortgagor of any
Environmental Law whether or not involving the Mortgaged Premises;
(c) any lien for damages caused by, or the recovery of any costs
incurred by any person or entity, including any governmental entity, for
the investigation, remediation or cleanup of any Hazardous Release or
threatened Hazardous Release on the Mortgaged Premises; or
(d) the destruction or loss of use of property, or the injury, illness
or death of any officer, director, employee, agent, representative, tenant
or invitee of the Mortgagor or any other person alleged to be or possibly
to be arising from or caused by the environmental condition of the
Mortgaged Premises or any Hazardous Activity on the Mortgaged Premises.
"Environmental Laws" shall mean:
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(a) any present or future federal statute, law, code, rule,
regulation, ordinance, order, standard, permit, license, guidance document
or requirement (including consent decrees, judicial decisions and
administrative orders) together with all related amendments, implementing
regulations and reauthorizations, pertaining to the protection,
preservation, conservation or regulation of the environment, including, but
not limited to: the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act, 42 U.S.C. Sections 9601 et seq. ("CERCLA"); the
Resource Conservation and Recovery Act of 1976, 42 U.S.C. Sections 6901 et
seq. ("RCRA"); the Toxic Substances Control Act, 15 U.S.C. Sections 2601 et
seq. ("TOSCA"); the Clean Air Act, 42 U.S.C. Sections 7401 et seq.; the
Clean Water Act, 33 U.S.C. Sections 1251 et seq.; the Hazardous Materials
Transportation Act, 49 U.S.C. Sections 1801 et seq. ("HMTA"); the Emergency
Planning and Community Right-to-Know Act, 42 U.S.C. Sections 11011 et seq.;
the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. Sections
136 et seq.; and the Atomic Energy Act, 42 U.S.C. Sections 2011 et seq.
(b) any present or future state or local statute, law, code, rule,
regulation, ordinance, order, standard, permit, license or requirement
(including consent decrees, judicial decisions and administrative orders)
together with all related amendments, implementing regulations and
reauthorizations, pertaining to the protection, preservation, conservation
or regulation of the environment.
"Hazardous Activity" shall mean any use, exposure, Hazardous Release,
generation, manufacture, sale, transport, handling, storage, treatment,
reuse, presence, decontamination, clean-up or recycling of any Hazardous
Material.
"Hazardous Materials" shall mean (a) all substances defined as
"hazardous substances", "hazardous materials", "toxic substances",
"hazardous wastes" or "solid waste" in CERCLA, RCRA, TOSCA or HMTA; (b)
those substances listed in the United States Department of Transportation
Table (49 C.F.R. 172.101 and amendments thereto) or by the Environmental
Protection Agency (or any successor agency) as "hazardous substances" (40
C.F.R. Part 302 and amendments thereto); those substances defined as
"hazardous wastes" or "hazardous substances" in the regulations adopted and
publications promulgated pursuant to said laws or which otherwise are or
become regulated by any governmental authority, agency, department,
commission, board or
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instrumentality of the United States of America, the State of Oklahoma, or
any political subdivision thereof; (d) any hazardous, dangerous or toxic
chemical, material, waste, pollutant, contaminant or substance
(collectively, "Pollutants") within the meaning of any Environmental Law
prohibiting, limiting or otherwise regulating any Hazardous Activity
relating to any such Pollutant; (e) any petroleum, crude oil, or fraction
or by-product thereof; (f) any radioactive material, including any source,
special nuclear or by-product material as defined at 42 U.S.C. Sections
2011 et seq., as amended or hereafter amended, and in the regulations
adopted and publications promulgated pursuant to said law; (g)
asbestos-containing materials in any form or condition; and (h)
polychlorinated biphenyls in any form or condition.
"Hazardous Release" shall mean the release of Hazardous Materials into
the environment by any means whatsoever, including but not limited to any
spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping removing or disposing
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(including the abandonment or discarding of barrels, containers and other
receptacles containing any Hazardous Material).
IN WITNESS WHEREOF, the Mortgagor has executed this Mortgage as of the day
and year first above written.
"Mortgagor"
CORPORATE REALTY INCOME
FUND I, L.P., a Delaware
limited partnership
By: _______________________
Robert F. Gossett, Jr.,
general partner
By: 1345 Realty Corporation,
general partner
By: ________________________
Robert F. Gossett, Jr.,
President
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STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
This instrument was acknowledged before me on September ___, 1996, by
ROBERT F. GOSSETT, JR., as a general partner of Corporate Realty Income Fund I,
L.P., a Delaware limited partnership, and as President of 1345 Realty
Corporation, which corporation is also a general partner of Corporate Realty
Income Fund I, L.P., a Delaware limited partnership.
_________________________
Notary Public
(Seal, if any)
_________________________
Title (and Rank)
(My commission expires: )
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EXHIBIT A
---------
PREMISES
LEGAL DESCRIPTION
Lot One (1) of Block One (1) in BRIXTON SQUARE, SECTION 2 to Oklahoma City,
Oklahoma County, Oklahoma, as shown by the recorded plat thereof.
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FIRST AMENDMENT TO MORTGAGE, ASSIGNMENT OF
LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING
FIRST AMENDMENT TO MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT
AND FIXTURE FILING dated as of December __, 1996 (as the same may be amended or
otherwise modified from time to time, this "Amendment") by and between CORPORATE
REALTY INCOME FUND I, L.P., a Delaware limited partnership (the "Mortgagor"),
having an office at 406 East 85th Street, New York, New York 10028, and FLEET
BANK, NATIONAL ASSOCIATION, a national banking association (the "Mortgagee"),
having an office at 56 East 42nd Street, New York, New York 10017.
W I T N E S S E T H:
WHEREAS, the Mortgagor executed and delivered to the Mortgagee that certain
Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing
dated September 26, 1996 (as the same may be amended or otherwise modified from
time to time, the "Mortgage") covering all of the Mortgagor's estate in and to
all that tract or parcel of land situate, lying and being in the County of
Oklahoma, State of Oklahoma, and more particularly described in EXHIBIT A
annexed to and made a part of this Amendment;
WHEREAS, the Mortgage was recorded by the Recorder of Deeds of the
___________________ on ____________________, 1996 in Book _________ at Page
__________;
WHEREAS, the Mortgagor and the Mortgagee are also parties to a Loan
Agreement dated as of September 26, 1996 (as the same may be amended or
otherwise modified from time to time, (the "Loan Agreement") and, pursuant to
the Loan Agreement, the Mortgagee has agreed to lend up to $24,000,000 to the
Mortgagor, and, to evidence such loans, the Mortgagor executed and delivered to
the Mortgagee the Note;
WHEREAS, payment of the indebtedness of the Mortgagor evidenced by the Note
is secured by the Mortgage;
WHEREAS, the Mortgagor and Mortgagee are simultaneously herewith entering
into a First Amendment to Loan Agreement and Note for the purpose, among others,
of increasing the principal amount of the Note from $24,000,000 to $44,000,000;
and
WHEREAS, it is a condition precedent to the effectiveness of the First
Amendment to Loan Agreement and Note that each of the parties hereto shall have
executed and delivered
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this Amendment, thereby amending the Mortgage and each of the parties hereto is
willing to do so.
NOW, THEREFORE, the parties to this Amendment hereby agree as follows:
1. All capitalized terms used herein without definition and which are
defined in the Mortgage are used herein with the meanings assigned to such terms
in the Mortgage.
2. The description in the Mortgage to the Note being in the principal
amount of $24,000,000 are hereby amended so that all of such references shall be
to a Note in the principal amount of $44,000,000.
3. The granting clauses of the Mortgage are hereby restated in their
entirety and incorporated herein and the Mortgagor hereby ratifies and restates
such granting clauses as incorporated herein.
4. The Mortgage, as modified by this Amendment, and all covenants of the
Mortgagor made in the Mortgage are hereby ratified and confirmed by the
Mortgagor in all respects, and the Mortgage, as so modified, shall continue in
full force and effect in accordance with its terms.
2
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IN WITNESS WHEREOF, each of the parties has caused these presents to be
signed and attested, all as of the day and year first above written.
ATTEST: CORPORATE REALTY INCOME FUND I, L.P.
_____________________ By: __________________________________
Robert F. Gossett, Jr.,
General Partner
By: 1345 Realty Corporation,
General Partner
By: ________________________________
Robert F. Gossett, Jr.,President
ATTEST: FLEET BANK, NATIONAL ASSOCIATION
____________________ By:_______________________________
Title:
3
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STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the ___ day of December, 1996, before me personally came ROBERT F.
GOSSETT, JR., to me known, who, being by me duly sworn, did depose and say that
he resides at 406 East 85th Street, New York, New York 10028; that he is the
President of 1345 Realty Corporation, the corporation described in and which
executed the foregoing instrument as a general partner of Corporate Realty
Income Fund I, L.P.; and that he signed his name thereto by order of the board
of directors of said corporation and as and for the act and deed of said
corporation and partnership.
___________________________________
NOTARY PUBLIC
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the ____day of December, 1996, before me personally came ROBERT F.
GOSSETT, JR., to me known, who, being by me duly sworn, did depose and say that
he resides at 406 East 85th Street, New York, New York 10028; that he is a
general partner of Corporate Realty Fund I, L.P., as described in the foregoing
instrument; and that he signed his name thereto as and for the act and deed of
said partnership.
___________________________________
NOTARY PUBLIC
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STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the ____day of December, 1996, before me personally came James Mirman,
to me known, who, being by me duly sworn, did depose and say that he resides at
56 East 42nd Street, New York, New York 10017; that he is a Vice President of
Fleet Bank, National Association; and that he signed his name thereto as and for
the act and deed of Fleet Bank, National Association.
___________________________________
NOTARY PUBLIC
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SECTION: 2
BLOCK: 1
LOT: 1
COUNTY: Oklahoma
Date: As of December __, 1996
FIRST AMENDMENT TO MORTGAGE, ASSIGNMENT OF
LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING
by and between
CORPORATE REALTY INCOME FUND I, L.P.
("Mortgagor")
having an office at
406 East 85th Street
New York, New York 10028
and
FLEET BANK, NATIONAL ASSOCIATION
having its principal office at
56 East 42nd Street
New York, New York 10017
("Mortgagee")
This instrument prepared by, and after recording please return to:
Loeb & Loeb LLP
345 Park Avenue
New York, New York 10154-0037
Attention: Kenneth D. Freeman, Esq.
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RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Loeb & Loeb LLP
345 Park Avenue
New York, New York 10154
Attn: Kenneth Freeman, Esq.
- ------------------SPACE ABOVE THIS LINE FOR RECORDER'S USE ONLY-----------------
[Las Colinas Office Center-Texas]
DEED OF TRUST, ASSIGNMENT OF RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
THIS DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND FIXTURE FILING
SECURES REVOLVING CREDIT INDEBTEDNESS. THE INDEBTEDNESS SECURED HEREBY IS
COMPOSED OF REVOLVING CREDIT TYPE INDEBTEDNESS, THE OUTSTANDING BALANCE OF WHICH
CAN FLUCTUATE UP OR DOWN ACCORDING TO PAYMENTS MADE ON THE INDEBTEDNESS AND
SUBSEQUENT ADVANCES.
THIS DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND FIXTURE
FILING, made as of the 26th day of September, 1996, by CORPORATE REALTY INCOME
FUND I, L.P., Delaware limited partnership (the "Trustor"), having an office at
406 East 85th Street, New York, New York 10028, to JAMES E. MIRMAN, an
individual, having an office at 56 East 42nd Street, New York, New York 10017
(the "Trustee"), for the benefit of FLEET BANK, NATIONAL ASSOCIATION, a national
banking association (the "Beneficiary"), having an office at 56 East 42nd
Street, New York, New York 10017.
W I T N E S S E T H:
WHEREAS, the Trustor is the owner of the fee estate in those certain
parcels of real property described in EXHIBIT A annexed hereto (together with
the improvements now or hereafter located thereon, collectively, the
"Premises"), and desires to convey the Premises in trust, to secure, among other
obligations, a certain loan being made concurrently herewith by the Beneficiary
to the Trustor, pursuant to the terms of a Loan Agreement of even date herewith
between the Trustor and Beneficiary (as the same
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may be amended or otherwise modified from time to time, the "Loan Agreement");
and
WHEREAS, the indebtedness secured hereby is evidenced by that certain
Secured Promissory Note of even date herewith in the principal amount of
$24,000,000 (as the same may be amended or otherwise modified from time to time,
the "Note") made by the Trustor to the Beneficiary, which Note provides for a
variable rate of interest.
NOW, THEREFORE,
FOR THE PURPOSE OF SECURING payment of all of the liabilities and
obligations of the Trustor to the Beneficiary evidenced by the Note, plus
interest thereon and all sums necessary to protect the Beneficiary under this
Trust Deed or under the other Security Documents (as hereinafter defined), and
all other sums due and payable under the Security Documents, and all of the
other Obligations (as hereinafter defined), the Trustor does hereby grant,
transfer, assign, bargain, sell and convey, and by these presents does hereby
irrevocably grant, transfer, assign, bargain, sell and convey, in trust, unto
Trustee, and the Trustee's successors and assigns, in trust, with power of sale
and right of entry and possession, all of the Trustor's estate, right, title and
interest in and to the Premises; and
TOGETHER with all and singular the easements, rights of way, air rights,
reservations, privileges, choses in action, options, tenements, hereditaments
and appurtenances thereunto belonging or in any way appertaining, including,
without limitation, all off-street parking rights and spaces, if any, and the
reversion and remainder of any or all of the foregoing; and all of the estate,
right, title, interest, claim or demand whatsoever of the Trustor therein and in
and to the Premises and/or the improvements thereon, and in and to all strips
and gores, and all alleys adjoining the land and in and to any land lying in the
bed of any street, road or avenue, open or proposed, in front of, or adjoining
or adjacent to the Premises, to the center line thereof, either in law or in
possession or expectancy, now or hereafter acquired;
TOGETHER with all of the right, title and interest of the Trustor in and to
(i) all buildings, vaults, and other improvements and additions thereto now
erected or hereafter constructed or placed upon the Premises or any part thereof
(the "Improvements"); (ii) to the extent permitted by law, the name or names, if
any, as may now or
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hereafter be used for each Improvement and the good will associated therewith,
as well as the trade names of the Improvements; and (iii) all machinery,
devices, fixtures, apparatus, interior improvements, appurtenances and equipment
of every kind and nature whatsoever now or hereafter attached to or placed in or
upon the Premises or the Improvements, or any part thereof, or used or procured
for use in connection with the operation of the Premises or any business
conducted thereon (except for fixtures and personal property that are at any
time the property of Space Tenants, as defined in SECTION 1.16, or independent
contractors employed at the Premises), all of the foregoing, except as
aforesaid, hereinafter collectively called "Building Service Equipment";
TOGETHER with all the right, title and interest of the Trustor in and to
all furniture, furnishings, decorations, chattels and other personal property
now or hereafter in, on or at said Premises (except for trade fixtures and
personal property that are at any time the property of Space Tenants), all of
the foregoing, except as aforesaid, hereinafter collectively called
"Furnishings;"
TOGETHER with all right, title and interest of the Trustor in and to all
insurance or other proceeds for damage done to the Improvements, Building
Service Equipment or Furnishings and all awards heretofore made or hereafter to
be made to or for the account of the Trustor for the permanent or temporary
taking by eminent domain of the whole or any part of the Premises, the
Improvements, the Building Service Equipment and the Furnishings or any lesser
estate in, or easement appurtenant to, the Premises (including, without
limitation, any awards for change of grade of streets), all of which proceeds
and awards are hereby assigned to the Beneficiary, subject to the further
provisions of this Trust Deed;
TOGETHER with all of the rents, issues, income, revenues, royalties,
proceeds, benefits and profits of the Mortgaged Premises (as hereinafter
defined), including amounts payable under all Space Leases (as hereinafter
defined), now in effect or hereafter entered into covering any part of the
Mortgaged Premises, as well as all rights and interest of the Trustor as
landlord thereunder, all of which are hereby assigned to the Beneficiary,
subject, however, to the right of the Trustor, as licensee, to receive and use
the same unless and until an Event of Default shall occur;
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TOGETHER with all of the records and books of account now or hereafter
maintained by the Trustor in connection with the operation of the Mortgaged
Premises;
TOGETHER with all water, water rights, shares of stock evidencing the same,
mineral rights, ditches, ditch rights, reservoirs and reservoir rights
appurtenant to, located on or used in connection with the Premises or the
Improvements, whether existing now or hereafter acquired;
TOGETHER with all deposits made with or other security given to utility
companies or governmental branches or agencies by the Trustor with respect to
the Mortgaged Premises, and all advance payments of insurance premiums made by
the Trustor with respect thereto;
TOGETHER with all licenses (including, but not limited to, any operating
licenses or similar matters), contracts, management agreements, franchise
agreements, permits, authorities or certificates required, used or useful in
connection with the use, enjoyment, occupancy, management or operation of the
Mortgaged Premises, except where the assignment or pledge of any such licenses,
permits or other rights is prohibited by applicable statute or by any applicable
issuing governmental agency; and
TOGETHER with any and all of the Trustor's rights in and to any and all
cash payments, reimbursements or other intangible rights arising in connection
with the development, operation or maintenance of the Mortgaged Premises,
including, without limitation, any tax appeal refunds, municipal reimbursements,
governmental subsidy payments and governmentally-registered credits (such as
emissions and reduction credits) (collectively, the "Payments and Intangibles");
TOGETHER with all proceeds and products of the foregoing.
All of the foregoing estates, rights, privileges, interests and franchises
hereby granted and released, assigned, transferred, set over and mortgaged, or
intended so to be, being hereinafter collectively referred to as the "Mortgaged
Premises".
TO HAVE AND TO HOLD the Mortgaged Premises, now or hereafter owned
absolutely or in fee by the Trustor, together with all rights, hereditaments and
appurtenances in any way appertaining or belonging thereto, unto the Trustee,
the successors and assigns of the Trustee, forever for the
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uses set forth herein, in trust, to secure the payment to the Beneficiary of the
principal and of interest on the Note at the maturity thereof (whether by
acceleration or otherwise), all other sums due under the Note or under this
Trust Deed or under the Loan Agreement, the performance of all covenants and
agreements in the Security Documents and all other obligations, whereupon this
Trust Deed shall cease and be void and the Mortgaged Premises shall be released
at the cost of the Trustor.
ARTICLE I.
Certain Definitions
In addition to other definitions contained herein, the following terms
shall have the meanings set forth below, unless the context of this Trust Deed
otherwise requires:
1.1. "Affiliate" - shall mean (a) if with respect to a corporation, (i) any
officer or director thereof and any person or entity who or which is, directly
or indirectly, the legal or beneficial owner of more than ten (10%) percent of
any class of shares or other equity security of such corporation, or (ii) any
person or entity who or which, directly or indirectly, controls or is controlled
by or is under common control with such corporation and (b) if with respect to a
partnership or venture, any (i) general partner, (ii) general partner of a
general partner, (iii) partnership with a common general partner, (iv)
coventurer thereof, or (v) any person, trust, corporation, partnership, venture
or other entity who or which, directly or indirectly, controls or is controlled
by or is under common control with such partnership; and if any general partner
or general partner of a general partner or coventurer is a corporation, any
person or entity which is an Affiliate as defined in clause (a) above of such
corporation. "Controls" (including the correlative meanings of "controlled by"
and "under common control with") means effective power, directly or indirectly,
to direct or cause the direction of the management and policies of such person
or entity.
1.2. "Backlease" means a sublease to the Trustor or its Affiliate made by a
lessee under a Space Lease.
1.3. "Beneficiary" shall mean the Beneficiary herein named or at any given
time the holder or holders of this Trust Deed and the Note.
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1.4. "Due and payable" when used with reference to the principal of, or
premium or interest on, or when referring to any and all other sums secured by
this Trust Deed or any other of the Security Documents shall mean due and
payable, whether at the monthly or other date of payment or at the date of
maturity specified in the Note, this Trust Deed or the other Security Documents;
or by acceleration or call for payment as provided in the Note, hereunder or in
the other Security Documents, or, in the case of Impositions, the last day upon
which any charge may be paid without penalty and/or interest.
1.5. "Default Rate" shall mean the Involuntary Rate (as such term is
defined in the Note).
1.6. "Event of Default" shall have the meaning assigned to such term in the
Note.
1.7. "Governmental Authorities" shall mean all federal, state, county,
municipal and local governments and all departments, commissions, boards,
bureaus and offices thereof, having or claiming jurisdiction over the Mortgaged
Premises or any part thereof.
1.8. "Impositions" shall mean all duties, taxes, water and sewer rents,
rates and charges, assessments (including, but not limited to, all assessments
for public improvements or benefit), charges for public utilities, excises,
levies, license and permit fees and other charges, ordinary or extraordinary,
whether foreseen or unforeseen, of any kind and nature whatsoever, which prior
to or during the term of this Trust Deed will have been or may be laid, levied,
assessed or imposed upon or become due and payable out of or in respect of, and
become a lien on the Premises, the Improvements, Building Service Equipment,
Furnishings or any other property or rights included in the Mortgaged Premises,
or any part thereof or appurtenances thereto, or which are levied or assessed
against the rent and income received by the Trustor from the Space Leases (as
defined in SECTION 1.15) by virtue of any present or future law, order or
ordinance of the United States of America or of any state, county or local
government or of any department, office or bureau thereof or of any other
Governmental Authority.
1.9. "Legal Requirements" shall mean all present and future laws,
ordinances, rules, regulations and requirements of all Governmental Authorities,
and all orders, rules and regulations of any national or local board
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of fire underwriters or other body exercising similar functions, foreseen or
unforeseen, ordinary or extraordinary, which may be applicable to the Mortgaged
Premises or any part thereof, or to the sidewalks, alleyways, passageways, curbs
and vaults adjoining the same, or to the use or manner of use of any of the
foregoing, or to the owners, tenants, or occupants thereof, whether or not any
such law, ordinance, order, rule, regulation or requirement shall necessitate
structural changes or improvements or shall interfere with the use or enjoyment
of any of the foregoing, and shall also mean and include all requirements of the
policies of public liability, fire and all other insurance at any time in force
with respect to any of the foregoing.
1.10. "Obligations" shall mean the (a) aggregate unpaid principal amount
of, and accrued and unpaid interest on, the Note, plus (b) any and all
indebtedness, obligations and other liabilities of the Trustor to the
Beneficiary arising out of or in connection with or otherwise relating to the
Note, the Loan Agreement or any of the Security Documents, and/or any
agreement(s) of the Trustor with the Beneficiary pertaining thereto; in each
case whether now or hereafter existing, direct or indirect, absolute or
contingent, joint, several or independent, due or to become due, liquidated or
unliquidated, held or to be held by the Beneficiary and whether created directly
or acquired by assignment or otherwise.
1.11. "Peg Rate" - shall have the meaning assigned to such term in the
Note.
1.12. "Permitted Encumbrances" shall mean each of the exceptions to
coverage set forth in SCHEDULE B, PART I of that certain Preliminary Title
Report dated September 26, 1996, issued by Chicago Title Insurance Company, to
and accepted by the Beneficiary with respect to the Premises, and such other
items as the Beneficiary in its sole discretion, may approve in writing.
1.13. "Person" shall mean and include any individual, corporation,
partnership, unincorporated association, trust, governmental agency or authority
or other entity.
1.14. "Security Documents" shall have the meaning assigned to such term in
the Note.
1.15. "Space Lease" shall mean any and all leases, subleases, licenses,
concession agreements or any other form of agreement, however denominated
(written or verbal, now or hereafter in effect), in which the Trustor (or any
predecessor in interest as owner of the Mortgaged Premises in the case of
existing Space Leases) now or here-
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after grants a possessory interest in and to, or the right to use and occupy the
Mortgaged Premises, or any portion thereof, and all renewals, extensions,
modifications, amendments and other agreements affecting the same.
1.16. "Space Tenant" shall mean the tenant or other user or occupant of
part or all of the Mortgaged Premises under any Space Lease.
1.17. "State" shall mean the State of Texas.
1.18. "to the best of the Trustor's knowledge" shall mean the actual
knowledge of Robert F. Gossett, Jr., after reasonable inquiry and investigation.
1.19. "Trust Deed" shall mean this instrument as originally executed or, if
hereafter amended, modified or supplemented, as so amended, modified or
supplemented.
1.20. "Trustee" shall mean the Trustee herein named or any successor
trustee designated pursuant hereto from time to time.
1.21. "Trustor" shall mean the Trustor herein named, any subsequent owner
or owners of the Mortgaged Premises, and its or their respective heirs,
executors, administrators, successors and assigns, but this provision shall not
be construed to limit the terms of SECTION 2.8 hereof.
ARTICLE II.
Particular Covenants of the Trustor
The Trustor covenants and agrees as follows:
2.1. Payment of Indebtedness. The Trustor shall duly and punctually pay to
the Beneficiary, as and when due and payable, the indebtedness evidenced by the
Note and the other Obligations secured hereby. As used in this SECTION 2.1 and
elsewhere in this Trust Deed, the term "indebtedness" shall mean and include the
principal amount of the Note together with all interest thereon, any other
payments due to the Beneficiary under the Loan Agreement and/or any of the
Security Documents, all costs of collection provided for in the Note, the Loan
Agreement or any of the Security Documents, and all other sums and charges at
any time due under or otherwise secured by this Trust Deed.
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2.2. Warranty of Title. The Trustor warrants that, to the best of the
Trustor's knowledge (a) the Mortgaged Premises are free and clear of all liens
and encumbrances other than the Permitted Encumbrances; (b) it owns the Building
Service Equipment and Furnishings free and clear of all liens and claims other
than in favor of the Beneficiary; (c) this Trust Deed is and will remain a valid
and enforceable first lien deed of trust on the Mortgaged Premises, subject only
to the Permitted Encumbrances; and (d) the Trustor has the right and lawful
authority to mortgage and convey the Mortgaged Premises in the manner and form
herein provided. The Trustor represents and warrants to the Beneficiary, to the
best of the Trustor's knowledge, and covenants for the benefit of the
Beneficiary, as follows:
(i) that the Trustor is lawfully seized and possessed of a fee in the
Premises and that the Trustor holds good legal and marketable title thereto
and to the rest of the Mortgaged Premises, subject only to the Permitted
Encumbrances; and
(ii) that the Mortgaged Premises are now free and clear of all liens
and encumbrances whatsoever, other than the Permitted Encumbrances, that
the Trustor has good right and lawful authority to mortgage and convey the
same in the manner and form herein provided and that the Trustor will
warrant and defend title to the Mortgaged Premises against all claims and
demands whatsoever.
2.3. To Maintain Priority of Lien.
2.3.1. This Trust Deed is and will be maintained as a valid first lien deed
of trust on the Mortgaged Premises, and the Trustor will not, directly or
indirectly, create or suffer or permit to be created, or to stand against the
Mortgaged Premises or any portion thereof, or against the rents, issues and
profits therefrom, and will promptly discharge, any lien or charge prior to or
upon a parity with or junior to the lien of this Trust Deed other than the
Permitted Encumbrances; provided, however, that the Trustor shall not be
required to pay any Imposition prior to the time it shall become due and payable
subject to the provisions of SECTION 2.4.1 hereof, and nothing herein contained
shall prevent the Trustor from contesting the validity of any such Imposition in
accordance with the provisions of SECTION 2.4.4. The Trustor will keep and
maintain the Mortgaged Premises, and every part thereof, free from all liens or
lien notices, of Persons supplying
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labor and/or materials in connection with any construction, alteration, repair,
improvement or replacement of the Improvements or of the Building Service
Equipment and Furnishings. If any such lien shall be filed against the Mortgaged
Premises, or any part thereof, the Trustor promptly shall discharge the lien of
record, by bonding or otherwise. The Trustor shall exhibit to the Beneficiary,
upon request, appropriate receipts or other satisfactory evidence of the payment
of the Impositions or any other item which may, if not paid, give rise to a lien
against the Mortgaged Premises.
2.4. To Pay Impositions.
2.4.1. The Trustor will pay or cause to be paid, as and when due and
payable, all Impositions levied upon the Mortgaged Premises or any part thereof.
However, if by law, any Imposition may at the option of the taxpayer be paid in
installments (whether or not interest shall accrue on the unpaid balance
thereof), the Trustor shall have the right to exercise such option and to pay
such Imposition, or cause it to be paid (together with any accrued interest on
the unpaid balance) in installments as they fall due and before any fine,
penalty, further interest or cost may be added thereto.
2.4.2. If an Event of Default shall occur and be continuing, then upon
demand of the Beneficiary, the Trustor shall deposit with the Beneficiary a sum
which bears the same relation to the annual insurance premiums for all insurance
required by the terms hereof and real estate taxes and assessments assessed
against the Mortgaged Premises for the insurance period or tax year then in
effect, as the case may be, as the number of months elapsed as of the date of
such demand since the last preceding installment of said premiums or taxes or
assessments shall have become due and payable bears to twelve (12). For the
purpose of this computation, the month in which such last preceding installment
of premiums or real estate taxes or assessments became due and payable and the
month in which such demand is given shall be included and deemed to have
elapsed. On the first day of the month next succeeding the month in which such
demand is given, and thereafter on the first day of each and every month during
the term of this Trust Deed, the Trustor shall deposit with the Beneficiary a
sum equal to one-twelfth of such insurance premiums and such taxes and
assessments for the then-current insurance period and tax year, so that as each
installment of such premiums and taxes and assessments shall become due and
payable, the Trustor shall have deposited with the Beneficiary a sum sufficient
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to pay the same. All such deposits shall be received and held as part of such
deposit by the Beneficiary (all such deposits to be held in an account without
interest thereon) and shall be applied to the payment of each installment of
such premiums and taxes and assessments as they shall become due and payable.
The Beneficiary shall, upon demand, furnish evidence to the Trustor of the
making of each such payment. If the amount of such premiums and taxes and
assessments has not been definitely ascertained at the time when any such
monthly deposits are required to be made, the Trustor shall make such deposits
based upon the amount of such premiums and taxes and assessments for the
preceding year, subject to adjustment as and when the amount of such premiums
and taxes and assessments are ascertained. If at any time when any installment
of such premiums and such taxes and assessments becomes due and payable the
Trustor shall not have deposited a sum sufficient to pay the same, the Trustor
shall, within five (5) days after demand, deposit any deficiency with the
Beneficiary. Upon payment in full of the indebtedness secured by this Trust
Deed, any remaining amount on deposit with the Beneficiary shall be repaid to
the Person lawfully entitled thereto. If an Event of Default shall occur and be
continuing, the Beneficiary may, at its option, apply all or any portion of the
amounts then on deposit with the Beneficiary pursuant to this SECTION 2.4.2
first to the payment of any premiums, taxes or assessments then due, and any
remaining amounts may be applied to the payment of the indebtedness. The Trustor
shall deliver to the Beneficiary all insurance and tax bills promptly following
receipt during any period when such monthly deposits are to be made with the
Beneficiary.
2.4.3. The Trustor will pay all taxes and other governmental charges
(including, without limitation, stamp taxes), except income or franchise taxes
or similar taxes based upon or measured by income, assessed by the United States
government or any state or local governmental authority and imposed on the
Beneficiary, its successors by reason of the ownership of this Trust Deed or the
Note or the receipt of the interest or other sums payable thereunder or payable
by either the Trustor or the Beneficiary upon any increase in the indebtedness
secured hereby, or any modification, amendment, extension or consolidation of
this Trust Deed. Without limiting the foregoing and subject to the limitations
set forth above, the Trustor will also pay the whole of any tax imposed,
directly or indirectly, on this Trust Deed or the Note or the receipt of any
portion of the Indebtedness in lieu of a tax on the Mortgaged Premises or the
Improvements and Building Service Equipment, whether by reason of (a) the
passage after the date of this Trust
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Deed of any law of the State deducting from the value of real property for the
purposes of taxation any lien thereon; (b) any change in the laws for the
taxation of Trust Deeds or debts secured by trust deeds for state or local
purposes; (c) a change in the means of collection of any such tax or otherwise;
or (d) any tax, whether or not now existing, assessed against, or withheld from,
interest or other payments made by the Trustor or assessed against this Trust
Deed and which are assessed or levied by the government of any foreign nation or
political subdivision thereof, provided such tax liability shall not result from
the ownership of this Trust Deed by a Person not a citizen of, or an entity not
formed under the laws of, the United States or any state. Within a reasonable
time after payment of any such tax or governmental charge, the Trustor will
deliver to the Beneficiary satisfactory proof of payment thereof, subject,
however, to the right of the Trustor to contest Impositions as hereinafter set
forth. If the Trustor shall fail to pay such tax or charge within fifteen (15)
days after written notice, or if under applicable law the Trustor's payment or
agreement to pay the same shall be unenforceable, the Beneficiary shall have the
right to declare the entire unpaid indebtedness and all accrued and unpaid
interest thereon due and payable on a date specified by the Beneficiary, but, in
any event, not less than thirty (30) days after written notice to the Trustor.
2.4.4. The Trustor shall have the right to contest the amount or validity,
in whole or in part, of any Imposition, or to seek a reduction in the valuation
of the Mortgaged Premises, or any part thereof, as assessed for real estate or
personal property tax purposes by appropriate proceedings diligently conducted
in good faith, but only after payment of such Imposition, unless such payment
would operate as a bar to such contest or materially adversely interfere with
the prosecution thereof, in which event the Trustor may postpone or defer
payment of such Imposition (but not the payment of any monthly deposits pursuant
to SECTION 2.4.2 hereof); and upon request by the Trustor, the Beneficiary shall
postpone or defer payment of such Imposition; provided, however, that if at any
time the Mortgaged Premises, the Building Service Equipment, the Furnishings, or
any part thereof would, in the Beneficiary's reasonable judgment, by reason of
such postponement or deferment be in imminent danger of being forfeited or lost,
or if the Beneficiary might be subjected to any civil or criminal liability or
other sanction, then the Trustor, on demand, shall immediately pay or cause to
be paid the amount so contested and unpaid, together with all interest and
penalties in connection therewith.
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2.4.5. The certificate, advice or bill of the appropriate official
designated by law to make or issue the same or to receive payment of any
Imposition indicating the nonpayment of such Imposition shall be prima facie
evidence that such Imposition is due and payable but unpaid at the time of the
making or issuance thereof.
2.5. Insurance; Restoration Following Casualty.
2.5.1. Until the indebtedness secured hereby is paid in full, the Trustor
shall at its own expense at all times maintain or cause to be maintained on all
of the Mortgaged Premises (a) comprehensive general liability insurance,
including umbrella liability insurance, covering all claims for bodily injury,
including death, and property damage occurring on, in or about the Mortgaged
Premises in an aggregate amount of not less than Five Million Dollars
($5,000,000) per occurrence, and a single limit of not less than Two Million
Dollars ($2,000,000) per person and per occurrence for personal injury, bodily
injury and property damage; the policy shall have no deductible or self insured
retention requirements; the policy limits of such insurance, if requested by the
Beneficiary, shall be increased from time to time to reflect what a reasonably
prudent owner or lessee of buildings or improvements similar in type and
locality to the Mortgaged Premises would carry; during any period of substantial
alterations or improvements in, on or to the Mortgaged Premises, the Trustor
will cause the comprehensive general liability insurance, including umbrella
liability insurance, endorsed to provide owners' and contractors' protective
liability coverage, including completed operations liability coverage; (b)
physical damage insurance (all risk non-reporting property insurance, including
earthquake insurance, with the Beneficiary named as loss payee), covering the
Mortgaged Premises for loss or damages resulting from the perils of fire,
lightning, earthquake, and such other risks and hazards as are provided under
the current standard "Extended Coverage Endorsement" and vandalism and malicious
mischief coverage, for the full replacement value of the Mortgaged Premises on a
stipulated and agreed-amount basis; (c) if the Mortgaged Premises is in an area
identified as a flood hazard area by the Secretary of Housing and Urban
Development, flood insurance, to the extent obtainable, in an amount equal to
the lesser of the full replacement value of the Mortgaged Premises or the
maximum amount available under the Federal flood insurance program; (d) boiler
and machinery insurance covering all boilers, machinery, air conditioning,
pressure vessels, and similar type equipment commonly covered under a broad-form
boiler and machinery policy, in an amount satisfactory to
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the Beneficiary; (e) insurance against such other risks of damage, hazards,
casualties and contingencies in such amounts as the Beneficiary shall from time
to time reasonably require, provided that insurance against such other risks,
hazards, casualties or contingencies shall then be commonly carried by prudent
owners or lessees of building or improvements in the locality similar in
character, construction, use and occupancy to the Improvements, Building Service
Equipment and Furnishings on, or constituting a part of, the Mortgaged Premises;
and (f) loss of rents/business interruption coverage in an amount sufficient to
pay all Impositions, insurance premiums, interest and principal installments and
all other amounts due under the Note and the Loan Agreement and the normal
operating expenses of the Mortgaged Premises, all for a period of one (1) year.
Furthermore, the Beneficiary reserves the right to require additional insurance
and/or higher policy limits than heretofore specified if such additional
insurance and/or higher policy limits are commercially reasonable for similar
properties, which right may be exercised by written notice to the Trustor, and,
as soon thereafter as practicable, but in any event within thirty (30) days of
the receipt thereof, the Trustor agrees to obtain insurance coverage complying
with such notice. The proceeds of all such insurance (except the insurance
specified in SECTION 2.5.1(a)) shall be paid solely to the Beneficiary and be
held, applied or disbursed by the Beneficiary as provided in SECTIONS 2.5.7 and
2.5.8.
2.5.2. All insurance required in SECTION 2.5.1 shall be evidenced by valid
and enforceable policies, in form and substance as shall be required by the
Beneficiary from time to time, and issued by and distributed among insurers of
recognized responsibility having an A.M. Best's Guide of A:XII or better, a
financial size category of Class XI or above, and the total limit of liability
shall not exceed ten percent (10%) of the total policyholders' surplus. Such
insurers shall be authorized to do business in the State and in all other
respects shall be reasonably satisfactory to the Beneficiary. The originals of
all such policies, or duplicate copies or certificates thereof, shall be
delivered to the Beneficiary concurrently with the execution and delivery of
this Trust Deed. Thereafter, all renewal or replacement policies, or duplicate
copies or certificates thereof, shall be delivered to the Beneficiary not less
than fifteen (15) days prior to the expiration date of the policy or policies to
be renewed or replaced, in each case accompanied by evidence reasonably
satisfactory to the Beneficiary that all premiums currently payable with respect
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to such policies have been paid in full by or at the direction of the Trustor.
2.5.3. All such insurance policies shall (a) except for any liability
policy required hereunder, contain a standard noncontributory form of mortgagee
clause (in favor of and entitling the Beneficiary to collect any and all
proceeds payable under such insurance), as well as a standard waiver of
subrogation endorsement, all to be in form and substance reasonably satisfactory
to the Beneficiary; (b) provide that such policies may not be cancelled or
amended without at least thirty (30) days prior written notice to the
Beneficiary; and (c) provide that no act, omission or negligence of the Trustor,
or its agents, servants or employees, or of any Space Tenant under any Space
Lease, which might otherwise result in a forfeiture of such insurance or any
part thereof, shall in any way affect the validity or enforceability of such
insurance insofar as the Beneficiary is concerned. The Trustor shall not carry
separate insurance, concurrent in kind or form or contributing in the event of
loss with any insurance required under this SECTION 2.5. All losses under such
insurance policies shall be adjusted by the Trustor in the case of any single
instance of such damage or destruction not exceeding $200,000, by the Trustor
and the Beneficiary in the case of any such single instance of damage or
destruction exceeding such amount, provided that in no event shall the Trustor
approve or consent to any final adjustment in any amount exceeding the amount
specified above in this sentence without obtaining the Beneficiary's prior
approval (which approval shall not be unreasonably withheld) of the amount of
such adjustment, and solely by the Beneficiary in the case when an Event of
Default exists and is continuing.
2.5.4. The Trustor, at its expense, will furnish to the Beneficiary, within
ninety (90) days after written demand, but in no event, except for reasonable
cause, more frequently than annually, proof of the then full replacement value
of each of the Improvements and the Building Service Equipment and Furnishings
therein, such proof to be by appraisals reasonably satisfactory in form and
substance to the Beneficiary and prepared by an appraiser (who may be an
appraiser for the insurance company insuring such property) designated and paid
for by the Trustor and approved by the Beneficiary, which approval shall not be
unreasonably withheld or delayed.
2.5.5. If the Beneficiary shall, by any means, acquire the title or estate
of the Trustor in or to any portion of the Mortgaged Premises, it shall
thereupon
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become the sole and absolute owner of all insurance policies affecting such
portion of the Mortgaged Premises held by, or required hereunder to be delivered
to, the Beneficiary, with the sole right to collect and retain all unearned
premiums thereon; and the Trustor shall be entitled only to a credit in
reduction of the then outstanding indebtedness secured hereby in the amount of
the short rate cancellation refund, when and if received by Beneficiary. The
Trustor agrees, immediately upon demand, to execute and deliver such assignments
or other authorizations or instruments as may, in the reasonable opinion of the
Beneficiary, be reasonably necessary or desirable to effectuate any of the
provisions of this SECTION 2.5.5.
2.5.6. If any of the Improvements, Building Service Equipment or
Furnishings shall be damaged or destroyed, in whole or in part, by fire or other
casualty, the Trustor shall give prompt notice thereof to the Beneficiary, and,
without regard to the availability or adequacy of insurance proceeds, shall
promptly following receipt of any insurance proceeds or the date when any such
proceeds are made available to the Trustor in accordance with the terms hereof,
commence to restore, replace, rebuild or alter the same as nearly as possible to
the condition, character and value thereof existing immediately prior to such
damage or destruction. Any insurance proceeds in respect of such damage or
destruction, or any Award (as defined in SECTION 3.2) for a partial taking which
is not a substantial or total taking, as such terms are referred to in ARTICLE
III hereof, at the option of the Beneficiary, may either (i) be applied as a
prepayment of the unpaid balance of the principal of the Note and of accrued and
unpaid interest thereon and as a payment of any other sums due and owing under
the Note, the Loan Agreement and the Security Documents, or (ii) be made
available to pay or reimburse costs incurred for restoration, replacement or
rebuilding necessitated as a result of such damage or destruction, or as a
result of such taking, as the case may be, or (iii) be used for any other
purpose or object deemed appropriate by the Beneficiary in connection with the
Mortgaged Premises, provided, however, that the Beneficiary may not elect either
option (i) or (iii) above if, and for so long as all of the following conditions
(collectively, the "Insurance or Award Conditions" have been and remain
satisfied: (a) no Event of Default has occurred and is continuing or would occur
as a result of such casualty or taking and no event has occurred that with the
passage of time or the giving of notice, or both, would constitute an Event of
Default; (b) the balance of the insurance proceeds or such Award either
initially paid to the Beneficiary or deposited with the Depository (as
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hereinafter defined) or remaining from time to time, shall be sufficient, in the
Beneficiary's reasonable judgment, to complete the restoration, replacement or
rebuilding, or the Trustor shall have deposited such sufficient funds with the
Beneficiary or the Depository; and (c) the Beneficiary determines, in its
reasonable discretion, that (i) the Loan to Value Ratio (as defined in the Loan
Agreement, and taking into consideration the value of all of the Projects, as
defined in the Loan Agreement) is not greater than 55%, and (ii) the Debt
Service Coverage Ratio (as defined in the Loan Agreement, and taking into
consideration the loss of income resulting from such damage or destruction as
projected by the Beneficiary in its reasonable discretion) is not less than
1.40:1.0. Notwithstanding the foregoing, if an event has occurred and is
continuing that with the passage of time or the giving of notice, or both, would
constitute an Event of Default but the same has not yet matured into an Event of
Default, then, if the conditions set forth in the foregoing clauses (b) and (c)
have been or will be, in the Beneficiary's reasonable judgment, satisfied, the
Beneficiary shall not elect either option (i) or (iii) unless such event shall
have matured into an Event of Default and, unless and until such event shall
have so matured into an Event of Default or such event has been cured or shall
otherwise cease to exist, the Beneficiary (or the Depository) shall not release
any such insurance proceeds or Award and the same shall be held until an Event
of Default occurs or the Default has been cured or shall otherwise cease to
exist.
2.5.7. Any such insurance proceeds (other than the proceeds of the rent
insurance policy, which shall be paid as provided in SECTION 2.5.8 below) or
Award which are to be applied to restoration, replacement or rebuilding of the
Mortgaged Premises shall, after payment or reimbursement to the Beneficiary of
all reasonable costs and expenses of the Beneficiary in collecting such proceeds
or Award, be applied upon satisfaction of the following provisions and
conditions:
(a) If the damage be of such nature as to require the Trustor to
construct a replacement for, or to alter in any material or substantial
way, the damaged or destroyed items, the Trustor shall, before commencing
any such work, submit copies of the plans and specifications therefor to
the Beneficiary for the Beneficiary's approval, such approval to not be
unreasonably withheld or delayed.
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(b) If after payment or reimbursement to the Beneficiary of all costs
and expenses of the Beneficiary in collecting such insurance proceeds or
Award, the aggregate insurance proceeds or Award received by reason of any
single instance of such damage or destruction or condemnation, as the case
may be, shall be $200,000 or less such insurance proceeds or Award shall be
paid to the Trustor, which shall hold all amounts so received in trust for
application first to pay the entire cost of restoring, repairing,
rebuilding or replacing the damaged or destroyed items, before any portion
of such proceeds may be used or applied for any other purpose. If the
aggregate net insurance proceeds or Award by reason of any single instance
of such damage or destruction or condemnation, as the case may be, shall be
more than $200,000 such sums shall be held and disbursed by Fleet Bank,
National Association or, if this Trust Deed is held by another financial
institution, by such financial institution or, if this Trust Deed is not
held by a financial institution, by a financial institution selected by the
then Beneficiary (the holder of such monies, the "Depository") in
accordance with the following provisions of this SECTION 2.5.7.
(c) The Beneficiary shall have received as to each such disbursement a
certificate of the Trustor (i) requesting the payment of a specified amount
of such insurance or condemnation proceeds; (ii) describing in reasonable
detail the work and materials applied to the restoration, replacement or
rebuilding of the damaged, destroyed or taken Improvement, or Building
Service Equipment and/or Furnishings located therein, since the date of the
last such certificate; (iii) stating that the requested amount does not
exceed the cost of such work and materials; and (iv) stating that a request
for payment for such work and materials has not previously been made,
accompanied by:
1. a certificate of an independent engineer or architect
designated by the Trustor, who shall have been approved in writing by
the Beneficiary (such approval not to be unreasonably withheld),
stating (i) that the work and materials described in the accompanying
certificate of the Trustor were satisfactorily performed and furnished
and were necessary, appropriate or desirable to the restoration,
replacement or rebuilding
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of the damaged, destroyed or taken Improvement, or Building Service
Equipment and/or Furnishings; (ii) that the amount specified in such
certificate of the Trustor does not exceed the reasonable cost of such
work and materials; and (iii) the additional amount, if any, required
to complete the restoration, replacement or rebuilding of the damaged,
destroyed or taken Improvement, Building Service Equipment and/or
Furnishings; and
2. evidence reasonably satisfactory to the Beneficiary (i) that
there exists no filed or recorded lien, or lien notice, or encumbrance
or charge in respect of all or any part of the Mortgaged Premises that
is prior to or on a parity with the lien of this Trust Deed, except as
may be permitted in the Permitted Encumbrances; (ii) that neither the
Mortgaged Premises nor any part thereof is subject to any recorded or
filed mechanic's, laborer's, materialman's or any similar lien,
encumbrance or charge; and (iii) that none of the Building Service
Equipment and Furnishings provided in connection with such
restoration, replacement or rebuilding is subject to any security
interest other than in favor of the Beneficiary;
Upon satisfaction of the conditions set forth herein, the Beneficiary shall
pay to the Trustor the amount of such insurance or condemnation proceeds
requested in such certificate of the Trustor or consent to the Depository's
payment thereof, as the case may be; provided, however, that in no event shall
the balance of insurance or condemnation proceeds held by the Beneficiary and
the Depository be reduced below the amount specified in such certificate of the
independent engineer or architect as the amount required to complete the
restoration, replacement or rebuilding of the damaged, destroyed or taken
Improvement, Building Service Equipment and/or Furnishings. Each such payment,
whether made by the Beneficiary or the Depository, shall be held by the Trustor
in trust and shall be used solely for the payment of the cost of the work and
materials described in the certificate of the Trustor, or if such cost or any
part thereof has theretofore been paid by the Trustor out of its own funds, then
for the reimbursement to the Trustor of any such cost or part thereof paid by
it. Any balance of insurance or condemnation proceeds held by the Beneficiary
after the completion of the restoration, replacement or
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rebuilding and payment of all costs incurred in connection therewith, to be
evidenced by a certificate to such effect of such independent engineer or
architect delivered to the Beneficiary, shall, if no Event of Default shall have
occurred and be continuing, be released to the Person lawfully entitled thereto.
Notwithstanding the foregoing, if the Trustor needs to make deposits with or
payments to contractors prior to the work being performed, if the Beneficiary is
otherwise obligated to allow funds to be used to rebuild or restore, the
Beneficiary agrees that it will not unreasonably withhold or delay its consent
to the Trustor's request that such deposits or advances payments be allowed.
2.5.8. All proceeds of rent insurance payable as a result of the occurrence
of any fire or other casualty which affects the Mortgaged Premises, or any part
thereof, shall be paid to the Beneficiary or, if the Beneficiary is not a
financial institution, the Depository. The Beneficiary or the Depository, as the
case may be, if it shall receive such proceeds, shall hold such proceeds in
trust if permitted under law, and in an account bearing interest (payable to or
for account of the Trustor), and shall apply or cause such proceeds (including
any net interest thereon) to be applied to the payment of those items referred
to in SECTION 2.5.1(f) which become, and as they become, due and payable from
and after the date of the occurrence of such damage or loss, until the
completion of the necessary restoration or replacement by the Trustor or until
the exhaustion of such proceeds (including any interest thereon), whichever
first occurs. Upon completion of such restoration or replacement, any balance of
such rent insurance proceeds, together with the interest thereon, if any, not
theretofore applied as provided herein, in the hands of the Beneficiary or the
Depository, as the case may be, shall, provided that no Event of Default shall
have occurred and be continuing, be paid to the Person lawfully entitled
thereto.
2.5.9. Nothing in this SECTION 2.5 contained shall (i) relieve the Trustor
of its duty to repair, restore, rebuild or replace the Improvements, Building
Service Equipment and/or Furnishings following damage or destruction by fire or
other casualty or taking in the event that no Award or an inadequate Award or
that no or inadequate proceeds of insurance are available to defray the cost of
such repairing, restoring, rebuilding or replacement (provided, however, the
Trustor shall be permitted to receive the insurance proceeds upon satisfaction
of the conditions set forth herein provided, in addition, that all
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of the Insurance or Award Conditions have been and remain satisfied), or (ii)
relieve the Trustor of its obligation to pay principal and interest and to make
all other payments required by the Note, the Loan Agreement and this Trust Deed
subsequent to the occurrence of any fire or other casualty, or taking, except
if, and to the extent that, any proceeds of rent insurance are applied by the
Beneficiary in accordance with SECTION 2.5.8 to such required payments.
2.5.10. If, while any insurance proceeds or Award is being held by the
Beneficiary or the Depository, an Event of Default shall occur and be
continuing, the Beneficiary shall be entitled to receive and apply all such
insurance proceeds or Award in reduction of the indebtedness and other
obligations secured by this Trust Deed, in such order and respective amounts, as
the Beneficiary in its discretion shall determine.
2.6. To Comply with Laws.
2.6.1. The Trustor, at its own expense, will promptly cure all violations
of law affecting the Mortgaged Premises, or any part thereof, and/or the use and
operation thereof and will promptly comply, or cause to be complied with, all
present and future Legal Requirements. However, the Trustor shall have the
right, after prior notice to the Beneficiary, to contest by appropriate legal
proceedings, diligently conducted in good faith, the validity or application of
any Legal Requirement if and so long as the Trustor shall promptly furnish to
the Beneficiary a certificate to such effect showing the steps taken to comply
with such provisions, provided that:
(a) if by the terms of any such Legal Requirement, compliance
therewith pending the prosecution of any such proceeding may be delayed
legally without incurring any lien, charge or liability of any kind against
the Mortgaged Premises, or any part thereof, and without subjecting the
Trustor or the Beneficiary to any liability, civil or criminal, for failure
so to comply therewith, the Trustor may delay compliance therewith until
the final determination of any such proceeding; and
(b) if any lien, charge or civil liability would be incurred by reason
of any such delay, the Trustor nevertheless, on the prior written consent
of the Beneficiary, such consent not to be unreasonably withheld, may
contest and delay compliance with the Legal Requirement, provided that such
delay
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would not subject the Beneficiary to criminal liability and the Trustor (i)
furnishes to the Beneficiary security reasonably satisfactory to the
Beneficiary against loss or injury by reason of such contest or delay and
(ii) prosecutes the contest with due diligence.
2.6.2. Notwithstanding the provisions of SECTION 2.6.1, if any delay in
compliance with any Legal Requirement shall, in the reasonable judgment of the
Beneficiary, place all or any part of the Mortgaged Premises in imminent danger
of being forfeited or lost, the Trustor shall, upon written notice from the
Beneficiary, immediately comply with such Legal Requirement.
2.6.3. The Trustor will use and permit the use of the Mortgaged Premises
only in accordance with the material requirements of any applicable licenses and
permits issued by Governmental Authorities.
2.6.4. The Trustor will procure, pay for and maintain (or cause to be
procured, paid and maintained) all permits, licenses and other authorizations
required to be procured and maintained by the owners and operators of the
Mortgaged Premises for any then use of all or any part of the Mortgaged Premises
then being made and for the lawful and proper operation and maintenance thereof.
2.7. Limitation on Alterations and Demolition.
2.7.1. The Trustor shall not voluntarily demolish, replace or alter the
Mortgaged Premises, or any part thereof, or voluntarily make any addition
thereto, or voluntarily construct any additional improvements thereon, or suffer
any of the same to occur, whether structural or otherwise (collectively,
"change"), without the prior written consent of the Beneficiary, which consent
shall not be unreasonably withheld or delayed; provided, however, that if no
Event of Default is continuing and such change involves an estimated cost of
less than $100,000 and is non-structural or if no Event of Default is continuing
and such change is non-structural and is being made to prepare space for a Space
Tenant pursuant to a Space Lease entered into in accordance with the Loan
Agreement, then, in either of such events, the Beneficiary's consent shall not
be required; provided, further, however, that if any such change is required by
law, the Trustor may make such change with the prior written consent of the
Beneficiary, which consent the Beneficiary will not unreasonably withhold or
delay. As a condition to any consent under this SECTION 2.7.1, the
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Beneficiary may require (a) that plans and specifications for the proposed work,
prepared by a reputable architect reasonably satisfactory to the Beneficiary, be
submitted to the Beneficiary for approval, and (b) that the Trustor obtain a
payment and performance bond or other security reasonably satisfactory to the
Beneficiary in form and amount reasonably satisfactory to the Beneficiary from
the contractor or subcontractor performing the work unless such work amounts to
less than $200,000 in aggregate total cost. All work performed by or on behalf
of the Trustor shall be completed with all reasonable diligence and continuity,
in a good and workmanlike manner, and in compliance with all applicable Legal
Requirements. Unless, and to the extent that, the provisions of SECTION 2.7.2 be
applicable, no Building Service Equipment or Furnishings shall be removed from
the Mortgaged Premises during the course of any such work without prior
notification to the Beneficiary and unless provision is made for return or
replacement on or prior to the completion of the work. The provisions of this
SECTION 2.7.1. shall apply to any change made or required to be made by the
Trustor in the course of complying with any other of the provisions of this
Trust Deed. A duplicate set of all plans and specifications required to be filed
with any Governmental Authority prior to, or at any time in connection with, any
such alteration, demolition or new construction shall be furnished to the
Beneficiary. The Trustor will pay on demand the reasonable expenses incurred by
the Beneficiary in the review of plans and specifications provided for in this
Trust Deed.
2.7.2. The Trustor shall have the right, at any time and from time to time,
to remove and dispose of any item of Building Service Equipment or Furnishings
which may have become obsolete or unfit for use or which is no longer useful in
the operation of the Improvements, provided that the Trustor promptly replaces
such item with other Building Service Equipment or Furnishings, free of superior
title, liens or claims (other than in favor of the Beneficiary) unless consent
of the Beneficiary is first obtained, not necessarily of the same character but
of at least equal quality, value and usefulness in connection with the operation
and maintenance of the Mortgaged Premises, provided, further, however, no
removal of any item of Building Service Equipment or Furnishings then having a
fair market value of $50,000 or more shall be made without the prior written
consent of the Beneficiary, which consent will not be unreasonably withheld or
delayed. However, if by reason of technological or other developments in the
operation and maintenance of buildings and other improvements of the general
character of the Improvements or
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a change in the use of the Mortgaged Premises or any part thereof, no
replacement of the Building Service Equipment or Furnishings so removed would be
necessary or desirable for the proper operation or maintenance of the
Improvements, the Trustor shall not be required to replace the item so removed.
2.8. Limitation on Disposition of the Mortgaged Premises.
2.8.1. Except as expressly set forth in this Trust Deed or the Loan
Agreement (including, without limitation, Sections 5.01 and 6.21 of the Loan
Agreement), the Trustor shall not directly or indirectly sell, assign, mortgage,
alienate, pledge or otherwise transfer or further encumber the Mortgaged
Premises or any part thereof or any interest therein or in any of the rents,
profits or income generated thereby, whether voluntarily, involuntarily, by
operation of law or otherwise, or lease all or any portion thereof or an
undivided interest therein, without the prior written consent of the
Beneficiary. The foregoing events are hereinafter referred as a "Transfer". Any
transfer without prior written the consent of the Beneficiary is an Event of
Default.
2.8.2. If there shall be a violation of the terms and provisions of SECTION
2.8.1, whether by the Trustor or any other person, in addition to all other
rights and remedies available to the Beneficiary under this Trust Deed, the
Beneficiary shall have the option, by the giving of notice to the Trustor, of
declaring the entire unpaid principal balance of the Note, together with all
accrued and unpaid interest and all other sums and charges evidenced thereby or
payable pursuant to the Loan Agreement, immediately due and payable.
2.9. Maintenance of Mortgaged Premises; Covenant Against Waste; Inspection
by the Beneficiary. The Trustor will not commit or permit waste on the Mortgaged
Premises and, at its expense, will keep and maintain the Improvements, the
Building Service Equipment and Furnishings in its (or their) present state of
repair and condition, reasonable wear and tear excepted, and, if improved, in
such improved state of repair and condition, reasonable wear and tear excepted;
provided, that this shall not limit the Trustor's other obligations hereunder,
such as compliance with laws. The Trustor shall do or cause to be done all
maintenance and make or cause to be made all repairs as may be required by the
landlord under any Space Lease. The Trustor will neither do nor permit to be
done anything to the Mortgaged
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Premises that may materially impair the value thereof or which may violate any
covenant, condition or restriction affecting the Mortgaged Premises, or any part
thereof, or which would effect any material change therein or in the condition
thereof that would increase the danger of fire or other hazard arising out of
the operation of the Mortgaged Premises. Subject to the rights of Space Tenants,
the Beneficiary, and its representatives and agents, may enter and inspect the
Mortgaged Premises at any time after reasonable notice (which may be oral)
during usual business hours, and the Trustor shall, within thirty (30) days
after demand by the Beneficiary (or immediately upon demand in case of
emergency), make such repairs, replacements, renewals or additions, or perform
such items of maintenance, to the Mortgaged Premises as the Beneficiary may
reasonably require in order to cause the Mortgaged Premises to comply with the
standards established in this SECTION 2.9.
2.10. To Furnish Certificates; Other Reporting Requirements.
2.10.1. The Trustor will, at its own expense, deliver to the Beneficiary,
within fifteen (15) days after written request, but no more frequently than once
per six (6) month period, a written statement executed by the Trustor, in
recordable form, setting forth to the best of the Trustor's knowledge, the
amount then unpaid upon the Note and secured by this Trust Deed and stating
whether any offsets or defenses exist against the indebtedness secured hereby;
and, if any such offsets or defenses are alleged to exist, then the factual
basis and amount of such claimed offsets or defenses.
2.10.2. The Trustor will, if requested by the Beneficiary, deliver to the
Beneficiary a certificate of an officer of the general partner of the Trustor or
of such general partner's general partner, to the effect that he is familiar
with this Trust Deed and the other Security Documents, has reviewed the affairs
of the Trustor, and to the best of his knowledge and belief there exists no
Event of Default and no act or event has occurred or exists which with notice or
lapse of time or both could become such an Event of Default, or if any such
event or Event of Default exists, specifying it and what action the Trustor is
taking to cause it to be remedied.
2.11. After-Acquired Property. All right, title and interest of the Trustor
in and to all improvements, betterments, renewals, substitutes and replacements
of, and all additions and appurtenances to, the Mortgaged Premises
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hereafter acquired, constructed, assembled or placed on the Mortgaged Premises,
immediately upon such acquisition, construction, assembly or placement, as the
case may be, and in each such case without any further mortgage, conveyance or
assignment or other act of the Trustor, shall become subject to the lien of this
Trust Deed as fully and completely, and with the same effect, as though now
owned by the Trustor and specifically described in the granting clauses hereof;
and at any time and from time to time the Trustor, on demand, will execute,
acknowledge and deliver to the Beneficiary any and all such further assurances,
mortgages, conveyances or assignments as the Beneficiary may reasonably require
to further evidence, confirm and perfect the provisions of this SECTION 2.11.
2.12. Further Assurances. The Trustor shall, at its sole cost and without
expense to the Beneficiary, on demand, do, execute, acknowledge and deliver all
and every such further acts, deeds, conveyances, mortgages, assignments, notices
of assignment, transfers and assurances as the Beneficiary shall from time to
time reasonably require for better assuring, conveying, assigning, transferring
and confirming unto the Beneficiary the property and rights hereby mortgaged or
assigned or intended now or hereafter so to be, or which the Trustor may be or
may hereafter become bound to convey, mortgage or assign to the Beneficiary, or
for carrying out the intention or facilitating the performance of the terms of
this Trust Deed, or for filing, registering or recording this Trust Deed.
2.13. Recorded Instruments. The Trustor will promptly perform and observe,
or cause to be performed and observed, all of the terms, covenants and
conditions of all instruments of record affecting the Mortgaged Premises (other
than non-consensual encumbrances hereafter affecting the Mortgaged Premises, the
validity or enforceability of which the Trustor is contesting in accordance with
this Trust Deed) where non-compliance therewith affects the security of this
Trust Deed or imposes any duty or obligation upon the Trustor or any Space
Tenant. The Trustor shall do or cause to be done all things reasonably required
to preserve intact and unimpaired and to renew any and all rights-of-way,
easements, grants, appurtenances, privileges, licenses, franchises and other
interests and rights in favor of or constituting any portion of the Mortgaged
Premises. The Trustor will not, without the prior written consent of the
Beneficiary, which consent shall not be unreasonably withheld or delayed,
initiate, join in or consent to any private restrictive covenant or other public
or private restriction as to the use of all or any portion
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of the Mortgaged Premises. The Trustor will, however, comply with all lawful
restrictive covenants and zoning ordinances and other public or private
restrictions affecting all or any portion of the Mortgaged Premises.
ARTICLE III.
Condemnation
3.1. Notice of Taking. The Trustor shall promptly notify the Beneficiary if
the Trustor receives notice of the institution of any proceeding or negotiations
for the taking of the Mortgaged Premises, or any part thereof, whether for
permanent or temporary use and occupancy in condemnation or by the exercise of
the power of eminent domain or by agreement of interested parties in lieu of
such condemnation (all the foregoing called a "taking"); shall keep the
Beneficiary currently advised, in detail, as to the status of such proceedings
or negotiations and will promptly give to the Beneficiary copies of all notices,
pleadings, judgments, determinations and other papers received or delivered by
the Trustor in connection with any such proceedings. The Beneficiary shall have
the right to appear and participate in such proceedings and may be represented
by counsel. The Trustor will not, without the Beneficiary's prior written
consent, which consent shall not be unreasonably withheld or delayed, enter into
any agreement for the taking of the Mortgaged Premises, or any part thereof,
with anyone authorized to acquire the Mortgaged Premises by eminent domain or in
condemnation.
3.2. Condemnation Award. If the Mortgaged Premises shall be the subject of
a taking the Beneficiary shall be entitled to and shall receive the total of
such portion of all awards made that shall be allowed to the Trustor with
respect to all the right, title and interest of the Trustor in and to the
Mortgaged Premises (the award made in any total, partial or temporary taking is
herein called the "Award"), provided that the obligations of the Trustor to
perform the terms, covenants and conditions of this Trust Deed, if any, affected
by such taking shall continue unimpaired until the actual vesting of title in
such proceeding and the actual receipt by the Beneficiary of the Trustor's share
of the entire Award resulting from such taking.
3.3. Application of Award. The Beneficiary shall have the option of
treating a total taking or a substantial
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taking (as hereinafter defined) as an Event of Default and of accelerating the
entire indebtedness secured hereby, in which event it shall apply the Trustor's
entire Award in reduction of such indebtedness (including principal, interest
and other sums secured hereby, in such order as the Beneficiary may determine)
and shall turn over any balance remaining, if any, to the Person lawfully
entitled thereto; or if the Beneficiary shall not so elect to accelerate the
indebtedness and apply the Award thereto, then the total Award shall, regardless
of amount, be deposited with the Beneficiary or with the Depository, the Trustor
hereby agreeing to elect that such proceeds be held and disbursed by the
Depository in accordance with SECTIONS 2.5.6, 2.5.7, 2.5.8, 2.5.9 and 2.5.10
hereof for restoration required to be made by the Trustor. If there be a partial
taking, the net proceeds of the Award shall be deposited with the Beneficiary
and applied by the Beneficiary in accordance with the provisions of SECTIONS
2.5.6, 2.5.7, 2.5.9 and 2.5.10. Any Award remaining after the completion of such
restoration, replacement or rebuilding shall be applied in reduction of the
indebtedness (including principal, interest and other sums secured hereby) in
such order as the Beneficiary shall determine. A partial taking is substantial
only if it materially decreases the fair market value of the Mortgaged Premises
and the remainder of the Mortgaged Premises cannot be restored to an
economically viable whole.
3.4. Temporary Taking. If any Award payable to the Trustor on account of a
taking for temporary use or occupancy is made in a lump sum or is payable other
than in equal monthly installments, the Trustor shall pay over such Award to the
Depository and such Award shall be applied to installments of Impositions and of
principal and interest and all other charges secured by this Trust Deed or due
under the Note, the Loan Agreement, or the other Security Documents as and when
the same become due and payable. Any unapplied portion of such Award held by the
Depository when such taking ceases or expires (if no Event of Default has then
occurred and is continuing), or after the indebtedness secured by this Trust
Deed or due under the Loan and Security Documents shall have been paid in full,
shall be paid to the Person lawfully entitled thereto.
3.5. The Trustor's Obligation to Restore. If all available proceeds of the
Award are made available to the Trustor for restoration, replacement or
rebuilding pursuant hereto, the Trustor shall be obligated promptly to restore,
replace, rebuild or alter any Improvements or Building Service Equipment
affected by a taking so as to restore the
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Mortgaged Premises to an economically viable whole, all without regard to the
adequacy of the proceeds of an Award, if any, made available to the Trustor.
ARTICLE IV.
Assignment of Space Leases, Rents, Profits
and Other Income as Further Security, Etc.
4.1. Assignment of Space Leases, Rents, Issues and Profits. Subject to the
Trustor's rights herein, including those set forth in Section 4.3.2 below, the
Trustor hereby absolutely, presently and irrevocably transfers, assigns and sets
over unto the Beneficiary all right, title and interest of the Trustor in and to
all Space Leases, if any, now or hereafter entered into with respect to all or
any part of the Mortgaged Premises, and all renewals, extensions, subleases or
assignments thereof, and all other occupancy agreements (written or oral), by
concession, license or otherwise, together with all of the rents, income,
receipts, revenues, issues and profits arising therefrom (the "Collateral").
4.2. The Trustor's Covenants Regarding Space Leases.
4.2.1. Without the prior consent and approval of the Beneficiary in each
instance, the Trustor will not (a) assign, pledge, hypothecate or otherwise
encumber any of the Space Leases or the rents, income, issue and profits of the
Mortgaged Premises; or (b) enter into any Space Leases affecting the Mortgaged
Premises or any part thereof, unless such Space Lease is expressly subordinate
to the lien of this Trust Deed and to any consolidation, extension, renewal,
recasting or refinancing hereof and the Space Lease provides, in substance, that
in the event of enforcement by the Beneficiary of the remedies provided for by
law or by this Trust Deed, each Space Tenant shall, at the option of the
Beneficiary, enter into a agreement with the Beneficiary which shall provide,
among other things, that (i) such Space Tenant shall attorn to any person
succeeding to the interest of the Trustor as a result of such enforcement and
shall recognize such successor in interest as landlord under such Space Lease
without change in the terms or other provisions thereof, (ii) such successor
shall not be bound by any payment of rent or additional rent for more than one
(1) month in advance or any amendment or modification of any such Space Lease
made
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without the Beneficiary's written consent, and (iii) such successor shall not
disturb the possession of the Space Tenant provided certain conditions (as
determined by the Beneficiary) have been satisfied, including, without
limitation, that the Space Tenant shall not be in default under the terms of the
Space Lease; or (c) enter into any Space Leases without the prior written
consent of the Beneficiary unless permitted in Section 6.21 of the Loan
Agreement.
4.2.2. The Trustor further represents, warrants, covenants and agrees that:
(a) To the best of its knowledge, each Space Lease is (or, when
executed, will be) a valid and legally enforceable obligation of the
parties thereto, in full force and effect.
(b) With respect to each Space Lease and the Space Tenant security
deposits thereunder, any and/or all of such security deposits shall be held
as required by the Space Lease but in no event in a manner other than that
required by law.
(c) The Trustor shall, at its sole cost and expense, keep, observe,
perform and discharge, duly and punctually, all and singular the material
obligations, terms, covenants, conditions, representations and warranties
of each Space Lease on the part of the Trustor to be kept, observed,
performed and discharged.
(d) (i) Except as herein in this clause (i) expressly provided, the
Trustor shall, at its sole cost and expense, maintain the Space Leases in
full force and effect; the Trustor will not waive its rights under or
materially modify, change, supplement, alter or amend ("Change"), nor shall
the Trustor surrender (whether partial or total), terminate, cancel or
subordinate, any of the Space Leases or enter into any Backlease (whether
through an Affiliate or otherwise), and any such attempted Change,
surrender, termination, cancellation or subordination or Backlease shall be
void, unless, in each case, the prior written consent thereto of the
Beneficiary shall have been obtained. Notwithstanding the foregoing, the
Trustor may (x) terminate any Space Lease under 10,000 square feet as a
result of a default by the tenant under such Space Lease and (y) consent to
any sublease or assignment of any Space Lease under 10,000 square feet
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provided (aa) such termination is being effected in the ordinary course of
the Trustor's business, (bb) no Event of Default then exists and no event
has occurred that with the passage of time or the giving of notice or both
would constitute an Event of Default, and (cc) the Beneficiary determines,
in its reasonable discretion, that upon the effectiveness of such
termination, assignment or sublease (i) the Loan to Value Ratio (as defined
in the Loan Agreement, and taking into consideration the value of all of
the Projects, as defined in the Loan Agreement) is not greater than 55%,
and (ii) the Debt Service Coverage Ratio (as defined in the Loan Agreement,
and taking into consideration the loss of income resulting from such
termination, assignment or sublease, as projected by the Beneficiary in its
reasonable discretion) is not less than 1.40:1.0. A material Change shall
include but not be limited to any material Change in the amount or time of
payment of the rent or additional rent, the length of term or square
footage of the premises under any Space Lease or any other Change which
would materially adversely affect the Trustor's rights under the Space
Lease, or would affect the Beneficiary's rights under the Space Lease or
the value of the Space Lease as collateral security for the indebtedness.
(ii) The Trustor shall, at its sole cost and expense, enforce the
Space Leases in accordance with their terms; and shall appear in and
defend any action or proceeding arising to which it is a party under
or in any manner connected with any of the Space Leases.
(e) The Trustor shall deliver to the Beneficiary a copy of each notice
of default sent or received by it relating in any way to any Space Lease
promptly upon, but in any event within five (5) business days after, its
sending or receipt thereof.
4.3. The Trustor's Rights and Powers.
4.3.1. The Trustor hereby irrevocably, in the name of the Trustor or
otherwise, authorizes and empowers the Beneficiary, and assigns and transfers
unto the Beneficiary, and constitutes and appoints the Beneficiary its true and
lawful attorney-in-fact, coupled with an interest and as its agent, irrevocably,
with full power or substitution for it and in its name, but solely for the
following purposes: (i) to exercise and enforce every right, power, remedy,
authority, option and privilege of the
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Trustor under the Space Leases, and as such attorney-in-fact, the Beneficiary
may subordinate, terminate, cancel or modify the Space Leases, accept the
surrender of the Space Leases, give any notice, take any action resulting in
such subordination, termination, cancellation, modification or surrender, give
any authorization, furnish any information, make any demands, execute any
instruments and take any and all other action on behalf of and in the name of
the Trustor which in the opinion of the Beneficiary may be necessary or
appropriate to be given, furnished, made, exercised or taken by the Trustor
under the Space Leases in order to comply therewith, to perform the conditions
thereof or to prevent or remedy any default by the Trustor thereunder or to
enforce any of the Trustor's rights and remedies thereunder, and (ii) to ask,
require, demand, receive and collect and give acquittances for the Income (as
hereinafter defined), and on nonpayment thereof to sue for, recover and receive
the same, and on payment thereof to give sufficient releases, receipts,
discharges and acquittances thereof; to endorse any checks or other instruments
or orders in connection therewith and to file any claims or take any action or
institute any proceedings which the Beneficiary may deem to be necessary or
advisable; provided, however, that the power provided for in this sentence may
not be exercised by the Beneficiary unless an Event of Default shall have
occurred and be continuing. "Income" shall mean all deposits, rents, issues,
profits, revenues, royalties, and other revenue producing arrangements, whether
written or oral, and all monetary benefits of, and/or derived from, and/or sums
payable under and by virtue of the Space Leases and/or the Premises.
4.3.2. So long as there shall not have occurred and then be continuing any
Event of Default and until such right of the Trustor is terminated by the
Beneficiary as provided in SECTION 4.3.3, the Beneficiary will not exercise its
rights pursuant to SECTION 4.3.1, and notwithstanding anything in Section 4.3.1
to the contrary, the Trustor shall have the right (but limited as hereinafter
provided) to exercise all of its rights under the Space Leases, including,
without limitation, to collect and receive all rents, income, receipts,
revenues, issues and profits arising therefrom, provided that the Trustor shall
at all times comply with, observe and perform, in the exercise of such right,
all of the provisions of this Trust Deed and the other Security Documents
applicable to the Space Leases; provided, further, that no action shall be taken
or failed to be taken by the Trustor which would
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impair the Collateral or any other collateral security for the Obligations
provided for in the Security Documents.
4.3.3. The Beneficiary, upon the occurrence and during the continuance of
an Event of Default, at its option and upon written notice to the Trustor, shall
have the right to terminate the right of the Trustor to exercise its rights
under the Space Leases, and, thereupon, in addition, the Beneficiary, at any
time thereafter, at its option, shall have the complete right, power and
authority hereunder to exercise and enforce all rights, powers, remedies,
authority, options and privileges of the Trustor under the Space Leases in the
name of the Trustor or the Beneficiary, to enforce all obligations of the other
parties to the Space Leases and to exercise and enforce all of its rights and
remedies hereunder and under law not exercisable prior to an Event of Default.
4.3.4. The Trustor does hereby direct each and all of the Space Tenants
under the Space Leases and all contractual obligors of the Trustor to pay any
Income to the Beneficiary upon written demand for payment thereof by the
Beneficiary without further inquiry. It is understood and agreed, however, that
no such demand shall be made unless an Event of Default shall have occurred and
be continuing. No such Space Tenant or obligor shall be obliged to account to
the Trustor for any amounts paid to the Beneficiary by reason of any payment
made to the Beneficiary pursuant to such demand and, upon any such payment to
the Beneficiary, shall be pro tanto released from their obligations to the
Trustor with respect to such payment. Each Space Tenant shall be permitted to
rely on any communication from the Beneficiary pursuant hereto, and under no
circumstances shall such Space Tenant be obligated to the Trustor for any
payments made to the Beneficiary hereunder. Until such demand is made, the
Trustor is authorized to collect or enforce or continue collecting or enforcing
such Income in accordance with the provisions of this Trust Deed.
4.3.5. The Beneficiary shall not have any duty as to the collection or
protection of the Collateral or any income thereon or payments with respect
thereto, or as to the preservation of any rights pertaining thereto beyond the
safe custody of any thereof actually in its possession. In no instance shall the
Beneficiary be responsible to lessees for payment of interest upon, or return
of, any lease security deposits, except as provided by law or as provided in the
leases and then only if and to the extent that such deposits are received by the
Beneficiary. The Trustor hereby waives notice of acceptance hereof, and
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except as otherwise specifically provided herein or required by provision of law
which may not be waived, hereby waives any and all notices or demands with
respect to any exercise by the Beneficiary of any rights or powers which it may
have or to which it may be entitled with respect to the Collateral.
4.3.6. The Trustor hereby irrevocably constitutes and appoints the
Beneficiary as the true and lawful attorney-in-fact of the Trustor, which
appointment is coupled with an interest, with full power of substitution, to
proceed from time to time in the Trustor's name in any statutory or
non-statutory proceeding affecting the Trustor or any Collateral, and the
Beneficiary or its nominee may (i) execute and file proof of claim for the full
amount of any Collateral and vote such claims for the full amount thereof (A)
for or against any proposal or resolution, (B) for a trustee or trustees or for
a receiver or receivers or for a committee of creditors and/or (C) for the
acceptance or rejection of any proposed arrangement, plan of reorganization,
composition or extension, and the Beneficiary or its nominee may receive any
payment or distribution and give acquittance therefor and may exchange or
release Collateral; (ii) endorse any draft or other instrument for the payment
of money, execute releases and negotiate and enter into settlements; and (iii)
execute all such other documents or instruments as may be necessary or expedient
to be executed by the Trustor for any of the purposes of this Trust Deed;
provided, however, that the power provided for in this sentence may be exercised
by the Beneficiary only while an Event of Default is continuing. The Beneficiary
shall have no duty to exercise any of the aforesaid rights, privileges or
options and shall not be responsible for any failure to do so or delay in so
doing.
4.4. Remedies and Entry Upon Default.
4.4.1. So long as no Event of Default shall have occurred and be
continuing, the Trustor shall have the right to collect (but not more than one
(1) month in advance) and retain all of the rents, gross receipts and other
payments, if any, from the Space Leases and from the Mortgaged Premises
generally, and the Beneficiary agrees that customary initial rent payments,
security deposits and reimbursements by a Space Tenant to the Trustor on account
of alterations made by the Trustor for the benefit of the Space Tenant are
permissible advance payments by the Space Tenant.
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4.4.2. Upon any Event of Default, the Beneficiary may, but shall not be
obligated to:
(a) terminate the rights of the Trustor referred to in SECTION 4.3
hereof and exercise all of the powers, rights and remedies provided for in
SECTION 4.3 hereof, including those to be exercised only from and after an
Event of Default;
(b) at any time and from time to time, without notice to, or assent
by, the Trustor or any other Person, but without affecting any of the
Obligations, in the name of the Trustor or in the name of the Beneficiary,
notify the account debtors and obligors on any or all of the Space Leases
to make payment and performance directly to the Beneficiary, and demand,
collect, receive, compound and give acquittance for the Space Leases or any
part thereof; extend the time of payment and performance of, compromise or
settle for cash, credit or otherwise, upon any terms and conditions, any of
the Space Leases; endorse to the order of the Beneficiary checks, drafts or
other orders or instruments for the payment of moneys payable to the
Trustor which shall be issued in respect of any of the Space Leases; file
any claims, commence, maintain or discontinue any actions, suits or other
proceedings deemed by the Beneficiary necessary or advisable for the
purpose of collecting upon or enforcing any of the Space Leases; and
execute any instrument and do all other things deemed necessary and proper
by the Beneficiary to protect and preserve and realize upon the Space
Leases and/or the other rights contemplated hereby; the Trustor hereby
irrevocably constitutes and appoints the Beneficiary as such the Trustor's
lawful attorney-in-fact, coupled with an interest, and its agent for the
foregoing purposes;
(c) demand, collect, sue for, attach, levy, recover, receive,
compromise and adjust, and make, execute and deliver receipts and releases
for all Income that may then be or may thereafter become due, owing or
payable with respect to the Premises or any part or parts thereof from any
present or future lessees, tenants, subtenants or occupants thereof or from
any present or future contract obligors; and/or
(d) pay, in such order as the Beneficiary in its sole discretion shall
determine, from and out of the Income collected in connection with the
Premises and/or the Collateral or any part or parts
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thereof or from or out of any other funds (less the expense of collection,
including reasonable attorneys' fees and disbursements), any taxes,
assessments, water rates, sewer rates, or other government or other charges
levied, assessed or imposed against the Premises or any part or part
thereof, and also any and all other charges, costs and expenses which the
Beneficiary deems necessary or advisable to pay in respect of the
management or operation of the Premises, including, without limitation, the
costs of insurance policies, repairs and alterations, commissions for
renting the Premises or any part or parts thereof, legal expenses in
enforcing claims, preparing papers or procuring any other services that may
be required and any amounts payable under or pursuant to any Lease; all
amounts so paid and expended shall be payable on demand, together with
interest at the Involuntary Rate from the date incurred until paid, and be
deemed to be included within the Obligations and secured by this Trust
Deed; the provisions of this ARTICLE and the rights given to the
Beneficiary hereby shall inure to the benefit of the Beneficiary even
though the Beneficiary does not enter and take possession of the Premises;
any balance remaining after the indebtedness secured hereby and the other
obligations of the Trustor under the Loan and Security Documents shall have
been paid in full shall be turned over to the Person lawfully entitled
thereto. Neither the entry upon and taking possession of the Mortgaged
Premises, nor the collection and application of the rents, gross receipts
or other charges thereof, nor any other action taken by the Beneficiary in
connection therewith, shall cure or waive any default hereunder or waive or
modify any notice thereof or notice of acceleration of the Note theretofore
given by the Beneficiary.
4.4.3. If an Event of Default shall have occurred and be continuing, a
notice in writing by the Beneficiary to the Space Tenants under the Space Leases
advising them that the Trustor has defaulted hereunder and requesting that all
future payments of rent, additional rent or other charges under the Space Leases
be made to the Beneficiary (or its agent) shall be construed as conclusive
authority to such Space Tenants that such payments are to be made to the
Beneficiary (or its agent). Each Space Tenant shall be fully protected in making
such payments to the Beneficiary (or its agent) and be given full credit against
its obligations under the applicable Space Lease to the extent of payments made
to the Beneficiary (or its agent) pursuant to any such notice; and the Trustor
hereby
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irrevocably constitutes and appoints the Beneficiary the attorney-in-fact and
agent of the Trustor, coupled with an interest, for the purpose of endorsing the
consent of the Trustor on any such notice.
4.5. No Obligation of Beneficiary.
4.5.1. The Beneficiary shall not be obligated to perform or discharge any
obligation of the Trustor as a result of the assignment hereby effected, and the
Trustor hereby agrees to indemnify and hold the Beneficiary harmless from and
against any and all liability, loss or damage which the Beneficiary may incur by
reason of any act of the Beneficiary under this Trust Deed, other than as a
result of the Beneficiary's willful misconduct or gross negligence and other
than as a result of the Beneficiary's misconduct or negligence after the
Beneficiary has taken possession of the Premises. Should the Beneficiary (i)
incur any such liability, loss or damage by reason of this Trust Deed and which
is covered by the foregoing indemnity, or in defense against any such claims or
demands, or (ii) perform any acts or covenants on the part of the Trustor to be
performed under the Space Leases, or (iii) pay for the account of the Trustor
(other than from Income or from funds delivered to the Beneficiary by the
Trustor to be held in Trust for such purpose), any and all sums, costs and
expenses for the discharge of taxes, assessments, water rents or other liens
against the Collateral or any part thereof, or on account of insurance premiums
or repairs, and also any amounts and expenses necessary to perform any covenants
and conditions to be performed on the part of the Trustor under the Space
Leases, the amount thereof, including costs, expenses and reasonable attorneys'
fees, together with interest thereon at the Involuntary Rate from the date such
expenses were paid by the Beneficiary to the date of payment to the Beneficiary
by the Trustor, shall be included in the Obligations secured by this Trust Deed,
and the Trustor shall reimburse the Beneficiary therefor upon demand.
4.5.2. The acceptance by the Beneficiary of this Trust Deed, with all the
rights, powers, privileges and authority so created, shall not at any time or in
any event obligate the Beneficiary to appear in or defend any action or
proceeding relating to the Collateral, or to take any action hereunder or
thereunder, or to expend any money or incur any expenses or perform or discharge
any obligation, duty or liability under the Collateral.
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ARTICLE V.
Security Agreement Under Uniform Commercial Code
5.1. This Trust Deed shall constitute a security agreement and a fixture
filing within the meaning of the Uniform Commercial Code of the State (the
"Code"), and the Beneficiary shall be deemed to be the "secured party" (as that
term is defined in the Code). The Trustor hereby grants to the Beneficiary, as
additional collateral for the obligations under the Note and the other
Obligations secured hereby, a security interest in and to all of the Mortgaged
Premises which are considered or as shall be determined to be personal property
or "fixtures" (as defined in the Code), including, without limitation, the
Building Service Equipment, the Furnishings, the Payments and Intangibles, all
books, records, licenses and certificates of the Trustor relating to the
Mortgaged Premises, together with all replacements thereof, substitutions
therefor or additions thereto (said property being sometimes hereinafter
referred to as the "Personal Property"). The Trustor agrees that a security
interest shall attach to the Personal Property for the benefit of the
Beneficiary to secure the indebtedness evidenced by the Note and the other
Obligations secured by this Trust Deed and all other sums and charges which may
become due hereunder, thereunder or under any of the other Security Documents.
The Trustor hereby authorizes the Beneficiary to file financing and continuation
statements with respect to the Personal Property without the signature of the
Trustor, if permitted by the Code. In any event the Trustor covenants to execute
such financing and continuation statements as the Beneficiary may reasonably
request. If an Event of Default shall occur and be continuing, the Beneficiary,
pursuant to the appropriate provisions of the Code, shall have the option of
proceeding as to both real and personal property in accordance with its rights
and remedies in respect of real property under this Trust Deed and the law of
the State, in which event the default provisions of the Code shall not apply.
The Trustor agrees that, in the event the Beneficiary shall elect to proceed
with respect to the Personal Property separately from the real property, unless
a greater period shall then be mandated by the Code, five (5) days notice of the
sale of the Personal Property shall be reasonable notice. The expenses of
retaking, holding, preparing for sale and selling incurred by the Beneficiary
shall be assessed against the Trustor and shall include, but not be limited to,
the reasonable legal expenses incurred by Beneficiary. The Trustor agrees that
it will not remove or permit to be removed from the Mortgaged Premises any of
the Personal
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Property without the prior written consent of the Beneficiary except as set
forth in SECTION 2.7.2. All replacements, renewals and additions to the Personal
Property shall be and become immediately subject to the security interest of
this Trust Deed and the provisions of this ARTICLE V. The Trustor warrants and
represents that all Personal Property now is free and clear of all liens,
encumbrances or security interests other than the Permitted Encumbrances, and
that all replacements of the Personal Property, substitutions therefor or
additions thereto, unless the Beneficiary otherwise consents, will be, free and
clear of liens, encumbrances or security interests of others.
ARTICLE VI.
Events of Default and Remedies
6.1. Events of Default. The whole of the outstanding Principal Amount (as
defined in the Note) and accrued interest evidenced by the Note shall, at the
option of the Beneficiary, become due upon the happening of an Event of Default.
6.2. Remedies.
6.2.1. If an Event of Default shall occur and be continuing, the
Beneficiary, at its option, may:
(a) by notice to the Trustor, declare the entire principal amount of
the Note then outstanding and all accrued and unpaid interest thereon and
all obligations of the Trustor to the Beneficiary to be immediately due and
payable, and upon such declaration such principal and interest and all
obligations of the Trustor to the Beneficiary shall become and be
immediately due and payable, anything in the Note, the Loan Agreement or in
this Trust Deed or in any of the other Security Documents to the contrary
notwithstanding;
(b) as a matter of right and without notice to the Trustor or anyone
claiming under the Trustor, and without regard to the then value of the
Mortgaged Premises or the interest of the Trustor therein, to apply to any
court having jurisdiction to appoint a receiver or receivers of the
Mortgaged Premises, and the Trustor hereby irrevocable consents to such
appointment and waives notice of any application therefor; any such
receiver or receivers
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shall have all the usual powers and duties of receivers in like or similar
cases and all the powers and duties of the Beneficiary in case of entry as
provided in this Trust Deed, and shall continue as such and exercise all
such powers until the later of (i) the date of confirmation of sale of the
Mortgaged Premises, (ii) the disbursement of all proceeds of the Mortgaged
Premises collected by such receiver and the payment of all expenses
incurred in connection therewith, and (iii) the termination of such
receivership with the consent of the Beneficiary or pursuant to an order by
a court of competent jurisdiction;
(c) exercise any and all remedies available to a secured party under
the UCC in such order and in such manner as the Beneficiary in its sole
discretion may determine; provided, however, that the expenses of retaking,
holding, preparing for sale or the like, shall include reasonable
attorneys' fees and other expenses of the Beneficiary and the Trustee and
be secured by this Trust Deed;
(d) bring an action in any court of competent jurisdiction to
judicially foreclose this Trust Deed or enforce any of the terms, covenants
and conditions hereof or contained in any other Security Document;
(e) require the Trustee to sell all or part of the Mortgaged Premises,
at public auction, to the highest bidder, for cash, at the county
courthouse of the county in Texas in which such Premises or any part hereof
is situated, between the hours of 10:00 o'clock a.m. and 4:00 o'clock p.m.
on the first Tuesday of any month, after giving notice of the time, place
and terms of said sale and of the property to be sold, by posting written
notice thereof at the courthouse door of the county, and filing such notice
with the County Clerk of the county in which the sale is to be made at
least twenty-one (21) days preceding the date of the sale, and if the
property to be sold is in more than one county, a notice shall be posted at
the courthouse door and filed with the County Clerk of each county in which
the property to be sold is situated. In addition, the Beneficiary shall, at
least twenty-one (21) days preceding the date of sale, serve written notice
of the proposed sale by certified mail on each debtor obligated to pay the
debt secured hereby according to the records of the Beneficiary. Service of
such notice shall be completed upon deposit of the notice, enclosed in a
postpaid wrapper, properly addressed to such debtor at the most recent
address as shown by the records of the Beneficiary, in a post office or
official depository under the care and custody of the United
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States Postal Service. The affidavit of any person having knowledge of the
facts to the effect that such service was completed shall be prima facie
evidence of the fact of service. Any notice that is required or permitted
to be given to the Trustor may be addressed to the Trustor at the Trustor's
address as stated above. Any notice that is to be given by certified mail
to any other debtor may, if no address for such other debtor is shown by
the records of the Beneficiary, be addressed to such other debtor at the
address of the Trustor as is shown by the records of the Beneficiary.
Notwithstanding the foregoing provisions of this paragraph, notice of such
sale given in accordance with the requirements of the applicable laws of
the State of Texas in effect at the time of such sale shall constitute
sufficient notice of such sale.. The Trustee may sell all or any portion of
the Mortgaged Premises, together or in lots or parcels, and may execute and
deliver to the purchaser or purchasers of such property good and sufficient
deeds of conveyance of fee simple title with covenants of special warranty
made on behalf of the Trustor. In no event shall the Trustee be required to
exhibit, present or display at any such sale any of the personalty
described herein to be sold at such sale. The Trustee making such sale
shall receive the proceeds thereof and shall apply the same as follows: (i)
first, they shall pay the reasonable expenses and actual fees (based upon
time spent) of the Trustee; (ii) second, they shall pay, so far as may be
possible, the Obligations, discharging first that portion of the
Obligations arising under the covenants or agreements herein contained and
not evidenced by the Note; (iii) third, they shall pay the residue, if any,
to the persons legally entitled thereto. Payment of the purchase price to
the Trustee shall satisfy the obligation of the purchaser at such sale
therefor, and such purchaser shall not be responsible for the application
thereof. The sale or sales by the Trustee of less than the whole of the
Mortgaged Premises shall not exhaust the power of sale herein granted, and
the Trustee is specifically empowered to make a successive sale or sales
under such power until the whole of the Mortgaged Premises shall be sold;
and if the proceeds of such sale or sales of less than the whole of the
Mortgaged Premises shall be less than the aggregate of the Obligations and
the expenses thereof, this Trust Deed and the lien, security interest and
assignment hereof shall remain in full force and effect as to the unsold
portion of the Mortgaged Premises just as though no sale or sales had been
made; provided, however, that the Trustor shall never have any right to
require the sale or sales of less than the whole of the Mortgaged Premises,
but the Beneficiary shall have the
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right, at its sole discretion, to request the Trustee to sell less than the
whole of the Mortgaged Premises;
(f) proceed by a suit or suits in equity or at law, whether for the
specific performance of any covenant or agreement herein contained or in
aid of the execution of any power herein granted, or for any foreclosure
hereunder or for the sale of the Mortgaged Premises under the judgment or
decree of any court or courts of competent jurisdiction; and/or
(g) exercise any or all of its other rights and remedies provided
herein, in any of the Security Documents, or other document or agreement
now or hereafter securing all or any portion of the Obligations secured
hereby, or as provided by law, in such order of priority as the Beneficiary
shall determine in its sole discretion.
6.2.2. If default is made hereunder, the holder of the Obligations or any
part thereof on which the payment is delinquent shall have the option to proceed
with foreclosure in satisfaction of such item either through judicial
proceedings or by directing the Trustee to proceed as if under a full
foreclosure, conducting the sale as herein provided without declaring the entire
Obligations due, and if sale is made because of default of an installment, or a
part of an installment, such sale may be made subject to the unmatured part of
the Obligations; and it is agreed that such sale, if so made, shall not in any
manner affect the unmatured part of the Obligations, but as to such unmatured
part this Trust Deed shall remain in full force and effect as though no sale has
been made under the provisions of this paragraph.
6.2.3. Several sales may be made hereunder without exhausting the right of
sale for any unmatured part of the Obligations. At any such sale the Trustor
hereby agrees, on its behalf and on behalf of its heirs, executors,
administrators, successors, personal representatives and assigns, that any and
all recitals made in any deed of conveyance given by the Trustee with respect to
the identity of the Beneficiary, the occurrence or existence of any default, the
acceleration of the maturity of any of the Obligations, the request to sell, the
notice of sale, the giving of notice to all debtors legally entitled thereto,
the time, place, terms, and manner of sale, and receipt, distribution and
application of the money realized therefrom, or the due and proper appointment
of any substitute trustee, and without being limited by the foregoing, with
respect to any other act or thing having
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been duly done by the Beneficiary or by the Trustee hereunder, shall be taken by
all courts of law and equity as prima facie evidence that the statements or
recitals state facts and are without further question to be so accepted, and the
Trustor hereby ratifies and confirms every act that the Trustee or any
substitute the trustee hereunder may lawfully do in the premises by virtue
hereof. The Beneficiary may bid and become the purchaser of all or any part of
the Mortgaged Premises at any the trustee's or foreclosure sale hereunder, and
the amount of the Beneficiary's successful bid may be credited on the
Obligations.
6.2.4. This Trust Deed is granted upon this express condition, that if the
Trustor, or its successors or assigns, shall pay or cause to be paid to the
Beneficiary or its successors or assigns all of the Obligations secured hereby,
in accordance with their terms, and shall well and truly comply with each and
every covenant and condition set forth in this Trust Deed, in the Note, and in
the Security Documents, then, except for the covenants, agreements,
indemnifications and warranties, if any, in this Trust Deed which expressly
survive the release hereof, the Premises shall be released from the lien of this
Trust Deed at the cost of the Trustor. Otherwise, this Trust Deed shall remain
in full force and effect. Upon the occurrence of any Event of Default under the
Loan Agreement, including but not limited to any breach of the covenants and
agreements of, and conditions imposed upon, the Trustor contained herein and in
the Note, the Loan Agreement, and the other instruments and agreements
evidencing or securing the Obligations secured hereby, which breach remains
uncured beyond the grace period, if any, provided herein or therein, or in the
Loan Agreement, the Beneficiary may proceed to protect and enforce its rights
hereunder and under the Note and the other Security Documents by foreclosure
proceedings, or by other suit in equity, action at law, or other appropriate
proceedings, including actions for the specific performance of any covenant or
agreement contained in this Trust Deed or in the Note, or in the other Security
Documents, or in aid of the exercise of any power granted in this Trust Deed,
the Note, or in said Security Documents, or may proceed in any other legal or
equitable right of the Beneficiary and of the holder of the Note.
6.3. Sale; No Marshalling of Assets.
6.3.1. In case of a foreclosure sale, all of the Mortgaged Premises may be
sold in one parcel even though the proceeds of such sale exceed or may exceed
the
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indebtedness secured hereby. The Beneficiary shall not be required to exercise
any rights under this Trust Deed before proceeding against any other security,
shall not be required to proceed against other security before proceeding under
this Trust Deed, and shall not be precluded from proceeding against any or all
of any security held by the Beneficiary for any or all of the indebtedness
secured hereby in any order or at the same time.
6.3.2. The Trustor agrees, to the full extent that it may lawfully do so,
that in any foreclosure or other action brought by the Beneficiary to enforce
this Trust Deed, it will not at any time insist upon or plead or in any way take
advantage of any appraisement, valuation, stay, marshalling of assets,
extension, redemption or moratorium law now or hereafter in force and effect so
as to prevent, hinder, delay or otherwise affect the enforcement of the
provisions of this Trust Deed or any rights or remedies the Beneficiary may have
hereunder or by law.
6.3.3. If the Beneficiary shall elect to accelerate the indebtedness
secured hereby following the occurrence of an Event of Default, the Trustor,
within five (5) days after demand, will pay to the Beneficiary, or any receiver
appointed in connection with the foreclosure of this Trust Deed, any and all
amounts then held as security deposits under all Space Leases; and the
Beneficiary or such receiver shall be deemed to indemnify the Trustor against
all claims of tenants in respect of the security deposits so paid following such
demand.
6.4. Legal Expenses of the Beneficiary.
6.4.1. The Trustor will pay to the Beneficiary or the Trustee, as the case
may be, on demand, all costs, charges and expenses (including, without
limitation, reasonable attorneys' fees and disbursements) incurred or paid at
any time by the Beneficiary or the Trustee (i) in connection with any action or
proceeding to foreclose this Trust Deed or to recover or collect all, or any
portion of the indebtedness secured hereby; and (ii) in connection with any
modification or amendment or assignment of this Trust Deed or the other Security
Documents, together with interest on each such payment made by the Beneficiary
at the Involuntary Rate from the date of the Beneficiary's demand for such
payment to the date of reimbursement by the Trustor.
6.4.2. If any action or proceeding be commenced in which the Beneficiary or
the Trustee is made a
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party, or in which it becomes necessary to defend or uphold the lien of this
Trust Deed, all reasonable sums paid by the Beneficiary for the expense of any
litigation to prosecute or defend the title, rights and lien created by this
Trust Deed (including, without limitation, reasonable attorneys' fees) shall be
paid by the Trustor, together with interest thereon at the Involuntary Rate from
the date of the Beneficiary's demand for such payment to the date of
reimbursement by the Trustor.
6.5. Remedies Cumulative; No Waiver; Etc.
6.5.1. No remedy in this Trust Deed conferred upon or reserved to the
Beneficiary is intended to be exclusive of any other remedy or remedies, and
each and every such remedy shall be cumulative, and shall be in addition to
every other remedy given hereunder or now or hereafter existing at law or in
equity. No delay or omission by the Beneficiary in exercising any right or power
arising upon any Event of Default shall impair any such right or power, or shall
be construed to be a waiver of or acquiescence in any such Event of Default; and
every power and remedy given by this Trust Deed to the Beneficiary may be
exercised from time to time as often as the Beneficiary may determine it is
appropriate to do so.
6.5.2. A waiver in one or more instances of compliance with any of the
terms, covenants, conditions or provisions of the Note, the Loan Agreement or of
the Security Documents shall apply to the particular instance or instances and
at the particular time or times only, and no such waiver shall be deemed a
continuing waiver. In any event, no waiver shall be effective, or be asserted by
the Trustor as having been made, unless set forth in a writing signed by the
Beneficiary.
6.5.3. The Trustor waives and renounces all homestead and similar exemption
rights with respect to the Mortgaged Premises provided for by the Constitution
and laws of the United States and of the State as against the collection of the
Security Documents, or any part thereof.
6.6. No Merger. It is the intention of the parties to this Trust Deed that
if the Beneficiary or the Trustee shall at any time hereafter acquire title to
all or any portion of the Mortgaged Premises, then, and until the indebtedness
secured hereby has been paid in full, the interest of the Beneficiary hereunder
and the lien of this Trust Deed shall not merge or become merged in or with the
estate and interest of the Beneficiary or the Trustee as the
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holder and owner of title to all or any portion of the Mortgaged Premises and
that, until such payment, the estate of the Beneficiary or the Trustee in the
Mortgaged Premises and the lien of this Trust Deed and the interest of the
Beneficiary hereunder shall continue in full force and effect to the same extent
as if the Beneficiary or the Trustee had not acquired title to all or any
portion of the Mortgaged Premises.
ARTICLE VII.
Provisions of General Application
7.1. Modifications. No change, amendment, termination, modification or
cancellation of this Trust Deed, or of any part hereof, shall be valid unless
set forth in a writing signed by the Trustor and the Beneficiary, except that
only the Beneficiary need sign any satisfaction of this Trust Deed.
7.2. Notices. All notices, demands, requests, consents, approvals or other
communications (each, a "Notice") given or required to be given hereunder shall
be sent to the addresses and in the manner required by the Loan Agreement.
7.3. The Beneficiary's Rights to Perform the Trustor's Covenants. If the
Trustor shall fail to pay or cause payment to be paid to the Beneficiary in
accordance with the terms of the Security Documents, or to perform or observe
any other term, covenant, condition or obligation required to be performed or
observed by the Trustor under this Trust Deed or the other Security Documents,
without limiting any other provision of this Trust Deed, and without waiving or
releasing the Trustor from any obligation or default hereunder, after giving any
notice to the Trustor required hereunder and after the passage of any applicable
cure periods (or without such notice in the event of an emergency), the
Beneficiary (or any receiver of the Mortgaged Premises) shall have the right,
but not the obligation, to make any such payment, or to perform any other act or
take any appropriate action, including, without limitation, entry on the
Mortgaged Premises and performance of work thereat, as it, in its sole
discretion, may deem necessary to cause such other term, covenant, condition or
obligation to be promptly performed or observed on behalf of the Trustor or to
protect the security of this Trust Deed. All amounts advanced by, or on behalf
of, the Beneficiary in
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exercising its rights under this SECTION 7.3 (including, but not limited to,
legal expenses and disbursements incurred in connection therewith), together
with interest thereon at the Involuntary Rate from the date of the Beneficiary's
demand upon the Trustor for reimbursement of such sums until reimbursement by
the Trustor, shall be payable by the Trustor to the Beneficiary upon demand and
shall be secured by this Trust Deed.
7.4. Additional Sums Payable by the Trustor. All sums which, by the terms
of this Trust Deed or any of the other Security Documents (excluding however the
principal indebtedness evidenced by the Note), are payable by the Trustor to the
Beneficiary shall, together with the interest thereon provided for herein or in
the Note or such other Security Documents, be added to and deemed part of the
indebtedness secured by the lien of this Trust Deed whether or not the provision
which obligates the Trustor to make any such payment to the Beneficiary
specifically so states.
7.5. Captions. The captions used in this Trust Deed are inserted only as a
matter of convenience and for reference, and in no way define, limit, enlarge or
describe the scope or intent of this Trust Deed or in any other way affect this
Trust Deed or the construction of any provision hereof.
7.6. Successors and Assigns. The covenants and agreements contained in this
Trust Deed shall run with the land and bind the Trustor, the successors and
assigns of the Trustor and all subsequent owners, encumbrances and Space Tenants
of the Mortgaged Premises, or any part thereof; and shall inure to the benefit
of the Beneficiary, its successors and assigns and all subsequent beneficial
owners of this Trust Deed.
7.7. Gender and Number. Wherever the context of this Trust Deed so
requires, the neuter gender includes the masculine and/or feminine gender and
the singular number includes the plural.
7.8. Severability. If any one or more of the provisions contained in this
Trust Deed shall for any reason be held to be invalid, illegal, or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provisions of this Trust Deed; and this Trust Deed shall, in such
event, be construed as if such invalid, illegal or unenforceable provision had
never been included.
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7.9. Usury. Anything in the Note, the Loan Agreement, this Trust Deed or
the other Security Documents to the contrary notwithstanding, the Beneficiary
shall never be entitled to receive, collect or apply as interest on the
principal amount of the Note or any other of the obligations secured hereby any
amount in excess of the maximum rate of interest permitted to be charged by
applicable law. In the event the Beneficiary ever receives, collects or applies
as interest any such excess, the amount which would be excessive interest shall
be applied to the reduction of the principal amount of said obligations; and if
said principal amount shall have been paid in full, shall be remitted to the
Person lawfully entitled thereto. In determining whether or not the interest
paid or payable in any specific instance shall exceed the highest lawful rate,
the Trustor and the Beneficiary shall to the maximum extent permitted by
applicable law (i) characterize any non-principal payment as an expense, fee or
premium rather than as interest, (ii) exclude voluntary prepayments and the
effects thereof and (iii) "spread" the total amount of interest throughout the
entire contemplated terms of the obligations so that the interest rate is
uniform throughout the entire said term.
7.10. Controlling Law. This Trust Deed shall be governed by, and construed
and enforced in accordance with the laws of the State of Texas applicable to
contracts made and to be wholly performed within such state.
7.11. Entire Agreement. This Trust Deed, together with the Note, the Loan
Agreement and the other Security Documents, embodies the entire agreement and
understanding between the parties relating to the subject matter hereof.
ARTICLE VIII.
Particular Provisions
The foregoing ARTICLES of this Trust Deed are subject to the following
further provisions set forth in this ARTICLE VIII.
8.1. Limited Recourse. The provisions of PARAGRAPH 6.16 of the Loan
Agreement are hereby incorporated herein by reference.
8.2. Environmental Representations and Warranties. The Trustor hereby makes
the following
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representations and warranties to the Beneficiary with respect to the Mortgaged
Premises:
8.2.1. Compliance with Environmental Laws. To the best of the Trustor's
knowledge based on all appropriate and thorough inquiry, (i) the Mortgaged
Premises (including surface and subsurface soil and water and areas leased to
tenants, if any), and the use and operation thereof, have been and are currently
in compliance with all Environmental Laws (as hereinafter defined), (ii) all
required permits are in effect, and the Trustor is in compliance therewith, and
(iii) all Hazardous Materials (as hereinafter defined) generated or handled on
the Mortgaged Premises have been disposed of in a lawful manner.
8.2.2. No Hazardous Materials. To the best of the Trustor's knowledge based
on all appropriate and thorough inquiry (a) no Hazardous Release (as hereinafter
defined) or other Hazardous Activity (as hereinafter defined) has occurred or is
occurring on or from the Mortgaged Premises except in compliance with
Environmental Laws and as has been disclosed in writing to the Beneficiary
("Disclosed Material"), (b) all Hazardous Materials used, treated, stored,
transported to or from, generated or handled on the Mortgaged Premises have been
disposed of on or off the Mortgaged Premises in a lawful manner, (c) no
environmental or public health or safety hazards currently exist with respect to
the Mortgaged Premises or the business or operations conducted thereon, (d) no
underground storage tanks (including but not limited to petroleum or heating oil
storage tanks) are present on or under the Mortgaged Premises or have been on or
under the Mortgaged Premises, except as has been disclosed in writing to the
Beneficiary, and (e) no changes have been made to or discovered regarding the
operations, use or environmental conditions on the Mortgaged Premises since the
date of the most recent written environmental assessment provided to the
Beneficiary.
8.2.3. No Environmental Actions. To the best of the Trustor's knowledge and
based on all appropriate and thorough inquiry, the Mortgaged Premises is not
listed on any local, state and/or federal lists of potentially contaminated
sites, including, but not limited to, the National Priorities List,
Comprehensive Environmental Response, Compensation and Liability Information
System or any state or federal hazardous waste site or leaking underground
storage tank lists, and there have been no past and there are no pending or
threatened Environmental Actions (as hereinafter defined) to which the Trustor
is a party or which relate to the Mortgaged Premises. The Trustor has not
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received any notice of any Environmental Action respecting the Trustor, the
Mortgaged Premises or any off-site facility to which has been sent any Hazardous
Material for purposes of any Hazardous Activity.
8.2.4. Intentionally Deleted.
8.2.5. Definitions. For purposes of this Trust Deed, the following
capitalized terms shall have the meanings set forth below:
"Environmental Action" shall mean:
(a) any notice of violation, complaint, claim, citation, demand,
inquiry, report, action, assertion of potential responsibility, lien,
encumbrance, or proceeding regarding the Mortgaged Premises, whether formal
or informal, absolute or contingent, matured or unmatured, brought or
issued by any governmental unit, agency, or body, or any person or entity
respecting:
(1) any Environmental Law;
(2) the environmental condition of the Mortgaged Premises, or any
portion thereof, or any property near the Mortgaged Premises,
including actual or alleged damage or injury to humans, public health,
wildlife, biota, air, surface or subsurface soil or water, or other
natural resources; or
(3) any Hazardous Activity on the Mortgaged Premises or off-site;
(b) any violation or claim of violation by the Trustor of any
Environmental Law whether or not involving the Mortgaged Premises;
(c) any lien for damages caused by, or the recovery of any costs
incurred by any person or entity, including any governmental entity, for
the investigation, remediation or cleanup of any Hazardous Release or
threatened Hazardous Release on the Mortgaged Premises; or
(d) the destruction or loss of use of property, or the injury, illness
or death of any officer, director, employee, agent, representative, tenant
or invitee of the Trustor or any other person alleged to be or possibly to
be arising from or caused by the environmental condition of the Mortgaged
Premises or any Hazardous Activity on the Mortgaged Premises.
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"Environmental Laws" shall mean:
(a) any present or future federal statute, law, code, rule,
regulation, ordinance, order, standard, permit, license, guidance document
or requirement (including consent decrees, judicial decisions and
administrative orders) together with all related amendments, implementing
regulations and reauthorizations, pertaining to the protection,
preservation, conservation or regulation of the environment, including, but
not limited to: the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act, 42 U.S.C. Sections 9601 et seq. ("CERCLA"); the
Resource Conservation and Recovery Act of 1976, 42 U.S.C. Sections 6901 et
seq. ("RCRA"); the Toxic Substances Control Act, 15 U.S.C. Sections 2601 et
seq. ("TOSCA"); the Clean Air Act, 42 U.S.C. Sections 7401 et seq.; the
Clean Water Act, 33 U.S.C. Sections 1251 et seq.; the Hazardous Materials
Transportation Act, 49 U.S.C. Sections 1801 et seq. ("HMTA"); the Emergency
Planning and Community Right-to-Know Act, 42 U.S.C. Sections 11011 et seq.;
the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. Sections
136 et seq.; and the Atomic Energy Act, 42 U.S.C. Sections 2011 et seq.
(b) any present or future state or local statute, law, code, rule,
regulation, ordinance, order, standard, permit, license or requirement
(including consent decrees, judicial decisions and administrative orders)
together with all related amendments, implementing regulations and
reauthorizations, pertaining to the protection, preservation, conservation
or regulation of the environment.
"Hazardous Activity" shall mean any use, exposure, Hazardous Release,
generation, manufacture, sale, transport, handling, storage, treatment,
reuse, presence, decontamination, clean-up or recycling of any Hazardous
Material.
"Hazardous Materials" shall mean (a) all substances defined as
"hazardous substances", "hazardous materials", "toxic substances",
"hazardous wastes" or "solid waste" in CERCLA, RCRA, TOSCA or HMTA; (b)
those substances listed in the United States Department of Transportation
Table (49 C.F.R. 172.101 and amendments thereto) or by the Environmental
Protection Agency (or any successor agency) as "hazardous substances" (40
C.F.R. Part 302 and amendments thereto); those substances defined as
"hazardous wastes" or as "hazardous substances" in the regulations adopted
and publications promulgated pursuant to said laws or which
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otherwise are or become regulated by any governmental authority, agency,
department, commission, board or instrumentality of the United States of
America, the State of Texas or any political subdivision thereof; (d) any
hazardous, dangerous or toxic chemical, material, waste, pollutant,
contaminant or substance (collectively, "Pollutants") within the meaning of
any Environmental Law prohibiting, limiting or otherwise regulating any
Hazardous Activity relating to any such Pollutant; (e) any petroleum, crude
oil, or fraction or by-product thereof; (f) any radioactive material,
including any source, special nuclear or by-product material as defined at
42 U.S.C. Sections 2011 et seq., as amended or hereafter amended, and in
the regulations adopted and publications promulgated pursuant to said law;
(g) asbestos-containing materials in any form or condition; and (h)
polychlorinated biphenyls in any form or condition.
"Hazardous Release" shall mean the release of Hazardous Materials into
the environment by any means whatsoever, including but not limited to any
spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping removing or disposing (including the
abandonment or discarding of barrels, containers and other receptacles
containing any Hazardous Material).
ARTICLE IX.
Trustee
9.1. The Trustee.
9.1.1. The powers of the Trustee may be exercised by any one Trustee,
acting singly, or by any successor Trustee, and in the event either Trustee
shall act alone, the authority and power of the Trustee so acting shall be as
full and complete as if the powers and authority granted to the Trustee herein
jointly had been granted to such Trustee alone; and either or both of the
Trustee are hereby authorized to act by agent or attorney in the execution of
this Trust Deed. The Trustor hereby grants to the Beneficiary, in its sole
discretion, the right and power, at any time and from time to time hereafter,
without notice, to appoint a substitute trustee or trustees for any reason
whatsoever. Upon such appointment, either with or without a conveyance to said
substituted trustee or trustees by the Trustee herein named, or by any
substituted trustee in case such right of appointment is exercised more than
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once, the new and substituted trustee or trustees in each instance shall be
vested with all the rights, titles, interests, powers, duties and trusts in the
Mortgaged Premises which are vested in and conferred upon the Trustee herein
named, and such new and substituted trustee or trustees shall be considered the
successors and assigns of the Trustee who is named herein within the meaning of
this instrument, and substituted in their name and stead. Such substitution
shall be made by an instrument duly executed by anyone acting in a
representative capacity, which instrument, upon execution shall be conclusive
proof of the proper substitution and appointment of such successor trustee or
trustees, the authority of the person executing such instrument, and notice of
such proper substitution and appointment to all parties in interest.
9.1.2. The Trustor shall pay the Trustee just compensation for any and all
services performed (based upon time spent) and all of the Trustee's expenses,
charges, reasonable attorneys' fees and other Obligations incurred in the
administration and execution of the trusts hereby created and the performance of
their duties and powers hereunder, which compensation, expenses, fees and
disbursements shall constitute a part of the obligations secured hereby. Without
limiting the generality of the foregoing, in the event that foreclosure
proceedings are instituted hereunder but not completed, the Trustee shall be
reimbursed for all costs and expenses incurred by them in commencing such
proceedings; and all costs and expenses incurred by the Trustee, and such
commission, together with interest thereon until paid at the Default Rate, shall
be payable by the Trustor on demand, and shall be and become a part of the
Obligations and shall be collectible as such.
9.1.3. The Trustee shall not be liable for any error of judgment or act
done by the Trustee in good faith, or be otherwise responsible or accountable
under any circumstances whatsoever, except due to the Trustee's gross negligence
or willful misconduct. The Trustee shall have the right to rely on any
instrument, document or signature authorizing or supporting any action taken or
proposed to be taken by them hereunder, believed by the Trustee in good faith to
be genuine. All money received by the Trustee shall, until used or applied as
herein provided, be held in trust for the purposes for which they were received,
but need not be segregated in any manner from any other money (except to the
extent required by law or under the Security Documents), and the Trustee shall
be under no liability for interest on any money received by them hereunder.
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9.1.4. The Trustee, at any time, upon request of the Beneficiary, may
reconvey to the Trustor or the Trustor's successors or assigns, any portion of
the Mortgaged Premises without affecting the personal liability of any person
for the payment of any said indebtedness, or the lien of this Trust Deed upon
the remainder of the Mortgaged Premises not reconveyed.
9.1.5. The Trustor forthwith upon request, at any and all times hereafter,
at the expense of the Trustor, will cause to be made, executed, acknowledged and
delivered to the Trustee, any and every deed or assurance in law which the
Trustee or counsel of the Trustee shall reasonably require for the more sure,
effectual and satisfactory granting and confirming of the Mortgaged Premises
unto the Trustee.
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IN WITNESS WHEREOF, the Trustor has executed this Trust Deed as of the day
and year first above written.
"Trustor"
CORPORATE REALTY INCOME
FUND I, L.P., a Delaware
limited partnership
By: _______________________
Robert F. Gossett, Jr.,
general partner
By: 1345 Realty Corporation,
general partner
By: _______________________
Robert F. Gossett, Jr.,
President
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State of _____________________ )
County of ____________________ )
On ________________ before me, ________________________________________________
Date
_______________________________________________________________________________,
NAME, TITLE OF OFFICER-E.G., "JANE DOE, NOTARY PUBLIC"
personally appeared ___________________________________________________________
NAME(S) OF SIGNER(S)
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.
WITNESS my hand and official seal.
Signature_______________________________ (Seal)
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EXHIBIT A
PREMISES
LEGAL DESCRIPTION
BEING all of Walnut Hill Business Park Fourth Installment, an Addition to the
City of Irving, Dallas County, Texas, according to the Map thereof recorded in
Volume 79068, Page 1713 of the Map Records of Dallas County, Texas and being
more particularly described as follows:
BEGINNING at a 1/2 inch iron rod found for corner at the intersection of the
West right-of-way line of Executive Drive (60' R.O.W.) and the South
right-of-way line of Greenway Drive (60' R.O.W.);
THENCE South 00 degrees 06 minutes 20 seconds West along the West right-of-way
line of Executive Drive, a distance of 725.00 feet to a 1/2 inch iron rod found
for corner at the intersection of the West Line of said North right of-way line
of Corporate Drive (60' R.O.W.);
THENCE North 89 degrees 53 minutes 40 seconds West along the North right-of-way
line of Corporate Drive, a distance of 400.00 feet to a 1/2 inch iron rod found
for corner;
THENCE North 00 degrees 06 minutes 20 seconds East departing the said North line
of Corporate Drive, a distance of 725.00 feet to a 1/2 inch iron rod set for
corner in the South right-of-way line of Greenway Drive;
THENCE South 89 degrees 53 minutes 40 seconds East along the South right-of-way
line of Greenway Drive, a distance of 400.00 feet to the POINT OF BEGINNING and
CONTAINING 290,000 square feet or 6.657 acre
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FIRST AMENDMENT TO DEED OF TRUST, ASSIGNMENT OF RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
FIRST AMENDMENT TO DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND
FIXTURE FILING dated as of December __, 1996 (as the same may be amended or
otherwise modified from time to time, this "Amendment") by and between CORPORATE
REALTY INCOME FUND I, L.P., a Delaware limited partnership (the "Trustor"),
having an office at 406 East 85th Street, New York, New York 10028, and FLEET
BANK, NATIONAL ASSOCIATION, a national banking association (the "Beneficiary"),
having an office at 56 East 42nd Street, New York, New York 10017.
W I T N E S S E T H:
WHEREAS, the Trustor executed and delivered to the JAMES E. MIRMAN (the
"Trustee"), for the benefit of the Beneficiary, that certain Deed of Trust,
Assignment of Rents, Security Agreement and Fixture Filing dated September 26,
1996 (as the same may be amended or otherwise modified from time to time, the
"Trust Deed") covering all of the Trustor's estate in and to all that tract or
parcel of land situate, lying and being in the County of Dallas, State of Texas,
and more particularly described in EXHIBIT A annexed to and made a part of this
Amendment;
WHEREAS, the Trust Deed was recorded by the ________________ Recorder's
Office on __________________, 1996 as Document _______________________;
WHEREAS, the Trustor and the Beneficiary are also parties to a Loan
Agreement dated as of September 26, 1996 (as the same may be amended or
otherwise modified from time to time, (the "Loan Agreement") and, pursuant to
the Loan Agreement, the Beneficiary has agreed to lend up to $24,000,000 to the
Trustor, and, to evidence such loans, the Trustor executed and delivered to the
Beneficiary the Note;
WHEREAS, payment of the indebtedness of the Trustor evidenced by the Note
is secured by the Trust Deed;
WHEREAS, the Trustor and Beneficiary are simultaneously herewith entering
into a First Amendment to Loan Agreement and Note for the purpose, among others,
of increasing the principal amount of the Note from $24,000,000 to $44,000,000;
and
WHEREAS, it is a condition precedent to the effectiveness of the First
Amendment to Loan Agreement and Note
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that each of the parties hereto shall have executed and delivered this
Amendment, thereby amending the Trust Deed and each of the parties hereto is
willing to do so.
NOW, THEREFORE, the parties to this Amendment hereby agree as follows:
1. All capitalized terms used herein without definition and which are
defined in the Trust Deed are used herein with the meanings assigned to such
terms in the Trust Deed.
2. The description in the Trust Deed to the Note being in the principal
amount of $24,000,000 are hereby amended so that all of such references shall be
to a Note in the principal amount of $44,000,000.
3. The granting clauses of the Trust Deed are hereby restated in their
entirety and incorporated herein and the Trustor hereby ratifies and restates
such granting clauses as incorporated herein.
4. The Trust Deed, as modified by this Amendment, and all covenants of the
Trustor made in the Trust Deed are hereby ratified and confirmed by the Trustor
in all respects, and the Trust Deed, as so modified, shall continue in full
force and effect in accordance with its terms.
2
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IN WITNESS WHEREOF, each of the parties has caused these presents to be
signed and attested, all as of the day and year first above written.
ATTEST: CORPORATE REALTY INCOME FUND I, L.P.
_____________________ By:__________________________________
Robert F. Gossett, Jr.,
General Partner
By: 1345 Realty Corporation,
General Partner
By:________________________________
Robert F. Gossett, Jr.,President
ATTEST: FLEET BANK, NATIONAL ASSOCIATION
____________________ By:_______________________________
Title:
3
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STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the ___ day of December, 1996, before me personally came ROBERT F.
GOSSETT, JR., to me known, who, being by me duly sworn, did depose and say that
he resides at 406 East 85th Street, New York, New York 10028; that he is the
President of 1345 Realty Corporation, the corporation described in and which
executed the foregoing instrument as a general partner of Corporate Realty
Income Fund I, L.P.; and that he signed his name thereto by order of the board
of directors of said corporation and as and for the act and deed of said
corporation and partnership.
___________________________________
NOTARY PUBLIC
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the ____day of December, 1996, before me personally came ROBERT F.
GOSSETT, JR., to me known, who, being by me duly sworn, did depose and say that
he resides at 406 East 85th Street, New York, New York 10028; that he is a
general partner of Corporate Realty Fund I, L.P., as described in the foregoing
instrument; and that he signed his name thereto as and for the act and deed of
said partnership.
___________________________________
NOTARY PUBLIC
4
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STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the ____day of December, 1996, before me personally came James Mirman,
to me known, who, being by me duly sworn, did depose and say that he resides at
56 East 42nd Street, New York, New York 10017; that he is a Vice President of
Fleet Bank, National Association; and that he signed his name thereto as and for
the act and deed of Fleet Bank, National Association.
___________________________________
NOTARY PUBLIC
5
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SECTION:
BLOCK:
LOTS:
COUNTY: Dallas
Date: As of December __, 1996
FIRST AMENDMENT TO DEED OF TRUST, ASSIGNMENT OF RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
by and between
CORPORATE REALTY INCOME FUND I, L.P.
("Trustor")
having an office at
406 East 85th Street
New York, New York 10028
and
FLEET BANK, NATIONAL ASSOCIATION
having its principal office at
56 East 42nd Street
New York, New York 10017
("Beneficiary")
This instrument prepared by, and after recording please return to:
Loeb & Loeb LLP
345 Park Avenue
New York, New York 10154-0037
Attention: Kenneth D. Freeman, Esq.
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SALE AGREEMENT
BETWEEN
METROPOLITAN LIFE INSURANCE COMPANY,
a New York corporation,
AS SELLER,
AND
CORPORATE REALTY INCOME FUND I, L.P.,
a Delaware limited partnership,
AS PURCHASER
As of November 13, 1996
Re: 475 Fifth Avenue, New York, New York
<PAGE>
TABLE OF CONTENTS
Page #
ARTICLE I PURCHASE AND SALE
Section 1.1 Agreement of Purchase and Sale.............................
Section 1.2 Property Defined...........................................
Section 1.3 Purchase Price.............................................
Section 1.4 Payment of Purchase Price..................................
Section 1.5 Deposit....................................................
ARTICLE II TITLE AND SURVEY
Section 2.1 Existing Title And Survey Matters..........................
Section 2.2 Pre-Closing "Gap" Title Defects............................
Section 2.3 Permitted Exceptions.......................................
Section 2.4 Conveyance of Title........................................
ARTICLE III REVIEW OF PROPERTY
Section 3.1 Right of Inspection........................................
Section 3.2 Reports....................................................
Section 3.3 Review of Tenant Estoppels.................................
ARTICLE IV CLOSING
Section 4.1 Time and Place.............................................
Section 4.2 Seller's Obligations at Closing............................
Section 4.3 Purchaser's Obligations at Closing.........................
Section 4.4 Credits and Prorations.....................................
Section 4.5 Transaction Taxes and Closing Costs........................
Section 4.6 Conditions Precedent to Obligation of
Purchaser..................................................
Section 4.7 Conditions Precedent to Obligation of
Seller.....................................................
ARTICLE V REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 5.1 Representations and Warranties of
Seller.....................................................
Section 5.2 Knowledge Defined..........................................
Section 5.3 Survival of Seller's Representations and
Warranties.................................................
Section 5.4 Covenants of Seller........................................
Section 5.5 Representations and Warranties of
Purchaser..................................................
Section 5.6 Survival of Purchaser's Representations
and Warranties.............................................
ARTICLE VI DEFAULT
Section 6.1 Default by Purchaser.......................................
Section 6.2 Default by Seller..........................................
Section 6.3 Recoverable Damages........................................
ARTICLE VII RISK OF LOSS
Section 7.1 Minor Damage...............................................
Section 7.2 Major Damage...............................................
Section 7.3 Definition of "Major" Loss or Damage.......................
Section 7.4 Section 5-1311 of the New York
General Obligations Law....................................
<PAGE>
ARTICLE VIII COMMISSIONS
Section 8.1 Brokerage Commissions......................................
ARTICLE IX DISCLAIMERS AND WAIVERS
Section 9.1 No Reliance on Documents...................................
SECTION 9.2 AS-IS SALE; DISCLAIMERS....................................
Section 9.3 Survival of Disclaimers....................................
ARTICLE X MISCELLANEOUS
Section 10.1 Confidentiality............................................
Section 10.2 Public Disclosure..........................................
Section 10.3 Assignment.................................................
Section 10.4 Notices....................................................
Section 10.5 Modifications..............................................
Section 10.6 Entire Agreement...........................................
Section 10.7 Further Assurances.........................................
Section 10.8 Counterparts...............................................
Section 10.9 Severability...............................................
Section 10.10 Applicable Law.............................................
Section 10.11 No Third-Party Beneficiary.................................
Section 10.12 Captions...................................................
Section 10.13 Construction...............................................
Section 10.14 Recordation................................................
ARTICLE XI LISTER-BUTLER, INC. INDEMNITY
Section 11.1 Indemnity..................................................
Section 11.2 Purchaser's Obligation to Defend and
Pay........................................................
Section 11.3 Seller's Right to Participate..............................
Section 11.4 Release and Dismissal with Prejudice.......................
Section 11.5 Limited and Temporary License..............................
Section 11.6 Costs......................................................
Section 11.7 Survival...................................................
Exhibits
A DESCRIPTION OF LAND
B LIST OF PERSONAL PROPERTY
C LIST OF OPERATING AGREEMENTS
D LIST OF WARRANTIES AND GUARANTIES
E LIST OF PERMITS
F LIST OF REPORTS
G FORM OF TENANT ESTOPPEL CERTIFICATE
H FORM OF DEED
I FORM OF BILL OF SALE
J FORM OF ASSIGNMENT OF LEASES
K FORM OF ASSIGNMENT OF CONTRACTS
L FORM OF TENANT NOTICE
M FORM OF FIRPTA CERTIFICATE
N LIST OF CERTAIN TENANT COSTS AND COMMISSIONS
O-1 COPY OF AGREEMENT, DATED AS OF FEBRUARY 15, 1995
O-2 COPY OF STIPULATION OF SETTLEMENT, DATED SEPTEMBER 5,
1995
P RENT ROLL
Q LIST OF SPECIFIED LITIGATION
<PAGE>
Q-1 LIST OF TENANT EVICTION PROCEEDINGS, TENANT BANKRUPTCIES,
AND PROCEEDINGS FOR THE COLLECTION OF DELINQUENT RENTALS
FROM TENANTS
R LIST OF VIOLATIONS
S COPY OF RAUSMAN LEASE DOCUMENTS
T COPY OF LISTER-BUTLER, INC. SUMMONS AND COMPLAINT
<PAGE>
SALE AGREEMENT
THIS SALE AGREEMENT (this "Agreement") is made as of this 13th day of
November, 1996 (the "Effective Date"), by and between METROPOLITAN LIFE
INSURANCE COMPANY ("Seller"), a New York corporation, and CORPORATE REALTY
INCOME FUND I, L.P. ("Purchaser"), a Delaware limited partnership.
W I T N E S S E T H:
ARTICLE I
PURCHASE AND SALE
Section 1.1 Agreement of Purchase and Sale. Subject to the terms and
conditions hereinafter set forth, Seller agrees to sell and convey to Purchaser,
and Purchaser agrees to purchase from Seller, the following:
(a) that certain tract or parcel of land situated in the City, County and
State of New York, known as and by street address 475 Fifth Avenue, and more
particularly described in Exhibit A attached hereto and made a part hereof,
together with all rights and appurtenances pertaining to such property,
including any right, title and interest of Seller in and to adjacent streets,
alleys or rights-of-way (the property described in clause (a) of this Section
1.1 being herein referred to collectively as the "Land");
(b) the buildings, structures, fixtures and other improvements affixed to
or located on the Land, excluding fixtures owned by tenants (the property
described in clause (b) of this Section 1.1 being herein referred to
collectively as the "Improvements");
(c) any and all of Seller's right, title and interest in and to all
tangible personal property located upon the Land or within the Improvements,
including, without limitation, any and all appliances, furniture, carpeting,
draperies and curtains, tools and supplies, and other items of personal property
owned by Seller (excluding cash and any software), located on and used
exclusively in connection with the operation of the Land and the Improvements,
which personal property includes, without limitation, the personal property
listed on Exhibit B attached hereto (the property described in clause (c) of
this Section 1.1 being herein referred to collectively as the "Personal
Property");
(d) any and all of Seller's right, title and interest in and to the leases,
licenses and occupancy agreements covering all or any portion of the Real
Property (as such term is defined in Section 1.2 hereof), to the extent they are
in effect on the date of the Closing (as such term is defined in Section 4.1
hereof) (the property described in clause (d) of this Section 1.1 being herein
referred to collectively as the "Leases"), together with all rents and other
sums due thereunder (the "Rents") and any and all security deposits in Seller's
possession in connection therewith (the "Security Deposits"); and
<PAGE>
(e) any and all of Seller's right, title and interest in and to (i) all
assignable contracts and agreements (collectively, the "Operating Agreements")
listed and described on Exhibit C attached hereto and made a part hereof,
relating to the upkeep, repair, maintenance or operation of the Land, the
Improvements or the Personal Property; and (ii) all assignable existing
warranties and guaranties (express or implied) issued to Seller in connection
with the Improvements or the Personal Property listed and described on Exhibit D
attached hereto and made a part hereof; and (iii) all assignable existing
permits, licenses, approvals and authorizations issued by any governmental
authority in connection with the Property (as such term is defined in Section
1.2 hereof) listed and described on Exhibit E attached hereto and made a part
hereof (the property described in clause (e) of this Section 1.1 being sometimes
herein referred to collectively as the "Intangibles").
Section 1.2 Property Defined. The Land and the Improvements are hereinafter
sometimes referred to collectively as the "Real Property." The Real Property,
the Personal Property, the Leases and the Intangibles are hereinafter sometimes
referred to collectively as the "Property."
Section 1.3. Purchase Price. Seller is to sell and Purchaser is to purchase
the Property for the sum of Twenty-Six Million Five Hundred Seventy Thousand and
00/100 Dollars ($26,570,000.00) (the "Purchase Price").
Section 1.4 Payment of Purchase Price. The Purchase Price, as increased or
decreased by prorations and adjustments as herein provided, shall be payable in
full at Closing in cash by wire transfer of immediately available funds to a
bank account designated by Seller in writing to Purchaser prior to the Closing.
Section 1.5 Deposit. Simultaneously with the execution and delivery of this
Agreement, Purchaser is depositing with Seller the sum of Three Million and
00/100 Dollars ($3,000,000.00) (the "Deposit") in good funds, either by
certified bank or cashier's check or by federal wire transfer. Seller shall hold
the Deposit in escrow in an interest-bearing account in The Chase Manhattan Bank
(or its successor-in-interest). Seller shall have no liability for any losses
incurred as a result of such investment of the Deposit, as aforesaid, and/or for
any failure or insolvency of the bank or depository in which the Deposit is so
invested. All interest on such sum shall be deemed income of Purchaser, and
Purchaser shall be responsible for the payment of all costs and fees imposed on
the Deposit account. The Deposit and all accrued interest shall be distributed
in accordance with the terms of this Agreement. The failure of Purchaser to
timely deliver the Deposit shall be a material default, and shall entitle
Seller, at Seller's sole option, to terminate this Agreement immediately.
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<PAGE>
ARTICLE II
TITLE
Section 2.1 Existing Title And Survey Matters. Purchaser acknowledges and
agrees that: (a) Seller has furnished Purchaser, prior to the Effective Date,
with copies of: (i) that certain Certificate and Report of Title (the
"Certificate of Title"), dated August 8, 1996 (the "Title Inspection Date"), for
the Real Property prepared by Commonwealth Land Title Insurance Company (the
"Title Company"); and (ii) Seller's title insurance policies (the "Owner's Title
Policies"), each dated June 30, 1994, and issued by, respectively, the Title
Company (Policy Number NY9300122M), and by First American Title Insurance
Company of New York (Policy Number Y0035325); and (iii) a copy of Seller's
survey (the "Survey"), prepared by J. George Hollerith, dated April 30, 1947 and
last redated by visual examination on May 31, 1994 by Harwood Surveying, P.C.,
for the Land and the Improvements; (b) Purchaser has had an opportunity, prior
to the Effective Date, to order its own title report and survey for the Land and
the Improvements; and (c) any and all matters (the "Existing Title And Survey
Matters") referred to, reflected in or disclosed by, the materials referred to
in the preceding sub-paragraphs (a)(i) through (iii), inclusive, have been
agreed to and accepted by Purchaser (including, but not limited to, any and all
exceptions to title set forth in Schedule B of the Certificate of Title and in
Schedule B of each of the Owner's Title Policies), and that, as of the Title
Inspection Date, Purchaser has approved the condition of title to the Real
Property. Notwithstanding the foregoing, Seller shall, prior to Closing,
effectuate the following with respect to the Existing Title and Survey Matters:
1. All judgments and liens noted in Item 9 of Schedule B of the Certificate
of Title shall be omitted as an exception to title from any owner's and
mortgagee's title insurance policy issued at the Closing, and at Closing, Seller
shall deliver to the Title Company, Purchaser and Purchaser's lender an
indemnification agreement in form, scope and substance sufficient to omit said
Item 9 and reasonably acceptable to Seller, (and which indemnification agreement
shall be freely assignable by Purchaser and Purchaser's lender) indemnifying and
holding the Title Company, Purchaser and Purchaser's lender (and Purchaser's and
Purchaser's lender's respective successors and assigns) harmless from and
against any and all judgments and liens noted in said Item 9.
2. All judgments noted in Item 10 of Schedule B of the Certificate of Title
shall be omitted as an exception to title from any owner's and mortgagee's title
insurance policy issued at the Closing, and at Closing, Seller shall deliver to
the Title Company, Purchaser and Purchaser's lender an indemnification agreement
in form, scope and substance sufficient to omit said Item 10 and reasonably
acceptable to Seller, (and which indemnification agreement shall be freely
assignable by Purchaser and Purchaser's lender) indemnifying and holding the
Title Company, Purchaser and Purchaser's lender (and Purchaser's and Purchaser's
lender's
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<PAGE>
respective successors and assigns) harmless from and against any and all
judgments noted in said Item 10.
3. Item No. 19 shall be omitted as an exception to title from any owner's
and mortgagee's title insurance policy issued at the Closing.
4. Seller shall deliver at Closing such affidavits as may be customarily
and reasonably required by the Title Company, in a form reasonably acceptable to
Seller, including, but not limited to, those specific affidavits required by
Schedule B of the Certificate of Title in order that Items 15, 16, 17 and 25
shall be omitted as exceptions from any owner's and mortgagee's title insurance
policy issued at the Closing.
5. Subject to adjustment as herein provided, all open taxes, assessments,
vault charges and other similar charges noted and set forth in the Existing
Title and Survey Matters shall be satisfied in full at or prior to Closing.
6. All violations of federal, state, New York City, municipal and local
laws, regulations, ordinances, permits and the like noted and set forth in the
Existing Title and Survey Matters shall be cured prior to Closing, except for
(a) those certain violations noted as Items 1 and 2 on Exhibit R attached hereto
(the "Violations"), regarding which Seller shall attempt to cure prior to
Closing; provided, however, (i) Seller shall not be obligated to cure the
Violations as a condition to Closing; (ii) the failure by Seller to cure the
Violations on or before Closing shall not be a default of Seller's obligations
under this Agreement; and (ii) if Seller fails to cure the Violations on or
before Closing, Seller shall not be obligated to continue to attempt to cure the
Violations (but Seller (at no cost to Seller) shall reasonably cooperate with
Purchaser to effectuate such cure); and (b) that certain violation noted as Item
3 on Exhibit R attached hereto.
7. Seller shall deliver at Closing such affidavit as may be customarily and
reasonably required by the Title Company, in a form reasonably acceptable to
Seller, regarding tenants referenced in Item 2 of Schedule B of the Certificate
of Title.
The Existing Title and Survey Matters, as modified, cured and affected
hereinabove, shall be referred to as the "Acceptable Title Matters").
Section 2.2 Pre-Closing "Gap" Title Defects. Purchaser may, at or prior to
Closing, notify Seller in writing (the "Gap Notice") of any objections to title
not disclosed by the Title Company or otherwise known to Purchaser on or before
the Title Inspection Date; provided that Purchaser must notify Seller of such
objection to title within two (2) business days of being made aware of the
existence of such exception. If Purchaser sends a Gap Notice to Seller, Seller
shall notify Purchaser within five (5) business days thereafter whether Seller,
at Seller's option, shall either (a) remove such objectionable exceptions from
title on or
4
<PAGE>
before the Closing; provided that Seller may extend the Closing for such period
as shall be required to effect such cure, but not beyond thirty (30) days; or
(b) not cause such exceptions to be removed. If Seller does not notify Purchaser
with said five (5) business day period, Seller shall be deemed to have elected
not to cause such objectionable exceptions from title. The procurement by Seller
of a commitment for the issuance of the Title Policy (as defined in Section 2.4
hereof) shall be deemed a cure by Seller of such objections set forth in the Gap
Notice. If Seller gives Purchaser notice under clause (b) above, Purchaser shall
have five (5) business days (but in all events must do so at or prior to the
Closing) in which to notify Seller that Purchaser will nevertheless proceed with
the purchase and take title to the Property subject to such exceptions, or that
Purchaser will terminate this Agreement. If this Agreement is terminated
pursuant to the foregoing provisions of this paragraph, then neither party shall
have any further rights or obligations hereunder (except for any indemnity
obligations of either party pursuant to the other provisions of this Agreement
other than the obligations set forth in Article 11 hereof, which shall void and
thereupon of no force or effect), the Deposit shall be returned to Purchaser and
each party shall bear its own costs incurred hereunder. If Purchaser shall fail
to notify Seller of its election within said five (5) business day period,
Purchaser shall be deemed to have elected to proceed with the purchase and take
title to the Property subject to such exceptions.
Section 2.3 Permitted Exceptions. The Property shall be conveyed subject to
the following matters, which are hereinafter referred to as the "Permitted
Exceptions":
(a) each and all of the Acceptable Title Matters;
(b) matters that either are not objected to in writing within the time
periods provided in Sections 2.2, or if objected to in writing by Purchaser, are
those which Seller has elected not to remove or cure, or has been unable to
remove or cure, and subject to which Purchaser has elected or is deemed to have
elected to accept the conveyance of the Property;
(c) the rights of tenants under the Leases as tenants only;
(d) the lien of all ad valorem real estate taxes and assessments not yet
due and payable as of the date of Closing, subject to adjustment as herein
provided; and
(e) local, state and federal laws, ordinances or governmental regulations,
including but not limited to, building and zoning laws, ordinances and
regulations, now or hereafter in effect relating to the Property.
Section 2.4 Conveyance of Title. At Closing, Seller shall convey and
transfer to Purchaser fee simple title to the Land and the Improvements, by
execution and delivery of the Deed (as defined in Section 4.2(a) hereof).
Evidence of delivery of such title
5
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shall be the issuance by the Title Company of a 1992 ALTA Owner's Policy of
Title Insurance (the "Title Policy") covering the Real Property, in the full
amount of the Purchase Price, subject only to the Permitted Exceptions.
ARTICLE III
REVIEW OF PROPERTY
Section 3.1 Right of Inspection. Purchaser acknowledges and agrees that it
has had an opportunity, prior to the Effective Date, to make any and all
physical and other inspections of the Property as Purchaser has deemed necessary
and/or appropriate in connection with the transaction contemplated by this
Agreement, and that Purchaser has agreed, subject to the provisions of Article
VII hereof, to accept the Property at the Closing in the condition that exists
on the Effective Date, reasonable wear and tear excepted. Purchaser shall have
the right to further inspect the Property within the two (2) day period
immediately preceding the Closing (during normal business hours and upon notice
to Seller) for the sole purpose of confirming that the Property is in the same
condition at the Closing as existed on the Effective Date, reasonable wear and
tear excepted, as aforesaid.
Section 3.2 Reports. PURCHASER ACKNOWLEDGES THAT (1) PURCHASER HAS RECEIVED
COPIES OF THE REPORTS LISTED ON EXHIBIT F ATTACHED HERETO, (2) IF SELLER
DELIVERS ANY ADDITIONAL REPORTS TO PURCHASER, PURCHASER WILL ACKNOWLEDGE IN
WRITING THAT IT HAS RECEIVED SUCH REPORTS PROMPTLY UPON RECEIPT THEREOF, AND (3)
ANY REPORTS DELIVERED OR TO BE DELIVERED BY SELLER OR ITS AGENTS OR CONSULTANTS
TO PURCHASER ARE BEING MADE AVAILABLE SOLELY AS AN ACCOMMODATION TO PURCHASER
AND MAY NOT BE RELIED UPON BY PURCHASER IN CONNECTION WITH THE PURCHASE OF THE
PROPERTY. PURCHASER AGREES THAT SELLER SHALL HAVE NO LIABILITY OR OBLIGATION
WHATSOEVER FOR ANY INACCURACY IN OR OMISSION FROM ANY REPORT. PURCHASER
ACKNOWLEDGES AND AGREES THAT IT HAS CONDUCTED, PRIOR TO THE EFFECTIVE DATE, ITS
OWN INVESTIGATION OF THE CONDITION OF THE PROPERTY TO THE EXTENT PURCHASER
DEEMED SUCH AN INVESTIGATION TO BE NECESSARY OR APPROPRIATE, AND PURCHASER HAS
APPROVED OF THE CONDITION OF THE PROPERTY.
Section 3.3 Review of Tenant Estoppels. Within five (5) days of the
Effective Date, Seller shall deliver to each tenant of the Property an estoppel
certificate in substantially the form of Exhibit G attached hereto (the "Tenant
Estoppels") and shall request that the tenants complete and sign the Tenant
Estoppels and return them to Seller; provided, however, Purchaser acknowledges
that each tenant shall only be obligated to return an estoppel certificate as
set forth in said tenant's lease. Seller shall deliver copies of the completed
Tenant Estoppels to Purchaser as Seller receives them and deliver the originals
thereof to Purchaser at the Closing. Purchaser shall notify Seller within three
(3) business days of receipt of any Tenant Estoppel in the event Purchaser
determines such Tenant Estoppel is not reasonably acceptable to Purchaser along
with the reasons for such determination. In the event Purchaser fails to give
such notice
6
<PAGE>
within such three (3) business day period then any such Tenant Estoppel shall be
deemed to be acceptable to Purchaser. In the event that Seller fails to obtain
the Tenant Estoppels or at a minimum, estoppel certificates containing the
information required under said tenants' leases (or in lieu thereof (except for
Flack & Kurtz), at Seller's option, Seller estoppels therefor in the form of the
Tenant Estoppel set forth in Exhibit G for not more than ten (10%) percent of
the currently occupied space at the Property as of the Effective Date) that are
reasonably satisfactory to Purchaser on or before three (3) business days prior
to Closing from (a) Flack & Kurtz and (b) those tenants occupying at least sixty
(60%) percent of the rentable square feet of the Property (which shall include
the rentable square feet occupied by Flack & Kurtz), in the aggregate, then
Purchaser shall have the right to terminate this Agreement by written notice to
Seller. If this Agreement is terminated pursuant to the foregoing provisions of
this paragraph, then neither party shall have any further rights or obligations
hereunder (except for any indemnity obligations of either party pursuant to the
other provisions of this Agreement other than the obligations set forth in
Article 11 hereof, which shall void and thereupon of no force or effect), the
Deposit shall be returned to Purchaser and each party shall bear its own costs
incurred hereunder. If Purchaser fails to give Seller a notice of termination as
set forth above, Purchaser shall be deemed to have approved the Tenant Estoppels
(and Seller estoppels, if applicable) and to have elected to proceed with the
purchase of the Property pursuant to the terms hereof. Except as otherwise
provided in the succeeding sentence, the representations and warranties set
forth in any Seller estoppels shall survive the Closing for a period of one (1)
year and Seller's liability to Purchaser for a breach of any representation or
warranty set forth in any Seller estoppels shall be subject to Section 5.3
hereof. Any Tenant Estoppel which is received from a tenant after Seller
provides its own estoppel may be substituted for Seller's estoppel and Seller
shall have no further liability thereunder, provided that such Tenant Estoppel
contains no changes or, if changed, is otherwise reasonably acceptable to
Purchaser. The provisions of this Section 3.4 shall survive the Closing.
ARTICLE IV
CLOSING
Section 4.1 Time and Place. The consummation of the transaction
contemplated hereby (the "Closing") shall be held at the offices of Seller
located at 200 Park Avenue, 12th Floor, New York, New York on December 4, 1996,
at 9:30 A.M. At the Closing, Seller and Purchaser shall perform the obligations
set forth in, respectively, Section 4.2 and Section 4.3 hereof, the performance
of which obligations shall be concurrent conditions; provided that the Deed
shall not be recorded until Seller receives confirmation that Seller has
received the full amount of the Purchase Price, adjusted by prorations as set
forth herein.
Section 4.2 Seller's Obligations at Closing. At Closing, Seller shall:
7
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(a) deliver to Purchaser a duly executed Bargain and Sale Deed without
Covenants Against Grantor's Acts (the "Deed") in the form attached hereto as
Exhibit H, conveying the Land and the Improvements, subject only to the
Permitted Exceptions. Subject to the terms of this Agreement, at Seller's
option, and for convenience, Seller may omit from the Deed the recital of any or
all of the "subject to" clauses concerning the Permitted Exceptions, but the
same shall nevertheless survive the Closing. The terms of the immediately
preceding sentence shall survive the Closing;
(b) deliver to Purchaser a duly executed bill of sale (the "Bill of Sale")
conveying the Personal Property without warranty of title or use and without
warranty, express or implied, as to merchantability and fitness for any purpose
and in the form attached hereto as Exhibit I;
(c) assign to Purchaser, and Purchaser shall assume, the landlord/lessor
interest in and to the Leases, Rents and Security Deposits, and any and all
obligations to pay leasing commissions and finder's fees with respect to the
Leases and amendments, renewals and expansions thereof, to the extent provided
in Section 4.4(b)(v) hereof, by duly executed assignment and assumption
agreement (the "Assignment of Leases") in the form attached hereto as Exhibit J
pursuant to which Purchaser shall indemnify Seller and hold Seller harmless from
and against any and all claims pertaining thereto arising from and after the
Closing, including without limitation, claims made by tenants with respect to
tenants' Security Deposits to the extent paid, credited or assigned to
Purchaser;
(d) to the extent assignable, assign to Purchaser, and Purchaser shall
assume, Seller's interest in the Operating Agreements and the other Intangibles
by duly executed assignment and assumption agreement (the "Assignment of
Contracts") in the form attached hereto as Exhibit K pursuant to which Purchaser
shall indemnify Seller and hold Seller harmless from and against any and all
claims pertaining thereto arising from and after the Closing;
(e) join with Purchaser to execute a notice (the "Tenant Notice") in the
form attached hereto as Exhibit L, which Purchaser shall send to each tenant
under each of the Leases promptly after the Closing, informing such tenant of
the sale of the Property and of the assignment to Purchaser of Seller's interest
in, and obligations under, the Leases (including, if applicable, any Security
Deposits), and directing that all Rent and other sums payable after the Closing
under each such Lease be paid as set forth in the notice;
(f) In the event that any representation or warranty of Seller needs to be
modified due to changes since the Effective Date, deliver to Purchaser a
certificate, dated as of the date of Closing and executed on behalf of Seller by
a duly authorized officer thereof, identifying any representation or warranty
which is not, or no longer is, true and correct and explaining the state
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of facts giving rise to the change. In no event shall Seller be liable to
Purchaser for, or be deemed to be in default hereunder by reason of, any breach
of representation or warranty which results from any change that (i) occurs
between the Effective Date and the date of Closing, and (ii) is expressly
permitted under the terms of this Agreement or is beyond the reasonable control
of Seller to prevent; provided, however, that the occurrence of a change which
is not permitted hereunder or is beyond the reasonable control of Seller to
prevent shall, if materially adverse to Purchaser, constitute the
non-fulfillment of the condition set forth in Section 4.6(b) hereof; if, despite
changes or other matters described in such certificate, the Closing occurs,
Seller's representations and warranties set forth in this Agreement shall be
deemed to have been modified by all statements made in such certificate;
(g) deliver to Purchaser such evidence as the Title Company may reasonably
require as to the authority of the person or persons executing documents on
behalf of Seller;
(h) deliver to Purchaser a certificate in the form attached hereto as
Exhibit M duly executed by Seller stating that Seller is not a "foreign person"
as defined in the Federal Foreign Investment in Real Property Tax Act of 1980;
(i) deliver to Purchaser the Leases and the Operating Agreements, together
with such leasing and property files and records located at the Property or the
property manager's office in connection with the continued operation, leasing
and maintenance of the Property, but excluding Seller's corporate records,
internal memoranda, financial projections, budgets, appraisals, accounting and
tax records and similar proprietary, confidential or privileged information. For
a period of three (3) years after the Closing, Purchaser shall allow Seller and
its agents and representatives access without charge to all files, records and
documents delivered to Purchaser at the Closing, upon reasonable advance notice
and at all reasonable times, to examine and make copies of any and all such
files, records and documents, which right shall survive the Closing;
(j) deliver to Purchaser the originals of those of the Tenant Estoppels
returned to Seller by the tenants at the Property;
(k) deliver such affidavits as may be customarily and reasonably required
by the Title Company, in a form reasonably acceptable to Seller;
(l) deliver to Purchaser possession and occupancy of the Property, subject
to the Permitted Exceptions;
(m) execute a closing statement acceptable to Seller; and
(n) deliver such additional documents as shall be reasonably required to
consummate the transaction contemplated by this Agreement.
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Section 4.3 Purchaser's Obligations at Closing. At Closing, Purchaser
shall:
(a) pay to Seller the full amount of the Purchase Price (which amount shall
include the Deposit), as increased or decreased by prorations and adjustments as
herein provided, in immediately available wire transferred federal funds
pursuant to Section 1.4 hereof;
(b) join Seller in the execution of the Assignment of Leases, the
Assignment of Contracts and the Tenant Notices;
(c) In the event that any representation or warranty of Purchaser set forth
in Sections 5.5(a) or (b) hereof needs to be modified due to changes since the
Effective Date, deliver to Seller a certificate, dated as of the date of Closing
and executed on behalf of Purchaser by a duly authorized representative thereof,
identifying any such representation or warranty which is not, or no longer is,
true and correct and explaining the state of facts giving rise to the change. In
no event shall Purchaser be liable to Seller for, or be deemed to be in default
hereunder by reason of, any breach of representation or warranty set forth in
Sections 5.5(a) or (b) hereof which results from any change that (i) occurs
between the Effective Date and the date of Closing, and (ii) is expressly
permitted under the terms of this Agreement or is beyond the reasonable control
of Purchaser to prevent; provided, however, that the occurrence of a change
which is not permitted hereunder or is beyond the reasonable control of
Purchaser to prevent shall, if materially adverse to Seller, constitute the
non-fulfillment of the condition set forth in Section 4.7(c) hereof; if, despite
changes or other matters described in such certificate, the Closing occurs,
Purchaser's representations and warranties set forth in this Agreement shall be
deemed to have been modified by all statements made in such certificate;
(d) deliver to Seller such evidence as the Title Company may reasonably
require as to the authority of the person or persons executing documents on
behalf of Purchaser;
(e) deliver such affidavits as may be customarily and reasonably required
by the Title Company, in a form reasonably acceptable to Purchaser;
(f) execute a closing statement acceptable to Purchaser; and
(g) deliver such additional documents as shall be reasonably required to
consummate the transaction contemplated by this Agreement.
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Section 4.4 Credits and Prorations.
(a) All income and expenses of the Property shall be apportioned as of
12:01 a.m., on the day of Closing, as if Purchaser were vested with title to the
Property during the entire day upon which Closing occurs. Such prorated items
shall include without limitation the following:
(i) all Rents, if any;
(ii) taxes and assessments (including personal property taxes on the
Personal Property) levied against the Property;
(iii) utility charges for which Seller is liable, if any, such charges
to be apportioned at Closing on the basis of the most recent meter reading
occurring prior to Closing (dated not more than fifteen (15) days prior to
Closing) or, if unmetered, on the basis of a current bill for each such
utility;
(iv) all amounts payable under Operating Agreements, pursuant to the
terms of this Agreement;
(v) any other operating expenses or other items pertaining to the
Property which are customarily prorated between a purchaser and a seller in
the county in which the Property is located; and
(vi) a credit in the sum of $77,025.00 in consideration for the
obligations of Purchaser set forth in Article 11 hereof.
(b) Notwithstanding anything contained in Section 4.4(a) hereof:
(i) At Closing, (A) Seller shall, at Seller's option, either deliver
to Purchaser any Security Deposits actually held by Seller pursuant to the
Leases or credit to the account of Purchaser the amount of such Security
Deposits (to the extent such Security Deposits have not been applied
against delinquent Rents or otherwise as provided in the Leases), and (B)
Purchaser shall credit to the account of Seller all refundable cash or
other deposits posted with utility companies serving the Property, or, at
Seller's option, Seller shall be entitled to receive and retain such
refundable cash and deposits. Any Security Deposits in form other than cash
(including, but not limited to, any letters of credit) shall be transferred
to Purchaser by way of appropriate instruments of replacement, transfer or
assignment, the cost of which shall be borne by Purchaser;
(ii) Any taxes paid at or prior to Closing shall be prorated based
upon the amounts actually paid. If taxes and assessments due and payable
during the year of Closing have not been paid before Closing, Seller shall
be charged at Closing an amount equal to that portion of such taxes and
assessments which relates to the period before Closing and Purchaser shall
pay the taxes and assessments prior to their becoming delinquent. Any such
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apportionment made with respect to a tax year for which the tax rate or
assessed valuation, or both, have not yet been fixed shall be based upon
the tax rate and/or assessed valuation last fixed. To the extent that the
actual taxes and assessments for the current year differ from the amount
apportioned at Closing, the parties shall make all necessary adjustments by
appropriate payments between themselves within thirty (30) days after such
amounts are determined following Closing, subject to the provisions of
Section 4.4(d) hereof;
(iii) Charges referred to in Section 4.4(a) hereof which are payable
by any tenant to a third party shall not be apportioned hereunder, and
Purchaser shall accept title subject to any of such charges unpaid and
Purchaser shall look solely to the tenant responsible therefor for the
payment of the same. As of the Effective Date, Seller has not paid any of
such charges on behalf of any tenant. However, if Seller (after obtaining
Purchaser's prior written consent, which consent shall not be unreasonably
withheld or delayed) shall pay any of such charges on behalf of any tenant
between the Effective Date and the Closing, and shall not have been
reimbursed therefor by the time of Closing, Purchaser shall credit to
Seller an amount equal to all such charges so paid by Seller;
(iv) As to utility charges referred to in Section 4.4(a)(iii) hereof,
Seller may on notice to Purchaser elect to pay one or more of all of said
items accrued to the date hereinabove fixed for apportionment directly to
the person or entity entitled thereto prior to the Closing, and to the
extent Seller so elects, such item shall not be apportioned hereunder;
(v) Purchaser shall be responsible for the payment of (A) all Tenant
Inducement Costs (as hereinafter defined) and leasing commissions which
become due and payable (whether before or after Closing) as a result of any
new Leases, or any renewals, amendments or expansions of existing Leases,
signed during the Lease Approval Period (as hereinafter defined) and, if
required, approved or deemed approved in accordance with Section 5.4
hereof; and (B) all Tenant Inducement Costs and leasing commissions with
respect to new Leases, or renewals, amendments or expansions of existing
Leases, signed or entered into from and after the date of Closing; and (C)
all Tenant Inducement Costs and leasing commissions listed on Exhibit N
attached hereto. If, as of the date of Closing, Seller shall have paid any
Tenant Inducement Costs or leasing commissions for which Purchaser is
responsible pursuant to the foregoing provisions, Purchaser shall reimburse
Seller therefor at Closing. For purposes hereof, the term "Tenant
Inducement Costs" shall mean any out-of-pocket payments required under a
Lease to be paid by the landlord thereunder to or for the benefit of the
tenant thereunder which is in the nature of a tenant inducement, including
specifically, without limitation, tenant improvement costs, lease buyout
costs, and moving, design, refurbishment and club membership allowances.
The term "Tenant Inducement Costs" shall not include loss of income
resulting from any free rental period, it being agreed that Seller shall
bear the
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loss resulting from any free rental period until the date of Closing and
that Purchaser shall bear such loss from and after the date of Closing. For
purposes hereof, the term "Lease Approval Period" shall mean the period
from the Effective Date until the date of Closing;
(vi) Unpaid and delinquent Rent collected by Seller and Purchaser
after the date of Closing shall be delivered as follows: (a) if Seller
collects any unpaid or delinquent Rent for the Property, Seller shall,
within fifteen (15) days after the receipt thereof, deliver to Purchaser
any such Rent which Purchaser is entitled to hereunder relating to the date
of Closing and any period thereafter, and (b) if Purchaser collects any
unpaid or delinquent Rent from the Property, Purchaser shall, within
fifteen (15) days after the receipt thereof, deliver to Seller any such
Rent which Seller is entitled to hereunder relating to the period prior to
the date of Closing. Seller and Purchaser agree, on a tenant-by-tenant
basis, that (i) all Rent received by Seller or Purchaser within the first
ninety (90) day period after the date of Closing from a tenant of the
Property shall be applied first to delinquent Rent, if any, owed by said
tenant, in the order of their maturity, and then to current Rent owed by
said tenant, and (ii) all Rent received by Seller or Purchaser after the
first ninety (90) day period after the date of Closing shall be applied
first to current Rent owed by said tenant and then to delinquent Rent, if
any, owed by said tenant, in the inverse order of maturity. Purchaser will
make a good faith effort after Closing to collect all Rents in the usual
course of Purchaser's operation of the Property, but Purchaser will not be
obligated to institute any lawsuit or other collection procedures to
collect delinquent Rents. Seller may attempt to collect any delinquent
Rents owed Seller and may institute any lawsuit or collection procedures,
but may not evict any tenant. In the event that there shall be any Rents or
other charges under any Leases which, although relating to a period prior
to Closing, do not become due and payable until after Closing or are paid
prior to Closing but are subject to adjustment after Closing (such as year
end common area expense reimbursements and the like), then any Rents or
charges of such type received by Purchaser or its agents or Seller or its
agents subsequent to Closing shall, to the extent applicable to a period
extending through the Closing, be prorated between Seller and Purchaser as
of Closing and Seller's portion thereof shall be remitted promptly to
Seller by Purchaser. Notwithstanding anything contained in this Agreement
to the contrary, Seller shall be entitled to all unpaid or delinquent Rent
for the period prior to the Closing that is received by Seller or Purchaser
from Goldman & Goldman in connection with that certain Agreement, dated as
of February 15, 1995, a copy of which is attached hereto as Exhibit O-1,
and that certain Stipulation of Settlement, dated September 5, 1995, a copy
of which is attached hereto as Exhibit O-2.
(c) Seller has filed and may continue to prosecute an appeal of the real
property tax assessment for the 1996/1997 tax years (and prior years), and may
take related action which Seller deems appropriate in connection therewith.
Purchaser shall cooperate
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with Seller in connection with such appeal and collection of a refund of real
property taxes paid. Seller owns and holds all right, title and interest in and
to such appeal and refund, and all amounts payable in connection therewith shall
be paid directly to Seller by the applicable authorities. If such refund or any
part thereof is received by Purchaser, Purchaser shall promptly pay such amount
to Seller. Any refund received by Seller shall be distributed as follows: first,
to reimburse Seller for all costs incurred in connection with the appeal;
second, with respect to refunds payable to tenants of the Real Property pursuant
to the Leases, to such tenants in accordance with the terms of such Leases; and
third, to Seller to the extent such appeal covers the period prior to the
Closing, and to Purchaser to the extent such appeal covers the period as of the
Closing and thereafter. If and to the extent any such appeal covers the period
after the Closing, Purchaser shall have the right to participate in such appeal.
(d) Except as otherwise provided herein, any revenue or expense amount
which cannot be ascertained with certainty as of Closing shall be prorated on
the basis of the parties' reasonable estimates of such amount, and shall be the
subject of a final proration within one hundred eighty (180) days after Closing,
or as soon thereafter as the precise amounts can be ascertained. Purchaser shall
promptly notify Seller when it becomes aware that any such estimated amount has
been ascertained. Once all revenue and expense amounts have been ascertained,
Purchaser shall prepare, and certify as correct, a final proration statement
which shall be subject to Seller's approval. Upon Seller's acceptance and
approval of any final proration statement submitted by Purchaser, such statement
shall be conclusively deemed to be accurate and final.
(e) Subject to the final sentence of Section 4.4(d) hereof, the provisions
of this Section 4.4 shall survive Closing.
Section 4.5 Transaction Taxes and Closing Costs.
(a) Seller and Purchaser shall execute such returns, questionnaires and
other documents as shall be required with regard to all applicable real property
transaction taxes imposed by applicable federal, state or local law or
ordinance;
(b) Seller shall pay the fees of any counsel representing Seller in
connection with this transaction. Seller shall also pay the following costs and
expenses:
(i) any transfer tax, sales tax, documentary stamp tax or similar tax
which becomes payable by reason of the transfer of the Property; and
(ii) the fees for the Broker (as hereinafter defined in Section 8.1
hereof).
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(c) Purchaser shall pay the fees of any counsel representing Purchaser in
connection with this transaction. Purchaser shall also pay the following costs
and expenses:
(i) the fee for the title examination and any title commitments
obtained by Purchaser and the premium for the Title Policy to be issued to
Purchaser by the Title Company at Closing, and all endorsements thereto;
(ii) the cost of any surveys obtained by Purchaser; and
(iii) the fees for recording the Deed.
(d) The Personal Property is included in this sale without charge, except
that Purchaser shall pay to Seller the amount of any and all sales or similar
taxes payable in connection with the transfer of the Personal Property and
Purchaser shall execute and deliver any tax returns required of it in connection
therewith;
(e) All costs and expenses incident to this transaction and the closing
thereof, and not specifically described above, shall be paid by the party
incurring same; and
(f) The provisions of this Section 4.5 shall survive the Closing.
Section 4.6 Conditions Precedent to Obligation of Purchaser. The obligation
of Purchaser to consummate the transaction hereunder shall be subject to the
fulfillment on or before the date of Closing of all of the following conditions,
any or all of which may be waived by Purchaser in its sole discretion:
(a) Seller shall have delivered to Purchaser all of the items required to
be delivered to Purchaser pursuant to the terms of this Agreement, including but
not limited to, those provided for in Section 4.2 hereof;
(b) All of the representations and warranties of Seller contained in this
Agreement shall be true and correct in all respects as of the date of Closing
(with appropriate modifications permitted under this Agreement); and
(c) Purchaser shall have received the Tenant Estoppels described in, and as
required by, Section 3.3 hereof; and
(d) Seller shall have performed and observed all covenants and agreements
of this Agreement to be performed and observed by Seller as of the date of
Closing.
Section 4.7 Conditions Precedent to Obligation of Seller. The obligation of
Seller to consummate the transaction hereunder shall be subject to the
fulfillment on or before the date of Closing of all of the following conditions,
any or all of which may be waived by Seller in its sole discretion:
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(a) Seller shall have received the Purchase Price as adjusted as provided
herein, pursuant to and payable in the manner provided for in this Agreement;
(b) Purchaser shall have delivered to Seller all of the items required to
be delivered to Seller pursuant to the terms of this Agreement, including but
not limited to, those provided for in Section 4.3 hereof;
(c) All of the representations and warranties of Purchaser contained in
this Agreement shall be true and correct in all material respects as of the date
of Closing (with appropriate modifications permitted under this Agreement); and
(d) Purchaser shall have performed and observed all covenants and
agreements of this Agreement to be performed and observed by Purchaser as of the
date of Closing.
ARTICLE V
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 5.1 Representations and Warranties of Seller. Seller hereby makes
the following representations and warranties to Purchaser as of the Effective
Date, which representations and warranties shall be deemed to have been made
again as of the Closing, subject to Section 4.2(f) hereof:
(a) Organization and Authority. Seller has been duly organized and is
validly existing under the laws of the State of New York. Seller has the full
right and authority to enter into this Agreement and to transfer all of the
Property and to consummate or cause to be consummated the transaction
contemplated by this Agreement. The person signing this Agreement on behalf of
Seller is authorized to do so.
(b) Pending or Threatened Actions. To Seller's knowledge, Seller has not
received written notice of any action, suit, arbitration, unsatisfied order or
judgment, government investigation or proceeding pending or threatened against
Seller which, if adversely determined, could individually or in the aggregate
materially interfere with the consummation of the transaction contemplated by
this Agreement.
(c) Operating Agreements. To Seller's knowledge, the Operating Agreements
listed on Exhibit C are all of the agreements concerning the operation and
maintenance of the Property entered into by Seller and affecting the Property,
except those operating agreements that are not assignable or are to be
terminated by Seller within thirty (30) days after the Closing, and except any
agreement with Seller's property manager, which shall be terminated by Seller.
(d) Condemnation. To Seller's knowledge, Seller has received no written
notice of any condemnation proceedings relating to the Property.
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(e) Leases. To Seller's knowledge, the rent roll attached hereto as Exhibit
P is accurate in all material respects, and lists all of the leases currently
affecting the Property.
(f) Litigation. To Seller's knowledge, except as set forth on Exhibit Q
attached hereto, and except tenant eviction proceedings, tenant bankruptcies,
and proceedings for the collection of delinquent rentals from tenants listed on
Exhibit Q-1 attached hereto, and except for proceedings related to claims for
personal injury or damage to property due to events occurring at the Property,
Seller has not received written notice of any litigation which has been filed
against Seller that arises out of the ownership of the Property and would
materially affect the Property or use thereof, or Seller's ability to perform
hereunder. To Seller's knowledge, in the event that there are any proceedings
related to claims for personal injury or damage to property due to events
occurring at the Property during the period of Seller's ownership of the
Property, such proceedings would be defended and satisfied by Seller's insurer.
(g) Violations. To Seller's knowledge, except as set forth on Exhibit R
attached hereto, Seller has not received written notice of any violation of any
federal, state or local law relating to the use or operation of the Property
which would materially adversely affect the Property or use thereof and which
has not been cured prior to the Effective Date.
Section 5.2 Knowledge Defined. References to the "knowledge" of Seller
shall refer only to the current actual knowledge of the Designated Employee (as
hereinafter defined in this Section 5.2) of Seller (after due inquiry of
Seller's property manager), and shall not be construed, by imputation or
otherwise, to refer to the knowledge of Seller or any affiliate of Seller, to
any property manager (except as otherwise set forth in this Section 5.2), or to
any other officer, agent, manager, representative or employee of Seller or any
affiliate thereof, or to impose upon such Designated Employee any duty to
investigate the matter to which such actual knowledge, or the absence thereof,
pertains (except as otherwise set forth in this Section 5.2). As used herein,
the term "Designated Employee" shall refer to Mr. John Kropke, Senior Investment
Analyst, Real Estate Investments Department, of Seller.
Section 5.3 Survival of Seller's Representations and Warranties. The
representations and warranties of Seller set forth in Section 5.1 hereof as
updated as of the Closing in accordance with the terms of this Agreement, shall
survive Closing for a period of one hundred eighty (180) days. No claim for a
breach of any representation or warranty of Seller shall be actionable or
payable if the breach in question results from or is based on a condition, state
of facts or other matter which was known to Purchaser prior to Closing. Seller
shall have no liability to Purchaser for a breach of any representation or
warranty (a) unless the valid claims for all such breaches collectively
aggregate more than Two Hundred Thousand Dollars ($200,000.00), in which event
the full amount of such valid claims shall be actionable, up to the Cap
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(as defined in this Section), and (b) unless written notice containing a
description of the specific nature of such breach shall have been given by
Purchaser to Seller prior to the expiration of said one hundred eighty (180) day
period and an action shall have been commenced by Purchaser against Seller
within two hundred forty (240) days of Closing. Seller shall not be liable to
Purchaser if Purchaser's claim is satisfied from any insurance policies, service
contracts or Leases; provided, however, Purchaser shall not be required to
exhaust such other potential sources of remedies prior to seeking recovery from
Seller. As used herein, the term "Cap" shall mean the total aggregate amount of
Two Million and 00/100 Dollars ($2,000,000.00).
Section 5.4 Covenants of Seller. Seller hereby covenants with Purchaser as
follows:
(a) From the Effective Date hereof until the Closing or earlier termination
of this Agreement, Seller shall use reasonable efforts to operate and maintain
the Property in a manner generally consistent with the manner in which Seller
has operated and maintained the Property prior to the date hereof, including the
maintenance of full replacement insurance for the Property (less the value of
the Land); and
(b) Except as provided hereinbelow, a copy of any amendment, renewal or
expansion of an existing Lease (unless such renewal or expansion is pursuant to
the terms of an existing Lease) or of any new Lease which Seller wishes to
execute between the Effective Date and the date of Closing will be submitted to
Purchaser prior to execution by Seller. Purchaser agrees to notify Seller in
writing within five (5) business days after its receipt thereof of either its
approval or disapproval thereof, including all Tenant Inducement Costs and
leasing commissions to be incurred in connection therewith. In the event
Purchaser informs Seller within such five (5) business day period that Purchaser
does not approve the amendment, renewal or expansion of the existing Lease or
the new Lease, which approval shall not be unreasonably withheld, Seller shall
have the right to terminate this Agreement by written notice thereof to
Purchaser within five (5) business days after Seller's receipt of written notice
of Purchaser's disapproval thereof. If this Agreement is not terminated pursuant
to the foregoing provisions of this paragraph, then Seller shall not proceed
with such amendment, renewal or expansion of the existing Lease or the new
Lease. If this Agreement is terminated pursuant to the foregoing provisions of
this paragraph, then neither party shall have any further rights or obligations
hereunder (except for any indemnity obligations of either party pursuant to the
other provisions of this Agreement other than the obligations set forth in
Article 11 hereof, which shall void and thereupon of no force or effect), the
Deposit shall be returned to Purchaser and each party shall bear its own costs
incurred hereunder. In the event Purchaser fails to notify Seller in writing of
its approval or disapproval within the five (5) business day period set forth
above, Purchaser shall be deemed to have approved such new Lease, amendment,
renewal or expansion. At Closing, Purchaser shall
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reimburse Seller for any Tenant Inducement Costs, leasing commissions or other
expenses, including legal fees, paid by Seller pursuant to an amendment, a
renewal, an expansion or a new Lease approved (or deemed approved) by Purchaser.
Section 5.5 Representations and Warranties of Purchaser. Purchaser hereby
makes the following representations and warranties to Seller as of the Effective
Date, which representations and warranties shall be deemed to have been made
again as of the Closing, subject to Section 4.3(c) hereof:
(a) Organization and Authority. Purchaser has been duly organized and is
validly existing under the laws of the State of Delaware. Purchaser has the full
right and authority to enter into this Agreement and to consummate or cause to
be consummated the transaction contemplated by this Agreement. The person
signing this Agreement on behalf of Purchaser is authorized to do so;
(b) Pending Actions. To Purchaser's knowledge, there is no action, suit,
arbitration, unsatisfied order or judgment, government investigation or
proceeding pending against Purchaser which, if adversely determined, could
individually or in the aggregate materially interfere with the consummation of
the transaction contemplated by this Agreement.
(c) ERISA. As of the Closing, (1) Purchaser will not be an employee benefit
plan as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), which is subject to Title I of ERISA, nor a plan
as defined in Section 4975(e)(1) of the Internal Revenue Code of 1986, as
amended (each of the foregoing hereinafter referred to collectively as "Plan"),
and (2) the assets of the Purchaser will not constitute "plan assets" of one or
more such Plans within the meaning of Department of Labor ("DOL") Regulation
Section 2510.3-101.
As of the Closing, if Purchaser is a "governmental plan" as defined in
Section 3(32) of ERISA, the closing of the sale of the Property will not
constitute or result in a violation of state or local statutes regulating
investments of and fiduciary obligations with respect to governmental plans.
As of the Closing, Purchaser will be acting on its own behalf and not on
account of or for the benefit of any Plan.
Purchaser has no present intent to transfer the Property to any entity,
person or Plan which will cause a violation of ERISA.
Purchaser shall not assign its interest under this Agreement to any entity,
person, or Plan which will cause a violation of ERISA.
Section 5.6 Survival of Purchaser's Representations and Warranties. The
representations and warranties of Purchaser set forth in Section 5.5 hereof as
updated as of the Closing in accordance with the terms of this Agreement, shall
survive Closing
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for a period of one hundred eighty (180) days. Purchaser shall have no liability
to Seller for a breach of any representation or warranty unless written notice
containing a description of the specific nature of such breach shall have been
given by Seller to Purchaser prior to the expiration of said one hundred eighty
(180) day period and an action shall have been commenced by Seller against
Purchaser within two hundred forty (240) days of Closing.
ARTICLE VI
DEFAULT
Section 6.1 Default by Purchaser. In the event the sale of the Property as
contemplated hereunder is not consummated due to Purchaser's default hereunder,
Seller shall be entitled, as its sole remedy, to terminate this Agreement and
receive the Deposit as liquidated damages for the breach of this Agreement, it
being agreed between the parties hereto that the actual damages to Seller in the
event of such breach are impractical to ascertain and the amount of the Deposit
is a reasonable estimate thereof.
Section 6.2 Default by Seller. In the event the sale of the Property as
contemplated hereunder is not consummated due to Seller's default hereunder,
Purchaser shall be entitled, as its sole remedy, either (a) to receive the
return of the Deposit, which return shall operate to terminate this Agreement
(except for any indemnity obligations of either party pursuant to the other
provisions of this Agreement other than the obligations set forth in Article 11
hereof, which shall be void and thereupon of no force or effect) and release
Seller from any and all liability hereunder, except as otherwise expressly
provided in this clause (a), or (b) to enforce specific performance of Seller's
obligation to convey the Property to Purchaser in accordance with the terms of
this Agreement, it being understood and agreed that the remedy of specific
performance shall not be available to enforce any other obligation of Seller
hereunder. Purchaser expressly waives its rights to seek damages in the event of
Seller's default hereunder. Purchaser shall be deemed to have elected to
terminate this Agreement and receive back the Deposit if Purchaser fails to file
suit for specific performance against Seller in a court having jurisdiction in
the county and state in which the Property is located, on or before sixty (60)
days following the date upon which Closing was to have occurred.
Section 6.3 Recoverable Damages. Notwithstanding Sections 6.1 and 6.2
hereof, in no event shall the provisions of Sections 6.1 and 6.2 limit the
damages recoverable by either party against the other party due to the other
party's obligation to indemnify such party in accordance with this Agreement.
ARTICLE VII
RISK OF LOSS
Section 7.1 Minor Damage. In the event of loss or damage to the Property or
any portion thereof which is not "Major" (as hereinafter defined), this
Agreement shall remain in full force and
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effect provided that Seller shall, at Seller's option, either (a) perform any
necessary repairs, or (b) assign to Purchaser, without representation, warranty
or recourse to Seller, all of Seller's right, title and interest in and to any
claims and proceeds Seller may have with respect to any net casualty insurance
policies or net condemnation awards relating to the premises in question (that
is, after expense of collection), subject however, to Seller's right to receive
reimbursement therefrom of any amounts paid or incurred by Seller for or on
account of any amounts paid or incurred by Seller for or on account of repairs
and/or restoration of the Property prior to Closing. In the event that Seller
elects to perform repairs upon the Property, Seller shall use reasonable efforts
to complete such repairs promptly and the date of Closing shall be extended a
reasonable time in order to allow for the completion of such repairs. If Seller
elects to assign a casualty claim to Purchaser, the Purchase Price shall be
reduced by an amount equal to the lesser of the deductible amount under Seller's
insurance policy or the cost of such repairs as determined in accordance with
Section 7.3 hereof. Upon Closing, full risk of loss with respect to the Property
shall pass to Purchaser.
Section 7.2 Major Damage. In the event of a "Major" loss or damage, either
Seller or Purchaser may terminate this Agreement by written notice to the other
party, in which event the Deposit shall be returned to Purchaser. If neither
Seller nor Purchaser elects to terminate this Agreement within ten (10) days
after Seller sends Purchaser written notice of the occurrence of such Major loss
or damage (which notice shall state the cost of repair or restoration thereof as
opined by an architect in accordance with Section 7.3 hereof), then Seller and
Purchaser shall be deemed to have elected to proceed with Closing, in which
event Seller shall, at Seller's option, either (a) perform any necessary
repairs, or (b) assign to Purchaser, without representation, warranty or
recourse to Seller, all of Seller's right, title and interest in and to any
claims and proceeds Seller may have with respect to any net casualty insurance
policies or net condemnation awards relating to the premises in question (that
is, after expense of collection), subject however, to Seller's right to receive
reimbursement therefrom of any amounts paid or incurred by Seller for or on
account of any amounts paid or incurred by Seller for or on account of repairs
and/or restoration of the Property prior to Closing. In the event that Seller
elects to perform repairs upon the Property, Seller shall use reasonable efforts
to complete such repairs promptly and the date of Closing shall be extended a
reasonable time in order to allow for the completion of such repairs. If Seller
elects to assign a casualty claim to Purchaser, the Purchase Price shall be
reduced by an amount equal to the lesser of the deductible amount under Seller's
insurance policy or the cost of such repairs as determined in accordance with
Section 7.3 hereof. Upon Closing, full risk of loss with respect to the Property
shall pass to Purchaser.
Section 7.3 Definition of "Major" Loss or Damage. For purposes of Sections
7.1 and 7.2, "Major" loss or damage refers to the following: (a) loss or damage
to the Property hereof such that the cost of repairing or restoring the premises
in question to
21
<PAGE>
substantially the same condition which existed prior to the event of damage
would be, in the opinion of an architect selected by Seller and reasonably
approved by Purchaser, equal to or greater than Two Million and 00/100 Dollars
($2,000,000.00), and (b) any loss due to a condemnation which permanently and
materially impairs the current use of the Property. If Purchaser does not give
written notice to Seller of Purchaser's reasons for disapproving an architect
within five (5) business days after receipt of notice of the proposed architect,
Purchaser shall be deemed to have approved the architect selected by Seller.
Section 7.4 Section 5-1311 of the New York General Obligations Law. The
terms of this Article VII shall be deemed to be the terms of an agreement which
"expressly provides otherwise" within the meaning of Section 5-1311 of the New
York General Obligations Law.
22
<PAGE>
ARTICLE VIII
COMMISSIONS
Section 8.1 Brokerage Commissions. With respect to the transaction
contemplated by this Agreement, Seller and Purchaser represent that the brokers
are The Galbreath Company, L.P., CB Commercial Real Estate Group, Inc. and
Howard Husum (collectively, the "Broker"). Each party hereto agrees that if any
person or entity, other than the Broker, makes a claim for brokerage commissions
or finder's fees related to the sale of the Property by Seller to Purchaser, and
such claim is made by, through or on account of any acts or alleged acts of said
party or its representatives, said party will protect, indemnify, defend and
hold the other party free and harmless from and against any and all loss,
liability, cost, damage and expense (including reasonable attorneys' fees) in
connection therewith. The provisions of this paragraph shall survive Closing or
any termination of this Agreement.
ARTICLE IX
DISCLAIMERS AND WAIVERS
Section 9.1 No Reliance on Documents. Except as expressly stated herein,
Seller makes no representation or warranty as to the truth, accuracy or
completeness of any materials, data or information delivered by Seller or its
brokers or agents to Purchaser in connection with the transaction contemplated
hereby. Purchaser acknowledges and agrees that all materials, data and
information delivered by Seller to Purchaser in connection with the transaction
contemplated hereby are provided to Purchaser as a convenience only and that any
reliance on or use of such materials, data or information by Purchaser shall be
at the sole risk of Purchaser, except as otherwise expressly stated herein.
Neither Seller, nor any affiliate of Seller, nor the person or entity which
prepared any report or reports delivered by Seller to Purchaser shall have any
liability to Purchaser for any inaccuracy in or omission from any such reports.
SECTION 9.2 AS-IS SALE; DISCLAIMERS. EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT, IT IS UNDERSTOOD AND AGREED THAT SELLER IS NOT MAKING AND HAS NOT AT
ANY TIME MADE ANY WARRANTIES OR REPRESENTATIONS OF ANY KIND OR CHARACTER,
EXPRESS OR IMPLIED, WITH RESPECT TO THE PROPERTY, INCLUDING, BUT NOT LIMITED TO,
ANY WARRANTIES OR REPRESENTATIONS AS TO HABITABILITY, MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE.
PURCHASER ACKNOWLEDGES AND AGREES THAT UPON CLOSING SELLER SHALL SELL AND
CONVEY TO PURCHASER AND PURCHASER SHALL ACCEPT THE PROPERTY "AS-IS, WHERE IS,
WITH ALL FAULTS", EXCEPT TO THE EXTENT EXPRESSLY PROVIDED OTHERWISE IN THIS
AGREEMENT. PURCHASER HAS NOT RELIED AND WILL NOT RELY ON, AND SELLER IS NOT
LIABLE FOR OR BOUND BY, ANY EXPRESS OR IMPLIED WARRANTIES, GUARANTIES,
STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO THE PROPERTY OR
RELATING THERETO (INCLUDING SPECIFICALLY, WITHOUT LIMITATION, OFFERING PACKAGES
DISTRIBUTED WITH RESPECT TO THE PROPERTY) MADE OR
23
<PAGE>
FURNISHED BY SELLER, THE MANAGERS OF THE PROPERTY, OR ANY REAL ESTATE BROKER OR
AGENT REPRESENTING OR PURPORTING TO REPRESENT SELLER, TO WHOMEVER MADE OR GIVEN,
DIRECTLY OR INDIRECTLY, ORALLY OR IN WRITING, UNLESS SPECIFICALLY SET FORTH IN
THIS AGREEMENT. PURCHASER ALSO ACKNOWLEDGES THAT THE PURCHASE PRICE REFLECTS AND
TAKES INTO ACCOUNT THAT THE PROPERTY IS BEING SOLD "AS-IS."
PURCHASER HEREBY ACKNOWLEDGES AND AGREES THAT NO REPRESENTATIONS,
WARRANTIES OR COVENANTS OF ANY KIND OR CHARACTER WHATSOEVER ARE OR WILL BE MADE
BY SELLER REGARDING THAT CERTAIN LEASE, DATED JANUARY, 1984, BETWEEN 41 FIFTH
ASSOCIATES, SELLER'S PREDECESSOR-IN-INTEREST, AND RAUSMAN ASSOCIATES, AS AMENDED
BY THAT CERTAIN AGREEMENT BETWEEN SAID PARTIES, DATED AS OF OCTOBER 25, 1984, OR
ANY GUARANTIES (IF ANY) OR CERTIFICATES (IF ANY) GIVEN IN CONNECTION THEREWITH
(SAID LEASE, AS AMENDED BY SAID AGREEMENT, TOGETHER WITH SAID GUARANTIES, IF
ANY, OR SAID CERTIFICATES, IF ANY, ARE HEREIN COLLECTIVELY REFERRED TO AS THE
"RAUSMAN LEASE DOCUMENTS"), OR THE EXISTENCE, VALIDITY OR BINDING EFFECT OF ANY
OF THE RAUSMAN LEASE DOCUMENTS AND/OR THE OCCUPANCY OR POSSESSION OF RAUSMAN
ASSOCIATES THEREUNDER OR IN ANY WAY RELATED THERETO. FURTHER, PURCHASER HEREBY
IRREVOCABLY RELEASES SELLER FROM ANY AND ALL LIABILITY TO PURCHASER ARISING FROM
OR RELATING TO THE MATTERS SET FORTH IN THE IMMEDIATELY PRECEDING SENTENCE.
NOTWITHSTANDING ANYTHING CONTAINED IN THIS AGREEMENT TO THE CONTRARY, PURCHASER
HEREBY ACKNOWLEDGES AND AGREES THAT THE PROPERTY SHALL BE CONVEYED TO PURCHASER
SUBJECT TO THE RAUSMAN LEASE DOCUMENTS AND/OR THE OCCUPANCY OR POSSESSION OF
RAUSMAN ASSOCIATES THEREUNDER OR IN ANY WAY RELATED THERETO. THE PROVISIONS OF
THIS PARAGRAPH SHALL SURVIVE THE CLOSING. A COPY OF SAID LEASE AND SAID
AGREEMENT ARE ATTACHED HERETO AS EXHIBIT S.
PURCHASER REPRESENTS TO SELLER THAT PURCHASER HAS CONDUCTED PRIOR TO THE
EFFECTIVE DATE SUCH INVESTIGATIONS OF THE PROPERTY, INCLUDING BUT NOT LIMITED
TO, THE PHYSICAL AND ENVIRONMENTAL CONDITIONS THEREOF, AS PURCHASER DEEMS
NECESSARY OR DESIRABLE TO SATISFY ITSELF AS TO THE CONDITION OF THE PROPERTY AND
THE EXISTENCE OR NONEXISTENCE OR CURATIVE ACTION TO BE TAKEN WITH RESPECT TO ANY
HAZARDOUS OR TOXIC SUBSTANCES ON OR DISCHARGED FROM THE PROPERTY, AND WILL RELY
SOLELY UPON SAME AND NOT UPON ANY INFORMATION PROVIDED BY OR ON BEHALF OF SELLER
OR ITS AGENTS OR EMPLOYEES WITH RESPECT THERETO, OTHER THAN SUCH
REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER AS ARE EXPRESSLY SET FORTH
IN THIS AGREEMENT. UPON CLOSING, PURCHASER SHALL ASSUME THE RISK THAT ADVERSE
MATTERS, INCLUDING BUT NOT LIMITED TO, CONSTRUCTION DEFECTS AND ADVERSE PHYSICAL
AND ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN REVEALED BY PURCHASER'S
INVESTIGATIONS, AND PURCHASER, UPON CLOSING, SHALL BE DEEMED TO HAVE WAIVED,
RELINQUISHED AND RELEASED SELLER (AND SELLER'S OFFICERS, DIRECTORS,
SHAREHOLDERS, EMPLOYEES AND AGENTS) FROM AND AGAINST ANY AND ALL CLAIMS,
DEMANDS, CAUSES OF ACTION (INCLUDING CAUSES OF ACTION IN TORT), LOSSES, DAMAGES,
LIABILITIES, COSTS AND EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES) OF ANY
AND EVERY KIND OR CHARACTER, KNOWN OR UNKNOWN, WHICH PURCHASER MIGHT HAVE
ASSERTED OR ALLEGED AGAINST SELLER (AND SELLER'S OFFICERS, DIRECTORS,
SHAREHOLDERS, EMPLOYEES AND AGENTS) AT ANY TIME BY REASON OF OR ARISING OUT OF
ANY LATENT OR PATENT
24
<PAGE>
CONSTRUCTION DEFECTS OR PHYSICAL CONDITIONS, VIOLATIONS OF ANY APPLICABLE LAWS
AND ANY AND ALL OTHER ACTS, OMISSIONS, EVENTS, CIRCUMSTANCES OR MATTERS
REGARDING THE PROPERTY.
Section 9.3 Survival of Disclaimers. The provisions of this Article IX
shall survive Closing or any termination of this Agreement.
ARTICLE X
MISCELLANEOUS
Section 10.1 Confidentiality. Purchaser and its representatives shall hold
in strictest confidence all data and information obtained with respect to Seller
or its business, whether obtained before or after the execution and delivery of
this Agreement, and shall not disclose the same to others; provided, however,
that it is understood and agreed that Purchaser may disclose such data and
information to the employees, lenders, consultants, accountants and attorneys of
Purchaser provided that such persons agree in writing to treat such data and
information confidentially. In the event this Agreement is terminated or
Purchaser fails to perform hereunder, Purchaser shall promptly return to Seller
any statements, documents, schedules, exhibits or other written information
obtained from Seller in connection with this Agreement or the transaction
contemplated herein. It is understood and agreed that, with respect to any
provision of this Agreement which refers to the termination of this Agreement
and the return of the Deposit to Purchaser, such Deposit shall not be returned
to Purchaser unless and until Purchaser has fulfilled its obligation to return
to Seller the materials described in the preceding sentence. In the event of a
breach or threatened breach by Purchaser or its agents or representatives of
this Section 10.1, Seller shall be entitled to an injunction restraining
Purchaser or its agents or representatives from disclosing, in whole or in part,
such confidential information. Nothing herein shall be construed as prohibiting
Seller from pursuing any other available remedy at law or in equity for such
breach or threatened breach. The provisions of this Section 10.1 shall survive
Closing or any termination of this Agreement.
Section 10.2 Public Disclosure. Prior to and after the Closing, no press
release or other public disclosure (except to the extent required by law,
including any filings required by the Securities and Exchange Commission and
communications with each of the limited partners of Purchaser) regarding the
purchase and sale as contemplated hereby will be issued or made by either party
without the prior written consent of both parties. The provisions of this
Section 10.2 shall survive the Closing or any termination of this Agreement.
Section 10.3 Assignment. Subject to the provisions of this Section 10.3,
the terms and provisions of this Agreement are to apply to and bind the
permitted successors and assigns of the parties hereto. Purchaser may not assign
its rights under this Agreement without first obtaining Seller's written
approval, which
25
<PAGE>
approval may be given or withheld in Seller's sole discretion. Notwithstanding
the preceding sentence, so long as Purchaser satisfies all of the conditions of
this Section 10.3, the prior written approval of Seller shall not be required in
the event that Purchaser assigns its rights under this Agreement to any entity
controlled by Purchaser. For purposes of this Section 10.3, the phrase "control"
shall mean the ownership of sufficient equity or voting interests of a
corporation or similar entity to enable the holder thereof to elect a majority
of the directors (or persons performing similar functions) thereof and in the
case of a partnership or joint venture, the ownership of more than a 50%
interest in the profits or capital thereof. In the event Purchaser intends to
assign its rights hereunder, (a) Purchaser shall send Seller written notice
thereof at least ten (10) business days prior to Closing, which notice shall
include the legal name and structure of the proposed assignee, as well as any
other information that Seller may reasonably request, and (b) Purchaser and the
proposed assignee shall execute an assignment and assumption of this Agreement
in form and substance satisfactory to Seller, and (c) in no event shall any
assignment of this Agreement release or discharge Purchaser from any liability
or obligation hereunder. Any assignee permitted under this Section 10.3 shall
make and deliver in writing to Seller the same representations at Closing as are
made by Purchaser in this Agreement. Notwithstanding the foregoing, under no
circumstances shall Purchaser have the right to assign this Agreement to any
person or entity owned or controlled by an employee benefit plan if Seller's
sale of the Property to such person or entity would, in the reasonable opinion
of Seller's ERISA advisor, create or otherwise cause a "prohibited transaction"
under ERISA. Any transfer, directly or indirectly, of any stock, partnership
interest or other ownership interest in Purchaser shall constitute an assignment
of this Agreement. The provisions of this Section 10.3 shall survive the Closing
or any termination of this Agreement.
Section 10.4 Notices. Any notice pursuant to this Agreement shall be given
in writing by (a) personal delivery, (b) reputable overnight delivery service
with proof of delivery, (c) United States Mail, postage prepaid, registered or
certified mail, return receipt requested, or (d) legible facsimile transmission,
sent to the intended addressee at the address set forth below, or to such other
address or to the attention of such other person as the addressee shall have
designated by written notice sent in accordance herewith, and shall be deemed to
have been given upon receipt or refusal to accept delivery, or, in the case of
facsimile transmission, as of the date of the facsimile transmission provided
that an original of such facsimile is also sent to the intended addressee by
means described in clauses (a), (b) or (c) above. Unless changed in accordance
with the preceding sentence, the addresses for notices given pursuant to this
Agreement shall be as follows:
26
<PAGE>
If to Seller: Metropolitan Life Insurance Company
200 Park Avenue - 12th Floor
New York, New York 10166
Attention: Mr. John Kropke
Senior Investment Analyst
Real Estate Investments
Telephone No. (212) 578-6965
Telecopy No. (212) 679-3899
with a copy to:
Metropolitan Life Insurance Company
One Madison Avenue - Area 6-A
New York, New York 10010
Attention: Joseph B. Cohen, Esq.
Attorney
Law Department
Real Estate Investments
Telephone No. (212) 578-8281
Telecopy No. (212) 685-5927
If to Purchaser:
Corporate Realty Income Fund I, L.P.
406 East 85th Street
New York, New York 10028
Attention: Mr. Robert F. Gossett, Jr.
Telephone No. (212) 751-3515
Telecopy No. (212) 879-4147
with a copy to:
Arnold & Porter
399 Park Avenue
New York, New York 10022
Attention: Michael J. Canning, Esq.
Telephone No. (212) 715-1110
Telecopy No. (212) 715-1399
Section 10.5 Modifications. This Agreement cannot be changed orally, and no
executory agreement shall be effective to waive, change, modify or discharge it
in whole or in part unless such executory agreement is in writing and is signed
by the parties against whom enforcement of any waiver, change, modification or
discharge is sought.
Section 10.6 Entire Agreement. This Agreement, including the exhibits and
schedules hereto, contains the entire agreement between the parties hereto
pertaining to the subject matter hereof and fully supersedes all prior written
or oral agreements and understandings between the parties pertaining to such
subject matter, other than any confidentiality agreement executed by Purchaser
in connection with the Property.
27
<PAGE>
Section 10.7 Further Assurances. Each party agrees that it will execute and
deliver such other documents and take such other action, whether prior or
subsequent to Closing, as may be reasonably requested by the other party to
consummate the transaction contemplated by this Agreement. The provisions of
this Section 10.7 shall survive Closing.
Section 10.8 Counterparts. This Agreement may be executed in counterparts,
all such executed counterparts shall constitute the same agreement, and the
signature of any party to any counterpart shall be deemed a signature to, and
may be appended to, any other counterpart.
Section 10.9 Severability. If any provision of this Agreement is determined
by a court of competent jurisdiction to be invalid or unenforceable, the
remainder of this Agreement shall nonetheless remain in full force and effect;
provided that the invalidity or unenforceability of such provision does not
materially adversely affect the benefits accruing to any party hereunder.
Section 10.10 Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State in which the Property is
located. Seller and Purchaser agree that the provisions of this Section 10.10
shall survive the Closing or any termination of this Agreement.
Section 10.11 No Third-Party Beneficiary. The provisions of this Agreement
and of the documents to be executed and delivered at Closing are and will be for
the benefit of Seller and Purchaser only and are not for the benefit of any
third party, and accordingly, no third party shall have the right to enforce the
provisions of this Agreement or of the documents to be executed and delivered at
Closing.
Section 10.12 Captions. The section headings appearing in this Agreement
are for convenience of reference only and are not intended, to any extent and
for any purpose, to limit or define the text of any section or any subsection
hereof.
Section 10.13 Construction. The parties acknowledge that the parties and
their counsel have reviewed and revised this Agreement and that the normal rule
of construction to the effect that any ambiguities are to be resolved against
the drafting party shall not be employed in the interpretation of this Agreement
or any exhibits or amendments hereto.
28
<PAGE>
Section 10.14 Recordation. This Agreement may not be recorded by any party
hereto without the prior written consent of the other party hereto. The
provisions of this Section 10.14 shall survive the Closing or any termination of
this Agreement.
ARTICLE 11
LISTER-BUTLER, INC. INDEMNITY
Section 11.1 Indemnity. Purchaser shall protect, defend, indemnify and hold
harmless Seller from and against all Costs (as hereinafter defined) (other than
as contemplated in Section 11.3 hereof), which at any time may be imposed upon
and/or incurred by Seller arising out of or in connection with that certain
matter entitled Lister-Butler, Inc. v. Metropolitan Life Insurance Company
(Index No. 96-119412, Supreme Court of the State of New York, County of New
York) (the "Lawsuit").
Section 11.2 Purchaser's Obligation to Defend and Pay. Purchaser agrees to
investigate, prosecute, negotiate and defend the Lawsuit on Seller's behalf (as
Purchaser shall reasonably determine), at Purchaser's sole cost and expense, and
to pay the amount of the Costs of any judgment or settlement arising out of or
in connection with the Lawsuit.
Section 11.3 Seller's Right to Participate. Notwithstanding anything to the
contrary contained in this Article 11, Seller, at Seller's sole cost and
expense, may, but shall not be obligated to, employ its own legal counsel and
consultants to investigate, prosecute, negotiate or defend the Lawsuit.
Section 11.4 Release and Dismissal with Prejudice. Purchaser agrees that in
connection with any settlement or compromise of the Lawsuit or consent to the
entry of any judgment Purchaser shall use reasonable efforts to obtain from the
plaintiff a full and complete written release of Seller and Purchaser from all
liability in respect of the Lawsuit and a dismissal with prejudice of the
Lawsuit.
Section 11.5 Limited and Temporary License. In the event that Seller
exercises Seller's right to participate in the Lawsuit as set forth in Section
11.3 hereof, then, subject to the rights of tenants under the Leases, Purchaser
hereby grants to Seller and Seller's agents a limited and temporary license,
upon reasonable prior to notice to Purchaser, to enter upon the premises that
are the subject of the Lawsuit for the sole purpose of performing investigations
reasonably appropriate to enable Seller to adequately prosecute, negotiate or
defend the Lawsuit. Such limited and temporary license shall commence upon the
date that Seller elects to participate in the Lawsuit as set forth in Section
11.3 hereof and provides Purchaser with written notice of such election, and
shall terminate immediately upon the final disposition of the Lawsuit. Seller
agrees to hold Purchaser harmless from any damages or liabilities arising by
reason of Seller's exercise of the limited and temporary license herein granted.
29
<PAGE>
Section 11.6 Costs. The phrase "Costs" shall mean all liabilities, losses,
costs, damages, expenses, claims, attorneys' fees, experts' fees, consultants'
fees and disbursements of any kind or of any nature whatsoever.
Section 11.7 Survival. The provisions of this Article 11 shall survive the
Closing.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the Effective Date.
SELLER:
METROPOLITAN LIFE INSURANCE COMPANY,
a New York corporation
By: ______________________
Name: Joanne Lyons
Title: Assistant Vice-President
PURCHASER:
CORPORATE REALTY INCOME FUND I, L.P.,
a Delaware limited partnership
By: ______________________
Name: ____________________
Title: ___________________
30
<PAGE>
EXHIBIT A
DESCRIPTION OF LAND
<PAGE>
EXHIBIT B
LIST OF PERSONAL PROPERTY
1 BEEPER
1 BOOK CASE
4 CCTV MONITORS
1 CHAIR
1 FAX MACHINE
4 HAND HELD RADIOS
2 TELEPHONES
7 CAMERAS
1 VCR
12 PLANTS
1 WATER COOLER
<PAGE>
EXHIBIT C
LIST OF OPERATING AGREEMENTS
<PAGE>
EXHIBIT D
LIST OF WARRANTIES AND GUARANTIES
NONE
<PAGE>
EXHIBIT E
LIST OF PERMITS
<PAGE>
EXHIBIT F
LIST OF ENVIRONMENTAL REPORTS
Report, dated May 30, 1996, from PSI Environmental Geotechnical Construction.
Report, dated May 24, 1994, from Kemron Environmental Services, Inc.
Property Conditions Report, dated October 30, 1996, from Eckland Consultants,
Inc.
<PAGE>
EXHIBIT G
TENANT ESTOPPEL FORM
_____________, 1996
Corporate Realty Income Fund I, L.P.
406 East 85th Street
New York, New York 10028
Metropolitan Life Insurance Company
One Madison Avenue
New York, New York 10010
Re: Lease dated _________, 199_ (the "Lease") executed between
______________________________________________________________________________
("Landlord"), and ____________________________________________________________
("Tenant"), for those premises located at 475 Fifth Avenue, New York, New York.
Gentlemen:
The undersigned Tenant understands that you or your assigns intend to
acquire fee title to that property located at 475 Fifth Avenue, New York, New
York (the "Property") from Metropolitan Life Insurance Company ("Metropolitan").
The undersigned Tenant does hereby certify to Metropolitan and to you as
follows:
A. Tenant has entered into a certain lease together with all amendments
(the "Lease") as described on Schedule 1 attached hereto.
B. The Lease is in full force and effect and has not been modified,
supplemented, or amended except as set forth on Schedule 1 attached hereto.
C. Tenant has not given Landlord written notice of any dispute between
Landlord and Tenant or that Tenant considers Landlord in default under the
Lease.
D. Tenant does not claim any offsets or credits against rents payable under
the Lease.
E. Tenant has not paid a security or other deposit with respect to the
Lease, except as follows: .
F. Tenant has fully paid rent to and including the month of ________, 199_.
G. Tenant has not paid any rentals in advance except for the current month
of ________________________, 199_.
H. The Lease expires on ____________________________.
<PAGE>
I. Tenant has no options, rights of first offer or rights of
first refusal to purchase the Property, except as follows:
______________________________________________________________________________
______________________________________________________________________________
TENANT:
_________________________________
a _______________________________
By: _____________________________
Name: ___________________________
Title: __________________________
<PAGE>
EXHIBIT H
BARGAIN AND SALE DEED
THIS INDENTURE, made the ___ day of December, 1996, between METROPOLITAN
LIFE INSURANCE COMPANY ("Grantor"), a New York corporation, having an address at
One Madison Avenue, New York, New York 10010, and CORPORATE REALTY INCOME FUND
I, L.P. ("Grantee"), a Delaware limited partnership, having an address at 406
East 85th Street, New York, New York 10028.
WITNESSETH, that Grantor, in consideration of Ten Dollars ($10.00) and
other valuable consideration paid by the Grantee, does hereby grant and release
unto Grantee, the heirs or successors and assigns of Grantee forever,
ALL that certain plot, piece or parcel of land, with the buildings and
improvements thereon erected, situate, lying and being commonly known as 475
Fifth Avenue, New York, New York, and more particularly described in Schedule A
attached hereto and made a part hereof.
TOGETHER with all right, title and interest, if any, of Grantor in and to
any streets and roads abutting the above described premises to the center lines
thereof;
TOGETHER with the appurtenances and all the estate and rights of Grantor in
and to said premises;
TO HAVE AND TO HOLD the premises herein granted unto Grantee, the heirs or
successors and assigns of Grantee forever.
AND Grantor, in compliance with Section 13 of the Lien Law, covenants that
Grantor will receive the consideration for this conveyance and will hold the
right to receive such consideration as a trust fund to be applied first for the
purpose of paying the costs of the improvement and will apply the same first to
the payment of the cost of the improvement before using any part of the total of
the same for any other purpose.
IN WITNESS WHEREOF, Grantor has duly executed this Deed on the date first
set forth above.
IN PRESENCE OF: METROPOLITAN LIFE INSURANCE COMPANY
___________________________ By:_________________________________
Name: Joanne Lyons
Title: Assistant Vice-President
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the day _____ December, 1996, before me personally came Joanne Lyons, to
me known, who, being duly sworn, did depose and say that (s)he resides at
_____________________________; that (s)he is the Assistant Vice-President of
METROPOLITAN LIFE INSURANCE COMPANY, a New York corporation, the corporation
described in and which executed foregoing instrument; that (s)he knows the seal
of said corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by order of the board of directors of said
corporation; and that (s)he signed her name thereto by like order.
_________________________________
Notary Public
My commission expires on ________________.
================================================================================
BARGAIN AND SALE DEED
WITHOUT COVENANT AGAINST GRANTOR'S ACTS
from
METROPOLITAN LIFE INSURANCE COMPANY,
as Grantor,
to
CORPORATE REALTY INCOME FUND I, L.P.,
as Grantee
================================================================================
Section: 5
Block: 1275
Lot: 69
County: New York
Address: 475 Fifth Avenue
New York, New York
Please record and return to:
Arnold & Porter
399 Park Avenue
New York, New York 10022
Attention: Michael J. Canning, Esq.
<PAGE>
Schedule A
Legal Description
<PAGE>
EXHIBIT J
FORM OF ASSIGNMENT OF LEASES
THIS ASSIGNMENT OF LEASES (the "Assignment") is made as of this _____ day
of December, 1996, between METROPOLITAN LIFE INSURANCE COMPANY ("Assignor"), a
New York corporation, and CORPORATE REALTY INCOME FUND I, L.P. ("Assignee"), a
Delaware limited partnership.
For and in consideration of the sum of Ten Dollars ($10.00) and other
valuable consideration to it in hand paid by Assignee to Assignor, the
conveyance by Assignor to Assignee of all that certain real property being
particularly described on Schedule 1 attached hereto and incorporated herein by
this reference, more commonly known as 475 Fifth Avenue, located in the City of
New York, County of New York, State of New York (the "Property"), and the mutual
covenants herein contained, the receipt and sufficiency of the foregoing
consideration being hereby acknowledged by the parties hereto, Assignor hereby
assigns, transfers, sets over and conveys to Assignee all of Assignor's right,
title and interest in, to and under any and all existing and outstanding leases,
licenses and occupancy agreements (collectively, the "Leases"), of the
improvements comprising a part of the Property, including without limitation,
all those Leases described on Schedule 2 attached hereto and incorporated herein
by this reference, together with all security deposits tendered under the Leases
remaining in the possession of Assignor.
Assignee does hereby assume and agree to perform all of Assignor's
obligations under or with respect to the Leases accruing from and after the date
hereof, including without limitation, any and all obligations to pay leasing
commissions and finder's fees which are due or payable after the date hereof
with respect to the Leases, and claims made by tenants with respect to the
tenants' security deposits to the extent paid, credited or assigned to Assignee
by Assignor. Assignee agrees to indemnify, protect, defend and hold Assignor
harmless from and against any and all liabilities, losses, costs, damages and
expenses (including reasonable attorneys' fees) directly or indirectly arising
out of or related to any breach or default in Assignee's obligations hereunder.
This Assignment shall be binding upon and inure to the benefit of Assignor
and Assignee and their respective heirs, executors, administrators, successors
and assigns.
<PAGE>
This Assignment may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
IN WITNESS WHEREOF, Assignor and Assignee have each executed this
Assignment as of the date first written above.
ASSIGNOR:
METROPOLITAN LIFE INSURANCE COMPANY,
a New York corporation
By: __________________________
Name: Joanne Lyons
Title: Assistant Vice-President
ASSIGNEE:
CORPORATE REALTY INCOME FUND I,
L.P., a Delaware limited partnership
By: __________________________
Name: ________________________
Title: _______________________
<PAGE>
SCHEDULE 1
LEGAL DESCRIPTION
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SCHEDULE 2
LEASES
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EXHIBIT K
FORM OF ASSIGNMENT OF CONTRACTS
THIS ASSIGNMENT AND ASSUMPTION OF CONTRACTS AND INTANGIBLES (the
"Assignment") is made as of the ___ day of December, 1996, between METROPOLITAN
LIFE INSURANCE COMPANY ("Assignor"), a New York corporation, and CORPORATE
REALTY INCOME FUND I, L.P. ("Assignee"), a Delaware limited partnership.
For and in consideration of the sum of Ten Dollars ($10.00) and other
valuable consideration to it in hand paid by Assignee to Assignor, the
conveyance by Assignor to Assignee of all that certain real property being
particularly described on Schedule 1 attached hereto and incorporated herein by
this reference, more commonly known as 475 Fifth Avenue, located in the City of
New York, County of New York, State of New York (the "Property"), and the mutual
covenants herein contained, the receipt and sufficiency of the foregoing
consideration being hereby acknowledged by the parties hereto, Assignor hereby
assigns, transfers, sets over and conveys to Assignee all of Assignor's right,
title and interest, to the extent assignable, in, to and under any and all of
the following, to wit:
(i) the contracts and agreements listed and described on Schedule 2
attached hereto and incorporated herein by this reference (the "Contracts"),
(ii) all existing warranties and guaranties (express or implied) issued to
Assignor in connection with the improvements or the personal property being
conveyed to Assignee by Bill of Sale on the date hereof, including, without
limitation, those listed on Schedule 3 attached hereto, and
(iii) all existing permits, licenses, approvals and authorizations issued by
any governmental authority in connection with the Property, including, without
limitation, those listed on Schedule 4 attached hereto.
All items described in (ii) and (iii) above are hereinafter collectively
referred to as "Intangible Property."
Assignee does hereby assume and agree to perform all of Assignor's
obligations under the Contracts and Intangible Property accruing from and after
the date hereof. Assignee agrees to indemnify, protect, defend and hold Assignor
harmless from and against any and all liabilities, losses, costs, damages and
expenses (including reasonable attorneys' fees) directly or indirectly arising
out of or related to any breach or default in Assignee's obligations hereunder.
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This Assignment shall be binding upon and inure to the benefit of Assignor
and Assignee and their respective heirs, executors, administrators, successors
and assigns.
This Assignment may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
IN WITNESS WHEREOF, Assignor and Assignee have each executed this
Assignment as of the date first written above.
ASSIGNOR:
METROPOLITAN LIFE INSURANCE COMPANY,
a New York corporation
By: __________________________
Name: Joanne Lyons
Title: Assistant Vice-President
ASSIGNEE:
CORPORATE REALTY INCOME FUND I,
L.P., a Delaware limited partnership
By: __________________________
Name: ________________________
Title: _______________________
PURCHASE AND SALE AGREEMENT
Between
CORPORATE REALTY INCOME FUND I, L.P.
(Seller)
and
PACIFIC GULF PROPERTIES INC.
(Purchaser)
Location: James River Building
1400 Churchill Downs Avenue
Woodland, California
Dated as of February 5, 1997
PURCHASE AND SALE AGREEMENT
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TABLE OF CONTENTS
Page
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1. PURCHASE AND SALE........................................... 1
1.1 Property......................................... 1
1.2 Assignment....................................... 2
2. PURCHASE PRICE.............................................. 3
2.1 Deposit.......................................... 3
2.2 Interest......................................... 3
2.3 Credit........................................... 3
2.4 Cash at Closing.................................. 4
3. TITLE ................................................. 4
3.1 Title Report; Survey............................. 4
3.2 Review of Title.................................. 4
3.3 Vesting of Title................................. 6
3.4 Title Insurance.................................. 6
3.5 Inspection Period................................ 6
3.6 Furnishing of Information........................ 8
3.7 Consideration.................................... 10
4. CLOSING..................................................... 11
4.1 Closing.......................................... 11
4.2 Transactions at Closing.......................... 11
4.3 Title Transfer and Payment of
Purchase Price................................... 14
4.4 Reporting Requirements........................... 16
5. PRORATIONS; CLOSING ITEMS................................... 16
5.1 Prorations; Closing Costs........................ 16
5.2 Calculation of Prorations........................ 19
6. REPRESENTATIONS AND WARRANTIES.............................. 20
6.1 Seller's Representations and
Warranties....................................... 20
6.2 Purchaser's Representations and
Warranties....................................... 23
6.3 Purchaser Accepts Property ("As Is")............. 24
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7. CONDITIONS AT CLOSING....................................... 27
7.1 Seller's Conditions.............................. 27
7.2 Purchaser's Conditions........................... 28
7.3 Failure of Condition............................. 29
8. DAMAGE OR DESTRUCTION OF THE PROPERTY;
CONDEMNATION................................................ 31
8.1 Damage or Destruction of the Property............ 31
8.2 Condemnation..................................... 32
9. COMMISSIONS AND EXPENSES.................................... 33
9.1 Payment of the Sale Commission................... 33
9.2 Maintenance of the Property; Property
Personnel ....................................... 33
9.3 Leasing; Contracts............................... 34
10. NOTICES...................................................... 34
11. MISCELLANEOUS............................................... 35
11.1 Time .................................................. 35
11.2 Attorney's Fees ....................................... 35
11.3 No Waiver ............................................. 35
11.4 Entire Agreement ...................................... 36
11.5 Survival .............................................. 36
11.6 Successors ............................................ 36
11.7 Assignment ............................................ 36
11.8 Relationship of the Parties ........................... 37
11.9 Governing Law ......................................... 37
11.10 Possession; Risk of Loss .............................. 37
11.11 Review by Counsel ..................................... 37
11.12 Confidentiality ....................................... 37
11.13 Termination ........................................... 39
11.14 Waiver of Jury Trial .................................. 40
11.15 Counterparts .......................................... 40
11.16 Limitation on Liability ............................... 40
11.17 Partial Invalidity .................................... 40
11.18 Construction........................................... 41
12. LIQUIDATED DAMAGES........................................... 41
(ii)
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13. NO RECORDING................................................. 42
14. EFFECTIVENESS................................................ 42
15. TAX-DEFERRED EXCHANGE........................................ 42
16. RIGHT OF FIRST OFFER......................................... 42
17. REIT........................................................ 43
EXHIBIT A
EXHIBIT B
EXHIBIT C
EXHIBIT D
EXHIBIT E
EXHIBIT F
EXHIBIT G
EXHIBIT H
EXHIBIT I
EXHIBIT J
EXHIBIT K
EXHIBIT L
EXHIBIT M
(iii)
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PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement ("Agreement") is made as of the 5th day of
February 1997 (the "Effective Date") by and between CORPORATE REALTY INCOME FUND
I, L.P., a Delaware limited partnership ("Seller") and PACIFIC GULF PROPERTIES
INC., a Maryland corporation ("Purchaser").
A. Seller owns in fee simple that certain parcel of real property located
in the City of Woodland, County of Yolo, State of California commonly referred
to as the James River Building located at 1400 Churchill Downs Avenue, in
Woodland, California, and easements as to certain additional parcels in the City
of Woodland, County of Yolo, State of California (hereinafter collectively
referred to as the "Real Property").
B. Subject to the terms and conditions herein, Seller desires to sell and
Purchaser desires to purchase the Real Property and certain items of personal
property.
NOW THEREFORE, in consideration of the mutual covenants contained herein,
Seller and Purchaser agree as follows:
1. PURCHASE AND SALE
1.1. Property.
Subject to the terms and conditions hereof, Seller hereby agrees to sell,
convey and assign to Purchaser, and Purchaser hereby agrees to purchase and
accept from Seller on the Closing Date (as defined in Section 4.1 below) the
following (collectively, the "Property"):
(a) the Real Property, which is legally described on Exhibit A attached
hereto, together with any and all rights, privileges and easements
appurtenant thereto, which are owned by Seller;
(b) all buildings located on the Real Property, and all other improvements
and fixtures located on the Real Property which are owned by Seller,
if any, including any apparatus, equipment and appliances
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incorporated therein and used in connection with the operation and
occupancy thereof, such as heating and air conditioning systems and
facilities used to provide any utility service, ventilation, or other
services thereto but excluding fixtures owned by tenants (all of which
are collectively referred to as the "Improvements");
(c) all right, title and interest of Seller in and to personal property
located on the Real Property and Improvements (the "Personal
Property"); and
(d) all assignable or transferable intangible property, including, but not
limited to: (i) all guaranties, warranties (including guaranties and
warranties pertaining to construction of the Improvements); (ii) all
air rights, excess floor area rights and other development rights
relating or appurtenant to the Real Property or the Improvements;
(iii) all rights to obtain utility service in connection with the
Improvements and the Real Property; (iv) assignable licenses and other
governmental permits and permissions relating to the Real Property,
the Improvements and the operation thereof; and (v) all assignable
contracts and contract rights (all of the foregoing are hereinafter
collectively referred to as the "Intangible Property").
(e) All right, title and interest of Seller in and to that certain lease
dated August, 1986 by and between Panattoni, Oates and Massie
Development Company, as landlord, and Crown Zellerbach, as tenant, as
amended by amendment dated October 1, 1993, to the extent in effect on
the Closing Date (the "Lease"), together with all rents and other sums
due thereunder and any and all security deposits in connection
therewith.
1.2 Assignment.
In addition, Seller shall assign to Purchaser all interest of Seller as
landlord in and to the Lease pertaining to the Real Property and Improvements as
more
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specifically set forth on Schedule B to the Assignment and Assumption Agreement,
as hereinafter defined in Section 4.2(a)(iii) and in and to any equipment
leases, commission agreements, and service contracts, as set forth on Schedules
C, D and E, respectively, to the Assignment and Assumption Agreement.
2. PURCHASE PRICE
Purchaser shall pay as the total Purchase Price for the Property ("Purchase
Price") the amount of Twelve Million Eight Hundred Seventy-Five Thousand and
No/100ths U.S. Dollars ($12,875,000.00) which shall be payable as follows:
2.1 Deposit.
Concurrently with the execution and delivery of this Agreement, Purchaser
has caused Three Hundred Thousand No/100ths U.S. Dollars ($300,000.00) (the
"Deposit") to be delivered by wire transfer to Escrow Holder (as hereinafter
defined). The Deposit shall be held in an interest bearing account as an earnest
money deposit toward the Purchase Price. Purchaser will provide Escrow Holder
with its Taxpayer Identification Number and such additional information and
documents as may be required by Escrow Holder.
2.2 Interest.
Except as provided in Section 2.1 above and in other provisions of this
Agreement where Seller shall be entitled to retain the Deposit and all interest
earned thereon as liquidated damages pursuant to Section 12 below, interest on
the Deposit shall accrue to the benefit of Purchaser. The Deposit (and interest
thereon) shall be applied against the Purchase Price.
2.3 Credit.
Anything herein to the contrary notwithstanding, the parties acknowledge
that certain items of deferred maintenance are required with respect to the
Property, all as more specifically set forth in a certain proposal of PCM
Builders, Inc. dated November 21, 1997 addressed to Ms. Ann Weatherford of PDC
Properties, Inc. (the "PCM Proposal"), a copy of which is attached hereto as
Exhibit K. The parties agree that in connection with the Closing, Purchaser
shall receive a credit toward the
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Purchase Price of One Hundred Thirty-One Thousand Nine Hundred Ninety Eight
($131,998.00) Dollars.
2.4 Cash at Closing.
Twelve Million Four Hundred Forty-Three Thousand Two and No/100ths U.S.
Dollars ($12,443,002.00) adjusted for interest earned on the Deposit plus any
other amounts required to be paid by Purchaser at Closing, and plus or minus any
prorations, in the form of immediately available U.S. funds, shall be paid by
Purchaser into escrow with the Escrow Holder, as defined in Section 4.1, in time
to allow the Closing to occur on the Closing Date (as hereinafter defined) by
wire transfer as more particularly set forth in Section 4.3 below.
3. TITLE
3.1 Title Report; Survey.
Purchaser acknowledges and agrees that Seller has furnished to Purchaser
prior to the Effective Date, the following:
(a) A preliminary title report (the "Title Report"), issued by Chicago
Title Insurance Company ("Title Company") covering the Real Property
and Improvements, with such Title Report setting forth the status of
the title to the Property and showing all liens, claims, encumbrances,
easements, rights-of-way, encroachments, reservations, restrictions
and any other matters of record affecting the Property.
(b) A copy of all recorded documents referred to in the Title Report as
exceptions to title to the Property (the "Title Documents").
(c) A copy of the survey of the Real Property and Improvements in Seller's
possession ("Survey").
3.2 Review of Title.
Purchaser shall have until February 21, 1997 (the "Title Approval Date") to
review the Title Report, Title Documents and Survey (collectively, "Title
Evidence") and render any objections as to matters of title i
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writing to Seller. Any such matters of title not timely objected to by Purchaser
shall be deemed waived and Purchaser shall be deemed to agree to acquire the
Property subject to such exceptions (collectively, "Permitted Exceptions")
hereunder. Seller, in its sole and absolute discretion, may elect to remove or
satisfy any such objections, provided that Seller shall have until February 26,
1997 to have such objections that Seller so elects removed or satisfied. Subject
to Purchaser's reasonable approval, Seller may cause the Title Company to issue
a title endorsement or "insure over" any objection (each, a "Seller
Endorsement") and it shall have the same effect as if such objection was cured
by Seller. If Seller shall fail to have such objections removed, insured over or
satisfied within such time or during such time delivers a written notice to
Purchaser that notwithstanding Seller's reasonable efforts, such objections may
not be cured, then, in the absence of a default by Purchaser, Purchaser may, by
written notice to Seller prior to Closing, either (a) terminate this Agreement
without any liability on its part, in which case the Deposit together with
interest thereon shall be refunded to Purchaser and neither party shall have any
further rights or obligations hereunder (except as set forth in Sections 3.6(b),
9.1, 11.2 and 11.12 hereof) or (b) proceed to Closing and take title subject to
such objections, in which case such non-cured objections shall become Permitted
Exceptions hereunder. After the Title Approval Date but prior to the Closing
Date, Purchaser shall also have the right to disapprove in writing any
additional item not previously set forth in the Title Report that Title Company
intends to show as an exception to title in the Title Policy. Any such
additional item not specifically disapproved in writing delivered within two (2)
days following Purchaser's receipt of written notice of such additional item
shall be deemed approved. Seller shall have until Closing to remove or cause
Title Company to insure over any disapproved item at Seller's own expense.
Seller may elect to (a) extend the Closing until the day after the date upon
which Seller is able to remove or cause Title Company to insure over any such
disapproved item (but in no event shall such extension exceed ten (10) business
days after the Closing Date), or (b) terminate this Agreement, in which event
neither Seller nor Purchaser shall have any further obligation hereunder (except
as set forth under Sections 3.6(b), 9.1, 11.2 and 11.12 hereof), Purchaser shall
return all documents to Seller and the Deposit and any interest accrued thereon
shall be returned to Purchaser. Notwithstanding anything in
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this Agreement to the contrary, and notwithstanding any approval or consent
given by Purchaser hereunder, Seller shall cause all mortgages and deeds of
trust encumbering Seller's interest in the Real Property, and all mechanic's
liens filed against the Property relating to work performed on the Property and
contracted for by Seller, to be released and reconveyed from the Real Property,
or, with respect to such mechanic's liens, otherwise bonded, on or prior to the
Closing and shall cause the Title Company to insure title to the Real Property
as vested in Purchaser without any exception for such matters.
3.3 Vesting of Title.
At Closing, Seller shall convey all of Seller's right, title and interest
in and to the Real Property and Improvements to Purchaser by standard grant deed
(as further described in Section 4.2(a)(i) below), subject to the Permitted
Exceptions, and shall convey Seller's interest in the Personal Property to
Purchaser by bill of sale (as further described in Section 4.2(a)(ii) below).
3.4 Title Insurance.
At Closing, the Title Company shall issue to Purchaser an ALTA extended
coverage Owner's Policy of Title Insurance (Form B, rev. 10/17/70 with
Endorsement Form 1 coverage), in the amount of the Purchase Price insuring that
title to the Real Property and Improvements is vested in Purchaser subject to
the Permitted Exceptions (the "Title Policy"), provided that, if required by the
Title Company, Purchaser at its sole cost and expense shall update the existing
survey of the Property and deliver a copy of same certified to the Title Company
in a manner that will allow the Title Company to issue the extended coverage
title policy.
3.5 Inspection Period.
Purchaser shall have until February 21, 1997 (the "Inspection Period") to
inspect the Property, the Due Diligence Documents (as hereinafter defined in
Section 3.6(c)), and perform such other due diligence with respect to the
Property as Purchaser reasonably deems necessary, subject to the rights of
tenants in possession of the Property. In the absence of a default by Purchaser,
Purchaser may, upon written notice to Seller, received by Seller no later than
5:00 p.m.
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Eastern Standard Time on the last day of the Inspection Period, elect to
terminate this Agreement. Upon any such termination, the Deposit together with
interest thereon shall be refunded to Purchaser and, subject to Sections 3.6(b),
9.1, 11.2 and 11.12 hereof, neither party shall have any further rights or
obligations hereunder. In the event no notice of termination is received by
Seller on or before such time, then the Deposit, together with all accrued
interest thereon, shall become non-refundable (subject to the other terms and
conditions of this Agreement) and Seller and Purchaser shall proceed to Closing
in accordance with the terms and conditions hereof and the Inspection Period
termination rights shall be deemed waived by Purchaser. Purchaser shall not
undertake any soil borings, ground water testing or other "Phase 2"
investigative procedures without first having obtained the prior written consent
of Seller. In connection with Purchaser's inspection of the Property, Purchaser
agrees that:
(a) All inspection fees, engineering fees, or other expenses of any kind
incurred by Purchaser relating to the inspection of the Property will
be at Purchaser's sole cost and expense;
(b) Purchaser will give Seller reasonable advance notice of the dates of
all inspections and will schedule all tests and inspections during
normal business hours whenever feasible unless otherwise requested by
Seller;
(c) Seller will have the right to have one or more representatives of
Seller accompany Purchaser and Purchaser's representatives, agents or
designees while they are on the Property;
(d) Any entry by Purchaser, its representatives, agents or designees will
not unreasonably interfere with Seller's use of the Property or with
the operations of any tenant;
(e) Purchaser will restore any damage caused to the Property by
Purchaser's entry on the Property for inspection purposes at
Purchaser's sole cost and expense if this transaction does not close;
and
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(f) In making any inspection hereunder, Purchaser will treat and will
cause any representative of Purchaser to treat all information
obtained by Purchaser pursuant to the terms of this Agreement as
strictly confidential in accordance with Section 11.12 below.
Purchaser shall have the right to further inspect the Property within the two
(2) business day period immediately preceding the Closing (during normal
business hours and upon notice to Seller) for the purpose of confirming that the
Property is in the same condition at Closing as existing at the end of the
Inspection Period, reasonable wear and tear excepted; provided, however, that
such right of pre-closing inspection shall in no way be deemed to extend or
resurrect the Inspection Period or constitute a condition to Closing, subject
however, to the other terms and conditions of this Agreement. For purposes of
this Agreement, the term "business day" shall mean a day other than any
Saturday, Sunday, or day upon which national banks in the City of Woodland,
California are not open for general banking business.
The covenants of Purchaser contained in this Section 3.5(a) and (e) shall
survive the Closing Date or any earlier termination of this Agreement.
3.6 Furnishing of Information.
(a) In furtherance of Purchaser's rights set forth above, and prior to the
date hereof, Seller has furnished to Purchaser copies of the
following:
(i) a current rent roll with respect to the Property, together with
copies of the Lease and amendments and/or modifications
currently in effect;
(ii) Copies of any service, maintenance and other such contracts
relating to the day-to-day operation or maintenance of the
Property;
(iii) a copy of the current Management Agreement with Carl D.
Panattoni dated September 8, 1987;
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(iv) copies of financial statements for the Property for the last
two (2) years and year to date 1997 in the form prepared by
Seller in the ordinary course of business with respect to the
Property; and
(v) copies of the current tax bill for the Property and current
property tax assessment information in Seller's possession.
(b) Seller has allowed Purchaser and Purchaser's agents reasonable access
to the Property during regular business hours, subject to the terms of
the Lease, and Purchaser shall have the right to further inspect the
Property during the Inspection Period, subject to the terms of the
Lease. Purchaser hereby indemnifies, defends and holds Seller and the
Property harmless from any and all costs, loss, damages or expenses,
of any kind or nature (including, without limitation, mechanics' liens
and including, without limitation, reasonable attorneys' fees and
expenses) arising out of or resulting from such inspection,
investigation, entry and/or other activities upon the Property by
Purchaser, its employees, agents, contractors, subcontractors, and/or
assigns. Notwithstanding anything to the contrary herein, the
indemnity set forth in this Section 3.6(b) shall survive (i) any
termination of this Agreement, and (ii) the Closing and not be merged
therein.
(c) Purchaser acknowledges and Seller agrees that Seller has made
available for Purchaser's inspection and shall continue to make
available during the Inspection Period (i) the Lease and lease files;
(ii) copies of financial statements for the Property for the last two
(2) years and copies of such historical information in Seller's
possession or the possession of Seller's agents regarding operating
expenses of the Property as Purchaser shall reasonably request; (iii)
the documents listed in 3.6(a) above; and (iv) guaranties, warranties,
licenses,
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governmental permits (including Certificates of Occupancy) and
relevant, pertinent reports and agreements in the possession of Seller
or its agents pertaining to the Property, if any (i.e., engineering
reports, environmental reports, and as-built plans) and service
contracts relating to the Property (collectively, the "Due Diligence
Documents"), on site at the Property or at the business office of
Seller or otherwise. Seller shall reasonably cooperate with Purchaser
to obtain any consents required in connection with an assignment of
any of the Due Diligence Documents. All of the Due Diligence Documents
are confidential and shall not be distributed or disclosed by
Purchaser to any person or entity not associated with Purchaser in
accordance with Section 11.12 hereof. Seller agrees to deliver to
Purchaser a copy of any written notices which Seller receives prior to
Closing from any governmental authority pertaining to any violation of
law or ordinance regulating the use of the Property which are received
by Seller prior to the Closing Date and of any notice which Seller
receives prior to Closing from any tenant regarding any default under
any Lease. If the transaction fails to close for any reason
whatsoever, Purchaser shall return to Seller all of the Due Diligence
Documents which Seller or its agents may have delivered to Purchaser
in accordance with this Section 3.6(b). THE FURNISHING OF ANY
MATERIALS, DOCUMENTS, REPORTS, OR AGREEMENTS DESCRIBED ABOVE SHALL NOT
BE INTERPRETED IN ANY MANNER AS A REPRESENTATION OR WARRANTY OF ANY
TYPE OR KIND BY SELLER, ANY PARTNER OF SELLER OR AGENT OF SELLER, OR
ANY OFFICER, DIRECTOR, OR EMPLOYEE OF SELLER, OR ITS AGENTS, OR ANY
OTHER PARTY RELATED IN ANY WAY TO ANY OF THE FOREGOING.
3.7 Consideration. Notwithstanding anything in this Agreement to the
contrary, to induce Purchaser to enter into this Agreement and to expend the
time and resources necessary to evaluate the Property and possibly forego other
opportunities while doing so, Seller hereby grants to Purchaser the rights to
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terminate this Agreement provided herein. Such expenditures of time and
resources and possible loss of opportunity by Purchaser constitute adequate
consideration for Seller's remaining bound by this Agreement notwithstanding
such termination rights in Purchaser.
4. CLOSING
4.1 Closing.
The purchase and sale of the Property ("Closing") shall occur on February
28, 1997 (the "Closing Date"). Seller and Purchaser agree that this transaction
shall close in escrow through the Title Company, which shall serve as escrow
holder hereunder ("Escrow Holder"). In this regard, Seller and Purchaser shall
execute Escrow Holder's standard form general provisions and such other
instructions consistent herewith as Escrow Holder may require and are reasonably
acceptable to Seller and Purchaser. Purchaser and Seller shall endeavor to
conduct a "pre-closing" on the business day prior to the Closing Date with title
transfer and payment of the Purchase Price to be completed on the Closing Date
as set forth in Section 4.3 below.
4.2 Transactions at Closing.
One (1) business day prior to the Closing Date:
(a) Seller shall deliver or cause to be delivered to Escrow Holder the
following documents (collectively, the "Conveyance Documents") duly
executed and acknowledged where appropriate:
(i) A grant deed (the "Deed") conveying the Real Property and the
Improvements, subject to the Permitted Exceptions, in the form
attached hereto as Exhibit H;
(ii) Bill of Sale in the form set forth on Exhibit B attached hereto
conveying the Personal Property to Purchaser;
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(iii) Two counterparts of the Assignment and Assumption Agreement
(the "Assignment") in the form set forth on Exhibit C attached
hereto;
(iv) Certificate of non-foreign status in the form set forth on
Exhibit D attached hereto, to confirm that Purchaser is not
required to withhold part of the Purchase Price pursuant to
Section 1445 of the Internal Revenue Code of 1986, as amended,
and a California form 590;
(v) Original executed copy of the Lease;
(vi) Information required by the Title Company to comply with the
real estate reporting requirements set forth in Section 6045(e)
of the Internal Revenue Code of 1986, as amended;
(vii) Certificate confirming that the representations and warranties
of Seller under this Agreement remain true and correct in the
form attached hereto as Exhibit L;
(viii) Evidence as to the authority of the person or persons executing
documents on behalf of the Seller reasonably acceptable to
Purchaser and the Title Company;
(ix) The Lease, equipment leases, commission agreements and service
contracts, together with such leasing and property files and
records necessary in connection with the continuing day-to-day
operation, leasing and maintenance of the Property; provided,
however, that proprietary information of Seller not relevant to
the ownership or operation of the Property shall not be
included. For a period of three (3) years after the Closing,
Purchaser shall allow Seller and its agents and
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representatives access without charge to all files, records and
documents delivered to Purchaser at the Closing upon reasonable
advance notice and at all reasonable times, to examine and make
copies of any and all such files, records and documents, which
right shall survive the Closing;
(x) Affidavits as may be customarily and reasonably required by the
Title Company, in a form reasonably acceptable to Seller;
(xi) Closing Statement acceptable to Seller; and
(xii) Such other documents as may be reasonably necessary and
appropriate to complete the Closing of the transaction
contemplated herein.
(b) Purchaser shall deliver to Escrow Holder the following:
(i) The Purchase Price as adjusted to reflect the Purchaser's share
of closing costs, prorations and any fees as more particularly
set forth in Section 4.3 below;
(ii) Purchaser's Affidavit and Agreement in the form set forth on
Exhibit E attached hereto;
(iii) Two counterparts of a duly executed and acknowledged Assignment
(as described in Section 4.2(a)(iii) above);
(iv) Information required by the Title Company to comply with the
real estate reporting requirements set forth in Section 6045(i)
of the Internal Revenue Code of 1986, as amended;
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(v) Evidence of the authority of the person or persons executing
documents on behalf of Purchaser reasonably acceptable to
Seller and the Title Company;
(vi) Certificate confirming that the representations and warranties
of Purchaser under this Agreement remain true and correct in
the form attached hereto as Exhibit M;
(vii) Closing Statement acceptable to Purchaser;
(viii) Affidavits as may be customarily and reasonably required by the
Title Company, in a form reasonably acceptable to Purchaser;
and
(ix) Such other documents as may be reasonably necessary and
appropriate to complete the Closing of the transaction
contemplated herein.
(c) Seller and Purchaser shall execute a tenant notification letter to
each tenant of the Property (the "Tenant Notification Letter") in the
form attached hereto as Exhibit I, and Purchaser shall, within
forty-eight (48) hours following the Closing, cause the Tenant
Notification Letter to be delivered to the tenants.
4.3 Title Transfer and Payment of Purchase Price.
(a) Purchaser agrees to deliver the cash payment specified in Section
4.2(b)(i) above by wiring the same to the Title Company so that
the wire may be confirmed in time to allow Closing to occur on
the Closing Date and directing the Title Company to deposit or
wire the same into Seller's designated account upon the
recording by the Title Company of the documents to be executed
and delivered by Seller under Sections 4.2(a) and 4.2(c) above
and upon issuance by the Title
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Company, or unconditional agreement by the Title Company to
issue, the Title Policy.
(b) Upon receipt of all items specified in Section 4.2 and following
the satisfaction or waiver of all conditions precedent to Closing
and upon Title Company issuing or committing to issue the Title
Policy, Escrow Holder shall take the following actions:
(i) Prorate any and all amounts to be prorated pursuant to
Sections 5.1 and 5.2 below;
(ii) Date and cause to be recorded the Deed as of Closing and
designate that the Deed be returned directly to Purchaser
after recordation;
(iii) Issue the Title Policy to Purchaser;
(iv) Deliver the Deposit and the balance of the Purchase Price
to Seller, less appropriate adjustments;
(v) Credit Purchaser with the total of any and all tenant
security deposits held by Seller and any and all prorated
rents and other items;
(vi) Deliver properly executed copies of the Closing Statement
to Seller and to Purchaser; which Closing Statement shall
have been approved by Seller and Purchaser prior to
Closing;
(vii) Deliver to Seller executed originals of all unrecorded
documents delivered by Purchaser to Escrow Holder pursuant
to Section 4.2(b) above;
(viii) Deliver to Purchaser executed originals of all unrecorded
documents delivered by Seller toEscrow Holder pursuant to
Section 4.2(a) above, other than those set
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forth in Section 4.2(a)(i) above; and
(ix) Pay broker's commissions as provided herein.
4.4 Reporting Requirements. The Escrow Holder shall comply with all
applicable federal, state and local reporting requirements relating to the close
of the transactions contemplated herein. Without limiting the generality of the
foregoing, to the extent the transactions contemplated by this Agreement involve
a real estate transaction within the purview of Section 6045 of the internal
Revenue Code of 1986, as amended (the "Internal Revenue Code"), Escrow Holder
shall have sole responsibility to comply with the requirements of Section 6045
of the Internal Revenue Code (and any similar requirements imposed by state or
local law). Escrow Holder shall hold Purchaser, Seller and their respective
counsel free and harmless from and against any and all liability, claims,
demands, damages and costs, including reasonable attorney's fees and other
litigation expenses, arising or resulting from the failure of Escrow Holder to
comply with such reporting requirements.
5. PRORATIONS; CLOSING ITEMS
5.1 Prorations; Closing Costs.
(a) The amount due on any gas, electric, water, sewer, or other utility
bill, or service contract relating to the Property shall be prorated
between Seller and Purchaser as of the Closing Date, to the extent
such utilities or service contracts are the obligation of the Seller
and not a direct or indirect obligation of the tenants. Any utility
deposits made by Seller shall be and remain the property of Seller.
(b) All collected rents and other payments from the tenant under the
Lease, including, but not limited to, base rent, additional rent,
percentage rent (if any), and expense reimbursements, shall be
prorated between Seller and Purchaser as of the Closing Date. The
balance remaining from any security deposits required under the Lease
or prepaid rent held by Seller shall be
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credited to Purchaser (including the balance of estimated tax,
insurance and common area maintenance payments made to Seller by the
tenant under the Lease net of any payments by Seller thereon).
Purchaser agrees to indemnify and hold harmless Seller from and
against any loss, cost or expense (including, but not limited to,
attorneys' fees) resulting from any claim for such deposits or prepaid
rent actually paid or credited to Purchaser. If any rent or other
payments under the Lease are in arrears as of the Closing Date
("Delinquent Rents"), the amount of any such Delinquent Rents which
are collected by Purchaser shall be promptly paid by Purchaser to
Seller after Closing. Purchaser shall be entitled to deduct from any
such payment (i) Purchaser's reasonable costs of collection incurred
with respect to such tenant (including attorneys' fees), (ii) rents
due for the month in which such payment is received by Purchaser, and
(iii) rents from such tenant attributable to any period after the
Closing that are past due on the date of receipt. Purchaser agrees to
use commercially reasonable efforts to collect Delinquent Rents after
the Closing provided Purchaser shall not be required to bring any
action or proceeding against any tenant on account of Delinquent
Rents. Purchaser's obligations hereunder with respect to the
collection and payment of Delinquent Rents shall survive the Closing.
Seller may make reasonable efforts to collect Delinquent Rents from
and after the Closing Date; provided, however, that Seller shall not
be entitled to pursue any action for eviction of any tenant from the
Property. The provisions of this Section shall survive Closing and
shall not be merged therein.
(c) All real estate taxes attributable to the Property for the fiscal year
beginning July 1, 1996 and ending June 30, 1997 shall be prorated as
of the Closing provided Seller shall be entitled to recover any
reimbursements from the tenant on account of such taxes for the period
prior to Closing, and Purchaser shall immediately
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remit to Seller any such reimbursements received by Purchaser upon
receipt thereof. Any real estate taxes due and payable for any periods
subsequent to the fiscal year ending June 30, 1997 shall be the
obligation of Purchaser and any real estate taxes due and payable for
any periods prior to the fiscal year beginning July 1, 1996 shall be
the obligation of Seller, provided Purchaser shall cooperate with
Seller to obtain any reimbursement from any tenant in respect of any
such taxes. Seller and Purchaser agree to mutually cooperate with each
other in connection with ongoing tax reduction proceedings relating to
prior tax years, if any, and any ongoing or future proceedings
relating to the fiscal year in which the Closing occurs, if any, and
any refund resulting therefrom (to the extent not refundable to the
tenant under the Lease) shall be prorated between Seller and Purchaser
based on the Closing Date, after deducting therefrom the reasonable
out-of-pocket expenses incurred by the parties. The provisions of the
immediately preceding two sentences shall survive Closing and shall
not be merged therein.
(d) Purchaser shall pay for the cost of recording the Deed, the cost of
any Purchaser Endorsements or special or extended coverages of any
nature in connection with the Title Policy and shall pay the
difference in price between a standard coverage title policy and the
extended coverage title policy being received, one-half (1/2) of any
escrow fees and closing fees to the Title Company, any surveys or
updates prepared by or at the direction of Purchaser, and any lender's
title insurance coverage for any loan obtained by Purchaser. Purchaser
shall pay for all costs relating to any financing obtained by
Purchaser in connection with its purchase of the Property and all
costs incurred by Purchaser in performing any related tests and
investigations. Seller shall pay the base premium for the Title Policy
equal to a standard coverage title policy and the Seller Endorsements
(without the cost of any endorsements or special or
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extended coverages other than the Seller Endorsements), one-half (1/2)
of all escrow fees and closing fees charged by the Title Company, any
documentary transfer tax, any prepayment or reconveyance fee in
connection with any payoff or release of any existing deed of trust or
mortgage, and the recording fees with respect to documents which
Seller elects to place of record in order to cure title objections
raised by Purchaser to the extent Seller elects to cure the same, as
fully described in said Section 3.2. Each party shall pay its own
attorney's fees.
5.2 Calculation of Prorations.
For purposes of calculating prorations, Seller shall be deemed to be in
title to the Property, and therefore entitled to the income therefrom and
responsible for the expenses thereof, through the day prior to the Closing Date
and Purchaser shall be deemed to be in title to the Property, and therefore
entitled to the income therefrom and responsible for the expenses thereof, from
and after 12:01 a.m. on the Closing Date. All prorations shall be made on the
basis of the actual number of days of the year and month which have elapsed as
of the Closing Date. All prorations which cannot be ascertained as of the
Closing shall be prorated on the basis of the parties' reasonable estimate of
such amount. Except as otherwise stated above, if necessary, the amount of
prorations shall be adjusted in cash after Closing, as and when complete and
accurate information becomes available but in any event no later than one
hundred twenty (120) days after the Closing Date; provided, however, the one
hundred twenty (120) day period shall be extended for a reasonable time for any
real property tax reduction or abatement proceeds, which are to be prorated
between Purchaser and Seller pursuant to Section 5.1(c) and for any period of
time which may be required for reconciliation of tax, insurance, and common area
maintenance expenses for the calendar year in which the Closing Date occurs.
Purchaser and Seller each agree to reasonably cooperate with the other with
respect to such final proration. This provision shall survive Closing and shall
not be merged therein.
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VI. REPRESENTATIONS AND WARRANTIES
6.1 Seller's Representations and Warranties.
Seller hereby represents and warrants to Purchaser as follows:
(a) Seller's Entity. Seller is a Delaware limited partnership duly
organized, validly existing and in good standing under the laws of the
State of Delaware.
(b) Seller's Authority. Seller has full power and authority to enter into
this Agreement and to perform all its obligations hereunder, and has
taken all action required by law, its governing instruments, or
otherwise to authorize the execution, delivery and performance of this
Agreement and all the deeds, agreements, certificates, and other
documents contemplated herein. This Agreement has been duly executed
by and is a valid and binding agreement of Seller, enforceable in
accordance with its terms, except as enforceability may be limited by
equitable principles or by the laws of bankruptcy, insolvency, or
other laws affecting creditors' rights generally.
(c) No Conflict or Lien. To the best of Seller's knowledge, neither the
execution or delivery of this Agreement nor the consummation of the
transactions contemplated herein will conflict with or result in a
breach of any contract, license or undertaking to which Seller is a
party or by which any of its property is bound, or constitute a
default thereunder or, except as contemplated herein, result in the
creation of any lien or encumbrance upon the Property.
(d) No Proceedings. No legal or administrative proceeding is pending or to
the best of Seller's knowledge threatened against the Property or
Seller which would adversely affect the Property or Seller's right to
convey the Property to Purchaser as contemplated in this Agreement.
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(e) Lease. Seller has delivered to Purchaser a correct and complete copy
of the Lease and all amendments thereto. Schedule B attached to
Exhibit C hereto is a complete and accurate list of all leases and
amendments thereto to which Seller is a signatory. To the knowledge of
Seller, the Lease is in full force and effect and neither Seller nor
the tenant is in default thereunder.
(f) Litigation. Seller has no knowledge of and has not received notice of
any litigation which has been filed against the Property or Seller in
connection with the Property and would materially affect the Property
or use thereof, or Seller's ability to perform hereunder.
(g) Violations. Seller has no knowledge of and has not received written
notice from any governmental body, authority or agency of any
violation of federal, state or local laws, ordinances, codes, rules or
regulations affecting the Property, including any notice with respect
to any Hazardous Materials, as hereinafter defined.
(h) Condemnation. Seller has no knowledge of and has received no written
notice of any condemnation proceedings relating to the Property.
(i) Commissions. No leasing commissions are due and payable with respect
to the existing terms of the Lease.
(j) Service Contracts. All equipment leases, commission agreements,
service and maintenance contracts affecting the Property which will
survive the Closing are accurately set forth on Exhibit F hereto.
(k) Documents. All documents delivered by Seller to Purchaser, or made
available to Purchaser for review, including, without limitation, the
Due Diligence Documents, are, to the best of Seller's knowledge, true
and complete copies thereof.
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(i) Notices. Robert F. Gossett, Jr. is the person who would, in the
ordinary course of his responsibilities, receive notice from other
agents or employees of Seller or from other persons or entities of any
of the matters described in this Section 6.1 which are limited by the
knowledge of Seller.
Except with respect to the warranties set forth in Section 6.1 hereof,
Seller has not made any warranty or representation, express or implied, written
or oral, concerning the Property, including without limitation any
representations relating to Hazardous Materials (as defined in Section 6.3(c)
below).
All representations and warranties of Seller contained herein are intended
to and shall remain true and correct as of the Closing and shall survive the
delivery of the Deed for a period of one (1) year after Closing and shall
thereafter expire unless a claim thereunder has been commenced in compliance
with the next sentence and diligently pursued thereafter. Any claims by
Purchaser with respect to such representations or warranties shall be commenced
by written notice to Seller within said one (1) year period and shall be
diligently pursued thereafter or shall be deemed waived by Purchaser.
Notwithstanding the foregoing, Purchaser shall have no claim against Seller with
respect to the representations and warranties set forth in this Section 6.1 if
Purchaser had actual knowledge that a representation or warranty was untrue or
inaccurate or incorrect as of the time of Closing and Purchaser nevertheless
chose to proceed with Closing hereunder.
Whenever in this Agreement a representation of Seller is based on the
"Seller's knowledge" or words of similar import, such reference shall be deemed
to be to the actual knowledge of Robert F. Gossett, Jr., without investigation
or inquiry of any kind. There shall be no personal liability to said individual
arising out of said representations or warranties. No knowledge of parties
affiliated with, employed by, or related by agency to Seller shall be imputed to
Seller or to the above-named person.
Notwithstanding anything to the contrary contained in this Agreement, the
aggregate amount which may be collected by Purchaser pursuant to the
representations and warranties of Seller set forth herein shall not exceed
$350,000.
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6.2 Purchaser's Representations and Warranties.
Purchaser represents, warrants, and covenants to Seller that:
(a) Authority to Execute; Organization. This Agreement constitutes the
valid and binding obligation of Purchaser and is enforceable against
Purchaser in accordance with its terms, except as enforceability may
be limited by equitable principles or by the laws of bankruptcy,
insolvency, or other laws affecting creditors' rights generally. If
Purchaser is a corporation, a partnership, or a trust, Purchaser is
validly organized and in good standing under the laws of the state of
its organization, and the execution of this Agreement, delivery of
money and all required documents, Purchaser's performance of this
Agreement and the transaction contemplated hereby have been duly
authorized by the requisite action on the part of the Purchaser and
Purchaser's directors, shareholders, partners or trustees.
(b) Recording. Purchaser shall not record this Agreement or a memorandum
hereof at any time.
(c) Litigation. There is no litigation pending or, to Purchaser's
knowledge, threatened, against Purchaser or any basis therefore before
any court, regulatory authority or administrative agency that might
result in any material adverse change in the business or financial
condition of the Purchaser.
(d) Financial Condition. Purchaser has adequate financial resources to
make timely payment of all sums due from Purchaser hereunder and to
perform all of its obligations hereunder.
(e) Purchaser Experience. Purchaser is an experienced real property
operator and investor and is represented or has had an opportunity to
be represented by local counsel in connection with this transaction.
Purchaser has the
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responsibility under this Agreement to inspect the Property and the
real estate market in sufficient detail to fully satisfy itself with
respect to the environmental conditions and the market conditions
affecting the Property including, without limitation, property values,
interest rates, and similar market factors. Purchaser has reached its
conclusions based upon its own analysis and without relying upon
representations by Seller, its employees, agents or consultants.
6.3 Purchaser Accepts Property ("As Is").
(a) Purchaser Acknowledgment. As of the expiration of the Inspection
Period, Purchaser acknowledges for Purchaser and Purchaser's
successors, heirs and assignees, (i) that Purchaser has been
given a reasonable opportunity to inspect and investigate the
Property, all improvements thereon and all aspects relating
thereto, either independently or through agents and experts of
Purchaser's choosing and (ii) that Purchaser is acquiring the
Property based solely upon Purchaser's own investigation and
inspection thereof, and (iii) that the provisions of this Section
6.3(a) shall survive Closing and shall not be merged therein.
SELLER AND PURCHASER AGREE THAT UPON CLOSING THE PROPERTY SHALL
BE SOLD AND THAT PURCHASER SHALL ACCEPT POSSESSION OF THE
PROPERTY ON THE CLOSING DATE "AS IS, WHERE IS, WITH ALL FAULTS"
WITH NO RIGHT OF SET-OFF OR REDUCTION IN THE PURCHASE PRICE, AND
THAT EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES OF SELLER SET
FORTH IN SECTION 6.1(a) THROUGH (l) HEREOF INCLUSIVE, SUCH SALE
SHALL BE WITHOUT REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS
OR IMPLIED, INCLUDING WITHOUT LIMITATION, WARRANTY OF INCOME
POTENTIAL, OPERATING EXPENSES, USES, MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE, AND SELLER DOES HEREBY DISCLAIM AND
RENOUNCE ANY SUCH REPRESENTATION OR WARRANTY. PURCHASER
SPECIFICALLY ACKNOWLEDGES THAT PURCHASER IS NOT RELYING ON ANY
REPRESENTATIONS OR WARRANTIES OF ANY
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KIND WHATSOEVER, EXPRESS OR IMPLIED, FROM SELLER, SELLER'S AGENTS
OR BROKERS, AS TO ANY MATTER CONCERNING THE PROPERTY (EXCEPT FOR
THE WARRANTIES SPECIFICALLY SET FORTH IN SECTION 6.1(a) THROUGH
(l) HEREOF INCLUSIVE), INCLUDING WITHOUT LIMITATION: (l) THE
CONDITION OR SAFETY OF THE PROPERTY OR ANY IMPROVEMENTS THEREON,
INCLUDING, BUT NOT LIMITED TO, PLUMBING, SEWER, HEATING AND
ELECTRICAL SYSTEMS, ROOFING, AIR CONDITIONING, IF ANY,
FOUNDATIONS, SOIL AND GEOLOGY INCLUDING HAZARDOUS MATERIALS (AS
HEREINAFTER DEFINED) LOT SIZE, OR SUITABILITY OF THE PROPERTY OR
ITS IMPROVEMENTS FOR A PARTICULAR PURPOSE; (2) WHETHER THE
APPLIANCES, IF ANY, PLUMBING OR UTILITIES ARE IN WORKING ORDER;
(3) THE HABITABILITY OR SUITABILITY FOR OCCUPANCY OF ANY
STRUCTURE AND THE QUALITY OF ITS CONSTRUCTION; (4) THE FITNESS OF
ANY PERSONAL PROPERTY; OR (5) WHETHER THE IMPROVEMENTS ARE
STRUCTURALLY SOUND, IN GOOD CONDITION, OR IN COMPLIANCE WITH
APPLICABLE CITY, COUNTY, STATE OR FEDERAL STATUTES, CODES OR
ORDINANCES, INCLUDING, WITHOUT LIMITATION THE REQUIREMENTS OF THE
AMERICANS WITH DISABILITIES ACT, 42 USCA ss. 12101 et. seq.
SUBJECT ONLY TO THE WARRANTIES EXPRESSLY SET FORTH IN SECTIONS
6.1(a) THROUGH (l) HEREOF, PURCHASER FURTHER ACKNOWLEDGES AND
AGREES THAT IT IS RELYING SOLELY UPON ITS OWN INSPECTION OF THE
PROPERTY AND NOT UPON ANY REPRESENTATIONS MADE TO IT BY SELLER,
ITS OFFICERS, DIRECTORS, CONTRACTORS, AGENTS OR EMPLOYEES OR ANY
PERSON WHOMSOEVER. ANY REPORTS, REPAIRS OR WORK REQUIRED BY
PURCHASER ARE TO BE THE SOLE RESPONSIBILITY OF PURCHASER AND
PURCHASER AGREES THAT THERE IS NO OBLIGATION ON THE PART OF
SELLER TO MAKE ANY CHANGES, ALTERATIONS, OR REPAIR TO THE
PROPERTY AND PURCHASER ACKNOWLEDGES THAT, UPON EXPIRATION OF THE
INSPECTION PERIOD, PURCHASER WILL HAVE COMPLETED ITS DUE
DILIGENCE WITH RESPECT TO THE PROPERTY TO ITS SATISFACTION.
PURCHASER IS SOLELY RESPONSIBLE FOR OBTAINING ANY RESALE
CERTIFICATE OR ANY OTHER APPROVAL OR PERMIT NECESSARY FOR
TRANSFER OF THE PROPERTY AND FOR ANY REPAIRS OR ALTERATIONS
NECESSARY TO OBTAIN
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THE SAME, ALL AT PURCHASER'S SOLE COST AND EXPENSE.
(b) No Claim for Hazardous Materials. Upon Closing, Purchaser, for
Purchaser and Purchaser's successors in interest, releases Seller
from, and waives all claims and liability which Purchaser may
have against Seller for, any structural, physical and
environmental condition of the Property, including without
limitation the presence, discovery or removal of any Hazardous
Materials in, at, about or under the Property, or for, connected
with or arising out of any and all claims or causes of action
based upon the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 ("CERCLA"), the Superfund
Amendments and Reauthorization Act of 1986 ("SARA"), the Resource
Conservation and Recovery Act ("RCRA"), the Toxic Substances
Control Act (the "TSCA"), as such acts may be amended from time
to time, or any other federal or state statutory or regulatory
cause of action arising from or related to Hazardous Materials
at, in or under the Property (collectively, the "Hazardous Waste
Laws") The waiver and release of Purchaser set forth in this
Section 6.3(b) shall survive the Closing Date and shall be
enforceable at any time after the Closing Date.
(c) "Hazardous Materials" Defined. For purposes of this Agreement,
the term "Hazardous Material" shall mean any substance, chemical,
waste or material that is or becomes regulated by any federal,
state or local governmental authority because of its toxicity,
infectiousness, radioactivity, explosiveness, ignitability,
corrosiveness or reactivity, including, without limitation, those
substances regulated by the Hazardous Waste Laws.
(d) No Representations as to Hazardous Materials. Purchaser
acknowledges that Seller has made no representations or
warranties whatsoever to Purchaser regarding the presence or
absence of any Hazardous Materials in, at, or under the
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Property; provided, however, that Seller and Purchaser
acknowledge that Seller has made certain representations as to no
proceedings, notices received, or knowledge as more specifically
set forth in Sections 6.1(d), (f) and (g) hereof. Purchaser has
made such studies and investigations, conducted such tests and
surveys, and engaged such specialists as Purchaser has deemed
appropriate to evaluate fairly the Property, and its risks from
an environmental and Hazardous Materials standpoint.
In furtherance of the general release of all claims against Seller as set
forth in this Section 6.3, Purchaser expressly acknowledges that it is familiar
with California Civil Code Section 1542 which provides:
"The general release does not extend to claims which the creditor
does not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have materially
affected his settlement with the debtor."
Purchaser expressly waives the benefits and protections of Section 1542. Each
covenant, agreement, representation, and warranty of Purchaser contained in this
Section 6.3 of this Agreement shall survive Closing or termination of this
Agreement. This provision is a material inducement for each of the parties to
enter into this transaction.
PURCHASER'S INITIALS: ______ SELLER'S INITIALS:
7. CONDITIONS TO CLOSING
7.1 Seller's Conditions.
The obligation of Seller to sell and convey the Property under this
Agreement is subject to the satisfaction of the following conditions precedent
or conditions concurrent (the satisfaction of which may be waived only in
writing by Seller):
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(a) Delivery and execution by Purchaser to Escrow Holder of all monies,
items, and other instruments required to be delivered by Purchaser to
Escrow Holder;
(b) Purchaser's covenants, warranties, and representations set forth
herein shall be true and correct as of the Closing Date;
(c) All of the actions by Purchaser contemplated by this Agreement shall
have been completed;
(d) There shall be no uncured default by Purchaser of any of its
obligations under this Agreement; and
(e) To the extent required for delivery of the Title Policy, Purchaser
shall have updated the existing survey and have caused same to be
certified to the Title Company in a manner to allow the Title Company
to issue the Title Policy.
7.2 Purchaser's Conditions.
The obligation of Purchaser to acquire the Property under this Agreement is
subject to the satisfaction of the following conditions precedent or conditions
concurrent:
(a) Delivery and execution by Seller to Escrow Holder of all monies, items
and other instruments to be delivered by Seller to Escrow Holder;
(b) Seller's covenants, warranties and representations set forth herein
shall be true and correct as of the Closing Date;
(c) All of the actions by Seller contemplated by this Agreement shall have
been taken;
(d) There shall be no uncured default by Seller of any of its obligations
under this Agreement; and
(e) Purchaser shall have received, on or before three (3) days before the
Closing Date, a Tenant Estoppel Certificate in substantially the form
attached hereto as
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Exhibit J from James River Paper Company, Inc.
(f) Title Company shall be irrevocably committed to issue the Title Policy
subject to the Permitted Exceptions.
(g) Seller shall have received and delivered to Purchaser, on or before
three (3) days before the Closing Date, written evidence reasonably
satisfactory to Purchaser confirming the election of James River Paper
Company, Inc. not to exercise the right of first offer granted to
James River Paper Company, Inc. pursuant to the Lease, as more
specifically set forth in Article 16 below.
7.3 Failure of Condition.
(a) In the event of a failure of any condition contained in Section
7.1 or 7.2 above which is not the result of a default by either
party, the party for whose benefit the condition existed may
either waive the condition and proceed to Closing or may
terminate this Agreement in which event (A) all documents and
funds deposited by Purchaser shall be immediately returned to
Purchaser; and (B) all documents deposited by Seller shall be
immediately returned to Seller and neither party shall have any
further rights or obligations hereunder (except as
set forth in Sections 3.6(b), 9.1, 11.2 and 11.12);
(b) In the event of a failure of any condition contained in Section
7.2 above due to a default by Seller, then Purchaser may in its
sole discretion:
(i) terminate this Agreement in which event (A) all documents
and funds deposited by Purchaser shall be immediately
returned to Purchaser; and (B) all documents deposited by
Seller shall be immediately returned to Seller and neither
party shall have any further rights or obligations hereunder
(except as
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set forth in Sections 3.6(b), 9.1, 11.2 and 11.12);
(ii) pursue specific performance of Seller's obligation to convey
the Property to Purchaser in accordance with the terms of
this Agreement; or
(iii)waive such default and close the transaction.
(c) In the event of a failure of any condition contained in Section
7.1 above due to a default by Purchaser, Seller may in its sole
discretion:
(i) terminate this Agreement and Seller shall retain as
liquidated damages the funds described in Article 12, in
which event all documents deposited by Purchaser shall be
immediately returned to Purchaser, and all documents
deposited by Seller shall be immediately returned to Seller
and neither party shall have any further rights or
obligations hereunder (except as set forth in Sections
5.3(b), 9.1, 11.2 and 11.12); or
(ii) Seller may waive such default and close the transaction.
(d) Seller waives any rights it may have to specific performance in
the event of a default by Purchaser with the exclusive remedy of
Seller being the right to liquidated damages more fully described
in Section 12 hereof. Purchaser waives any right to any claim of
any nature for damages or otherwise in the event of a default by
Seller and Purchaser acknowledges that its exclusive remedies in
the event of a default by Seller shall be to either terminate
this Agreement in accordance with Section 7.3(a)(i) above, to
seek specific performance in accordance with Section 7.3(a)(ii)
above, or waive such default and close the transaction in
accordance with Section 7.3(a)(iii) above.
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8. DAMAGE OR DESTRUCTION OF THE PROPERTY; CONDEMNATION
8.1 Damage or Destruction of the Property.
(a) If, between the Effective Date and the Closing Date, the Property is
Materially Damaged or Destroyed (as hereinafter defined), Purchaser
may elect in writing, within five (5) days after receipt of notice by
Purchaser from Seller of such damage or destruction, accompanied by
information regarding the amount and payment of insurance (the
"Casualty Notice Date"), to terminate this Agreement or to purchase
all of the Property without regard to such damage or destruction. If
Purchaser fails to notify Seller of Purchaser's election, Purchaser
will be deemed to have elected to proceed with the purchase of all of
the Property. In the event that Purchaser purchases all of the
Property, Seller shall have no obligation to repair any such damage or
destruction, nor shall the Purchase Price be adjusted except as
provided in 8.1(b) below. "Materially Damaged or Destroyed" shall mean
damage or destruction the repair or replacement of which, as
determined by a licensed general contractor reasonably approved by
Purchaser and Seller, would exceed $750,000 as to any casualty of a
type against which insurance is maintained (a "Major Insured
Casualty") or would exceed $100,000 as to any casualty against which
insurance is not maintained (a "Major Uninsured Casualty"). If,
between the Effective Date and the Closing Date, the Property sustains
nonmaterial damage, the parties shall proceed to closing. If between
the Effective Date and the Closing Date, the Property is Materially
Damaged or Destroyed due to a Major Uninsured Casualty, Seller may
elect in writing, within five (5) days after the Casualty Notice Date,
to terminate this Agreement. If Seller fails to notify Purchaser of
Seller's election, Seller will be deemed to
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have elected to proceed with the sale of all of the Property.
(b) If Purchaser elects or is required to purchase the Property despite
such damage or destruction, Seller shall assign its rights to and
Purchaser shall be entitled to receive any insurance proceeds (with
any accrued interest thereon) at or after Closing (as the same are
available) and Purchaser shall receive a credit toward the Purchase
Price (i) for the insurance deductible relative to Seller's insurance
on the Property with respect to an insured casualty, including a Major
Insured Casualty, or (ii) for the cost of repair not covered by
insurance with respect to an uninsured casualty, including a Major
Uninsured Casualty. Seller shall reasonably cooperate with Purchaser
to allow Purchaser to collect any available insurance proceeds. Seller
agrees to maintain until the Closing the level of insurance coverage
in effect on the Property as of the Effective Date.
8.2 Condemnation.
If prior to Closing all or a Material Part of the Property is subject to a
proposed taking by any public authority, Seller shall promptly notify Purchaser
in writing of such proposed taking and Purchaser may terminate this Agreement by
notice to Seller within five (5) days after written notice thereof. If Purchaser
so elects, this Agreement shall terminate. If Purchaser does not so elect to
terminate this Agreement, or if the taking is as to a non-Material Part of the
Property, Purchaser shall accept the Property subject to the taking without a
reduction in the Purchase Price and shall receive at closing an assignment of
all of Seller's rights to any condemnation award to the extent that such amount
does not exceed the Purchase Price plus any legal fees and expenses actually
expended in obtaining such award. Seller shall reasonably cooperate with
Purchaser to allow Purchaser to collect any such award. A "Material Part" of the
Property shall mean a taking which would exceed $750,000 as determined by a
licensed appraiser reasonably approved by Seller and Purchaser.
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9. COMMISSIONS AND EXPENSES
9.1 Payment of the Sale Commission.
Purchaser and Seller represent and warrant to each other that no real
estate broker or agent has been authorized to act on either parties' behalf
except Trenton Bonner/Business Real Estate Brokerage Company, Inc. ("Seller's
Agent") under a commission agreement between Seller and Seller's Agent, which
commission ("TB Commission") under said commission agreement Seller will pay to
Seller's Agent at Closing. Purchaser hereby indemnifies Seller and holds Seller
harmless from any and all demands or claims which now or hereafter may be
asserted against Seller for any brokerage fees, commissions or similar types of
compensation which may be claimed by any broker which was engaged or which
claims to have been engaged by Purchaser and all expenses and costs in handling
or defending any such demand or claim, including reasonable attorney's fees.
Seller hereby indemnifies Purchaser and holds Purchaser harmless from any and
all demands or claims which now or hereafter may be asserted against Purchaser
for any brokerage fees, commissions or similar types of compensation which may
be claimed by any broker which was engaged or which claims to have been engaged
by Seller and all expenses and costs in handling or defending any such demand or
claim, including reasonable attorney's fees. This provision shall survive (i)
any termination of this Agreement and (ii) the Closing and not be merged
therein.
9.2 Maintenance of the Property; Property Personnel.
Between Seller's execution of this Agreement and the Closing, Seller shall
maintain the Property in its existing condition and repair, reasonable wear and
tear excepted, shall perform all work required to be performed by the landlord
under the terms of any Lease, except Seller shall not be required to perform any
repairs set forth in the PCM Proposal. In the event of the Closing, Purchaser
will not retain any existing employees and management agents of Seller for the
Property, and, accordingly, on the Closing, Seller shall (i) cause all
employment and management agreements respecting the Property to be terminated,
and deliver evidence of such termination to Purchaser, and (ii) remove all
employees and management personnel from the Property.
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9.3 Leasing; Contracts.
Seller shall not, after the date of this Agreement, enter into any lease or
contract affecting the Property or any amendment thereof, which shall be an
obligation of Purchaser after Closing, or waive, compromise or settle any rights
of Seller under any contract or Lease which shall be assumed by Purchaser upon
Closing, or agree to return any security deposit, or modify, amend, or terminate
any contract which shall be assumed by Purchaser upon Closing, without in each
case obtaining Purchaser's prior written consent thereto. Seller shall terminate
prior to the Closing, at no cost or expense to Purchaser, any and all service or
management contracts related to the Property to which Seller is a party.
10. NOTICES
All notices, requests or demands to a party hereunder shall be in writing
and shall be effective (i) when received by overnight courier service or
facsimile telecommunication (provided that a copy of such notice, request or
demand is deposited into the United States mail within one (1) business day of
the facsimile transmission), or (ii) three (3) days after being deposited into
the United States mail (sent certified or registered, return receipt requested),
in each case addressed as follows (or to such other address as Purchaser or
Seller may designate in writing in accordance with this Section 10):
If to Seller:
Corporate Realty Income Fund I, L.P.
406 East 85th Street
New York, New York 10028
Attention: Robert F. Gossett, Jr.
Phone No. (212) 751-3515
Fax No. (212) 879-4147
With a copy to:
Arnold & Porter
399 Park Avenue
New York, New York 10022
Attention: Michael J. Canning
Phone No. (212) 715-1110
Fax N. (212) 715-1399
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If to Purchaser:
Pacific Gulf Properties Inc.
363 San Miguel Drive
Suite 100
Newport Beach, California 92660
Attention: Lonnie P. Nadal
Phone No. (714) 721-2700
Fax No. (714) 719-1955
With a copy to:
Cox, Castle & Nicholson LLP
2049 Century Park East
28th Floor
Los Angeles, California 90067
Attention: John H. Kuhl
Phone No. (310) 284-2267
Fax No. (310) 277-7889
11. MISCELLANEOUS
11.1 Time.
Time is of the essence in the performance of each party's obligations
hereunder.
11.2 Attorney's Fees.
If any legal action, arbitration or other proceeding is commenced to
enforce or interpret any provision of this Agreement, the prevailing party shall
be entitled to an award of its attorneys' fees and expenses. The phrase
"prevailing party" shall include a party who receives substantially the relief
desired whether by dismissal, summary judgment, judgment or otherwise. This
provision shall survive (i) any termination of this Agreement and (ii) the
Closing and not be merged therein.
11.3 No Waiver.
No waiver by any party of the performance or satisfaction of any covenant
or condition shall be valid unless in writing and shall not be considered to be
a waiver by such party of any other covenant or condition hereunder.
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11.4 Entire Agreement.
This Agreement contains the entire agreement between the parties regarding
the Property and supersedes all prior agreements, whether written or oral,
between the parties regarding the same subject. This Agreement may only be
modified in writing.
11.5 Survival.
Except for (i) the representations and indemnity obligations of Purchaser
and Seller under this Agreement, (ii) the post-closing obligations of Purchaser
and Seller under this Agreement and (iii) as otherwise specifically provided in
this Agreement, none of the agreements, warranties and representations contained
herein shall survive Closing.
11.6 Successors.
Subject to Section 11.7, this Agreement shall bind and inure to the benefit
of the parties hereto and to their respective legal representatives, successors
and permitted assigns.
11.7 Assignment.
Seller's written consent shall be required for any assignment of
Purchaser's rights to a nominee under this Agreement. Any attempted unpermitted
assignment, except with Seller's prior written consent, shall be ineffective and
shall constitute a default under this Agreement. Notwithstanding any assignment
hereunder, Purchaser shall remain liable for the obligations of Purchaser under
this Agreement. Purchaser represents, warrants and certifies to Seller that
Purchaser has not assigned, transferred or encumbered or agreed to assign,
transfer or encumber, directly or indirectly, all or any portion of its rights
or obligations under this Agreement. Purchaser shall give written notice of any
proposed assignment at least five (5) business days prior to Closing. If Seller
approves such assignment, Seller shall have no obligation to reissue any
estoppels, surveys, or title commitments previously delivered to Purchaser, nor
shall Seller be responsible for any costs or expenses of any nature associated
with such transfer.
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11.8 Relationship of the Parties.
The parties acknowledge that neither party is an agent for the other party,
and that neither party shall or can bind or enter into agreements for the other
party.
11.9 Governing Law.
This Agreement and the legal relations between the parties hereto shall be
governed by and construed in accordance with the laws of the State of
California.
11.10 Possession; Risk of Loss.
Seller shall deliver to Purchaser possession of the Property on the Closing
Date, subject only to the Lease and Permitted Exceptions. All risk of loss or
damage with respect to the Property shall pass from Seller to Purchaser on the
Closing Date.
11.11 Review by Counsel.
The parties acknowledge that each party and its counsel have reviewed and
approved this Agreement, and the parties hereby agree that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement or
any amendments or exhibits hereto.
11.12 Confidentiality.
(a) Seller and Purchaser hereby covenant and agree that, at all times
after the date of execution hereof and prior to the Closing, unless
consented to in writing by the other party, no press release or other
public disclosure concerning this transaction shall be made, and each
party agrees to use best efforts to prevent disclosure of this
transaction, other than (i) to directors and officers of the parties,
limited partners and/or shareholders of Seller and Purchaser, and
employees, prospective lenders of Purchaser, attorneys, accountants,
agents and affiliates of the parties who are involved in the ordinary
course of business with this transaction, all of which shall be
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instructed to comply with the confidentiality provisions hereof; (ii)
as required by law or in response to lawful process or subpoena or
other valid or enforceable order of a court of competent jurisdiction;
or (iii) in compliance with any filings required by the Securities and
Exchange Commission ("SEC") or other federal or state agency.
(b) Notwithstanding anything to the contrary contained elsewhere herein,
Purchaser hereby acknowledges that all information furnished by Seller
to Purchaser or obtained by Purchaser in the course of Purchaser's
investigation of the Property, or in any way arising from or relating
to any and all studies or entries upon the Property by Purchaser, its
agents or representatives, shall be treated as confidential
information and further, that if any such confidential information is
disclosed to third parties prior to the Closing, Seller may suffer
damages and irreparable harm. In connection therewith, Purchaser
hereby expressly understands, acknowledges and agrees (i) that
Purchaser will not disclose any of the contents or information
contained in or obtained as a result of any reports or studies made in
connection with Purchaser's investigation of the Property, in any form
whatsoever (including, but not limited to, any oral information
received by Purchaser during the course of Purchaser's inspection of
the Property), to any party prior to the Closing other than (a) the
Seller, Seller's employees, agents or representatives, or Purchaser's
agents, employees, representatives, attorneys, consultants or
potential institutional lenders, without the prior express written
consent of Seller (which consent shall not be unreasonably withheld),
(b) as required by law or in response to lawful process or subpoena or
other valid and enforceable order of a court of competent
jurisdiction, and (c) as required by the SEC or other federal or state
agency; (ii) that in making any disclosure of such information as
permitted hereunder, Purchaser will advise said parties of the
confidentiality of such information and the potential of damage to
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Seller as a result of any disclosure of such information by said third
party, and (iii) that Seller is relying on Purchaser's covenant not to
disclose any of the contents or information contained in any such
reports or investigations to third parties (all of which is deemed to
be confidential information by the provisions of this Section). In the
event this Agreement is terminated, Purchaser agrees to return to
Seller all information, studies, or reports Purchaser or Purchaser's
agents have obtained from Seller or Seller's agents, contractors or
representatives with respect to the Property or the condition of the
Property. In the event either Purchaser or Purchaser's agents,
employees, representatives, attorneys, consultants or potential
institutional lenders cause a breach of Purchaser's duty of
confidentiality hereunder, Purchaser shall be liable to Seller for
damages and Seller may pursue all of its remedies afforded it under
this Agreement. This provision shall survive (i) any termination of
this Agreement and (ii) the Closing and not be merged therein.
11.13 Termination.
Upon termination of this Agreement for any reason by either party,
Purchaser shall have the obligation to return to Seller all Due Diligence
Documents and copies thereof (including the Survey) and any other information or
documentation received by Purchaser from Seller or Seller's agents with respect
to the Property and shall not disclose to any third party the contents thereof.
Seller shall not have any obligation to return or permit the return of any sums
due Purchaser upon any termination of this Agreement by Purchaser until the Due
Diligence Documents and copies thereof (including the Survey) and such other
information or documents provided to Purchaser by Seller or Seller's agents have
been returned to Seller.
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11.14 Waiver of Jury Trial. THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT THAT EITHER PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN
CONNECTION WITH THE PROPERTY, THE CONVEYANCE DOCUMENTS OR ANY OTHER DOCUMENTS
EXECUTED IN CONNECTION HEREWITH, OR IN RESPECT OF ANY COURSE OF CONDUCT,
STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTIONS OF EITHER PARTY. THIS PROVISION
IS A MATERIAL INDUCEMENT FOR EACH OF THE PARTIES TO ENTER INTO THIS TRANSACTION.
PURCHASER'S INITIALS: ______ SELLER'S INITIALS: _____
11.15 Counterparts.
This Agreement may be executed in one or more counterparts, each of which
will be deemed an original, and the counterparts taken together shall constitute
a single agreement.
11.16 Limitation on Liability. Purchaser expressly agrees that the
obligations and liabilities of Seller under this Agreement and any document
referenced herein shall not constitute personal obligations of the officers,
directors, employees, agents, affiliates, members, representatives, partners,
stockholders or other principals and representatives of Seller. Notwithstanding
anything to the contrary, Seller's liability, if any, arising in connection with
this Agreement or with the Property shall, prior to Closing, be limited to the
remedies as set forth in Section 7.3 of this Agreement and, post-Closing, shall
be limited to $350,000 in accordance with Section 6.1 of this Agreement. The
limitations of liability contained in this section shall apply equally and inure
to the benefit of Seller's present and future officers, directors, trustees,
partners, shareholders, agents and employees, and their respective heirs,
successors and assigns.
11.17 Partial Invalidity. If any term or provision of this Agreement or the
application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement, or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby, and each
such term and provision of this Agreement shall be valid and be enforced to the
fullest extent permitted by law.
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11.18 Construction. Headings at the beginning of each section and
subsection are solely for the convenience of the Purchaser and Seller and are
not a part of this Agreement and shall have no effect upon the construction or
interpretation of any part hereof. Whenever required by the context of this
Agreement, the singular shall include the plural and the masculine shall include
the feminine, and vice versa. This Agreement shall not be construed as if it had
been prepared by one of the parties, but rather as if Purchaser and Seller had
prepared the same. Unless otherwise indicated, all references to sections and
subsections are to this Agreement. All Exhibits referred to in this Agreement
are attached hereto and incorporated herein by this reference. In the event the
date on which Purchaser or Seller is required to take any action under the terms
of this Agreement is not a business day, the action shall be taken on the next
succeeding business day thereafter.
12. LIQUIDATED DAMAGES
IF PURCHASER SHALL BREACH OR DEFAULT IN ANY OF ITS OBLIGATIONS UNDER THIS
AGREEMENT, SELLER SHALL BE ENTITLED TO TERMINATE THIS AGREEMENT AND RETAIN THE
AMOUNT OF THE DEPOSIT DESCRIBED IN SECTION 2.1 PLUS ANY ACCRUED INTEREST THEREON
(THE "SPECIFIED SUM") AS LIQUIDATED DAMAGES. SELLER AND PURCHASER ACKNOWLEDGE
THAT SELLER'S DAMAGES WOULD BE DIFFICULT TO DETERMINE, AND THAT THE SPECIFIED
SUM IS A REASONABLE ESTIMATE OF SELLER'S DAMAGES. SELLER AND PURCHASER
SPECIFICALLY FURTHER AGREE AFTER NEGOTIATION THAT THIS SECTION 12 IS INTENDED TO
AND DOES LIQUIDATE THE AMOUNT OF DAMAGES DUE SELLER, AND SHALL BE SELLER'S
EXCLUSIVE REMEDY AGAINST PURCHASER, BOTH AT LAW AND IN EQUITY ARISING FROM OR
RELATED TO A BREACH BY PURCHASER OF ITS OBLIGATION TO CONSUMMATE THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. PROVISIONS OF THIS SECTION 12 SHALL
NOT BE CONSTRUED AS A LIMITATION ON THE OBLIGATIONS OF PURCHASER UNDER SECTIONS
3.6(b), 9.1, 11.2 and 11.12 HEREOF. THIS PROVISION IS A MATERIAL INDUCEMENT FOR
EACH OF THE PARTIES TO ENTER INTO THIS TRANSACTION.
PURCHASER'S INITIALS: ______ SELLER'S INITIALS: _____
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13. NO RECORDING
The provisions hereof shall not constitute a lien on the Property and this
Agreement shall not be placed or suffered to be placed by Purchaser for
recording with the office of the recorder (clerk) for the county in which the
Property is located. Purchaser hereby appoints Seller as Purchaser's true and
lawful attorney-in-fact, coupled with an interest, for the purposes of the
execution of such documents and doing such acts as shall be necessary to effect
the discharge of the recording of this Agreement if such recording shall have
been accomplished in violation of the Section.
14. EFFECTIVENESS
This Agreement shall only be effective if a counterpart is signed by both
Seller and Purchaser.
15. TAX-DEFERRED EXCHANGE
At the option of Seller, this transaction may be part of a tax-deferred
exchange pursuant to United States Internal Revenue Code Section 1031 and
related regulations. If requested by Seller, Purchaser shall cooperate with
Seller to effect such assignments and other documents as Seller may require in
connection with the same; provided, however, that Purchaser shall not take title
to any property other than the Property or incur any additional liability on
account of such exchange and provided, further, that Seller shall reimburse
Purchaser for all costs and expenses, including attorneys' fees and costs,
incurred by Purchaser in connection with such exchange without prior consent.
16. RIGHT OF FIRST OFFER
The parties hereto acknowledge that Seller's right to sell the Property is
subject to a certain right of first offer held by the James River Paper Company,
Inc. pursuant to its lease with Seller relative to the Property. In this regard,
Seller has, prior to the date hereof, advised the James River Paper Company,
Inc. of its intention to sell the Property, and has requested that the James
River Paper Company, Inc. confirm its decision to either exercise or waive its
right of first offer. Seller has been advised preliminarily of the James River
Paper Company, Inc.'s intention not to
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exercise its right of first offer in connection with Seller's sale of the
Property, and Seller is awaiting written confirmation thereof. In the event,
however, that, prior to the Closing, the James River Paper Company, Inc. shall
elect to exercise such right of first offer and proceeds in accordance therewith
to close on its acquisition of the Property, Purchaser acknowledges and agrees
that Seller shall be unable to consummate the transaction contemplated herein,
and, in such event, Seller shall have the right to terminate this Agreement
prior to the Closing, in which event all documents and funds deposited by
Purchaser shall be immediately returned to Purchaser, all documents deposited by
Seller shall be immediately returned to Seller and neither party shall have any
further rights or obligations hereunder (except as set forth in Sections 3.6(b),
9.1, 11.2 and 11.12).
17. REIT
Purchaser hereby advises Seller that Purchaser is qualified as a real
estate investment trust under the provisions of the Internal Revenue Code, and
that, by reason thereof, the maintaining of such status and the avoiding of any
activity which might cause a penalty tax to be applied is of material concern to
Purchaser. Accordingly, Seller agrees to make any modifications or amendments to
this Agreement reasonably requested by Purchaser prior to the expiration of the
Inspection Period that may be necessary for Purchaser to maintain its status as
a real estate investment trust or in order for it to avoid a penalty tax;
provided, however, that Seller shall have no obligation to enter into any such
modification or amendment that would materially alter or affect, in Seller's
sole judgment, Seller's rights, duties, or obligations under this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first set forth above.
SELLER:
CORPORATE REALTY INCOME FUND I, L.P.
a Delaware limited partnership
By: /s/ Robert F. Gossett, Jr.
------------------------------
Robert F. Gossett, Jr.
Its General Partner
By: 1345 REALTY CORPORATION
Its General Partner
By: /s/ Robert F. Gossett, Jr.
------------------------------
Robert F. Gossett, Jr.
Its President
PURCHASER:
PACIFIC GULF PROPERTIES INC.,
a Maryland corporation
By: /s/ ILLEGIBLE
------------------------------
Its: PRES-CEO
------------------------------
By: /s/ ILLEGIBLE
------------------------------
Its: S.V.P.
------------------------------
ESCROW HOLDER:
CHICAGO TITLE INSURANCE COMPANY
By:______________________________
Its:_____________________________
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EXHIBIT C
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT ("Assignment"), is made as of the
___ day of __________, 1997 by and between CORPORATE REALTY INCOME FUND I, L.P.,
a Delaware limited partnership ("Assignor") and PACIFIC GULF PROPERTIES INC., a
Maryland corporation ("Assignee").
RECITALS
Assignor, as seller, and Assignee, as purchaser, are parties to a Purchase
and Sale Agreement ("Purchase Agreement") dated as of February 5, 1997, which
provides for the sale of Assignor's interest in certain real property (the
"Property") located in the State of California, as more particularly described
on Schedule A attached hereto; and
The Purchase Agreement provides, inter alia, (i) that Assignor shall assign
to Assignee certain leases, commission agreements, service contracts, warranties
and guaranties, (ii) that Assignee shall assume all of the obligations of Seller
thereunder from and after the date of Closing (as defined in the Purchase
Agreement), and (iii) that Assignor and Assignee shall execute this Assignment.
NOW, THEREFORE, in consideration of TEN AND NO/100 DOLLARS ($10.00) and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1. Definitions. As used herein, the following terms have the following
meanings:
A. Accrued Obligations. All obligations or rights to damages which
accrued or arose prior to the Closing under any of the Assigned Property,
as defined below.
B. Assumed Obligations. All obligations of Seller under the Assigned
Property, as defined below, which arise or accrue on or after the Closing.
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2. Assignment. Assignor hereby conveys and assigns to Assignee all of its
right, title and interest in, to and under the following (collectively, the
"Assigned Property"):
A. those certain tenant space leases set forth on Schedule B attached
hereto; together with all rents and other sums due thereunder (other than
Delinquent Rents (as defined in the Purchase Agreement) and other
additional rent and reimbursements payable under such tenant space leases
and accruing prior to the Closing) after Closing and any and all security
deposits in connection therewith;
B. those certain equipment leases set forth on Schedule C attached
hereto, to the extent assignable;
C. those certain commission agreements set forth on Schedule D
attached hereto, to the extent assignable;
D. those certain service and maintenance contracts set forth on
Schedule E attached hereto, to the extent assignable;
E. all permits and licenses held by Assignor pertaining to the
Property, to the extent assignable;
F. all unexpired warranties, permits, approvals, licenses, legal
certificates, and authorizations pertaining to the Property, to the extent
assignable; and
G. all other intangibles pertaining to the Property, to the extent
assignable.
3. Assumption. Assignee hereby assumes and agrees timely to perform the
Assumed Obligations.
4. Indemnity. Assignee hereby indemnifies and agrees to defend and hold
harmless Assignor from any loss, cost, claim, liability, expense or demand of
whatever nature arising from any breach or failure of Assignee to observe or
perform any of the Assumed Obligations. Assignor hereby indemnifies and agrees
to defend and hold harmless Assignee from any loss, cost, claim, liability,
expense or demand of whatever nature arising from any breach or failure of
Assignor to observe or perform any of the Accrued Obligations.
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5. Claims. As a condition to the liability of the other party hereunder,
the claiming parting ("Claiming Party") shall notify the other party ("Other
Party"), in writing, of any claim ("Claim") covered by this Assignment within a
reasonable time after the assertion thereof by a third party against Other
Party. In the event of such a notice of a Claim by Claiming Party to Other
Party, Other Party shall have ten (10) days after receipt thereof in which to
undertake the defense of the Claim on behalf of itself and Claiming Party. If
Other Party so undertakes to defend said Claim on behalf of itself and Claiming
Party, it shall retain and pay counsel to conduct such defense. Such counsel
shall be subject to the approval of the Claiming Party which approval shall not
be unreasonably withheld or delayed. Claiming Party may employ its own
counsel to work with Other Party as counsel in connection with the defense of
said Claim, but Claiming Party shall pay all fees and disbursements of said
counsel. Other Party may settle the Claim, without the consent of Claiming
Party, to the extent the settlement does not bind Claiming Party or impose any
obligation on Claiming Party. If Claiming Party would have any liability for the
payment and/or performance of any settlement, Claiming Party's written consent
thereto must be obtained by Other Party in order for said settlement to be
binding upon Claiming Party.
If Other Party refuses or fails to so undertake to defend the Claim,
Claiming Party may defend the same on its own behalf, may retain and pay counsel
to conduct such defense and may settle the Claim, without the consent of Other
Party. Other Party shall then reimburse Claiming Party (a) for all reasonable
costs, including court costs and reasonable attorneys' fees, incurred by
Claiming Party in connection with said defense and/or any such settlement, (b)
for all sums paid pursuant to any judgment interest against Claiming Party in
connection therewith.
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IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment as
of the date first set forth above.
ASSIGNOR:
CORPORATE REALTY INCOME FUND I,
L.P.
By:_______________________________
Robert F. Gossett, Jr.,
General Partner
By: 1345 REALTY CORPORATION,
General Partner
By:__________________________
Robert F. Gossett, Jr.,
President
ASSIGNEE:
PACIFIC GULF PROPERTIES INC.
By:_______________________________
Its:___________________________
By:_______________________________
Its:___________________________
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SCHEDULE A
TO ASSIGNMENT AND ASSUMPTION AGREEMENT
PARCEL ONE:
LOT A, REVERSION TO ACREAGE, PLAT NO. 3999 FILED FOR RECORD OCTOBER 08, 1996 IN
BOOK 14 OF MAPS, PAGES 54 AND 55, YOLO COUNTY RECORDS.
ASSESSOR'S PARCEL NUMBER: 027-450-74
PARCEL TWO:
AN EASEMENT FOR TRUCK STAGING AND ASSOCIATED USES IN COMMON WITH THE OWNERS OF
THE LAND BOUNDERED BY THIS EASEMENT OVER THE FOLLOWING DESCRIBED REAL PROPERTY
LOCATED IN YOLO COUNTY, CALIFORNIA:
LAND BEING DELINEATED AS "STAGING AREA" ON THAT CERTAIN UNRECORDED SURVEY,
PREPARED AUGUST 27, 1987 BY MORTON & PITALO, INC., FILE NO. 860255. A COPY OF
WHICH IS ATTACHED TO THAT CERTAIN NON-EXCLUSIVE TRUST STAGING EASEMENT RECORDED
OCTOBER 16, 1987 IN BOOK 1896 OF OFFICIAL RECORDS, PAGE 155, ALSO DESCRIBED AS
BRING A PORTION OF PARCEL 1-B-2-B, PARCEL MAP NO. 2494, VENTURA INDUSTRIAL PARK
MAP FOUR FILED JUNE 18, 1976 IN BOOK 2 OF PARCEL MAPS, PAGE 76, YOLO COUNTY,
CALIFORNIA RECORDS AND PARCELS 15 AND 16 OF SUBDIVISION NO. 2284, VENTURA
INDUSTRIAL PARK NO. 2, FILED JANUARY 18, 1980 IN BOOK 11 OF MAPS, PAGES 88 AND
89, YOLO COUNTY, CALIFORNIA RECORDS.
PARCEL THREE:
A PERPETUAL AND NON-EXCLUSIVE EASEMENT FOR INGRESS, EGRESS AND PARKING OVER THE
FOLLOWING DESCRIBED REAL PROPERTY LOCATED IN YOLO COUNTY, CALIFORNIA:
PARKING EASEMENT BEING DELINEATED AS "PARKING AREA" ON THAT CERTAIN UNRECORDED
SURVEY PREPARED AUGUST 27, 1987 BY MORTON & PITALO, INC., FILE NO. 860255, A
COPY OF WHICH IS ATTACHED TO THAT CERTAIN PERPETUAL NON-EXCLUSIVE PARKING
EASEMENT RECORDED OCTOBER 16, 1987 IN BOOK 1896 OF OFFICIAL RECORDS, PAGE 152,
ALSO DESCRIBED AS BEING PARCELS 15 AND 16 OF SUBDIVISION NO. 2284, VENTURA
INDUSTRIAL PARK NO. 2 FILED JANUARY 18, 1980 IN BOOK 11 OF MAPS, PAGES 88 AND
89, YOLO COUNTY, CALIFORNIA RECORDS.
C-5
<PAGE>
PARCEL FOUR:
AN EASEMENT 6 FEET IN WIDTH FOR STORM DRAINAGE PURPOSES, THE CENTERLINE OF WHICH
IS DESCRIBED AS FOLLOWS:
SEGMENT NO. 1:
BEGINNING AT A POINT 3 FEET NORTH OF THE SOUTH BOUNDARY OF PARCEL 1-B-2-B,
PARCEL MAP NO. 2494, VENTURA INDUSTRIAL PARK MAP FOUR, FILED JUNE 18, 1976 IN
BOOK 2 OF PARCEL MAPS, PAGE 76, YOLO COUNTY RECORDS, AT AN EXISTING STORM
DRAINAGE PIPE; AND RUNNING THENCE WESTERLY ACROSS SAID PARCEL 1-B-2-B AND ACROSS
LOT 15 OF SUBDIVISION NO. 2284, VENTURA INDUSTRIAL PARK NO. 2 FILED JANUARY 18,
1980 IN BOOK 11 OF MAPS, PAGES 88 AND 89, YOLO COUNTY RECORDS, 3 FEET NORTH OF
AND PARALLEL TO THE SOUTH BOUNDARY OF SAID PARCEL 1-B-2-B AND LOT 15 TO THE WEST
BOUNDARY OF LOT 15 AND THE EAST BOUNDARY OF SANTA ANITA DRIVE.
SEGMENT NO. 2:
BEGINNING AT A POINT ON THE SOUTH BOUNDARY OF SANTA ANITA DRIVE INTERSECTED BY
THE LOT LINE COMMON TO LOTS 13 AND 14 OF SUBDIVISION NO. 2284, VENTURA
INDUSTRIAL PARK NO. 2 FILED JANUARY 18, 1980 IN BOOK 11 OF MAPS, PAGES 88 AND
89, YOLO COUNTY RECORDS; AND RUNNING THENCE SOUTH ALONG SAID COMMON LINE TO THE
SOUTHERLY BOUNDARY OF SAID LOTS 13 AND 14.
SEGMENT NO. 3:
BEGINNING AT A POINT ON THE WESTERLY BOUNDARY OF LOT 15 OF SUBDIVISION NO. 2284,
VENTURA INDUSTRIAL PARK NO. 2, FILED JANUARY 18, 1980 IN BOOK 11 OF MAPS, PAGES
88 AND 89 AND THE EAST BOUNDARY OF SANTA ANITA DRIVE; THENCE SOUTHERLY TO THE
INTERSECTION OF SANTA ANITA DRIVE AND TANFORAN AVENUE AS SHOWN ON AFOREMENTIONED
MAP; THENCE SOUTH 39o 08'34" EAST 562.55 FEET; THENCE SOUTH 00o 23'42" WEST TO A
POINT, SAID POINT BEING THE MOST NORTHERLY CORNER COMMON TO LOTS 13 AND 14 OF
THE AFOREMENTIONED MAP.
C-6
<PAGE>
SCHEDULE B
TO ASSIGNMENT AND ASSUMPTION AGREEMENT
Lease dated August, 1986 between Panattoni, Oates and Massie Development
Company, as landlord, and Crown Zellerbach Corporation, as tenant, as amended by
that certain amendment dated October 1, 1993.
C-7
<PAGE>
SCHEDULE C
TO ASSIGNMENT AND ASSUMPTION AGREEMENT
Equipment Leases
NONE
C-8
<PAGE>
SCHEDULE D
TO ASSIGNMENT AND ASSUMPTION AGREEMENT
Commission Agreements
NONE
C-9
<PAGE>
SCHEDULE E
TO ASSIGNMENT AND ASSUMPTION AGREEMENT
Service Contracts
NONE
C-10
<PAGE>
EXHIBIT D
SELLER'S AFFIDAVIT
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
Section 1445 of the Internal Revenue Code provides that a transferee of a
United States real property interest must withhold tax if the transferor is a
foreign person. To inform the transferee that withholding of tax is not required
upon the disposition of a United States real property interest by CORPORATE
REALTY INCOME FUND I, L.P., a Delaware limited partnership ("CRIF"), the
undersigned hereby certifies the following on behalf of CRIF:
1. CRIF is not a foreign corporation, foreign partnership, foreign trust,
foreign estate or foreign person (as those terms are defined in the Internal
Revenue Code and Income Tax Regulations); and
2. CRIF's U.S. employer tax identification number is 13-3311993; and
3. CRIF's office address is 406 East 85th Street, New York, New York 10028.
CRIF understands that this certification may be disclosed to the Internal
Revenue Service by transferee and that any false statement contained herein
could be punished by fine, imprisonment, or both.
The undersigned officer of CRIF declares that he has examined this
certification and to the best of his knowledge and belief it is true, correct
and complete,
<PAGE>
and he further declares that he has authority to sign this document on behalf of
CRIF.
Dated:______________, 1997
CORPORATE REALTY INCOME FUND I, L.P.
By:________________________________
Robert F. Gossett, Jr.,
General Partner
By: 1345 REALTY CORPORATION,
General Partner
By:___________________________
Robert F. Gossett, Jr.,
President
Sworn to and subscribed before me this _____ day of __________, 1997.
_______________________________
Notary Public
<PAGE>
EXHIBIT H
FORM OF DEED
Recording Requested by: ___________________
After Recordation, Mail This
Grant Deed To:
COX, CASTLE & NICHOLSON, LLP
2049 Century Park East
28th Floor
Los Angeles, CA 90067
Attention: John Kuhl, Esq.
MAIL TAX STATEMENTS TO:
Pacific Gulf Properties Inc.
363 San Miguel Drive
Suite 100
Newport Beach, CA 92660
Attention: Lonnie P. Nadal
- --------------------------------------------------------------------------------
(Space above this line for Recorder's use)
Pursuant to Section 11932 of the California Revenue and Taxation Code, the
transfer tax due is set forth in a separate statement not to be recorded.
GRANT DEED
THIS GRANT DEED made as of this ____ day of February, 1997, between
CORPORATE REALTY INCOME FUND I, L.P., a Delaware limited partnership,
("Grantor") and PACIFIC GULF PROPERTIES INC., a Maryland corporation
("Grantee").
W I T N E S S E T H:
THAT the Grantor, in consideration of the sum of Ten Dollars ($10.00)
lawful money of the United States in
H-1
<PAGE>
hand paid and other good and valuable consideration paid by Grantee, the receipt
and sufficiency of which is hereby acknowledged, does hereby grant unto Grantee,
its successors and assigns the following: all of Grantor's right, title, and
interest in and to the parcels of land described in Schedule A hereto (the
"Land"), together with all easements, rights of way, privileges and
appurtenances pertaining to the Land and rights of Grantor with respect to the
Land; and (b) all buildings, structures and other improvements, including the
building fixtures therein, now or hereafter located on and permanently annexed
to the Land, including, without limiting the generality of the foregoing, any
walks, parking facilities, and light standards, planters and signs, now or
hereafter located on the Land (the "Improvements") which Improvements are and
shall remain real property (the Land and the Improvements, collectively referred
to as, the "Property").
This Grant Deed is being made and delivered subject to all matters of
record and the documents and records referenced hereinafter.
TO HAVE AND TO HOLD unto Grantee, its successors and assigns, all of
Grantor's right, title and interest in and to the Property forever.
[Remainder of Page Intentionally Left Blank]
H-2
<PAGE>
IN WITNESS WHEREOF, Grantor has caused these presents to be executed and
delivered as of the date and year first above written.
CORPORATE REALTY INCOME FUND I, L.P.,
a Delaware limited partnership
By:_____________________
Robert F. Gossett, Jr.
General Partner
By: 1345 REALTY CORPORATION,
General Partner
By:_____________________
Robert F. Gossett, Jr.
President
H-3
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ___ day of _______________, 1997, before me personally came Robert
F. Gossett, Jr., to me known to be the person who executed the foregoing
instrument, and who being duly sworn by me, did depose and say that he is the
President of 1345 Realty Corporation, the corporation described in and which
executed the foregoing instrument, and that he signed his name by authority of
the board of directors of said corporation.
_________________________
Notary Public
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ___ day of _______________, 1997, before me personally came Robert
F. Gossett, Jr., to me known to be the person who executed the foregoing
instrument, and who being duly sworn by me, did depose and say that he is a
general partner in Corporate Realty Income Fund I, L.P., a Delaware limited
partnership, that he had authority to sign same, and he acknowledged to me that
he executed same as the act and deed of said partnership for the uses and
purposes therein mentioned.
_________________________
Notary Public
H-4
<PAGE>
SCHEDULE A
PARCEL ONE:
LOT A, REVERSION TO ACREAGE, PLAT NO. 3999 FILED FOR RECORD OCTOBER 08, 1996 IN
BOOK 14 OF MAPS, PAGES 54 AND 55, YOLO COUNTY RECORDS.
ASSESSOR'S PARCEL NUMBER: 027-450-74
PARCEL TWO:
AN EASEMENT FOR TRUCK STAGING AND ASSOCIATED USES IN COMMON WITH THE OWNERS OF
THE LAND BOUNDERED BY THIS EASEMENT OVER THE FOLLOWING DESCRIBED REAL PROPERTY
LOCATED IN YOLO COUNTY, CALIFORNIA:
LAND BEING DELINEATED AS "STAGING AREA" ON THAT CERTAIN UNRECORDED SURVEY,
PREPARED AUGUST 27, 1987 BY MORTON & PITALO, INC., FILE NO. 860255. A COPY OF
WHICH IS ATTACHED TO THAT CERTAIN NON-EXCLUSIVE TRUST STAGING EASEMENT RECORDED
OCTOBER 16, 1987 IN BOOK 1896 OF OFFICIAL RECORDS, PAGE 155, ALSO DESCRIBED AS
BRING A PORTION OF PARCEL 1-B-2-B, PARCEL MAP NO. 2494, VENTURA INDUSTRIAL PARK
MAP FOUR FILED JUNE 18, 1976 IN BOOK 2 OF PARCEL MAPS, PAGE 76, YOLO COUNTY,
CALIFORNIA RECORDS AND PARCELS 15 AND 16 OF SUBDIVISION NO. 2284, VENTURA
INDUSTRIAL PARK NO. 2, FILED JANUARY 18, 1980 IN BOOK 11 OF MAPS, PAGES 88 AND
89, YOLO COUNTY, CALIFORNIA RECORDS.
PARCEL THREE:
A PERPETUAL AND NON-EXCLUSIVE EASEMENT FOR INGRESS, EGRESS AND PARKING OVER THE
FOLLOWING DESCRIBED REAL PROPERTY LOCATED IN YOLO COUNTY, CALIFORNIA:
PARKING EASEMENT BEING DELINEATED AS "PARKING AREA" ON THAT CERTAIN UNRECORDED
SURVEY PREPARED AUGUST 27, 1987 BY MORTON & PITALO, INC., FILE NO. 860255, A
COPY OF WHICH IS ATTACHED TO THAT CERTAIN PERPETUAL NON-EXCLUSIVE PARKING
EASEMENT RECORDED OCTOBER 16, 1987 IN BOOK 1896 OF OFFICIAL RECORDS, PAGE 152,
ALSO DESCRIBED AS BEING PARCELS 15 AND 16 OF SUBDIVISION NO. 2284, VENTURA
INDUSTRIAL PARK NO. 2 FILED JANUARY 18, 1980 IN BOOK 11 OF MAPS, PAGES 88 AND
89, YOLO COUNTY, CALIFORNIA RECORDS.
PARCEL FOUR:
AN EASEMENT 6 FEET IN WIDTH FOR STORM DRAINAGE PURPOSES, THE CENTERLINE OF WHICH
IS DESCRIBED AS FOLLOWS:
H-5
<PAGE>
SEGMENT NO. 1:
BEGINNING AT A POINT 3 FEET NORTH OF THE SOUTH BOUNDARY OF PARCEL 1-B-2-B,
PARCEL MAP NO. 2494, VENTURA INDUSTRIAL PARK MAP FOUR, FILED JUNE 18, 1976 IN
BOOK 2 OF PARCEL MAPS, PAGE 76, YOLO COUNTY RECORDS, AT AN EXISTING STORM
DRAINAGE PIPE; AND RUNNING THENCE WESTERLY ACROSS SAID PARCEL 1-B-2-B AND ACROSS
LOT 15 OF SUBDIVISION NO. 2284, VENTURA INDUSTRIAL PARK NO. 2 FILED JANUARY 18,
1980 IN BOOK 11 OF MAPS, PAGES 88 AND 89, YOLO COUNTY RECORDS, 3 FEET NORTH OF
AND PARALLEL TO THE SOUTH BOUNDARY OF SAID PARCEL 1-B-2-B AND LOT 15 TO THE WEST
BOUNDARY OF LOT 15 AND THE EAST BOUNDARY OF SANTA ANITA DRIVE.
SEGMENT NO. 2:
BEGINNING AT A POINT ON THE SOUTH BOUNDARY OF SANTA ANITA DRIVE INTERSECTED BY
THE LOT LINE COMMON TO LOTS 13 AND 14 OF SUBDIVISION NO. 2284, VENTURA
INDUSTRIAL PARK NO. 2 FILED JANUARY 18, 1980 IN BOOK 11 OF MAPS, PAGES 88 AND
89, YOLO COUNTY RECORDS; AND RUNNING THENCE SOUTH ALONG SAID COMMON LINE TO THE
SOUTHERLY BOUNDARY OF SAID LOTS 13 AND 14.
SEGMENT NO. 3:
BEGINNING AT A POINT ON THE WESTERLY BOUNDARY OF LOT 15 OF SUBDIVISION NO. 2284,
VENTURA INDUSTRIAL PARK NO. 2, FILED JANUARY 18, 1980 IN BOOK 11 OF MAPS, PAGES
88 AND 89 AND THE EAST BOUNDARY OF SANTA ANITA DRIVE; THENCE SOUTHERLY TO THE
INTERSECTION OF SANTA ANITA DRIVE AND TANFORAN AVENUE AS SHOWN ON AFOREMENTIONED
MAP; THENCE SOUTH 39o 08'34" EAST 562.55 FEET; THENCE SOUTH 00o 23'42" WEST TO A
POINT, SAID POINT BEING THE MOST NORTHERLY CORNER COMMON TO LOTS 13 AND 14 OF
THE AFOREMENTIONED MAP.
H-6
FIRST AMENDMENT TO
PURCHASE AND SALE AGREEMENT
THIS FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT (this "Amendment"),
dated February 21, 1997 for reference purposes, is entered into by and between
PACIFIC GULF PROPERTIES INC., a Maryland corporation ("Purchaser"), and
CORPORATE REALTY INCOME FUND I, L.P., a Delaware limited partnership ("Seller'),
with reference to the following facts:
A. Seller and Purchaser have previously executed and delivered that certain
Purchase and Sale Agreement dated February 5, 1997 (the "Agreement") with
respect to the purchase and sale of the James River Building at 1400 Churchill
Downs Avenue, Woodland, California. Terms used herein shall have the meanings
given thereto in the Agreement.
B. Purchaser and Seller now desire to amend the Agreement as hereinafter
set forth.
NOW THEREFORE, in consideration of the foregoing recitals, and
the mutual covenants contained herein, Purchaser and Seller hereby agree as
follows:
1. The date of February 2l, 1997 appearing in the first sentence of
Sections 3.2 and 3.5 of the Agreement is hereby extended to February 26, 1997;
provided, however, that Purchaser hereby agrees that Purchaser is satisfied with
the results of its due diligence with respect to the Property except for those
items set forth in Purchaser's title objection letter dated February 20, 1997 as
supplemented by Purchaser's supplement to such title objection letter of even
date herewith and the added Purchaser conditions set forth below.
2. The written evidence required by Section 7.2(g) of the Agreement may be
included in the Tenant Estoppel Certificate required by Section 7.2(e) of the
Agreement. Sections 7.2(e) and (g) of the Agreement are hereby amended to
require that written evidence and Estoppel required thereby shall be delivered
to Purchaser by facsimile telecommunication on or before two (2) days prior to
the Closing Date, and that the originals of such documents be delivered to
Purchaser on or before one (1) day prior to the Closing Date.
3. The following additional Purchaser condition is hereby added as a new
subsection (h) to Section 7.2 of the Agreement:
(h) On or before February 26, 1997, Purchaser shall have obtained its Board
of Director's approval of the transactions contemplated by this Agreement. This
condition shall be deemed satisfied unless Purchaser provides Seller
-1-
<PAGE>
written notice that it has not been satisfied on or before February 26, 1997.
4. This Amendment may be executed in counterparts, each of which shall be
deemed an original and all of which shall constitute one and the same agreement
with the same effect as if all parties had signed the same signature page. This
Amendment shall be deemed executed and delivered upon each party's delivery of
executed signature pages, which signature pages may be delivered by facsimile
with the same effect as delivery of the originals.
5. Except as expressly set forth herein, the Agreement remains unmodified
and in full force and effect.
IN WITNESS WHEREOF, Purchaser and Seller have executed this Amendment of
the date first set forth above.
PURCHASER:
PACIFIC GULF PROPERTIES INC.,
a Maryland corporation
By: /s/ Donald G. Herrman
-----------------------
Donald G. Herrman
Executive Vice President
By: /s/ Lonnie P. Nadal
-----------------------
Lonnie P. Nadal
Senior Vice President
[SIGNATURES CONTINUED ON NEXT PAGE]
-2-
<PAGE>
[SIGNATURES CONTINUED PROM PRIOR PAGE]
SELLER:
CORPORATE REALTY INCOME FUND I,
L.P., a Delaware limited
partnership
By: /s/ Robert F. Gossett, Jr.
-----------------------
Robert F. Gossett, Jr.,
General Partner
By: 1345 REALTY CORPORATION,
General Partner
By:/s/ Robert F. Gossett, Jr.
-----------------------
Robert F. Gossett, Jr.,
President
-3-
1/28/97
PURCHASE AND SALE AGREEMENT
Between
ST. PAUL PROPERTIES, INC.
(Seller)
and
CORPORATE REALTY INCOME FUND I, L.P.
(Buyer)
Location: Alamo Towers
901 and 909 NE Loop 410
San Antonio, Texas
Dated as of January 28, 1997
<PAGE>
TABLE OF CONTENTS
PAGE
1. PURCHASE AND SALE.........................................................1
1.1 Property..............................................................1
1.2 Assignment............................................................2
2. PURCHASE PRICE............................................................2
2.1 Deposit...............................................................2
2.2 Interest..............................................................2
2.3 Cash at Closing.......................................................3
3. TITLE.....................................................................3
3.1 Title Commitment: Survey............................................. 3
3.2 Review of Title.......................................................3
3.3 Vesting of Title......................................................4
3.4 Title Insurance.......................................................4
3.5 Inspection Period.....................................................4
4. CLOSING.................................................................. 6
4.1 Closing...............................................................6
4.2 Transactions at Closing...............................................6
4.3 Title Transfer and Payment of Purchase Price..........................8
5. PRORATIONS; CLOSING ITEMS.................................................8
5.1 Prorations: Closing Costs.............................................8
5.2 Calculation of Prorations............................................10
5.3 Furnishing of Information............................................10
6. REPRESENTATIONS AND WARRANTIES...........................................12
6.1 Seller's Representations and Warranties..............................12
6.2 Buyer's Representations and Warranties...............................14
6.3 Buyer Accepts Property "As Is".......................................14
7. CONDITIONS TO CLOSING....................................................17
7.1 Seller's Conditions..................................................17
7.2 Buyer's Conditions...................................................17
7.3 Failure of Condition.................................................18
8. DAMAGE OR DESTRUCTION OF THE PROPERTY; ..................................18
8.1 Damage or Destruction of the Property................................18
8.2 Condemnation.........................................................19
9. COMMISSIONS AND EXPENSES.................................................19
9.1 Payment of the Sale Commission.......................................19
i
<PAGE>
9.2 Leasing Commissions.................................................20
9.3 Lease Expense Reimbursement and Assumption..........................21
10. NOTICES.................................................................21
11. MISCELLANEOUS...........................................................22
11.1 Time...............................................................22
11.2 Attorneys'Fees.....................................................22
11.3 No Waiver..........................................................22
11.4 Entire Agreement...................................................22
11.5 Survival...........................................................22
11.6 Successors.........................................................23
11.7 Assignment.........................................................23
11.8 Relationship of the Parties........................................23
11.9 Governing Law......................................................23
11.10 Possession: Risk of Loss..........................................23
11.11 Review by Counsel.................................................23
11.12 Confidentiality...................................................24
11.13 Termination.......................................................25
11.14 Intentionally Omitted.............................................25
11.15 Counterparts......................................................25
12. LIQUIDATED DAMAGES......................................................25
13. NO RECORDING............................................................26
14. EFFECTIVENESS...........................................................26
EXHIBIT A LEGAL DESCRIPTION OF THE PROPERTY
EXHIBIT B BILL OF SALE
EXHIBIT C ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT D SELLER'S AFFIDAVIT
EXHIBIT E BUYER'S AFFIDAVIT AND AGREEMENT
EXHIBIT F SERVICE CONTRACTS
EXHIBIT G INITIAL PERMITTED EXCEPTIONS
EXHIBIT H FORM OF DEED
EXHIBIT I TENANT NOTIFICATION LETTER
EXHIBIT J TENANT ESTOPPEL CERTIFICATE
EXHIBIT K RENT ROLL
EXHIBIT L SELLER'S CERTIFICATE
EXHIBIT M BUYER'S CERTIFICATE
EXHIBIT N EQUIPMENT LEASE
ii
<PAGE>
PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement ("Agreement") is made as of the 28th day
of January, 1997 (the "Effective Date") by and between ST. PAUL PROPERTIES,
INC., a Delaware corporation ("Seller"), and CORPORATE REALTY INCOME FUND I,
L.P., a Delaware limited partnership ("Buyer").
A. Seller owns in fee simple that certain parcel of real property located
in the City of San Antonio, County of Bexar, State of Texas commonly referred to
as Alamo Towers located at 901 and 909 NE Loop 410 in San Antonio, Texas
(hereinafter referred to as the "Real Property").
B. Subject to the terms and conditions herein, seller desires to sell and
buyer desires to purchase the real property and certain items of personal
property.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
Seller and Buyer agree as follows:
1. PURCHASE AND SALE
1.1 Property.
Subject to the terms and conditions hereof, Seller hereby agrees to sell,
convey and assign to Buyer, and Buyer hereby agrees to purchase and accept from
Seller on the Closing Date (as defined in Section 4.1 below) the following
(collectively, the "Property"):
(a) the Real Property which is legally described on Exhibit A attached
hereto, together with any and all rights, privileges and easements
appurtenant thereto, which are owned by Seller;
(b) all buildings and other improvements and fixtures located on the Real
Property which are owned by Seller, including any apparatus, equipment
and appliances incorporated therein and used in connection with the
operation and occupancy thereof, such as heating and air conditioning
systems and facilities used to provide any utility service,
ventilation, or other services thereto (all of which are collectively
referred to as the "Improvements");
(c) all right, title and interest of Seller in and to personal property
located on the Property and listed on Exhibit B to the Bill of Sale,
which Bill of Sale is itself attached hereto as Exhibit B (the
"Personal Property"); and
(d) all assignable or transferable intangible property, including, but not
limited to: (i) all guaranties, warranties (including guaranties and
warranties pertaining to construction of the Improvements); (ii) all
air rights, excess floor area rights and other development rights
relating or appurtenant to the Real Property or the
<PAGE>
Improvements; (iii) all rights to obtain utility service in connection
with the Improvements and the Real Property; (iv) assignable licenses
and other governmental permits and permissions relating to the Real
Property, the Improvements and the operation thereof; and (v) all
assignable contracts and contract rights as set forth on Exhibit F
attached hereto (all of the foregoing are hereinafter collectively
referred to as the "Intangible Property").
(e) All right, title and interest of Seller in and to the Leases, and
other occupancy agreements covering all or any portion of the Real
Property or the Improvements, to the extent they are in effect on the
Date of Closing (collectively the "Leases"), together with all rents
and other sums due thereunder (the "Rents") and any and all security
deposits in connection therewith ("Security Deposits").
1.2 Assignment.
In addition, Seller shall assign to Buyer all interest of Seller as
landlord in and to all of the Leases pertaining to the Real Property and
Improvements as more specifically set forth on Exhibit B to the Assignment and
Assumption Agreement, and in and to any equipment leases, commission agreements,
and service contracts, if any, as set forth on Exhibits C, D and E,
respectively, to the Assignment and Assumption Agreement (individually and
collectively the "Service Contracts"). Such assignment shall be made pursuant to
an Assignment and Assumption Agreement in the form described in Section 4.2(a)
(iii) below.
2. PURCHASE PRICE
Buyer shall pay as the total Purchase Price for the Property ("Purchase
Price") in the amount of Twelve Million One Hundred Eighty Thousand and
No/lOOths U.S. Dollars ($12,180,000.00) which shall be payable as follows:
2.1 Deposit.
Concurrently with the execution and delivery of this Agreement, Buyer has
caused Two Hundred Thousand and No/lOOths U.S. Dollars ($200,000.00) (the
"Deposit") to be delivered to Seller. The Deposit shall be held by Seller as an
earnest money deposit toward the Purchase Price. The Deposit shall be held by
Seller in an interest bearing account. Buyer will provide the by Seller with its
Taxpayer Identification Number and such additional information and documents as
may be required by Seller.
2.2 Interest.
Except as provided in Section 2.1 above and in other provisions of this
Agreement where Seller shall be entitled to retain the Deposit and all interest
earned thereon as liquidated damages pursuant to Section 12 below, interest
thereon on the Deposit shall accrue to the benefit of Buyer. The Deposit (and
interest thereon) shall be applied against the Purchase Price.
2
<PAGE>
2.3 Cash at Closing.
Eleven Million Nine Hundred Eighty Thousand and No/100ths U.S. Dollars
($11,980,000.00) adjusted for interest earned on the Deposit plus any other
amounts required to be paid by Buyer at Closing, and plus or minus any
prorations, in the form of immediately available U.S. funds by wire transfer as
more particularly set forth in Section 4.3 below.
3. TITLE
3.1 Title Commitment; Survey
Within ten (10) days of the date hereof, Seller shall cause to be delivered
to Buyer the following:
(a) A commitment for an owner's policy of title insurance (the "Title
Commitment"), issued by First American Title Insurance Company
("Title Company") covering the Real Property and Improvements and
indicating the willingness of Title Company to issue to Buyer at
Closing the owner's title policy described in Section 3.4 below
(the "Title Policy") in the amount of the Purchase Price, with
such Title Commitment setting forth the status of the title to
the Property and showing all liens, claims, encumbrances,
easements, rights-of-way, encroachments, reservations,
restrictions and any other matters of record affecting the
Property.
(b) A copy of all recorded documents referred to in the Title
Commitment as exceptions to title to the Property (the "Title
Documents").
(c) A copy of the survey of the Real Property and Improvements in
Seller's possession ("Survey").
3.2 Review of Title.
Buyer shall have until February 15, 1997 to review the Title Commitment,
Title Documents and Survey (collectively "Title Evidence") and render any
objections as to matters of title in writing to Seller. Any such matters of
title not timely objected to by Buyer shall be deemed waived and shall
constitute additional permitted exceptions ("Additional Permitted Exceptions")
hereunder. Seller shall have thirty (30) days from the date of such objections
to have such objections removed or satisfied. If Seller shall fail to have such
objections removed or satisfied within such time or during such time delivers a
written notice to Buyer that notwithstanding Seller's reasonable efforts, such
objections may not be cured, then Buyer may, at its sole election, within ten
(10) days of the first to occur of the expiration of said thirty (30) day period
or the date of receipt of such notice from Seller, by written notice to Seller
either (a) terminate this Agreement without any liability on its part in which
case the Deposit together with interest thereon shall be refunded to Buyer and
neither party shall have further rights or obligations hereunder (except as set
forth in Section 5.3(b) hereof) or (b) proceed to Closing and take title subject
to such objections, in which case such non-cured objections shall become
Additional Permitted Exceptions hereunder. Seller agrees to use reasonable
efforts to satisfy
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promptly any such title objections; provided, however, that Seller shall not be
obligated to expend more than $10,000 in the aggregate in connection with curing
any such objections. Notwithstanding anything in this Agreement to the contrary,
Buyer shall not object to, and agrees to acquire the Property subject to, the
initial permitted exceptions described on Exhibit H attached hereto ("Initial
Permitted Exceptions", with the Initial Permitted Exceptions and the Additional
Permitted Exceptions sometimes hereinafter collectively referred to as the
"Permitted Exceptions").
3.3 Vesting of Title.
At Closing, Seller shall convey fee simple title to the Real Property and
Improvements to Buyer by special warranty deed (as further described in Section
4.2(a)(i) below), subject to the Permitted Exceptions, and shall convey Seller's
interest in the Personal Property to Buyer by bill of sale (as further described
in Section 4.2(a) (ii) below).
3.4 Title Insurance.
At Closing, the Title Company shall issue to Buyer a 1992 ALTA owner's form
of title insurance policy, in the form that is customarily issued in the State
of Texas or if an ALTA owner's form of policy is not available, then in the form
that is customarily issued in Texas, together with any endorsements reasonably
required by Buyer (but only to the extent available in Texas) and with the
survey exception amended to read "shortages in area only" in the amount of the
Purchase Price insuring that fee simple title to the Real Property and
Improvements is vested in Buyer subject to the Permitted Exceptions (the "Title
Policy).
3.5 Inspection Period.
Buyer shall have until February 15, 1997 (the "Inspection Period") to
inspect the Property, the Due Diligence Documents (as hereinafter defined in
Section 5.3(b)), and perform such other due diligence with respect to the
Property as Buyer reasonably deems necessary. Buyer may, upon written notice to
Seller, received by Seller no later than 5:00 p.m. Central Time on the last day
of the Inspection Period, elect to terminate this Agreement. Upon any such
termination, the Deposit together with interest thereon shall be refunded to
Buyer and, subject to Section 5.3(b) hereof, neither party shall have further
rights or obligations hereunder. In the event no notice of termination is
received by Seller on or before such time, then the Deposit, together with all
accrued interest thereon, shall become non-refundable (subject to the other
terms and conditions of this Agreement) and Seller and Buyer shall proceed to
Closing in accordance with the terms and conditions hereof and the Inspection
Period termination rights shall be deemed waived by Buyer. Buyer shall not
undertake any soil borings, ground water testing or other "Phase 2"
investigative procedures without first having obtained the prior written consent
of Seller. In connection with Buyer's inspection of the Property, Buyer agrees
that:
(a) All inspection fees, engineering fees, or other expenses of any
kind incurred by Buyer relating to the inspection of the Property
will be at Buyer's sole cost and expense;
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(b) Buyer will advise Seller at least two (2) business days in
advance of the dates of all inspections and will schedule all
tests and inspections during normal business hours whenever
feasible unless otherwise requested by Seller;
(c) Seller will have the right to have one or more representatives of
Seller accompany Buyer and Buyer's representatives, agents or
designees while they are on the Property;
(d) Any entry by Buyer, its representatives, agents or designees will
not unreasonably interfere with Seller's use of the Property or
with the operations of any tenant;
(e) Buyer will restore any damage caused to the Property by Buyer's
entry on the Property for inspection purposes at Buyer's sole
cost and expenses if this transaction does not close; and
(f) In making any inspection hereunder, Buyer will treat and will
cause any representative of Buyer to treat all information
obtained by Buyer pursuant to the terms of this Agreement as
strictly confidential in accordance with Section 11.12 below.
Purchaser shall have the right to further inspect the Property within the two
(2) business day period immediately preceding the Closing (during normal
business hours and upon notice to Seller) for the purpose of confirming that the
Property is in the same condition at Closing as existing at end of Inspection
Period, reasonable wear and tear excepted; provided, however, that such right of
pre-closing inspection shall in no way be deemed to extend or resurrect the
Inspection Period or constitute a condition to Closing; subject, however, to the
other terms and conditions of this Agreement. For purposes of this Agreement,
the term "business day" shall mean a day other than any Saturday, Sunday, or day
upon which national banks in the City of San Antonio, Texas are not open for
general banking business.
The Covenants of Buyer contained in this Section 3.5(a) and (e) shall
survive Closing Date or any earlier termination of this Agreement.
Seller agrees to use reasonable efforts to operate and maintain the
Property in a manner generally consistent with the manner in which Seller has
operated and maintained the Property prior to the effective date (including any
scheduled renovations to the Improvements).
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4. CLOSING
4.1 Closing.
The purchase and sale of the Property ("Closing") shall occur on March 17,
1997 (the "Closing Date"). Seller and Buyer agree that this transaction shall
close in escrow through the Title Company. Buyer and Seller shall endeavor to
conduct a "pre-closing" on the business day prior to the Closing Date with title
transfer and payment of the Purchase Price to be completed on the Closing Date
as set forth in Section 4.3 below.
4.2 Transactions at Closing.
On the Closing Date:
(a) Seller shall deliver or cause to be delivered to Buyer the following
documents (collectively, the "Conveyance Documents") duly executed and
acknowledged where appropriate:
(i) Standard-form special warranty deed (the "Deed") conveying the
Real Property and the Improvements, subject only to the
applicable Permitted Exceptions, in the form attached hereto as
Exhibit H;
(ii) Bill of Sale in the form set forth on Exhibit B attached hereto
conveying the Personal Property to Buyer;
(iii) Assignment and Assumption Agreement (the "Assignment") in the
form set forth on Exhibit C attached hereto;
(iv) Certificate of non-foreign status in the form set forth on
Exhibit D attached hereto, to confirm that Buyer is not
required to withhold part of the Purchase Price pursuant to
Section 1445 of the Internal Revenue Code of 1986, as amended;
(v) Original Tenant Estoppel Certificates for the Leases to the
extent and in the form that tenants may have delivered same on
or before the Closing Date;
(vi) Original executed copies of all of the Leases;
(vii) Information required by the Title Company to comply with the
real estate reporting requirements set forth in Section 6045(e)
of the Internal Revenue Code of 1986, as amended;
(viii) Certificate confirming that the representations and warranties
of Seller under this Agreement remain true and correct in the
form attached hereto as Exhibit L;
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(ix) Evidence as to the authority of the person or persons executing
documents on behalf of the Seller reasonably acceptable to
Buyer and the Title Company;
(x) Leases and Service Contracts, together with such leasing and
property files and records located at the Property or at the
property manager's office necessary in connection with the
continuing day-to-day operation, leasing and maintenance of the
Property; provided, however, that proprietary information of
Seller not required in the day-to-day operation of the Property
shall not be included. For a period of three (3) years after
the Closing, Buyer shall allow Seller and its agents and
representatives access without charge to all files, records and
documents delivered to Purchaser at the Closing upon reasonable
advance notice and at all reasonable times, to examine and make
copies of any and all such files, records and documents, which
right shall survive the Closing;
(xi) Affidavits as may be customarily and reasonably required by the
Title Company, in a form reasonably acceptable to Seller;
(xii) Closing Statement acceptable to Seller; and
(xiii) Such other documents as may be reasonably necessary and
appropriate to complete the Closing of the transaction
contemplated herein.
(b) Buyer shall deliver to Seller the following:
(i) The Purchase Price as adjusted to reflect the Buyer's share of
closing costs, prorations and any fees as more particularly set
forth in Section 4.3 below;
(ii) Buyer's Affidavit and Agreement in the form set forth on
Exhibit E attached hereto;
(iii) Duly executed and acknowledged Assignment (as described in
Section 4.2(a)(iii) above);
(iv) Mechanic's Lien Affidavit in the form reasonably acceptable to
the Buyer; and
(v) Information required by the Title Company to comply with the
real estate reporting requirements set forth in Section 6045(e)
of the Internal Revenue Code of 1986, as amended;
(vi) Evidence of the authority of the person or persons executing
documents on behalf of Buyer reasonably acceptable to Seller
and the Title Company;
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(vii) Certificate confirming that the representations and warranties
of Buyer under this Agreement remain true and correct in the
form attached hereto as Exhibit M;
(viii) Closing Statement acceptable to Buyer;
(ix) Affidavits as may be customarily and reasonably required by the
Title Company, in a form reasonably acceptable to Buyer; and
(x) Such other documents as may be reasonably necessary and
appropriate to complete the Closing of the transaction
contemplated herein.
(c) Seller and Buyer shall execute a tenant notification letter to each
tenant of the Property (the "Tenant Notification Letter") in the form
attached hereto as Exhibit I, and Buyer shall, within forty-eight (48)
hours following the Closing, cause the Tenant Notification Letter to
be delivered to the tenants.
4.3 Title Transfer and Payment of Purchase Price.
Buyer agrees to deliver the cash payment specified in Section 4.2(b)(i)
above by wiring the same to the Title Company by no later than 12:00 noon
Central Time on the Closing Date directing the Title Company to deposit or wire
the same into Seller's designated account upon the receipt by the Title Company
of the documents to be executed and delivered by Seller under Sections 4.2(a)
and 4.2(c) above and upon issuance by the Title Company, or unconditional
agreement by the Title Company to issue, the Title Policy.
5. PRORATIONS; CLOSING ITEMS
5.1 Prorations; Closing Costs.
(a) The amount due on any gas, electric, water, sewer, or other utility
bill, or service contract relating to the Property shall be prorated
between Seller and Buyer as of the Closing Date, to the extent such
utilities or service contracts are the obligation of the Seller and
not a direct or indirect obligation of the tenants. Any utility
deposits made by Seller shall be and remain the property of Seller.
(b) All collected rents and other payments from each tenant under the
Leases, including, but not limited to, base rent, additional rent,
percentage rent (if any), and expense reimbursements, shall be
prorated between Seller and Buyer as of the Closing Date. The balance
remaining from any security deposits or prepaid rent held by Seller
shall be credited to Buyer (including the balance of estimated tax,
insurance and common area maintenance payments made to Seller by
tenants under the Leases net of any payments by Seller thereon). Buyer
agrees to indemnify and hold harmless Seller from and against any
loss, cost or expense (including, but not limited to, attorneys' fees)
resulting from any claim for such deposits or prepaid rent. If any
rent or other payments under the Leases are, in
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arrears as of the Closing Date ("Delinquent Rents"), the amount of any
such Delinquent Rents which are collected by Buyer shall be promptly
paid by Buyer to Seller after Closing. Buyer shall be entitled to
deduct from any such payment (i) Buyer's reasonable costs of
collection incurred with respect to such tenant (including attorneys'
fees), (ii) rents due for the month in which such payment is received
by Buyer, and (iii) rents from such tenant attributable to any period
after the Closing that are past due on the date of receipt. Buyer
agrees to use commercially reasonable efforts to collect Delinquent
Rents after the Closing provided Buyer shall not be required to bring
any action or proceeding against any Tenant on account of Delinquent
Rents. Seller may make reasonable efforts to collect Delinquent Rents
from and after the Closing Date; provided, however, that Seller shall
not be entitled to pursue any action for eviction of any tenant from
the Property.
(c) All real estate taxes attributable to the Property due and payable in
the calendar year in which the Closing occurs (i.e., 1997 real estate
taxes due October 1, 1997 and delinquent February 1, 1998) shall be
prorated as of the Closing provided Seller shall be entitled to
recover any reimbursements from Tenants on account of such taxes for
the period prior to Closing, and Buyer shall immediately remit to
Seller any such reimbursements received by Buyer upon receipt thereof.
Any real estate taxes (exclusive of tenant payment thereof) due and
payable in any calendar year which is (i) prior to the calendar year
in which Closing occurs (including 1996 real estate taxes due October
1, 1996 and delinquent February 1, 1997) shall be the obligation of
Seller and Seller shall pay all such taxes, including any interest or
penalty thereon, prior to Closing, and (ii) subsequent to the calendar
year in which the Date of Closing occurs shall be the obligation of
Buyer. If Closing shall occur before the actual real estate taxes for
the year of Closing (i.e., 1997 taxes) are known, the apportionment of
real estate taxes shall be upon the basis of the real estate taxes for
the Property for the immediately preceding year, provided that if the
taxes for the current year are thereafter determined to be more or
less than the real estate taxes for the preceding year (after any
appeal in assessed valuation thereof is concluded), Seller and Buyer
promptly shall adjust the proration of such real estate taxes and
Seller or Buyer, as the case may be, shall pay to the other any amount
required as a result of such adjustment. Seller and Buyer agree to
mutually cooperate with each other in connection with ongoing tax
reduction proceedings relating to prior tax years, if any, and any
ongoing or future proceedings relating to the tax year in which the
Closing occurs, if any, and any refund resulting therefrom (to the
extent not refundable to the tenants under the Leases) shall be
prorated between Seller and Buyer based on the Closing Date, after
deducting therefrom the reasonable out-of-pocket expenses incurred by
the parties. The provisions of the immediately preceding two sentences
shall survive Closing and shall not be merged therein.
(d) Buyer shall pay for the cost of recording the Deeds, the cost of any
endorsements or special coverages of any nature in connection with the
Title Policy (including
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without limitation any amendment of the survey exception to "shortages in
area only"), one-half (l/2) of any escrow fees and closing fees to the
Title Company, any surveys prepared by or at the direction of Buyer, any
lender's title insurance coverage, and any mortgage taxes or other similar
taxes, fees or assessments, and pay any sales tax in connection with the
transfer of the Personal Property. Buyer shall pay for all costs relating
to any financing obtained by Buyer in connection with its purchase of the
Property and all costs incurred by Buyer in performing any related tests
and investigations. Seller shall pay the base premium for the Title Policy
(without the cost of any endorsements or special coverages) one-half (1/2)
of all escrow fees and closing fees charged by the Title Company, and the
recording fees with respect to documents which Seller elects to place of
record in order to cure title objections raised by Buyer to the extent
Seller elects to cure the same, as fully described in said Section 3.3.
Each party shall pay its own attorney's fees.
5.2 Calculation of Prorations.
For purposes of calculating prorations, Seller shall be deemed to be in
title to the Property, and therefore entitled to the income therefrom and
responsible for the expenses thereof, through the day prior to the Closing Date
and Buyer shall be deemed to be in title to the Property, and therefore entitled
to the income therefrom and responsible for the expenses thereof, from and after
12:01 a.m. on the Closing Date. All prorations shall be made on the basis of the
actual number of days of the year and month which have elapsed as of the Closing
Date. Except as otherwise stated above, if necessary, the amount of prorations
shall be adjusted in cash after Closing, as and when complete and accurate
information becomes available but in any event no later than one hundred twenty
(120) days after the Closing Date; provided, however, the one hundred twenty
(120) day period shall be extended for a reasonable time for any real property
tax reduction or abatement proceeds which are to be prorated between Buyer and
Seller pursuant to the last sentence of Section 5.1(c) and for any period of
time which may be required for reconciliation of tax, insurance, and common area
maintenance expenses for the calendar year in which the Closing Date occurs.
Buyer and Seller each agree to reasonably cooperate with the other with respect
to such final proration. This provision shall survive Closing and shall not be
merged therein.
5.3 Furnishing of Information.
(a) Prior to the date hereof or within five (5) days of the date hereof,
Seller has or will furnish to Buyer copies of the following:
(i) a current rent roll, certified by The Heights Management Group,
Inc. (Seller's onsite property manager and hereinafter "Property
Manager") with respect to the Property, together with copies of
all Leases and amendments and/or modifications currently in
effect, together with a list prepared by Property Manager
pertaining to the status of rental payments by tenants under the
Leases and any delinquencies in connection therewith
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and listing to the best of the knowledge of Property Manager
any disputes pertaining to rent or additional rent with respect
to which Property Manager has received written notice;
(ii) a schedule of service, maintenance and other such contracts
relating to the day-to-day operation or maintenance of the
Property, together with copies of such contracts;
(iii) a statement summarizing all pending lease and/or renewal lease
negotiations currently being conducted by Seller and/or its
leasing agent with existing or prospective tenants;
(iv) a copy of the current Leasing and Management Agreement with The
Heights Management Group, Inc.;
(v) copies of financial statements for the Property for the last
two (2) years in the form prepared by Seller or Property
Manager in the ordinary course of business with respect to the
Property; and
(vi) copies of the current tax bill for the Property and current
property tax assessment information in Seller's possession.
(vii) A list of Personal Property prepared by Property Manager to be
conveyed at Closing pursuant to the Bill of Sale.
(b) Seller has allowed Buyer and Buyer's agents reasonable access to the
Property during regular business hours, subject to the terms of the
Leases and Buyer shall have the right to further inspect the Property
during the Inspection Period. Buyer hereby indemnifies, defends, and
holds Seller and the Property harmless from any and all costs, loss,
damages or expenses, of any kind or nature (including without
limitation mechanics' liens and including without limitation
reasonable attorneys' fees and expenses) arising out of or resulting
from such inspection, investigation entry and/or other activities upon
the Property by Buyer, its employees, agents, contractors,
subcontractors, and/or assigns. Notwithstanding anything to the
contrary herein, the indemnity set forth in this Section 5.3(b) shall
survive (i) any termination of this Agreement; and (ii) the Closing
and not be merged therein.
(c) Buyer acknowledges that Seller has made available for Buyer's
inspection and shall continue to make available during the Inspection
Period (i) the Leases and lease files; (ii) copies of financial
statements for the Property for the last two (2) years and copies of
such historical information in Seller's possession or the possession
of Seller's agents regarding operating expenses of the Property as
Buyer shall reasonably request; and (iii) other files, guaranties,
warranties, licenses, governmental permits (including Certificates of
Occupancy) and reports and agreements in the possession of Seller or
Property Manager pertaining to the Property, if any (i.e., engineering
reports, environmental reports, as-built plans,
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insurance information, ADA audits) and Service Contracts (including
contracts for lawn care, snow plowing, janitorial and preventive
maintenance services) relating to the Property (collectively, the "Due
Diligence Documents"), on site at the Property or at the business
office of the Property Manager or otherwise. Seller shall reasonably
cooperate with Buyer to obtain any consents required in connection
with an assignment of any of the Due Diligence Documents. All of the
Due Diligence Documents are confidential and shall not be distributed
or disclosed by Buyer to any person or entity not associated with
Buyer in accordance with Section 11.12 hereof. Seller agrees to
deliver to Buyer a copy of any written notices which Seller receives
prior to Closing, from any governmental authority pertaining to any
violation of law or ordinance regulating the use of the Property which
are received by Seller prior to the Closing Date and of any notice
which Seller receives prior to Closing from any tenant regarding any
default under any Lease. If the transaction fails to close for any
reason whatsoever, Buyer shall return to Seller all of the Due
Diligence Documents which Seller or Property Manager may have
delivered to Buyer in accordance with this Section 5.3. THE FURNISHING
OF ANY MATERIALS, DOCUMENTS, REPORTS, OR AGREEMENTS DESCRIBED ABOVE
SHALL NOT BE INTERPRETED IN ANY MANNER AS A REPRESENTATION OR WARRANTY
OF ANY TYPE OR KIND BY SELLER, PROPERTY MANAGER, ANY PARTNER OF SELLER
OR AGENT OF SELLER, OR ANY OFFICER, DIRECTOR, OR EMPLOYEE OF SELLER,
OR PROPERTY MANAGER, OR ANY OTHER PARTY RELATED IN ANY WAY TO ANY OF
THE FOREGOING.
6. REPRESENTATIONS AND WARRANTIES
6.1 Seller's Representations and Warranties.
Seller hereby represents and warrants to Buyer as follows:
(a) Seller's Entity. Seller is a Delaware corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware.
(b) Seller Authority. Seller has full power and authority to enter into
this Agreement and to perform all its obligations hereunder, and has
taken all action required by law, its governing instruments, or
otherwise to authorize the execution, delivery, and performance of
this Agreement and all the deeds, agreements, certificates, and other
documents contemplated herein. This Agreement has been duly executed
by and is a valid and binding agreement of Seller, enforceable in
accordance with its terms, except as enforceability may be limited by
equitable principles or by the laws of bankruptcy, insolvency, or
other laws affecting creditors' rights generally.
(c) No Conflict or Lien. Neither the execution or delivery of this
Agreement nor the consummation of the transactions contemplated herein
will conflict with or result in a breach of any contract, license, or
undertaking to which Seller is a party or by
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which any of its property is bound, or constitute a default thereunder
or, except as contemplated herein, result in the creation of any lien
or encumbrance upon the Premises.
(d) No Proceedings. No legal or administrative proceeding is threatened or
pending against Seller which would adversely affect its right to
convey the Premises to Buyer as contemplated in this Agreement.
(e) Leases. Seller has delivered to Buyer a correct and complete copy of
each Lease and all amendments thereto. The information regarding the
Leases contained on the Rent Roll attached here as Exhibit K is
correct and complete as of the date of this Agreement. To the
knowledge of Seller, the Leases are in full force and effect and
neither Seller, nor any tenant, is in default under the Leases. There
are no other leases or possessory rights of others regarding the
Property except as described in Exhibit K.
(f) Seller has no knowledge of and has not received notice of any
litigation which has been filed against Seller that arises out of the
ownership of the Property and would materially affect the Property or
use thereof, or Seller's ability to perform hereunder.
(g) Seller has no knowledge of and has not received written notice from
any governmental body, authority or agency of any violation of
federal, state or local laws, rules or regulations affecting the
Property, including any notice with respect to any Hazardous
Materials, as hereinafter defined.
(h) Seller has no knowledge of and has received no written notice of any
condemnation proceedings relating to the Property.
(i) All equipment leases to which Seller is a party relating to the
Property are accurately set forth on Exhibit N hereto.
(j) No leasing commissions are due and payable with respect to the
existing terms of the Leases except as set forth on the Rent Roll
described in Section 5.3(a)(i) hereof; provided, however, that nothing
contained in this Section 6.1(j) shall be construed in any way to
modify the obligations with respect to leasing commissions and tenant
improvements described in Sections 9.2 and 9.3 hereof.
(k) All service and maintenance contracts, including Service Contracts,
affecting the Property are accurate set forth on Exhibit F hereto.
Except with respect to the warranties set forth in the Deed and in Section
6.1 hereof, Seller has not made any warranty or representation, express or
implied, written or oral, concerning the Property, including without limitation
any representations relating to Hazardous Materials (as defined in Section
6.3(c) below).
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All representations and warranties of Seller contained herein are intended
to and shall remain true and correct as of the Closing and shall survive the
delivery of the Deed for a period of one (1) year after Closing and shall
thereafter expire. Any claims by Buyer with respect to such representations or
warranties shall be commenced by written notice to Seller within said one (1)
year period or shall be deemed waived by Buyer. Notwithstanding the foregoing,
Buyer shall have no claim against Seller with respect to the representations and
warranties set forth in this Section 6.1 if Buyer had actual knowledge that a
representation or warranty was untrue and inaccurate or incorrect as of the time
of Closing and Buyer nevertheless chose to proceed with Closing hereunder.
Whenever in this Agreement a representation of Seller is based on the
"Seller's knowledge" or words of similar import, such reference shall be deemed
to be to the actual knowledge of Michael Elnicky (asset manager of Seller) and
Debra C. Cole and Michael G. Johnson of Property Manager, without investigation
or inquiry of any kind. There shall be no personal liability to said individuals
arising out of said representations or warranties. No knowledge of parties
affiliated with, employed by, or related by agency to Seller other than those
persons specifically named above, shall be imputed to Seller or to the
above-named persons.
Notwithstanding anything to the contrary contained in this Agreement, the
aggregate amount which may be collected by Buyer pursuant to the representations
and warranties of Seller set forth herein shall not exceed $1,000,000.00.
6.2 Buyer's Representations and Warranties.
Buyer represents, warrants, and covenants to Seller that:
(a) Authority to Execute; Organization. This Agreement constitutes valid
and binding obligation of Buyer and is enforceable against Buyer in
accordance with its terms. If Buyer is a corporation, a partnership,
or a trust, Buyer is validly organized and in good standing under the
laws of the state of its organization, and the execution of this
Agreement, delivery of money and all required documents, Buyer's
performance of this Agreement and the transaction contemplated hereby
have been duly authorized by the requisite action or the part of the
Buyer and Buyer's directors, partners or trustees.
(b) Recording. Buyer shall not record this Agreement or a memorandum
hereof at any time.
6.3 Buyer Accepts Property "As Is".
(a) Buyer Acknowledgment. As of the expiration of the Inspection Period,
Buyer acknowledges for Buyer and Buyer's successors, heirs and
assignees, (i) that Buyer has been given a reasonable opportunity to
inspect and investigate the Property, all improvements thereon and all
aspects relating thereto, either
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independently or through agents and experts of Buyer's choosing and
(ii) that Buyer is acquiring the Property based upon Buyer's own
investigation and inspection thereof, and (iii) the provisions of this
Section 6.3(a) shall survive Closing and shall not be merged therein.
SELLER AND BUYER AGREE THAT UPON CLOSING THE PROPERTY SHALL BE SOLD
AND THAT BUYER SHALL ACCEPT POSSESSION OF THE PROPERTY ON THE CLOSING
DATE "AS IS, WHERE IS, WITH ALL FAULTS" WITH NO RIGHT OF SET-OFF OR
REDUCTION IN THE PURCHASE PRICE, AND THAT EXCEPT FOR THE WARRANTIES OF
TITLE CONTAINED IN THE DEED AND EXCEPT FOR THE REPRESENTATIONS AND
WARRANTIES OF SELLER SET FORTH IN SECTION 6.1(a) THROUGH (k) HEREOF
INCLUSIVE, SUCH SALE SHALL BE WITHOUT REPRESENTATION OR WARRANTY OF
ANY KIND, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION, WARRANTY
OF INCOME POTENTIAL, OPERATING EXPENSES, USES, MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE, AND SELLER DOES HEREBY DISCLAIM AND
RENOUNCE ANY SUCH REPRESENTATION OR WARRANTY. BUYER SPECIFICALLY
ACKNOWLEDGES THAT BUYER IS NOT RELYING ON ANY REPRESENTATIONS OR
WARRANTIES OF ANY KIND WHATSOEVER, EXPRESS OR IMPLIED, FROM SELLER,
PROPERTY MANAGER, OTHER AGENTS OR BROKERS AS TO ANY MATTER CONCERNING
THE PROPERTY (EXCEPT FOR THE WARRANTIES SPECIFICALLY SET FORTH IN THE
DEED AND IN SECTION 6.1(a) THROUGH (k) HEREOF INCLUSIVE), INCLUDING
WITHOUT LIMITATION: (1) THE CONDITION OR SAFETY OF THE PROPERTY OR ANY
IMPROVEMENTS THEREON, INCLUDING, BUT NOT LIMITED TO, PLUMBING, SEWER,
HEATING AND ELECTRICAL SYSTEMS, ROOFING, AIR CONDITIONING, IF ANY,
FOUNDATIONS, SOILS AND GEOLOGY INCLUDING HAZARDOUS MATERIALS (AS
HEREINAFTER DEFINED), LOT SIZE, OR SUITABILITY OF THE PROPERTY OR ITS
IMPROVEMENTS FOR A PARTICULAR PURPOSE; (2) WHETHER THE APPLIANCES, IF
ANY, PLUMBING OR UTILITIES ARE IN WORKING ORDER; (3) THE HABITABILITY
OR SUITABILITY FOR OCCUPANCY OF ANY STRUCTURE AND THE QUALITY OF ITS
CONSTRUCTION; AND (4) THE FITNESS OF ANY PERSONAL PROPERTY; OR (5)
WHETHER THE IMPROVEMENTS ARE STRUCTURALLY SOUND, IN GOOD CONDITION, OR
IN COMPLIANCE WITH APPLICABLE CITY, COUNTY, STATE OR FEDERAL STATUTES,
CODES OR ORDINANCES. SUBJECT ONLY TO THE LIMITED WARRANTIES OF TITLE
SET FORTH IN THE DEED AND THE WARRANTIES EXPRESSLY SET FORTH IN
SECTIONS 6.1(a) THROUGH (k) HEREOF, BUYER FURTHER ACKNOWLEDGES AND
AGREES THAT IT IS RELYING SOLELY UPON ITS OWN INSPECTION OF THE
PROPERTY AND NOT UPON ANY REPRESENTATIONS MADE TO IT BY SELLER, ITS
OFFICERS, DIRECTORS, CONTRACTORS, AGENTS OR EMPLOYEES OR ANY PERSON
WHOMSOEVER. ANY REPORTS,
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<PAGE>
REPAIRS OR WORK REQUIRED BY BUYER ARE TO BE THE SOLE RESPONSIBILITY OF
BUYER AND BUYER AGREES THAT THERE IS NO OBLIGATION ON THE PART OF
SELLER TO MAKE ANY CHANGES, ALTERATIONS, OR REPAIR TO THE PROPERTY,
AND BUYER ACKNOWLEDGES THAT UPON EXPIRATION OF THE INSPECTION PERIOD
BUYER HAS COMPLETED ITS DUE DILIGENCE WITH RESPECT TO THE PROPERTY TO
ITS SATISFACTION. BUYER IS SOLELY RESPONSIBLE FOR OBTAINING ANY RESALE
CERTIFICATE, CERTIFICATE OF OCCUPANCY OR ANY OTHER APPROVAL OR PERMIT
NECESSARY FOR TRANSFER OR OCCUPANCY OF THE PROPERTY AND FOR ANY
REPAIRS OR ALTERATIONS NECESSARY TO OBTAIN THE SAME, ALL AT BUYER'S
SOLE COST AND EXPENSE.
(b) No Claim for Hazardous Materials. Upon Closing, Buyer for Buyer and
Buyer's successors in interest releases Seller from, and waives all
claims and liability which Buyer may have against Seller for, any
structural, physical or environmental condition at the Property and
further releases Seller from, and waives all liability against Seller
attributable to, the structural, physical and environmental condition
of the Property, including without limitation the presence, discovery
or removal any Hazardous Materials in, at, about or under the
Property, or for, connected with or arising out of any and all claims
or causes of action based upon the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980 ("CERCLA"), the
Superfund Amendments and Reauthorization Act of 1986 ("SARA"), the
Resource Conservation and Recovery Act ("RCRA"), the Toxic Substances
Control Act (the "TSCA"), as such acts may be amended from time to
time, or any other federal or state statutory or regulatory cause of
action arising from or related to Hazardous Materials at, in or under
the Property (collectively, the "Hazardous Waste Laws") The waiver and
release of Buyer set forth in this section 6.3(b) shall survive the
Closing Date and shall be enforceable at any time after the Closing
Date.
(c) "Hazardous Materials" Defined. For purposes of this Agreement, the
term "Hazardous Material" shall mean any substance, chemical, waste or
material that is or becomes regulated by any federal, state or local
governmental authority because of its toxicity, infectiousness,
radioactivity, explosiveness, ignitability, corrosiveness or
reactivity, including, without limitation, those substances regulated
by the Hazardous Waste Laws.
(d) No Representations as to Hazardous Materials. Buyer acknowledges that
Seller has made no representations or warranties whatsoever to Buyer
regarding the presence or absence of any Hazardous Materials in, at,
or under the Property; provided, however, that if Seller and Buyer
acknowledge that Seller has made certain representations as to no
proceedings or notices received as more specifically set forth in
Sections 6.1(d), (f) and (g) hereof. Buyer has made such studies and
investigations, conducted such tests and surveys, and engaged such
16
<PAGE>
Specialists as Buyer has deemed appropriate to evaluate fairly the
Property, and its risks from an environmental and Hazardous Materials
standpoint.
7. CONDITIONS TO CLOSING
7.1 Seller's Conditions.
The obligation of Seller to sell and convey the Property under this
Agreement is subject to the satisfaction of the following conditions precedent
or conditions concurrent (the satisfaction of which may be waived only in
writing by Seller):
(a) Delivery and execution by Buyer of all monies, items, and other
instruments required to be delivered by Buyer to Seller;
(b) Buyer's covenants, warranties, and representations set forth herein
shall be true and correct as of the Closing Date;
(c) All of the actions by Buyer contemplated by this Agreement shall have
been completed; and
(d) There shall be no uncured default by Buyer of any of its obligations
under this Agreement.
7.2 Buyer's Conditions.
The obligation of Buyer to acquire the Property under this Agreement is
subject to the satisfaction of the following conditions precedent or conditions
concurrent:
(a) Delivery and execution by Seller of all monies, items and other
instruments to be delivered by Seller to Buyer;
(b) Seller's covenants, warranties and representations set forth herein
shall be true and correct as of the Closing Date.
(c) All of the actions by Seller contemplated by this Agreement shall have
been taken;
(d) There shall be no uncured default by Seller of any of its obligations
under this Agreement; and
(e) Buyer shall have received, on or before three (3) days before the
Closing Date, a Tenant Estoppel Certificate in substantially the form
attached hereto as Exhibit J from tenants leasing not less than
seventy-five percent (75%) of the leaseable area of the Improvements.
17
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7.3 Failure of Condition.
(a) In the event of a failure of any condition contained in Section 7.2
above if Closing shall not occur as and when provided in this
Agreement solely because of a default by Seller, then Buyer may:
(i) terminate this Agreement in which event: (1) all documents and
funds deposited by Buyer shall be immediately returned to Buyer;
and (2) all documents deposited by Seller shall be immediately
returned to Seller;
(ii) pursue specific performance of Seller's obligation to convey the
Property to Buyer in accordance with the terms of this Agreement;
or
(iii) waive such default and close the transaction.
(b) In the event of a failure of any condition contained in Section 7.1
above, Seller may in its sole discretion:
(i) Terminate this Agreement and Seller shall retain as liquidated
damages the funds described in Article 12, in which event all
documents deposited by Buyer shall be immediately returned to
Buyer, and all documents deposited by Seller shall be immediately
returned to Seller; or
(ii) Seller may waive such default and close the transaction.
(c) Seller waives any rights it may have to specific performance in the
event of a default by Buyer with the exclusive remedy of Seller being
the right to liquidated damages more fully described in Section 12
hereof. Buyer waives any right to any claim of any nature for damages
or otherwise in the event of a default by Seller and Buyer
acknowledges that its exclusive remedies in the event of a default by
Seller shall be to either terminate this Agreement in accordance with
Section 7.3(a)(i) above or to seek specific performance in accordance
with Section 7.3(a)(ii) above.
8. DAMAGE OR DESTRUCTION OF THE PROPERTY;
CONDEMNATION
8.1 Damage or Destruction of the Property.
(a) If, between the Effective Date and the Closing Date, the Property is
Materially Damaged or Destroyed (as hereinafter defined), Buyer may
elect in writing, within five (5) days after receipt of notice from
Seller of such damage or destruction, accompanied by information
regarding the amount and payment of insurance, to terminate this
Agreement or to purchase all of the Property without regard to such
damage or destruction. If Buyer fails to notify Seller of Buyer's
election, Buyer will be deemed to have elected to proceed with the
purchase of all
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<PAGE>
of the Property. In the event that Buyer purchases all of the
Property, Seller shall have no obligation to repair any such damage or
destruction, nor shall the Purchase Price be adjusted except that the
Purchase Price shall be reduced by an amount equal to the deductible
amount under Seller's casualty insurance policy. "Materially Damaged
or Destroyed" shall mean damage or destruction the repair or
replacement of which would exceed twenty percent (20%) of the Purchase
Price, as determined by a licensed general contractor approved by
Buyer and Seller. If, between the Effective Date and the Closing Date,
the Property sustains nonmaterial damage, Seller shall assign its
rights to insurance proceeds, if any, as provided for in Section
8.1(b) below. Seller agrees to maintain until the Closing the level of
insurance coverage in effect on the Property as of the Effective Date,
which insurance coverage is maintained at a replacement cost level.
(b) If Buyer elects or is required to purchase the Property despite such
damage or destruction, Seller shall assign its rights to and Buyer
shall be entitled to receive any insurance proceeds (with any accrued
interest thereon) at or after Closing (as the same are available).
Seller shall reasonably cooperate with Buyer to allow Buyer to collect
any available insurance proceeds.
8.2 Condemnation.
If prior to Closing all or a Material Part of the Property is subject to a
proposed taking by any public authority, Seller shall promptly notify Buyer in
writing of such proposed taking and Buyer may terminate this Agreement by notice
to Seller within fifteen (15) days after written notice thereof. If Buyer so
elects, this Agreement shall be of no further force and effect. If Buyer does
not so terminate this Agreement, or if the taking is as to a non-Material Part
of the Property, Buyer shall accept the Property subject to the taking without a
reduction in the Purchase Price and shall receive at closing an assignment of
all of Seller's rights to any condemnation award. Seller shall reasonably
cooperate with Buyer to allow Buyer to collect any such award. A "Material Part"
of the Property shall mean a taking which would exceed twenty percent (20%) or
more of the Purchase Price the Property, as determined by a licensed appraiser
approved by Seller and Buyer.
9. COMMISSIONS AND EXPENSES.
9.1 Payment of the Sale Commission.
Buyer and Seller represent and warrant to each other that no real estate
broker or agent has been authorized to act on either parties' behalf except CB
Commercial Group, Inc. ("Seller's Agent") under a commission agreement between
Seller and Seller's Agent, which commission ("CB Commission") under said
commission agreement Seller will pay to Seller's Agent at Closing. In addition,
it is contemplated that Trenton Bonner/Business Real Estate ("TB") will enter
into an additional agreement with Seller's Agent in connection with the
transaction described herein ("Additional Agreement"). Seller agrees to pay to
Seller's Agent an additional commission above and beyond the CB Commission in an
amount equal to the lesser of (i) the
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amount payable by Seller's Agent to TB under the Additional Agreement or (ii)
$180,000.00 (hereinafter "Additional Commission"). Buyer hereby indemnifies
Seller and holds Seller harmless from any and all demands or claims which now or
hereafter may be asserted against Seller for any brokerage fees, commissions or
similar types of compensation (other than the obligation of Seller to pay at
Closing the Additional Commission described in the immediately preceding
sentence) which may be claimed by any broker which was engaged or which claims
to have been engaged by Buyer and all expenses and costs in handling or
defending any such demand or claim, including reasonable attorney's fees. Seller
hereby indemnifies Buyer and holds Buyer harmless from any and all demands or
claims which now or hereafter may be asserted against Buyer for any brokerage
fees, commissions or similar types of compensation which may be claimed by any
broker which was engaged or which claims to have been engaged by Seller and all
expenses and costs in handling or defending any such demand or claim, including
reasonable attorney's fees.
9.2 Leasing Commissions.
Seller shall pay all leasing commissions payable under Leases executed
prior to November 14, 1996 except for commissions payable by reason of any
expansion, extension or renewal of such Leases (to the extent such expansions,
extensions or renewals are pursuant to option rights expressly set forth in such
Leases as of November 14, 1996) occurring on or after the date hereof which
shall be paid by Buyer. A summary of the business terms of any amendment,
renewal or expansion of an existing Lease (unless such renewal or expansion is
pursuant to the terms (existing as of November 14, 1996) of an existing Lease,
in which case Seller and Buyer agree that any such renewal or expansion shall be
effective upon the valid exercise by a tenant pursuant to the terms of any such
existing Lease and that any such renewals or expansions are hereby deemed
approved by Buyer) or of any new Lease which Seller wishes to execute between
November 14, 1996 and the Date of Closing will be submitted to Buyer prior to
execution by Seller. Buyer agrees to notify Seller in writing within five (5)
business days after its receipt thereof of either its approval or disapproval
thereof, including all leasing commissions, tenant improvement and inducement
payments to be incurred in connection therewith. In the event Buyer informs
Seller within such five (5) business day period that Buyer does not approve the
amendment, renewal or expansion of the existing Lease or the new Lease, which
approval shall not be unreasonably withheld, Seller shall have the right to
terminate this Agreement by written notice thereof to Buyer within five (5)
business days after Seller's receipt of written notice of Buyer's disapproval
thereof, or Seller shall not proceed with such amendment, renewal or expansion
of the existing Lease or new Lease. In the event Buyer fails to notify Seller in
writing of its approval or disapproval within the five (5) business day period
set forth above, Buyer shall be deemed to have approved such new Lease,
amendment, renewal or expansion. All leasing commissions and tenant improvement
costs with respect to any such amendment, renewal, expansion or new lease
approved or deemed approved by Buyer as set forth above in this Section 9.2
shall be the obligation of Buyer.
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9.3 Lease Expense Reimbursement and Assumption.
At Closing, Buyer shall (i) reimburse Seller for all leasing commissions,
tenant improvement or inducement payments, attorney's fees and other fees paid
or expenses incurred by Seller under Leases, expansions, extensions, or renewals
made on or after November 14, 1996, if any, which have been approved or deemed
approved by Buyer pursuant to Section 9.2, and (ii) assume all obligations of
the landlord under Leases which either (a) arise after Closing or (b) are
continuing covenants of the landlord which apply after Closing, if any.
10. NOTICES
All notices, requests or demands to a party hereunder shall be in writing
and shall be effective (i) when received by overnight courier service or
facsimile telecommunication (provided that a copy of such notice, request or
demand is deposited into the United States mail within one (1) business day of
the facsimile transmission), or (ii) three (3) days after being deposited into
the United States mail (sent certified or registered, return receipt requested),
in each case addressed as follows (or to such other address as Buyer or Seller
may designate in writing in accordance with this Section 10):
If to Seller:
St. Paul Properties, Inc.
385 Washington Street
St. Paul, Minnesota 55102-1398
Attention: James C. Adams
Phone No. (612) 310-8429
Fax No. (612) 310-2124
With a copy to:
Oppenheimer Wolff & Donnelly
3400 Plaza VII
45 South Seventh Street
Minneapolis, Minnesota 55402-1609
Attention: Lloyd G. Kepple
Phone No. (612) 344-9300
Fax No. (612) 344-9376
If to Buyer:
Corporate Realty Income Fund I, L.P.
406 East 85th Street
New York, New York 10028
Attention: Robert F. Gossett, Jr.
Phone No. (212) 751-3515
Fax No. (212) 879-4147
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With a copy to:
Arnold & Porter
35th Floor
399 Park Avenue
New York, New York 10022
Attention: Michael J. Canning
Phone No. (212) 715-1110
Fax No. (212) 715-1399
11. MISCELLANEOUS
11.1 Time.
Time is of the essence in the performance of each party's obligations
hereunder.
11.2 Attorneys' Fees.
If any legal action, arbitration or other proceeding is commenced to
enforce or interpret any provision of this Agreement, the prevailing party shall
be entitled to an award of its attorneys' fees and expenses. The phrase
"prevailing party" shall include a party who receives substantially the relief
desired whether by dismissal, summary judgment, judgment or otherwise.
11.3 No Waiver.
No waiver by any party of the performance or satisfaction of any covenant
or condition shall be valid unless in writing and shall not be considered to be
a waiver by such party of any other covenant or condition hereunder.
11.4 Entire Agreement.
This Agreement contains the entire agreement between the parties regarding
the Property and supersedes all prior agreements, whether written or oral,
between the parties regarding the same subject. This Agreement may only be
modified in writing.
11.5 Survival.
Except for (i) the representations and indemnity obligations of Buyer and
Seller under this Agreement, (ii) the post-closing obligations of Buyer and
Seller under this Agreement and (iii) as otherwise specifically provided in this
Agreement, none of the agreements, warranties and representations contained
herein shall survive Closing.
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11.6 Successors.
Subject to Section 11.7, this Agreement shall bind and inure to the benefit
of the parties hereto and to their respective legal representatives, successors
and permitted assigns.
11.7 Assignment.
Seller's written consent shall be required for any assignment of Buyer's
rights to a nominee under this Agreement. Any attempted unpermitted assignment,
except with Seller's prior written consent, shall be ineffective and shall
constitute a default under this Agreement provided Buyer shall be entitled to
assign its rights under this Agreement to a wholly owned affiliate of Buyer
without Seller's consent. Notwithstanding any assignment hereunder, Buyer shall
remain liable for the obligations of Buyer under this Agreement. Buyer
represents, warrants and certifies to Seller that Buyer has not assigned,
transferred or encumbered or agreed to assign, transfer or encumber, directly or
indirectly, all or any portion of its rights or obligations under this
Agreement. Buyer shall give written notice of any proposed assignment at least
five (5) business days prior to Closing. If Seller approves such assignment (or
in the case of a permitted transfer to a wholly owned affiliate), Seller shall
have no obligation to reissue any estoppels, surveys, or title commitments
previously delivered to Buyer, nor shall Seller be responsible for any costs or
expenses of any nature associated with such transfer.
11.8 Relationship of the Parties.
The parties acknowledge that neither party is an agent for the other party,
and that neither party shall or can bind or enter into agreements for the other
party.
11.9 Governing Law.
This Agreement and the legal relations between the parties hereto shall be
governed by and construed in accordance with the laws of the State of Texas.
11.10 Possession: Risk of Loss.
Seller shall deliver to Buyer possession of the Property on the Closing
Date, subject only to the Leases and any existing tenancies, and Permitted
Exceptions. All risk of loss or damage with respect to the Property shall pass
from Seller to Buyer on the Closing Date.
11.11 Review by Counsel.
The parties acknowledge that each party and its counsel have reviewed and
approved this Agreement, and the parties hereby agree that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement or
any amendments or exhibits hereto.
23
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11.12 Confidentiality.
(a) Seller and Buyer hereby covenant and agree that, at all times after
the date of execution hereof and prior to the Closing, unless
consented to in writing by the other party, no press release or other
public disclosure concerning this transaction shall be made, and each
party agrees to use best efforts to prevent disclosure of this
transaction, other than (i) to directors and officers of the parties,
limited partners of Buyer, and employees, prospective mortgage
lenders of Buyer, attorneys, accountants, agents and affiliates of the
parties who are involved in the ordinary course of business with this
transaction, all of which shall be instructed to comply with the
confidentiality provisions hereof; (ii) in response to lawful process
or subpoena or other valid or enforceable order of a court of
competent jurisdiction; (iii) in compliance with any filings required
by the Securities and Exchange Commission ("SEC") or other federal or
state agency.
(b) Notwithstanding anything to the contrary contained elsewhere herein,
Buyer hereby acknowledges that all information furnished by Seller to
Buyer or obtained by Buyer in the course of Buyer's investigation of
the Property, or in any way arising from or relating to any and all
studies or entries upon the Property by Buyer, its agents or
representatives, shall be treated as confidential information and
further, that if any such confidential information is disclosed to
third parties prior to the Closing, Seller may suffer damages and
irreparable harm. In connection therewith, Buyer hereby expressly
understands, acknowledges and agrees (i) that Buyer will not disclose
any of the contents or information contained in or obtained as a
result of any reports or studies made in connection with a Buyer's
investigation of the Property, in any form whatsoever (including, but
not limited to, any oral information received by Buyer during the
course of Buyer's inspection of the Property), to any party prior to
the Closing other than (a) the Seller, Seller's employees, agents or
representatives, or Buyer's agents, employees, representatives,
attorneys, consultants or potential institutional lenders, without the
prior express written consent of Seller (which consent shall not be
unreasonably withheld), (b) in response to lawful process or subpoena
or other valid and or enforceable order of a court of competent
jurisdiction, and (c) as required by the SEC or other federal or state
agency; (ii) that in making any disclosure of such information as
permitted hereunder, Buyer will advise said parties of the
confidentiality of such information and the potential of damage to
Seller as a result of any disclosure of such information by said third
party, and (iii) that Seller is relying on Buyer's covenant not to
disclose any of the contents or information contained in any such
reports or investigations to third parties (all of which is deemed to
be confidential information by the provisions of this Section). In the
event this Agreement is terminated, Buyer agrees to return to Seller
all information, studies, or reports Buyer or Buyer's agents have
obtained from Seller or Seller's agents, contractors or
representatives with respect to the Property or the condition of the
Property. In the event either Buyer or Buyer's agents, employees,
representatives, attorneys, consultants or potential institutional
24
<PAGE>
lenders causes a breach of Buyer's duty of confidentiality hereunder,
Buyer shall be liable to Seller for damages and Seller may pursue all
of its remedies afforded it under this Agreement.
11.13 Termination.
Upon termination of this Agreement for any reason by either party, Buyer
shall have the obligation to return to Seller all Due Diligence Documents and
copies thereof (including the Survey) and any other information or documentation
received by Buyer from Seller or Seller's agents with respect to the Property
and shall not disclose to any third party the contents thereof. Seller shall not
have any obligation to return any sums due Buyer, upon any termination of this
Agreement by Buyer, until the Due Diligence Documents and copies thereof
(including the Surveys) and such other information or documents provided to
Buyer by Seller or Seller's agents have been returned to Seller.
11.14 Intentionally Omitted.
11.15 Counterparts.
This Agreement may be executed in one or more counterparts, each of which
will be deemed an original, and the counterparts taken together shall constitute
a single agreement.
12. LIQUIDATED DAMAGES
If Buyer is unable or fails to consummate the transactions under this
Agreement, Seller shall be entitled to terminate this Agreement and Buyer shall
pay the amount of the Deposit described in Section 2.1 plus any accrued interest
thereon (the "Specified Sum") to Seller as liquidated damages. SELLER AND BUYER
ACKNOWLEDGE THAT SELLER'S DAMAGES WOULD BE DIFFICULT TO DETERMINE, AND THAT THE
SPECIFIED SUM IS A REASONABLE ESTIMATE OF SELLER'S DAMAGES. SELLER AND BUYER
FURTHER AGREE THAT THIS SECTION 12 IS INTENDED TO AND DOES LIQUIDATE THE AMOUNT
OF DAMAGES DUE SELLER, AND SHALL BE SELLER'S EXCLUSIVE REMEDY AGAINST BUYER,
BOTH AT LAW AND IN EQUITY ARISING FROM OR RELATED TO A BREACH BY BUYER OF ITS
OBLIGATION TO CONSUMMATE THE
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
25
<PAGE>
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. PROVISIONS OF THIS SECTION 12 SHALL
NOT BE CONSTRUED AS A LIMITATION ON THE INDEMNIFICATION OBLIGATIONS OF BUYER
UNDER SECTION 5.3(b) HEREOF.
13. NO RECORDING
The provisions hereof shall not constitute a lien on the Property and this
Agreement shall not be placed or suffered to be placed by Buyer for recording
with the office of the recorder (clerk) for the county in which the Property is
located. Buyer hereby appoints Seller as Buyer's true and lawful
attorney-in-fact, coupled with an interest, for the purposes of the execution of
such documents and doing such acts as shall be necessary to effect the discharge
of the recording of this Agreement if such recording shall have been
accomplished in violation of the Section.
14. EFFECTIVENESS
This Agreement shall only be effective if a counterpart is signed by both
Seller and Buyer.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set forth above.
SELLER:
ST. PAUL PROPERTIES, INC.,
a Delaware corporation
By: /s/ James C. Adams
------------------------
James C. Adams
Its: President
BUYER:
CORPORATE REALTY INCOME FUND I, L.P.
a Delaware limited partnership
By: /s/ Robert F. Gossett, Jr.
------------------------
Robert F. Gossett, Jr.
Its: General Partner
26
<PAGE>
EXHIBIT B
BILL OF SALE
THIS BILL OF SALE (the "Bill of Sale") is made as of the ________ day of
______________, 1997 by ST. PAUL PROPERTIES, INC., a Delaware corporation
("Seller"), in favor of CORPORATE REALTY INCOME FUND I, L.P. a Delaware limited
partnership ("Buyer").
Seller and Buyer are parties to a Purchase and Sale Agreement (the
"Purchase Agreement") dated ________, 1997 which provides for the sale of a
certain parcel of real property (the "Property") located in the State of Texas
as legally described on Exhibit A attached hereto.
In connection with the Purchase Agreement, Seller is required to convey to
Buyer certain items of tangible personal property as hereinafter described.
NOW THEREFORE, in consideration of TEN AND NO/100 DOLLARS ($10.00) and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Seller hereby CONVEYS AND TRANSFERS to Buyer, its legal
representatives, successors and assigns, all of its right, title and interest in
and to personal property located on the Property (excluding computer hardware
and software and property owned or used by Seller's agents) relating to the
ownership, use, maintenance or operation of the Property as set forth in Exhibit
B attached hereto.
SELLER MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE CONDITION OF THE
PERSONAL PROPERTY OR ITS MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE.
BY ITS ACCEPTANCE OF THIS BILL OF SALE BUYER ACKNOWLEDGES THAT IT HAS FULLY
INSPECTED THE PERSONAL PROPERTY AND BUYER ACCEPTS THE SAME IN ITS PRESENT USED
AND "AS IS" CONDITION.
IN WITNESS WHEREOF, the foregoing Bill of Sale was executed as of the date
first set forth above.
ST. PAUL PROPERTIES, INC.
By:______________________________
James C. Adams
Its: President
B-1
<PAGE>
State of Minnesota )
)ss.
County of Ramsey )
This instrument was acknowledged before me on this _____ day of
____________, 1997 by James C. Adams, the President of St. Paul Properties,
Inc., on behalf of said corporation.
--------------------------
Notary Public
My Commission Expires:_________________
B-2
<PAGE>
EXHIBIT A
TO BILL OF SALE
Legal Description
B-3
<PAGE>
EXHIBIT B
TO BILL OF SALE
Personal Property
B-4
<PAGE>
EXHIBIT C
---------
ASSIGNMENT AND ASSUMPTION AGREEMENT
-----------------------------------
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT ("Assignment"), is made as of
the ____ day of __________, 1997 by and between ST. PAUL PROPERTIES, INC., a
Delaware corporation ("Assignor") and CORPORATE REALTY INCOME FUND I, L.P., a
Delaware limited partnership ("Assignee").
RECITALS
Assignor, as seller, and Assignee, as buyer, are parties to a Purchase
and Sale Agreement ("Purchase Agreement") dated ___________, 1997, which
provides for the sale of certain real property (the "Property") located in the
State of Texas, as legally described on Exhibit A attached hereto; and
The Purchase Agreement provides, inter alia, (i) that Assignor shall
assign to Assignee certain leases, commission agreements, service contracts,
warranties, guarantees and trade name, (ii) that Assignee shall assume all of
the obligations of Seller thereunder from and after the date of such assignment,
and (iii) that Assignor and Assignee shall execute this Assignment.
NOW, THEREFORE, in consideration of TEN AND NO/100 DOLLARS ($10.00) and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1. Definitions. As used herein, the following terms have the following
meanings:
A. Accrued Obligations. Monetary obligations or rights to damages which
accrued or arose on or prior to the date hereof under any of the Assigned
Property, as defined below. Accrued Obligations do not include obligations to
pay leasing commissions (i) with respect to new leases made on or after November
14, 1996 approved or deemed approved by Buyer pursuant to Article 9 of the
Purchase Agreement, or (ii) with respect to any lease expansions, renewals,
modifications, amendments or extensions which occur on or after November 14,
1996 pursuant to leases made before that date which have been approved or deemed
approved by Buyer pursuant to Article 9 of the Purchase Agreement.
B. Assumed Obligations. Except for Accrued Obligations, all obligations
of Seller under the Assigned Property, as defined below.
2. Assignment. Assignor hereby conveys and assigns to Assignee all of
its right title and interest in, to and under the following (collectively, the
"Assigned Property"):
C-1
<PAGE>
A. those certain tenant space leases set forth on Exhibit B attached
hereto;
B. those certain equipment leases set forth on Exhibit C attached
hereto, to the extent assignable;
C. those certain commission agreements set forth on Exhibit D attached
hereto, to the extent assignable;
D. those certain service and maintenance contracts set forth on Exhibit
E attached hereto, to the extent assignable;
E. all permits and licenses held by Assignor pertaining to the Property,
to the extent assignable;
F. all unexpired warranties, permits, approvals, licenses, legal
certificates, and authorizations pertaining to the Property, to the extent
assignable;
G. the trade name "Alamo Towers", except that this assignment is made
without warranty of title to such name or of Assignee's right to the exclusive
use of such name, and Assignee hereby acknowledges that Assignor may never have
used or registered such trade name; and
H. all other intangibles pertaining to the Property, to the extent
assignable.
3. Assumption. Assignee hereby assumes and agrees timely to perform the
Assumed Obligations.
4. Indemnity. Assignee hereby indemnifies and agrees to defend and hold
harmless Assignor from any loss, cost, claim, liability expense or demand of
whatever nature arising from any breach or failure of Assignee to observe or
perform any of the Assumed Obligations. Assignor hereby indemnifies and agrees
to defend and hold harmless Assignee from any loss, cost, claim, liability,
expense or demand of whatever nature arising from any breach or failure of
Assignor to observe or perform any of the Accrued Obligations.
5. Claims. As a condition to liability of Other Party hereunder, the
claiming party ("Claiming Party") shall notify the other party ("Other Party"),
in writing, of any claim ("Claim") covered by this Assignment within a
reasonable time after the assertion thereof by a third party against Other
Party. In the event of such a notice of a Claim by Claiming Party to Other
Party, Other Party shall have ten (10) days after receipt thereof in which to
undertake the defense of the Claim on behalf of itself and Claiming Party. If
Other Party so undertakes to defend said Claim on behalf of itself and Claiming
Party, it shall retain and pay counsel to conduct such defense. Such counsel
shall be subject to the approval of the Claiming Party which approval shall not
be unreasonably withheld or delayed. Claiming Party may employ its own counsel
to work with Other Party as counsel in connection with the defense of said
Claim, but Claiming Party shall pay all fees and disbursements of said counsel.
Other Party may settle the Claim, without the
C-2
<PAGE>
consent of Claiming Party, to the extent the settlement does not bind Claiming
Party or impose any obligation on Claiming Party. If Claiming Party would have
any liability for the payment and/or performance of any settlement, Claiming
Party's written consent thereto must be obtained by Other Party in order for
said settlement to be binding upon Claiming Party.
If Other Party refuses or fails to so undertake to defend the Claim,
Claiming Party may defend the same on its own behalf, may retain and pay counsel
to conduct such defense and may settle the Claim, without the consent of Other
Party. Other Party shall then reimburse Claiming Party (a) for all reasonable
costs, including court costs and reasonable attorneys' fees, incurred by
Claiming Party in connection with said defense and/or any such settlement, (b)
for all sums paid by Claiming Party in accordance with any such settlement, and
(c) for all sums paid pursuant to any judgment entered against Claiming Party in
connection therewith.
IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment
as of the date first set forth above.
ASSIGNOR:
ST. PAUL PROPERTIES, INC.
By:_________________________________
James C. Adams
Its: President
ASSIGNEE:
CORPORATE REALTY INCOME FUND I, L.P.
By:_________________________________
Robert F. Gossett, Jr.
Its: General Partner
C-3
<PAGE>
EXHIBIT A
TO ASSIGNMENT AND ASSUMPTION AGREEMENT
Legal Description
C-4
<PAGE>
EXHIBIT B
TO ASSIGNMENT AND ASSUMPTION AGREEMENT
Tenant Space Leases
C-5
<PAGE>
EXHIBIT C
TO ASSIGNMENT AND ASSUMPTION AGREEMENT
Equipment Leases
NONE
C-6
<PAGE>
EXHIBIT D
TO ASSIGNMENT AND ASSUMPTION AGREEMENT
Commission Agreements
No Assignable Commission Agreements
C-7
<PAGE>
EXHIBIT E
TO ASSIGNMENT AND ASSUMPTION AGREEMENT
Service and Maintenance Contracts
C-8
<PAGE>
EXHIBIT H
FORM OF DEED
-------------
RECORDING REQUESTED BY:
WHEN RECORDED MAIL TO:
___________________________
___________________________
___________________________
Attn:
- --------------------------------------------------------------------------------
SPACE ABOVE THIS LINE RESERVED FOR RECORDER'S USE
SPECIAL WARRANTY DEED
THE STATE OF MINNESOTA )
) KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF RAMSEY )
THAT, ST. PAUL PROPERTIES, INC., a Delaware corporation ("Grantor"), for
and in consideration of the sum of Twelve Million and No/l00ths Dollars
($12,180,000.00) and other good and valuable consideration in hand paid to
Grantor by CORPORATE REALTY INCOME FUND I, L.P., a Delaware limited partnership
("Grantee"), whose mailing address is 406 East 85th Street, New York, New York
10028, the receipt and sufficiency of such consideration being hereby
acknowledged, has GRANTED, SOLD and CONVEYED, and by these presents does GRANT,
SELL AND CONVEY unto Grantee that certain real property being more particularly
described in Exhibit A attached hereto and made a part hereof for all purposes,
together with all improvements and fixtures situated thereon (collectively, the
"Property"); subject to those matters more particularly described in Exhibit B
attached hereto and made a part hereof for all purposes (collectively, the
"Permitted Exceptions").
TO HAVE AND TO HOLD the Property, together with all and singular the
rights and appurtenances thereto in any way belonging, unto Grantee, its
successors and assigns forever, subject to the Permitted Exceptions; and Grantor
does hereby bind itself and its successors to WARRANT AND FOREVER DEFEND all and
singular the Property, subject to the Permitted Exceptions, unto Grantee, its
successors and assigns, against every person whomsoever lawfully claiming, or
claim the same, or any part thereof, by, through, or under Grantor, but not
otherwise.
H-1
<PAGE>
NOT WITHSTANDING ANYTHING TO THE CONTRARY HEREIN, IT IS EXPRESSLY
UNDERSTOOD AND AGREED THAT GRANTEE IS ACQUIRING THE PROPERTY "AS IS" AND "WHERE
IS", AND WITH ALL FAULTS AND THAT, EXCEPT AS TO THE SPECIAL WARRANTY OF TITLE
SET FORTH ABOVE AND EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES OF GRANTOR
EXPRESSLY SET FORTH IN SECTION 6.1 OF THE PURCHASE AND SALE AGREEMENT BETWEEN
GRANTOR AND GRANTEE DATED AS OF JANUARY 28, 1997 ("PURCHASE AGREEMENT") (AS SUCH
REPRESENTATIONS AND WARRANTIES ARE LIMITED BY THE LAST FOUR PARAGRAPHS OF SAID
SECTION 6.1 OF THE PURCHASE AGREEMENT), GRANTOR HAS NOT MADE AND DOES NOT MAKE
ANY REPRESENTATIONS OR WARRANTIES, EXPRESSED OR IMPLIED, IN THIS SPECIAL
WARRANTY DEED WITH RESPECT TO THE QUALITY, PHYSICAL CONDITION, EXPENSES, VALUE
OF THE PROPERTY OR IMPROVEMENTS THEREON, HANDICAPPED ACCESSIBILITY LAW
COMPLIANCE, PRESENCE/ABSENCE OF HAZARDOUS MATERIALS, ELECTRIC AND MAGNETIC
FIELDS OR ABOVE/BELOW GROUND STORAGE TANKS, OR ANY OTHER MATTER OR THING
AFFECTING OR RELATED TO THE PROPERTY (INCLUDING, WITHOUT LIMITATION, WARRANTIES
OF HABITABILITY, WARRANTIES OF MERCHANTABILITY AND/OR OF FITNESS FOR A
PARTICULAR PURPOSE), WHICH MIGHT BE PERTINENT IN CONSIDERING THE MAKING OF THE
PURCHASE OF THE PROPERTY, AND GRANTEE, BY ITS ACCEPTANCE HEREOF, DOES HEREBY
RELEASE AND FOREVER DISCHARGE GRANTOR AND ITS OFFICERS, DIRECTORS, AGENTS,
EMPLOYEES, SUCCESSORS AND ASSIGNS FROM ANY AND ALL CLAIM, OBLIGATION AND
LIABILITY (WHETHER BASED IN TORT, UNDER CONTRACT OR OTHERWISE) ATTRIBUTABLE, IN
WHOLE OR IN PART, TO ANY SUCH REPRESENTATION AND/OR ALLEGED REPRESENTATION.
IN WITNESS WHEREOF, Grantor has executed this Special Warranty Deed as
of ____________________________, 1997.
"Grantor"
ST. PAUL PROPERTIES, INC.,
a Delaware corporation
By:____________________________
James C. Adams
Its: President
Grantee's Address:
- -----------------
406 East 85th Street
New York, NY 10028
H-2
<PAGE>
STATE OF MINNESOTA )
) ss.
COUNTY OF RAMSEY )
On December ____, 1996 before me, a Notary Public, personally appeared
James C. Adams,
[ ] personally known to me [ ] proved to me on the basis of
satisfactory evidence
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his authorized capacity, and
that by his signature on the instrument the person, or the entity upon behalf of
which the person acted, executed the instrument.
WITNESS my hand and official seal.
--------------------------------
Signature of Notary
CAPACITY CLAIMED BY SIGNER:
[ ] Individual (s) [ ] Attorney-in-Fact
[ ] Partner(s) [ ] Subscribing Witness
[ ] Trustee(s) [ ] Guardian/Conservator
[ ] Corporate ___________________ [ ] Other:
Officer(s)____________________
SIGNER IS REPRESENTING:
Name of Person(s) or Entity(ies):
H-3
<PAGE>
EXHIBIT A
TO SPECIAL WARRANTY DEED
Legal Description
H-4
<PAGE>
LEGAL DESCRIPTION OF LAND
-------------------------
A 8.154 acre tract of land, said tract being all of Lot 30, Block 1, NCB 12571,
Alamo Savings Subdivision, Unit 1-B as recorded in Volume 8900, Page 210, Deed
and Plat Records of Bexar County, Texas, and 5.002 acres out of Lot 29, Block 1,
NCB 12571, Alamo Savings Subdivision, Unit 1-A, as recorded in Volume 8700, Page
239, Deed and Plat Records of Bexar County, Texas, said 8.154 acre tract being
more particularly described by metes and bounds, as follows:
BEGINNING: At a point in the north R.O.W. line of N.E. Loop 410 said point
being at the southwest end of a cut off line from the westerly
R.O.W. line of N. New Braunfels Avenue, for the southeast corner
of above referenced Lot 29;
THENCE: N 85(degree)36'20" W, with the north R.O.W. line of N.E. Loop
410, a distance of 691.32 feet to an angle point;
THENCE: N 83(degree)31'14" W, continuing along said north R.O.W. line of
N.E. Loop 410, a distance of 141.70 feet to a point for the
southwestern most corner of said 8.154 acre tract; said point
being the southwest corner of said Lot 30, Block 1, NCB 12571;
THENCE: Along the west line of said Lot 30, Block 1, NCB 12571, the
following bearings and distances:
N 06(degree)26'19" E, a distance of 125.02 feet to a point for
corner;
N 83(degree)31'44" W, a distance of 140.38 feet to a point for
corner;
N 40(degree)21'04" E, a distance of 212.71 feet to a point for
corner;
N 47(degree)51'57" W, a distance of 97.33 feet to a point for
corner;
N 41(degree)27'51" E, a distance of 220.05 feet to a point in
the southwest R.O.W. line of Cheever Alley (30' R.O.W.) for the
northwest corner of said 8.154 acre tract of land, said point
being the northwest corner of said Lot 30, Block 1, NCB 12571;
THENCE: S 48(degree)39'51" E, along said southwest R.O.W. line of
Cheever Alley, a distance of 235.21 feet to an angle point;
THENCE: S 85(degree)08'05" E, along the south line of said Cheever
Alley, a distance of 426.59 feet to a point for the northeast
corner of said 8.154 acre tract;
THENCE: S 05(degree)21'10" W, a distance of 135.25 feet to a point for
corner;
THENCE: S 89(degree)15'41" E, a distance of 51.10 feet to an angle
point;
Page 1 of 2
<PAGE>
EXHIBIT "A" (Cont.)
THENCE: S 85(degree)44'12" E, a distance of 153.05 feet to a point in
the west R.O.W. line of N. New Braunfels Avenue for corner of
said 8.154 acre tract;
THENCE: S 04(degree)52'30" W, with the west line of N. New Braunfels
Avenue, a distance of 241.54 feet to a point at the northeast
end of a cut off line from the north R.O.W. line of N.E. Loop
410;
THENCE: S 51(degree)15'48" W, along said cut off line a distance of
35.82 feet to the Point of BEGINNING and containing 8.154 acres
of 355,199. square feet of land, more or less.
Page 2 of 2
<PAGE>
EXHIBIT B
TO SPECIAL WARRANTY DEED
Permitted Exceptions
H-5
FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT
This First Amendment dated February 19, 1997 to Purchase and Sale Agreement
between ST. PAUL PROPERTIES, INC., a Delaware corporation ("Seller") and
CORPORATE REALTY INCOME FUND I, L.P., a Delaware limited partnership ("Buyer").
R E C I T A L S
A. Seller and Buyer have entered into that certain Purchase and Sale Agreement
dated January 28, 1997 ("Purchase Agreement") wherein Seller has agreed to
sell and Buyer has agreed to purchase that certain office project known as
Alamo Towers in San Antonio, Texas as more fully described in the Purchase
Agreement ("Real Property").
B. Seller and Buyer wish to acknowledge the expiration of the Inspection
Period as defined in Section 3.5 of the Purchase Agreement and the waiver
by Buyer of its rights to terminate under said Section 3.5 in connection
with the Inspection Period, as well as an amendment to the amount of the
Purchase Price and the resolution of certain other issues between the
parties.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, Seller and
Buyer hereby agree as follows:
1. Recitals a Part Hereof. The Recitals set forth above shall be deemed a part
of this Agreement and are hereby incorporated herein by reference.
2. Purchase Price. The reference to "Twelve Million One Hundred Eighty
Thousand and No/100 Dollars ($12,180,000.00)" in the second and third lines
of the first paragraph of Article 2 is hereby deleted in its entirety and
replaced with the following language:
"Twelve Million Two Thousand Three Hundred Seventy-Five and No/100
U.S. Dollars ($12,002,375.00)"
Further, Section 2.3 of the Purchase Agreement is hereby amended by
deleting the reference therein to "Eleven Million Nine Hundred Eighty
Thousand and No/100 U.S. Dollars ($11,980,000.00)" and replacing the same
with the following:
"Eleven Million Eight Hundred Two Thousand Three Hundred Seventy-Five
and No/100 U.S. Dollars ($11,802,375.00)"
3. Waiver of Inspection Period. By execution hereof, Seller and Buyer agree
that, subject to the agreements herein set forth, the Inspection Period (as
defined in Section 3.5 of the Purchase Agreement) has been terminated and
that Buyer has waived all termination rights in connection with the
Inspection Period. Accordingly, as more fully set forth in the Purchase
Agreement, the Deposit, together with all accrued interest thereon, has
become non-refundable as it pertain to any termination rights of Buyer with
respect to the Inspection Period (including without regard to the existence
of certain asbestos containing materials disclosed by Buyer's environmental
reports and the default by tenant under the Allied Physicians lease (Suite
E-900), which Buyer hereby acknowledges).
<PAGE>
4. Allied Physicians Lease. Not later than three (3) business days prior to
Closing (as defined in the Purchase Agreement), and as a further condition
under Section 7.2 of the Purchase Agreement to Buyer's obligation to
acquire the Real Property, Seller shall terminate that certain lease
between Seller and Allied Physicians relative to Suite E-900 (the "Lease")
and shall provide evidence reasonably satisfactory to Buyer of such
termination. Moreover, Buyer and Seller agree that Buyer shall not assume
any rights or obligations under the Lease pursuant to the Purchase
Agreement, the Assignment and Assumption Agreement to be executed in
connection with the Closing, or otherwise.
Seller agrees to protect, defend, indemnify and hold Buyer and its
representatives, agents and employees, and the officers, directors,
shareholders, partners, representatives, agents and employees of each of
them (collectively, the "Indemnitees") harmless from and against all
losses, damages, claims, causes of action, liens, costs or expenses,
including, without limitation, attorneys' fees and brokerage commissions,
which at any time may be imposed upon and/or incurred by the Indemnitees
arising from or in connection with the Lease or any dispute relating
thereto.
5. Commissions. Clause (ii) of the third sentence of Section 9.1 of the
Purchase Agreement is hereby amended by deleting the reference to
"180,000.00" and replacing the same with "177,375.00".
6. All Other Provisions Unchanged. Except as expressly set forth in this First
Amendment, all other provisions of the Purchase Agreement shall remain
unchanged and in full force and effect.
7. Counterparts. This First Amendment to Purchase and Sale Agreement may be
executed in one or more counterparts, each of which will be deemed an
original, and the counterparts taken together shall constitute a single
agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date hereinabove first written.
SELLER: ST. PAUL PROPERTIES, INC.,
a Delaware corporation
By: /s/ James C. Adams
---------------------------
James C. Adams
Its: President
BUYER: CORPORATE REALTY INCOME FUND I, L.P.,
a Delaware corporation
By: /s/ Robert F. Gossett, Jr.
---------------------------
Robert F. Gossett, Jr.
Its: General Partner
SECOND AMENDMENT OF LOAN AGREEMENT
SECOND AMENDMENT OF LOAN AGREEMENT (as the same may be amended or otherwise
modified from time to time, the "Amendment"), dated as of the 17th day of March,
1997, among FLEET BANK, NATIONAL ASSOCIATION, a national banking association,
having an office at 56 East 42nd Street, New York, New York 10017 ("Fleet"),
FIRST AMERICAN BANK TEXAS SSB, a Texas State Savings Bank, having an office at
14651 Dallas Parkway, Suite 400, Dallas, Texas 75240 ("FAB"; Fleet and FAB are,
collectively, the "Lender"); CORPORATE REALTY INCOME FUND I, L.P., a Delaware
limited partnership, having an office at 406 East 85th, New York, New York 10028
("Borrower"); and Fleet, as Agent for the Lender.
W I T N E S S E T H:
WHEREAS, pursuant to that certain Loan Agreement dated as of September 26,
1996 between Fleet and Borrower (as heretofore amended and the same may further
be amended or otherwise modified from time to time, the "Loan Agreement"), Fleet
made a loan to Borrower in the original principal amount of up to forty-four
Million and 00/100 ($44,000,000.00) Dollars (the "Loan");
WHEREAS, the Loan is evidenced by that certain promissory note of even date
with the Loan Agreement (as heretofore amended and as the same may further be
amended or otherwise modified from time to time, the "Note") made by Borrower
payable to the order of Fleet;
WHEREAS, pursuant to that certain Intercreditor Agreement dated as of
February 28, 1997 (as the same may be amended or otherwise modified from time to
time, the "Intercreditor Agreement") between Fleet and FAB and consented to by
Borrower, FAB has become a party to the Loan Agreement and Agent was appointed
to act as Agent;
WHEREAS, concurrently herewith Borrower is acquiring property commonly
known as Alamo Towers, San Antonio, Texas (the "San Antonio Project"); and
WHEREAS, Lender and Borrower desire to modify and amend the terms and
provisions of the Loan Agreement as hereinafter provided.
<PAGE>
NOW, THEREFORE, in consideration of the covenants set forth herein and for
other good and valuable consideration, the receipt and legal sufficiency of
which is hereby acknowledged, Lender, Borrower and Agent hereby agree as
follows:
1. Definitions. All capitalized terms used herein without definition and which
are defined in the Loan Agreement are used herein with the meanings
assigned to such terms in the Loan Agreement.
2. San Antonio Project. Lender hereby confirms and agrees that the San Antonio
Project shall be deemed to be a Project and that the amount of title
insurance to be purchased with respect to the San Antonio Project is
$12,002,375.
3. Amendments to Loan Agreement. The Loan Agreement is hereby modified as
follows:
a. EXHIBIT C (which is referred to in SECTION 6.10(c) of the Loan
Agreement) is hereby amended to provide for new Loan allocations for
the Projects. Such revised Loan allocations are as follows:
REVISED LOAN ALLOCATIONS FOR PROJECTS
(i) Alamo Towers in San Antonio, Texas -$6,711,196.
(ii) 2.06 acre site in the Los Angeles Corporate Center, located in
Monterey Park, California -- $699,083.
(iii) 6.1 acre site at 7301 Northwest Highway, Oklahoma City, Oklahoma
-- $1,342,239
(iv) 4.96 acre site in the Flatiron Industrial Park in the City of
Boulder, Colorado -- $4,474,131
(v) 6.75 acre site in the Las Colinas Office Center, Irving, Texas
-- $5,592,663
(vi) 5 acre site at 1001 Durham Avenue, South Plainfield, New Jersey
-- $6,487,490
(vii) 475 Fifth Avenue, New York, New York-- $18,455,789.
2
<PAGE>
b. The next to last sentence of SECTION 6.21 of the Loan Agreement is
hereby amended to read, in its entirety, as follows:
"Provided, however, that such 10,000 rentable square foot number
shall be 5,000 rentable square feet with respect to each of the New
York Project and the San Antonio Project."
4. Confirmation Regarding Environmental Compliance and Indemnification
Agreement. Borrower hereby confirms and agrees that, from and after the
date hereof, the San Antonio Project is and shall be considered part of the
Premises (as such term is defined in the Environmental Compliance and
Indemnification Agreement).
5. Outstanding Loans. Borrower represents and warrants to Lender that there
are no offsets, defenses or counterclaims to its obligations under the Loan
Documents and to the extent that any such offsets, defenses or
counterclaims exist without its knowledge, the same are hereby waived to
the fullest extent permitted by law. Except as modified by this Amendment
and by amendments to the other Loan Documents being executed and delivered
concurrently herewith, the terms and provisions of the Loan Documents are
hereby ratified and confirmed in all respects and continue in full force
and effect.
6. Modifications. No provision of this Amendment may be waived, amended or
supplemented except by a written instrument executed by Borrower, Lender
and Agent.
7. Successors and Assigns. This Amendment, which sets forth the entire
understanding of the parties hereto with respect to the subject matter
hereof, inures to the benefit of, and shall be binding upon, the parties
hereto and their respective successors and assigns.
8. Severabilitv. In the event that any one or more of the provisions contained
in this Amendment shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Amendment,
but this Amendment shall be construed as if such invalid,
3
<PAGE>
illegal or unenforceable provision had never been contained herein.
9. Captions; Counterparts. Captions used in this Amendment are for convenience
of reference only and shall not be deemed a part of this Amendment nor used
in the construction of its meaning. This Amendment may be signed in
counterparts.
IN WITNESS WHEREOF, Borrower, Lender and Agent have duly executed this
Amendment, as of the date and year first above
CORPORATE REALTY INCOME FIND I, L.P.
By: /s/ Robert Gossett, Jr
----------------------------
Robert Gossett, Jr
General Partner
By: 1345 REALTY CORPORATION,
Genral Partner
By: /s/ Robert Gossett, Jr
----------------------------
Robert Gossett, Jr
President
FLEET BANK, NATIONAL ASSOCIATION,
as a Lender and as Agent
By:
----------------------------
Title:
--------------------------
FIRST AMERICAN BANK TEXAS, SSB
By:
----------------------------
Title:
--------------------------
4
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from registrant's
audited financial statements as of and for the year ended December 31, 1996 and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 2,025,925
<SECURITIES> 0
<RECEIVABLES> 442,201
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,678,654
<PP&E> 112,971,546
<DEPRECIATION> 18,553,069
<TOTAL-ASSETS> 102,983,279
<CURRENT-LIABILITIES> 2,142,503
<BONDS> 39,955,200
0
0
<COMMON> 0
<OTHER-SE> 60,885,576
<TOTAL-LIABILITY-AND-EQUITY> 102,983,279
<SALES> 9,101,611
<TOTAL-REVENUES> 9,142,369
<CGS> 0
<TOTAL-COSTS> 6,793,357
<OTHER-EXPENSES> 705,558
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 965,540
<INCOME-PRETAX> 677,914
<INCOME-TAX> 0
<INCOME-CONTINUING> 677,914
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 677,914
<EPS-PRIMARY> 0.22
<EPS-DILUTED> 0.22
</TABLE>
