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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) November 25, 1997
(November 7, 1997) -----------------
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KRANZCO REALTY TRUST
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(Exact Name of Registrant as Specified in Charter)
Maryland 1-11478 23-2691327
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
128 Fayette Street, Conshohocken, Pennsylvania 19428
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (610) 941-9292
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(Former Name or Former Address, if Changed Since Last Report)
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<PAGE>
Item 5. Other Events.
Kranzco Realty Trust, a Maryland real estate investment trust
(the "Company"), has entered into an agreement with GP Development
Corporation ("GPD"), pursuant to which the Company will acquire GPD's
rights under five contracts to purchase three shopping centers and to
purchase partnership interests in entities which own two shopping centers,
all of which are located in the Atlanta metropolitan area (the "Georgia
Properties"), comprising an aggregate of approximately 650,000 square feet
of gross leasable area, which are known as The Village at Mableton, Park
Plaza, Northpark, Holcomb Bridge Crossing and Tower Plaza. The Georgia
Properties were approximately 98% leased as of November 1, 1997. The
Company will acquire the aforesaid shopping centers and interests pursuant
to contracts entered into with the following owners of the shopping
centers: (i) Tower Plaza - Tower Plaza Associates, L.P., (ii) Park Plaza -
West Stewarts Mill Associates, L.P., (iii) Northpark - NorthPark
Associates, L.P. (Cobb), (iv) Holcomb Bridge Crossing - Holcomb Bridge
Partners, L.P., and (v) The Village at Mableton - Mableton Village
Associates, L.L.C.
The Company will pay approximately $44 million for the Georgia
Properties of which approximately $1.6 million is payable by the issuance
of common shares of beneficial interest, par value $.01 per share, of the
Company (approximately 85,000 common shares assuming such shares are issued
at $18 13/16 per share, the closing price for such shares on the New York
Stock Exchange on November 24, 1997); approximately $21.9 million is
payable in cash (which is expected to be derived from the proceeds of a
contemplated offering of equity securities); and approximately $20.5
million is payable by the assumption of three mortgage loans each of which
is secured by one of the following properties: The Village at Mableton,
Park Plaza and Holcomb Bridge Crossing. Park Plaza secures a mortgage loan
in the unpaid principal amount of approximately $3,346,000 which bears
interest at the rate of 8.25% per annum and is due September 10, 2001. The
Village at Mableton secures a mortgage loan in the unpaid principal amount
of approximately $10,582,000 which bears interest at the rate of 9.22% per
annum, principal and interest payable monthly, with the unpaid principal
balance of approximately $9,567,000 on August 1, 2006 due on such date.
Holcomb Bridge Crossing secures a mortgage loan in the unpaid principal
amount of approximately $6,507,000 which bears interest at a rate of 8.20%
per annum, principal and interest payable monthly, with the unpaid
principal balance of approximately $6,162,000 on November 1, 2000 due on
such date.
The consummation of the acquisition of the Georgia Properties,
which is expected to take place in December 1997, is subject to the
satisfaction of various closing conditions.
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Trustees of
Kranzco Realty Trust:
We have audited the combined statement of revenue and certain expenses of
Georgia Properties, described in Note 1, for the year ended December 31,
1996. This financial statement is the responsibility of the Properties'
management. Our responsibility is to express an opinion on this financial
statement based on our audit.
We conducted our audit 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 statement is free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statement.
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 audit provides a
reasonable basis for our opinion.
The statement of revenue and certain expenses was prepared for the purpose
of complying with the rules and regulations of the Securities and Exchange
Commission for inclusion in a current report on Form 8-K of Kranzco Realty
Trust, as described in Note 1, and is not intended to be a complete
presentation of the Properties' revenue and expenses.
In our opinion, the financial statement referred to above presents fairly,
in all material respects, the revenue and certain expenses of Georgia
Properties for the year ended December 31, 1996, in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Philadelphia, Pa.,
November 10, 1997
<PAGE>
GEORGIA PROPERTIES
COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES (NOTE 1)
FOR THE YEAR ENDED DECEMBER 31, 1996
September 30, December 31
1997 1996
---- ----
(unaudited)
REVENUE
Minimum rent (Note 2) $ 3,577,512 $ 4,667,835
Tenant reimbursements 476,155 691,798
------------ ------------
Total revenue 4,053,667 5,359,633
------------ ------------
CERTAIN EXPENSES
Maintenance and other
operating expenses 271,755 358,680
Utilities 97,197 122,713
Real estate taxes 315,097 393,905
------------ ------------
Total certain expenses 684,049 875,298
------------ ------------
REVENUE IN EXCESS OF CERTAIN EXPENSES $ 3,369,618 $ 4,484,335
============ ============
The accompanying notes are an integral part of these financial statements.
<PAGE>
GEORGIA PROPERTIES
NOTES TO COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES
DECEMBER 31, 1996
1. BASIS OF PRESENTATION:
The combined statements of revenue and certain expenses reflect the
operations of Georgia Properties (the "Properties") that are owned by a
common control group which is managed by Parkway Partners LLC ("Parkway"),
as described below:
Square
Property Location Footage
-------- -------- -------
The Village at Mableton Atlanta, Georgia 231,594
North Park Macon, Georgia 180,555
Tower Plaza Carrollton, Georgia 87,990
Park Plaza Douglasville, Georgia 46,494
Holcomb Bridge Crossing Atlanta, Georgia 105,420
The Properties are expected to be acquired by Kranzco Realty Trust
("Kranzco") from GP Development Corporation in December 1997. The
Properties are approximately 98% leased as of December 31, 1996. The
combined statements of revenue and certain expenses will be included in
Kranzco's current report on Form 8-K as the above described transaction has
been deemed significant pursuant to the rules and regulations of the
Securities and Exchange Commission.
The accounting records of the Properties are maintained on an accrual
basis. Adjusting entries have been made to present the accompanying
financial statements in accordance with generally accepted accounting
principles. The accompanying financial statements exclude certain expenses
such as interest, depreciation and amortization, management fees and other
costs not directly related to the future operations of the Properties.
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenses
during the reporting period. The ultimate results could differ from those
estimates.
The combined statement of revenue and certain expenses for the nine months
ended September 30, 1997 is unaudited; however, in the opinion of
management, all adjustments (consisting solely of normal recurring
adjustments) necessary for the fair presentation of the combined statement
of revenue and certain expenses for the interim period have been included.
The results of the interim period are not necessarily indicative of the
results for the full year.
2. OPERATING LEASES:
Minimum rent includes straight-line adjustments for rental revenue
increases in accordance with generally accepted accounting principles. The
aggregate rental revenue increase resulting from the straight-line
adjustments for the year ended December 31, 1996, was $20,583 and $15,437
for the nine months ended September 30, 1997.
The following tenants account for greater than 10% minimum annual rent:
Property Tenant Minimum Annual Rent
-------- ------ -------------------
North Park Kmart $474,349
The Village at Mableton Kmart 483,554
The Properties are leased to tenants under operating leases with expiration
dates extending to the year 2013. Future minimum rentals under
noncancelable operating leases, excluding tenant reimbursements of
operating expenses as of December 31, 1996, are as follows:
1997 $4,340,674
1998 4,120,537
1999 3,696,853
2000 3,084,251
2001 2,809,766
Thereafter 22,138,637
Certain leases also include provisions requiring tenants to reimburse the
Properties for management costs and other operating expenses up to
stipulated amounts.
3. SUBSEQUENT EVENTS:
In October 1997, there was a fire at the Village at Mableton that destroyed
the Kmart and damaged three other stores. Kmart intends to rebuild the
store within the next eight months and is continuing to pay its minimum
rent obligations during this period. Parkway intends to rebuild the three
other stores, aggregating 8,800 square feet and approximately $95,000 of
annual minimum rent, within the next two months. The three other stores
are not paying rent; however Parkway has insurance to cover the related
lost revenue during the renovation.
In November 1997, Kranzco signed a letter of intent to acquire the
Properties from GP Development Corporation. Under the terms of the
Purchase Agreement, Kranzco will purchase the Properties through the
assumption of approximately $20.5 million of debt, issuance of $1.6 million
of Kranzco common shares and approximately $21.9 million of cash.
(b) Pro Forma Financial Information.
Kranzco Realty Trust Pro Forma Combined Condensed Financial Information
(Unaudited)
The accompanying financial statements present the unaudited pro forma
combined condensed Balance Sheet of Kranzco Realty Trust after giving
effect to the consummation of the UPI Acquisition and the Georgia
Acquisition, as of September 30, 1997 and the unaudited pro forma combined
condensed Statements of Operations of Kranzco Realty Trust for the nine
months ended September 30, 1997 and for the year ended December 31, 1996.
The unaudited pro forma combined condensed Balance Sheet as of
September 30, 1997 is presented as if the consummation of the Georgia
Acquisition had occurred on September 30, 1997. The unaudited pro forma
combined condensed Statements of Operations for the nine months ended
September 30, 1997 and for the year ended December 31, 1996 are presented
as if the consummation of the UPI Acquisition and the Georgia Acquisition
had occurred as of January 1, 1996 and carried forward through September
30, 1997.
Preparation of the pro forma financial information was based on
assumptions deemed appropriate by the management of Kranzco Realty Trust.
The assumptions give effect to the consummation of the UPI Acquisition and
the Georgia Acquisition in accordance with generally accepted accounting
principles, the entity qualifying as a REIT, distributing all of its
taxable income and, therefore, incurring no federal income tax expense
during the periods presented. The pro forma financial information is
unaudited and is not necessarily indicative of the results which actually
would have occurred if the transactions had been consummated at the
beginning of the periods presented, nor does it purport to represent the
future financial position and results of operations for future periods.
The pro forma information should be read in conjunction with the historical
financial statements of Kranzco Realty Trust incorporated by reference into
this Form 8-K.
<PAGE>
Kranzco Realty Trust
Pro Forma Combined Condensed Balance Sheet
As of September 30, 1997
(Unaudited)
The Company Georgia The Company
(Historical) Acquisition (Pro Forma)
---------- ---------- -----------
Assets: (Dollar amounts in thousands)
Shopping centers,
at cost, net $399,185 $43,860(B)
$443,045
Cash and marketable
securities 3,466 -- 3,466
Restricted cash 743 -- 743
Rents and other
receivables, net 9,025 -- 9,025
Prepaid expenses 2,843 -- 2,843
Deferred financing
costs, net 2,156 -- 2,156
Other deferred costs, net 2,158 -- 2,158
Other assets 1,232 -- 1,232
-------- ------- --------
Total assets $420,808 $42,260
$464,668
======== =======
========
Liabilities:
Mortgages and notes
payable $250,424 $20,435(B)
$270,859
Tenant security deposits 1,263 -- 1,263
Accounts payable and
accrued expenses 2,057 -- 2,057
Other liabilities 1,256 -- 1,256
Distributions payable 5,743 -- 5,743
-------- ------- --------
Total liabilities 260,743 20,435 281,178
-------- ------- --------
Kranzco Series C
Preferred Shares 2,673 -- 2,673
Beneficiaries Equity:
Common shares and
Preferred shares 116 10(A) 126
Capital in excess of
par value 216,777 23,415(A)
240,192
Cumulative net income
available for common shares 32,458 -- 32,458
Cumulative distributions on
common shares (91,772) -- (91,772)
-------- ------- --------
157,579 23,425 181,004
Unearned compensation on
restricted common shares (187) -- (187)
-------- ------- --------
Total beneficiaries' equity 157,392 23,425 180,817
-------- ------- --------
Total liabilities, Kranzco
Series C Preferred Shares
and beneficiaries' equity $420,808 $43,860 $464,668
======== ======= ========
The accompanying notes and management's assumptions are an integral part of
this statement.
<PAGE>
Notes and Management's Assumptions to Pro Forma Combined Condensed
Balance Sheet for Kranzco Realty Trust as of September 30, 1997
(Dollar amounts in thousands)
(A) To reflect the net proceeds from an
equity offering:
Gross proceeds $ 22,734
Cost of issuance 909
--------
Net proceeds $21,825
========
(B) Adjustment to reflect acquisition of
Georgia Properties:
Purchase Price $43,000
Plus: Acquisition costs 860
-------
Total Purchase Price $43,860
=======
Acquisition paid for by:
Assumption of debt $20,435
Issuance of Common Shares 1,600
Cash 21,825
-------
Total Debt $43,860
=======
<PAGE>
<TABLE>
<CAPTION>
Kranzco Realty Trust
Pro Forma Combined Condensed
Statement of Operations for
the Nine Months Ended September 30, 1997
(Unaudited)
The UPI Georgia
Company Acquisition Acquisition The Company
(Historical) (1/1-2/27/97) Total (Pro Forma) (Pro Forma)
---------- ----------- --------- --------- -----------
<S> <C> <C> <C> <C> <C>
(A)
(Dollar amounts in thousands
except share and per share data)
REVENUE:
Minimum rent $35,185 $1,194 $36,379 $3,578 $39,957
Percentage rent 831 4 835 -- 835
Expense reimbursements 8,253 152 8,405 476 8,881
Other income 94 -- 94 -- 94
Interest income 180 -- 180 -- 180
-------- ------- -------- ------- -------
Total revenue 44,543 1,350 45,893 4,054 49,947
-------- ------- -------- ------- -------
EXPENSES:
Interest 14,070 498 14,568 1,324(B) 15,892
Depreciation and amortization 9,247 228 9,475 768(C) 10,243
Real estate taxes 4,891 83 4,974 315 5,289
Operations and maintenance 6,062 96 6,158 369 6,527
General and administrative 2,190 -- 2,190 -- 2,190
-------- ------- -------- ------- -------
Total expenses 36,460 905 37,365 2,776 40,141
-------- ------- -------- ------- -------
Net income 8,083 445 8,528 1,278 9,806
DISTRIBUTIONS ON
PREFERRED SHARES 2,379 528 2,907 1,534(E) 4,441
-------- ------- -------- ------- -------
Net income (loss)
attributable to
common shareholders $5,704 $(83) $5,621 $(256) $5,365
======= ======= ======== ======= =======
NET INCOME PER COMMON SHARE $0.55 $0.54 $0.51
======= ======== =======
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES OF
BENEFICIAL INTEREST 10,337,000 10,337,000 10,422,000
The accompanying notes and management's assumptions are an integral part of this statement.
/TABLE
<PAGE>
<TABLE>
<CAPTION>
Kranzco Realty Trust
Pro Forma Combined Condensed
Statement of Operations for
the Year Ended December 31, 1996
(Unaudited)
The UPI Georgia
Company Acquisition Acquisition The Company
(Historical) (Pro Forma) Total (Pro Forma) (Pro Forma)
---------- ----------- --------- --------- -----------
<S> <C> <C> <C> <C> <C>
(Dollar amounts in thousands,
except share and per share data) (A)
REVENUE:
Minimum rent $41,665 $7,183 $48,848 $4,668 $53,516
Percentage rent 1,042 166 1,208 -- 1,208
Expense reimbursements 11,732 760 12,492 692 13,184
Other income 117 75 192 -- 192
Interest income 624 -- 624 -- 624
-------- ------- -------- ------- -------
Total revenue 55,180 8,184 63,364 5,360 68,724
-------- ------- -------- ------- -------
EXPENSES:
Interest 17,069 2,579 19,648 1,765(B) 21,413
Depreciation and amortization 11,194 2,110(D) 13,304 1,023(C) 14,327
Provision to reduce property to
net realizable value -- 400 400 -- 400
Real estate taxes 6,073 494 6,567 394 6,961
Operations and maintenance 9,473 575 10,048 482 10,530
General and administrative 2,836 476(D) 3,312 -- 3,312
-------- ------- -------- ------- -------
Total expenses 46,645 6,634 53,279 3,664 56,943
-------- ------- -------- ------- -------
Net income 8,535 1,550 10,085 1,696 11,781
DISTRIBUTIONS ON PREFERRED
SHARES 695 3,171 3,866 2,046(E) 5,912
-------- ------- -------- ------- -------
Net income (loss) attributable to
common shareholders $7,840 $(1,621) $6,219 $(350) $5,869
======== ======= ======== ======= =======
NET INCOME PER COMMON SHARE $0.76 $0.60 $0.56
======== ======== =======
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES OF
BENEFICIAL INTEREST 10,333,000 10,333,000 10,418,000
The accompanying notes and management's assumptions are an integral part of this statement.
</TABLE>
<PAGE>
Footnotes to Pro Forma Combined Condensed Statements of Operations
(unaudited)
The extraordinary loss of $11,052 on refinancing recorded in the second
quarter of 1996 and the loss of $63 on the sale of real estate recorded in
the first quarter of 1996 by Kranzco have been excluded from the pro forma
presentation of the Statement of Operations.
(A) To record the operations of the Georgia Properties.
(B) To reflect interest expense of debt assumed and the additional
borrowings as a result of the Georgia Acquisition:
September 30, December 31,
1997 1996
---- ----
Debt assumed $20,435 $20,435
Interest expense
at various rates $ 1,324 $ 1,765
======= =======
(C) To reflect depreciation expense over a 30 year life as a result of the
Georgia Acquisition as follows:
September 30, December 31,
1997 1996
---- ----
Depreciable basis
of the Georgia Properties $30,702 $30,702
Depreciation expense $ 768 $ 1,023
======= =======
(D) The depreciation and amortization and general and administrative
amounts include pro forma adjustments as a result of the UPI
Acquisition.
(E) To reflect distributions on equity offering as follows:
September 30, December 31,
1997 1996
------------- ------------
Net proceeds from
equity offering $22,734 $22,734
Distribution rate 9% 9%
------------- -----------
Distributions $1,534 $2,046
============= ===========<PAGE>
(c) Exhibits
2.1 Agreement dated October 30, 1997 between Kranzco Realty Trust and
GP Development Corporation.
2.2 Agreement and Plan of Merger dated October 30, 1997 between
Kranzco Realty Trust, GP Development Corporation, the
shareholders of GP Development Corporation and KR Atlanta, Inc.
2.3 Mortgage Note for $6,700,000.00, dated as of October 5, 1990,
from Holcomb Bridge Partners, L.P., a Georgia limited partnership
("Holcomb"), in favor of Allstate Life Insurance Company
("Allstate") (relating to Holcomb Bridge Crossing).
2.4 Modification of Mortgage Note, dated as of October 31, 1995,
between Holcomb and Harris Trust and Savings Bank ("Harris
Trust") (relating to Holcomb Bridge Crossing).
2.5 Deed to Secure Debt, Assignment of Leases, Rents and Contracts,
Security Agreement and Fixture Filing ("Deed to Secure Debt")
from Holcomb to Allstate, dated as of October 5, 1990 (relating
to Holcomb Bridge Crossing).
2.6 Modification to Deed to Secure Debt between Holcomb and Harris
Trust, dated as of October 31, 1995 (relating to Holcomb Bridge
Crossing).
2.7 Real Estate Note for $3,725,000.00, dated as of August 6, 1987,
from West Stewarts Mill Associates, Ltd., a Georgia limited
partnership ("West Stewarts"), in favor of Confederation Life
Insurance Company, a mutual insurance company incorporated in
Canada ("Confederation"), first amendment thereto dated as of
November 27, 1987, second amendment thereto dated as of November
1, 1993, third amendment thereto dated as of November 1, 1993 and
fourth amendment thereto dated as of February 21, 1995 (relating
to Park Plaza).
2.8 Deed to Secure Debt and Security Agreement between West Stewarts
and Confederation, dated as of August 6, 1987, first amendment
thereto dated as of November 27, 1987 and second amendment
thereto dated as of November 1, 1993 (relating to Park Plaza).
2.9 Escrow Agreement, dated as of November 1, 1993, between
Confederation and West Stewarts.
2.10 Promissory Note for $10,670,000.00, dated as of July 31, 1996,
from Mableton Village Associates, L.L.C., a Georgia limited
liability company ("Mableton Village"), in favor of Lehman
Brothers Holdings, Inc. d/b/a Lehman Capital ("Lehman") (relating
to The Village at Mableton).
2.11 Deed to Secure Debt and Security Agreement, dated as of July 31,
1996, between Mableton Village and Lehman (relating to The
Village at Mableton).
23.1 Consent of Independent Public Accountants - Arthur Andersen LLP.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Date: November 25, 1997
KRANZCO REALTY TRUST
By:/s/ Robert H. Dennis
---------------------------------
Name: Robert H. Dennis
Title: Vice President and
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
2.1 Agreement dated October 30, 1997 between Kranzco Realty Trust and
GP Development Corporation.
2.2 Agreement and Plan of Merger dated October 30, 1997 between
Kranzco Realty Trust, GP Development Corporation, the
shareholders of GP Development Corporation and KR Atlanta, Inc.
2.3 Mortgage Note for $6,700,000.00, dated as of October 5, 1990,
from Holcomb Bridge Partners, L.P., a Georgia limited partnership
("Holcomb"), in favor of Allstate Life Insurance Company
("Allstate") (relating to Holcomb Bridge Crossing).
2.4 Modification of Mortgage Note, dated as of October 31, 1995,
between Holcomb and Harris Trust and Savings Bank ("Harris
Trust") (relating to Holcomb Bridge Crossing).
2.5 Deed to Secure Debt, Assignment of Leases, Rents and Contracts,
Security Agreement and Fixture Filing ("Deed to Secure Debt")
from Holcomb to Allstate, dated as of October 5, 1990 (relating
to Holcomb Bridge Crossing).
2.6 Modification to Deed to Secure Debt between Holcomb and Harris
Trust, dated as of October 31, 1995 (relating to Holcomb Bridge
Crossing).
2.7 Real Estate Note for $3,725,000.00, dated as of August 6, 1987,
from West Stewarts Mill Associates, Ltd., a Georgia limited
partnership ("West Stewarts"), in favor of Confederation Life
Insurance Company, a mutual insurance company incorporated in
Canada ("Confederation"), first amendment thereto dated as of
November 27, 1987, second amendment thereto dated as of November
1, 1993, third amendment thereto dated as of November 1, 1993 and
fourth amendment thereto dated as of February 21, 1995 (relating
to Park Plaza).
2.8 Deed to Secure Debt and Security Agreement between West Stewarts
and Confederation, dated as of August 6, 1987, first amendment
thereto dated as of November 27, 1987 and second amendment
thereto dated as of November 1, 1993 (relating to Park Plaza).
2.9 Escrow Agreement, dated as of November 1, 1993, between
Confederation and West Stewarts.
2.10 Promissory Note for $10,670,000.00, dated as of July 31, 1996,
from Mableton Village Associates, L.L.C., a Georgia limited
liability company ("Mableton Village"), in favor of Lehman
Brothers Holdings, Inc. d/b/a Lehman Capital ("Lehman") (relating
to The Village at Mableton).
2.11 Deed to Secure Debt and Security Agreement, dated as of July 31,
1996, between Mableton Village and Lehman (relating to The
Village at Mableton).
23.1 Consent of Independent Public Accountants - Arthur Andersen LLP
AGREEMENT
THIS AGREEMENT, made as of the 30th day of October, 1997, between
GP Development Corporation, a Maryland corporation having an office c/o
Erwin L. Greenberg & Associates, Inc., 400 East Pratt Street, Baltimore,
Maryland 21202 ("GP") and Kranzco Realty Trust, a Maryland real estate
investment trust having an office at 128 Fayette Street, Conshohocken,
Pennsylvania 19428 ("KRT").
W I T N E S S E T H:
WHEREAS, ELG Financial Corporation ("ELG") entered into five
purchase and sale agreements with the sellers described therein (each, a
"Seller", and collectively, the "Sellers") with respect to the properties
described therein, as more particularly described in Exhibit A annexed
hereto (the "Contracts");
WHEREAS, by assignment dated as of the 9th day of October, 1997,
ELG assigned all of its right, title and interest in and to the Contracts
to GP; and
WHEREAS, GP desires to merge with a wholly owned subsidiary of
KRT designated by KRT ("KRT Sub") and KRT desires to allow GP to do so.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable consideration,
the adequacy and receipt of which are hereby acknowledged by all the
parties, it is agreed as follows:
4. All initially capitalized terms used herein which are not
otherwise defined herein shall have the meanings set forth in the
Contracts. As used herein, "Properties" shall mean the five properties
each of which is referred to as a Property under the Contract relating
thereto.
5. Simultaneously with the Closing contemplated by the
Contracts, GP shall merge into KRT Sub pursuant to a merger agreement
effectuating the terms of this Agreement in a form to be agreed upon by GP
and KRT on or before 5:00 P.M. (E.S.T.) on October 31, 1997 (the "Merger
Agreement"), and KRT Sub, at its sole cost and expense and without cost to
GP, shall cause GP to perform its obligations under the Contracts.
6. Simultaneously herewith, KRT has deposited in escrow with
Fedder and Garten Professional Association ("Escrow Agent") (i) the sum of
Twenty-Five Thousand and no/100 ($25,000.00) Dollars, representing the five
Initial Escrow Deposits made by ELG under the Contracts (the "Deposit") and
(ii) the sum of Twenty-Five Thousand and no/100 Dollars ($25,000),
representing the deposit made by GP to obtain an extension of the
Inspection Period under the Contracts to November 15, 1997 pursuant to that
certain letter agreement dated October 28, 1997 between GP and Parkway
Partners, L.L.C. (the "Extension Deposit"). The Deposit and the Extension
Deposit shall be held in escrow by Escrow Agent in accordance with the
provisions of Section 17 hereof. In the event KRT does not notify GP on or
before 5:00 P.M. (E.S.T.) on November 6, 1997 that KRT has elected to
terminate this Agreement in accordance with its rights set forth in Section
8 hereof, GP shall deliver the Additional Escrow Deposits to the Title
Company and KRT shall deposit in escrow with the Escrow Agent, on or before
5:00 P.M. (E.S.T.) on November 6, 1997, the sum of Two Hundred Twenty-Five
Thousand and no/100 ($225,000.00) Dollars in cash or other immediately
available funds, representing the sum of the Additional Escrow Deposits
(the "Additional Deposit"), provided that, if Sellers and GP modify the
Contracts such that the Extension Deposit is credited against the
Additional Escrow Deposits, the amount of the Additional Deposit payable by
KRT hereunder shall be reduced by $25,000. The Additional Deposit shall be
held in escrow by Escrow Agent in accordance with the provisions of Section
17 hereof.
7. Simultaneously with the Closing, KRT shall pay the
shareholders of GP, in consideration for the merger of GP into KRT Sub, the
sum of Two Million and no/100 ($2,000,000.00) Dollars (the
"Consideration"), as follows: (a) Four Hundred Thousand and no/100
($400,000.00) Dollars in immediately available federal funds wire
transferred to such account as GP may designate in writing not less than
one business day before the Closing, and (b) One Million Six Hundred
Thousand and no/100 ($1,600,000.00) Dollars by issuing to GP's shareholders
common shares of beneficial interest in KRT (the "Stock"). The number of
shares of Stock issued to GP or its designees shall be determined by
dividing $1,600,000 (or such other amount as shall be designated by GP in
accordance with the terms of this Section 4) by the closing price of such
stock on the New York Stock Exchange on the business day immediately
preceding the Closing, and rounding the quotient to the nearest whole
number. Such Stock shall have the restrictions on transfer for a period of
one (1) year and the registration rights set forth in the Merger Agreement.
Notwithstanding the foregoing, KRT shall increase the portion of the
Consideration payable in shares of Stock and reduce the portion of the
Consideration payable in cash in such proportion as GP shall elect in its
sole and absolute discretion upon written notice to KRT not less than three
(3) days prior to Closing. In the event the Closing occurs but any one or
more of the shopping centers included within the definition of Assemblage
are not included in the sale by reason of the failure of a condition or
conditions precedent set forth in the applicable Contract or the applicable
Seller's default thereunder, the Consideration shall be reduced by an
amount equal to $400,000 for each Property not included in the sale, in
which event the portions of the Consideration payable in cash and in shares
of Stock shall be reduced proportionately. GP hereby covenants that, in
the event any of the Property Inspection Reports (as hereinafter defined)
disclose material environmental, structural, title or survey defects in
respect of any Property, and KRT does not have the right to, or does not
exercise any right it may have to, terminate this Agreement in accordance
with the terms of Section 8 hereof, GP shall negotiate in good faith with
the applicable Seller to obtain a reduction of the Purchase Price in an
amount necessary to cure such defects. If for any reason GP enters into a
modification or amendment to any Contract reducing the Purchase Price
payable for the Property to be conveyed thereunder, the Consideration shall
be increased by an amount equal to one-half (1/2) of such reduction, in
which event the portions of the Consideration payable in cash and in shares
of Stock shall be increased accordingly.
8. GP represents and warrants to KRT as follows:
(a) The Contracts are in full force and effect, have not been amended
except as set forth on Exhibit A, and the Initial Escrow Deposits have been
deposited with the Escrow Agent under the Contracts;
(b) with the exception of the assignment from ELG to GP, neither the
Contracts nor any interest in the Initial Escrow Deposits have previously
been assigned;
(c) GP has the full power and authority to make, deliver and perform
this Agreement without the prior consent of any person, entity or
governmental authority. This Agreement is valid, binding and enforceable
against GP in accordance with its terms;
(d) (i) to the best of GP's knowledge, GP is not in default of any
term, provision or obligation to be performed by it under any of the
Contracts, and (ii) to the best of GP's actual knowledge, the Sellers
thereunder are not in default of any term, provision or obligation to be
performed by them under any of the Contracts;
(e) GP has no actual knowledge of any state of facts which would now
or, with the passage of time, cause any of the representations made by the
Sellers under any of the Contracts to be untrue;
(f) true and complete copies of the Contracts have been delivered by
GP to KRT; and
(g) GP owns no assets other than (x) the purchaser's rights under the
Contracts, and to the Initial Escrow Deposits and the Extension Deposit
held under the Contracts and (y) cash in bank accounts. GP has no
liabilities other than the purchaser's obligations under the Contracts,
payment obligations with respect to the Property Inspection Reports and
legal fees incurred in connection with this Agreement, the Merger Agreement
and the Contracts (which legal fees shall not be payable by KRT or KRT Sub
by reason of the merger contemplated by the Merger Agreement).
9. GP and KRT represent and warrant that no broker had any part
in bringing about this transaction other than New America Network, Inc. and
Smith Barney Inc. (collectively, the "Brokers"). GP agrees to indemnify
and hold harmless KRT from and against any and all liabilities,
obligations, costs and expenses in connection with any claim for
commission, compensation or otherwise for the bringing about of this
transaction or the consummation thereof which may be made against KRT by
any person or firm as a result of a breach of the foregoing representation
made by GP. KRT agrees to indemnify and hold harmless GP from and against
any and all liabilities, obligations, costs and expenses in connection with
any claim for commission, compensation or otherwise for the bringing about
of this transaction or the consummation thereof which may be made against
GP by any person or firm as a result of a breach of the foregoing
representation made by KRT. KRT shall pay any commissions or other fees
payable to the Brokers at the Closing, provided, however, that such
commissions or other fees shall not exceed $100,000 for New America
Network, Inc. and $50,000 for Smith Barney Inc. The obligations set forth
in this Section 6 shall survive the Closing.
10. GP has ordered certain reports and studies in connection
with the inspection of the Properties by GP and KRT, as more particularly
described in Exhibit B annexed hereto (the "Property Inspection Reports").
The anticipated costs of the Property Inspection Reports and the
anticipated date of delivery of said Property Inspection Reports are set
forth on Exhibit B. At all times prior to the Closing or upon the
termination of this Agreement by reason of GP's default hereunder, GP shall
pay the costs of the Property Inspection Reports as and when the same
become due and payable. Upon the Closing or the termination of this
Agreement for any reason other than GP's default hereunder, KRT shall
reimburse GP for all costs theretofore expended by GP in respect of the
Property Inspection Reports. To secure KRT's obligations under this
Section 7, KRT has simultaneously with the execution and delivery of this
Agreement delivered to Escrow Agent the sum of $50,000 (the "Reports
Deposit"), to be held in escrow in accordance with the terms of this
Agreement. Escrow Agent shall at the Closing disburse (x) to GP a portion
of the Reports Deposit equal to all amounts theretofore expended by GP in
connection with the Property Inspection Reports and (y) the balance of the
Reports Deposit, if any, to KRT. Upon the termination of this Agreement
for any reason other than GP's default hereunder, Escrow Agent shall
disburse (x) to GP an amount equal to all amounts theretofore expended by
GP in connection with the Property Inspection Reports and (y) the balance,
if any, to KRT, unless GP shall have instructed Escrow Agent in writing
within five (5) days of the termination of this Agreement to retain all or
any portion of such balance to defray the cost of any Property Inspection
Reports not theretofore paid by GP. In the event Escrow Agent retains all
or any portion of such balance in accordance with the terms of the
preceding sentence, Escrow Agent shall from time to time disburse from the
Reports Deposit such amounts as GP shall specify upon GP's submission to
Escrow Agent of evidence reasonably satisfactory to Escrow Agent that the
costs of Property Inspection Reports not theretofore paid by GP have become
due and payable. On the date which is three (3) months after the date of
the termination of this Agreement for any reason other than GP's default
hereunder, Escrow Agent shall disburse the balance of the Reports Deposit,
if any, to KRT, and Escrow Agent shall have no further obligation to KRT or
GP under this Section 7. In the event of the exhaustion of the Reports
Deposit (or the disbursement of the balance thereof to KRT in accordance
with the terms of the preceding sentence) following the termination of this
Agreement for any reason other than GP's default hereunder, KRT, promptly
following GP's written demand therefor, shall remit to GP all amounts
payable in respect of the Property Inspection Reports and not theretofore
paid by GP or disbursed to GP by Escrow Agent. In the event of the
termination of this Agreement by reason of GP's default hereunder, KRT
shall have no obligation with respect to the costs of the Property
Inspection Reports and Escrow Agent shall promptly remit to KRT the Reports
Deposit. Notwithstanding the foregoing, in the event that Escrow Agent
releases all or any portion of the Reports Escrow to GP following the
termination of this Agreement by KRT pursuant to the exercise of its rights
under Section 8 hereof, and GP subsequently either proceeds to Closing
under the Contracts or effectuates a transaction in the nature of an
assignment of the Contracts, GP shall promptly remit to KRT an amount equal
to all amounts theretofore released to GP by Escrow Agent from the Reports
Escrow and Escrow Agent shall release to KRT the balance, if any, of the
Reports Escrow. The terms of this Section 7 shall survive the Closing or
any earlier termination of this Agreement.
11. Under the Contracts, GP has an Inspection Period ending on
November 15, 1997 to complete its inspections of the Properties. GP shall
have no right to terminate the Contracts unless KRT has terminated this
Agreement. KRT shall have a limited inspection period under this Agreement
to complete its inspections of the Properties, which inspections shall be
limited to KRT's review of the Property Inspection Reports and the
insurance coverages (the "Insurance Coverages") maintained by the Seller
with respect to The Village at Mableton Shopping Center (the "Mableton
Property"), and for no other purpose. In the event KRT shall notify GP on
or before 5:00 P.M. (E.S.T.) on November 6, 1997 that KRT was unsatisfied
with such Property Inspection Reports or the Insurance Coverages, this
Agreement shall terminate and be of no further force or effect, and Escrow
Agent shall deliver the Deposit to KRT. Notwithstanding anything to the
contrary contained herein, KRT shall have no right to send such notice or
to terminate this Agreement if the aggregate cost to cure any
environmental, engineering, title and/or survey defects (excluding any
defects caused by the Mableton Casualty (hereinafter defined)) disclosed by
the Property Inspection Reports does not exceed Four Hundred Ten Thousand
and no/100 ($410,000.00) Dollars and KRT's review of the Insurance
Coverages indicates that such coverages (A) are in full force and effect
and (B) are sufficient to (i) pay the cost of repairing the damage caused
by the Mableton Casualty, to the extent that the tenant under the K-Mart
lease is not obligated to repair the same and notwithstanding that a
portion of an insurance claim may not be payable by the insurer by reason
of a deductible clause in the applicable Seller's casualty insurance policy
and (ii) compensate the owner of the Mableton Property for losses generally
covered by business income coverage caused by the Mableton Casualty for a
period of up to two (2) years, if applicable, from the date of the Mableton
Casualty. If the aggregate cost to cure such defects exceeds $410,000
(excluding any defects caused by the Mableton Casualty) or KRT's review of
the Insurance Coverages indicates that such coverages (1) are not in full
force and effect or (2) are insufficient to (x) pay the cost of repairing
the damage caused by the Mableton Casualty, to the extent that the tenant
under the K-Mart lease is not obligated to repair the same and
notwithstanding that a portion of an insurance claim may not be payable by
the insurer by reason of a deductible clause in the applicable Seller's
policy of title insurance or (y) compensate the owner of the Mableton
Property for losses generally covered by business income coverage caused by
the Mableton Casualty for a period of up to two (2) years, if applicable,
from the date of the Mableton Casualty, and KRT elects to terminate this
Agreement, GP may elect to terminate the Contracts. For purposes of this
Paragraph 8, the "Mableton Casualty" shall mean the casualty occurring at
the Mableton Property on October 26, 1997. KRT and GP hereby acknowledge
and agree that the following standards shall apply in assessing and
quantifying the aggregate cost to cure any environmental, structural, title
or survey defects disclosed by the Property Inspection Reports:
a. Any matter disclosed in the PCS Report (as defined in
Exhibit B) must require repair within two years of the date
of the PCS Report;
b. With respect to any matter disclosed in the Phase I Report
(as defined in Exhibit B), such matter shall qualify as a
defect (x) if the same constitutes a violation of applicable
law or laws or (y) if the same would result in a violation
of applicable law or laws upon the development,
redevelopment or improvement of the applicable Property (or
any portion thereof).
c. In the case of any matter disclosed in any title report for
any Property, to qualify as a defect, (x) the Title Company
shall not be willing to omit or insure against (without
additional premium) such matter as an exception from
coverage in the policy of title insurance issued in respect
of the Property at Closing, and (y) such matter shall not
constitute an easement, covenant, restriction or other
encumbrance which is not violated by the present use of the
Property and would not, upon any future violation, cause a
forfeiture or reversion of title; provided, however, that if
the Title Company shall be willing to insure against any
such matter with an additional premium the amount of such
additional premium may be included by KRT in determining
whether the $410,000 threshold has been met; and
d. In the case of any matter disclosed by a survey of any
Property, to qualify as a defect, (x) the Title Company
shall not be willing to insure without additional premium
against monetary loss sustained by reason of the enforced
removal of any improvements located on such Property by
reason of such matter and (y) such defect shall affect the
marketability of title to the Property; provided, however,
that if the Title Company shall be willing to insure against
any such matter with an additional premium the amount of
such additional premium may be included by KRT in
determining whether the $410,000 threshold has been met;
12. During the Inspection Period, and, if KRT has not terminated
this Agreement in accordance with the provisions of Section 8 hereof and is
otherwise not in material default of any of its obligations hereunder,
after the Inspection Period and until the Closing, (a) GP shall continue to
take the leading role in communicating with the Sellers and any other third
parties (including, without limitation, tenants and mortgagees of the
Properties, environmental and engineering firms, title companies and
surveyors) in connection with the transactions contemplated hereby;
provided, however, that the foregoing is not intended to prevent KRT from
communicating with such parties with the active, present participation of a
representative of GP; and (b) GP shall not grant any consents or otherwise
make any decisions binding on the purchaser under the Contracts (including,
without limitation, notifying the Seller under the Contract relating to
Park Plaza as to whether to prepay the loan thereon, approving the proposed
partnership agreements with the partners of the Sellers in connection with
the Contracts relating to Park Plaza and North Park, and deciding whether
to acquire any of the Properties subject to the existing debt) without the
prior written consent of KRT, which consent shall not be unreasonably
withheld, conditioned or delayed. GP shall promptly send to KRT copies (by
telecopy and/or by overnight courier if telecopy is impracticable) of any
notices received by GP under the Contracts. If KRT does not notify GP on
or before 5:00 P.M. (E.S.T.) on November 6, 1997 that KRT has elected to
terminate this Agreement in accordance with its rights set forth in Section
8 hereof, then, promptly following such date, KRT shall be introduced to
the Sellers, tenants and mortgagees as a prospective investor in the
Properties, the manner of such introductions to be determined by GP in its
sole discretion. In the event the Sellers default under the Contracts, GP
agrees to cooperate with KRT and to exercise such remedies under the
Contracts as KRT may elect, including, without limitation, seeking specific
performance or obtaining a refund of the Initial Escrow Deposit and the
Additional Escrow Deposit from the Title Company. GP further agrees to
cooperate with KRT to facilitate KRT's communication with the Sellers and
with third parties in connection with the transactions contemplated hereby,
such cooperation to include, without limitation, making representatives of
GP available at reasonable times and upon reasonable notice to participate
in such communications and meetings. KRT acknowledges, affirms,
represents, warrants and covenants on behalf of itself and its officers,
directors, employees, agents, successors and assigns, that it shall not
make any contact whatsoever, direct or indirect, with any of the Sellers
except as set forth in this Agreement.
13. Notwithstanding the provisions of Section 9 hereof, KRT
acknowledges that West Stewarts Mill Associates, L.P., as the Seller under
the Contract in respect of the Park Plaza Shopping Center (the "Park Plaza
Seller"), has applied for a loan (the "New Park Plaza Loan") on the terms
set forth in that certain letter dated October 21, 1997 from Morgan
Guaranty Trust Company of New York to Parkway Partners LLC, as modified by
the terms reflected in that certain letter agreement dated October 28, 1997
between GP and Parkway Partners, L.L.C. Provided that KRT has not
exercised its right to terminate this Agreement in accordance with the
terms of Section 8 hereof, KRT shall consent to the New Park Plaza Loan.
14. (a) In the event that KRT (x) elects not to terminate this
Agreement during the Inspection Period in accordance with the provisions of
Section 8 hereof or (y) terminates this Agreement in violation of the terms
of Section 8 hereof, KRT agrees that GP's damages in the event KRT defaults
in its obligations hereunder (other than by reason of the failure of the
Sellers or GP to perform their obligations under the Contracts or GP's
failure to perform its obligations under this Agreement or the failure of a
condition precedent under the Contracts or this Agreement) shall be
impracticable and difficult to ascertain. KRT and GP have considered
carefully the loss as a consequence of the negotiation and execution of
this Agreement, and the expenses of GP incurred in connection with GP's
performance hereunder, and the other damages, general and special, that GP
and KRT realize and recognize GP would sustain, but that cannot be
calculated with reasonable certainty. Based on all those considerations,
in the event of a default by KRT with respect to its obligations hereunder,
GP shall be entitled to the Deposit and the Additional Deposit, and KRT
shall owe GP Five Hundred Thousand and no/100 ($500,000.00) Dollars as
liquidated damages in full settlement of all claims resulting from such
default by KRT, GP hereby specifically waiving and relinquishing any and
all other remedies at law or in equity; provided, however, that the
foregoing liquidated damages shall not apply to any duty, obligation,
liability or responsibility which GP may have to any Seller under Paragraph
5.A of any Contract by reason of any action of KRT or any obligation which
KRT may have to GP pursuant to Section 6 hereof. To secure the payment of
the foregoing obligation, KRT has simultaneously herewith delivered its
promissory note in the amount of $500,000 (the "KRT Note") to Escrow Agent
to be held in escrow in accordance with the provisions of Section 17
hereof.
(b) GP agrees that KRT's damages in the event GP defaults in its
obligations hereunder (other than by reason of the failure of the Sellers
to perform their obligations under the Contracts or KRT's failure to
perform its obligations under this Agreement or the failure of a condition
precedent under the Contracts or this Agreement) shall be impracticable and
difficult to ascertain. KRT and GP have considered carefully the loss as a
consequence of the negotiation and execution of this Agreement, and the
expenses of KRT incurred in connection with KRT's performance hereunder,
and the other damages, general and special, that GP and KRT realize and
recognize KRT would sustain, but that cannot be calculated with reasonable
certainty. Based on all those considerations, in the event of a default by
GP with respect to its obligations hereunder, KRT shall have the right to
either (x) seek specific performance of GP's obligations hereunder or (y)
terminate this Agreement, whereupon KRT shall receive a refund of the
Deposit and the Additional Deposit and GP shall owe KRT Five Hundred
Thousand and no/100 ($500,000.00) Dollars as liquidated damages in full
settlement of all claims resulting from such default by GP, KRT hereby
specifically waiving and relinquishing any and all other remedies at law or
in equity; provided, however, that the foregoing liquidated damages shall
not apply to any duty, obligation, liability or responsibility which GP may
have to KRT pursuant to Section 6 hereof. To secure the payment of the
foregoing obligation, GP has simultaneously herewith delivered its
promissory note (the "GP Note") to Escrow Agent to be held in escrow in
accordance with the provisions of Section 17 hereof. GP acknowledges and
affirms that if GP defaults under this Agreement, and subsequently either
assigns directly or indirectly its rights under the Contracts to any other
person or entity in exchange for cash or any other form of consideration,
KRT, for the purpose of satisfying a judgment obtained by KRT under the GP
Note, shall have recourse to (i) any proceeds specifically received by GP
as a result of such subsequent assignment or assignments and (ii) actual
distributions of such proceeds made by GP. Any recipients of any such
distributions from GP, which distributions are directly traceable to such
assignment or assignments, shall be personally liable for the sole purpose
of refunding to GP, or to KRT as judgment creditor of GP, the distribution
actually received by such person which is directly traceable to such
subsequent assignment or assignments. KRT acknowledges and affirms that
the recipients of any such distributions would be the shareholders of GP
and that such persons' liability is limited to the repayment of such
proceeds actually received by such persons. Erwin L. Greenberg, Joel D.
Fedder, Herbert B. Mittental and Mark Laken, as the primary shareholders of
GP, hereby join in the making of this Agreement for the sole purpose of
acknowledging their agreement to be personally bound, as a potential
recipient of proceeds from GP as aforesaid, to return any proceeds actually
received by them in violation of this Section 11(b). In no event shall the
aggregate amount required to be returned by such shareholders exceed
$500,000.
15. Notwithstanding anything contained herein or in the
Contracts to the contrary, the parties acknowledge and agree that they
shall exercise commercially reasonable efforts and proceed with good faith
and due diligence to close the transactions contemplated hereby and by the
Merger Agreement contemporaneously with the Closing of the transactions
contemplated by the Contracts and within the time periods required by the
Contracts and as soon as reasonably possible, with a goal of closing the
same on or about November 10, 1997. In furtherance thereof, the parties
hereto agree to cooperate with one another to effectuate the closing of the
aforesaid transactions, such cooperation to include, without limitation,
(x) the preparation and submission of such documentation as shall be
required to secure the consent of any lender under a mortgage loan
encumbering any Property to the conveyance of such Property to GP and to
GP's assumption of the mortgage indebtedness secured thereby, to the extent
the purchaser under the Contract shall be obligated to seek such consent or
GP shall, in accordance with Section 9 hereof, elect to acquire title to
such Property subject to such mortgage indebtedness and (y) the undertaking
of negotiations with the partners of the Park Plaza Seller and the partners
of the Seller under the Contract in respect of North Park Shopping Center
with regard to GP's admittance as a general partner of such Sellers (or the
delivery of KRT stock to such partners in lieu of such admittance), with a
goal of finalizing such partnership agreements (or agreement to deliver
stock) on or before October 31, 1997. KRT further agrees to cause GP to
proceed to the Closing of the transactions contemplated by the Contracts
upon the receipt of tenant estoppel certificates from (x) the anchor
tenants specified in the Contracts and (y) tenants under leases demising
not less than fifty (50%) of the balance of the rentable square feet at
each Property demised as of the date hereof, provided that Sellers shall
have complied with all material conditions to Closing set forth in the
Contracts and provided further that (x) each Seller shall execute and
deliver to GP at Closing a certificate in form reasonably acceptable to KRT
from such Seller as to the matters set forth in the form of tenant estoppel
certificate annexed to the Contracts for the tenants selected by such
Seller which did not execute and deliver a tenant estoppel certificate to
the extent required to increase to 80% the rentable square footage of the
premises demised under leases as of the date hereof at the applicable
Property (exclusive of the premises demised under the aforesaid anchor
leases as of the date hereof) for which a tenant estoppel certificate is
obtained and (y) any representations contained in any such certificate
delivered by a Seller shall survive for a period of not less than one (1)
year from the date of the Closing. In addition, KRT agrees that it shall
not direct GP to exercise any right to terminate the Contract in respect of
the Village at Mableton Shopping Center by reason of any right accorded to
the buyer thereunder by the risk of loss provisions thereof. KRT further
agrees that, upon the request of GP and subject to the agreement of the
Sellers, upon the Sellers' satisfaction of the conditions precedent to
Closing set forth in the Contracts in respect of not less than three (3) of
the Properties, KRT shall proceed to the Closing under the Contracts and
under the Merger Agreement with respect to such Properties, notwithstanding
Sellers' failure to satisfy the conditions precedent to Closing in respect
of the entire Assemblage. If KRT proceeds to Closing under the Contracts
and the Merger Agreement with respect to less than the entire Assemblage in
accordance with the terms of the preceding sentence, then the Consideration
payable at such Closing shall be reduced in accordance with the terms of
Section 4 hereof and (A) GP shall assign the Contracts with respect to
which KRT shall not proceed to Closing (the "Remaining Contracts") to a
single-purpose entity to be formed by GP ("Newco"), (B) GP and KRT shall
modify this Agreement and the Merger Agreement to the extent necessary to
reflect the intention of the parties thereto to proceed to Closing under
the Contracts with respect to less than the entire Assemblage and to
proceed to a subsequent closing under the Remaining Contracts and (C)
simultaneously with the Closing under the Remaining Contracts, Newco shall
merge into a wholly owned subsidiary of KRT pursuant to an agreement
between Newco and KRT substantially in the form of this Agreement and a
merger agreement between Newco and KRT substantially in the form of the
Merger Agreement, in each case with such modifications as shall be required
to reflect the intention of the parties thereto to proceed to Closing under
only the Remaining Contracts. Notwithstanding the foregoing, it shall be a
condition to KRT's obligation to close the transactions contemplated hereby
that GP shall have caused Arthur Andersen or such other nationally
recognized accounting firm reasonably acceptable to KRT to deliver to GP
not later than the Closing audited 1996 financial statements for each of
the Properties.
16. This Agreement contains the entire understanding of the
parties hereto and may not be modified or terminated except by a written
instrument signed by the party sought to be charged thereby. This
Agreement supersedes all prior agreements between the parties and/or their
affiliates with respect to the subject matter hereof, including, without
limitation, the September 23, 1997 letter agreement between Erwin L.
Greenberg Commercial Corporation and KRT and the September 23, 1997 letter
from KRT to Erwin L. Greenberg & Associates.
17. This Agreement is binding upon, and shall inure to the
benefit of, the parties hereto and their successors and assigns; provided,
however, that neither party may assign this Agreement without the prior
written consent of the other party, which consent may be withheld in the
sole discretion of the party being asked to give its consent.
18. All notices and communications hereunder shall be in writing
and shall be deemed to be duly given if delivered by telecopy (with a copy
sent by overnight courier) or by overnight courier, addressed as follows:
If to GP:
GP Development Corporation
c/o Erwin L. Greenberg & Associates, Inc.
400 East Pratt Street, Suite 606
Baltimore, Maryland 21202
Attn: Mr. Mark Laken
Telecopy No.: (410) 837-0596
with a copy to:
Fedder and Garten Professional Association
36 South Charles Street
2300 Charles Center South
Baltimore, Maryland 21201
Attn: Brian J. Gibbons, Esq.
Telecopy No.: (410) 659-0543
If to KRT:
128 Fayette Street
Conshohocken, Pennsylvania 19428
Attn: Mr. Norman M. Kranzdorf
Telecopy No.: (610) 941-9193
with a copy to:
Robinson Silverman Pearce Aronsohn & Berman LLP
1290 Avenue of the Americas
New York, New York 10104
Attn: Alan S. Pearce, Esq.
Telecopy No.: (212) 541-4630
If to Escrow Agent:
Fedder and Garten Professional Association
36 South Charles Street
2300 Charles Center South
Baltimore, Maryland 21201
Attn: Brian J. Gibbons, Esq.
Telecopy No.: (410) 659-0543
All notices shall be deemed given on the date of receipt.
19. This Agreement shall be governed and construed in accordance
with the laws of the State of Maryland.
20. (a) Escrow Agent shall hold the Deposit, the Extension
Deposit, the Reports Deposit and, if applicable, the Additional Deposit in
one or more escrow accounts (collectively, the "Escrow Account") with a
recognized commercial bank or savings bank, of the type with which the
Escrow Agent usually and customarily maintains funds to be held in escrow.
The Escrow Account shall bear interest at the then prevailing rate for
insured money market accounts and the passbook or passbooks or other
evidence or indicia of ownership of the Escrow Account shall be retained by
Escrow Agent. All further deposits into, withdrawals from or other
transactions regarding the Escrow Account shall be performed, made and
undertaken solely by Escrow Agent.
(b) Notwithstanding anything to the contrary, in the event
Escrow Agent shall be uncertain as to its responsibilities hereunder, or
shall receive conflicting instructions with respect to the disposition of
the Deposit, the Extension Deposit and/or the Additional Deposit and/or the
Reports Deposit and/or the KRT Note and/or the GP Note, Escrow Agent shall
be entitled to retain the Deposit, the Extension Deposit, the Additional
Deposit (if applicable), the Reports Deposit, the KRT Note and the GP Note
until such time as Escrow Agent receives (i) written instructions signed by
GP and KRT directing Escrow Agent to make disposition of the Deposit, the
Extension Deposit, the Additional Deposit (if applicable), the Reports
Deposit, the KRT Note and the GP Note as directed, and (ii) such other
documentation, including but not limited to a joint release of Escrow
Agent's obligations hereunder, as counsel to Escrow Agent may reasonably
require. Hereinafter the aforesaid documentation is referred to as the
"Direction Letter". Such disposition shall be made within five (5)
business days following receipt by Escrow Agent of the Direction Letter.
(c) KRT shall be entitled to receive all of the interest
accruing on the Deposit, the Extension Default, the Additional Deposit and
the Reports Deposit, except in the event of a default by KRT under this
Agreement, in which event GP shall be entitled to retain such interest.
KRT's employer identification number is 23-2691327.
(d) Except to the extent otherwise provided in the
Contracts, GP shall be entitled to receive all interest on the Initial
Escrow Deposits and the Additional Escrow Deposits held by the escrow agent
under the Contracts.
(e) Escrow Agent undertakes to perform only such duties as
are expressly set forth herein, which duties the parties agree are
ministerial only. KRT acknowledges that Escrow Agent may continue to
represent GP in the transactions contemplated by this Agreement.
(f) Escrow Agent may accept any instructions, directions,
documents or instruments signed or issued by or on behalf of the parties
hereto, if believed by Escrow Agent to have been properly executed.
(g) Escrow Agent shall not be liable for any action taken
by it in good faith and believed by it to be authorized or within the
rights or powers conferred upon it by these instructions, and may consult
with counsel of its own choice and shall have full and complete
authorization and protection for any action taken or suffered by it
hereunder in good faith and in accordance with the opinion of such counsel,
except that nothing herein contained shall excuse the Escrow Agent from
liability for any act or omission on its part taken or suffered in bad
faith or in willful disregard of these instructions.
(h) Escrow Agent may, at any time and for any or no reason,
resign and be discharged from its duties or obligations hereunder by giving
to the parties hereto notice in writing of such resignation, specifying a
date when such resignation shall take effect. Effective upon such
resignation, Escrow Agent shall turn over the Deposit, the Extension
Deposit, the Additional Deposit (if applicable), the Reports Deposit, the
KRT Note and the GP Note to a successor escrow agent acceptable to the
parties.
(i) The parties hereto hereby jointly and severally
indemnify and hold harmless Escrow Agent from and against any and all
liability, cost, claims, damage and expense which Escrow Agent may incur in
the performance of its functions hereunder, including, without limitation,
attorneys' fees and expenses, except for any act or omission on the part of
Escrow Agent taken or suffered in bad faith or in wilful disregard of this
Escrow Agreement.
(j) Upon the Closing, Escrow Agent shall (1) deliver the
Deposit, the Extension Deposit and the Additional Deposit (other than any
interest accruing thereon) to GP, (2) deliver the interest accruing on the
Deposit, the Extension Deposit and the Additional Deposit to KRT (3) return
the KRT Note to KRT, and (4) return the GP Note to GP. The Reports Deposit
shall be disbursed in accordance with the terms of Section 7 hereof.
(k) In the event the Closing does not occur, KRT may send a
notice to Escrow Agent claiming that the Closing did not occur by reason of
(x) a default by Sellers under the Contracts or by reason of a failure of a
condition precedent to the obligations of GP under the Contracts or by
reason of a failure of a condition precedent to the obligations of KRT
under this Agreement, or (y) a default by GP under the Contracts or under
this Agreement. Any such notice may be accompanied by a request that, in
the case of (x) above, Escrow Agent (A) deliver the Deposit, the Extension
Deposit, the Additional Deposit and the KRT Note to KRT and the GP Note to
GP and (B) disburse the Reports Deposit in accordance with the terms of
Section 7 hereof or that, in the case of (y) above, Escrow Agent deliver
the Deposit, the Extension Deposit, the Additional Deposit, the Reports
Deposit, the KRT Note and the GP Note to KRT.
(l) In the event the Closing does not occur, GP may send a
notice to Escrow Agent claiming that the Closing did not occur by reason of
(x) a default by Sellers under the Contracts or by reason of a failure of a
condition precedent to the obligations of GP under the Contracts or by
reason of a failure of a condition precedent to the obligations of GP under
this Agreement, or (y) a default by KRT under this Agreement. Any such
notice may be accompanied by a request that Escrow Agent disburse the
Reports Deposit in accordance with the terms of Section 7 hereof and, in
the case of (x) above, deliver the Deposit, the Extension Deposit, the
Additional Deposit, the Reports Deposit and the KRT Note to KRT, and the GP
Note to GP, or that, in the case of (y) above, deliver the Deposit, the
Extension Deposit, the Additional Deposit, the KRT Note and the GP Note to
GP.
(m) In the event Escrow Agent shall receive a notice from
KRT pursuant to Section 17(k) hereof or from GP pursuant to Section 17(l)
hereof, Escrow Agent shall promptly send a copy of such notice to the other
party (the "Receiving Party"), and shall follow the instructions set forth
in such notice unless Escrow Agent receives from the Receiving Party on or
prior to the tenth day after delivering such notice to the Receiving Party
a notice indicating that the Receiving Party disputes the instructions set
forth in such notice. In the event Escrow Agent receives such a notice
from the Receiving Party within such period, Escrow Agent shall continue to
hold the Deposit, the Extension Deposit, the Additional Deposit, (if
applicable), the Reports Deposit, the KRT Note and the GP Note until such
time as Escrow Agent has received the Direction Letter.
21. This Agreement and all documents, agreements, understandings
and arrangements relating to this transaction have been executed by the
undersigned in his capacity as an officer or trustee of KRT which has been
formed as a Maryland real estate trust pursuant to a Declaration of Trust
of Kranzco Realty Trust, dated June 17, 1992, as amended and restated, and
not individually, and none of the trustees, officers or shareholders of KRT
shall be bound or have any personal liability hereunder or thereunder.
Each party hereto shall look solely to the assets of KRT for satisfaction
of any liability of KRT in respect of this Agreement and all documents,
agreements, understandings and arrangements relating to this transaction,
and will not seek recourse or commence an action against any of the
trustees, officers or shareholders of KRT or any of their personal assets
for the performance or payment of any obligation hereunder or thereunder.
The foregoing shall also apply to any future documents, agreements,
understandings, arrangements and transactions between the parties hereto.
22. Each party hereto agrees to take such further actions and to
execute such further documents as may be reasonably requested by the other
party in order to more fully effectuate the provisions of this Agreement.
23. Prior to the closing of the transactions contemplated
hereby, GP shall not issue any press release or make any public statement
with respect to this Agreement or any transaction contemplated hereby
without the prior written consent of KRT; provided, however, that GP may,
without the prior written consent of KRT, issue such press release or make
such public statement as may be required by law or as is legally necessary
for securities filings if it has used reasonable efforts to consult with
KRT and to obtain KRT's consent but has been unable to do so in a timely
manner.
24. Notwithstanding anything to the contrary contained herein or
elsewhere, and except as set forth specifically in Section 11(b) hereof, in
the event of a default by GP under any provision of this Agreement, no
corporation, trust, person or other entity affiliated with GP, as a
shareholder, officer, director or agent of GP or otherwise, or any person
who participated in the negotiation or documentation of the transactions
contemplated hereby, shall have any personal liability, financial or
otherwise, in law or in equity, for any performance required herein.
Without limiting the generality of the foregoing, except as set forth in
Section 11(b) hereof, there shall be no personal liability on the part of
Erwin L. Greenberg, Herbert B. Mittental, Mark Laken, J. Paul Mitchell,
David L. Goldbloom or Joel D. Fedder.
25. Notwithstanding anything contained herein to the contrary,
KRT acknowledges, warrants and covenants on behalf of itself and its
successors and assigns that, in the event this Agreement is terminated for
any reason other than the default of GP, KRT shall refrain, for a period of
two (2) years from such termination, from making any contacts or entering
into any negotiations or contracts with Sellers relating to the purchase or
other acquisition of the Properties. KRT acknowledges that any breach of
the foregoing is a material breach of this Agreement and would cause
irreparable damage to GP that would be difficult to ascertain, and as a
result of such breach, GP shall be entitled to the Deposit, the Extension
Deposit and the Additional Deposit, and KRT shall owe GP Two Million and
00/100 Dollars ($2,000,000) as liquidated damages in full settlement of all
claims resulting from such breach.
26. Time shall be of the essence with respect to the obligations
of GP and KRT to close the transactions contemplated hereby and by the
Merger Agreement within the time periods required with respect to the
Closing under the Contracts.
27. If legal action is commenced to enforce any obligation of
either party hereunder or under the KRT Note or the GP Note, the prevailing
party shall be entitled to recover from the non-prevailing party reasonable
attorneys' fees and disbursements sustained in connection with such legal
action and in connection with any post-judgment proceedings commenced to
enforce or collect any judgment obtained in such action.
The provisions of this Section 24 shall survive Closing or any termination
of this Agreement.
28. GP hereby covenants that, so long as this Agreement shall be
in full force and effect, GP shall not effectuate, or attempt to
effectuate, a transaction in the nature of an assignment of the Contracts
to any party other than KRT.
29. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
original, and the execution of separate counterparts by the parties hereto
shall bind the parties hereto as if they had each executed the same
counterpart. The parties hereto may further execute and deliver this
Agreement by facsimile, with original executed counterparts to follow
promptly after delivery thereof by facsimile.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date set forth above.
GP DEVELOPMENT CORPORATION
By: /s/Mark Laken
------------------------
Name: Mark Laken
Title: Vice President
KRANZCO REALTY TRUST
By: /s/Norman M. Kranzdorf
-----------------------
Name: Norman M. Kranzdorf
Title: President
Agreed to for purposes of
Section 17 only:
FEDDER AND GARTEN
PROFESSIONAL ASSOCIATION
By: /s/Brian J. Gibbons
-----------------------
Brian J. Gibbons
Shareholder
Agreed to for purposes of
Section 11(b) only:
/s/Erwin L. Greenberg
- ---------------------------
Erwin L. Greenberg
/s/Joel D. Fedder
- ---------------------------
Joel D. Fedder
/s/Mark Laken
- ---------------------------
Mark Laken
/s/Herbert B. Mittental
- ---------------------------
Herbert B. Mittental
<PAGE>
EXHIBIT A
THE CONTRACTS
1. Purchase and Sale Agreement dated July 25, 1997 among Tower Plaza
Associates, L.P., as seller ("Tower"), ELG, as buyer, and Newmark & Company
Real Estate, Inc., Westside Realty Group, L.L.C. and Parkway Partners,
L.L.C., as brokers, as modified by First Amendment to Purchase and Sale
Agreement dated as of September 30, 1997 between Tower and ELG, as further
modified by letter agreement dated October 28, 1997 between GP and Parkway
Partners, L.L.C.
2. Purchase and Sale Agreement dated July 25, 1997 among West
Stewarts Mill Associates, L.P., as seller ("West Stewarts"), ELG, as buyer,
and Newmark & Company Real Estate, Inc., Westside Realty Group, L.L.C. and
Parkway Partners, L.L.C., as brokers, as modified by First Amendment to
Purchase and Sale Agreement dated as of September 30, 1997 between West
Stewarts and ELG, as further modified by letter agreement dated October 28,
1997 between GP and Parkway Partners, L.L.C.
3. Purchase and Sale Agreement dated July 25, 1997 among NorthPark
Associates, L.P. (Cobb), as seller ("NorthPark"), ELG, as buyer, and
Newmark & Company Real Estate, Inc., Westside Realty Group, L.L.C. and
Parkway Partners, L.L.C., as brokers, as modified by First Amendment to
Purchase and Sale Agreement dated as of September 30, 1997 between
NorthPark and ELG, as further modified by letter agreement dated October
28, 1997 between GP and Parkway Partners, L.L.C.
4. Purchase and Sale Agreement dated July 25, 1997 among Holcomb
Bridge Partners, L.P., as seller ("Holcomb"), ELG, as buyer, and Newmark &
Company Real Estate, Inc., Westside Realty Group, L.L.C. and Parkway
Partners, L.L.C., as brokers, as modified by First Amendment to Purchase
and Sale Agreement dated as of September 30, 1997 between Holcomb and ELG,
as further modified by letter agreement dated October 28, 1997 between GP
and Parkway Partners, L.L.C.
5. Purchase and Sale Agreement dated July 25, 1997 among Mableton
Village Associates, L.L.C., as seller ("Mableton"), ELG, as buyer, and
Newmark & Company Real Estate, Inc., Westside Realty Group, L.L.C. and
Parkway Partners, L.L.C., as brokers, as modified by First Amendment to
Purchase and Sale Agreement dated as of September 30, 1997 between Mableton
and ELG, as further modified by letter agreement dated October 28, 1997
between GP and Parkway Partners, L.L.C.
<PAGE>
EXHIBIT B
PROPERTY INSPECTION REPORTS
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of October 30, 1997, by and
among GP Development Corporation, a Maryland corporation ("Target"),
Kranzco Realty Trust, a Maryland real estate investment trust ("Acquiror"),
KR Atlanta, Inc., a Maryland corporation and wholly-owned subsidiary of
Acquiror ("Newco"), and Erwin L. Greenberg, Herbert B. Mittental, Mark
Laken, J. Paul Mitchell, David L. Goldbloom and Joel D. Fedder, who are all
of the shareholders of Target (collectively, the "Shareholders," and each,
a "Shareholder").
WHEREAS, the Board of Directors of each of Target and Acquiror have
determined that it is in the best interests of their respective entities
and shareholders to consummate the business combination transaction
provided for herein, pursuant to which Target will, on the terms and
subject to the conditions set forth herein, merge with and into Newco;
WHEREAS, each of the Shareholders has consented to the Merger of
Target with and into Newco;
WHEREAS, the parties hereto desire to make certain covenants,
representations, warranties and agreements in connection with the merger
and also to prescribe certain conditions to the merger.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and intending
to be legally bound hereby, the parties hereto hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01 The Merger.
(a) Upon the terms and subject to the conditions hereof and in
accordance with the Maryland General Corporation Law, as amended (the
"MGCL"), simultaneously with the Closing contemplated by the Contracts (as
such terms are used in that certain Agreement of even date herewith between
Target and Acquiror relating to the contracts set forth on Exhibit A
thereto (the "Contracts Agreement"), and upon the satisfaction or waiver of
the conditions set forth in Article V and Article VI, unless the parties
shall otherwise agree in writing, a closing (the "Merger Closing") of the
merger of Target with and into Newco in accordance with this Agreement with
the separate corporate existence of Target thereupon ceasing (the "Merger")
shall take place at such time and place as the parties shall agree in
writing. The date on which the Merger Closing occurs is hereinafter
referred to as the "Merger Closing Date".
(b) Concurrently with the Merger Closing, Articles of Merger (the
"Maryland Merger Certificate"), in form and substance reasonably
satisfactory to Acquiror and Target, providing for the merger of Target
with and into Newco shall be duly prepared, executed and filed by Newco, as
the surviving corporation (the "Surviving Corporation"), with the State
Department of Assessment and Taxation of Maryland (the "SDAT") in
accordance with the relevant provisions of the MGCL and the Merger shall
become effective upon the effective date of the acceptance for record by
the SDAT of the Maryland Merger Certificate, or at such later time (but not
more than 30 days thereafter) as the parties shall have agreed upon and
designated in the Maryland Merger Certificate in accordance with the MGCL.
The date and time the Merger becomes effective is referred to herein as the
"Effective Time".
SECTION 1.02 Effects of the Merger; Merger Consideration.
(a) The Merger shall have the effects set forth in the MGCL and as
hereinafter set forth. Immediately following the Merger, the Surviving
Corporation shall (i) continue its corporate existence under the laws of
the State of Maryland, (ii) be a wholly-owned, subsidiary of Acquiror and
(iii) succeed to all rights, assets, liabilities and obligations of Target
in accordance with the MGCL. At the Effective Time, in accordance with the
relevant provision of the MGCL, the separate existence of Target shall
cease and the Surviving Corporation shall succeed, without other transfer,
to all the rights and property of Target and shall be subject to all the
debts and liabilities of each in the manner provided by the MGCL.
(b) At the Effective Time each share of common stock, par value $.01
per share, of Newco issued and outstanding immediately prior to the
Effective Time shall remain outstanding and by reason of the Merger and
without any action by the holder thereof represent one validly issued,
fully paid and non-assessable share of common stock, par value $.01 per
share, of the Surviving Corporation. Subject to adjustment as contemplated
by Sections 4 and 12 of the Contracts Agreement, at the Effective Time,
each share of Target's common stock, par value $.01 per share (the "Target
Common Stock") issued and outstanding, shall be converted, by reason of the
Merger and without any action by the holder thereof, into its pro rata
portion (based on the number of shares of Target Common Stock outstanding)
of (i) the sum of $400,000 and (ii) such number of common shares of
beneficial interest, par value $.01 per share, of Acquiror (the "Acquiror
Common Shares") as would in the aggregate have a Fair Market Value (as
defined below) of one million six hundred thousand dollars ($1,600,000),
upon the surrender of the certificate(s) representing the shares of Target
Common Stock (collectively, the "Merger Consideration"); provided, however,
that (i) the portion of the Merger Consideration payable to David L.
Goldbloom shall consist solely of cash, (ii) the other Shareholders shall
share pro rata in the remaining portion of the cash consideration (subject
to the election by such Shareholders to distribute the cash otherwise), and
(iii) Target may elect in its sole and absolute discretion upon written
notice to Acquiror not less than three (3) days prior to the Merger Closing
Date, that the portion of the Merger Consideration payable in Acquiror
Common Shares be increased and the portion of the Merger Consideration
payable in cash be reduced in such proportion as Target shall elect
(provided, that David L. Goldbloom's portion of the Merger Consideration
shall consist solely of cash), so long as the aggregate Merger
Consideration is two million dollar ($2,000,000) (subject to adjustment as
contemplated by Sections 4 and 12 of the Contracts Agreement).
Notwithstanding the foregoing, the Shareholders of Target may elect any
distribution of Merger Consideration among the Shareholders as they may
designate in a written notice to Acquiror not less than three (3) days
prior to the Merger Closing Date (provided, that David L. Goldbloom's
portion of the Merger Consideration shall consist solely of cash). In the
event Merger Consideration is adjusted pursuant to Sections 4 or 12 of the
Contracts Agreement, the portions of the Merger Consideration payable in
cash and Acquiror Common Shares shall be adjusted proportionally, subject
to Target's election to increase the number of Acquiror Common Shares
pursuant to clause (iii) above. Upon filing of the Maryland Merger
Certificate, Acquiror will pay the cash portion of the Consideration by
wire transfer of immediately available funds to the account designated in
writing by the Shareholders and will deliver certificates evidencing the
Acquiror Common Shares. The "Fair Market Value" of an Acquiror Common
Share shall be the closing price of an Acquiror Common Share on the New
York Stock Exchange on the last trading day immediately prior to the Merger
Closing Date. In the event that any public announcement of the
transactions contemplated by this Agreement (or the Contracts Agreement) is
made by Acquiror prior to the Merger Closing Date, the Fair Market Value
shall be determined on the day immediately preceding such announcement. No
fractional shares of Acquiror Common Shares shall be issued and therefore
any fractional share shall be rounded up to a whole share if the fraction
is more than .50 and down (eliminating such fractional share) if the
fraction is less than .51 and any additional whole share shall become part
of the Merger Consideration.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF TARGET AND THE SHAREHOLDERS
Target and each of the Shareholders, severally and not jointly,
represent and warrant to Acquiror and Newco as follows:
SECTION 2.01 Organization and Good Standing. Target is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Maryland and has all requisite corporate power and
authority to own, operate, lease and encumber its properties and assets and
to carry on its business as it is now being conducted. Target is not
required to be qualified or licensed to do business as a foreign
corporation in any other jurisdiction. Target was incorporated in the
State of Maryland on October 9, 1997 (its "Formation Date").
SECTION 2.02 Capitalization of Target. The authorized stock of
Target consists of 5,000 shares of Target Common Stock, of which 1,000
shares are issued and outstanding as of the date hereof. All of the issued
and outstanding shares of Target Common Stock are owned beneficially and of
record by the Shareholders, free of any liens, claims or other
encumbrances, and have been duly authorized and are validly issued, fully
paid and nonassessable and are free of preemptive rights with no personal
liability attaching to the ownership thereof. Target has no other
outstanding securities, whether debt or equity, derivative or direct, of
any nature and there are no options or rights existing to acquire any
authorized or outstanding securities of Target.
SECTION 2.03 Authority of Target. Target and the Shareholders have
all requisite power (corporate, in the case of Target) and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated by this Agreement and the Contracts Agreement, and to take all
other actions required to be taken by them pursuant to the provisions
hereof and thereof. The execution, delivery and performance by Target of
this Agreement and the Contracts Agreement, the consummation by Target of
the transactions contemplated by this Agreement and the Contracts
Agreement, have been duly and validly authorized and approved by all
requisite corporate action of Target and no other corporate proceedings on
the part of Target are necessary to authorize the execution, delivery and
performance of this Agreement and the Contracts Agreement and to consummate
the transactions contemplated by this Agreement and the Contracts
Agreement. This Agreement and the Contracts Agreement have been duly and
validly executed and delivered by Target and each of the Shareholders, as
the case may be, and constitute valid and binding agreements of Target and
the Shareholders, as the case may be, enforceable against Target and the
Shareholders in accordance with their respective terms.
SECTION 2.04 Consents and Approvals; No Violations. Except for the
filing and recordation of the Maryland Merger Certificate, as required by
the MGCL, no filing or registration with, and no consent, authorization,
declaration or approval of, any governmental body, court, arbitration
board, tribunal or authority ("Governmental Entity"), or any third party,
is necessary for the execution, delivery and performance by Target or the
Shareholders of this Agreement or the Contracts Agreement. The execution,
delivery and performance by Target and the Shareholders of this Agreement
and the Contracts Agreement, as the case may be, will not (i) constitute
any violation or breach of any provision of the charter or By-laws of
Target, or (ii) constitute any violation or breach of any provision of, or
constitute a default (or an event which, with the giving of notice or the
passage of time or both, would constitute a default) under, or result in
the termination or in a right of termination or cancellation of, or
accelerate the performance required by, or result in the creation of any
liens, pledges, mortgages, deeds of trust, security interests, claims
against title, charges, options or other encumbrances ("Encumbrances") upon
any of the assets of Target or the Shareholders under, or result in being
declared void, voidable or without further binding effect, any of the
terms, conditions or provisions of any agreement to which any of Target or
the Shareholders is a party.
SECTION 2.05 Assets and Liabilities. Attached as Schedule 2.05 is a
list of all contracts and agreements to which Target is a party and a list
of all of Target's assets and direct, indirect and contingent liabilities.
Target has no other assets, liabilities, or obligations of any nature,
direct, indirect or contingent, other than those set forth on Schedule
2.05. Since its Formation Date, Target has never owned any assets other
than its interest in the contracts and agreements listed on Schedule 2.05
and cash in bank accounts, or engaged in any business activity. Target has
delivered to Acquiror true, correct and complete copies of the contracts
and agreements listed on Schedule 2.05.
SECTION 2.06 Litigation. There are no, and have never been any
orders, injunctions, judgements or decrees of any court, arbitrator or
other Governmental Entity, to which Target is or has been a party or by
which any of Target' properties are, or have been bound. There are no, and
have never been any, actions, suits or proceedings pending (or to Target's
knowledge, threatened), at law or in equity, against Target.
SECTION 2.07 Compliance with Applicable Law. Target is not in
violation of any order of any Governmental Entity, or any law, ordinance,
governmental rule or regulation to which Target is subject.
SECTION 2.08 Taxes. Target has timely filed all federal, state,
local and foreign tax returns required to be filed by it through the date
hereof and such returns are complete, accurate and comply with all
applicable law and Target has paid all taxes required to be paid by it.
True, correct and complete copies of all federal, state, local and foreign
tax returns filed by Target and all communications relating thereto have
been delivered to Acquiror. There are no claims or assessments for the
collection of any taxes from Target, which have been asserted, are pending,
or, to the knowledge of Target, threatened.
SECTION 2.09 Brokers or Finders. Except as set forth in the
Contracts Agreement, no broker or finder had any part in bringing about the
Merger.
SECTION 2.10 Vote Required. Each of the Shareholders consents to
and has executed written consents in favor of the Merger and execution,
delivery and performance by Target of this Agreement.
SECTION 2.11 Parent Shares. Neither Target, the Shareholders, nor
any of their affiliates or associates, beneficially own any voting shares
of Acquiror, directly or indirectly.
SECTION 2.12 Employee Benefit Plans. Target has no employees or
employee benefits plans.
SECTION 2.13 Public Reports. Target has received from Acquiror and
reviewed copies of (i) Acquiror's Annual Report on Form 10-K for the year
ended December 31, 1996, (ii) Acquiror's Quarterly Report on Form 10-Q for
the three months ended March 31, 1997, (iii) Acquiror's Quarterly Report on
Form 10-Q for the six months ended June 30, 1997, (iv) Acquiror's Form 8-K
dated March 14, 1997, as amended by Acquiror's Form 8-K/A dated May 6,
1997, (v) the Proxy Statement/Prospectus dated January 30, 1997 relating to
the Merger of Union Property Investor's and KRT Union Corp., a wholly-owned
subsidiary of Acquiror and (vi) Acquiror's Annual Report to its
shareholders relating the year ended December 31, 1996 (collectively, the
"Public Reports").
SECTION 2.14 Investor Representations. Solely for the purposes of
this Section 2.14, the term "Shareholder" or "Shareholders" shall be deemed
to exclude David L. Goldbloom. (a) Except for the materials set forth in
Section 2.13 and any information requested by and furnished to Target and
the Shareholders, as described in (b) and (c) below, neither Target nor the
Shareholders have been furnished any other material or literature relating
to the Merger, Acquiror or Acquiror Common Shares.
(b) Target and the Shareholders have been afforded full and
complete access to all information and other materials relating to Acquiror
and its affiliates and the, properties, financial condition and operation
of Acquiror, and any other matters relating to the Merger, Acquiror and the
Acquiror Common Shares which Target or the Shareholders have requested, or
deemed necessary in evaluating the merits and risks of acquiring Acquiror
Common Shares, and have been afforded the opportunity to obtain any
additional information necessary to verify the accuracy of any information
set forth in the documents.
(c) Target and the Shareholders have had the opportunity to have
answered any questions concerning the financial condition or business or
other information with respect to Acquiror and its affiliates and the
properties, financial condition and operation of Acquiror or with respect
to the merits and risks of an acquisition of Acquiror Common Shares, and
Target and Shareholder have received complete and satisfactory answers to
all such questions.
(d) No representation to Target or the Shareholders has been
made with respect to any tax or economic benefits to be derived from an
investment in Acquiror Common Shares or as to any other matter. Target and
the Shareholders are relying solely upon their own knowledge and upon the
advice of their personal advisors with respect to the tax, economic and
other aspects of an investment in Acquiror Common Shares.
(e) Target and the Shareholders have carefully reviewed and
understand the Public Reports and other information provided by Acquiror
and they have such knowledge and experience in financial, business and real
estate matters that they are capable of evaluating the merits and risks of
an acquisition of Acquiror Common Shares and of making an informed
investment decision.
(f) Target and the Shareholders have retained their own counsel,
accountant and/or other advisors as to the legal, tax and related matters
concerning the Merger and the acquisition of Acquiror Common Shares.
(g) Target and the Shareholders understand that the acquisition
of Acquiror Common Shares involves the purchase of a security which may not
be sold for a period of one year after the Merger Closing Date and which
has not been registered under the Securities Act of 1933, as amended (the
"Securities Act"), and therefore cannot be sold unless either such security
is subsequently registered under said Act or an exemption from such
registration is available.
(h) Each Shareholder is not acquiring Acquiror Common Shares as
a result of or subsequent to any advertisement, article, notice or other
communication published in any newspaper, magazine or similar media or
broadcast over television or radio, or presented at any meeting or seminar.
(i) Each Shareholder is over 21 years of age, has adequate means
of providing for his current needs and personal contingencies and has no
need for liquidity of an investment in Acquiror Common Shares and is able
to bear the economic risk of the acquisition of Acquiror Common Shares.
(j) Each Shareholder has (i) a net worth, when combined with the
net worth of that person's spouse, in excess of $1 million, or (ii) has had
adjusted gross income for calendar years 1995 and 1996 and expects to have
adjusted gross income for calendar year 1997, of at least $200,000 for each
such year.
(k) Each Shareholder is acquiring the Acquiror Common Shares in
the Merger for his own account, as principal, for investment and not with a
view to the resale or distribution of any interest therein (other than the
bona fide gifts contemplated by Section 7.13).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND NEWCO
Acquiror and Newco, jointly and severally, represent and warrant to
Target and each of the Shareholders as follows:
SECTION 3.01 Organization and Good Standing. (i) Acquiror is a real
estate investment trust duly formed and existing by virtue of the laws of
the State of Maryland and is in good standing with the SDAT, (ii) Newco is
a corporation duly incorporated, validly existing and in good standing
under with the SDAT, and (iii) each of Acquiror and Newco has all requisite
trust or corporate power, as the case may be, to own and operate, lease and
encumber its properties and assets and to carry on its business as it is
now being conducted.
SECTION 3.02 Capitalization of Newco and Acquiror. All of the
issued and outstanding shares of stock of Newco are owned beneficially and
of record by Acquiror. The authorized shares of beneficial interest of
Acquiror consist of 100,000,000 shares of beneficial interest. As of June
27, 1997, Acquiror had issued and outstanding 10,334,796 common shares of
beneficial interest; 11,155 Series A-1 Increasing Rate Cumulative
Convertible Preferred Shares of Beneficial Interest; 195,631 9.75% Series
B-1 Cumulative Convertible Preferred Shares of Beneficial Interest; 907,578
9.75% Series B-2 Cumulative Convertible Preferred Shares of Beneficial
Interest; and 311,850 Series C Cumulative Redeemable Preferred Shares of
Beneficial Interest. All of the issued and outstanding shares of
beneficial interest of Acquiror have been duly authorized and are validly
issued, fully paid and nonassessable.
SECTION 3.03 Authority of Acquiror and Newco. Each of Acquiror and
Newco has all requisite trust or corporate power and authority, as the case
may be, to execute and deliver this Agreement and the Contracts Agreement,
as the case may be, and to consummate the transactions contemplated by this
Agreement and the Contracts Agreement, as the case may be, and to take all
other actions required to be taken by it pursuant to the provisions hereof
and thereof. The execution, delivery and performance by each of Acquiror
and Newco of this Agreement and the Contracts Agreement, as the case may
be, and the consummation by each of Acquiror and Newco of the transactions
contemplated by this Agreement and the Contracts Agreement, as the case may
be, have been duly and validly authorized and approved by all requisite
trust or corporate action of Acquiror and Newco, as the case may be, and no
other trust or corporate proceedings on the part of Acquiror or Newco, as
the case may be, are necessary to authorize the execution, delivery and
performance of this Agreement and the Contracts Agreement, as the case may
be, or to consummate the transactions contemplated by this Agreement and
the Contracts Agreement, as the case may be. This Agreement and the
Contracts Agreement have been duly and validly executed and delivered by
Acquiror or Newco, as the case may be, and constitutes a valid and binding
agreement of Acquiror or Newco, as the case may be, enforceable against
Acquiror or Newco, as the case may be, in accordance with its terms.
SECTION 3.04 Consents and Approvals; No Violations. Except for
applicable requirements of state Blue Sky laws, if any, and the filing and
recordation of the Maryland Merger Certificate, no filing or registration
with, and no consent, authorization, declaration or approval of, any
Governmental Entity, or any third party, is necessary for the execution,
delivery and performance by Acquiror or Newco of this Agreement or the
Contracts Agreement or the consummation of the transactions contemplated by
this Agreement or the Contracts Agreement. Neither the execution, delivery
and performance by Acquiror or Newco of this Agreement or the Contracts
Agreement nor the consummation by Acquiror or Newco of the transactions
contemplated by this Agreement or the Contracts Agreement will (i)
constitute any violation or breach of any provision of the charter of
Acquiror or Newco, or (ii) constitute any violation or breach of any
provision of, or constitute a default (or an event which, with the giving
of notice or the passage of time or both, would constitute a default)
under, or result in the termination or in a right of termination or
cancellation of, or accelerate the performance required by, or result in
the creation of any Encumbrances upon any of the properties of the Company
under, or result in being declared void, voidable or without further
binding effect, any of the terms, conditions or provisions of any
agreement, or any license, franchise, permit, concession, lease, contract,
or other instrument, or other obligation to which the Company is a party,
or by which the Company or any of its properties is bound or affected.
SECTION 3.05 Brokers or Finders. Except as set forth in the
Contracts Agreement, no broker or finder had any part in bringing about the
Merger.
SECTION 3.06 Acquiror Common Shares. Acquiror has reserved for
issuance a sufficient number of Acquiror Common Shares to satisfy its
obligations under Section 1.02(b). The Acquiror Common Shares to be issued
in connection with the Merger will be validly issued, fully paid and non-
assessable shares at the time so issued. There are no preemptive rights
with respect to the Acquiror Common Shares. As of the date hereof,
Acquiror satisfies the conditions set forth in Rule 144(c)(1) promulgated
by the Securities and Exchange Commission under the Securities Act and will
take commercially reasonable efforts to continue to satisfy such
requirements so that the Shareholders may sell the Acquiror Common Shares
pursuant to Rule 144 under the Securities Act during the Effectiveness
Period (as such term is defined in the Registration Rights Agreement
attached as Exhibit A hereto). As of October 31, 1997, Acquiror has
10,347,064 common shares of beneficial interest outstanding and attached as
Schedule 3.06 hereto is the average daily trading volume of the Acquiror
Common Shares as reported by the New York Stock Exchange for the period
beginning October 1, 1996 and ending October 30, 1997.
SECTION 3.07 Financing. Acquiror has, or will have on or prior to
the Closing Date, financing sufficient to pay the cash portion of the
Consideration.
ARTICLE IV
COVENANTS
SECTION 4.01 Target Pre-Closing Obligations.
(a) Except as expressly contemplated by this Agreement, during the
period from the date of this Agreement and continuing until the earlier of
the Effective Time or the termination of this Agreement in accordance with
its terms, Target will not engage in any business or activity or acquire
any assets, amend or propose to amend its charter or By-laws, encumber any
of its assets, issue any securities or options to acquire securities,
authorize or pay any dividend, make any loans or guarantees, enter into any
agreements or incur any liabilities except as contemplated by the Contract
Agreement or take any action that is reasonably likely to result in any of
Target's representations or warranties contained in this Agreement being
untrue, or result in any of the conditions to the Merger set forth in this
Agreement not being satisfied and Target will use reasonable efforts to
preserve its existing assets.
(b) During the period from the date of this Agreement and
continuing until the earlier of the Effective Time or the termination of
this Agreement in accordance with its terms, Target or a Shareholder, as
the case may be, shall promptly notify Acquiror of any change in Target's
condition (financial or otherwise), business, properties, assets,
liabilities or the occurrence of any governmental complaints,
investigations or hearings (or communications indicating that the same may
be contemplated), or the breach or potential or threatened breach of any of
Target's or a Shareholder's representations or warranties contained in this
Agreement.
SECTION 4.02 No Solicitations. Target will immediately cease any
existing discussions or negotiations with any third parties conducted prior
to the date hereof with respect to any merger, business combination, sale
of any of the assets of Target, sale of shares of capital stock by Target
or assignment of the Contracts or purchase or sale of the Properties or
similar transaction involving such party or any of its subsidiaries or
divisions and not have any other discussions relating to the foregoing with
any third party prior to the earlier of the Effective Time or termination
of this Agreement.
SECTION 4.03 Access to Information.
(a) Upon reasonable notice, Target shall afford to the officers,
employees, accountants, counsel and other representatives of Acquiror
("Acquiror Representatives"), reasonable access, during normal business
hours during the period prior to the Effective Time, to all its properties,
books, contracts and records and, during such period, Target shall furnish
promptly to Acquiror all information concerning Target, its business,
properties and personnel as Acquiror may reasonably request. Acquiror
Representatives shall be permitted to make copies of the files of Target,
as Acquiror shall reasonably request.
SECTION 4.04 Efforts to Consummate. Subject to the terms and
conditions of this Agreement, in addition to the matters otherwise
specifically set forth in this Agreement, each of the parties hereto agrees
to use reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement including, without limitation,
(i) the preparation and filing of all other forms, registrations and
notices required to be filed to consummate the Merger and the transactions
hereby contemplated and the taking of such actions as are necessary to
obtain any requisite approvals, consents, orders, exemptions, or waivers
(including, without limitation, any Target Consents) by any public or
private third party and (ii) such actions as may be required to permit, on
or prior to the Effective Time, the Acquiror Common Shares to be issued
upon the Merger to be listed on the NYSE (subject to official notice of
issuance).
SECTION 4.05 No Breach of Representations and Warranties. Each of
Target, the Shareholders, Acquiror and Newco agree that it will not take
any action that would cause or constitute, or would, if it had been taken
prior to the date hereof, have caused or constituted, a breach of any of
its respective representations or warranties. Each of the parties hereto
shall, in the event of, or promptly after the occurrence of, or promptly
after obtaining knowledge of the occurrence of or the impending or
threatened occurrence of, any fact or event which would cause or constitute
a breach of any of the representations or warranties, give notice to the
other parties of such fact or event; and such notifying party shall use its
or their reasonable efforts to prevent or promptly to remedy such breach.
The giving of such notice shall not act as a waiver of any breach
hereunder. Notwithstanding the foregoing or anything contained in Section
6.01 hereof, nothing in this Agreement shall prohibit Acquiror from doing
any act or taking any action which would result in a change in the capital
structure of Acquiror as set forth in Section 3.02, and any such resulting
change in the capital structure of Acquiror shall not be considered a
breach of the representations and warranties contained in, or a default
under, this Agreement.
SECTION 4.06 Public Announcements. In addition to the provisions of
Section 20 of the Contracts Agreement, the parties hereto agree that,
except as otherwise required by law, Securities and Exchange Commission
reporting requirements or the rules of the NASD or the NYSE, they shall not
issue or cause the publication of any press release or other public
announcement with respect to the Merger and the transactions contemplated
by this Agreement or the Contracts Agreement without prior written approval
of the other party, which approval shall not be unreasonably withheld.
SECTION 4.07 Listing. Acquiror shall take all action necessary or
desirable to cause the Acquiror Common Shares to be listed on the NYSE on
or prior to the first anniversary of the Effective Time.
ARTICLE V
CONDITIONS TO ACQUIROR'S AND NEWCO'S OBLIGATIONS
All obligations of Acquiror and Newco under this Agreement are subject
to the fulfillment, at the Closing, of each of the following conditions,
any or all of which may be waived in whole or in part, at or prior to the
Closing, by Acquiror in its sole discretion:
SECTION 5.01 Representations and Warranties. All representations
and warranties of Target and the Shareholders contained in this Agreement
shall be true and correct in all material respects, at and as of the
Closing as though such representations and warranties were made at and as
of such time, except for those representations and warranties that are
expressly made as of a specified earlier date.
SECTION 5.02 Covenants. Target and the Shareholders shall have
performed and complied in all material respects with all agreements and
conditions on their part required by this Agreement to be performed or
complied with on or prior to the Closing.
SECTION 5.03 Officer's Certificate. Acquiror shall have received a
certificate of an executive officer of Target, dated the date of the
Closing, certifying to the fulfillment of the conditions specified in
Section 6.01 and Section 6.02.
SECTION 5.04 Approvals and Consents. Acquiror shall have received
(in form and substance reasonably satisfactory to Acquiror) all filings,
registrations, consents, authorizations, declarations or approvals
necessary to consummate the transactions contemplated by this Agreement.
Acquiror shall have also obtained the approval for the listing of the
Acquiror Common Shares issuable in the Merger on the NYSE, subject to
official notice of issuance.
SECTION 5.05 Injunctions. No court, agency or other authority
shall have issued any order, decree or judgment to set aside, restrain,
enjoin or prevent, and no statute, rule, regulation, executive order,
decree or injunction shall have been enacted, entered, promulgated or
enforced by any United States court or Governmental Entity of competent
jurisdiction which prohibits restrains, enjoins, sets aside or prevents,
the consummation of the Merger or the transactions hereby contemplated.
SECTION 5.06 Contracts Agreement. The closing of the transactions
contemplated by the Contracts Agreement shall take place simultaneously
with the Merger.
SECTION 5.07 Registration Rights Agreement. The Shareholders shall
have entered into the Registration Rights Agreement in the form annexed
hereto as Exhibit A.
SECTION 5.08 Merger. The Maryland Merger Certificate shall have
been executed by Target and delivered to Newco.
ARTICLE VI
CONDITIONS TO TARGET'S OBLIGATIONS
All obligations of Target under this Agreement are subject to the
fulfillment, at the Closing, of each of the following conditions, any or
all of which may be waived in whole or in part, at or prior to the Closing,
by Target in its sole discretion:
SECTION 6.01 Representations and Warranties. All representations
and warranties of Acquiror and Newco contained in this Agreement shall be
true and correct in all material respects, at and as of the Closing as
though such representations and warranties were made at and as of such
time, except for those representations and warranties that are expressly
made as of a specified earlier date.
SECTION 6.02 Covenants. Acquiror and Newco shall each have
performed and complied in all material respects with all agreements and
conditions on their respective parts required by this Agreement to be
performed or complied with prior to or on the Closing.
SECTION 6.03 Officer's Certificate. Target shall have received a
certificate of an executive officer of each of Acquiror and Newco, dated
the date of the Closing, certifying to the fulfillment of the conditions
specified in Section 6.01 and Section 6.02.
SECTION 6.04 Approvals and Consents. Acquiror shall have obtained
the approval for the listing of the Acquiror Common Shares issuable in the
Merger on the NYSE, subject to official notice of issuance.
SECTION 6.05 Injunctions. No court, agency or other authority shall
have issued any order, decree or judgment to set aside, restrain, enjoin or
prevent, and no statute, rule, regulation, executive order, decree or
injunction shall have been enacted, entered, promulgated or enforced by any
United States court or Governmental Entity of competent jurisdiction which
prohibits restrains, enjoins, sets aside or prevents, the consummation of
the Merger or the transactions hereby contemplated.
SECTION 6.06 Contracts Agreement. The closing of the transactions
contemplated by the Contracts Agreement shall take place simultaneously
with the Merger.
SECTION 6.07 Registration Rights Agreement. Acquiror shall have
entered into the Registration Rights Agreement in the form annexed hereto
as Exhibit A.
SECTION 6.08 Merger. The Maryland Merger Certificate shall have
been executed by Acquiror and Newco and delivered to Target.
ARTICLE VII
GENERAL
SECTION 7.01 Notices. All notices and other communications
hereunder shall be in writing (and shall be deemed given upon receipt) if
delivered personally, sent by facsimile transmission (receipt of which is
confirmed) or by registered or certified mail, return receipt requested, to
the parties at the following addresses (or at such other address for a
party as shall be specified by like notice):
if to Target or any Shareholder, to:
GP Development Corporation
c/o Erwin L. Greenberg & Associates, Inc.
400 East Pratt Street, Suite 606
Baltimore, Maryland 21202
Attn: Mr. Erwin L. Greenberg
Telecopy No.: (410) 837-0596
with a copy to:
Fedder and Garten
36 South Charles Street
2300 Charles Center South
Baltimore, Maryland 21201
Attn: Brian J. Gibbons, Esq.
Telecopy No.: (410) 659-0543
if to Acquiror or Newco, to:
Kranzco Realty Trust
128 Fayette Street
Conshohocken, Pennsylvania 19428
Attention: Norman M. Kranzdorf, President
Telecopy: (610) 941-9193
with a copy to:
Robinson Silverman Pearce
Aronsohn & Berman LLP
1290 Avenue of the Americas
New York, New York 10104
Attention: Alan S. Pearce, Esq.
Telecopy: (212) 541-4630
SECTION 7.02 Descriptive Headings. The descriptive headings herein
are inserted for convenience only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
SECTION 7.03 Assignment; Binding Effect; Benefit. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other parties. Subject
to the preceding sentence, this Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors
and assigns.
SECTION 7.04 Counterparts. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same
agreement and shall become effective when two or more counterparts have
been signed by each of the parties and delivered to the other parties, it
being understood that all parties need not sign the same counterpart.
SECTION 7.05 Entire Agreement. This Agreement, together with the
Contracts Agreement and the Registration Rights Agreement, constitutes the
entire agreement and supersede all prior contracts and understandings, both
written and oral, among the parties with respect to the subject matter
hereof. To the extent that the terms or conditions of this Agreement or
the Registration Rights Agreement conflict with or are inconsistent with
the terms of the Contracts Agreement, the terms and conditions of the
Contracts Agreement shall prevail and be controlling.
SECTION 7.06 Governing Law and Consent to Jurisdiction. This
Agreement shall be governed by and construed in accordance with the laws of
the State of Maryland without regard to any applicable principles of
conflicts of law. Each of Target, the Shareholders, Acquiror and Newco
hereby consents to submit to the exclusive jurisdiction of the courts of
the state of Maryland and of the United States of America located in the
city and state of Maryland (the "Maryland Courts") for any litigation
arising out of or relating to this Agreement and the transactions
contemplated hereby and agrees not to commence any litigation relating
thereto except in such courts, waives any objection to the laying of venue
of any such litigation in the Maryland Courts and agrees not to plead or
claim that such litigation brought in any Maryland Court has been brought
in an inconvenient forum.
SECTION 7.07 Fees and Expenses. Except as otherwise set forth
herein, each of the parties hereto shall bear its own expenses associated
with the negotiation and execution of the Agreement and the consummation of
the transactions hereby by this Agreement including, without limitation,
investment banking, legal and accounting fees and expenses.
SECTION 7.08 Non-Recourse. This Agreement and all documents,
agreements, understandings and arrangements relating to this transaction
have been executed by the undersigned in his capacity as an officer or
trustee of Acquiror which has been formed as a Maryland real estate trust
pursuant to a Declaration of Trust of Kranzco Realty Trust, dated June 17,
1992, as amended and restated, and not individually, and none of the
trustees, officers or shareholders of Acquiror shall be bound or have any
personal liability hereunder or thereunder. Each party hereto shall look
solely to the assets of Acquiror for satisfaction of any liability of
Acquiror in respect of this Agreement and all documents, agreements,
understandings and arrangements relating to this transaction, and will not
seek recourse or commence an action against any of the trustees, officers
or shareholders of Acquiror or any of their personal assets for the
performance or payment of any obligation hereunder or thereunder. The
foregoing shall also apply to any future documents, agreements,
understandings, arrangements and transactions between the parties hereto.
SECTION 7.09 Limitation of Liability.
(a) Notwithstanding anything to the contrary contained herein,
except as set forth in the Contracts Agreement, in the event of a default
by Target under any provision of this Agreement, no corporation, trust,
person or other entity affiliated with Target, as a shareholder, officer,
director or agent of Target or otherwise, or any person who participated in
the negotiation or documentation of the transactions contemplated hereby,
shall have any personal liability, financial or otherwise, in law or in
equity, for any performance required herein or in the Contract Agreement.
(b) In the event of a breach by the Shareholders under any
provision of this Agreement, the liability of each Shareholder for such
breach shall be limited to the amount of the Merger Consideration received,
or to be received, by such Shareholder.
SECTION 7.10 Enforcement. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with its specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in
any Maryland Court, this being in addition to any other remedy to which
they are entitled at law or in equity. The prevailing party in any
proceeding brought to enforce any provision of the Agreement shall be
entitled to recover the reasonable fees and costs of its counsel, plus all
other costs of such proceeding.
SECTION 7.11 Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining
terms and provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Agreement in any
other jurisdiction. If any provision of this Agreement is so broad as to
be unenforceable, the provision shall be interpreted to be only so broad as
is enforceable.
SECTION 7.12 Termination. This Agreement shall terminate upon the
mutual written agreement of the parties hereto or upon the termination of
the Contracts Agreement.
SECTION 7.13 Lock-up Period. Each Shareholder hereby agrees that,
for a period of one year after the Merger Closing Date, he will not offer,
sell, contract to sell, grant any option for the sale of, or otherwise
dispose of, directly or indirectly, any shares of Common Stock of Acquiror,
or securities convertible into or exercisable or exchangeable for shares of
Common Stock of Acquiror or other securities of Acquiror. Each Shareholder
agrees to the imprinting of the following legend on certificates
representing the Acquiror Common Shares:
THE SHARES EVIDENCED HEREBY ARE SUBJECT TO A LOCK-UP AGREEMENT
WHICH PROHIBITS THE OFFER, SALE, CONTRACT TO SELL, GRANT ANY OPTION
FOR THE SALE OF, OR OTHER DISPOSITION OF, DIRECTLY OR INDIRECTLY, SUCH
SHARES, UNTIL: [insert lock-up expiration date].
Notwithstanding the first sentence of this Section 7.13, Joel D.
Fedder and Erwin L. Greenberg may in the aggregate transfer up to $200,000
worth of the Acquiror Common Share received by them as part of the Merger
Consideration (as valued on the Merger Closing Date) to up to 8 people
pursuant to a bona fide gift; provided, however, that the recipient of any
such gift of Acquiror Common Shares agrees to sign a letter in favor of the
Company (i) representing that no consideration was paid for such shares,
and (ii) agreeing to be bound by the provisions of Sections 7.13 and 7.14
of this Agreement.
SECTION 7.14 Transfer Restrictions. If after the expiration of the
lock-up period referred to in Section 7.13 above, any Shareholder should
decide to dispose of any Acquiror Common Shares, such Shareholder covenants
and agrees that it shall do so only pursuant to an effective registration
statement under the Securities Act or pursuant to an exemption from
registration under the Securities Act. In connection with any offer,
resale or other transfer (individually and collectively, a "Transfer") of
any Acquiror Common Shares other than pursuant to an effective registration
statement, Acquiror may require that the transferor of such shares provide
to Acquiror an opinion of counsel experienced in the area of applicable
securities laws selected by the transferor, which counsel shall be and the
form and substance of which opinion shall be, satisfactory to Acquiror, to
the effect that such Transfer is being made pursuant to an exemption from,
or in a transaction not subject to, the registration requirements of the
Securities Act or any State or foreign securities laws. In connection with
any such Transfer pursuant to an effective registration statement or upon
receipt of an opinion described above, Acquiror shall take such action as
may be necessary as a result of the existence of the legend referred to
below, to facilitate such Transfer as the Shareholder may reasonably
request. The Shareholders agree to the imprinting of the following legend
on certificates representing the Acquiror Common Shares:
THE SHARES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH IN THE
FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER AGREES THAT
IT WILL NOT OFFER, RESELL, PLEDGE OR OTHERWISE TRANSFER THE SHARES
EVIDENCED HEREBY, EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, OR (B) PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT. THE COMPANY MAY REQUIRE
AN OPINION OF COUNSEL, IN FORM AND SUBSTANCE AND BY COUNSEL
SATISFACTORY TO THE COMPANY, AS TO THE AVAILABILITY OF AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT AND COMPLIANCE WITH STATE
SECURITIES LAWS.
SECTION 7.15 Amendment. This Agreement may be amended by the
parties hereto at any time before the Effective Time. This Agreement may
not be amended except by a written instrument signed on behalf of each of
the parties hereto.
SECTION 7.16 Extension; Waiver. At any time prior to the Effective
Time, the parties hereto may, to the extent legally allowed, (i) extend the
time for the performance of any of the obligations or other acts of the
other parties hereto, (ii) waive any inaccuracies in the representations
and warranties contained in this Agreement, and (iii) waive compliance with
any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only
if set forth in a written instrument signed on behalf of such party.
SECTION 7.17 Interpretation. In this Agreement, unless the context
otherwise requires, words describing the singular number shall include the
plural and vice versa, and words denoting any gender shall include all
genders and words denoting natural persons shall include corporations and
partnerships and vice versa.
* * *
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed by their respective officers thereunto duly authorized as of the
date first written above.
KRANZCO REALTY TRUST GP DEVELOPMENT CORPORATION
By: /s/Norman M. Kranzdorf By: /s/Mark Laken
--------------------------------- -----------------------------
Name: Norman M. Kranzdorf Name: Mark Laken
------------------------------- ---------------------------
Title: President Title: Vice President
------------------------------ --------------------------
KR ATLANTA, INC. SHAREHOLDERS OF TARGET:
By: /s/Norman M. Kranzdorf /s/Erwin L. Greenberg
--------------------------------- -----------------------------
Erwin L. Greenberg
Name: Norman M. Kranzdorf
------------------------------- /s/Herbert B. Mittental
---------------------------
Title:
------------------------------ Herbert B. Mittental
--------------------------
/s/Mark Laken
--------------------------
Mark Laken
/s/J. Paul Mitchell
--------------------------
J. Paul Mitchell
/s/David L. Goldbloom
--------------------------
David L. Goldbloom
/s/Joel D. Fedder
--------------------------
Joel D. Fedder
MORTGAGE NOTE
Atlanta, Georgia
$6,700,000.00 October 5, 1990
1. Payment of Principal and Interest.
FOR VALUE RECEIVED, HOLCOMB BRIDGE PARTNERS, L.P., a Georgia limited
partnership (the "Maker"), hereby promises to pay to the order of ALLSTATE
LIFE INSURANCE COMPANY, and any subsequent holder of this Note ("Holder" or
"Holders") in the manner hereinafter provided, the principal amount of SIX
MILLION SEVEN HUNDRED THOUSAND AND NO/100 ($6,700,000.00) together with
interest on the outstanding principal balance from the date of the initial
disbursement of all or a part of the principal of this Note ("Disbursement
Date") until maturity at the rate of ten percent (10.0%) per annum
("Contract Rate") as follows:
(a) on the Disbursement Date, interest only, in advance,
accruing from the Disbursement Date to the last day of
October, 1990, both inclusive; and
(b) interest only, in arrears, in the amount of FIFTY-FIVE
THOUSAND EIGHT HUNDRED THIRTY-THREE AND 33/100 DOLLARS
($55,833.33) on the first day of December, 1990, and on the
first day of each month thereafter until this Note is fully
paid; and
(c) on November 1, 1995 (unless this Note is extended pursuant
to paragraph 25 and, in that event, on November 1, 2000),
the entire unpaid principal amount and any interest accrued,
but remaining unpaid, and all other sums due under this
Note.
Except for the interest payable under paragraph (a) above, interest shall
be payable in arrears and calculated on the basis of a 360 day year
containing twelve 30 day months. All such payments on account of the
indebtedness evidenced by this Note shall be first applied to interest
accrued on the unpaid principal amount and the remainder toward reduction
of the unpaid principal amount.
2. Payment Information. All payments required to be made hereunder
shall be made during regular business hours to Holder at its office at 3100
Sanders Road, Northbrook, Illinois 60062, with sufficient information to
identify the source and application of such payment to Holder's Loan
#121026, or at such other place as Holder may from time to time designate
in writing. All payments shall be made in currency of United States of
America without presentment or surrender of this Note. Payments made by
check will not be deemed made until servicing agent receives good funds for
such check. Should Holder notify Maker to make payments directly to
Holder, such payments shall be made by transferring the payment in federal
or immediately available funds by bank wire or interbank transfer for the
account of Holder provided, however, that any payment of principal or
interest received after 1:00 p.m. Chicago time shall be deemed to have been
received by Holder on the next business day and shall bear interest
accordingly.
3. Security For Note. The payment of this Note and all other sums
due Holder is secured by (i) a Deed to Secure Debt, Assignment of Leases,
Rents and Contracts, Security Agreement and Fixture Filing ("Mortgage"), of
even date herewith, granted by Maker, as grantor, to Holder, as grantee,
covering certain real property, the improvements thereon and certain
personal property situated in the County of Fulton, State of Georgia
("Subject Property"), and (ii) those certain instruments of indebtedness
and security described as "Related Agreements" in the Mortgage. Except as
otherwise defined herein, all of the terms and provisions contained in the
Mortgage and the Related Agreements are hereby incorporated herein by
express reference.
4. Late Charges. Should any payment required under this Note not be
paid in full within 10 days from the date such payment is due, Maker
acknowledges that the Holder will incur extra expenses for the handling of
the delinquent payment and servicing the indebtedness evidenced hereby, and
that the exact amount of these extra expenses is extremely difficult and
impracticable to ascertain, but that a charge of five percent (5%) of the
amount of the delinquent payment ("Late Charge") would be a fair
approximation of the expense so incurred by Holder. If applicable law
requires a lesser charge, however, then the maximum charge permitted by
such law may be charged by Holder for said purpose. Therefore, Maker
shall, in such event, without further notice, and without prejudice to the
right of Holder to collect any other amounts provided to be paid hereunder
or under the Mortgage, the Related Agreements or any other instrument
executed for purposes of further securing payment of the obligations
evidenced by this Note, or to declare an Event of Default, pay to Holder
the Late Charge to compensate Holder for expenses incurred in handling
delinquent payments, unless the payment in full is received within 10 days
from the date such payment is due.
5. Interest Payable Upon Default. If there occurs an Event of
Default, under this Note or the Mortgage or under any Related Agreement,
then the unpaid principal amount of this Note, accrued and unpaid interest
thereon and all other indebtedness evidenced or secured by this Note, the
Mortgage and the Related Agreements, including any unpaid Late Charges,
shall bear interest at the Contract Rate plus five percent (5%) per annum
compounded monthly ("Default Rate") from the date of expiration of any
applicable notice, cure and grace period until such time, if any, as the
Event of Default is cured and the Mortgage and this Note are reinstated as
permitted by applicable law, or otherwise until such time as the unpaid
principal amount of this Note and all other indebtedness evidenced by this
Note are fully repaid, whichever is earlier.
6. Events of Default. An "Event of Default" shall exist under this
Note in the event Maker shall (i) fail to make any payment due under this
Note within ten (10) days from the date when such payment is due; (ii) fail
to perform or observe any covenant or agreement of Maker under this Note
within fifteen (15) days from the date notification is received from Holder
to cure any nonmonetary default (other than defaults arising from
bankruptcy and other insolvency); provided, however, that if such
nonmonetary default is of a nature that it cannot be cured within such 15
day period, Maker shall have a reasonable period of time not to exceed 180
days after the date notice of default is received by Maker within which to
effect such cure on the condition that Maker commences good faith efforts
to cure within the 15 day period and demonstrates continuous diligent
efforts in a manner satisfactory to Holder; (iii) fail to effect prepayment
after Maker issues notice of prepayment as provided in paragraph 9 hereof;
or (iv) if there shall exist an Event of Default as that term is defined in
the Mortgage or in any of the Related Agreements.
7. Additional Payments. The additional payments called for under
paragraphs 4 and 5 shall be in addition to, and shall in no way limit, any
other rights and remedies provided for in this Note, the Mortgage or in any
Related Agreements, as well as all other remedies provided by law.
8. Payment of Taxes and Expenses. Make further promises to pay to
Holder, immediately upon written notice from Holder, (i) all recordation,
transfer, stamp, documentary or other fees or taxes levied on Holder by
reason of the making or recording of this Note, the Mortgage or any of the
Related Agreements, and (ii) all actual costs, expenses, disbursements,
intangible property taxes imposed upon any Holder of this Note or mortgage
under the Mortgage or secured party under the Related Agreements (but
excluding income, estate, capital or franchise taxes), escrow fees, title
charges and reasonable legal fees and expenses actually incurred by Holder
and its counsel in the negotiation, funding, collection or attempted
collection, by foreclosure or otherwise, of the principal amount of this
Note, the interest thereon or any installment or other payment due
hereunder, and in any suit or proceeding to protect or sustain any
instrument securing this Note, including, without limitation, any
reasonable attorneys' fees and expenses incurred in any bankruptcy or
foreclosure of the Subject Property.
9. Prepayment. Maker is prohibited from prepaying this Note until
October 1, 1993 (the "No-Prepayment Period"). Subsequent to the No-
Prepayment Period, on any regular payment date, with sixty (60) days prior
written notice to Holder specifying the date of prepayment, Maker will have
the privilege of prepaying the entire outstanding principal amount together
with an accrued but unpaid interest, any other sums secured by the Mortgage
and the Related Agreements and the following percent premium on the
principal balance ("Prepayment Premium"):
2% in Loan Year 4
1% in Loan Year 5
No Prepayment Premium shall be due on the principal balance prepaid in the
last sixty (60) days of the 5th Loan Year. As used herein, the term "Loan
Year" shall mean the consecutive full twelve (12) month period commencing
on the first calendar month immediately following the Disbursement Date and
each consecutive full twelve (12) month period thereafter commencing on
such anniversary thereof.
Written notice of Marker's election to make prepayment in full of this
Note shall be given in the manner provided for notice under the Mortgage.
Partial prepayment of the outstanding principal amount of this Note shall
not be permitted except in accordance with the terms of the Mortgage. In
the event of such a permitted partial prepayment, the Prepayment Premium
calculated in this paragraph 9 shall be prorated based on the amount of the
partial prepayment relative to the then current outstanding principal
balance of this Note.
Maker acknowledges that Holder (a) has advanced the amounts evidenced
by this Note with the expectation that such amounts would be outstanding
for a period at least equal to the No-Prepayment Period, (b) would not have
been willing to advance such amounts on these terms for a shorter period of
time, (c) in making the loan evidenced by this Note, is relying on Maker's
creditworthiness and its agreement to pay in strict accordance with the
terms set forth in the Note, (d) would not make the loan without full and
complete assurance by Maker of its agreement not to prepay all or a part of
the principal of this Note except as expressly permitted herein and in the
Mortgage. Maker has been advised and acknowledges that Holder is relying
on the receipt of payments under this Note to, among other things, match
and support its obligations under contracts entered into by Holder with
third parties and that in the event of a prepayment, Holder could suffer
loss and additional expenses which are extremely difficult and impractical
to ascertain. The Prepayment Premium is a good faith resolution by Maker
and Holder of the damages Holder would suffer, and it is not intended as a
penalty. Accordingly, should this Note be paid for any reason, whether
voluntary or involuntary, or after this Note is accelerated, whether such
acceleration is due to Maker's default or otherwise, except a prepayment
resulting from condemnation or other taking of the Subject Property when no
default exists under this Note, prior to the end of the No-Prepayment
Period then Maker shall pay to Holder a Prepayment Premium calculated in
accordance with this paragraph 9.
BY INITIALING BELOW, MAKER EXPRESSLY ACKNOWLEDGES THAT PURSUANT TO THE
PROVISIONS OF THIS NOTE, MAKER HAS NO RIGHT TO PREPAY THIS NOTE IN WHOLE OR
IN PART WITHOUT PAYMENT OF THE PREPAYMENT PREMIUM, AND THAT MAKER SHALL BE
LIABLE FOR THE PAYMENT OF THE PREPAYMENT PREMIUM UPON ANY PAYMENT OF THE
OUTSTANDING PRINCIPAL OF THIS NOTE BEFORE ITS DUE DATE, WHETHER VOLUNTARY
OR INVOLUNTARY OR AFTER ACCELERATION OF THE NOTE WHETHER THE ACCELERATION
OF THE MATURITY HEREOF IS DUE TO MAKER'S DEFAULT OR OTHERWISE.
FURTHERMORE, BY INITIALING BELOW, MAKER WAIVES ANY RIGHTS IT MAY HAVE UNDER
ANY APPLICABLE STATE LAWS AS THEY RELATE TO ANY PREPAYMENT RESTRICTIONS
CONTAINED IN THIS PARAGRAPH 9 OR OTHERWISE IN THIS NOTE AND EXPRESSLY
ACKNOWLEDGES THAT HOLDER HAS MADE THE LOAN IN RELIANCE UPON SUCH AGREEMENTS
AND WAIVER OF MAKER AND THAT HOLDER WOULD NOT HAVE MADE THE LOAN WITHOUT
SUCH AGREEMENTS AND WAIVER OF MAKER. MAKER ACKNOWLEDGES THAT SPECIFIC
WEIGHT HAS BEEN GIVEN TO THE CONSIDERATION GIVEN FOR SUCH AGREEMENTS, WHICH
CONSIDERATION IS THE GRANTING OF THE LOAN.
Maker's Initials ____________
10. Evasion of Prepayment Premium. Maker acknowledges that in the
event of an acceleration of payment of this Note following default by
Maker, a tender of payment of an amount necessary to satisfy the entire
indebtedness evidenced hereby, but not including the Prepayment Premium,
made at any time prior to a foreclosure sale by Marker, its successors or
assigns or by anyone on behalf of Maker, or by a buyer upon foreclosure or
trustee's sale, shall be presumed to be and conclusively deemed to
constitute a deliberate evasion of the prepayment provisions hereof and
shall constitute a prepayment hereunder and shall therefore be subject to
the Prepayment Premium as calculated in accordance with this Note with the
date of prepayment being deemed the date of occurrence of the foreclosure
sale or the tender of payment of the amount necessary to pay the entire
indebtedness evidenced hereby in full, including the Prepayment Premium.
11. Maker's Covenants. Maker agrees that (i) this instrument and the
rights and obligations of all parties hereunder shall be governed by and
construed under the laws of the state in which the Subject Property is
located; (ii) the obligation evidenced by this Note is an exempted
transaction under the Truth-in-Lending Act, 15 U.S.C. Section 1601, et seq.
(1982); (iii) said obligation constitutes a business loan for the purpose
of the application of any laws that distinguish between consumer loans and
business loans and that have as their purpose the protection of consumers
in the state in which the Subject Property is located; (iv) at the option
of the Holder, the United States District Court for the Northern District
of Illinois and any court of competent jurisdiction of the State of
Illinois shall have jurisdiction in any action, suit or other proceeding
arising out of or relating to any act taken or omitted hereunder or the
enforcement of this Note, the Mortgage and the Related Agreements and Maker
shall not assert in any such action, suit or other proceeding that it is
not personally subject to the jurisdiction of the courts in (iv) above,
that the action, suit or proceeding is brought in an inconvenient forum or
that the venue of the action, suit or other proceeding is improper; (v) it
hereby waives any objections to venue of the courts in (iv) above; and (vi)
it hereby waives its right to a trial by jury.
12. Severability. The parties hereto intend and believe that each
provision of this Note comports with all applicable local, state and
federal laws and judicial decisions. However, if any provision or any
portion of any provision contained in this Note is held by a court of law
to be invalid, illegal, unlawful, void or unenforceable as written in any
respect, then it is the intent of all parties hereto that such portion or
provision shall be given force to the fullest possible extent that it is
legal, valid and enforceable, that the remainder of the Note shall be
construed as if such illegal, invalid, unlawful, void or unenforceable
portion or provision was not contained therein, and the rights, obligations
and interests of Maker and Holder under the remainder of this Note shall
continue in full force and effect.
13. Usury Laws. It is the intention of Maker and Holder to conform
strictly to the usury laws now or hereafter in force in the State of
Georgia, and any interest payable under this Note, the Mortgage, or any
Related Agreement shall be subject to reduction to the amount not in excess
of the maximum non-usurious amount allowed under the usury laws of the
State of Georgia as now or hereafter construed by the courts having
jurisdiction over such matters. In the event the maturity of this Note is
accelerated under the terms of this Note, the Mortgage or any Related
Agreement, or by voluntary prepayment by Maker, or otherwise, then earned
interest may never include more than the maximum amount permitted by law,
computed from the dates of each advance of loan proceeds hereunder until
payment, and any interest in excess of the maximum amount permitted by law
shall be cancelled automatically and, if theretofore paid, shall at the
option of the Holder either be rebated to Maker or credited on the
principal amount of this Note or if all principal has been prepaid, then
the excess shall be rebated to Maker. The aggregate of all interest
(whether designated as interest, service charges, points, or otherwise)
contracted for, chargeable, or receivable under this Note, the Mortgage, or
any Related Agreement shall under no circumstances exceed the maximum legal
rate upon the balance of this Note remaining unpaid from time to time. In
the event such interest does exceed the maximum legal rate, it shall be
cancelled automatically to the extent that such interest exceeds the
maximum legal rate and if theretofore paid, credited on the principal
amount of this Note or, if the Note has been prepaid, then such excess
shall be rebated to Maker.
14. Acceleration. Upon an Event of Default, Holder shall have the
right, without demand or notice, to declare the entire principal amount of
this Note and/or any Future Advance (as defined in the Mortgage) then
outstanding, and all accrued and unpaid interest thereon, and all other
sums required under this Note or under the Mortgage, to be immediately due
and payable, and notwithstanding the stated maturity in this Note or any
note evidencing any Future Advance, the principal amount of this Note
and/or any Future Advance and the accrued and unpaid interest hereon and
thereon and all other sums required hereunder and thereunder, including
without limitation, the Prepayment Premium, shall thereupon become
immediately due and payable. During the existence of such Event of
Default, Holder may apply payments received on any amounts due hereunder or
under the Mortgage or any Related Agreement as Holder may determine in its
sole discretion.
15. Waivers by Maker. As to this Note, the Mortgage, the Related
Agreements and any other instruments securing the indebtedness, Maker and
all guarantors, sureties and endorsers, severally waive all applicable
exemption rights, whether under any state constitution, homestead laws or
otherwise, and also severally waive diligence, valuation and appraisement,
presentment for payment, protest and demand, notice of protest, demand and
dishonor and diligence in collection and nonpayment of this Note and all
other notices in connection with the delivery, acceptance, performance,
default, or enforcement of the payment of this Note (except notice of
default specifically provided for in the Mortgage and the Related
Agreements). To the extent permitted by law, Maker further waives all
benefit that might accrue to Maker by virtue of any present or future laws
exempting the Subject Property, or any other property, real or personal, or
the proceeds arising from any sale of any such property, from attachment,
levy, or sale under execution, or providing for any stay of execution to be
issued on any judgment recovered on this Note or in any action to foreclose
the Mortgage, injunction against sale pursuant to power of sale, exemption
from civil process or extension of time for payment. Maker agrees that any
real estate that may be levied upon pursuant to a judgment obtained by
virtue of this Note, or any writ of execution issued thereon, may be sold
upon any such writ in whole or in part in any order desired by Holder.
16. Maker Not Released. No delay or omission of Holder to exercise
any of its rights and remedies under this Note, the Mortgage or any Related
Agreements at any time following the happening of an Event of Default shall
constitute a waiver of the right of Holder to exercise such rights and
remedies at a later time by reason of such Event of Default or by reason of
any subsequently occurring Event of Default. This Note, or any payment
hereunder, may be extended from time to time by agreement in writing
between Maker and Holder without in any other way affecting the liability
and obligations of Maker and endorsers, if any.
17. Nonrecourse. Notwithstanding any provision in this Note, the
Mortgage, or Related Agreements, except as otherwise set forth in this
paragraph, the liability of Maker and the general partners of Maker, if
any, under this Note, the Mortgage and the Related Agreements shall be
limited to, and satisfied from the Subject Property and the proceeds
thereof, the rents and all other income arising therefrom, the other assets
of Maker arising out of the Subject Property which are given as collateral
for this Note, and any other collateral given in writing to Holder as
security for repayment of this Note (all of the foregoing are collectively
referred to as the "Loan Collateral"); provided, however, that nothing
contained in this paragraph shall (i) preclude Holder from foreclosing the
lien of the Mortgage or from enforcing any of its rights or remedies in law
or inequity against Maker except as stated in this paragraph, (ii)
constitute a waiver of any obligation evidenced by this Note or secured by
the Mortgage or any Related Agreements, (iii) limit the right of Holder to
name Maker as a party defendant in any action brought under this Note, the
Mortgage or any Related Agreements, so long as execution on any judgment is
limited to the Loan Collateral, (iv) prohibit Holder from pursuing all of
its rights and remedies against any guarantor or surety, whether or not
such guarantor or surety is a partner of Maker, (v) limit the personal
liability of Maker, or any shareholder of Maker, or any general partner of
Maker to Holder for misappropriation or misappropriation of funds, fraud,
waste, willful misrepresentation or willful damage to the Subject Property
or (vi) preclude Holder from recovering from Maker and the indemnitors
under that certain Environmental Indemnity Agreement of even date herewith.
18. Successors and Assigns. The provisions of this Note shall be
binding upon Maker and its legal representatives, successors and assigns
and shall inure to the benefit of any Holder and its successors and
assigns. In the event Maker is composed of more than one party,
obligations arising from this Note are and shall be joint and several as to
each such party.
19. Remedies Cumulative. The remedies of Holder as provided in this
Note, or in the Mortgage or the Related Agreements, and the warranties
contained herein or therein shall be cumulative and concurrent, may be
pursued singly, successively or together at the sole discretion of Holder,
may be exercised as often as occasion for their exercise shall occur and in
no event shall the failure to exercise any such right or remedy be
construed as a waiver or release of such right or remedy. No remedy under
this Note, conferred upon or reserved to Holder is intended to be exclusive
of any other remedy provided in this Note, the Mortgage or any of the
Related Agreements or provided by law, but each shall be cumulative and
shall be in addition to every other remedy given under the Mortgage or any
of the Related Agreements or hereunder or now or hereafter existing at law
or in equity or by statute.
20. Notices. All notices, written confirmation of wire transfers and
all other communications with respect to this Note shall be directed as
follows: If to Holder, c/o Allstate Insurance Company, Commercial Mortgage
Division, 3100 Sanders Road, Allstate Plaza West - J2A, Northbrook,
Illinois 60062, Attention: Taxable Fixed Income - Commercial Mortgage
Division, with a copy to Allstate Insurance Company, 3100 Sanders Road,
Allstate Plaza West - M2A, Northbrook, Illinois 60062, Attention:
Financial Law Division; if to Maker, c/o Barge-Wagener, Inc., 1815 The
Exchange, Atlanta, Georgia 30339, Attn: John M. Barge and John Wagener,
with a copy to: Long, Aldridge & Norman, Two Concourse Parkway, Suite 750,
Atlanta, Georgia 30328, Attn: James A. Fleming or at such other place as
Holder or Maker may from time to time designate in writing by ten (10) days
prior written notice thereof. All notices shall be in writing and shall be
(i) hand-delivered, effective upon receipt, or (ii) sent by United States
express mail or by private overnight courier, effective upon receipt, or
(iii) served by certified mail at the appropriate address set forth above,
or at such other place as Holder or Maker may from time to time designate
in writing. Any notice or demand served by certified mail, return receipt
requested, shall be deposited in the United States mail with postage
thereon fully prepaid and addressed to the party so to be served at its
address above stated or at such other address of which said party shall
have theretofore notified in writing, as provided above, the party giving
such notice. Service of any such notice or demand so made shall be deemed
effective on the day of actual delivery as shown by the addressee's return
receipt or the expiration of three (3) business days after the date of
mailing, whichever is earlier in time.
21. No Oral Modification. This Note may not be modified or
discharged orally, but only by an agreement in writing signed by the party
against whom enforcement of any waiver, modification or discharge is
sought.
22. Time. Time is of the essence with regard to the performance
of the obligations of Maker in this Note and each and every term, covenant
and condition herein by or applicable to Maker.
23. Captions. The captions and headings of the paragraphs of
this Note are for convenience only and are not to be used to interpret,
define or limit the provisions hereof.
24. Replacement Note. Upon receipt of evidence reasonably
satisfactory to Maker of the loss, theft, destruction or mutilation of this
Note, and in the case of any such loss, theft or destruction, upon delivery
of any indemnity agreement reasonably satisfactory to Maker or, in the case
of any such mutilation, upon surrender and cancellation of this Note, Maker
will execute and deliver to Holder in lieu thereof, a replacement note
dated as of the date of this Note, identical in form and substance to this
Note and upon such execution and delivery all references in the Mortgage to
this Note shall be deemed to refer to such replacement note.
25. Extension of Note. Upon written notice by Maker to Holder
not more than 120 days nor less than 90 days prior to the maturity of this
Note, Maker may notify Holder of its intention to extend the Note for an
additional 5 years ("Extension Term") on the same terms and conditions as
contained herein except as and subject to the following terms and
conditions:
(a) Maker shall only have the right to elect to extend this Note
provided that:
(i) there is no default or event which, with notice or
the passage of time, or both, could result in a
default by Maker under the Mortgage or the Related
Agreements,
(ii) Holder is then extending mortgage loans on terms
comparable to the terms of the loan evidenced hereby,
secured by properties comparable to the Subject
Property,
(iii) there is no deterioration in the financial condition
of Maker or the Subject Property in the sole opinion
of Holder,
(iv) the Subject Property has maintained a ratio of Net
Operating Income (as defined in this paragraph 25) to
annual debt service due under the Note and any other
notes secured by the Subject Property of not less
than 110% for the 12 month period ending upon the
date Maker requests its extension of the maturity
date of this Note, and
(v) the Subject Property has a projected ratio of Net
Operating Income to annual debt service due under
this Note and any other notes secured by the Subject
Property of not less than 110% for the 12 month
period commencing on the date of the original
maturity of this Note.
(b) The interest rate shall be Holder's interest rate for 5 year
loans comparable to the loan evidenced hereby on the date
Maker notifies Holder of its election to extend this Note
pursuant to the terms hereof, as quoted to Maker.
(c) The principal outstanding as of the maturity of this initial
term of this Note shall be amortized on a 25 year schedule
with consecutive equal monthly installments of principal and
interest and a final payment of all outstanding principal
and accrued and unpaid interest at maturity of the Extension
Term.
(d) On any or all of the ten (10) business days ending 90 days
prior to the maturity date of the initial term of this Note
upon Maker's request on no more than a daily basis, Holder
shall inform the Maker of its then current interest rate,
with the understanding that its interest rate fluctuates on
at least a daily basis. Maker may notify Holder in writing
(which may be given by facsimile, followed by original
overnight delivery) on or before 2:00 p.m. Chicago time on
the day of any such quote, of its election to extend this
Note at the rate quoted on that day.
(e) In the event and after Maker elects to extend the term Maker
may prepay this Note on the terms and conditions set forth
in paragraph 9 of this Note as if the Extension Term were
the original term.
(f) Maker shall pay any costs and expenses, including legal
fees, incurred by Holder or otherwise involved in extending
the term of this Note.
(g) All items reasonably required by Holder in connection with
the extension of this Note shall be received from the Maker
within 15 calendar days of Maker's written notice of its
intention to extend this Note.
(h) At Holder's option, the extension of the term of this Note
shall be evidenced by an extension or renewal of or
amendment to this Note or by the execution of a new note.
Maker further agrees to execute and/or deliver Holder any
other documentation reasonably requested by Holder,
including without limitation, opinions of counsel and title
endorsements, all of which shall be satisfactory to Holder
in Holder's reasonable discretion.
As used in this paragraph 25, "Net Operating Income" shall mean all
rents projected from tenants in the Subject Property and paying rent under
Leases (as defined in the Mortgage) in effect during the applicable twelve
month period, which do not contain any termination rights during that
period, calculated on a cash basis, including all amounts to be received
from tenants as payment of operating expenses but not including refundable
deposits, principal or interest payments received by Maker on loans to
tenants and fees and reimbursements for work performed for tenants by
Maker, less all amounts, calculated on a cash basis, for the operation or
maintenance of the Subject Property, including ground rents, the cost of
property management, maintenance, cleaning, security, landscaping, parking
maintenance and utilities, and other costs and expenses approved in writing
by Holder and amounts reasonably estimated by Holder for the payment of
real estate taxes and assessments and other taxes related to the operation
of the Subject Property, insurance premiums, necessary repairs and future
replacements of equipment; payments under this Note shall not be included
in Net Operating Income.
IN WITNESS WHEREOF, Maker has caused this Mortgage Note to be duly
executed under seal on the date first above written.
MAKER:
HOLCOMB BRIDGE PARTNERS, L.P., a Georgia
limited partnership
By:/s/ John M. Barge (SEAL)
-------------------------
John M. Barge, Partner
By:/s/ John H. Wagener (SEAL)
--------------------------
John H. Wagener, Partner
(Being all the general partners of Maker)
ALLSTATE LIFE INSURANCE COMPANY
LOAN NO. 121-026
MODIFICATION OF MORTGAGE NOTE
-----------------------------
THIS AGREEMENT (the "Modification") is entered into as of the 31st day
of October, 1995, by and between HOLCOMB BRIDGE PARTNERS, L.P., a Georgia
limited partnership ("Borrower"), and HARRIS TRUST AND SAVINGS BANK as
Collateral Agent and Trustee under the Security and Trust Agreement dated
as of September 1, 1993 (Northbrook Life Insurance Company, Secured Party
and Beneficiary), ("Lender").
RECITALS
--------
A. Borrower executed that certain Mortgage Note in the original
principal amount of $6,700,000.00 dated as of October 5, 1990 (the "Note")
in favor of Allstate Life Insurance Company ("Allstate"). The Note is
secured by that certain Deed to Secure Debt, Assignment of Leases, Rents
and Contracts, Security Agreement and Fixture Filing dated as of October 5,
1990 (the "Security Deed") encumbering certain real property located at
1575 Old Alabama Road and 1005 Holcomb Woods Parkway, in the City of
Roswell, County of Fulton, State of Georgia. The Security Deed was
recorded October 10, 1990 in Deed Book 13769, Page 239 in the Official
Records of Fulton County. The Note is further secured by that certain
Financing Statement on Form UCC-1 filed October 10, 1990 with the office of
Fulton County Superior Court Clerk as File No. 746094 and the office of the
Cobb County Superior Court Clerk as File No. 90-9641 (the "Financing
Statement"), and certain representations, warranties, covenants and
agreements of Borrower under that certain Borrower's Closing Certificate
from Borrower to Allstate dated October 5, 1990 (the "Borrower's
Certificate"). The Note, the Security Deed, the Financing Statement and
the Borrower's Certificate are sometimes hereinafter collectively referred
to as the "Original Loan Documents." All terms not otherwise defined
herein shall have the meanings ascribed to them in the Deed to Secure Debt.
B. In addition to the Loan Documents, Borrower, Borrower's general
partners, individually, have executed and delivered to Allstate that
certain Environmental Indemnity Agreement dated as of October 5, 1990 (the
"Indemnity").
C. On or about October 25, 1993 Allstate endorsed the Note and
assigned the original Loan Documents to Lender.
D. The original maturity date of the Note is November 1, 1995. The
outstanding principal balance on the Note as of November 1, 1995 is
scheduled to be $6,700,000.00 ("Outstanding Balance").
E. Borrower has exercised its option to extend the maturity date of
the Note pursuant to the terms and conditions of Paragraph 25 of the Note,
and the provisions of the Loan Documents shall be modified to extend the
term of the Note, modify the interest rate and make other certain
modifications.
F. Concurrently herewith Lender and Borrower have executed (i) a
Modification to Deed to Secure Debt, Assignment of Leases, Rents and
Contracts, Security Agreement and Fixture Filing, (ii) a Reaffirmation of
Environmental Indemnity Agreement, and (iii) a Reaffirmation of Master
Lease. (The within Agreement together with the foregoing agreements
collectively the "Modification Documents".)
G. The Original Loan Documents, the Modification Documents and all
other documents executed by Borrower concurrently with or after the
execution of this Agreement shall be collectively referred to as the "Loan
Documents."
NOW THEREFORE, in consideration of the foregoing, the parties hereto
agree as follows:
1. The maturity date of the Note is hereby extended to November 1,
2000 (the "Extended Maturity Date").
2. Effective as of November 1, 1995, the first sentence of Section 1
of the Note is amended to read in its entirety as follows:
1. Payment of Principal and Interest. FOR VALUE RECEIVED,
HOLCOMB BRIDGE PARTNERS, L.P., a Georgia limited partnership
("Maker"), hereby promises to pay to the order of ALLSTATE LIFE
INSURANCE COMPANY, an Illinois corporation, and any subsequent
holder of this Note ("Holder" or "Holders") in the manner
hereinafter provided, the principal amount of SIX MILLION SEVEN
HUNDRED THOUSAND AND NO/100 DOLLARS ($6,700,000.00) together with
(i) interest on the outstanding principal balance from the date
of the initial disbursement of all or a part of the principal of
this Note ("Disbursement Date") to and including October 31, 1995
at the rate of ten percent (10%) per annum, and (ii) interest on
the unpaid principal balance from and including November 1, 1995
until maturity at the rate of eight and 20/100 percent (8.20%)
per annum (collectively, "Contract Rate") as follows:
(a) on the Disbursement Date, interest only in advance,
accruing from the Disbursement Date to the last day of
October, 1990, both dates inclusive; and
(b) interest only, in arrears, in the amount of FIFTY-FIVE
THOUSAND EIGHT HUNDRED THIRTY-THREE AND 33/100 DOLLARS
($55,833.33) on the first day of December, 1990 and on the
first day of each month thereafter to and including November
1, 1995; and
(c) in arrears, on the first day of December, 1995 and on
the first day of each month thereafter until this Note
matures, principal and interest in consecutive equal
installments of FIFTY-TWO THOUSAND SIX HUNDRED TWO AND
49/100 ($52,602.49), which amount is calculated using an
amortization period of twenty-five (25) years; and
(d) on November 1, 2000, the entire unpaid principal and
any interest accrued but remaining unpaid, and all other
sums due under this Note.
3. Effective as of November 1, 1995, the first full paragraph of
Section 9 of the Note is amended to read in its entirety as follows:
Prepayment. Maker shall be prohibited from prepaying the Note
until October 1, 1998 (the "No-Prepayment Period"). Subsequent
to the No-Prepayment Period, on any regular payment date, with
sixty (60) days prior written notice to Holder specifying the
date of the prepayment, Maker will have the privilege of
prepaying the entire outstanding principal amount together with
accrued but unpaid interest, any other sums secured by the
Security Deed and the Related Agreements and the following
percent premium on the principal balance (the "Prepayment
Premium"): a two percent (2%) premium on the principal balance
if the prepayment is made between October 1, 1998 and September
30, 1999 and a one percent (1%) premium on the principal balance
if the prepayment is made between October 1, 1999 and August 1,
2000. No Prepayment Premium shall be due on the principal
balance prepaid in the last sixty days of the loan term.
4. Borrower and Lender agree that the option to extend the maturity
of the Note described in paragraph 25 of the Note has been properly
exercised and Borrower has no further rights or option to extend the
maturity of the Note.
5. All payment and performance obligations of the Borrower under the
Loan Documents, the Indemnity and any other Related Agreements, as modified
hereby, shall hereinafter sometimes be referred to as the "Obligations."
Borrower hereby acknowledges by its execution hereof that as of the date of
execution hereof the Obligations are unconditionally due and owing to
Lender as provided in the Loan Documents and that Borrower has no actions,
defenses, demands and/or claims or rights of set-off or deduction
whatsoever against (a) Lender, (b) the indebtedness evidenced by the Note,
and owed to the Lender, or (c) the Loan Documents. Furthermore, Borrower
acknowledges that as of the date of execution hereof, Lender has in no way
defaulted or performed, or failed to perform, any act or omission under the
Note or the other Loan Documents or any other agreements between Borrower
and Lender which would or could give rise to any action or actions, cause
or causes of actions, suits, debts, sums of money, damages, claims, costs,
expenses and/or demands whatsoever, in law or in equity or otherwise by
Borrower against Lender.
6. Except as expressly provided herein, nothing in this Modification
shall alter or affect any provision, condition, or covenant in the Loan
Documents, or affect or impair any rights, powers, or remedies thereunder.
Borrower hereby reaffirms, for the benefit of Lender, all representations,
warranties, covenants, and agreements in the Loan Documents, as modified
hereby. All interests granted to Lender securing Borrower's obligations
under the Loan Documents shall secure this Modification.
7. All provisions contained in this Modification are severable and
the invalidity or unenforceability of any provision shall not affect or
impair the validity or enforceability of the remaining provisions and this
Modification, all of the obligations set forth herein survive the
recordation of this Modification.
8. This Modification may be executed in multiple counterparts, all
of which shall be deemed originals and with the same effect as if all
parties had signed the same document. All of such counterparts shall be
construed together and shall constitute one instrument. The singular form
shall include the plural and vice versa.
<PAGE>
The parties have entered into this Modification as of the date
hereinabove set forth.
BORROWER
--------
HOLCOMB BRIDGE PARTNERS, L.P.,
a Georgia limited partnership
By:/s/ John M. Barge
---------------------------
John M. Barge, Partner
By:/s/ John H. Wagener
---------------------------
John H. Wagener, Partner
LENDER
------
HARRIS TRUST AND SAVINGS BANK as Collateral Agent and
Trustee under the Security and Trust Agreement dated
as of September 1, 1993 (Northbrook Life Insurance
Company, Secured Party and Beneficiary)
By: ALLSTATE LIFE INSURANCE
COMPANY
By:___________________________
By:___________________________
ITS AUTHORIZED SIGNATORIES
WHEN RECORDED MAIL TO:
ALSTON & BIRD
100 Galleria Parkway
Suite 1200
Atlanta, Georgia 30339
Attention: Jane S. Smith
- -----------------------------------------------------------------
DEED TO SECURE DEBT
FROM
HOLCOMB BRIDGE PARTNERS, L.P.
AS GRANTOR, ("BORROWER")
TO ALLSTATE LIFE INSURANCE COMPANY
AS GRANTEE, ("LENDER")
- -----------------------------------------------------------------
THIS INSTRUMENT IS ALSO TO BE INDEXED IN THE INDEX OF FINANCING STATEMENTS.
THE NAMES OF THE DEBTOR AND THE SECURED PARTY, THE MAILING ADDRESS OF THE
SECURED PARTY FROM WHICH INFORMATION CONCERNING THE SECURITY INTEREST MAY
BE OBTAINED, THE MAILING ADDRESS OF THE DEBTOR AND A STATEMENT INDICATING
THE TYPES, OR DESCRIBING THE ITEMS, OF COLLATERAL, ARE DESCRIBED HEREIN, IN
COMPLIANCE WITH THE REQUIREMENTS OF THE UNIFORM COMMERCIAL CODE, OFFICIAL
CODE OF GEORGIA ANNOTATED SECTION 11-9-402.
This Deed to Secure Debt secures the indebtedness of that certain Note
of even date herewith executed by BORROWER and payable to the order of
LENDER in the principal sum of Six Million Seven Hundred Thousand Dollars
($6,700,000.00) with interest thereon and all late charges, loan fees,
commitment fees, and prepayment premiums, maturing November 1, 1995, unless
extended pursuant to the Note.
<PAGE>
DEED TO SECURE DEBT, ASSIGNMENT OF LEASES,
RENTS AND CONTRACTS, SECURITY AGREEMENT
AND
FIXTURE FILING
PAGE
ARTICLE SECTION DESCRIPTION NUMBER
- ------- ------- ----------- ------
I COVENANTS OF BORROWER
1.01 Performance of Obligations Secured 4
1.02 Insurance 5
1.03 Condemnation and Insurance Proceeds 6
1.04 Taxes, Liens and other Items 11
1.05 Assignment of Leases, Contracts, 11
Rents and Profits
1.06 Acceleration Upon Sale or 15
Encumbrance
1.07 Preservation and Maintenance of 16
Subject Property
1.08 Offset Certificates 16
1.09 Protection of Security; Costs 17
and Expenses
1.10 BORROWER'S Covenants Respecting 17
Collateral
1.11 Covenants Regarding Financial 19
Statements
1.12 Covenants of BORROWER 20
1.13 Additional Encumbrances on the
Subject Property 21
II EVENTS OF DEFAULT
2.01 Monetary and Performance Defaults 24
2.02 Bankruptcy, Insolvency, Dissolution 25
2.03 Misrepresentation 25
2.04 Default under Subordinate Loans 25
III REMEDIES
3.01 Acceleration 25
3.02 Entry 26
3.03 Judicial Action 27
3.04 Power of Sale 27
3.05 Rescission of Notice of Default 29
3.06 LENDER'S Remedies Respecting 29
Collateral
<PAGE>
PAGE
ARTICLE SECTION DESCRIPTION NUMBER
- ------- ------- ----------- ------
3.07 Proceeds of Sales 29
3.08 Waiver of Marshalling, Right of 30
Redemption Homestead and
Valuation
3.09 Remedies Cumulative 30
3.10 Nonrecourse 31
3.11 Performance by LENDER 31
IV MISCELLANEOUS
4.01 Severability 32
4.02 Certain Charges and Brokerage
Fees 32
4.03 Notices 33
4.04 BORROWER Not Released; Certain 33
LENDER Acts
4.05 Inspection 34
4.06 Reconveyance or 34
Cancellation
4.07 Statute of Limitations 34
4.08 Interpretation 34
4.09 Consent; Delegation to Subagents 35
4.10 Successors and Assigns 35
4.11 Governing Law 35
4.12 Changes in Taxation 35
4.13 Maximum Interest Rate 35
4.14 Time of the Essence 36
4.15 Reproduction of Documents 36
4.16 Request for Notices 36
4.17 No Oral Modifications 37
SIGNATURE PAGE
Exhibit A - Legal Description of Land
Exhibit B - Permitted Exceptions
<PAGE>
DEED TO SECURE DEBT, ASSIGNMENT OF LEASES, RENTS AND CONTRACTS,
SECURITY AGREEMENT AND FIXTURE FILING
THIS DEED TO SECURE DEBT, ASSIGNMENT OF LEASES, RENTS AND CONTRACTS,
SECURITY AGREEMENT AND FIXTURE FILING ("Security Deed") is made as of this
5th day of October, 1990, from HOLCOMB BRIDGE PARTNERS, L.P., a Georgia
limited partnership, whose mailing address is c/o Barge-Wagener, Inc., 1815
The Exchange, Atlanta, Georgia 30339, Attention: John M. Barge and John
Wagener (herein "BORROWER"), to ALLSTATE LIFE INSURANCE COMPANY, a
corporation, whose mailing address is 3100 Sanders Road, Allstate Plaza
West - M2A, Northbrook, Illinois, 60062, as Grantee (herein "LENDER").
BORROWER, in consideration of the indebtedness herein recited, hereby
irrevocably grants, bargains, sells, conveys, transfers and assigns to
LENDER, its successors and assigns, with power of sale and right of entry
and possession, all of BORROWER's estate, right, title and interest in, to
and under that certain real property located in Fulton County, Georgia,
more particularly described in Exhibit A attached hereto and incorporated
herein by this reference (the "Land");
TOGETHER with all of BORROWER's estate, right, title and interest in,
to and under all buildings, structures, improvements and fixtures now
existing or hereafter erected on the Land and all right, title and
interest, if any, of BORROWER in and to the streets and roads, opened or
proposed, abutting the Land to the center lines thereof, and strips within
or adjoining the Land, the air space and right to use said air space above
the Land, all rights of ingress and egress on or within the Land, all
easements, rights and appurtenances thereto or used in connection with the
Land, including, without limitation, air lateral support, alley and
drainage rights, all revenues, income, rents, cash or security deposits,
advance rental deposits, and other benefits thereof or arising from the use
or enjoyment of all or any portion thereof (subject however to the rights
and authorities given herein to BORROWER to collect and apply such
revenues, and other benefits), all interests in and rights, royalties and
profits in connection with all minerals, oil and gas and other hydrocarbon
substances thereon or therein, and water stock, all options to purchase or
lease, all development or other rights relating to the Land or the
operation thereof, or used in connection therewith, including all
BORROWER's right, title and interest in all fixtures, attachments,
partitions, machinery, equipment, building materials, appliances and goods
of every nature whatever now or hereafter located on, or attached to, the
Land, all of which, including replacements and additions thereto, shall, to
the fullest extent permitted by law and for the purposes of this Security
Deed, be deemed to be real property and, whether affixed or annexed thereto
or not, be deemed conclusively to be real property; and BORROWER agrees to
execute and deliver, from time to time, such further instruments and
documents as may be required by LENDER to confirm the legal operation and
effect of this Security Deed on any of the foregoing. All of the foregoing
property described in this paragraph (the "Improvements") together with the
Land, shall be herein after referred to as the "Subject Property").
TOGETHER with all of BORROWER's right, title and interest in the
following:
(a) All equipment, fixtures, inventory, goods, instruments,
appliances, furnishings, machinery, tools, raw materials, component parts,
work in progress and materials, and all other tangible personal property of
whatsoever kind, used or consumed in the improvement, use or enjoyment of
the Subject Property now or any time hereafter owned or acquired by
BORROWER, wherever located and all products thereof whether in possession
of BORROWER or whether located on the Subject Property or elsewhere;
(b) To the extent such general intangibles are assignable, all
general intangibles relating to design, development, operation, management
and use of the Subject Property, including, but not limited to, (i) all
names under which or by which the Subject Property may at any time be owned
and operated under any such names or any variant thereof, and all goodwill
in any way relating to the Subject Property and all service marks and
logotypes used in connection therewith, (ii) all permits, licenses,
authorizations, variances, land use entitlements, approvals, consents,
clearances, and rights obtained from governmental agencies issued or
obtained in connection with the Subject Property, (iii) all permits,
licenses, approvals, consents, authorizations, franchises and agreements
issued or obtained in connection with the use, occupation or operation of
the Subject Property, (iv) all materials prepared for filing or filed with
any governmental agency, and (v) the books and records of BORROWER relating
to construction, or operation of the Subject Property;
(c) All shares of stock or partnership interest or other
evidence of ownership of any part of the Subject Property that is owned by
BORROWER in common with others, including all water stock relating to the
Subject Property, if any, and all documents or rights of membership in any
owners' or members' association or similar group having responsibility for
managing or operating any part of the Subject Property provided, however,
that the foregoing shall not include any ownership interests in the
BORROWER;
(d) All accounts, deposit accounts, tax and insurance escrows
held pursuant to this Security Deed, accounts receivable, instruments,
documents, documents of title, general intangibles, rights to payment of
every kind, all of BORROWER's rights, direct or indirect, under or pursuant
to any and all construction, development, financing, guaranty, indemnity,
maintenance, management, service, supply and warranty agreements,
commitments, contracts, subcontracts, insurance policies, licenses and
bonds now or anytime hereafter arising from construction on the Land or the
use or enjoyment of the Subject Property to the extent such are assignable;
TOGETHER with all additions to, substitutions for and the products of
(a)-(d), and all proceeds, whether cash proceeds or noncash proceeds, and
including insurance and condemnation proceeds, received when any such
property (or the proceeds thereof) is sold, exchanged, leased, licensed, or
otherwise disposed of, whether voluntarily or involuntarily. Such proceeds
shall include any of the foregoing specifically described property of
BORROWER acquired with cash proceeds.
AND TOGETHER with, and without limiting the above items in (a)-(d),
all Goods, Accounts, Documents, Instruments, Money, Chattel Paper and
General Intangibles arising from or used in connection with the Subject
Property, as those terms are defined in the Uniform Commercial Code from
time to time in effect in the state in which the Subject Property is
located. (All of the foregoing property in (a)-(d) and this paragraph,
including such products and proceeds thereof, are collectively referred to
as "Collateral".)
The personal property in which LENDER has a security interest includes
goods which are or shall become fixtures on the Subject Property. It is
the intention and understanding of BORROWER that this Security Deed shall
be a security agreement pursuant to the Uniform Commercial Code of the
State of Georgia. This Security Deed is intended to serve as a fixture
filing pursuant to the terms of the applicable provisions of the Uniform
Commercial Code of the state in which the Subject Property is located.
This filing is to be recorded in the real estate records of the appropriate
city, town or county in which the Subject Property is located. In that
regard, the following information is provided:
Names of Debtor: Holcomb Bridge Partners, L.P.
Address of Debtor: See Section 4.16 hereof
Name of Secured Party: Allstate Life Insurance Company, an
Illinois insurance corporation
Address of Secured Party: See Section 4.16 hereof.
BORROWER warrants and agrees that there is no financing statement
covering the foregoing Collateral, the Subject Property, or any part
thereof, on file in any public office.
This Security Deed is given for the purpose of securing:
(a) The repayment of the indebtedness evidenced by that certain
Mortgage Note ("Note") of even date herewith executed by BORROWER and
payable to the order of LENDER, in the principal sum of SIX MILLION SEVEN
HUNDRED THOUSAND DOLLARS ($6,700,000.00) with interest thereon, as provided
therein and all late charges, loan fees, commitment fees, Prepayment
Premiums (as described in the Note), and all extensions, renewals,
modifications, amendments and replacements thereof;
(b) The payment of all other sums which may be advanced by or
otherwise be due to LENDER under any provision of this Security Deed or
under any other instrument or document referred to in clause (c) below,
with interest thereon at the rate provided herein or therein;
(c) The performance of each and every covenant and agreement of
BORROWER contained (i) herein, in the Note, or in any note evidencing a
Future Advance (as hereinafter defined), and (ii) in the obligations of
BORROWER upon any and all pledge or other security agreements, loan
agreements, disbursement agreements, supplemental agreements, assignments
(both present and collateral) and all instruments of indebtedness or
security now or hereafter executed by BORROWER in connection with any
indebtedness referred to in clauses (a), (b) or (d) of this paragraph or
for the purpose of supplementing or amending this Security Deed or any
instrument secured hereby, including, without limitation, the commitment
letter between BORROWER and LENDER dated August 6, 1990 ("Commitment
Letter") (all of the foregoing in this clause (ii), as the same may be
amended, modified or supplemented from time to time, being referred to
hereinafter as "Related Agreements") and all costs and expenses, including
reasonable attorneys' fees with respect to all such documents; and
(d) The repayment of any other loans or advances, with interest
thereon, hereafter made to BORROWER (or any successor in interest to
BORROWER as the owner of the Subject Property or any part thereof) by
LENDER when the promissory note evidencing the loan or advance specifically
states that said note is secured by this Security Deed, together with all
extensions, renewals, modifications, amendments and replacements thereof
(herein and in the Related Agreements "Future Advance").
TO HAVE AND TO HOLD the Subject Property to the use, benefit, and
behoof of LENDER, forever, in Fee Simple. This Security Deed is intended
to operate and is to be construed as a deed passing title to the Subject
Property to LENDER and is made under those provisions of the existing laws
of the State of Georgia relating to deeds to secure debt, and not as a
mortgage and is given to secure the payment of the indebtedness described
above.
BORROWER warrants that BORROWER has good title to the Subject
Property, is lawfully seized and possessed of the Subject Property and
every part thereof, and has the right to convey same; that the Subject
Property is unencumbered except as may be expressly provided in the
Permitted Exceptions described in Exhibit B attached hereto and
incorporated herein by this reference (the "Permitted Exception"); and that
BORROWER will forever warrant and defend title to the Subject Property unto
LENDER against the claims of all persons whomsoever.
ARTICLE I
COVENANTS OF BORROWER
To protect the security of this Security Deed, BORROWER covenants and
agrees as follows:
1.01. Performance of Obligations Secured. BORROWER shall promptly
pay when due the principal of and interest on the indebtedness evidenced by
the Note, the principal of and interest on any Future Advance, and any
prepayment and late charges provided for in the Note or in any note
evidencing a Future Advance, and shall further perform fully and in a
timely manner all other obligations of BORROWER contained herein or in the
Note or in any note evidencing a Future Advance or in any of the Related
Agreements.
1.02. Insurance. For all times during the period there remains any
indebtedness under the Note, or any and all other indebtedness (including
without limitation Future Advances) secured by this Security Deed, BORROWER
shall keep the Subject Property insured against all risks or hazards as
LENDER may require. Such insurance shall be in policy form, amount and
coverage satisfactory to LENDER, including, but not limited to: (i) Fire
and extended coverage property damage insurance, including, but not limited
to all risk and earthquake insurance and boiler and machinery insurance, if
applicable, in an amount equal to the full replacement value of the
Improvements, without deducting for depreciation, containing a waiver of
subrogation clause and a deductible amount acceptable to LENDER. Said
insurance shall name LENDER under a standard noncontributory mortgagee
clause or otherwise directly insure LENDER's interest in the Subject
Property. All losses under said insurance shall be payable to LENDER in
the manner provided in Section 1.03 hereof; (ii) Comprehensive general
liability insurance, in such form, amount and deductible satisfactory to
LENDER, and naming LENDER under a standard noncontributory mortgagee clause
or as additional insured covering LENDER's interest in the Subject
Property; (iii) Business interruption or rent loss insurance in an amount
at least equal to 100% of the annual debt service on the Note, the annual
debt service on any other financing permitted by LENDER, ground rents, if
any, and operating expenses for the Subject Property. Business
interruption or rent loss insurance shall contain a standard
noncontributory mortgagee clause in favor of and in form acceptable to
LENDER; (iv) Flood insurance required by and obtainable through the
National Flood Insurance Program sufficient to cover any damage which may
be anticipated in the event of flood unless BORROWER has provided LENDER
evidence satisfactory to LENDER that no portion of the Subject Property is
located within the boundaries of the 100 year flood plain; and (v) so
called "dram shop" insurance if alcoholic beverages are sold on the Subject
Property. All policies of insurance required under this Section 1.02 shall
be with a company or companies with a policy rating of A and financial
rating of at least Class X in the most current edition of Best's Insurance
Reports and authorized to do business in the state in which the Subject
Property is located. All policies of insurance shall provide that they
will not be cancelled or modified without thirty (30) days' prior written
notice to LENDER. True copies of the above mentioned insurance policies or
certificates of such insurance satisfactory to LENDER shall be delivered to
and held by LENDER. True copies of all renewal and replacement policies
shall be delivered to LENDER at least thirty (30) days before the
expiration of the expiring policies. If any renewal or replacement policy
is not obtained as required herein, LENDER is authorized to obtain the same
in BORROWER's name and at BORROWER's expense. LENDER shall not by the fact
of failing to obtain any insurance, incur any liability for or with respect
to the amount of insurance carried, the form or legal sufficiency of
insurance contracts, solvency of insurance companies, or payment or defense
of lawsuits, and BORROWER hereby expressly assumes full responsibility
therefor and all liability, if any, with respect thereto.
1.03. Condemnation and Insurance Proceeds.
(a) Immediately upon obtaining knowledge of the commencement or
threat of any action in connection with (i) any condemnation or other
taking ("Condemnation") of the Subject Property or any part thereof or (ii)
any conveyance in lieu of condemnation ("Taking") of the Subject Property
or any part thereof, BORROWER shall promptly notify LENDER in writing. In
any event, such notice shall be given to LENDER no more than ten (10) days
after BORROWER obtains knowledge of the commencement of or threat of a
Condemnation or Taking. LENDER shall have the right, but not the
obligation, to participate in any proceedings relating to any Condemnation
or Taking and may, in its sole discretion, consent or withhold its consent
to any settlement, adjustment, or compromise of any claims arising from the
Condemnation or Taking and no such settlement, adjustment or compromise
shall be final or binding upon LENDER without LENDER's prior consent.
If all or part of the Subject Property is taken by Condemnation or a
Taking, and no Event of Default (as hereinafter defined) then exists, and
LENDER in its reasonable judgment determines that the remainder of the
Subject Property, if any, cannot be operated as an economically viable
entity at substantially the same level of operations as immediately prior
to such Condemnation or Taking, then all proceeds of the Condemnation or
Taking ("Condemnation Proceeds") shall be paid over to LENDER and shall be
applied first toward reimbursement of the costs and expenses (including
reasonable attorneys' fees) of LENDER, if any, in connection with the
recovery of such proceeds, and then shall be applied in the sole and
absolute discretion of LENDER and without regard to the adequacy of its
security under this Security Deed: (i) to the payment or prepayment of all
or any portion of the Note but without the payment of the Prepayment
Premium unless an Event of Default exists, and/or (ii) to the performance
of any of the covenants contained in this Security Deed as LENDER may
determine, and/or (iii) to be released to the BORROWER.
If less than all of the Subject Property is taken by Condemnation or a
Taking, and no default then exists and LENDER in its reasonable judgment
determines that the remainder of the Subject Property can be operated as an
economically viable entity at substantially the same level of operations as
immediately prior to such Condemnation or Taking, then all Condemnation
Proceeds shall be at the option of LENDER, either released to BORROWER for
restoration of the Subject Property or deposited into an interest bearing
condemnation escrow fund under an escrow agreement and with an escrow agent
satisfactory to LENDER and BORROWER (the "condemnation escrow agent") and
BORROWER shall restore the Subject Property to a value at least equivalent
to its value immediately before the Condemnation or Taking. LENDER shall
have the right to obtain an opinion of an independent contractor or
engineer satisfactory to LENDER, at BORROWER's expense, to estimate the
cost to restore the remaining portion of the Subject Property. If the
amount of the Condemnation Proceeds is not sufficient to restore the
Subject Property based on the contractor's or engineer's opinion, subject
to revision as restorations are made, BORROWER shall be obligated to
deposit in the condemnation escrow fund the difference between the
contractor's or engineer's estimate and the amount of the Condemnation
Proceeds or to deliver to the condemnation escrow agent an irrevocable,
unconditional letter of credit in form and issued by a financial
institution acceptable to LENDER or other cash equivalent acceptable to
LENDER. The BORROWER's funds, if necessary, and the Condemnation Proceeds
shall be deposited into the condemnation escrow fund and shall not be
released by the condemnation escrow agent unless used to restore the
Subject Property and unless a disbursement agent satisfactory to LENDER and
BORROWER approves such disbursements from time to time. The condemnation
escrow agreement shall provide that the condemnation escrow agent shall not
disburse funds to BORROWER unless and until: (i) LENDER has approved the
plans and specifications for the restoration of the Subject Property; (ii)
BORROWER has executed a contract with a general contractor acceptable to
LENDER for the restoration of the Subject Property; (iii) the general
contractor has submitted lien waivers and/or releases, executed by the
general contractor and all subcontractors; (iv) BORROWER has furnished
LENDER with an endorsement to its title policy showing no additional
exceptions; and (v) BORROWER has submitted such other documents and
information as may be requested by LENDER to determine that the work to be
paid for has been performed in accordance with the plans and specifications
approved by LENDER. If any requisition for payment of work performed is
for an amount in excess of the sum then remaining in the condemnation
escrow fund, BORROWER shall advance the requisite amount in cash to the
condemnation escrow fund immediately upon written request from the
condemnation escrow agent or LENDER. The cost of such condemnation escrow
and services of the independent contractor or engineer shall be paid by
BORROWER.
If an Event of Default exists at the time that the Subject Property is
Condemned or at the time of a Taking or at the time of payment of any
Condemnation Proceeds, all Condemnation Proceeds and any interest earned
thereon shall be paid over either by the condemning authority directly to
LENDER or by the condemnation escrow agent to LENDER and shall be applied
first toward reimbursement of the costs and expenses of LENDER (including
reasonable attorneys' fees), if any, in connection with the recovery of
such proceeds, and then shall be applied in the sole and absolute
discretion of LENDER and without regard to the adequacy of its security
under this Security Deed (i) to the payment or prepayment of all or any
portion of the Note including the Prepayment Premium described in the Note;
(ii) to the reimbursement of expenses incurred by LENDER in connection with
the restoration of the Subject Property; (iii) to the performance of any of
the covenants contained in this Security Deed as LENDER may determine
and/or (iv) if such Taking or Condemnation is partial, to be released to
the BORROWER so long as the proceeds are used to restore the Subject
Property or to reimburse BORROWER for costs and expenses incurred by
BORROWER in such restoration. The amount released to BORROWER shall not be
deemed a payment of any portion of the unpaid balance of the Note. Any
prepayment of the Note or portion thereof pursuant to LENDER's election
under this paragraph shall be subject to the Prepayment Premium described
in the Note.
Any Condemnation Proceeds and any interest thereon remaining in the
condemnation escrow fund after restoration of the Subject Property pursuant
to the plans and specifications shall be paid to BORROWER if the BORROWER
is not then in default under this Security Deed, the Note or the Related
Agreements. If, however, BORROWER is in default under this Security Deed,
the Note or the Related Agreements, after payment of the costs to complete
the restoration of the Subject Property, the amount remaining in the
condemnation escrow fund may at the sole and absolute discretion of LENDER,
be retained by LENDER and applied to the payment or prepayment of all or
any principal and interest due under the Note and any excess shall be paid
to the BORROWER or in accordance with a final order, if any, of a court of
competent jurisdiction.
If BORROWER (i) abandons the Subject Property or (ii) fails to fulfill
any of BORROWER's obligations under this paragraph (a), then LENDER may, in
its sole and absolute discretion, collect and apply the Condemnation
Proceeds to the restoration of the Subject Property or to the payment or
prepayment of all or any portion of the Note.
At the time of any partial prepayment described in this subparagraph
(a), if BORROWER elects to exercise its right to prepay the portion of the
Note remaining unpaid after application of the Condemnation Proceeds, such
prepayment shall continue to be subject to the Prepayment Premium described
in the Note.
(b) Promptly upon obtaining knowledge of any casualty damage to
the Subject Property or any part thereof, or damage in any other manner,
BORROWER shall promptly notify LENDER in writing. In any event, such
notice shall be given to LENDER no more than five days after BORROWER
obtains knowledge of any damage to the Subject Property.
(1) If no Event of Default exists at the time the Subject
Property is damaged by fire or other casualty, BORROWER shall restore
the Subject Property to its condition immediately preceding such
damage and all proceeds of insurance shall be made available to
BORROWER for such restoration on the terms and conditions set forth as
follows:
(A) If the estimated cost of restoration of the Subject
Property is equal to or less than $50,000.00, BORROWER shall
promptly settle and adjust any claims under the insurance
policies which insure against such risks, receive and hold any
insurance proceeds and apply the same to the restoration of the
Subject Property, in which case BORROWER shall not be obligated
to establish an insurance escrow fund. LENDER shall have the
right to obtain an opinion of an independent contractor or
engineer satisfactory to LENDER to estimate the cost to restore
the Subject Property to its original condition, which opinion may
be revised, at BORROWER's expense, as restorations are made. If
the amount of the insurance proceeds is not sufficient to restore
the Subject Property based on an independent contractor's or
engineer's opinion, subject to revision as restorations are made,
BORROWER shall be obligated to pay the difference toward the
restoration of the Subject Property.
(B) If the estimated cost of restoration is greater than
$50,000.00, LENDER shall have the right, but not the obligation,
to participate in the settlement of the insurance claims and may,
in its sole discretion, consent or withhold its consent to any
settlement, adjustment, or compromise of such insurance claims
and no such settlement, adjustment, or compromise shall be final
or binding upon LENDER without its prior consent. Upon
settlement of insurance claims, the insurance proceeds shall be
deposited into an interest bearing insurance escrow fund. The
insurance escrow agent and the form of the insurance escrow
agreement shall be satisfactory to LENDER and BORROWER. If the
amount of the insurance proceeds is not sufficient to restore the
Subject Property based on an independent contractor's or
engineer's opinion described in Section 1.03(b)(1)(A), subject to
revision as restorations are made, BORROWER shall be obligated to
deposit in the insurance escrow fund the difference between the
contractor's or engineer's estimate and the amount of the
insurance proceeds or deliver to the insurance escrow agent an
irrevocable, unconditional letter of credit issued in a form and
by a financial institution acceptable to LENDER or other cash
equivalent acceptable to LENDER. The BORROWER's funds, if
necessary, and the insurance proceeds shall be deposited into the
insurance escrow fund and shall not be released by the insurance
escrow agent unless used to restore the Subject Property to its
original condition and unless a disbursement agent satisfactory
to LENDER and BORROWER approves such disbursements from time to
time. The insurance escrow agreement shall provide that the
insurance escrow agent shall not disburse funds to BORROWER
unless and until (i) LENDER has approved the plans and
specifications for the restoration of the Subject Property; (ii)
BORROWER has executed a contract acceptable to LENDER with a
general contractor acceptable to LENDER for the restoration of
the Subject Property; (iii) the general contractor has submitted
lien waivers and/or releases, executed by the general contractor
and all subcontractors which may be partial to the extent of
partial payments and which, in the case of releases, may be
contingent upon payment if the insurance escrow agent makes
payment directly to such contractor or subcontractor; (iv)
BORROWER has furnished LENDER with an endorsement to its title
policy showing no additional exceptions; and (v) BORROWER has
submitted such other documents and information as may be
requested by LENDER to determine that the work to be paid for has
been performed in accordance with the plans and specifications
approved by LENDER. If any requisition for payment of work
performed is for an amount in excess of the sum then remaining in
the insurance escrow fund, BORROWER shall advance the requisite
amount in cash to the insurance escrow fund immediately upon
written request from the disbursement agent or LENDER.
(2) If an Event of Default exists at the time that the Subject
Property is damaged by fire or other casualty, or at the time of
payment of any insurance proceeds or at any time during the period of
restoration of the Subject Property, all insurance proceeds and any
interest earned thereon shall be either paid over by the insurer
directly to LENDER or by the escrow agent to LENDER and shall be
applied first toward reimbursement of the costs and expenses of
LENDER, if any, in connection with the recovery of such proceeds, and
then shall be applied in the sole and absolute discretion of LENDER
and without regard to the adequacy of its security under this Security
Deed (i) to the payment or prepayment of all or any portion of the
Note, including the Prepayment Premium described in the Note; (ii) to
the reimbursement of expenses incurred by LENDER in connection with
the restoration of the Subject Property; (iii) to the performance of
any of the covenants contained in this Security Deed as LENDER may
determine and/or (iv) in accordance with the disbursement procedure
set forth in Section 1.03(b)(1)(A) to be released to the BORROWER so
long as the proceeds are used to restore the Subject Property or to
reimburse BORROWER for costs and expenses incurred by BORROWER in such
restoration. The amount released to BORROWER shall not be deemed a
payment of any portion of the unpaid balance of the Note.
(3) Any insurance proceeds and any interest thereon remaining in
the insurance escrow fund after payment of the costs to complete the
restoration of the Subject Property pursuant to the plans and
specifications shall be paid to BORROWER if the BORROWER is not then
in default under this Security Deed, the Note or Related Agreements.
If, however, there remains an Event of Default under this Security
Deed, the Note or Related Agreements after payment of the costs to
complete the restoration of the Subject Property, the amount remaining
in the insurance escrow fund may, at the sole and absolute discretion
of LENDER, be paid to the LENDER and applied to the payment or
prepayment of all or any principal and interest due under the Note,
including the Prepayment Premium described in the Note.
(4) If BORROWER (i) abandons the Subject Property, (ii) fails to
respond within 90 days to a settlement offer by the insurer, (iii)
fails to fulfill any of BORROWER's obligations under this paragraph
(b), including, but not limited to, the obligations to promptly settle
and adjust any insurance claims, to apply all insurance proceeds to
the restoration of the Subject Property, to fund any difference
between the contractor's or engineer's estimate and the amount of
insurance proceeds, and to fund in cash any differences between the
cost of restoration and the amount in the insurance escrow fund, or
(iv) fails to satisfy any condition to a disbursement of insurance
proceeds set forth in Section 1.06(b)(1)(B) within 30 days after
written notice from LENDER to BORROWER demanding such satisfaction,
then LENDER may at its sole and absolute discretion collect and apply
the insurance proceeds to the restoration of the Subject Property or
to the payment or prepayment of all or any portion of the Note,
including the Prepayment Premium described in the Note.
(5) Any prepayment of the Note or a portion thereof pursuant to
LENDER's election under this paragraph (B) shall not be subject to the
Prepayment Premium described in the Note unless an Event of Default
exists. At the time of any partial prepayment described in this
paragraph (b), if BORROWER elects to exercise its right to prepay the
portion of the Note remaining unpaid after application of the
insurance proceeds, such prepayments shall continue to be subject to
the Prepayment Premium described in the Note.
1.04. Taxes, Liens and other Items. BORROWER shall pay any and all
taxes, bonds, assessments, fees, liens, charges, fines, impositions and any
accrued interest or penalty thereon, and any and all other items which are
attributable to or affect the Subject Property by making payment prior to
delinquency directly to the payee thereof and promptly furnish copies of
paid receipts for these to LENDER. BORROWER shall promptly discharge or
bond any lien or encumbrance on the Subject Property whether said lien or
encumbrance has or may attain priority over this Security Deed or not.
This Security Deed shall be the sole encumbrance on the Subject Property
and, if with the consent of LENDER it is not the sole encumbrance, then it
shall be prior to any and all other liens or encumbrances on the Subject
Property. Provided that the priority of this Security Deed is not in any
way affected, BORROWER may in good faith protest the payment of any tax or
lien which it believes is unwarranted or excessive and may defer payment of
such tax pending conclusion of such contest if legally permitted to do so
and provided LENDER's security is not jeopardized in LENDER's sole opinion.
As further security for the payment of the Note and the payment of real
estate taxes, regular or special assessments and insurance premiums,
BORROWER shall be required to deposit 1/12 of the annual amounts of such
items as estimated by LENDER, with each monthly payment on the Note.
LENDER shall be furnished evidence to allow it to estimate such amounts,
including paid receipts or annual insurance premium statements, assessment
notices and tax receipts.
1.05. Assignment of Leases, Contracts, Rents and Profits.
(a) BORROWER hereby absolutely, presently and unconditionally
assigns, transfers, conveys and sets over to LENDER the following:
(1) All of the rents, income, profits, revenue, judgments,
condemnation awards, insurance proceeds, unearned insurance premiums
and any other fees or sums payable to BORROWER or any other person as
landlord and other benefits and rights of the Subject Property arising
from the use, occupancy, operation or management of all or any portion
thereof or from all the Leases (as defined in subparagraph (2)), and
any proceeds, deposits or security deposits relating thereto,
including, without limitation, any award to BORROWER made hereafter in
any court involving any of the tenants under the Leases in any
bankruptcy, insolvency, or reorganization proceeding in any state or
federal court, and BORROWER's right to appear in any action and/or to
collect any such award or payment, and all payments by any tenant in
lieu of rent (collectively, "Rents and Profits");
(2) All of the leases of the Subject Property which are in
effect on the date hereof, and entered into or in effect from time to
time after the date hereof, including, without limitation, all
amendments, extensions, replacements, modifications and renewals
thereof and all subleases, concession agreements, any ground leases or
ground subleases and all other agreements affecting the same (the
"Leases");
(3) All right, title and interest of BORROWER in and to all
Leases whether arising thereunder, by statute, at law, in equity, or
in any other way;
(4) All right, title and interest of BORROWER in and to all
contracts, agreements, management, operating and maintenance
agreements, warranties, licenses, permits, guaranties and sales
contracts relating to the Subject Property and the Collateral (the
"Contracts").
(b) Notwithstanding the provisions of paragraph (a), prior to
the occurrence of any Event of Default hereunder, LENDER shall not exercise
any of the rights or powers conferred upon LENDER by this Section 1.05,
and, subject to Section 1.05(f), BORROWER shall have a license to manage
the Subject Property, to collect, receive and use all Rents and Profits, to
let the Subject Property and to take all such actions which a reasonable
and prudent landlord would take in enforcing the provisions of the Leases
or Contracts. This covenant is not intended to benefit any party other
than BORROWER. Upon the occurrence of an Event of Default (whether or not
LENDER shall have exercised its option to declare the Note immediately due
and payable), such license shall be automatically revoked without any
action required by LENDER and the Rents and Profits shall be paid directly
to LENDER; and LENDER may notify the tenants under the Leases or any other
parties in possession of the Subject Property, to pay the Rents and Profits
directly to LENDER at the address specified in Section 4.16. Rents and
Profits so paid to LENDER may be applied by LENDER, at LENDER's sole
discretion, to the payment of the costs and expenses of the operation of
the Subject Property, to the payment of accrued interest and principal on
the Note and/or to the prepayment of the Note, including the Prepayment
Premium defined in the Note, all in the order, manner and respective
amounts as LENDER shall from time to time determine.
(c) Upon the occurrence of an Event of Default, the LENDER shall
have the right but not the obligation to perform as landlord under the
Leases and as a party under the Contracts. The assignment of Rents and
Profits set forth herein constitutes an irrevocable direction and
authorization of all tenants under the Leases to pay all Rents and Profits
to LENDER upon demand and without further consent or other action by
BORROWER. BORROWER irrevocably appoints LENDER its true and lawful
attorney, at the option of LENDER at any time, to demand, receive and
enforce payment, to give receipts, releases and satisfactions, and to sue,
either in the name of BORROWER or in the name of LENDER, for all such Rents
and Profits and apply the same to the indebtedness secured by this Security
Deed.
(d) Neither the foregoing assignment of Rents and Profits,
Leases and Contracts to LENDER nor the exercise by LENDER of any of its
rights or remedies under Article III shall be deemed to make LENDER a
"mortgagee-in-possession" or otherwise liable in any manner with respect to
the Subject Property, unless LENDER, in person or by agent, assumes actual
possession thereof. Nor shall appointment of a receiver for the Subject
Property by any court at the request of LENDER or by agreement with
BORROWER, or the entering into possession of the Subject Property by such
receiver, be deemed to make LENDER a "mortgagee-in-possession" or otherwise
liable in any manner with respect to the Subject Property.
(e) In the event LENDER collects and receives any Rents and
Profits under this Section 1.05 pursuant to any Monetary or Performance
Default as defined in Section 2.01 hereof, such collection or receipt shall
in no way constitute a curing of the Monetary or Performance Default.
(f) Without the prior written consent of LENDER, BORROWER shall
not (1) modify, amend, cancel or in any way alter the terms of the Leases
previously approved by LENDER or take any action under or with respect to
any such Leases which would materially decrease either the obligations of
the tenant thereunder or the rights or remedies of the landlord, or (2)
create or permit any lien or encumbrance which, upon foreclosure, would be
superior to any such Leases, or (3) in any other manner impair LENDER's
rights and interest with respect to the Rents and Profits, (4) pledge,
transfer, mortgage or otherwise encumber or assign the Leases, the
Contracts or the Rents and Profits, or (5) collect rents more than 30 days
prior to accrual or, (6) enter into any leases except that LENDER's prior
written approval shall not be required with respect to Leases which (i)
provide for a term of five (5) years or less and a market rental rate for
comparable properties within the Subject Property's market area, (ii) have
been negotiated at arm's length, (iii) are for less than ten percent (10%)
of the total rentable square feet in any buildings on the Subject Property,
and (iv) do not contain material modifications to the form of lease
previously approved by LENDER.
(g) BORROWER shall promptly give notice to LENDER of any
material default under any of the Leases together with a complete copy of
any notices delivered to or by the tenant as a result of such default.
LENDER shall have the right, but not the obligation, to cure any default of
BORROWER under any of the Leases and all amounts disbursed in connection
with said cure shall be deemed to be indebtedness secured hereby.
(h) LENDER shall have the right to approve any lease forms used
by BORROWER for lease of space in the Subject Property.
(i) BORROWER hereby represents, warrants and agrees that:
(i) BORROWER has the right, power and capacity to make this
assignment and that no person, firm or corporation or other entity
other than BORROWER has or will have any right, title or interest in
or to the Leases or the Rents and Profits;
(ii) BORROWER shall, at its sole cost and expense, perform
and discharge all of the obligations and undertakings of the landlord
under the Leases. BORROWER shall enforce the performance of each
obligation of the tenants under the Leases and will appear in and
prosecute or defend any action connected with the Leases or the
obligations of the tenants thereunder;
(iii) BORROWER agrees to assign and transfer to LENDER all
further Leases of the Subject Property, and to execute and deliver, at
the request of LENDER, all such further assurances and assignments as
LENDER shall from time to time require.
(j) LENDER shall not be obligated to perform or discharge, nor
does it hereby undertake to perform or discharge, any obligation, duty or
liability under the Leases or under or by reason of this assignment.
BORROWER shall and does hereby agree to indemnify LENDER for and to defend
and hold LENDER harmless from any liability, loss or damage which LENDER
may incur under the Leases or under or by reason of this assignment, and
from any claims whatsoever which may be asserted against LENDER by reason
of any alleged obligations or undertakings on LENDER's part to perform or
discharge any of the terms, covenants or agreements contained in the
Leases. Should LENDER incur any liability, loss or damage under the Leases
or under or by reason of this assignment, or in the defense of any of such
claims or demands, the amount thereof, including costs, expenses and
attorneys' fees, shall be secured by this Security Deed; and BORROWER shall
reimburse LENDER therefor immediately upon demand, and upon failure of
BORROWER to do so, LENDER may declare all sums so secured to be immediately
due and payable.
(k) LENDER may take or release other security, may release any
party primarily or secondarily liable for any indebtedness secured hereby,
may grant extensions, renewals or indulgences with respect to such
indebtedness, and may apply any other security therefor held by it to the
satisfaction of such indebtedness, without prejudice to any of its rights
hereunder.
(l) Nothing herein contained and no act done or omitted by
LENDER pursuant to the powers and rights granted it herein shall be deemed
to be a waiver by LENDER of its other rights and remedies under the Note
and this Security Deed, and this assignment is made and accepted without
prejudice to any of the other rights and remedies possessed by LENDER under
the terms thereof. The right of LENDER to collect said indebtedness and to
enforce any other security therefor held by it may be exercised by LENDER
either prior to, simultaneously with, or subsequent to any action taken by
it hereunder. It is the intent of both BORROWER and LENDER that this
assignment be supplementary to, and not in substitution of, any other
provision contained in this Security Deed giving LENDER any interest in or
rights with respect to the Leases or Rents and Profits.
(m) Neither this assignment nor pursuit of any remedy hereunder
by LENDER shall cause or constitute a merger of the interests of the tenant
and the BORROWER under any of the Leases such that any of the Leases hereby
assigned are no longer valid and binding legal obligations of the parties
executing the same.
(n) Upon the occurrence of an Event of Default, LENDER may, at
its option, without any action on its part being required and without in
any way waiving such default, take possession of the Subject Property and
have, hold, manage, lease and operate the same, on such terms and for such
period of time as LENDER may deem proper, and may collect and receive all
Rents and Profits, with full power to make, from time to time, all
alterations, renovations, repairs or replacements thereto as may seem
proper to LENDER, and to apply such Rents and Profits to the payment of (a)
the cost of all such alterations, renovations, repairs and replacements,
and all costs and expenses incident to taking and retaining possession of
the Subject Property, and the management and operation thereof, and keeping
the same properly insured; (b) all taxes, charges, claims, assessments, and
any other liens which may be prior to this Security Deed, and premiums for
insurance, with interest on all such items; and (c) the indebtedness
secured hereby; together with all costs and attorneys' fees, in such order
or priority as to any of such items as LENDER in its sole discretion may
determine, any statute, law, custom or use to the contrary notwithstanding.
Any amounts received by BORROWER or its agents in the performance of any
acts prohibited by the terms of this assignment, including but not limited
to any amounts received in connection with any cancellation, modification
or amendment of any of the Leases prohibited by the terms of this
assignment and any Rents and Profits received by BORROWER after the
occurrence of an Event of Default shall be held by BORROWER as trustee for
LENDER and all such amounts shall be accounted for to LENDER and shall not
be commingled with other funds of the BORROWER. Any person receiving any
portion of such trust funds shall receive the same in trust for LENDER as
if such person had actual or constructive notice that such funds were
impressed with a trust in accordance herewith.
(o) The receipt by LENDER of any Rents and Profits pursuant to
this assignment after the institution of foreclosure proceedings under this
Security Deed shall not cure any such Event of Default or affect such
proceedings or any sale pursuant thereto.
(p) BORROWER shall from time to time execute and deliver to
LENDER, upon demand, any writings that LENDER may reasonably deem necessary
to carry out the intent of Section 1.05 hereof or to enable LENDER to
enforce any rights hereunder.
(q) BORROWER shall complete the cure of a default by it under
the lease between BORROWER and Super Discount Markets, Inc. ("Cub") dated
November 20, 1987, within fifteen (15) days after notice from Cub, and
failure to do so shall be an Event of Default entitling LENDER to all its
remedies hereunder, including, without limitation, the remedies set forth
in Section 3.11 below.
1.06. Acceleration Upon Sale or Encumbrance. If BORROWER shall (i)
sell or convey the Subject Property or any part thereof, or any interest in
the Subject Property or in BORROWER; (ii) be divested of its title to the
Subject Property or any interest therein; (iii) further encumber the
Subject Property or the ownership interests in the BORROWER; (iv) enter
into any lease giving the tenant any option to purchase the Subject
Property or any part thereof; or (v) encumber, grant a security interest
in, transfer, permit the transfer of, or change or permit the change in the
ownership of shares of the BORROWER or any corporate general partner in
BORROWER or the amount of the general partnership interests in the general
partners of the BORROWER or the beneficiary thereof, without the prior
written consent of LENDER, then LENDER shall have the right, at its option,
to declare the indebtedness secured by this Security Deed, irrespective of
the maturity date specified in the Note, immediately due and payable.
Except as expressly consented to in writing by LENDER, BORROWER shall
not permit any additional encumbrances on the Subject Property.
1.07. Preservation and Maintenance of Subject Property. BORROWER
shall hire competent and responsive property managers who shall be
reasonably acceptable to LENDER. BORROWER or its property manager, if
applicable shall keep the Subject Property and every part thereof in good
condition and repair, in accordance with sound property management
practices and shall promptly and faithfully comply with and obey all laws,
ordinances, rules, regulations, requirements and orders of every duly
constituted governmental authority or agent having jurisdiction with
respect to the Subject Property. BORROWER shall not permit or commit any
waste, impairment, or deterioration of the Subject Property, nor commit,
suffer or permit any act upon or use of the Subject Property in violation
of law or applicable order of any governmental authority, whether now
existing or hereafter enacted, or in violation of any covenants, conditions
or restrictions affecting the Subject Property or bring or keep any article
in the Subject Property or cause or permit any condition to exist thereon
which would be prohibited by or invalidate the insurance coverage required
to be maintained hereunder. BORROWER shall not make any material
structural changes or alterations to the Subject Property nor remove or
demolish the Improvements or any portion thereof without the prior written
consent of LENDER which approval shall not be unreasonably withheld.
BORROWER shall promptly restore any portion of the Subject Property which
may be damaged or destroyed. BORROWER shall promptly bond or discharge any
mechanics' liens against the Subject Property.
Unless required by applicable law or unless LENDER has otherwise first
agreed in writing, BORROWER shall not make or allow any changes which will
adversely affect the value of the Subject Property to be made in the nature
of the occupancy or use of the Subject Property or any part thereof for
which the Subject Property or such part was intended at the time this
Security Deed was delivered. BORROWER shall not initiate or acquiesce in
any change which will adversely affect the value of the Subject Property in
any zoning or other land use classification now or hereafter in effect and
affecting the Subject Property or any part thereof without in each case
obtaining LENDER's prior written consent thereto.
1.08. Offset Certificates. BORROWER, within three (3) days upon
request in person or within ten (10) days upon request by mail, shall
furnish a written statement duly acknowledged and notarized, of all amounts
due on any indebtedness secured hereby or secured by any of the Related
Agreements, whether for principal or interest on the Note or otherwise, and
stating whether any offsets or defenses exist against the indebtedness
secured hereby and covering such other matters with respect to any such
indebtedness as LENDER may reasonably require.
1.09. Protection of Security; Costs and Expenses. BORROWER shall
hire competent and responsible property managers which shall be reasonably
acceptable to LENDER. BORROWER and its property manager, if applicable,
shall appear in and defend any action or proceeding purporting to affect
the security of this Security Deed or any additional or other security for
the obligations secured hereby, or the rights or powers of the LENDER, and
shall pay all costs and expenses actually incurred, including, without
limitation, cost of evidence of title and actual attorneys' fees, in any
such action or proceeding in which LENDER may appear, and in any suit
brought by LENDER to foreclose this Security Deed or to enforce or
establish any other rights or remedies of LENDER hereunder or under any
other security for the obligations secured hereby. If BORROWER fails to
perform any of the covenants or agreements contained in this Security Deed,
or if any action or proceeding is commenced which affects LENDER's interest
in the Subject Property or any part thereof, including, eminent domain,
code enforcement, or proceedings of any nature whatsoever under any federal
or state law, whether now existing or hereafter enacted or amended,
relating to bankruptcy, insolvency, arrangement, reorganization or other
form of debtor relief, or to a decedent, then LENDER may, but without
obligation to do so and without notice to or demand upon BORROWER, perform
such covenant or agreement and compromise any encumbrance, charge or lien
which in the judgment of LENDER appears to be prior or superior hereto;
BORROWER further agrees to pay all expenses of LENDER actually incurred
(including reasonable and actual fees and disbursements of counsel)
incident to the protection or enforcement of the rights of LENDER
hereunder, and enforcement or collection of payment of the Note or any
Future Advance whether by judicial or nonjudicial proceedings, or in
connection with any bankruptcy, insolvency, arrangement, reorganization or
other debtor relief proceeding of BORROWER, or otherwise. Any amounts
disbursed by LENDER pursuant to this Section shall be additional
indebtedness of BORROWER secured by this Security Deed and each of the
Related Agreements as of the date of disbursement and shall bear interest
at the Contract Rate for the first five (5) business days after demand for
payment and thereafter at the Default Rate set forth in the Note, until
paid. All such amounts shall be payable by BORROWER immediately upon
demand. Nothing contained in this Section shall be construed to require
LENDER to incur any expense, make any appearance, or take any other action.
1.10. BORROWER's Covenants Respecting Collateral.
(a) BORROWER shall execute and deliver financing and
continuation statements covering the Collateral from time to time and in
such form as LENDER may require to perfect and continue the perfection of
LENDER's security interest with respect to such property, and BORROWER
shall pay all reasonable costs and expenses of any record searches for
financing statements LENDER may require;
(b) Without the prior written consent of LENDER, BORROWER shall
not create or suffer to be created any other security interest in the
Collateral, including replacements and additions thereto;
(c) Without the prior written consent of LENDER or except in the
ordinary course of business, BORROWER shall not sell, transfer or encumber
any of the Collateral, or remove any of the Collateral from the Subject
Property unless BORROWER shall promptly substitute and replace the property
removed with similar property of at least equivalent value on which LENDER
shall have a continuing security interest ranking at least equal in
priority to LENDER's security interest in the property removed;
(d) BORROWER shall (i) upon reasonable notice (unless an
emergency or Event of Default exists) permit LENDER and its representatives
to enter upon the Subject Property to inspect the Collateral and BORROWER's
books and records relating to the Collateral and make extracts therefrom
and to arrange for verification of the amount of Collateral, under
procedures acceptable to LENDER, directly with BORROWER's debtors or
otherwise at BORROWER's expense; (ii) promptly notify LENDER of any
attachment or other legal process levied against any of the Collateral and
any information received by BORROWER relative to the Collateral, BORROWER's
debtors or other persons obligated in connection therewith, which may in
any way affect the value of the Collateral or the rights and remedies of
LENDER in respect thereto; (iii) reimburse LENDER upon demand for any and
all costs actually incurred, including, without limitation, reasonable and
actual attorneys' and accountants' fees, and other expenses incurred in
collecting any sums payable by BORROWER under any obligation secured
hereby, or in the checking, handling and collection of the Collateral and
the preparation and enforcement of any agreement relating thereto; (iv)
notify LENDER of each location at which the Collateral is or will be kept,
other than for temporary processing, storage or similar purposes, and of
any removal thereof to a new location, including, without limitation, each
office of BORROWER at which records relating to the Collateral are kept;
(v) provide, maintain and deliver to LENDER originals or certified copies
of the policies of insurance and certificates of insurance insuring the
Collateral against loss or damage by such risks and in such amounts, form
and by such companies as LENDER may require and with loss payable to
LENDER, and in the event LENDER takes possession of the Collateral, the
insurance policy or policies and any unearned or returned premium thereon
shall at the option of LENDER become the sole property of LENDER; and (vi)
do all acts necessary to maintain, preserve and protect all Collateral,
keep all Collateral in good condition and repair and prevent any waste or
unusual or unreasonable depreciation thereof.
(e) Until LENDER exercises its right to collect proceeds of the
Collateral pursuant hereto, BORROWER will collect with diligence any and
all proceeds of the Collateral. If an Event of Default exists, any
proceeds received by BORROWER shall be held in trust for LENDER, and
BORROWER shall keep all such collections separate and apart from all other
funds and property so as to be capable of identification as the property of
LENDER and shall deliver to LENDER such collections at such time as LENDER
may request in the identical form received, properly endorsed or assigned
when required to enable LENDER to complete collection thereof.
(f) LENDER shall have all of the rights and remedies granted to
a secured party under the Uniform Commercial Code of the state in which the
Collateral is located, as well as all other rights and remedies available
at law or in equity. During the continuance of any Event of Default
hereunder or under the Note, LENDER shall have the right to take possession
of all or any part of the Collateral, to receive directly or through its
agent(s) collections of proceeds of the Collateral (including notification
of the persons obligated to make payments to BORROWER in respect of the
Collateral), to release persons liable on the Collateral and compromise
disputes in connection therewith, to exercise all rights, powers and
remedies which BORROWER would have, but for the security agreement
contained herein and in this Section 1.10, to all of the Collateral and
proceeds thereof, and to do all other acts and things and execute all
documents in the name of BORROWER or otherwise, deemed by LENDER as
necessary, proper and convenient in connection with the preservation,
perfection or enforcement of its rights hereunder; and
(g) During the continuance of any Event of Default hereunder or
under the Note, BORROWER shall, at the request of LENDER, assemble and
deliver the Collateral and books and records pertaining to the Subject
Property at a place designated by LENDER, and LENDER may, with reasonable
notice to BORROWER (unless an emergency or Event of Default exists), enter
onto the Subject Property and take possession of the Collateral. It is
agreed that public or private sales, for cash or on credit to a wholesaler
or retailer or investor, or user of collateral of the types subject to the
security agreement, or public auction, are all commercially reasonable
since differences in the sales prices generally realized in the different
kinds of sales are ordinarily offset by the differences in the costs and
credit risks of such sales. The proceeds of any sale of the Collateral
shall be applied first to the expenses of LENDER actually incurred in
retaking, holding, preparing for sale, selling or similar matters,
including reasonable and actual attorneys' fees.
1.11. Covenants Regarding Financial Statements. BORROWER shall keep
true books of record and account in which full, true and correct entries in
accordance with sound accounting practice and principles applied on a
consistent basis from year to year shall be made of all dealings or
transactions with respect to the Subject Property.
Within 90 days after the last day of each fiscal year of BORROWER
during the term of the Note, BORROWER shall deliver to LENDER unaudited
annual financial reports prepared in accordance with generally accepted
auditing standards and generally accepted accounting principles
consistently applied covering the operation of the Subject Property and the
financial condition of BORROWER for the previous fiscal year and a current
rent roll, all certified to LENDER by a managing general partner or chief
financial officer of BORROWER to be complete, correct and accurate. Within
90 days after the last day of each fiscal quarter of the BORROWER during
the term of the Note, BORROWER shall also deliver to LENDER unaudited
financial reports prepared in accordance with generally accepted accounting
principles consistently applied covering the operation of the Subject
Property and the financial condition of BORROWER for the previous fiscal
quarter, certified to LENDER by the managing general partner or chief
financial officer of BORROWER to be complete, correct and accurate. Within
forty-five (45) days after the last day of each fiscal quarter during the
term of the Note, BORROWER will also deliver to LENDER a current rent roll
of the Subject Property, certified to LENDER by the chief financial officer
or managing general partner of BORROWER to be complete, correct and
accurate. All reports shall include, without limitation, balance sheets
and statements of income and of partner's equity, if applicable, setting
forth in each case in comparative form the figures for the previous fiscal
quarter or year, as the case may be. The interim quarterly reports shall
also include a breakdown of all categories of revenues and expenses, and
any supporting schedules and data requested by LENDER. Each set of annual
or quarterly financial reports or quarterly rent rolls delivered to LENDER
pursuant to this Section 1.11 shall also be accompanied by a certificate of
the chief financial officer or the managing general partner of BORROWER,
stating whether any condition or event exists or has existed during the
period covered by the annual or quarterly reports which then constituted or
now constitutes an Event of Default under the Note or this Security Deed,
and if any such condition or event then existed or now exists, specifying
its nature and period of existence and what BORROWER did or proposes to do
with respect to such condition or event.
In the event such statements are not in a form reasonably acceptable
to LENDER or BORROWER fails to furnish such statements and reports, then
LENDER shall have the immediate and absolute right to audit the respective
books and records of the Subject Property and BORROWER at the expense of
BORROWER.
1.12. Covenants of BORROWER. BORROWER covenants: (a) that no
substances, including without limitation, asbestos or any substance
containing asbestos and deemed hazardous under any Hazardous Material Law
(defined below), the group of organic compounds known as polychlorinated
biphenyls, flammable explosives, radioactive materials, chemicals known to
cause cancer or reproductive toxicity, pollutants, effluents, contaminants,
emissions or related materials and any items included in the definition of
hazardous or toxic waste, materials or substances ("Hazardous Materials")
under any law relating to environmental conditions and industrial hygiene,
including without limitation, the Resource Conservation and Recovery Act of
1976 ("RCRA"), 42 U.S.C. Section 6901 et seq., the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"),
42 U.S.C. Sections 9601-9657, as amended by the Superfund Amendments and
Reauthorization Act of 1986 ("SARA"), the Hazardous Materials
Transportation Act, 49 U.S.C. Section 6901, et seq., the Federal Water
Pollution Control Act, 33 U.S.C. Sections 1251 et seq., the Clean Air Act,
42 U.S.C. Sections 741 et seq., the Clean Water Act, 33 U.S.C. Section
7401, et seq., the Toxic Substances Control Act, 15 U.S.C. Sections
2601-2629, the Safe Drinking Water Act, 42 U.S.C. Sections 300f-300j, and
all similar federal, state and local environmental statutes, ordinances and
the regulations, orders, decrees now or hereafter promulgated thereunder
(collectively, the "Hazardous Material Laws"), shall be installed, used,
generated, manufactured, treated, handled, refined, produced, processed,
stored or disposed of, in, on or under the Subject Property, including,
without limitation, the surface and subsurface waters of the Subject
Property; (b) that no activity shall be undertaken on the Subject Property
which would cause (i) the Subject Property to become a hazardous waste
treatment, storage or disposal facility as such terminology is defined and
classified under any Hazardous Material Law, (ii) a release or threatened
release of Hazardous Material from the Subject Property in violation of any
Hazardous Material Law, or (iii) the discharge of Hazardous Material into
any watercourse, body of surface or subsurface water or wetland, or the
discharge into the atmosphere of any Hazardous Material which would require
a permit under any Hazardous Material Law and for which no such permit has
been issued; (c) that no activity shall be undertaken or permitted to be
undertaken, by the BORROWER on the Subject Property which would result in a
violation under any Hazardous Material Law, (d) to obtain and deliver to
LENDER, within a reasonable time following completion of the actions as
have been required to be taken by the appropriate governmental agency,
certifications of engineers or other professionals reasonably acceptable to
LENDER, in form and substance reasonably satisfactory to LENDER, certifying
that all necessary and required actions to clean up, remove, contain,
prevent and eliminate all releases or threats of release of Hazardous
Materials on or about the Subject Property to the levels required by the
appropriate governmental agencies have been taken, and that upon completion
of such action, the Subject Property is, to the knowledge of such
professional, then in compliance with applicable Hazardous Material Laws as
then in effect and applicable to such actions.
1.13. Additional Encumbrances on the Subject Property.
Notwithstanding any provision in the Note, this Security Deed or the
Related Agreements to the contrary, BORROWER may, provided that no event
has occurred which is or with notice or the passage of time or both, could
become a default under the Note, this Security Deed or the Related
Agreements, encumber the Subject Property with a sole additional mortgage
to a subordinate mortgagee ("Subordinate Mortgagee") to secure secondary
indebtedness (the "Second Loan") in form and content satisfactory to LENDER
in LENDER's reasonable discretion, under the following conditions:
(a) The amount of Second Loan when added to the unpaid balance of the
Note, shall be no more than ninety percent (90%) of the value
established in a then-current MAI appraisal of the Subject
Property made at BORROWER's expense by a then-currently certified
MAI appraiser mutually satisfactory to LENDER and BORROWER.
(b) The ratio of Net Operating Income, as defined in this Section
1.13, to annual debt service due under the Note and the Second
Loan (calculated as though the Second Loan were already in
place), shall be no less than 110% for the 12 month period ending
30 days before the payment date of the recording of the Second
Loan documents.
(c) LENDER may reinstate its rights to require escrow deposits of
real estate taxes and assessments and insurance premiums.
(d) The Subordinate Mortgagee shall expressly acknowledge the
priority of the debt, liens and security interests of the loan
secured by this Security Deed ("Allstate Loan") over the debt,
liens and security interests of the Second Loan, in a
subordination agreement between LENDER and the Subordinate
Mortgagee satisfactory in form and substance to LENDER
("Subordination Agreement"). Failure to include any of the
following provisions in the Subordination Agreement shall
constitute a default under the Note and this Security Deed. The
Subordination Agreement shall provide, without limitation, that:
(i) The Subordinate Mortgagee shall give LENDER notice of any
default by BORROWER under the Second Loan at the time such
notice is given to BORROWER, copies of all further notices
to BORROWER relating to such default and copies of any
foreclosure proceedings involving the BORROWER.
(ii) LENDER may, without affecting the subordination of the
Second Loan (1) release or compromise any obligation in the
Note, this Security Agreement or the Related Agreements,
(2) release its liens in, or surrender, release or permit
any substitution or exchange of all or any part of any
properties securing repayment of the Note or (3) retain or
obtain a lien in any property to further secure payment of
the Note.
(iii) LENDER shall give the Subordinate Mortgagee notices of
monetary default under the Allstate Loan and shall give the
Subordinate Mortgagee copies of any notices of nonmonetary
default under the Note, this Security Deed and the Related
Agreements. The Subordinate Mortgagee shall have the right
to cure (a) monetary defaults by BORROWER within ten days
after notice is sent to the Subordinate Mortgagee and (b)
nonmonetary defaults by BORROWER within the time periods
allowed BORROWER. Failure to give such notices shall not
interfere with any of LENDER's rights under the Note, this
Security Deed and the Related Agreements. LENDER shall not
be obligated to give the Subordinate Mortgagee notices of
(1) any increase, amendment, deferral, extension,
consolidation, or supplement ("Modification") to the Note,
this Security Deed and the Related Agreements if such
Modification does not increase the principal amount of the
Note, reduce the term of the Note or increase the interest
rate on the Note, except as otherwise expressly permitted
under the Allstate Loan, provided that LENDER may, without
notice to the Subordinate Mortgagee, enter into
Modifications which provide for increases in the Allstate
Loan resulting from actions by LENDER to protect the
security of this Security Deed, increases for amounts
expended by LENDER to remedy a default of BORROWER under
the Allstate Loan, increases to work out repayment of the
Note due to BORROWER's default, and increases representing
deferrals of interest or other charges payable by BORROWER
under the Note; or (2) any cancellation, extension,
modification, renewal or amendment of any of the Leases.
(iv) The commencement of foreclosure proceedings or other
remedial action under the Second Loan by the Subordinate
Mortgagee, shall constitute a default under the Allstate
Loan at the time the Subordinate Mortgagee takes such
enforcement or remedial action.
(v) All amounts due to the Subordinate Mortgagee by BORROWER
under the Second Loan (including interest and/or principal
payments or prepayments, assignments of leases and rents,
rights with respect to insurance proceeds and condemnation
awards, advances and expenses with interest), shall at all
times be wholly subordinate in right of payment to the
indebtedness of the BORROWER evidenced by the Allstate
Loan. All the liens, security interests, terms, covenants
and conditions of the Second Loan shall at all times be
wholly subordinate to the liens, security interests, terms,
covenants and conditions of the Allstate Loan.
(vi) During the continuance of a default under the Note after
Subordinate Mortgagee has received notice from LENDER of
such default, or in the event of a foreclosure sale under
either the Allstate Loan or the Second Loan or any
liquidation or dissolution of BORROWER, or of any execution
sale, receivership, insolvency, bankruptcy, liquidation,
readjustment, reorganization or other similar proceeding
relative to the BORROWER or its property, the Subordinate
Mortgagee shall not be entitled to receive or retain any
payment made under the Second Loan and all amounts due
under the Note shall first be paid in full before any
payment is made under the Second Loan. In such event a
payment or distribution of any kind, whether in cash,
rents, profits, property or securities, which is made
against the Second Loan shall be held in trust by the
Subordinate Mortgagee for the benefit of LENDER and shall
be paid over to LENDER in kind for application in payment
of the Note. The Note shall not be deemed paid or
satisfied in full until LENDER has received a payment that
is not subject to rescission, restoration or return.
(vii) If the Subordinate Mortgagee brings a foreclosure
proceeding, no tenant will be named as a party defendant
and no action will be taken that would terminate any Leases
or other rights held by or granted by third parties with
respect to the Subject Property.
(e) For the purposes of this Section 1.13, "Net Operating Income"
shall mean all rents projected from tenants in the Subject
Property and paying rent under Leases in effect during the
applicable twelve month period, which do not contain any
termination rights during that period, calculated on a cash
basis, including all amounts received from tenants as payment of
operating expenses but not including refundable deposits,
principal or interest payments received by BORROWER on loans to
tenants and fees and reimbursements for work performed for
tenants by BORROWER, less all amounts calculated on a cash basis,
for the operation or maintenance of the Subject Property,
including ground rents, the cost of property management,
maintenance, cleaning, security, landscaping, parking maintenance
and utilities, and other costs and expenses approved in writing
by LENDER and amounts reasonably estimated by LENDER for the
payment of real estate taxes and assessments and other taxes
related to the operation of the Subject Property, insurance
premiums, necessary repairs and future replacements of equipment;
payments under the Note and the Second Loan shall not be included
in Net Operating Income.
(f) BORROWER shall not permit any additional encumbrances on the
Subject Property other than the Second Loan permitted under this
Section 1.13.
ARTICLE II
EVENTS OF DEFAULT
Each of the following shall constitute an event of default ("Event of
Default") hereunder:
2.01. Monetary and Performance Defaults. Failure to make any payment
of principal, interest or Prepayment Premium on the Note or any Future
Advance or to make any payment due under this Security Deed, within ten
(10) days after the date when due and payable whether at maturity or by
acceleration or as part of any prepayment or otherwise ("Monetary
Default"); or default in the performance of, or breach of, any of the
covenants or agreements of BORROWER contained herein, in the Note, in any
note evidencing a Future Advance or in any Related Agreement ("Performance
Default"), if such default or breach shall continue for fifteen (15) days
or more after written notification specifying the nature of the default has
been received from LENDER to cure the default; provided, however, that if
such Performance Default is of a nature that it cannot be cured within such
15 day period, then BORROWER shall not be in default if it commences good
faith efforts to cure such default within said 15 day period, demonstrates
continuous diligent efforts to cure such Performance Default in a manner
satisfactory to LENDER and, within a reasonable period, not to exceed 180
days after the date notification of default was received by BORROWER,
completes the cure of such default.
2.02. Bankruptcy, Insolvency, Dissolution. Any court of competent
jurisdiction shall sign an order (a) adjudicating BORROWER, or any general
partner of BORROWER, or any guarantor (which term when used in this
Security Deed shall mean guarantor of payment of the indebtedness) bankrupt
or insolvent, (b) appointing a receiver, trustee or liquidator of the
Subject Property or of a substantial part of the property of BORROWER, or
any general partner of BORROWER, or any guarantor, or (c) approving a
petition for, or effecting an arrangement in bankruptcy, or any other
judicial modification or alteration of the rights of LENDER or of other
creditors of BORROWER, or any general partner of BORROWER, or any
guarantor; or BORROWER, any general partner of BORROWER or any guarantor,
shall (i) apply for or consent to the appointment of a receiver, trustee or
liquidator for it or for any of its property, (ii) as debtor, file a
voluntary petition in bankruptcy, or petition or answer seeking
reorganization or an arrangement with creditors or to take advantage of any
bankruptcy, reorganization, insolvency, readjustment of debt, dissolution
or liquidation law or statute, or an answer admitting the material
allegations of a petition filed against it and any proceeding under such
law, (iii) admit in writing an inability to pay its debts as they mature,
or (iv) make a general assignment for the benefit of creditors.
2.03. Misrepresentation. A misrepresentation by BORROWER is an Event
of Default. A misrepresentation shall be any representation, warranty,
statement, certificate, schedule and/or report made or furnished to LENDER
by BORROWER in this Security Deed or any of the Related Agreements which is
false or misleading in any material respect as of the date made or
furnished.
2.04. Default under Subordinate Loans. An occurrence of a default
under any loan subordinate to this Security Deed which is not an
independent default under this Security Deed which results in the
commencement of foreclosure proceedings or the taking of any other remedial
action under such subordinate loan.
ARTICLE III
REMEDIES
Upon the occurrence of any Event of Default, LENDER shall have the
following rights and remedies:
3.01. Acceleration. LENDER may without notice or demand, declare the
entire principal amount of the Note and/or any Future Advances then
outstanding and accrued and unpaid interest thereon, and all other sums or
payments required thereunder including, but not limited to the Prepayment
Premium described in the Note, to be due and payable immediately, and
notwithstanding the stated maturity in the Note, or any note evidencing any
Future Advance, the principal amount of the Note and/or any Future Advance,
the accrued and unpaid interest thereon and all other sums or payments
required thereunder including, but not limited to the Prepayment Premium
described in the Note, shall thereupon become and be immediately due and
payable.
3.02. Entry. Irrespective of whether LENDER exercises the option
provided in Section 3.01 above, LENDER in person or by agent or by court-
appointed receiver (and LENDER shall have the right to the immediate
appointment of such a receiver without regard to the adequacy of the
security and BORROWER hereby irrevocably consents to such appointment and
waives notice of any application therefor) may enter upon, take possession
of, conduct tests of, manage and operate the Subject Property or any part
thereof and do all things necessary or appropriate in LENDER's sole
discretion in connection therewith without the appointment of a receiver,
or an application therefor. LENDER or its agent or a receiver may exclude
BORROWER, its agents and servants, wholly therefrom, and having and holding
the same, may use, operate, manage and control the Subject Property or any
part thereof, and upon every such entry LENDER, at the expense of BORROWER,
from time to time may have joint access with BORROWER to the books, papers
and accounts of BORROWER and may make all necessary or proper repairs,
renewals, replacements and useful or required alterations, additions,
betterments and improvements to and upon the Subject Property as LENDER may
deem judicious and pay all costs and expenses of so taking, holding and
managing the same, including compensation to LENDER's employees and other
agents (including, without limitation, reasonable and actual attorneys'
fees and management and rental commissions) and any taxes, assessments and
other charges prior to the legal operation and effect of this Security Deed
which LENDER may deem it wise or desirable to pay, and in such case LENDER
shall have the right to manage the Subject Property and to carry on the
business and exercise all rights and powers of BORROWER, either in the name
of BORROWER, or otherwise, as LENDER shall deem advisable; and LENDER shall
be entitled to collect and receive all rents thereof and therefrom. The
taking of possession and collections of rents by LENDER shall not be
construed to be an affirmation of any lease or acceptance of attornment
with respect to any lease of all or any portion of the Subject Property.
LENDER may commence, appear in and/or defend any action or proceedings
purporting to affect the security hereof, and/or any additional or other
security therefor, the interests, rights, powers and/or duties of LENDER
hereunder, whether brought by or against BORROWER or LENDER. LENDER may
pay, purchase, contest or compromise any claim, debt, lien, charge or
encumbrance which in the judgment of LENDER may affect or appear to affect
the security of this Security Deed, the interest of LENDER or the rights,
powers and/or duties of LENDER hereunder. After deducting the expenses of
operating the Subject Property and of conducting the business thereof, and
of all repairs, maintenance, renewals, replacements, alterations,
additions, betterments, improvements and all payments which LENDER may be
required or may elect to make for taxes or other proper charges on the
Subject Property, or any part thereof, as well as just and reasonable
compensation for all LENDER's employees and other agents (including,
without limitation, reasonable and actual attorneys' fees and management
and rental commissions) engaged and employed, the moneys arising as
aforesaid shall be applied to the indebtedness secured hereby. Whenever
all that is due upon the principal of and interest on the Note and under
any of the terms of this Security Deed shall have been paid and all
defaults made good, LENDER shall surrender possession to BORROWER. The
same right of entry, however, shall exist if any subsequent Event of
Default shall occur; provided, however, LENDER shall not be under any
obligation to make any of the payments or do any of the acts referred to in
this Section 3.02.
3.03. Judicial Action. LENDER may, in addition to and not in
abrogation of the rights covered under Article III, either with or without
entry or taking possession as herein provided or otherwise, proceed in any
court of competent jurisdiction by a suit or suits in law or in equity or
by any other appropriate proceeding or remedy (i) to enforce payment of the
Note or the performance of any term, covenant, conditions or agreement of
this Security Deed or any other right, (ii) to foreclose this Security Deed
(the Subject Property may be foreclosed in parts or as an entirety), and
(iii) to pursue any other remedy available to it, all as LENDER at its sole
discretion shall elect.
3.04. Power of Sale. LENDER, at its option, may sell the Subject
Property or any part of the Subject Property under the power of sale
granted herein in any manner permitted by applicable law at one or more
public sale or sales at the usual place for conducting sales at the
courthouse of the county in which the Land or any part of the Land is
situated, to the highest bidder for cash, in order to pay the indebtedness
secured hereby, and all expenses of sale and of all proceedings in
connection therewith, including attorneys' fees, after advertising the
time, place and terms of sale once a week for four (4) consecutive weeks
immediately preceding such sale (but without regard to the number of days)
in a newspaper in which Sheriff's sales are advertised in said county, all
other notice, including judicial notice, being hereby waived by BORROWER.
At any such public sale, LENDER may execute and deliver to the Purchaser a
conveyance of the Subject Property or any part of the Subject Property in
Fee Simple, which conveyance shall be by deed or deeds without any covenant
or warranty whatever, express or implied and such deed or deeds may contain
recitals as to the happening of the default upon which the execution of the
power of sale herein granted depends, and said recitals shall be
presumptive evidence that all preliminary acts prerequisite to said sale
and deed were in all things duly complied with, and to this end, BORROWER
hereby constitutes and appoints LENDER the agent and attorney-in-fact of
BORROWER to make such recitals, sale and conveyance, and thereby to divest
BORROWER of all right, title and equity that BORROWER may have in and to
the Subject Property and to vest the same in the purchaser or purchasers at
such sale or sales, and all the acts and doings of said agent and attorney-
in-fact are hereby ratified and confirmed and any recitals in said
conveyance or conveyances as to facts essential to a valid sale shall be
binding and conclusive upon BORROWER. In the event of default of any
purchaser, LENDER shall have the right to resell the Subject Property as
set forth above. The conveyance to be made by LENDER, or its assigns, (and
in the event of a deed in lieu of foreclosure, then as to such conveyance)
shall be effective to bar all right, title and interest, equity or
redemption, including all statutory redemption, homestead, dower, courtesy,
and all other exemptions of BORROWER, or its successors in interest, in and
to the Subject Property. In the event of deficiency in the proceeds
received from such sale, BORROWER shall immediately on demand from LENDER
pay over to LENDER, or its nominee, such deficiency. BORROWER agrees that
possession of the Subject Property by BORROWER, or any person claiming
under BORROWER during the existence of the indebtedness secured hereby,
shall be that of tenant under LENDER, or its assigns, and, in case of a
sale, as herein provided, BORROWER or any person in possession under
BORROWER shall then become and be tenants holding over, and shall forthwith
deliver possession to the purchaser at such sale, or be summarily
dispossessed in accordance with the provisions of law applicable to tenants
holding over. The aforesaid power of sale and agency hereby granted are
coupled with an interest and are irrevocable by death or otherwise. One or
more exercises of the powers herein granted shall not extinguish or exhaust
such powers, until the entire Subject Property is sold or the indebtedness
secured hereby is paid in full. If the indebtedness secured hereby is now
or hereafter further secured by any chattel mortgages, pledges, contracts
or guaranties, assignments or leases or other security instruments, LENDER
may at its option exhaust the remedies granted under any of said security
instruments either concurrently or independently, and in such order as
LENDER may determine. Any person, including BORROWER or LENDER, may
purchase at any sale hereunder, and LENDER shall have the right to purchase
at any sale hereunder by crediting upon the bid price the amount of all or
any part of the indebtedness hereby secured plus interest, late charges,
prepayment fees, and attorneys' fees, as herein provided. If the Subject
Property consists of several lots, parcels or items of property, LENDER may
designate the order in which such lots, parcels or items shall be offered
for sale or sold. Should LENDER desire that more than one sale or other
disposition of the Subject Property be conducted, LENDER may, at its
option, cause the same to be conducted simultaneously, or successively, on
the same day, or at such different times and in such order as LENDER may
deem to be in its best interest, and no such sale shall terminate or
otherwise affect the security of this Security Deed on any part of the
Subject Property not sold until all indebtedness secured hereby has been
fully paid. In connection with any sale or sales hereunder, LENDER may
elect to treat any of the Subject Property which consists of a right in
action or which is property that can be severed from the real property
covered hereby or any improvements thereon without causing structural
damage thereto in accordance with applicable law, separate and apart from
the sale of real property. Any sale of any personal property hereunder
shall be conducted in any manner permitted by the laws of the state in
which the Subject Property is located.
3.05. Rescission of Notice of Default. LENDER, from time to time
before any such public sale or deed in lieu of foreclosure, may rescind any
such notice of breach or default and of election to cause the Subject
Property to be sold by executing and delivering to BORROWER a written
notice of such rescission, which notice, when recorded, shall also
constitute a cancellation of any prior declaration of default and demand
for sale or such documents as may be required by the laws of the state in
which the Subject Property is located to effect such rescission. The
exercise by LENDER of such right of rescission shall not constitute a
waiver of any breach or default then existing or subsequently occurring, or
impair the right of LENDER to execute and deliver to BORROWER, as above
provided, other declarations of default and demand for sale, and notices of
breach or default, and of election to cause the Subject Property to be sold
to satisfy the obligations hereof, nor otherwise affect any provision,
agreement, covenant or condition of the Note and/or of this Security Deed
or any of the rights, obligations or remedies of the parties hereunder.
3.06. LENDER's Remedies Respecting Collateral. LENDER may realize
upon the Collateral, enforce and exercise all of the BORROWER's rights,
powers, privileges and remedies in respect of the Collateral, dispose of or
otherwise deal with the Collateral in such order as LENDER may in its
discretion determine, and exercise any and all other rights, powers,
privileges and remedies afforded to a secured party under the laws of the
state in which the Subject Property is located as well as all other rights
and remedies available at law or in equity.
3.07. Proceeds of Sales. The proceeds of any sale made under or by
virtue of this Article III, together with all other sums which then may be
held by LENDER under this Security Deed, whether under the provisions of
this Article III or otherwise, shall be applied as follows:
FIRST: To the payment of the costs, fees and expenses of sale and of
any judicial proceedings wherein the same may be made, including the cost
of evidence of title in connection with the sale, compensation to LENDER,
and to the payment of all expenses, liabilities and advances made or
incurred by LENDER under this Security Deed, together with interest on all
advances made by LENDER at the interest rate applicable under the Note, but
limited to any maximum rate permitted by law to be charged by LENDER.
SECOND: To the payment of any and all sums expended by LENDER under
the terms hereof, not then repaid, with accrued interest at the Contract
Rate or Default Rate, as applicable, set forth in the Note, and all other
sums (except advances of principal and interest thereon) required to be
paid by BORROWER pursuant to any provisions of this Security Deed, or the
Note, or any note evidencing any Future Advance, or any of the Related
Agreements, including, without limitation, all expenses, liabilities and
advances made or incurred by LENDER under this Security Deed or in
connection with the enforcement thereof, together with interest thereon as
herein provided.
THIRD: To the payment of the entire amount then due, owing or unpaid
for principal and interest upon the Note, any notes evidencing any Future
Advance, and any other obligation secured hereby, with interest on the
unpaid principal at the rate set forth therein from the date of advancement
thereof until the same is paid in full.
FOURTH: The remainder, if any, to the person or persons, including
the BORROWER, legally entitled thereto.
3.08. Waiver of Marshalling, Rights of Redemption, Homestead and
Valuation. BORROWER, for itself and for all persons hereafter claiming
through or under it or who may at any time hereafter become holders of
liens junior to the lien of this Security Deed, hereby expressly waives and
releases all rights to direct the order in which any of the Subject
Property shall be sold in the event of any sale or sales pursuant hereto
and to have any of the Subject Property and/or any other property now or
hereafter constituting security for any of the indebtedness secured hereby
marshalled upon any foreclosure of this Security Deed or of any other
security for any of said indebtedness.
To the fullest extent permitted by law, BORROWER, for itself and all
who may at any time claim through or under it, hereby expressly waives,
releases and renounces all rights of redemption from any foreclosure sale,
all rights of homestead, exemption, monitoring reinstatements, forbearance,
appraisement, valuation, stay and all rights under any other laws which may
be enacted extending the time for or otherwise affecting enforcement or
collection of the Note, the debt evidenced thereby, or this Security Deed.
3.09. Remedies Cumulative. No remedy herein conferred upon or
reserved to LENDER is intended to be exclusive of any other remedy herein
or by law provided, but each shall be cumulative and shall be in addition
to every other remedy given hereunder or now or hereafter existing at law
or in equity or by statute. No delay or omission of LENDER to exercise any
right or power accruing upon any Event of Default shall impair any right or
power or shall be construed to be a waiver of any Event of Default or any
acquiescence therein; and every power and remedy given by this Security
Deed to LENDER may be exercised separately, successively or concurrently
from time to time as often as may be deemed expedient by LENDER. If there
exists additional security for the performance of the obligations secured
hereby, LENDER, at its sole option, and without limiting or affecting any
of its rights or remedies hereunder, may exercise any of the rights and
remedies to which it may be entitled hereunder either concurrently with
whatever rights and remedies it may have in connection with such other
security or in such order as it may determine. Any application of any
amounts or any portion thereof held by LENDER at any time as additional
security or otherwise, to any indebtedness secured hereby shall not extend
or postpone the due dates of any payments due from BORROWER to LENDER
hereunder or under the Note, any Future Advance, or under any of the
Related Agreements, or change the amounts of any such payments or otherwise
be construed to cure or waive any default or notice of default hereunder or
invalidate any act done pursuant to any such default or notice.
In any action to foreclose this Security Deed, LENDER may, at its
option, have a receiver appointed to take charge of the Subject Property
and to collect such rents, issues and profits, all without consideration of
the value of the Subject Property as security for the amount of
indebtedness secured hereby. All such rents, issues and profits paid to
LENDER or collected by such receiver shall be first applied to the cost of
collection thereof (including the cost of such receivership, if any) and
then to the payment of the interest on and principal of the Note. BORROWER
for itself and any subsequent owner of the Subject Property hereby waives
any and all defenses to the application for such receiver and hereby
specifically consents to such appointment without notice.
3.10. Nonrecourse. Notwithstanding anything contained in this
Security Deed, the Note, or the Related Agreements, except as otherwise set
forth in this paragraph, the liability of BORROWER and the general partners
of BORROWER, if any, under the Note, this Security Deed and the Related
Agreements shall be limited to, and satisfied from, the Subject Property
and the proceeds thereof, the rents and all other income arising therefrom,
the other assets of BORROWER arising out of the Subject Property which are
given as collateral for the Note, and any other collateral given in writing
to LENDER as security for repayment of the Note (all of the foregoing
collectively referred to as the "Loan Collateral"); provided, however, that
nothing contained in this paragraph shall (i) preclude LENDER from
foreclosing this Security Deed or from enforcing any of its rights or
remedies in law or in equity against BORROWER except as stated in this
paragraph, (ii) constitute a waiver of any obligation evidenced by the Note
or secured by this Security Deed or any Related Agreements, (iii) limit the
right of LENDER to name BORROWER as a party defendant in any action brought
under this Security Deed, the Note or any Related Agreements, so long as
execution on any judgment is limited to the Loan Collateral, (iv) prohibit
LENDER from pursuing all of its rights and remedies against any guarantor
or surety, whether or not such guarantor or surety is a partner of
BORROWER, (v) limit the personal liability of BORROWER or shareholder of
BORROWER, or any general partner of BORROWER, to LENDER, for
misappropriation or misapplication of funds, fraud, waste, willful
misrepresentation or willful damage to the Subject Property, or (vi)
preclude LENDER from recovering from BORROWER and indemnitors under the
Environmental Indemnity Agreement of even date herewith.
3.11 Performance by LENDER. If BORROWER shall default in the
payment, performance or observance of any term, covenant or condition of
this Security Deed, LENDER may, at its option, pay, perform or observe the
same, and all payments made or costs or expenses incurred by LENDER in
connection therewith shall be secured hereby and shall be, without demand,
immediately repaid by BORROWER to LENDER with interest thereon at the
Default Rate provided in the Note. LENDER shall be the sole judge of the
necessity for such actions and of the amounts to be paid. LENDER is
hereby empowered to enter and to authorize others to enter upon the Subject
Property or any part thereof for the purpose of performing or observing any
such defaulted term, covenant or condition without hereby becoming liable
to BORROWER or any person in possession holding under BORROWER. LENDER may
(i) grant forbearance or an extension of time for the payment of all or any
portion of the indebtedness secured hereby; (ii) take other or additional
security for the payment of the indebtedness secured hereby; (iii) waive or
fail to exercise any right granted hereunder or in the Note; (iv) release
any part of the Subject Property from this Security Deed or otherwise
change any of the terms, covenants, conditions or agreements of the Note or
this Security Deed; (v) consent to the filing of any map, plat or replat
affecting the Subject Property; (vi) consent to the granting of any
easement or other right affecting the Subject Property; (vii) make or
consent to any agreement subordinating the security title, security
interest or lien hereof; or (viii) take or omit to take any action
whatsoever with respect to the Note, this Security Deed, the Subject
Property or any document or instrument evidencing, securing or in any way
relating to the indebtedness secured hereby; all without releasing,
discharging, modifying, changing or affecting any such liability, or
precluding LENDER from exercising any such right, power or privilege or
affecting the security of this Security Deed. In the event of the sale or
transfer by operation of law or otherwise of all or any part of the Subject
Property, LENDER, without notice, is hereby authorized and empowered to
deal with any such vendee or transferee with reference to the Subject
Property or the indebtedness secured hereby, or with reference to any of
the terms, covenants, conditions or agreements hereof, as fully and to the
same extent as it might deal with the original parties hereto and without
in any way releasing and/or discharging any liabilities, obligations or
undertakings.
ARTICLE IV
MISCELLANEOUS
4.01. Severability. In the event any one or more of the provisions
contained in this Security 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 provision of this Security
Deed, but this Security Deed shall be construed as if such invalid, illegal
or unenforceable provision had never been contained herein, but only to the
extent that it is invalid, illegal or unenforceable.
4.02. Certain Charges and Brokerage Fees. BORROWER agrees to pay
LENDER a reasonable charge for each written statement requested of LENDER
as to the obligations secured hereby, furnished at BORROWER's request.
BORROWER further agrees to pay the reasonable charges of LENDER for any
other service rendered BORROWER, or on its behalf, connected with this
Security Deed or the indebtedness secured hereby, including, without
limitation, the delivery to an escrow holder of a request for full or
partial reconveyance of this Security Deed, transmittal to an escrow holder
of moneys secured hereby, changing its records pertaining to this Security
Deed and indebtedness secured hereby to show a new owner of the Subject
Property, and replacing an existing policy of insurance held hereunder with
another such policy.
BORROWER agrees to indemnify and hold LENDER harmless from any
responsibility and/or liability for the payment of any commission charge or
brokerage fees to anyone which may be payable in connection with the
funding of the loan evidenced by the Note and this Security Deed or
refinancing of any prior indebtedness, if applicable, based upon any action
taken by BORROWER. It is understood that any such commission charge or
brokerage fees shall be paid directly by BORROWER to the entitled parties.
4.03. Notices. All notices expressly provided hereunder to be given
by LENDER to BORROWER and all notices, demands and other communications of
any kind or nature whatever which BORROWER may be required or may desire to
give to or serve on LENDER shall be in writing and shall be (i) hand-
delivered, effective upon receipt, (ii) sent by United States Express Mail
or by private overnight courier, effective upon receipt, or (iii) served by
certified mail, to the appropriate address set forth in Section 4.16, or at
such other place as the BORROWER, or LENDER, as the case may be, may from
time to time designate in writing by ten (10) days prior written notice
thereof. Any such notice or demand served by certified mail, return
receipt requested, shall be deposited in the United States mail, with
postage thereon fully prepaid and addressed to the party so to be served at
its address above stated or at such other address of which said party shall
have theretofore notified in writing, as provided above, the party giving
such notice. Service of any such notice or demand so made shall be deemed
effective on the day of actual delivery as shown by the addressee's return
receipt or the expiration of three (3) business days after the date of
mailing, whichever is the earlier in time.
4.04. BORROWER Not Released; Certain LENDER Acts.
(a) Extension of the time for payment or modification of the
terms of payment of any sums secured by this Security Deed granted by
LENDER to any successor in interest of BORROWER shall not operate to
release, in any manner, the liability of BORROWER. LENDER shall not be
required to commence proceedings against such successor or refuse to extend
time for payment or otherwise modify the terms of payment of the sums
secured by this Security Deed by reason of any demand made by BORROWER.
Without affecting the liability of any person, including BORROWER, but
subject to the terms and provisions of Section 3.10, for the payment of any
indebtedness secured hereby, or the legal operation and effect of this
Security Deed on the remainder of the Subject Property for the full amount
of any such indebtedness and liability unpaid, LENDER is empowered as
follows: LENDER may from time to time and without notice (i) release any
person liable for the payment of any of the indebtedness; (ii) extend the
time or otherwise alter the terms of payment of any of the indebtedness;
(iii) accept additional real or personal property of any kind as security
therefor, whether evidenced by deeds to secure debt, mortgages, security
agreements or any other instruments of security; or (iv) alter, substitute
or release any property securing the indebtedness.
(b) LENDER may, at any time, and from time to time, (i) consent
to the making of any map or plan of the Subject Property or any part
thereof, (ii) join in granting any easement or creating any restriction
thereon, (iii) join in any subordination or other agreement affecting this
Security Deed or the legal operation and effect or charge hereof, or (iv)
reconvey, without any warranty, all or part of the Subject Property from
the lien of this Security Deed.
4.05. Inspection. Upon reasonable prior notice and subject to the
inspection rights of tenants under the Leases, LENDER may at any reasonable
time make or cause to be made entry upon and make inspections,
reappraisals, surveys, construction and environmental testing of the
Subject Property or any part thereof in person or by agent, all at LENDER's
sole cost and expense.
4.06. Reconveyance or Cancellation. Upon the payment in full of all
sums secured by this Security Deed, LENDER shall cancel this Security Deed
and shall mark satisfied all notes evidencing indebtedness secured by this
Security Deed. The duly recorded satisfaction of this Security Deed shall
constitute a reassignment of the Leases by the LENDER to the BORROWER.
BORROWER shall pay all costs of recordation, if any.
4.07. Statute of Limitations. BORROWER hereby expressly waives and
releases to the fullest extent permitted by law, the pleading of any
statute of limitations as a defense to any and all obligations secured by
this Security Deed.
4.08. Interpretation. Wherever used in this Security Deed, unless
the context otherwise indicates a contrary intent, or unless otherwise
specifically provided herein, the word "BORROWER" shall mean and include
both BORROWER and any subsequent owner or owners of the Subject Property,
and the word "LENDER" shall mean and include not only the original LENDER
hereunder but also any future owner and holder, including pledgees, of the
Note or other obligations secured hereby. In this Security Deed whenever
the context so requires, the masculine gender includes the feminine and/or
neuter, and the neuter includes the feminine and/or masculine, and the
singular number includes the plural. In this Security Deed, the use of the
word "including" shall not be deemed to limit the generality of the term or
clause to which it has reference, whether or not non-limiting language
(such as "without limitation," or "but not limited to," or words of similar
import) is used with reference thereto. The captions and headings of the
Articles and Sections of this Security Deed are for convenience only and
are not to be used to interpret, define or limit the provisions hereof.
4.09. Consent; Delegation to Subagents. The granting or withholding
of consent by LENDER to any transaction as required by the terms hereof
shall not be deemed a waiver of the right to require consent to future or
successive transactions. BORROWER covenants and agrees to reimburse LENDER
promptly on demand for all legal and other expenses incurred by LENDER in
connection with all requests by BORROWER for consent or approval under this
Security Deed. Wherever a power of attorney is conferred upon LENDER
hereunder, it is understood and agreed that such power is conferred with
full power of substitution, and LENDER may elect in its sole discretion to
exercise such power itself or to delegate such power, or any part thereof,
to one or more subagents.
4.10. Successors and Assigns. All of the grants, obligations,
covenants, agreements, terms, provisions and conditions herein shall run
with the land and shall apply to, bind and inure to the benefit of, the
heirs, administrators, executors, legal representatives, successors and
assigns of BORROWER (but this shall not permit any assignment prohibited
hereby) and the endorsees, transferees, successors and assigns of LENDER.
In the event BORROWER is composed of more than one party, the obligations,
covenants, agreements, and warranties contained herein as well as the
obligations arising therefrom are and shall be joint and several as to each
such party.
4.11. Governing Law. THIS SECURITY DEED IS INTENDED TO BE GOVERNED
BY AND CONSTRUED UNDER THE LAWS OF THE STATE IN WHICH THE SUBJECT PROPERTY
IS LOCATED. BORROWER HEREBY WAIVES ITS RIGHT TO A TRIAL BY JURY.
4.12. Changes in Taxation. If, after the date of this Security Deed,
any law is passed by the state in which the Subject Property is located or
by any other governing entity, imposing upon LENDER any tax against the
Subject Property, or changing in any way the laws for the taxation of
mortgages or debts secured by mortgages so that an additional or substitute
tax is imposed on LENDER or the holder of the Note, BORROWER shall
reimburse LENDER for the amount of such taxes immediately upon receipt of
written notice from LENDER (but excluding income, estate, capital or
franchise taxes). Provided, however, that such requirement of payment
shall be ineffective if BORROWER is permitted by law to pay the whole of
such tax in addition to all other payments required hereunder, without any
penalty or charge thereby accruing to LENDER and if BORROWER in fact pays
such tax prior to the date upon which payment is required by such notice.
4.13. Maximum Interest Rate. No provision of this Security Deed or
of the Note or of any note evidencing a Future Advance shall require the
payment or permit the collection of interest in excess of the maximum
non-usurious rate permitted by applicable law. In the event such interest
does exceed the maximum legal rate, it shall be cancelled automatically to
the extent that such interest exceeds the maximum legal rate and if
theretofore paid, credited on the principal amount of the Note or, if the
Note has been prepaid, then such excess shall be rebated to BORROWER.
4.14. Time of Essence. Time is of the essence of the obligations of
BORROWER in this Security Deed and each and every term, covenant and
condition made herein by or applicable to BORROWER.
4.15. Reproduction of Documents. This Security Deed and all
documents relating thereto, specifically excluding the Note but including,
without limitation, consents, waivers and modifications which may hereafter
be executed, financial and operating statements, certificates and other
information previously or hereafter furnished to LENDER, may be reproduced
by LENDER by any photographic, photostatic, microfilm, micro-card,
miniature photographic or other similar process and LENDER may destroy any
original document ("Master") so reproduced. BORROWER agrees and stipulates
that any such reproduction is an original and shall be admissible in
evidence as the Master in any judicial or administrative proceeding
(whether or not the Master is in existence and whether or not such
reproduction was made or preserved by LENDER in the regular course of
business) and any enlargement, facsimile or further reproduction of such a
reproduction shall be no less admissible.
4.16. Request for Notices. BORROWER hereby requests that any notice,
demand, request or other communication (including any notice of an Event of
Default and notice of sale as may be required by law) desired to be given
or required pursuant to the terms hereof be addressed to BORROWER as
follows:
Holcomb Bridge Partners, L.P.
c/o Barge-Wagener, Inc.
1815 The Exchange
Atlanta, Georgia 30339
Attn: John M. Barge and John H. Wagener
With a copy to:
Long, Aldridge & Norman
Two Concourse Parkway
Suite 750
Atlanta, Georgia 30328
Attn: James A. Fleming
All notices and other communications to LENDER shall be addressed as
follows:
Allstate Life Insurance Company
c/o Allstate Insurance Company
Commercial Mortgage Division
3100 Sanders Road
Allstate Plaza West - J2A
Northbrook, Illinois 60062
Attention: Mortgage Servicing Department
With a copy to:
Allstate Insurance Company
Financial Law Division
3100 Sanders Road
Allstate Plaza West - M2A
Northbrook, Illinois 60062
4.17. No Oral Modifications. This Security Deed may not be amended
or modified orally, but only by an agreement in writing signed by the party
against whom enforcement of any amendment or modification is sought.
IN WITNESS WHEREOF, the undersigned has executed this Security Deed
under seal as of the day and year first hereinabove written.
BORROWER:
Signed, sealed and delivered HOLCOMB BRIDGE PARTNERS, L.P.,
in the presence of: a Georgia limited partnership
____________________________ By:/s/ John M. Barge (SEAL)
Unofficial Witness ----------------------
John M. Barge, Partner
____________________________ By:/s/ John H. Wagner (SEAL)
Notary Public ----------------------
John H. Wagner, Partner
My Commission Expires: (Being all the General
Partners of BORROWER)
____________________________
(Affix Notarial Seal)
<PAGE>
The debt which this Security Deed was given to secure having been paid
in full, this Security Deed is hereby cancelled and the Clerk of the
Superior Court of Fulton County, Georgia is hereby authorized and directed
to make it satisfied of record.
This ___ day of ________________, 19__.
LENDER:
ALLSTATE LIFE INSURANCE COMPANY
By:____________________________
By:____________________________
Its Authorized Signatories
<PAGE>
EXHIBIT A
ALL THAT TRACT or parcel of land lying and being in Land Lots 612 and 613
of the 1st District, 2nd Section of Fulton County, Georgia, City of
Roswell, containing 10.9870 acres, same being more particularly described
as follows:
BEGINNING at a point on the southeasterly Right-of-Way Line of Old Alabama
Road which point is located south 55 degrees 22 minutes 40 seconds west a
distance of 84.50 feet along said Right-of-Way Line from its intersection
with the southwesterly Right-of-Way Line of Holcomb Woods Parkway (Ninety
(90') foot Right-of-Way) if said Right-of-Way Lines were extended to form
an angle instead of a curve; thence traveling along the mitered
intersection of said Old Alabama Road and said Holcomb Woods Parkway along
a curve to the right an arc distance of 126.58 feet to a point on the
southerly Right-of-Way Line of said Holcomb Woods Parkway (said arc being
subtended by a chord bearing south 88 degrees 21 minutes 35 seconds east a
chord distance of 118.30 feet and having a radius of 100.00 feet); thence
continuing along the southerly Right-of-Way Line of said Holcomb Woods
Parkway along a curve to the left an arc distance of 185.44 feet to a point
on said Right-of-Way Line (said arc being subtended by a chord bearing
south 74 degrees 36 minutes 31 seconds east a chord distance of 180.71 feet
and having a radius of 235.99 feet); thence continuing along said Right-of-
Way Line north 82 degrees 52 minutes 32 seconds east a distance of 140.24
feet to a point on said Right-of-Way Line; thence continuing along said
Right-of-Way Line along a curve to the right an arc distance of 181.61 feet
to a point on said Right-of-Way Line (said arc being subtended by a chord
bearing south 80 degrees 30 minutes 20 seconds east a chord distance of
179.07 feet and having a radius of 313.06 feet); thence continuing along
said Right-of-Way Line south 63 degrees 53 minutes 15 seconds east a
distance of 145.45 feet to a point on said Right-of-Way Line; thence
continuing along said Right-of-Way Line along a curve to the left an arc
distance of 29.95 feet to a point on said Right-of-Way Line (said arc being
subtended by a chord bearing south 65 degrees 16 minutes 33 seconds east a
chord distance of 29.94 feet and having a radius of 617.96 feet); thence
leaving said Right-of-Way Line and traveling south 31 degrees 03 minutes 46
seconds west a distance of 205.73 feet to a point; thence traveling south
59 degrees 53 minutes 13 seconds east a distance of 59.43 feet to a point;
thence traveling south 31 degrees 00 minutes 38 seconds west a distance of
104.89 feet to a point; thence traveling south 58 degrees 59 minutes 22
seconds east a distance of 129.99 feet to a point; thence traveling south
31 degrees 00 minutes 38 seconds west a distance of 34.50 feet to a point;
thence traveling south 84 degrees 58 minutes 59 seconds west a distance of
68.00 feet to a point; thence traveling north 58 degrees 59 minutes 22
seconds west a distance of 175.00 feet to a point; thence traveling south
63 degrees 55 minutes 38 seconds west a distance of 434.80 feet to a point;
thence traveling south 31 degrees 00 minutes 38 seconds west a distance of
160.00 feet to a point; thence traveling south 13 degrees 59 minutes 47
seconds east a distance of 28.28 feet to a point on the northeasterly
Right-of-Way Line of Holcomb Bridge Road (One Hundred (100') foot
Right-of-Way); thence traveling along said Right-of-Way Line north 58
degrees 56 minutes 20 seconds west a distance of 80.07 feet to a point on
said Right-of-Way Line; thence leaving said Right-of-Way Line and traveling
north 31 degrees 00 minutes 38 seconds east a distance of 166.94 feet to a
point; thence traveling north 58 degrees 56 minutes 32 seconds west a
distance of 129.89 feet to a point; thence traveling north 67 degrees 15
minutes 05 seconds west a distance of 165.63 feet to a point; thence
traveling north 20 degrees 22 minutes 08 seconds east a distance of 85.00
feet to a point; thence traveling north 60 degrees 07 minutes 00 seconds
west a distance of 223.02 feet to a point; thence traveling north 13
degrees 18 minutes 26 seconds west a distance of 38.12 feet to a point on
the southeasterly Right-of-Way Line of said Old Alabama Road; thence
traveling along said Right-of-Way Line along a curve to the right an arc
distance of 2.67 feet to a point on said Right-of-Way Line (said arc being
subtended by a chord bearing north 48 degrees 20 minutes 54 seconds east a
chord distance of 2.67 feet and having a radius of 778.45 feet); thence
continuing along said Right-of-Way Line along a curve to the right an arc
distance of 38.97 feet to a point on said Right-of-Way Line (said arc being
subtended by a chord bearing north 49 degrees 52 minutes 50 seconds east a
chord distance of 38.96 feet and having a radius of 778.45 feet); thence
continuing along said Right-of-Way Line north 51 degrees 45 minutes 19
seconds east a distance of 163.94 feet to a point on said Right-of-Way
Line; thence continuing along said Right-of-Way Line north 55 degrees 22
minutes 40 seconds east a distance of 232.79 feet to a point on said Right-
of-Way Line, which point is the TRUE POINT OF BEGINNING.
SHOWN AS TRACT I on that certain Survey entitled "As-Built Survey For:
Holcomb Bridge Partners, L.P., Allstate Life Insurance Company & Ticor
Title Insurance Company", prepared by Sunbelt Engineering & Surveying,
Inc., stamped by Russell L. Shreeve, Jr., Georgia Registered Land Surveyor
No. 2157, dated June 6, 1989, last revised October 3, 1990.
TOGETHER WITH those rights arising under the following:
1. Grant of Slope and Grading Easement from The Prudential Insurance
Company of America, a New Jersey corporation, to Jebco Ventures, Inc.,
a Georgia corporation, dated February 5, 1988, filed for record
February 5, 1988 at 3:06 p.m., recorded at Deed Book 11314, Page 13,
in the Office of the Clerk of the Superior Court of Fulton County,
Georgia.
2. Grant of Slope and Grading Easement from Holcomb Woods Village, a
Georgia joint venture composed of Lincoln National Development
Corporation, an Indiana corporation, and KHW Associates, Ltd., a
Georgia limited partnership having Robert F. Kern as its sole general
partner, as tenant-in-common, to Jebco Ventures, Inc., a Georgia
corporation, dated January 26, 1988, filed for record February 5, 1988
at 3:06 p.m., recorded at Deed Book 11314, Page 37, aforesaid records.
3. Grant of Storm Sewer Easement by and between The Prudential Insurance
Company of America, a New Jersey corporation, Holcomb Woods, Inc., a
Georgia non-profit membership corporation, and Jebco Ventures, Inc., a
Georgia corporation, dated February 5, 1988, filed for record February
5, 1988 at 3:06 p.m., recorded at Deed Book 11314, Page 45, aforesaid
records.
4. Grant of Sanitary Sewer Easements by and between The Prudential
Insurance Company of America, a New Jersey corporation, Holcomb Woods,
Inc., a Georgia non-profit membership corporation, and Jebco Ventures,
Inc., a Georgia corporation, dated February 5, 1988, filed for record
February 5, 1988 at 3:06 p.m., recorded at Deed Book 11314, Page 59,
aforesaid records.
10/2/90-jeb-RC#2-02831
5. Declaration of Reciprocal Easements dated October 5, 1990 by Holcomb
Bridge Partners, L.P. to be recorded in aforesaid records.
<PAGE>
EXHIBIT B
1. All State and County taxes subsequent to the year 1990, and all City
of Roswell taxes subsequent to the year 1989.
2. Permit for Anchors, Guy Poles and Wires from S. Lowell Wammock to
Georgia Power Company, dated November 21, 1977, recorded at Deed Book
6982, Page 293, Fulton County, Georgia records.
3. Permit for Anchors, Guy Poles and Wires from S. Lowell Wammock to
Georgia Power Company, dated November 21, 1977, recorded at Deed Book
6982, Page 291, aforesaid records.
4. Permit for Anchors, Guy Poles and Wires from Wm. D. Ellis to Georgia
Power Company, dated November 18, 1977, recorded at Deed Book 6982,
Page 289, aforesaid records.
5. Second Declaration of Protective Covenants and Restrictions for
Holcomb Woods by The Prudential Insurance Company of America, a New
Jersey corporation, dated February 22, 1984, recorded at Deed Book
8858, Page 1, aforesaid records; as amended by that certain First
Amendment to Second Declaration of Protective Covenants and
Restrictions for Holcomb Woods, dated May 7, 1984, recorded at Deed
Book 8971, Page 320, aforesaid records; as further amended by that
certain Second Amendment to Second Declaration of Protective Covenants
and Restrictions for Holcomb Woods, dated December 30, 1986, recorded
at Deed Book 10526, Page 42, aforesaid records; as further amended by
that certain Third Amendment to Second Declaration of Protective
Covenants and Restrictions for Holcomb Woods, dated December 10, 1987,
recorded at Deed Book 11314, Page 1, aforesaid records; as further
amended by that certain Fourth Amendment to Second Declaration of
Protective Covenants and Restrictions for Holcomb Woods, dated May 13,
1988, recorded at Deed Book 11565, Page 178, aforesaid records; as
further amended by that certain Fifth Amendment to Second Declaration
of Protective Covenants and Restrictions for Holcomb Woods, dated
March 29, 1989, recorded at Deed Book 12388, Page 7, aforesaid
records.
6. Slopes, Fills and Drainage, if any, conveyed by that certain Right-of-
Way Deed to City of Roswell, dated November 15, 1982, recorded at Deed
Book 8372, Page 414, aforesaid records.
7. Conveyance of Access Rights from The Prudential Insurance Company of
America to Department of Transportation, State of Georgia, dated
February 13, 1984, recorded at Deed Book 9215, Page 252, aforesaid
records.
8. Grant of Easement from The Prudential Insurance Company of America to
Lincoln National Development Corporation, and KHW Associates, Ltd.
d/b/a Holcomb Woods Village, a joint venture, dated February X, 1984,
recorded at Deed Book 8859, Page 180, aforesaid records.
9. Slopes, Fills and Drainage, if any, conveyed by that certain
unrecorded Right-of-Way Deed from Holcomb Woods, Inc. to City of
Roswell, dated November 13, 1986, as disclosed on that certain plat
recorded at Plat Book 152, Page 89, aforesaid records.
10. Non-exclusive utility easements as contained in that certain Limited
Warranty Deed from The Prudential Insurance Company of America to Dean
Witter Realty Income Partnership III, L.P., dated December 30, 1986,
recorded at Deed Book 10526. Page 47, aforesaid records.
11. Grant of Slope Grading Easement by and between The Prudential
Insurance Company of America to Lincoln National Development
Corporation and KHW Associates, Ltd., d/b/a Holcomb Woods Village, a
joint venture, dated February 23, 1984, recorded at Deed Book 8859,
Page 194, aforesaid records; as corrected by that certain Corrective
Grant of Slope and Grading Easement, dated July 30, 1987, recorded at
Deed Book 11178, Page 297, aforesaid records.
12. Grant of Easement from The Prudential Insurance Company of America to
Trust Company Mortgage, dated September 30, 1983, recorded at Deed
Book 10443, Page 289, aforesaid records.
13. Declaration of Use Covenants by and between The Prudential Insurance
Company of America and Dean Witter Realty Income Partnership III,
L.P., dated December 30, 1986, recorded at Deed Book 10526, Page 72,
aforesaid records.
14. Easement Agreement from The Prudential Insurance Company of America to
Trust Company Mortgage, dated September 30, 1983, recorded at Deed
Book 8685, Page 112, aforesaid records.
15. Grant of Slope and Grading Easement from Holcomb Woods, Inc. to The
Prudential Insurance Company of America, dated February 2, 1988,
recorded at Deed Book 11310, Page 328, aforesaid records.
16. Grant of Slope and Grading Easement from The Prudential Insurance
Company of America to Jebco Ventures, Inc., dated February 5, 1988,
recorded at Deed Book 11314, Page 13, aforesaid records.
17. Grant of Slope and Grading Easement from Holcomb Woods Village to
Jebco Ventures, Inc., dated January 26, 1988, recorded in Deed Book
11314, Page 37, aforesaid records.
18. Grant of Storm Sewer Easement by and between The Prudential Insurance
Company of America, Holcomb Woods, Inc. and Jebco Ventures, Inc.,
dated February 5, 1988, recorded at Deed Book 11314, Page 45,
aforesaid records.
19. Grant of Sanitary Sewer Easements by and between The Prudential
Insurance Company of America, Holcomb Woods, Inc. and Jebco Ventures,
Inc., dated February 5, 1988, recorded at Deed Book 11314, Page 59,
aforesaid records.
20. Memorandum of Lease by and between Jebco Ventures, Inc. ("Landlord")
and Super Discount Markets, Inc. ("Tenant"), dated February 3, 1988,
recorded at Deed Book 11314, Page 133, aforesaid records.
21. Right-of-Way Easement from Jebco Ventures, Inc. to Sawnee Electric
Membership Corporation, dated June 14, 1988, recorded at Deed Book
11739, Page 270, aforesaid records.
22. Declaration of Reciprocal Easements dated October 5, 1990 by Holcomb
Bridge Partners, L.P. to be recorded in aforesaid records.
ALLSTATE LIFE INSURANCE COMPANY
LOAN NO. 121-026
MODIFICATION TO DEED TO SECURE DEBT, ASSIGNMENT OF LEASES,
RENTS AND CONTRACTS, SECURITY AGREEMENT AND FIXTURE FILING
THIS AGREEMENT (the "Modification") is entered into as of the 31st day
of October, 1995, by and between HOLCOMB BRIDGE PARTNERS, L.P., a Georgia
limited partnership ("Borrower"), and HARRIS TRUST AND SAVINGS BANK as
Collateral Agent and Trustee under the Security and Trust Agreement dated
as of September 1, 1993 (Northbrook Life Insurance Company, Secured Party
and Beneficiary), ("Lender").
RECITALS
A. Borrower executed that certain Mortgage Note in the original
principal amount of $6,700,000.00 dated as of October 5, 1990 (the "Note")
in favor of Allstate Life Insurance Company ("Allstate"). The Note is
secured by that certain Deed to Secure Debt, Assignment of Leases, Rents
and Contracts, Security Agreement and Fixture Filing dated as of October 5,
1990 (the "Security Deed") encumbering certain real property located at
1575 Old Alabama Road and 1005 Holcomb Woods Parkway, in the City of
Roswell, County of Fulton, State of Georgia, as more particularly described
on Exhibit "A" attached hereto and made a part hereof. The Security Deed
was recorded October 10, 1990 in Deed Book 13769, Page 259, in the Official
Records of Fulton County. The Note is further secured by that certain
Financing Statement on Form WCC-1 filed October 10, 1990 in the office of
Fulton County Superior Court Clerk as File No. 746094 and in the office of
the Cobb County Superior Court Clerk as File No. 90-9641 (the "Financing
Statement"), and certain representations, warranties, covenants and
__________________
[THIS IS AN EXTENSION OF AN EXISTING LOAN FOR WHICH INTANGIBLE TAX HAS
ALREADY BEEN PAID]
agreements of Borrower under that certain Borrower's Closing Certificate
from Borrower to Allstate dated October 5, 1990 (the "Borrower's
Certificate"). The Note, the Security Deed, the Financing Statement and
the Borrower's Certificate are sometimes hereinafter collectively referred
to as the "Original Loan Documents." All terms not otherwise defined
herein shall have the meanings ascribed to them in the Security Deed.
B. In addition to the Loan Documents, Borrower, Borrower's general
partners, individually, have executed and delivered to Allstate that
certain Environmental Indemnity Agreement dated as of October 5, 1990 (the
"Indemnity").
C. Allstate has assigned the Original Loan Documents and Indemnity
to Lender as evidenced by that certain Assignment of Deed to Secure Debt(s)
recorded December 2, 1993 in Book 17559, Page 340.
D. The original maturity date of the Note is November 1, 1995. The
outstanding principal balance on the Note as of November 1, 1995 is
scheduled to be $6,700,000.00 ("Outstanding Balance").
E. Borrower has exercised its option to extend the maturity date of
the Note pursuant to the terms and conditions of Paragraph 25 of the Note,
and the provisions of the Loan Documents shall be modified to extend the
term of the Note to November 1, 2000, modify the interest rate and make
other certain modifications.
F. Concurrently herewith Lender and Borrower have executed (i) a
Modification of Mortgage Note; (ii) a Reaffirmation of Environmental
Indemnity Agreement; and (iii) reaffirmation of Master Lease. (The within
Agreement together with the foregoing agreements collectively the
"Modification Documents".)
G. The Original Loan Documents, the Modification Documents and all
other documents executed by Borrower concurrently with or after the
execution of this Agreement shall be collectively referred to as the "Loan
Documents."
NOW THEREFORE, in consideration of the foregoing, the parties hereto
agree as follows:
1. Section (a) on page 3 of the Security Deed is amended to
read as follows:
(a) The repayment of the indebtedness evidenced by that
certain Mortgage Note ("Note") of even date herewith executed by Borrower,
and payable to the order of Lender, as amended by that certain Modification
of Mortgage Note dated 10/31/95 in the principal sum of SIX MILLION SEVEN
HUNDRED THOUSAND AND NO/100 DOLLARS ($6,700,000.00) with interest thereon
as provided therein, and all late charges, loan fees, commitment fees,
Prepayment Premiums (as described in the Note) and all extensions,
renewals, modifications, amendments and replacements thereof;
2. All references to the Security Deed in the original Security
Deed shall include the original Security Deed and this Agreement. All
references to the Note in the Security Deed shall include the original Note
and the Modification of Mortgage Note.
3. As modified herein, the Security Deed remains in full force
and effect and is hereby ratified and confirmed.
4. Except as otherwise expressly provided herein, all of the
terms and provisions of the Security Deed shall remain unchanged and in
full force and effect and are hereby ratified and affirmed.
5. This Agreement may be executed in one or more counterparts,
each of which together shall constitute one and the same instrument.
Signature pages may be detached from the counterparts and attached to a
single copy of this document to physically form one document.
The parties have entered into this Modification as of the date
hereinabove set forth.
BORROWER
HOLCOMB BRIDGE PARTNERS, L.P.,
Signed, sealed and delivered a Georgia limited partnership
in the presence of:
_______________________ By:/s/ John M. Barge
Unofficial Witness --------------------------
John M. Barge, Partner
_______________________ By:/s/ John H. Wagener
Notary Public --------------------------
John H. Wagener, Partner
________________________
(Affix Notary Seal)
LENDER
HARRIS TRUST AND SAVINGS BANKS as Collateral
Agent and Trustee under the Security and
Trust Agreement dated as of September 1, 1993
(Northbrook Life Insurance Company, Secured
Party and Beneficiary)
By: ALLSTATE LIFE INSURANCE COMPANY
Signed, sealed and delivered By:________________________________
in the presence of:
By:________________________________
_____________________________
Unofficial Witness ITS AUTHORIZED SIGNATORIES
______________________________
Notary Public
My Commission expires:
______________________________
(Affix Notary Seal)
<PAGE>
EXHIBIT A
ALL THAT TRACT or parcel of land lying and being in Land Lots 612 and 613
of the 1st District, 2nd Section of Fulton County, Georgia, City of
Roswell, containing 10.9870 acres, same being more particularly described
as follows:
BEGINNING at a point on the southeasterly Right-of-Way Line of Old Alabama
Road which point is located south 55 degrees 22 minutes 40 seconds west a
distance of 84.50 feet along said Right-of-Way Line from its intersection
with the southwesterly Right-of-Way Line of Holcomb Woods Parkway (Ninety
(90') foot Right-of-Way) if said Right-of-Way Lines were extended to form
an angle instead of a curve; thence traveling along the mitered
intersection of said Old Alabama Road and said Holcomb Woods Parkway along
a curve to the right an arc distance of 126.58 feet to a point on the
southerly Right-of-Way Line of said Holcomb Woods Parkway (said arc being
subtended by a chord bearing south 88 degrees 21 minutes 35 seconds east a
chord distance of 118.30 feet and having a radius of 100.00 feet); thence
continuing along the southerly Right-of-Way Line of said Holcomb Woods
Parkway along a curve to the left an arc distance of 185.44 feet to a point
on said Right-of-Way Line (said arc being subtended by a chord bearing
south 74 degrees 36 minutes 31 seconds east a chord distance of 180.71 feet
and having a radius of 235.99 feet); thence continuing along said
Right-of-Way Line north 82 degrees 52 minutes 32 seconds east a distance of
140.24 feet to a point on said Right-of-Way Line; thence continuing along
said Right-of-Way Line along a curve to the right an arc distance of 181.61
feet to a point on said Right-of-Way Line (said arc being subtended by a
chord bearing south 80 degrees 30 minutes 20 seconds east a chord distance
of 179.07 feet and having a radius of 313.06 feet); thence continuing along
said Right-of-Way Line south 63 degrees 53 minutes 15 seconds east a
distance of 145.45 feet to a point on said Right-of-Way Line; thence
continuing along said Right-of-Way Line along a curve to the left an arc
distance of 29.95 feet to a point on said Right-of-Way Line (said arc being
subtended by a chord bearing south 65 degrees 16 minutes 33 seconds east a
chord distance of 29.94 feet and having a radius of 617.96 feet); thence
leaving said Right-of-Way Line and traveling south 31 degrees 03 minutes 46
seconds west a distance of 205.73 feet to a point; thence traveling south
59 degrees 53 minutes 13 seconds east a distance of 59.43 feet to a point;
thence traveling south 31 degrees 00 minutes 38 seconds west a distance of
104.89 feet to a point; thence traveling south 58 degrees 59 minutes 22
seconds east a distance of 129.99 feet to a point; thence traveling south
31 degrees 00 minutes 38 seconds west a distance of 34.50 feet to a point;
thence traveling south 84 degrees 58 minutes 59 seconds west a distance of
68.00 feet to a point; thence traveling north 58 degrees 59 minutes 22
seconds west a distance of 175.00 feet to a point; thence traveling south
63 degrees 55 minutes 38 seconds west a distance of 434.80 feet to a point;
thence traveling south 31 degrees 00 minutes 38 seconds west a distance of
160.00 feet to a point; thence traveling south 13 degrees 59 minutes 47
seconds east a distance of 28.28 feet to a point on the northeasterly
Right-of-Way Line of Holcomb Bridge Road (One Hundred (100') foot
Right-of-Way); thence traveling along said Right-of-Way Line north 58
degrees 66 minutes 20 seconds west a distance of 80.07 feet to a point on
said Right-of-Way Line; thence leaving said Right-of-Way Line and traveling
north 31 degrees 00 minutes 38 seconds east a distance of 166.94 feet to a
point; thence traveling north 58 degrees 56 minutes 32 seconds west a
distance of 129.89 feet to a point; thence traveling north 67 degrees 15
minutes 05 seconds west a distance of 165.63 feet to a point; thence
traveling north 20 degrees 22 minutes 08 seconds east a distance of 85.00
feet to a point; thence traveling north 60 degrees 07 minutes 00 seconds
west a distance of 223.02 feet to a point; thence traveling north 13
degrees 18 minutes 26 seconds west a distance of 38.12 feet to a point on
the southeasterly Right-of-Way Line of said Old Alabama Road; thence
traveling along said Right-of-Way Line along a curve to the right an arc
distance of 2.67 feet to a point on said Right-of-Way Line (said arc being
subtended by a chord bearing north 48 degrees 20 minutes 54 seconds east a
chord distance of 2.67 feet and having a radius of 778.45 feet); thence
continuing along said Right-of-Way Line along a curve to the right an arc
distance of 38.97 feet to a point on said Right-of-Way Line (said arc being
subtended by a chord bearing north 49 degrees 52 minutes 50 seconds east a
chord distance of 38.96 feet and having a radius of 778.45 feet); thence
continuing along said Right-of-Way Line north 51 degrees 45 minutes 19
seconds east a distance of 163.94 feet to a point on said Right-of-Way
Line; thence continuing along said Right-of-Way Line north 55 degrees 22
minutes 40 seconds east a distance of 232.79 feet to a point on said
Right-of-Way Line, which point is the TRUE POINT OF BEGINNING.
SHOWN AS TRACT I on that certain Survey entitled "As-Built Survey For:
Holcomb Bridge Partners, L.P., Allstate Life Insurance Company & Ticor
Title Insurance Company", prepared by Sunbelt Engineering & Surveying,
Inc., stamped by Russell L. Shreeve, Jr., Georgia Registered Land Surveyor
No. 2157, dated June 6, 1989, last revised October 3, 1990.
TOGETHER WITH those rights arising under the following:
1. Grant of Slope and Grading Easement from The Prudential Insurance
Company of America, a New Jersey corporation, to Jebco Ventures, Inc.,
a Georgia corporation, dated February 5, 1988, filed for record
February 5, 1988 at 3:06 p.m., recorded at Deed Book 11314, Page 13,
in the Office of the Clerk of the Superior Court of Fulton County,
Georgia.
2. Grant of Slope and Grading Easement from Holcomb Woods Village, a
Georgia joint venture composed of Lincoln National Development
Corporation, an Indiana corporation, and KHW Associates, Ltd., a
Georgia limited partnership having Robert F. Kern as its sole general
partner, as tenant-in-common, to Jebco Ventures, Inc., a Georgia
corporation, dated January 26, 1988, filed for record February 5, 1988
at 3:06 p.m., recorded at Deed Book 11314, Page 37, aforesaid records.
3. Grant of Storm Sewer Easement by and between The Prudential Insurance
Company of America, a New Jersey corporation, Holcomb Woods, Inc., a
Georgia non-profit membership corporation, and Jebco Ventures, Inc., a
Georgia corporation, dated February 5, 1988, filed for record February
5, 1988 at 3:06 p.m., recorded at Deed Book 11314, Page 45, aforesaid
records.
4. Grant of Sanitary Sewer Easements by and between The Prudential
Insurance Company of America, a New Jersey corporation, Holcomb Woods,
Inc., a Georgia non-profit membership corporation, and Jebco Ventures,
Inc., a Georgia corporation, dated February 5, 1988, filed for record
February 5, 1988 at 3:06 p.m., recorded at Deed Book 11314, Page 59,
aforesaid records.
10/2/90-jeb-RC#2-02831
5. Declaration of Reciprocal Easements dated October 5, 1990 by Holcomb
Bridge Partners, L.P. to be recorded in aforesaid records.
<PAGE>
SECRETARY'S CERTIFICATE
I, PAUL N. KIERIG, Assistant Secretary of ALLSTATE LIFE INSURANCE
COMPANY and NORTHBROOK LIFE INSURANCE COMPANY hereby certify that the
following is a true, complete and correct copy of an excerpt from the
Security and Trust Agreement, dated as of September 1, 1993 (the
"Agreement"), among Allstate Life Insurance Company, an Illinois
corporation (the "Grantor"), Northbrook Life Insurance Company, an Illinois
corporation (the "Beneficiary"), Dean Witter Reynolds Inc, a Delaware
corporation ("DWR"), and Harris Trust and Savings Bank, an Illinois banking
corporation (the "Trustee"):
SECTION 5. Right to Administer Assets.
(a) The Trustee shall forward all annual and interim stockholder
reports, and all proxies and proxy materials, notices, requests for
consents and waivers, tenders and all other correspondence relating to the
Assets in the Trust Accounts to the Grantor (with copies to the Beneficiary
and DWR if reasonably requested). Until such time as a Section 6(f) Notice
shall have been delivered to the Trustee, the Grantor shall be entitled to
make all decisions an individual owner of the Assets could make with
respect to Assets in the Trust, including, but not limited to, voting,
proxies, tenders, consents and waivers, but shall make such decisions in
good faith and with due regard to the interests of the Beneficiary and to
the preservation of the value of the Assets. After delivery of the Section
6(f) notice, the Beneficiary shall have the powers of the Grantor referred
to in the preceding sentence and in Section 5(b), below.
(b) Subject to the foregoing, in the day-to-day management of the
Assets, Grantor shall have full authority to execute, on behalf of the
Trustee, all consents, waivers, leases, amendments to agreements or any
other documentation relating to the administration and management of the
Assets. The Trustee, acting on letters of direction from the Grantor,
shall have sole authority to sign all bond powers, stock powers, acceptance
of tender offers and other documentation which is required to effect the
transfer of ownership of any of the Assets. All ancillary documents with
respect to such transfers, as well as all other documentation relating to
the management or administration of the Assets, shall be executed on behalf
of the Trustee by the Grantor. The Trustee shall have no liability
whatsoever for any actions taken or not taken by the Grantor.
I FURTHER CERTIFY that no event has occurred which would permit any
party to the Agreement to give a Section 6(f) notice (as defined in the
Agreement), and that no such notice has been given by the Beneficiary.
IN WITNESS WHEREOF, I set my hand and affix the official seals of said
Corporations.
/s/ Paul N. Kierig
------------------------------
Assistant Secretary
Dated: October 27, 1995
[Corporate Seal] [Corporate Seal]
REAL ESTATE NOTE
----------------
August 6, 1987 Atlanta, Georgia
FOR VALUE RECEIVED, the undersigned, WEST STEWARTS MILL
ASSOCIATES, LTD., a Georgia limited partnership whose sole general partner
is Charles H. Lesley (hereinafter referred to as "Maker"), promises to pay
to the order of CONFEDERATION LIFE INSURANCE COMPANY, a mutual insurance
company incorporated in Canada (hereinafter referred to as "Payee"; Payee,
and any subsequent holder(s) hereof, are hereinafter referred to
collectively as "Holder"), without grace, at the office of Standard
Mortgage Company, 5871 Glenridge Drive, Atlanta, Georgia 30328, or at such
other place as Holder may designate to Maker in writing from time to time,
the principal sum of THREE MILLION SEVEN HUNDRED TWENTY-FIVE THOUSAND AND
NO/100 DOLLARS ($3,725,000.00), together with interest thereon at the rate
of nine and seven-eighths percent (9.875%) per annum (hereinafter referred
to as the "Interest Rate") in lawful money of the United States of America.
Payments of principal and interest are to be made in consecutive monthly
installments of THIRTY-TWO THOUSAND THREE HUNDRED FORTY-SIX AND NO/100
DOLLARS ($32,346.00) each (such payments being based on a 30-year
amortization schedule), beginning on the first day of October, 1987, and
continuing on the same day of each succeeding month thereafter up to and
including the first day of September, 2001 (hereinafter referred to as the
"Final Maturity Date"). The outstanding principal balance of this Note and
all accrued interest thereon shall be due and payable on the Final Maturity
Date. Interest accruing from and including the date hereof through and
including August 31, 1987, shall be due and payable on the date hereof.
Interest on this Note shall be computed on a 360-day-per-year basis times
the actual number of days outstanding. The Interest Rate expressed in
simple interest terms as of the date hereof is nine and seven eighths
percent (9.875%) per annum.
Maker further agrees as follows:
1. Interest Adjustment.
-------------------
Holder shall have the right to adjust the Interest Rate
commencing on September 1, 1994 (hereinafter referred to as the "Early
Maturity Date") as follows:
(a) Holder shall deliver to Maker a notice in the manner
described for notices in the hereinafter defined Security Deed not less
than ninety (90) days nor more than one hundred twenty (120) days prior to
the Early Maturity Date (hereinafter referred to as the "Adjustment
Notice") which notice shall specify a rate of interest (hereinafter
referred to as the "Adjusted Interest Rate") other than the Interest Rate
specified above, which shall be effective as of the Early Maturity Date,
and the new monthly payments (hereinafter referred to as "Adjusted Monthly
Payments") to be due and payable as a result of such Adjusted Interest
Rate. The Adjusted Interest Rate shall be Holder's then-current seven (7)
year term rate for similar quality neighborhood retail center loans.
(b) Holder and Maker shall, within sixty (60) days after receipt
of the Adjustment Notice by Maker, enter into an amendment to this Note, in
form and content satisfactory to Holder, setting forth the Adjusted
Interest Rate and the Adjusted Monthly Payments.
If the Adjustment Notice has been timely made by Holder and if
the event described in clause (b) immediately above has not been timely
accomplished, then Holder, at its option and without notice, may declare
the amount of the total unpaid balance hereof to be due and forthwith
payable, whereupon it shall be so due and payable.
In the event Holder does not elect to adjust the interest rate
upon the Early Maturity Date, this Note shall continue and remain in full
force and effect upon all other terms stated therein.
Notwithstanding paragraph 2 below and provided no default exists
under the terms of this Note, the Security Deed or any other Loan Documents
(as hereinafter defined) and whether or not Holder delivers the Adjustment
Notice described above, the Maker may prepay on the Early Maturity Date the
entire balance of principal and interest then remaining unpaid hereon
without premium or penalty, and provided, further, that the Maker notifies
the Holder of its intent to prepay this Note on the Early Maturity Date by
written notice delivered to Holder not less than sixty (60) days nor more
than ninety (90) days prior to the Early Maturity Date.
2. Prepayment.
----------
Except as provided in paragraph 1 above and in this paragraph 2,
the Maker shall have no right to prepay this Note, in whole or in part,
voluntarily or involuntarily (including, specifically, as a result of
foreclosure) during the term of this Note. Provided no default exists
under the terms of this Note, the Security Deed or any other Loan
Documents, the Maker may prepay the entire unpaid principal balance of this
Note at any time upon giving the Holder written notice of its intent to
prepay, delivered to Holder not less than sixty (60) days prior to the
intended date of prepayment. In the event the Maker so elects to prepay
this Note, then in addition to the prepaid principal and all accrued
interest thereon and all other sums which may be due Holder under the
Security Deed or any other Loan Document, the Maker shall pay a premium
(hereinafter referred to as the "Prepayment Premium") if, at the time of
said prepayment, the "Treasury Yield" (as hereinafter defined) is less than
the then-effective annual yield hereunder, in order to provide the Holder
with a yield equal to the yield provided for herein until the Early
Maturity Date, if such prepayment occurs prior to the Early Maturity Date,
or the Final Maturity Date, if such prepayment occurs after the Early
Maturity Date. The Prepayment Premium shall be determined as follows: the
outstanding principal balance due hereunder (including accrued interest) at
the time of prepayment shall be multiplied by the "Monthly Interest Payment
Differential" (as hereinafter defined), which is then discounted at the
Treasury Yield over the number of months then remaining until the Early
Maturity Date or Final Maturity Date, as the case may be. The "Monthly
Interest Payment Differential" equals one-twelfth (1/12) of the amount (if
any) by which the effective annual interest rate set forth herein at such
time (as adjusted, if applicable) exceeds the Treasury Yield for the period
of time that most nearly equals the period of time until the Early Maturity
Date, if prepayment occurs prior to the Early Maturity Date, or the Final
Maturity Date, if prepayment occurs after the Early Maturity Date.
"Treasury Yield" shall mean the yield in percent per annum of the Treasury
Constant Maturities for the length of time specified in this Note as
published in document H.15(519) (presently published by the Board of
Governors of the Federal Reserve System titled "Federal Reserve Statistical
Release") for the calendar week immediately preceding the calendar week in
which the prepayment occurs. If the yield of the Treasury Constant
Maturities for the calendar week in question is not published on or before
the business day preceding the date the Treasury Yield in question is to
become effective, then the Treasury Yield shall be based upon the yield of
the Treasury Constant Maturities for the length of time specified in this
Note for the most recent calendar week for which such publication has
occurred. If no yield for Treasury Constant Maturities is published for
the specific length of time specified in this Note, the Treasury Yield for
such length of time shall be the weighted average of the yields of the
Treasury Constant Maturities most nearly corresponding to the length of the
applicable period specified in this Note. If the publishing of the yield
of Treasury Constant Maturities is ever discontinued, then the Treasury
Yield shall be based upon the index which is published by the Board of
Governors of the Federal Reserve System in replacement thereof or, if no
such replacement index is published, the index which, in Holder's
reasonable determination, most nearly corresponds to the yield of the
Treasury Constant Maturities. Exhibit "A" to this Note, attached hereto
and made a part hereof, is an example of the calculation of the Prepayment
Premium.
No Prepayment Premium will be applicable to any amount paid on
the Early Maturity Date (if in accord with the foregoing provisions of this
Note) or the Final Maturity Date; provided, however, in the event Holder in
accordance with Paragraph 5 below, accelerates the maturity date of any
installment of principal and/or interest upon the occurrence of an event of
default hereunder or under the Security Deed or any other Loan Document, a
Prepayment Premium shall be due and payable.
No prepayment penalty will be applicable to any payments received
by Holder from (a) proceeds of casualty insurance, (b) condemnation
proceeds or (c) proceeds paid to Holder pursuant to the terms of that
certain $285,000.00 Escrow Agreement of even date among Maker, Payee and
Chicago Title Insurance Company that are applied by Holder to payment of
any part of the loan evidenced hereby.
3. Excess Interest.
In no event shall the amount of interest due or payable hereunder
exceed the maximum rate of interest allowed by applicable law, and in the
event any such payment is inadvertently paid by Maker or inadvertently
received by Holder, then such excess sum shall be credited as a payment of
principal, unless the Maker shall notify the Holder, in writing, that the
Maker elects to have such excess sum returned to it forthwith. It is the
express intent hereof that the Maker not pay and the Holder not receive,
directly or indirectly in any manner whatsoever, interest in excess of that
which may be legally paid by the Maker under applicable law.
4. Late Charges, Default Interest.
In the event that any payment of principal and/or interest is not
made when due, as herein provided, then all principal, including the past-
due principal and interest, shall bear interest at the greater of (i) the
highest lawful rate or (ii) if there is no such rate, then a rate of five
percent (5%) above the Interest Rate or Adjusted Interest Rate, whichever
is then in effect, until paid.
In the event any installment required to be paid by the terms of
this Note is not paid in full when due to the Holder of this Note, the
Holder, at its option and without the waiver on its part of any other
rights, privileges and options it may have or be entitled to by the terms
of this Note or any instrument given to ensure payment of same, but in lieu
of interest at the default rate specified therein, may collect from Maker a
late charge to cover the extra expenses in handling delinquent payments,
which late charge shall be the greater of an amount equal to 5% of the
installment required to be paid or $1,000.00.
5. Acceleration.
The Holder shall have the optional right to declare the amount of
the total unpaid balance hereof to be due and forthwith payable in advance
of the maturity date of any installment of principal and/or interest, as
fixed herein, upon the failure of the Maker to pay, when due, any one of
the installments of principal and/or interest hereon, or upon the
occurrence of any event of default, or failure to perform in accordance
with any of the terms and conditions in the Security Deed, or any other
instrument securing this Note or relating hereto.
6. Application of Payments.
Each payment when paid shall be applied first to the payment of
interest accrued on the unpaid principal, next to expenses reimbursable to
Holder and the residue thereof shall be credited on the principal.
7. Exculpation and Limitation.
Notwithstanding anything to the contrary in this Note, in the
Security Deed or in any other Loan Document, the Holder expressly agrees
that the personal liability of the Maker under this Note, under the
Security Deed and under the other Loan Documents shall be strictly and
absolutely limited to the Premises, as that term is defined in the Security
Deed, and the leases, rents, profits and issues thereof and any other
collateral securing the indebtedness evidenced hereby except as limited in
this Note.
Without regard to and notwithstanding any contrary provision in
this Note, Maker shall be fully and personally liable for:
(a) Its failure to comply completely and on a timely basis with
any covenant or warranty contained in the Loan Documents relating to
security deposits;
(b) Any rents (i) collected by the Maker during any period in
which Maker is in default under the loan evidenced hereby after Maker
receives written notice of such default from Holder and (ii) not applied by
Maker to the payment of legitimate expenses of owning, operating and
maintaining the property owed to third parties unrelated to Maker.
8. Presentation and Demand.
Presentment for payment, demand, protest and notice of demand,
protest and non-payment and all other notices are hereby waived by Maker.
No failure to accelerate the debt evidenced hereby by reason of default
hereunder, acceptance of a past due installment or indulgences granted from
time to time shall be construed (i) as a novation of this Note or as a
waiver of such right of acceleration or of the right of Holder thereafter
to insist upon strict compliance with the terms of this Note, or (ii) to
prevent the exercise of such right of acceleration or any other right
granted hereunder or by the laws of the State of Georgia; and Maker nereby
expressly waives the benefit of any statute or rule of law or equity now
provided, or which may hereafter be provided, which would produce a result
contrary to or in conflict with the foregoing. No extension of the time
for the payment of this Note or any installment due hereunder, made by
agreement with any person now or hereafter liable for the payment of this
Note, shall operate to release, discharge, modify, change or affect the
original liability of Maker under this Note, either in whole or in part,
unless Holder agrees otherwise in writing. This Note may not be changed
orally, but only by an agreement in writing signed by the party against
whom enforcement of any waiver, change, modification or discharge is
sought.
9. Waiver.
Maker hereby waives and renounces for itself, its heirs,
successors and assigns, all rights to the benefit of any statute of
limitations and any moratorium, reinstatement, marshalling, forbearance,
valuation, stay, extension, redemption, appraisement, exemption and
homestead now provided, or which may hereafter be provided by the
Constitution and laws of the United States of America and of any state
thereof, both as to itself and in and to all of its property, real and
personal, against the enforcement and collection of the obligations
evidenced by this Note. Maker hereby transfers, conveys and assigns to
Holder a sufficient amount of such homestead or exemption as may be set
apart in bankruptcy, to pay this Note in full, with all costs of
collection, and does hereby direct any trustee in bankruptcy having
possession of such homestead or exemption to deliver to Holder a sufficient
amount of property or money set apart as exempt to pay the indebtedness
evidenced hereby, or any renewal thereof, and does hereby appoint Holder
the attorney-in-fact for Maker to claim any and all homestead exemptions
allowed by law.
10. Loan Documents.
The indebtedness evidenced by this Note and the obligations
created hereby are secured by that certain Deed to Secure Debt and Security
Agreement ("Security Deed") (together with all other documents evidencing
or securing or in any way relating to the indebtedness evidenced hereby,
herein referred to collectively as the "Loan Documents") entered into this
day between Maker and Payee concerning property located in Douglas County,
Georgia; some of which Loan Documents are to be filed for record on or
about the date hereof in the appropriate public records.
11. Notices.
Any notices required or permitted hereunder must be served in the
manner prescribed in the Security Deed.
12. Applicable Law.
This Note is intended as a contract under and shall be construed
and enforceable in accordance with the laws of the State of Georgia.
13. Successors and Assigns.
As used herein, the terms "Maker" and "Holder" shall be deemed to
include their respective heirs, successors, legal representatives and
assigns, whether by voluntary action of the parties or by operation of law.
In the event that more than one person, firm or entity is a Maker
hereunder, then all references to "Maker" shall be deemed to refer equally
to each of said persons, firms, or entities, all of whom shall be jointly
and severally liable for all of the obligations of Maker hereunder.
14. Terminology. Titles of paragraphs are for convenience only
and neither limit nor amplify the provisions of this Note.
15. Time of Essence. Time is of the essence of this Note.
16. Right to Notice and Cure. Notwithstanding anthing contained
herein to the contrary, in the event Maker fails to make any payment of
principal or interest required hereunder, or upon any payment of principal
or interest required hereunder, or upon the occurrence of any default or
Event of Default under any of the Loan Documents, Holder shall not be
entitled to accelerate the indebteness evidenced hereby or exercise any
other right or remedy hereunder or under the Loan Documents until Holder
has given notice of such default or Event of Default to Maker and a right
to cure as prescribed in the Security Deed. As used in the preceding
sentence, the term "cure" shall include not only payment of the principal
and interest due, but also the payment of any additional interest or late
charges which may be due under this Note or under the Loan Documents
because of late payment.
IN WITNESS WHEREOF, Maker has executed this Note under seal on
the date first above written.
MAKER:
WEST STEWARTS MILL ASSOCIATES, LTD., a
Georgia limited partnership by its sole
general partner
By:/s/ Charles H. Lesley (SEAL)
-------------------------
Charles H. Lesley
<PAGE>
EXHIBIT "A"
-----------
Example of calculation of Prepayment Premium:
Assume (1) $1,000,000 loan at 10%, 30 year amortization, 5 year term
(2) At end of 3 years borrower exercises option to prepay
subject to the "Prepayment Premium" (i.e. 2 years to go to
maturity date).
(3) Loan balance at end of 3 years equals $981,505
(4) Treasury Yield at end of 3 years as per H.15 (519) equals
8.25% for 2 years.
Prepayment Premium = (Loan balance x Monthly Interest Differential)
discounted at the Treasury Yield rate over the time
period
(A) Monthly Interest Differential:
Mortgage Rate = 10.00%
Treasury Yield = 8.25%
Annual Interest Differential 1.75%
divided by 12 =
Monthly Interest Differential = 0.145833% = 0.00145833
(B) Loan Balance x Monthly Interest Differential =
$981,505 x .00145833 = $1,431.36
(C) $1,431.36 per month discounted at 8.25% p.a. (0.6875% per month) over
24 months = $31,568.50
Therefore, Prepayment Premium equals $31,568.50
THIS IS A SAMPLE CALCULATION ONLY.
<PAGE>
FIRST AMENDMENT TO REAL ESTATE NOTE
-----------------------------------
THIS FIRST AMENDMENT, made and entered into this 27th day of
November, 1987, by and between WEST STEWARTS MILL ASSOCIATES, LTD., a
Georgia limited partnership (hereinafter referred to as "Borrower"), and
CONFEDERATION LIFE INSURANCE COMPANY, a mutual insurance company
incorporated in Canada (hereinafter referred to as "Lender"),
W I T N E S S E T H:
WHEREAS, on August 6, 1987, Borrower and Lender entered into that
certain Real Estate Note (hereinafter referred to as the "Note");
WHEREAS, Borrower has requested, and Lender has agreed, to change
the due date of monthly installments of principal and interest payable
under the Note; and
WHEREAS, simultaneously with delivery of this First Amendment,
Borrower has paid to Lender accrued interest under the Note for the period
commencing on December 1, 1987, and ending on December 10, 1987.
NOW, THEREFORE, for and in consideration of the sum of Ten and
No/100 Dollars ($10.00), each paid to the other, and other good and
valuable considerations, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. The "Final Maturity Date", as that term is defined in the
Note, is changed from the first day of September, 2001, to
the tenth day of September, 2001. In addition, the "Early
Maturity Date", as that term is defined in the Note, is
changed from the first day of September, 1994, to the tenth
day of September, 1994.
2. The monthly installment of principal and interest stated in
the Note to be due on the first of December, 1987, shall
instead be due on the tenth of December, 1987, and monthly
installments of principal and interest shall be due on the
same day of each succeeding month thereafter up to and
including the 10th day of September, 2001.
3. Except as specifically amended by Paragraphs 1 and 2 above,
all other terms and conditions of the Note shall remain in
full force and effect. Borrower and Lender ratify and
confirm the terms of the Note as amended hereby.
IN WITNESS WHEREOF, Borrower and Lender have executed this First
Amendment to Real Estate Note, under seal, as of the day and year first
above written.
BORROWER
WEST STEWARTS MILL ASSOCIATES, LTD., a
Georgia limited partnership
By:/s/ Charles H. Lesley (SEAL)
--------------------
Charles H. Lesley,
General Partner
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
<PAGE>
LENDER
CONFEDERATION LIFE INSURANCE COMPANY, a
mutual insurance company incorporated in
Canada
By:/s/ Heather A.T. Hunter By:/s/ J.C. Curtis
---------------------------- --------------------------
H.A.T. HUNTER Title: J.C. CURTIS
ASS'T. V.P.-U.S. INVESTMENTS INV. V.P.-INSURANCE INV. [CORPORATE
SEAL]
<PAGE>
MODIFICATION OF REAL ESTATE NOTE
THIS MODIFICATION OF REAL ESTATE NOTE is made this 21st day of
November, 1988, by and between WEST STEWARTS MILL ASSOCIATES, LTD., a
Georgia limited partnership whose sole general partner is Charles H. Lesley
("Borrower") and CONFEDERATION LIFE INSURANCE COMPANY, a Canadian mutual
company ("Lender").
STATEMENT OF FACTS
On August 6, 1987, Lender made a loan to Borrower in the
principal amount of $3,725,000.00 (the "Loan"), which Loan is evidenced by
a certain Real Estate Note ("Note") dated August 6, 1987, executed by
Borrower in favor of Lender. Pursuant to the Escrow Agreement executed in
connection with the Loan, Lender has received $285,000.00 from the Escrow
Agent as a principal reduction of the Loan. Further pursuant to the Escrow
Agreement, Borrower has now requested and Lender has agreed to reamortize
the payments due under the Note to reflect the principal reduction.
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the premises and the sum of
Ten Dollars ($10.00) in hand paid by Borrower to Lender, and other good an
valuable consideration, the receipt and sufficiency of which hare hereby
acknowledged, Borrower and Lender hereby agree and the Note is hereby
modified as follows:
(i) The principal balance of the Note as of October 10, 1988, is
$3,416,895.78.
(ii) Payments of principal and interest due under the Note shall
be made to Lender on the tenth (10th) day of each month
commencing on November 10, 1988, in the amount of
$29,895.78.
(iii) Except as modified herein, all terms and conditions of
the Note remain in full force and effect and unamended.
IN WITNESS WHEREOF, Borrower and Lender have executed this
Modification under seal as of the day and year first above written.
BORROWER:
WEST STEWARTS MILL ASSOCIATES, LTD., as
Georgia limited partnership, by its sole General Partner
By: /s/ Charles H. Lesley (SEAL)
--------------------------------
LENDER:
CONFEDERATION LIFE INSURANCE COMPANY
By: /s/ Richard C. Warner
-------------------------------
Title: Richard C. Warner
Assistant Vice President
U.S. Mortgage
Investments
Attest: /s/ Stephen F. Spragus
---------------------------
Title: Stephen F. Spragus
Legal Vice-President
(CORPORATE SEAL)<PAGE>
THIRD AMENDMENT TO REAL ESTATE NOTE
THIS THIRD AMENDMENT TO REAL ESTATE NOTE ("Third Amendment") is made
and entered into as of this 1st day of November, 1993, by and between WEST
STEWARTS MILL ASSOCIATES, L.P. (successor by name change to West Stewarts
Mill Associates, Ltd.), a Georgia limited partnership whose sole general
partner is Charles H. Lesley ("Borrower") and CONFEDERATION LIFE INSURANCE
COMPANY, a Canadian mutual insurance company ("Lender").
W I T N E S S E T H:
WHEREAS, Borrower executed that certain Real Estate Note dated August
6, 1987 in favor of Lender in the original principal amount of Three
Million Seven Hundred Twenty-Five Thousand and No/100 Dollars
($3,725,000.00), as amended by that certain First Amendment to Real Estate
Note ("First Amendment") dated November 27, 1987 by and between Lender and
Borrower, and as further amended by that certain Modification of Real
Estate Note ("Second Amendment") dated November 21, 1988 by and between
Lender and Borrower (as so amended, the "Note"); and
WHEREAS, the Note is secured by (among other things) that certain Deed
to Secure Debt and Security Agreement dated August 6, 1987, executed by
Borrower in favor of Lender and recorded at Deed Book 571, Page 388 of the
Douglas County, Georgia records, as amended by that certain First Amendment
to Deed to Secure Debt and Security Agreement dated November 27, 1987 by
and between Borrower and Lender and recorded at Deed Book 589, Page 208,
aforesaid records (as so amended, the "Security Deed"), which Security Deed
encumbers certain improved commercial real estate located in Douglas
County, Georgia described on Exhibit A attached hereto and made a part
hereof (the "Property"), which Property is generally known as Park Plaza
Shopping Center.
WHEREAS, Borrower has requested and Lender has agreed to revise the
Note in the manner contemplated by that certain Letter Agreement dated
August 13, 1993 by and between Borrower and Lender (the "Modification
Letter"), as more particularly hereinafter set forth.
NOW THEREFORE, for and in consideration of the sum of Ten and No/100
Dollars ($10.00), the mutual covenants and agreements contained herein and
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged by Lender and Borrower, Lender and Borrower hereby
agree as follows:
1. EARLY MATURITY DATE. The Early Maturity Date referenced in
paragraph 1 of the First Amendment is hereby extended from September 10,
1994 to September 10, 1996.
2. PRINCIPAL BALANCE. Lender and Borrower hereby acknowledge and
agree that the interest portion of Borrower's scheduled monthly payments
under the Note for August 10, 1993 and September 10, 1993 totalling
Fifty-Four Thousand Three Hundred Ninety and No/100 Dollars ($54,390.00)
(the "Interest Amount"), have been paid to and are being held by
Shoptaw-James, Inc. ("Escrow Agent") under the Escrow Agreement (as that
term is defined in Section 6 hereof). As Lender has not applied the
Interest Amount against accrued and unpaid interest under the Note, the
Interest Amount has been and is hereby added to the outstanding principal
balance of the Note. Lender and Borrower hereby acknowledge and agree that
as a result of the capitalization of the Interest Amount, the outstanding
principal balance of the Note as of September 10, 1993 was Three Million
Three Hundred Forty-Five Thousand Five Hundred Fifty-Six and 86/100 Dollars
($3,345,556.86).
3. INTEREST RATE/PAYMENTS. Notwithstanding anything contained in
the Note to the contrary, the following shall determine the interest rate
and payment requirements applicable under the Note.
3.1 Floating Interest Rate. Lender and Borrower hereby agree
that commencing on September 10, 1993 through September 9, 1994, the
interest rate accruing on the outstanding principal balance under the Note
shall be 7.688% per annum, making the monthly interest only payments of
Borrower during such time $21,433.87 per month. Thereafter, on September
10, 1994 and each succeeding September 10 thereafter (each herein referred
to as an "Adjustment Date") the annual interest rate accruing on the
outstanding principal balance under the Note shall be adjusted to equal the
sum of (i) four percent (4%), and (ii) the one (1) year LIBOR interest rate
as published by the British Banker's Association two (2) business days
prior to such Adjustment Date. If the British Banker's Association shall
cease to publish such rate, Lender shall designate a substitute publication
or rate as Lender shall deem appropriate. Except as hereinafter set forth,
commencing on October 10, 1993 and continuing on the same day of each
succeeding calendar month thereafter, monthly installments of interest only
on the outstanding principal balance under the Note shall be due and
payable to Lender.
3.2 First Fixed Rate Option. Lender shall adjust the interest
rate under the Note on the Early Maturity Date by delivering to Borrower a
notice in the manner provided for notices in the Security Deed not less
than ninety (90) days nor more than one hundred twenty (120) days prior to
the Early Maturity Date (the "Adjustment Notice") which notice shall
specify an annual fixed rate of interest (the "Adjusted Interest Rate")
which shall be effective as of the Early Maturity Date, and the new monthly
payments (the "Adjusted Monthly Payments") of principal and interest to be
due and payable as a result of the Adjusted Interest Rate and revised
repayment schedule. The Adjusted Interest Rate and Adjusted Monthly
Payments shall be based on a twenty-five (25) year amortization rate and
shall otherwise conform to Lender's then current five (5) year term fixed
rate and payment schedule for loans secured by similar quality neighborhood
retail shopping center loans.
Lender and Borrower shall, within sixty (60) days after receipt
of the Adjustment Notice by Borrower, enter into an amendment to the Note,
in form and content reasonably satisfactory to Lender, setting forth the
Adjusted Interest Rate and the Adjusted Monthly Payments. If the
Adjustment Notice has been timely sent by Lender, and thereafter Borrower
shall fail or refuse to (i) accept such Adjusted Interest Rate and Adjusted
Monthly Payments, or (ii) execute an amendment to the Note evidencing same,
then Lender, at its option and without notice may declare the amounts of
the total unpaid balance of the Note to be immediately due and payable,
whereupon it shall be so due and payable.
3.3 Principal Payments from Escrow Funds. In addition to any
and all payments of principal and interest from time to time contemplated
by the Note (as modified hereby), in the event the Escrow Funds (as that
term is defined in Section 6.5 hereof) shall exceed One Hundred Thousand
and No/100 Dollars ($100,000.00) at the end of any calendar quarter, the
amount of Escrow Funds in excess of One Hundred Thousand and No/100 Dollars
($100,000.00) shall be paid to Lender and applied to outstanding principal
under the Note. Such principal payments shall not reduce or otherwise
affect any other payments of principal or interest payable under the Note
as modified hereby.
3.4 Interest Accrual. All interest accruing under the Note
shall be computed on a 360 day year basis and on the actual number of days
in each month.
4. PREPAYMENT PREMIUM. Notwithstanding anything contained in
paragraph 2 of the Note to the contrary, from and after the date hereof,
the Prepayment Premium referenced in paragraph 2 of the Note shall be
calculated as follows:
4.1 Premium Prior to Lender's Exercise of First Fixed Rate
Option. Provided no default exists under the terms of the Note, the
Security Deed or any other Loan Documents, Borrower may prepay the entire
principal balance of the Note at any time prior to the Early Maturity Date,
upon giving Lender written notice of its intent to prepay, delivered to
Lender not less than sixty (60) days prior to the intended date of
prepayment. In the event Borrower so elects to prepay the Note prior to
the Early Maturity Date, then in addition to the outstanding principal and
all accrued interest thereon and all other sums which may be due to Lender
under the Note, Security Deed and the other Loan Documents (including,
without limitation, Lender's equity participation described in Section 5
hereof), Borrower shall pay a Prepayment Premium equal to the amount, if
any, by which the interest which would accrue on the outstanding principal
balance under the Note at the rate of eight and one-half percent (8.5%) per
annum from the date of such prepayment through the Early Maturity Date
would exceed the interest which would accrue on the outstanding principal
balance under the Note at the rate in effect on the date of such prepayment
through the Early Maturity Date assuming such rate remained constant
through such date.
4.2 Premium Subsequent to Lender's Exercise of First Fixed Rate
Option. Provided no default exists under the terms of the Note, the
Security Deed or any other Loan Documents, Borrower may prepay the entire
principal balance of the Note at any time subsequent to the Early Maturity
Date, upon giving Lender written notice of its intent to prepay, delivered
to Lender not less than sixty (60) days prior to the intended date of
prepayment. In the event Borrower so elects to prepay the Note, then in
addition to the outstanding principal and all accrued interest thereon and
all other sums which may be due to Lender under the Note, Security Deed and
the other Loan Documents (including, without limitation, Lender's equity
participation described in Section 5 hereof), Borrower shall pay a
Prepayment Premium equal to the amount, if any, by which the interest which
would accrue on the outstanding principal balance under the Note at an
interest rate equal to the sum of (i) four percent (4%), and (ii) the Swap
Rate obtainable through Confederation Treasury Services Limited on a like
amount for a term approximating the period commencing on the date of such
prepayment and continuing through September 10, 2001 would exceed the
interest which would accrue on the outstanding principal balance under the
Note at the rate in effect on the date of such prepayment through September
10, 2001 assuming such rate remained constant through such date.
5. LENDER'S PARTICIPATION. In addition to interest and other
amounts payable by Borrower to Lender under the Note and Security Deed, and
the Other Loan Documents, Borrower hereby agrees to pay to Lender the
following on the same date all principal and interest is due:
5.1 Participation in Sale Proceeds. If Borrower shall sell the
Property, then, in addition to the outstanding principal and all accrued
interest thereon and all other sums which may be due to Lender under the
Note, Security Deed and the Other Loan Documents, Borrower shall pay to
Lender an amount equal to twenty-five percent (25%) of the Net Sale
Proceeds. "Net Sale Proceeds" as used herein shall mean the gross sale
price of the Property less (i) the outstanding principal balance of the
Note, (ii) all accrued and unpaid interest under the Note, (iii) any
Prepayment Premium required by Section 4 of this Third Amendment, (iv)
customary closing costs incident to the sale and closing actually incurred
by Borrowers, and (v) an amount equal to the capital contributions actually
made by the partners of Borrower prior to the date hereof to fund capital
expenses of Borrower for tenant improvement costs and leasing commissions
related solely to the Property; provided, however, Borrower shall provide
to Lender such documentation and back up information as Lender shall
reasonably request to verify such contributions and expenses, which
documentation and information shall be in form and substance reasonably
satisfactory to Lender, and in no event shall the total amount expended
under this subsection 5.1(v) exceed $120,000 for the purposes of
calculating Net Sale Proceeds. Closing costs shall include only the
following: (a) actual amounts paid by Borrower as a sales or brokerage
commission or other like fee to real estate agents (in no event shall any
such commission or fee be payable to Borrower or any partners of Borrower
or any affiliate of Borrower or its partner if the total commission would
exceed the normal sales commission by a third party broker), (b) normal
adjustments between Borrower and the purchaser such as taxes (including any
transfer tax paid by Borrower), rents, security deposits, utilities and
other similar Property expenses, (c) actual and reasonable attorneys' fees
incurred by Borrower for the negotiation of the contract for sale and
consummation of the sale, and (d) any other costs approved by Lender prior
to sale in Lender's reasonable discretion. "Gross Sale Price" shall mean
total consideration in whatever form paid for the Property (including,
e.g., the value of sums to be received by Borrower or any related party
pursuant to a long term management agreement, leasing commissions or
similar devices to the extent the consideration received pursuant to or in
the form of such management agreements, leasing commissions or similar
devices exceeds the commercially reasonable amount such purchaser would pay
an independent third party in an arm's length transaction for such
services). Borrower shall be permitted to sell the Property only with the
written consent of Lender, which consent shall be granted or withheld
subject to the satisfaction of the following conditions in Lender's
reasonable discretion:
(x) the sale shall be to a party unrelated to Borrower or
any partner of Borrower or any affiliate of Borrower or any of
its partners;
(y) the terms of the sale shall be for cash and shall be
arm's length and bona fide in all respects and Borrower shall
provide Lender with copies of all documents relative to such
transaction; and
(z) in the event Lender determines, in its reasonable
judgment, that the Gross Sale Price for the Property is less than
the fair market value of the Property, the amount to be paid to
Lender pursuant to this provision shall be computed on the basis
of the fair market value of the Property as determined pursuant
to Section 5.4 hereof. For the purposes of this Section 5.1, a
sale shall include any conveyance of the Property, including, but
not limited to conveyance of the fee, or conveyance of any
partnership interest in Borrower (except a transfer of such
interest by will or intestate succession or as permitted under
the Security Deed); or a lease of all or substantially all of the
Property.
5.2 Participation in Refinance Proceeds. If Borrower shall
refinance or otherwise prepay the loan, then, in addition to the
outstanding principal and all accrued interest thereon and all other sums
which may be due to Lender under the Note, Security Deed and the Other Loan
Documents, Borrower shall pay to Lender an amount equal to twenty-five
percent (25%) of the "Net Refinance Proceeds" as hereinafter defined. "Net
Refinance Proceeds" shall mean an amount equal to the proceeds of the
refinancing loan obtained less (i) the outstanding principal balance of the
Note, (ii) all accrued and unpaid interest under the Note, (iii) any
Prepayment Premium required by Section 4 of this Third Amendment, (iv) all
normal closing costs incident to the refinancing actually incurred by
Borrower, and (v) an amount equal to the capital contributions actually
made by the partners of Borrower prior to the date hereof to fund capital
expenses of Borrower for tenant improvement costs and leasing commissions
related solely to the Property; provided, however, Borrower shall provide
to Lender such documentation and back up information as Lender shall
reasonably request to verify such contributions and expenses, which
documentation and information shall be in form and substance reasonably
satisfactory to Lender, and in no event shall the total amount expended
under this subsection 5.2(v) exceed $120,000 for the purposes of
calculating Net Refinance Proceeds. Closing costs shall include only (a)
commitment fees or points payable to such lender, which shall not exceed
commitment fees or points customarily charged in similar loan transactions
in the area in which the Property is located, (b) title insurance policy
premiums, (c) intangible taxes, (d) survey and property inspection costs,
(e) lender required escrows, and (f) such lender's and Borrower's actual
attorneys' fees and expenses incurred in connection with such transaction,
and (f) any other costs approved by Lender prior to such transaction in
Lender's reasonable discretion. Borrower shall be permitted to refinance
the Property only with the written consent of Lender, which consent shall
be granted or withheld subject to the satisfaction of the following
conditions in Lender's reasonable discretion:
(x) The refinance loan shall be from a party unrelated to
Borrower or any partner of Borrower or any affiliate of Borrower
or any of its partners;
(y) The terms of refinance loan shall be arm's length and
bona fide in all respects, shall be in the maximum amount
obtainable from an institutional lender based upon underwriting
standards considered in the market in which the Property is
located at the time of such refinancing and Borrower shall
provide Lender with copies of all documentation relative to such
transaction; and
(z) Borrower shall agree in writing at the time of such
refinancing that in the event there is a sale of the Property (as
the term sale is used in Section 5.1 hereof) within one (1) year
of the closing date of such refinancing loan, Lender shall
participate in the sale proceeds from such sale in the manner
contemplated by Section 5.1 hereof; provided, however, that the
Net Sale Proceeds shall be calculated based on the outstanding
principal balance of the Note on the date of the initial
prepayment of the Note. Lender's percentage shall be net of any
Net Refinance Proceeds it received in connection with the initial
prepayment of the Note, and any closing costs or expenses
relating to the preceding refinance transaction approved by
Lender at the time of such refinance transaction.
5.3 Participation Upon Maturity. In the event no sale,
refinance, or other prepayment shall have occurred on or before the earlier
to occur of (i) September 10, 2001, or (ii) the date the entire outstanding
principal and interest under the Note shall become due and payable through
acceleration after a default or otherwise, Borrower shall pay to Lender,
together with and in addition to all other sums payable to Lender under the
Note, Security Deed and any other Loan Documents, an amount equal to
twenty-five percent (25%) of the amount which would be payable to Lender
pursuant to Section 5.1 above, assuming the Property were sold on such date
for fair market value as determined pursuant to Section 5.4 below.
5.4 Fair Market Value Determination. For the purposes of this
Section 5, the term "fair market value" of the Property shall be determined
as follows: Lender and Borrower may agree upon the fair market value of
the Property. If Lender and Borrower are unwilling or unable to agree on
the fair market value of the Property within ten (10) days after (i) all
principal and interest shall become due and payable under the Note, or (ii)
Borrower shall have submitted a written request for Lender to agree upon
the fair market value of the Property or consent to a sale transaction,
Lender and Borrower shall submit such dispute to the following independent
appraisal process, which process shall be performed by appraisers in
accordance with the procedures hereinafter described. Lender and Borrower
shall, within ten (10) days after the expiration of the earlier of such ten
(10) day period or the date Lender or Borrower shall determine that the
dispute shall be submitted to this appraisal process, attempt to select an
appraiser mutually acceptable to Lender and Borrower whose determination of
fair market value shall be final and binding. If Lender and Borrower are
unable to mutually agree upon an acceptable appraiser within said ten (10)
day period, Lender and Borrower shall within ten (10) days after the
expiration of such ten (10) day period, each select an appraiser. The two
appraisers shall within thirty (30) days thereafter submit their written
appraisals of the fair market value of the Property to each other and
attempt to reach an agreement within five (5) days thereafter if there is
any discrepancy with respect to the fair market value of the Property. If
the appraisers reach an agreement as to the fair market value, then such
fair market value shall be final and binding. If no agreement can be
reached, then the appraisers shall select a third appraiser within five (5)
days who shall within thirty (30) days thereafter select either one or the
other of the first two appraisers' determinations of fair market value (it
being agreed that the third appraiser shall not have the right to
independently determine fair market value of the item in question, it shall
instead select the fair market value as determined by one of the two
appraisers). If the appraisers fail or are unable to agree upon a third
appraiser, either party may seek appointment of such third appraiser by any
court of competent jurisdiction. Notwithstanding anything contained herein
to the contrary, Borrower shall have the right to request Lender's
agreement on the fair market value of the Property at any tune by providing
Lender with written notice. Once the fair market value of the Property is
determined pursuant to this subparagraph 5.4, such valuation shall be
binding upon the parties hereto for a period of ninety (90) days after the
date of determination. If a sale transaction as contemplated by
subparagraph 5.1 hereof shall not be completed, including without
limitation, the payment to Lender of all amounts payable under the Note as
amended hereby within ninety (90) days of such determination, such
determination of fair market value shall be null and void and of no force
or effect for the purposes of this Third Amendment.
Each appraiser shall be an MAI appraiser with at least ten (10)
years experience appraising similar properties as the Property in the area
where the Property is located. The appraisers shall be entitled to be paid
reasonable compensation for their services; such compensation shall be paid
by Borrower. Both Lender and Borrower agree that the determination of
exact fair market value of any item is not subject to mathematical
certainty and agree that the appraisal mechanism provided herein is a
reasonable method of estimating such values. In the event that either
party fails to timely select an appraiser, then the party timely selecting
an appraiser may go forward with the appraisal process. In such event, the
amount determined by the sole appraiser shall be final and binding upon the
parties. The final appraised fair market value shall be utilized by Lender
and Borrower in determining the Net Sale Proceeds, and Lender's
participation therein. Any failure or refusal by Borrower to repay the
amount so determined when due, in addition to all sums due under the Note,
shall constitute a default under the Note. At any time during the
appraisal process, Lender and Borrower may mutually agree upon the fair
market value of the Property. The cost of any appraisal obtained by Lender
or Borrower pursuant to this subparagraph 5.4 shall be a closing cost for
the purposes of calculating Net Sale Proceeds.
6. NET OPERATING INCOME/SECURITY DEPOSIT ESCROW. Except as
hereinafter specifically set forth, from and after the date hereof,
Borrower shall not distribute to any of its general or limited partners or
any other persons or entities, any portion of the Net Operating Income from
the Property. All Net Operating Income and all present Security Deposits
(as hereinafter defined) which have not previously been returned to or
forfeited by Tenants (as hereinafter defined) at the Property and all
future Security Deposits related to any of the Leases (as hereinafter
defined) at the Property shall be paid to Escrow Agent to be held and
disbursed by Escrow Agent as required by that certain Escrow Agreement
between and among Lender, Borrower and Escrow Agent of even date (the
"Escrow Agreement"). The Escrow Agreement shall contain or reference,
among other things, the following covenants and agreements.
6.1 Net Operating Income. As used herein, the phrase "Net
Operating Income" for a particular period shall mean:
(a) The gross income, rentals, consideration and other
revenues of every kind or nature received during such period by or for the
account of Borrower or any affiliate of Borrower, and attributable to the
ownership, operation, leasing or occupancy of the Property ("Revenues"),
including fixed, percentage and additional rentals received from tenants,
concessionaires, licensees, and other persons and entities making use of
the Property (a "Tenant"), reimbursements, sundry income, parking fees,
fees received from concessions, vending machines and similar items, amounts
received under any claim (whether a claim of warranty, contract, tort or
otherwise), and capital proceeds and other extraordinary receipts,
determined on a sound cash basis, consistently applied. Revenues shall
exclude (1) proceeds from any condemnation or taking for public or
quasi-public purposes of any portion of the Property or any interest
therein, or amounts received from claims to insurance proceeds or other
compensatory amounts, in either case only to the extent applied to the
repair or restoration of the Property or reduction of the amounts due under
the Note; (2) any Security Deposits, unless and until the same are
forfeited by a Tenant; minus
(b) All actual, reasonable expenses which are customary in
the market in which the Property is located paid during such period by
Borrower with respect to the ownership, operation, leasing or occupancy of
the Property ("Expenditures"), determined on a sound cash basis
consistently applied, including: property taxes and assessments; management
fees; ordinary maintenance and repair costs; utility, heating and air
conditioning costs; hazard and liability insurance premiums; landscaping
expenses; debt service payable under the Note, reasonable advertising and
promotion costs related to the Property and customary and reasonable
accounting costs and expenditures relating solely to the Property,
including costs and expenses incurred by Borrower internally for accounting
personnel, and in connection with retaining an independent accounting firm.
However, Expenditures shall not include (1) depreciation, amortization, or
cost recovery of other noncash items; (2) management fees and salaries in
excess of five percent (5%) of gross Revenues; (3) amounts paid to
affiliates of Borrower other than (i) leasing commissions and (ii) the
management fees referenced in Section 6.1(b)(2) hereof to the extent
commercially reasonable and paid for services actually performed (Lender
hereby acknowledges that management fees and leasing commissions shall be
paid to Charter Properties, which entity is an affiliate of Borrower or
such other affiliate of Borrower as Lender shall reasonably approve during
the term of the Note); (4) any interest, principal, default interest, late
charges, attorneys' fees, appraisers' fees or other amounts paid in
connection with any secured or unsecured loan (excluding such amounts
payable under the Note); (5) payment of attorneys' fees; (6) payments
relating to forming, administering or operating Borrower, including office
and other overhead, travel and lodging expenses, and income or franchise
taxes; (7) costs, expenses or fees incurred in connection with the actual
or prospective sale or refinancing of the Property; (8) reserves of any
kind; (9) amounts which would not have been incurred but for a default in
Borrower's obligations with respect to the Property; (10) a payment, or a
series of related payments other than payments for Expenditures which are
permitted under this Section 6.1(b), that exceeds $5,000 in any one month
(other than as is necessary to avoid immediate disruption in the operations
of the Property or personal injury or property damage) that is not
specifically approved in writing by Lender; provided, however, the $5,000
cap shall not apply to expenses which fall within the definition of the
word "Expenses"; (11) tenant improvements, major repairs and replacements,
and other capital expenditures (as determined under generally accepted
accounting principles) other than payments for replacements reasonably
required for the continued operation of the Property; (12) payments made
with proceeds that are not Revenues; and (13) any other amounts expressly
excluded by any provision of this Third Amendment.
6.2 Security Deposits. As used herein, the phrase "Security
Deposits" shall mean all prepaid rents, damage deposits, security deposits,
and other amounts which have been or which may hereafter be paid by any
tenant, licensee, concessionaire or other persons or entities making use of
the Property (a "Tenant") to Borrower as security for the performance of a
Tenant's obligations under its lease, license or other agreement for use of
any portion of the Property (a "Lease"). On or before the date hereof,
Borrower has delivered to Escrow Agent $9,717.83, which amount Borrower
hereby represents and warrants to Lender constitutes all Security Deposits
paid by any Tenant under any Lease through the date hereof which have not
previously been returned to or forfeited by such Tenant.
6.3 Payments to Escrow Agent. Except as hereinafter set forth
in Section 6.6 hereof, Borrower hereby agrees to deliver the Net Operating
Income and all Security Deposits to Escrow Agent on a monthly basis within
twenty (20) days of the end of each calendar month from and after the date
hereof through the date on which all amounts evidenced or secured by the
Note and Security Deed are paid in full.
6.4 Books, Records and Financial Statements. In addition to the
annual financial statements required by Section 1.13 of the Security Deed,
Borrower will furnish to Lender and Escrow Agent within twenty (20) days of
the end of each calendar month financial statements related to the
operation of the Property in form and substance satisfactory to Lender,
which financial statements shall consist of a balance sheet, a rent roll
indicating each Tenant and any Security Deposits held by such Tenant and
such other information as Lender shall request, an operating statement, a
statement of sources and uses of funds and a detailed accounting of the
computation of Net Operating Income for the prior month, including a
detailed itemization of all Expenditures and Revenues during such period.
Said monthly financial statement shall be certified by the managing general
partner of Borrower. As set forth in Section 1.13 of the Security Deed,
Lender shall have the right to audit the books, records and accounts of
Borrower from time to time as it shall deem necessary.
6.5 Disbursement of Escrow Funds. The funds paid to Escrow
Agent and held under the Escrow Agreement and any interest earned thereon
shall be referred to as the "Escrow Funds." The Escrow Funds shall be held
in an interest bearing account in a national bank located in the
metropolitan Atlanta, Georgia area, and shall be used for the payment of
(i) such tenant improvement costs, leasing commissions paid to third
parties and Charter Properties, Borrower's legal fees pertaining to the
leasing of space at the Property or Property management, and major repairs
and replacements which are reasonable and customary in the market in which
the Property is located (the "Capital Expenditures") and which have been
approved by Lender in writing in Lender's reasonable discretion, and (ii)
improvements to the Property which are approved by Lender as hereinabove
set forth.
(a) Security Deposits. Security Deposits shall be retained
by Escrow Agent until such time as Borrower, as landlord, is required to
refund any of the Security Deposits to a Tenant. Borrower shall provide
such documentation and evidence as Lender shall request to establish that
the Tenant in question is entitled to a return of all or a portion of its
Security Deposit. Upon receipt and approval of such evidence, Lender shall
instruct Escrow Agent to release to such Tenant the refundable portion of
its Security Deposit. Any Security Deposit or portion thereof which is
forfeited by a Tenant for any reason shall be considered Revenue for the
purpose of calculating Net Operating Income.
(b) Principal Reduction from Escrow Funds. If the Escrow
Funds (excluding Security Deposits which have not been forfeited by any
Tenant) shall exceed One Hundred Thousand Dollars ($100,000.00) at the end
of any calendar quarter, the amount in excess of said One Hundred Thousand
Dollars ($100,000.00) shall be paid to Lender and applied quarterly against
the outstanding principal balance under the Note. The quarterly principal
payments contemplated by this paragraph 6.5(b) shall not alter, diminish or
in any manner modify Borrower's obligations with respect to monthly
payments of principal and/or interest under the Note or any other amounts
payable to Lender under the Note, Security Deed and the Other Loan
Documents.
(c) Other Disbursement of Escrow Funds. Disbursements
under the Escrow Agreement shall be made at the direction of Lender no more
than once in any calendar month; provided, however, Lender shall also
request disbursements under the Escrow Agreement within five (5) days of a
written request by Borrower containing a fully executed Lease for space at
the Property. Escrow Agent shall be entitled to rely solely upon
instructions from Lender with respect to the disposition of the Escrow
Funds held pursuant to the Escrow Agreement. Borrower shall provide Lender
with such documentation and evidence as Lender shall request with respect
to any request for a disbursement of Escrow Funds for tenant improvement
costs, leasing commissions, legal fees and items of major repair or
replacement including all Capital Expenditures. Lender shall have the
right to approve or disapprove all or any portion of any request for a
disbursement from the Escrow Funds in its sole discretion.
6.6 Reduction of Escrow Funds Balance. In the event that (i)
ninety percent (90%) of the rentable square feet contained in the
improvements on the Property shall be leased for a period of six (6)
consecutive months, and (ii) during such time the Revenues from the
Property shall have been adequate to cover all Expenditures and Capital
Expenditures and other costs related to the operation of the Property, (a)
Lender shall no longer be authorized to request Escrow Agent to pay to
Lender, the quarterly principal payments contemplated by Section 6.5(b)
above, and (b) so long as the Escrow Funds (excluding Security Deposits
which have not been forfeited by any Tenant) shall not be less than Fifty
Thousand Dollars ($50,000.00), Borrower shall be entitled to retain Net
Operating Income in excess of the amount necessary to maintain the Escrow
Funds at said level.
6.7 Borrower Contribution to Expenses. In the event the Escrow
Funds (excluding Security Deposits which have not been forfeited by any
Tenant) shall be inadequate to cover any Capital Expenditures or other
costs it is designed to cover, Borrower shall promptly fund any and all
deficits. Borrower's failure to fund any such deficit as and when the same
shall be due and payable shall constitute a default under the Note.
6.8 Escrow Funds as Security for Loan. The Escrow Funds shall
constitute additional collateral for the indebtedness evidenced by the
Note. Upon any default by Borrower under the Note or the Security Deed
which extends beyond any applicable grace or cure period provided under the
Note or Security Deed, Lender may, at its option, notify Escrow Agent that
such default has occurred and direct Escrow Agent to pay all of the Escrow
Funds to Lender, and Lender may apply such amounts to the indebtedness
under the Note and the Security Deed in any manner it deems appropriate.
Borrower hereby agrees to execute and deliver to Lender such documents and
agreements as Lender shall require to perfect Lender's security interest in
and to the Escrow Funds, including, without limitation, security
agreements, UCC financing statements and such other documentation as Lender
shall deem appropriate.
7. TAX ESCROW. In addition to the Escrow Funds, to secure the
future payment of the taxes and assessments payable in connection with the
ownership, operation and management of the Property, Borrower shall deposit
with Lender's servicer, ShoptawJames, Inc., or such other servicer as
Lender may designate in writing to Borrower ("Shoptaw") on the tenth (10th)
day of each and every month together with and in addition to the monthly
payments required under the Note, a sum which, in the reasonable estimation
of Lender, shall be equal to one-twelfth (1/12) of said annual taxes and
assessments related to the Property. Said deposit shall be held by Shoptaw
free of any interest (unless required by law) and free of any liens or
claims on the part of creditors of Borrower and as a part of the security
of Lender, and shall be used to pay current taxes and assessments on the
Property as the same accrue and are payable. Such deposits shall not be,
nor be deemed to be, trust funds but may be commingled with the general
funds of Shoptaw. If said deposits are insufficient to pay the taxes and
assessments in full as and when the same become payable, Borrower will
deposit with Shoptaw within ten (10) days after notice from Lender of said
deficiency, such additional sum or sums as may be required in order for
Lender to pay such taxes and assessments in full. Upon any default under
the Note or the Security Deed, which default extends beyond any applicable
grace or cure period, Lender may, at its option, apply any money in the
fund resulting from said deposit to the payment of the indebtedness under
the Note in such manner as it may elect. The collection of such deposits
by Lender shall not relieve Borrower of any of the obligations of Borrower
under the provisions of the Security Deed; and under no circumstances shall
Lender be liable for failure to make any payment on behalf of Borrower,
including, without limitation, payments of taxes and assessments.
Simultaneously with the execution of this Third Amendment, Borrower has
delivered to Lender the sum of $-0- as a partial payment under this Section
7. Said amount, together with Borrower's initial monthly escrow payments
of $3,411.12 shall be used to pay such taxes and assessments when due. The
escrow provisions relative to taxes and assessments set forth in this
Section 7 shall be a separate escrow arrangement, and shall not be
considered a part of the Escrow Funds held by Escrow Agent under the Escrow
Agreement.
8. ACKNOWLEDGEMENTS, AGREEMENTS AND WAIVERS OF BORROWER. Borrower
hereby acknowledges and agrees that it has no, and no events have occurred
which with the passage of time or notice would give Borrower any, rights of
setoff, counterclaims or any other defenses under the Note, the Security
Deed or any other Loan Documents or at law or in equity against Lender to
(i) the payment and performance of the obligations under the Note and the
Security Deed, (ii) the acceleration of the indebtedness evidenced or
secured by the Note and the Security Deed upon the occurrence of a default
under the Note or Security Deed which default extends beyond any applicable
grace or cure periods, all such defenses teeing hereby waived and
relinquished in all respects, or (iii) Lender's right to foreclose the
security title and security interest of the Security Deed subsequent to the
occurrence of a default under the Note or Security Deed which default
extends beyond any applicable grace or cure periods. Neither a default nor
any event which with the passage of time or notice would constitute a
default with respect to Borrower's obligations under the Note, the Security
Deed or any other Loan Documents exists or has occurred under the Note, the
Security Deed or any of the other Loan Documents, except such defaults or
events as will be cured upon the execution of this Third Amendment.
8.1 Bankruptcy Proceedings/Lender's Remedies. Borrower hereby
acknowledges and agrees that the modifications to the interest rate and
repayment structure of the Note set forth herein have been made at the
request of and for the benefit of Borrower, and have been designed to avert
a potential default under the Note resulting from inadequate Revenues to
cover expenses related to the Property. In consideration of Lender's
agreement to modify the terms of the Note set forth herein, Borrower hereby
agrees that in the event Borrower files for protection from creditors under
Title 11 of the United States Code, Lender shall thereupon be entitled to
relief from any automatic stay imposed by Section 362 of Title 11 of the
U.S. Code, as amended, or otherwise on or against the exercise of any
rights and remedies otherwise available to Lender under the Note, the
Security Deed and the other Loan Documents, including, without limitation,
the exercise of the power of sale contained in the Security Deed, and
Borrower hereby waives and voluntarily agrees not to exercise any right it
may have to object, oppose or otherwise respond to any motion filed by
Lender seeking relief from any automatic stay for the purpose of exercising
any such right(s). This provision was specifically negotiated by Lender
and Borrower for inclusion in this Third Amendment. Both Borrower and
Lender have received independent legal advice from their attorneys with
respect to the effect, operation and importance of this provision and with
respect to the advisability of executing an agreement containing this
provision. Additionally, Borrower hereby agrees that it will not otherwise
contest or resist the lawful and proper exercise of any of Lender's
remedies under the Note, the Security Deed and any other Loan Documents
subsequent to any default under such documents which default extends beyond
any applicable grace or cure period, and Borrower shall cooperate with
Lender in the exercise of any such remedies. Specifically, Borrower shall
not seek to enjoin, prohibit or otherwise delay Lender's lawful and proper
exercise of such remedies including, without limitation, the proper
exercise of the power of sale contained in the Security Deed or the
appointment of a receiver for the Property, and Borrower hereby consents to
any such action taken by Lender subsequent to such default.
9. REPRESENTATIONS AND WARRANTIES OF BORROWER. Borrower does hereby
represent and warrant to and for the benefit of Lender as follows:
(a) Except as set forth on Exhibit A attached hereto and made a
part hereof, there are no actions, suits or proceedings pending or, to the
knowledge of Borrower or any of Borrower's partners (the "Partners"),
threatened against or affecting Borrower or any of the Partners, and
Borrower has no actual knowledge of any actions, suits, or proceedings
pending or threatened against the Property, or involving the validity or
enforceability of the Security Deed or the priority thereof at law or in
equity, or before or by any federal, state or local governmental agency,
department, commission, board, bureau, political subdivision or
instrumentality ("Governmental Authority"). And to Borrower's knowledge,
neither Borrower nor any of the Partners are in default under any order,
writ, injunction, decree or demand of any court or any Governmental
Authority.
(b) The consummation of the transactions hereby contemplated,
and the performance of Borrower's obligations under this Third Amendment
will not result in any breach of, or constitute a default under, any deed
to secure debt, mortgage, deed of trust, indenture, security agreement,
lease, loan or credit agreement, corporate charter, by-laws, partnership
agreement or other instruments to which Borrower or any of the Partners are
a party or by which any of them are bound or may be affected, and neither
Borrower nor any of its Partners is currently in default under any such
instruments in any manner which would adversely affect the ability of
Borrower to perform its obligations hereunder.
(c) Borrower is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of Georgia,
having as its sole general partner, Charles H. Lesley. Borrower is duly
formed and validly existing and fully qualified to do business in the State
of Georgia, and Charles H. Lesley, as the sole general partner of
Borrower, has full power and authority to execute and deliver this Third
Amendment on behalf of Borrower and to consummate the transactions
contemplated hereby.
10. LENDER/BORROWER RELATIONSHIP. Borrower shall not in any event be
construed for any purpose to be a co-owner, joint venturer or partner of
Lender regardless of the provisions of the Note concerning the payment by
Borrower and the acceptance by Lender of a portion of Net Sale Proceeds or
of Net Refinance Proceeds or reservations of additional interest on this
Note. Lender and Borrower hereby agree and intend that when any such
amounts are received by Lender hereunder, such additional interest shall be
allocated on a per diem basis over the period of time which has transpired
from the date of this Third Amendment until the date such payment is
received. Lender and Borrower intend that the relationship between them
shall be that of creditor and debtor. Lender shall not be in any way
responsible or liable for the debts, losses, obligations or duties of
Borrower with respect to the Property or otherwise. All obligations to pay
real property or other taxes, assessments, insurance premiums and all other
fees and charges arising from the ownership, operation or occupancy of the
Property and to perform all Leases and other agreements and contracts
relating to the Property shall solely be the responsibility of Borrower.
11. REAFFIRMATION. Except as modified by this Third Amendment, the
terms and conditions of the Note, as amended, shall remain in full force
and effect, the same being republished and confirmed hereby.
12. CAPITALIZED TERMS. The capitalized terms used in this Third
Amendment shall have the meaning attributed to them in the Note unless
otherwise specifically set forth herein.
13. AMENDMENTS CONTROLLING. Lender and Borrower hereby acknowledge
and agree that to the extent there is any conflict or inconsistency between
the terms of the Modification Letter and this Third Amendment or any other
document executed in connection with this Third Amendment (the
"Amendments") the terms of the Amendments shall control.
IN WITNESS WHEREOF, the duly authorized representatives of Lender and
Borrower have executed this Agreement under seal as of the day and year
first above written.
LENDER
CONFEDERATION LIFE INSURANCE COMPANY, a mutual
insurance company incorporated in Canada
By:/s/ Ross D. Friend
--------------------------------------
Name: Ross D. Friend
------------------------------------
Title: Legal Vice President
-----------------------------------
By:/s/ Kevin Ellis
--------------------------------------
Name: Kevin Ellis
------------------------------------
Title: Manager Mortgage Investments
-----------------------------------
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
BORROWER:
WEST STEWARTS MILL ASSOCIATES, LP
(successor by name change to West Stewarts
Mill Associates, Ltd.),
a Georgia limited partnership
By:/s/ Charles H. Lesley (SEAL)
---------------------------------
Name: Charles H. Lesley
its sole general partner
<PAGE>
Loan No. 93548-7
FOURTH MODIFICATION OF NOTE
THIS FOURTH MODIFICATION OF NOTE (this "Agreement") is made and
entered into as of February 21, 1995 by and between WEST STEWARTS MILL
ASSOCIATES, L.P. ("Borrower"), a Georgia limited partnership, and
CONFEDERATION LIFE INSURANCE COMPANY (U.S.) IN REHABILITATION ("Lender"), a
rehabilitation estate created pursuant to the laws of the State of Michigan
by that certain Amended and Restated Order of Rehabilitation dated
September 27, 1994 entered nunc pro tunc as to August 12, 1994 by the
Circuit Court for the County of Ingram, State of Michigan.
W I T N E S S E T H:
WHEREAS, on August 6, 1987, Lender made a loan (the "Loan") in the
original principal amount of Three Million Seven Hundred Twenty-Five
Thousand and No/100 Dollars ($3,725,000.00) to Borrower; and
WHEREAS, the Loan is evidenced by that certain note dated August 6,
1987 in the face principal amount of Three Million Seven Hundred Twenty-
Five Thousand and No/100 Dollars ($3,725,000.00) and payable to the order
of Lender (as renewed and modified, hereinafter referred to as the "Note";
the loan evidenced by the Note is herein referred to as the "Loan"), as
amended by that certain First Amendment to Real Estate Note dated November
27, 1987 by and between Lender and Borrower, by that certain Modification
of Real Estate Note dated November 21, 1988 by and between Lender and
Borrower and by that certain Third Amendment to Real Estate Note (the
"Third Amendment") dated November 1, 1993 by and between Lender and
Borrower; and
WHEREAS, the Note is secured by that certain Deed to Secure Debt and
Security Agreement (as amended, hereinafter referred to as the "Mortgage")
dated August 6, 1987 executed by Borrower in favor of Lender conveying and
encumbering certain property located in Douglas County, Georgia more
particularly described in the Mortgage (the "Property"), and which Mortgage
is recorded in Book 571, Page 388 of the Real Estate Records of Douglas
County, Georgia (hereinafter the "Public Records") as amended by that
certain First Amendment to Deed to Secure Debt and Security Agreement by
and between Lender and Borrower dated November 27, 1987 and recorded in
Deed Book 589, Page 208 of the Public Records, as further amended by that
certain Second Amendment to Deed to Secure Debt and Security Agreement
dated November 1, 1993, recorded in Deed Book 851, Page 21 of the Public
Records; and
WHEREAS, the Loan is also secured by that certain Amendment of
Lessor's Interest in Lease (the "Assignment") dated August 6, 1987 from
Borrower to Lender, recorded in Book 571, Page 417, aforesaid records; and
WHEREAS, Borrower has requested that Lender modify the Note to modify
the interest rate due and payable under the Note, and Lender has agreed to
modify the interest rate due and payable under the Note to the rate set
forth below; and
WHEREAS, the Note, as amended hereby, shall continue to be secured by
all of the collateral which secures the Note, including, but not limited
to, the Mortgage, the Assignment and the other documents which evidence or
secure the indebtedness secured thereby (the "Loan Documents"); and
WHEREAS, the outstanding principal balance under the Note as of
November 10, 1994 is $3,345,557.41, and as of November 14, 1994, the
outstanding balance under the Escrow Fund (as defined in the Third
Amendment) is $66,604.47; and
WHEREAS, Borrower and Lender desire to modify the Note as more
particularly hereinafter set forth;
NOW, THEREFORE, for and in consideration of the sum of Ten Dollars
($10.00) and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Borrower and Lender have
agreed and do hereby agree as follows:
1. Recitals. The recitals set forth above are true and correct in
all material respects.
2. Interest Rate. Effective as of November 10, 1994, the rate of
interest due and payable under the Note (the "Interest Rate") shall be
eight and one quarter percent (8.25%) per annum, and subject to paragraph 3
below and so long as there is then no Event of Default (as defined in the
Loan Modification Agreement of even date herewith) hereunder or under any
other Loan Document, such rate of interest shall remain in effect so long
as any amounts remain outstanding under the Note.
3. Adjusted Interest Rate. Lender shall have the right, but not the
obligation, to adjust the Interest Rate as of November 10, 1997
(hereinafter referred to as the "Early Maturity Date") as follows:
a. Lender shall deliver to Borrower a notice in the manner described
for notices in the Mortgage not less than ninety (90) days nor more than
one hundred twenty (120) days prior to the Early Maturity Date (hereinafter
referred to as the "Adjustment Notice") which notice shall specify a rate
of interest (hereinafter referred to as the "Adjusted Interest Rate") other
than the Interest Rate specified above, which shall be effective as of the
Early Maturity Date, and the new monthly payments (hereinafter referred to
as "Adjusted Monthly Payments") to be due and payable as a result of such
Adjusted Interest Rate. The Adjusted Interest Rate shall be the then
current four (4) year term rather for similar quality neighborhood retail
center loans held by the then holder of the Note.
b. Lender and Borrower shall, within sixty (60) days after receipt
of the Adjustment Notice by Borrower, enter into an amendment to the Note,
in form and content satisfactory to Lender, setting forth the Adjusted
Interest Rate and the Adjusted Monthly Payments.
c. If the Adjustment Notice has been timely made by Lender and if
the event described in subparagraph b immediately above has not been timely
accomplished, then Lender, at its option and without notice, may declare
the amount of the total unpaid balance of the Note to be due and forthwith
payable, whereupon it shall be so due and payable.
d. In the event Lender does not elect to adjust the interest rate
upon the Early Maturity Date, the Note shall continue and remain in full
force and effect upon all other terms stated herein, and the interest rate
shall not be adjusted as of such Early Maturity Date.
e. Notwithstanding any other provisions of this Note and provided no
default exists under the terms of the Note or the other Loan Documents, and
whether or not Lender delivers the Adjustment Notice described above,
Borrower may prepay on the Early Maturity Date the entire balance of
principal and interest then remaining unpaid hereon without premium or
penalty, and provided, further, that Borrower notifies the Lender of its
intent to prepay the Note on the Early Maturity Date by a written notice
delivered to Lender not less than sixty (60) days nor more than ninety (90)
days prior to the Early Maturity Date.
4. Payments of Interest. Commencing on December 10, 1994 and
continuing on the same day of each calendar month thereafter to and
including the Maturity Date of the Note, monthly installments of interest
only at the Interest Rate shall be due and payable to Lender; and such
interest-only monthly payments shall be equal to $23,000.71 through
November 10, 1997, at which time the Interest Rate may be adjusted as set
forth above. Principal payment shall be made as set forth in the Note.
5. Maturity Date. The "Maturity Date", as that term if defined in
the Note, shall be amended from September 1, 2001 to September 10, 2001, on
which date the entire outstanding principal balance, together with all
interest accrued and unpaid thereon and all other sums due under the Note
and the Loan Documents, shall be due and payable.
6. Loan Documents. All references to the Mortgage, to the
Assignment of Rents or to the Loan Documents shall be amended to refer to
such instruments as amended hereby and by that certain Third Modification
of Deed to Secure Debt and Security Agreement as of Assignment of Lessor's
Interest in Lease of even date herewith executed by Borrower and Lender.
7. Prepayment. The prepayment provisions of the Third Amendment
shall remain in effect. The interest rate which must be maintained as
outlined under the yield maintenance formula set forth in paragraph 4.1 of
the Third Amendment, shall be 8.25% from December 10, 1994 through November
10, 1997, and shall be adjusted thereafter (if an Adjusted Rate is put into
effect) to the Adjusted Rate from November 10,1 997 through September 10,
2001.
8. Limited Non-Recourse. In addition to the exculpatory and
recourse provisions (the "Non-Recourse Provisions") under the Existing Note
and original Loan Documents, the following provisions shall now govern
Borrower's liability under the Note and the other Loan Documents. The
agreement of Lender not to pursue recourse liability as provided in any
Non-Recourse Provisions shall become null and void and Lender shall have
the right to pursue recourse liability against Borrower to the extent of
all sums due to, and only to the extent that Lender actually suffers loss,
cost, expense or damage, by reason of any of the following events:
(i) fraud or misrepresentation made in connection with the Loan,
the Note, the Mortgage or any of the other Loan Documents;
(ii) the misapplication by Borrower, its partners or agents (or
any affiliate of Borrower, such partners or agents) of (a)
proceeds of insurance covering any portion of the Property
or (b) proceeds of the sale or condemnation of any portion
of the Property;
(iii) the failure to apply rents, issues or profits derived from
the Property received by or on behalf of Borrower subsequent
to the occurrence of an Event of Default under the Note or
the Mortgage (or, only as to non-monetary Events of Default
other than the failure of Borrower to procure insurance or
pay taxes, subsequent to Lender's delivery of notice of such
Event of Default to Borrower) toward the payment of taxes,
assessments, insurance, normal and usual maintenance and
operating costs of the Property, and principal and interest
payments to Lender; and
(iv) failure to deliver to Lender all unearned advance rents
under the leases with respect to the Property and security
deposits paid by tenants or other occupants of the Property
and not refunded to or forfeited by such tenants.
9. Reaffirmation. As amended hereby, the Note, the Mortgage, the
Assignment and the other Loan Documents shall remain in full force and
effect and all covenants, agreements, warranties, representations and other
terms and provisions thereof, as amended hereby, are hereby ratified,
confirmed, reaffirmed and republished, and are hereby incorporated by
reference.
10. Costs, Expenses and Taxes. Subject to any non-recourse provision
of the Note, Borrower agrees to pay on or before ten (10) days after demand
from Lender all costs and expenses incurred by Lender, in connection with
the enforcement of the Loan Documents and the other documents delivered
under the Loan Documents, including, without limitation, reasonable
attorneys' fees if collection is by or through an attorney at law. In
addition, Borrower shall pay and an all stamp and other taxes and fees
payable or determined to be payable in connection with the execution,
delivery, filing and recording of this Agreement, the Note and the other
documents delivered in connection therewith, and agrees to save Lender
harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes and fees.
11. No Novation. THE PARTIES DO NOT INTEND THIS MODIFICATION NOR THE
TRANSACTIONS CONTEMPLATED HEREBY TO BE, AND THIS MODIFICATION AND THE
TRANSACTIONS CONTEMPLATED HEREBY SHALL NOT BE CONSTRUED TO BE, A NOVATION
OF ANY OF THE OBLIGATIONS OWING BY THE BORROWER UNDER OR IN CONNECTION WITH
THE NOTE, MORTGAGE, ASSIGNMENT AND OTHER LOAN DOCUMENTS. FURTHER THE
PARTIES DO NOT INTEND THIS MODIFICATION NOR THE TRANSACTIONS CONTEMPLATED
HEREBY TO AFFECT THE PRIORITY OF ANY OF THE LENDER'S LIENS IN ANY OF THE
COLLATERAL SECURING THE NOTE IN ANY WAY, INCLUDING, BUT NOT LIMITED TO, THE
LIENS, SECURITY INTERESTS AND ENCUMBRANCES CREATED BY THE MORTGAGE, THE
ASSIGNMENT AND THE OTHER LOAN DOCUMENTS.
12. No Offsets or Defenses. Borrower neither has nor claims any
offset, defense, claim or counterclaim against Lender or with respect to
the Note, this Agreement, the Mortgage, the Assignment, the other Loan
Documents, the loans evidenced thereby or the Property as of the date of
this Agreement; and if any such offset, defense, claim or counterclaim
exists, Borrower hereby irrevocably waives the right to assert such matter.
13. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
GEORGIA.
14. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
legal representatives, successors, successors it title and assigns,
subject, however, to all restrictions on transfer and encumbrance set forth
in the Mortgage.
15. Trial By Jury Waiver. To the extent permitted by applicable law,
Borrower hereby irrevocably and unconditionally waives any and all right to
trial by jury in any action, suit or counterclaim arising in connection
with, out of or otherwise relating to the Loan, this Agreement or the Other
Loan Documents.
IN WITNESS WHEREOF, this Agreement has been duly executed and sealed
by the parties the day and year first above written.
BORROWER:
WEST STEWARTS MILL
ASSOCIATES, L.P., a Georgia limited
partnership
By:/s/ Charles H. Lesley
---------------------------
Name: Charles H. Lesley
Title: General Partner
[BEING THE SOLE GENERAL PARTNER THEREOF]
LENDER:
CONFEDERATION LIFE INSURANCE COMPANY
(U.S.) IN REHABILITATION, a
rehabilitation estate created pursuant
to the laws of Michigan
By:/s/ Kevin Ellis
---------------------------
Name: Kevin Ellis
Title: Director Mortgage
Investments
By:/s/ Brent Campbell
---------------------------
Name: Brent Campbell
Title: Vice President &
Chief Investment
Officer
THIS INSTRUMENT IS ALSO TO BE INDEXED IN THE INDEX OF FINANCING STATEMENTS.
THE NAMES OF THE DEBTOR AND THE SECURED PARTY, THE MAILING ADDRESS OF THE
SECURED PARTY FROM WHICH INFORMATION CONCERNING THE SECURITY INTEREST MAY
BE OBTAINED, THE MAILING ADDRESS OF THE DEBTOR AND A STATEMENT INDICATING
THE TYPES, OR DESCRIBING THE ITEMS, OF COLLATERAL, ARE AS DESCRIBED IN
PARAGRAPH 1.08(c) HEREOF, IN COMPLIANCE WITH THE REQUIREMENTS OF THE
UNIFORM COMMERCIAL CODE, OFFICIAL CODE OF GEORGIA ANNOTATED SECTION
11-9-402.
THE NAME OF THE RECORD OWNER OF THE PROPERTY HEREIN DESCRIBED IS WEST
STEWARTS MILL ASSOCIATES, LTD., A GEORGIA LIMITED PARTNERSHIP WHOSE SOLE
GENERAL PARTNER IS CHARLES H. LESLEY.
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STATE OF GEORGIA
COUNTY OF COBB
DEED TO SECURE DEBT AND SECURITY AGREEMENT
------------------------------------------
THIS DEED TO SECURE DEBT AND SECURITY AGREEMENT (hereinafter
referred to as the "Deed") entered into as of this 6th day of August, 1987,
by and between WEST STEWARTS MILL ASSOCIATES, LTD., a Georgia limited
partnership whose sole general partner is Charles H. Lesley, as Grantor
(hereinafter referred to as "Borrower"), and CONFEDERATION LIFE INSURANCE
COMPANY, a mutual insurance company incorporated in Canada, as Grantee
(hereinafter referred to as "Lender").
W I T N E S S E T H:
--------------------
IN CONSIDERATION of the sum of Ten and No/100 Dollars ($10.00)
and other valuable considerations, the receipt and sufficiency whereof are
hereby acknowledged, and in order to secure the indebtedness and other
obligations of Borrower set forth in this Deed, Borrower does hereby grant,
bargain, sell, convey, assign, transfer, pledge and set over unto Lender
and the successors, successors-in-title and assigns of Lender all of the
following described land and interests in land, estates, easements, rights,
improvements, personal property, fixtures, equipment, furniture,
furnishings, appliances and appurtenances (hereinafter referred to
collectively as the "Premises"):
(a) All those parcels of land described in "Exhibit A" attached
hereto and made a part hereof (hereinafter referred to as the "Land").
(b) All improvements of every nature whatsoever now or hereafter
situated on the Land, and all gas and electric fixtures, radiators,
heaters, engines and machinery, boilers, ranges, elevators and motors,
plumbing and heating fixtures, carpeting and other floor coverings, fire
extinguishers and any other safety equipment required by governmental
regulation or law, washers, dryers, water heaters, mirrors, mantels, air
conditioning apparatus and appurtenances, window screens, awnings and storm
sashes, which are or shall be attached to such improvements and all other
furnishings, furniture, fixtures, machinery, equipment, appliances,
vehicles, building supplies, appliances, vehicles, building supplies and
materials, books and records, chattels, inventory, accounts, farm products,
consumer goods, general intangibles and personal property of every kind and
nature whatsoever now or hereafter owned by Borrower and located in, on or
about, or used or intended to be used with or in connection with the use,
operation or enjoyment of the Premises, including all extensions,
additions, improvements, after-acquired property, renewals, replacements
and substitutions, or proceeds from a permitted sale of any of the
foregoing, and all the right, title and interest of Borrower in any such
furnishings, furniture, fixtures, machinery, equipment, appliances,
vehicles and personal property subject to or covered by any prior security
agreement, conditional sales contract, chattel mortgage or similar lien or
claim, together with the benefit of any deposits or payments now or
hereafter made by Borrower or on behalf of Borrower, all tradenames,
trademarks, servicemarks, logos and goodwill related thereto which in any
way now or hereafter belong, relate or appertain to the Premises or any
part thereof or are now or hereafter acquired by Borrower; and all
inventory, accounts, chattel paper, documents, equipment, fixtures, farm
products, consumer goods and general intangibles constituting proceeds
acquired with cash proceeds of any of the property described hereinabove,
all of which are hereby declared and shall be deemed to be fixtures and
accessions to the Land and a part of the Premises as between the parties
hereto and all persons claiming by, through or under them, and which shall
be deemed to be a portion of the security for the indebtedness described in
and to be secured by this Deed (hereinafter referred to as the
"Collateral"). The location of the above-described Collateral is also the
location of the Land.
(c) All easements, rights-of-way, strips and gores of land,
vaults, streets, ways, alleys, passages, sewer rights, waters, water
courses, water rights and powers, minerals, flowers, shrubs, crops, trees,
timber and other emblements now or hereafter located on the Land or under
or above the same or any part or parcel thereof, and all estates, rights,
titles, interests, privileges, liberties, tenements, hereditaments and
appurtenances, reversion and reversions, remainder and remainders,
whatsoever, in any way belonging, relating or appertaining to the Premises
or any part thereof, or which hereafter shall in any way belong, relate or
be appurtenant thereto, whether now owned or hereafter acquired by
Borrower.
(d) All income, rents, issues, profits, and revenues of the
Premises from time to time accruing (including without limitation all
payments under leases or tenancies, proceeds of insurance, condemnation
payments, the inchoate rights of Borrower to tenant security deposits
whether held by Borrower or in a trust account, and escrow funds), and all
the estate, right, title, interest, property, possession, claim and demand
whatsoever at law, as well as in equity, of Borrower, in the same;
reserving only the right to Borrower to collect the same so long as
Borrower is not in Default hereunder.
TO HAVE AND TO HOLD the Premises to the use, benefit and behoof
of Lender and the successors, successors-in-title and assigns of Lender, IN
FEE SIMPLE forever. Borrower covenants that Borrower is lawfully seized
and possessed of the Premises as aforesaid, and has good right to convey
the same, that the same are unencumbered except for those matters
(hereinafter referred to as the "Permitted Encumbrances") expressly set
forth in "Exhibit B" attached hereto and made a part hereof. Borrower
warrants and will forever defend the title thereto against the claims of
all persons whomsoever, except as to the Permitted Encumbrances.
This Deed is intended to operate and is to be construed as a deed
passing the title to the Premises to Lender and is made under those
provisions of the existing laws of the State of Georgia relating to deeds
to secure debt, and not as a mortgage, and is given to secure the payment
of the following described indebtedness (hereinafter referred to
collectively as the "Indebtedness"):
(a) The debt evidenced by that certain real estate note, dated
of even date herewith, made by Borrower to the order of Lender in the
principal face amount of Three Million Seven Hundred Twenty-Five
Thousand and No/100 Dollars ($3,725,000.00) with the final payment
being due on or before September 1, 2001, together with any and all
renewals, modifications, consolidations and extensions of the
Indebtedness evidenced thereby (hereinafter referred to as the
"Note"); and
(b) Any and all additional advances made by Lender to protect or
preserve the Premises or the security interest created hereby on the
Premises, or for taxes, assessments or insurance premiums as
hereinafter provided or for performance of any of Borrower's
obligations hereunder or for any other purpose provided herein
(whether or not the original Borrower remains the owner of the
Premises at the time of such advances).
Should the Indebtedness be paid according to the tenor and effect
thereof when the same shall become due and payable, and should
Borrower perform all covenants contained in this Deed in a timely
manner, then this Deed shall be cancelled and surrendered.
Borrower hereby further covenants and agrees with Lender as follows:
ARTICLE I
---------
1.01 Payment of Indebtedness. Borrower shall pay the Note
according to the terms thereof and the remainder of the Indebtedness
promptly as the same shall become due.
1.02 Taxes, Liens and Other Charges.
(a) Borrower shall pay, on or before the due date thereof, all
taxes, assessments, levies, license fees, permit fees and all other charges
(in each case whether general or special, ordinary or extraordinary,
foreseen or unforeseen) of every character whatsoever (including all
penalties and interest thereon) now or hereafter levied, assessed,
confirmed or imposed on, or in respect of, or which may be a Lien upon the
Premises, or any part thereof, or any estate, right or interest therein, or
upon the rents, issues, income or profits thereof, and shall submit to
Lender such evidence of the due and punctual payment of all such taxes,
assessments and other fees and charges as Lender may require.
(b) Borrower shall pay, on or before the due date thereof, all
taxes, assessments, charges, expenses, costs and fees which may now or
hereafter be levied upon, or assessed or charged against, or incurred in
connection with, the Note, the other Indebtedness, this Deed or any other
instrument now or hereafter evidencing, securing or otherwise relating to
the Indebtedness, and shall submit to Lender such evidence of the due and
punctual payment of all such taxes, assessments, charges, expenses, costs
and fees as Lender may require.
(c) Borrower shall pay, on or before the due date thereof, all
premiums on policies of insurance covering, affecting or relating to the
Premises, as required pursuant to paragraph 1.03. Borrower shall submit to
Lender such evidence of the due and punctual payment of all such premiums,
rentals and other sums as Lender may require.
(d) In the event of the passage of any state, federal, municipal
or other governmental law, order, rule or regulation, subsequent to the
date hereof, in any manner changing or modifying the laws now in force
governing the taxation of deeds to secure debt or security agreements or
debts secured thereby or the manner of collecting such taxes so as to
adversely affect Lender with respect to the Indebtedness, Borrower will pay
any such tax on or before the due date thereof. If Borrower fails to make
such prompt payment or if, in the opinion of Lender, any such state,
federal, municipal, or other governmental law, order, rule or regulation
prohibits Borrower from making such payment or would penalize Lender if
Borrower makes such payment of if, in the opinion of Lender, the making of
such payment might result in the imposition of interest beyond the maximum
amount permitted by applicable law, then the entire balance of the
Indebtedness and all interest accrued thereon shall, at the option of
Lender, become immediately due and payable.
(e) Borrower will not suffer any mechanic's, materialman's,
laborer's, statutory or other Lien (except for ad valorem taxes not yet due
and payable) to be filed of record or to remain outstanding against the
Premises and not be released (by payment, bonding or otherwise) within the
earlier of (i) forty (40) days after the date of filing thereof or (ii) ten
(10) days after Borrower receives actual notice thereof.
1.03 Insurance.
(a) Borrower shall procure for, deliver to and maintain for the
benefit of Lender during the term of this Deed, original paid insurance
policies of such insurance companies (having a "Best's" financial size
rating of Class B+:XII or higher) in such amounts, in such form and
substance, and covering consecutive twelve (12) month periods as are
reasonably acceptable to Lender and containing non-contributory standard
mortgagee clauses, their equivalent or a satisfactory mortgagee loss
payable endorsement in favor of Lender, providing the following types of
insurance covering the Premises and the interest and liabilities incident
to the ownership, possession and operation thereof:
(i) insurance against loss or damage by fire, lightning,
windstorm, tornado, hail, explosion, riot, riot attending a strike,
civil commotion, aircraft, vehicles, smoke, vandalism and malicious
mischief and against such other hazards as may be now or hereafter be
included in so-called "extended coverage" forms or endorsements, and
as under good insurance practices, from time to time are insured
against for properties of similar character and location, the amount
of which insurance shall not be less than one hundred (100%) percent
of replacement cost with a replacement cost endorsement without
deduction for depreciation;
(ii) rental insurance against loss of rental income arising
out of any hazard against which the Premises are required to be
insured under subparagraph 1.03(a)(i) above, in an amount not less
than one hundred percent (100%) of six (6) months' gross rental income
from the Premises;
(iii) comprehensive general public liability insurance
against claims for bodily injury, death or property damage occurring
on, in or about the Premises and improvements, or the elevators or
escalators therein, including, without limitation, coverage against
so-called occurrences in a comprehensive general liability policy with
a combined single limit for bodily injury and property damage of not
less than $1,000,000.00;
(iv) in the event the Premises is located in an area that
has been identified by the U.S. Secretary of Housing and Urban
Development as an area having special flood hazards, the Premises must
be insured by flood insurance that is provided under the National
Flood Insurance Program ("NFIP"), which flood insurance shall be in an
amount equal to the lesser or either (a) the outstanding balance of
the Note, or (b) the maximum balance of flood insurance available
under the NFIP; and
(v) such other insurance on the Premises or any
replacements or substitutions therefor and in such amounts as may from
time to time be reasonably required by Lender against other insurable
casualties which at the time are commonly insured against in the case
of properties of similar character and location, due regard being
given to the height and type of the improvements, their construction,
location, use and occupancy, or any replacements or substitutions
therefor.
(b) Lender is hereby authorized and empowered, at its option, to
adjust or compromise any loss under any insurance policies maintained
pursuant to this paragraph 1.03, and to collect and receive the proceeds
from any such policy or policies. Each insurance company is hereby
authorized and directed to make payment for all such losses directly to
Lender, instead of to Borrower and Lender jointly. In the event any
insurance company fails to disburse directly and solely to Lender but
disburses instead either solely to Borrower or to Borrower and Lender
jointly, Borrower agrees immediately to endorse and transfer such proceeds
to Lender. Upon the failure of Borrower to endorse and transfer such
proceeds as aforesaid, Lender may execute such endorsements or transfers
for and in the name of Borrower and Borrower hereby irrevocably appoints
Lender as Borrower's agent and attorney-in-fact so to do. Except as set
forth in paragraph 1.06(f) and in paragraph 1.19, after deducting from said
insurance proceeds all of its expenses incurred in the collection and
administration of such sums, including attorneys' fees, Lender may apply
the net proceeds or any part thereof, at its option, (i) to the payment of
the Indebtedness, whether or not due and in whatever order Lender elects,
and (ii) to the repair and/or restoration of the Premises, and/or (iii) for
any other purposes or objects for which Lender is entitled to advance funds
under this Deed, all without affecting the security interest created by
this Deed; and any balance of such moneys then remaining shall be paid to
Borrower or the person or entity lawfully entitled thereto.
(c) At least thirty (30) days prior to the expiration date of
each policy maintained pursuant to this paragraph 1.03, a renewal or
replacement thereof satisfactory to Lender shall be delivered to Lender.
Borrower shall deliver to Lender receipts evidencing the payment for all
such insurance policies and renewals or replacements. The delivery of any
insurance policies hereunder shall constitute an assignment of all unearned
premiums as further security hereunder. In the event of the foreclosure of
this Deed or any other transfer of title to the Premises in extinguishment
or partial extinguishment of the Indebtedness, all right, title and
interest of Borrower in and to all insurance policies then in force shall
pass to the purchaser or to Lender, as the case may be, and Lender is
hereby irrevocably appointed by Borrower as attorney-in-fact for Borrower
to assign any such policy to said purchaser or to Lender, as the case may
be, without accounting to Borrower for any unearned premiums thereon.
Without limiting the provisions of paragraph 1.03(a), all policies to be
obtained pursuant to this paragraph 1.03 shall oblige unequivocally the
issuers thereof to provide at least thirty (30) days' written notice prior
to cancellation, expiration or modification of any of the policies. In
addition, none of the insurance policies and renewals shall contain any
co-insurance provisions.
1.04 Monthly Deposits. At the option of Lender and further to
secure the payment of the taxes and assessments referred to in paragraph
1.02 and the premiums on the insurance referred to in paragraph 1.03,
Borrower shall deposit with Lender, on the due date of each installment
under the Note, such amounts as, in the estimation of Lender, shall be
necessary to pay such charges at least thirty (30) days before they become
due; said deposits to be held by Lender, in a non-interest bearing account,
free of any liens or claims on the part of creditors of Borrower and as
part of the security of Lender, and to be used by Lender to pay current
taxes and assessments and insurance premiums on the Premises as the same
accrue and are payable. Payment from such sums for such purposes shall be
made by Lender at its discretion and may be made even though such payments
will benefit subsequent owners of the Premises. Such deposits shall not be,
nor be deemed to be, trust funds but may be commingled with the general
funds of Lender. If such deposits are insufficient to pay the taxes and
assessments and insurance premiums in full as the same become payable,
Borrower will deposit with Lender such additional sum or sums as may be
required in order for Lender to pay such taxes and assessments and
insurance premiums in full. Upon any default in the provisions of this
Deed or the Note, or any instrument evidencing, securing or in any way
relating to the Indebtedness, Lender may, at its option, apply any money in
the fund resulting from such deposits to the payment of the Indebtedness in
such manner as it may elect.
1.05 Condemnation. Subject to paragraph 1.19, if all or any
material portion of the Premises shall be damaged or taken through
condemnation (which term when used in this Deed shall include any damage or
taking by any governmental or quasi-governmental authority and any transfer
by private sale in lieu thereof), either temporarily or permanently, then
the entire Indebtedness shall, at the option of Lender, immediately become
due and payable. Borrower, immediately upon obtaining knowledge of the
institution, or the proposed, contemplated or threatened institution of any
action or proceeding for the taking through condemnation of the Premises or
any part thereof, will notify Lender, and Lender is hereby authorized, at
its option, to commence, appear in and prosecute, through counsel selected
by Lender, in its own (or, if Borrower shall be in default under this Deed,
in Borrower's) name, any action or proceeding relating to any condemnation,
and to settle or compromise any claim in connection therewith. All such
compensation, awards, damages, claims, rights of action and proceeds and
the right thereto are hereby assigned by Borrower to Lender, and Lender s
authorized, at its option, to collect and receive all such compensation,
awards or damages and to give proper receipts and acquittances therefor
without any obligation to question the amount of any such compensation,
awards or damages. After deducting from such condemnation proceeds all of
its expenses incurred in the collection and administration of such sums,
including attorney's fees, Lender, subject to paragraph 1.19, may apply the
net proceeds or any part thereof, at its option, (i) to the payment of the
Indebtedness, whether or not due and in whatever order Lender elects, (ii)
to the repair and/or restoration of the Premises and/or (iii) for any other
purposes or objects for which Lender is entitled to advance funds under
this Deed, all without affecting the security interest created by this
Deed, and any balance of such moneys then remaining shall be paid to
Borrower or any other person or entity lawfully entitled thereto. Borrower
agrees to execute such further assignments of any compensation, awards,
damages, claims, rights of action and proceeds as Lender may require. If,
prior to the receipt by Lender of such award or proceeds, the Premises
shall have been sold on foreclosure of this Deed, or under the power of
sale herein granted, Lender shall have the right to receive such award or
proceeds to the extent of any unpaid Indebtedness following such sale, with
legal interest thereon, whether or not a deficiency judgment on this Deed
or the Note shall have been sought or recovered, and to the extent of
reasonable counsel fees, costs and disbursements incurred by Lender in
connection with the collection of such award or proceeds.
1.06 Care of Premises.
(a) Borrower will keep the buildings, parking areas, roads and
walkways, recreational facilities, landscaping and all other improvements
of any kind now or hereafter erected on the Land or any part thereof in
good condition and repair, will not commit or suffer any waste or will not
do or suffer to be done anything which would or could increase the risk of
fire or other hazard to the Premises or any other party thereof or which
would or could result in the cancellation of any insurance policy carried
with respect to the Premises.
(b) Borrower will not remove, demolish or alter the structural
character of any improvement located on the Land without the written
consent of Lender.
(c) If the Premises or any part thereof is damaged by fire or
other cause, Borrower will give immediate written notice thereof to Lender.
(d) Lender or its representative is hereby authorized to enter
upon and inspect the Premises at any time during normal business hours.
(e) Borrower will promptly comply with all present and future
laws, ordinances, rules and regulations of any governmental authority
affecting the Premises or any part thereof.
(f) If all or any part of the Premises shall be damaged by fire
or other casualty, Borrower will promptly restore the premises to the
equivalent of its original condition. If a part of the Premises shall be
damaged through condemnation, Borrower will promptly restore, repair or
alter the remaining portions of the Premises in a manner satisfactory to
Lender. Notwithstanding the foregoing, Borrower shall not be obligated so
to restore, repair or alter unless in each instance, Lender agrees to make
available to Borrower (pursuant to a procedure satisfactory to Lender) any
net insurance or condemnation proceeds actually received by Lender
hereunder in connection with such casualty loss or condemnation, to the
extent such proceeds are required to defray the expense of such
restoration, repair or alteration. Provided, however, that the
insufficiency of any such insurance or condemnation proceeds to defray the
entire expense of restoration, repair or alteration shall in no way relieve
Borrower of its obligation to restore, repair or alter. In the event all
or any portion of the Premises shall be damaged or destroyed by fire or
other casualty or by condemnation, Borrower shall promptly deposit with
Lender a sum equal to the amount by which the estimated cost of the
restoration of the Premises (as determined by Lender in its good faith
judgment) exceeds the actual net insurance or condemnation proceeds with
respect to such damage or destruction. In the event any insurance or
condemnation proceeds are in excess of the amount necessary to effect
repairs, then those excess proceeds are to be paid to Lender to be applied
as set forth in paragraph 1.03(b).
(g) Borrower makes the following covenants to and for the
benefit of Lender: Borrower has not used or suffered and will not use or
suffer the use of the Land as a landfill or as a dump for garbage or
refuse, or as a site for storage, treatment, or disposal of hazardous
wastes, hazardous substances, or toxic substances (defined as "hazardous
waste" or "hazardous substance" under Section 1004 of the Federal
Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq., or Section
101 of the Comprehensive Environmental Responses, Compensation, and
Liability Act, 42 U.S.C. Section 9601); Borrower has not used or suffered
and will not use or suffer the use of the Land or any other property or
facility owned or operated by Borrower in any manner other than in full
compliance with all applicable federal, state, or local environmental laws
and regulations regulating the discharge of solid, liquid, or gaseous waste
into the environment or the placement of structure or materials into waters
of the United States of America.
1.07 Leases, Contracts, Etc.
(a) As additional collateral and further security for the
Indebtedness, Borrower hereby assigns to Lender Borrower's interest in any
and all leases, tenant contracts, rental agreements, franchise agreements,
management contracts, construction contracts and other contracts, licenses
and permits now or hereafter affecting the Premises, or any part thereof,
and Borrower agrees to execute and deliver to Lender such additional
instruments, in form and substance satisfactory to Lender, as may hereafter
be requested by Lender further to evidence and confirm said assignment.
Provided, however, that acceptance of any such assignment shall not be
construed as a consent by Lender to any lease, tenant contract, rental
agreement, franchise agreement, management contract, construction contract
or other contract, license or permit, or to impose upon Lender any
obligation with respect thereto. Borrower shall faithfully keep and
perform, or cause to be kept and performed, all of the covenants,
conditions and agreements contained in each of said instruments, now or
hereafter existing, on the part of Borrower to be kept and performed and
shall at all times do all things necessary to compel performance by each
other party to said instruments of all obligations, covenants and
agreements by such other party to be performed thereunder. Borrower shall
not be entitled to enter into, modify and cancel any leases without the
prior written consent of Lender. If an Event of Default shall have
occurred under this Deed, Borrower shall not cancel or permit the
cancellation of any such lease, tenant contract, rental agreement,
franchise agreement, management contract, construction contract, or other
contract, license or permit, or modify any of said instruments, or accept,
or permit to be made, any prepayment of any installment of rent or fees
thereunder (except for security deposits and the usual prepayment of rent
which results from the acceptance by a landlord on the first day of each
month of the rent for that month).
(b) Borrower shall not execute an assignment of the income,
rents, issues or profits, or any part thereof, from the Premises unless
Lender shall first consent to such assignment and unless such assignment
shall expressly provide that it is subordinate to the assignment contained
in this Deed and any assignment executed pursuant hereto or concerning the
Indebtedness.
(c) Borrower shall furnish to Lender, within ten (10) days after
a request by Lender to do so, a sworn statement setting forth the names of
all lessees and tenants of the Premises, the terms of their respective
leases, tenant contracts or rental agreements, the space occupied, and the
rentals payable thereunder, and stating whether any defaults, off-sets or
defenses exist under or in connection with any of said leases, tenant
contacts or rental agreements.
(d) Each lease, tenant contract and rental agreement pertaining
to the Premises, or any part thereof, shall provide that, in the event of
the enforcement by Lender of the remedies provided by law or by this Deed,
the lessee or tenant thereunder will, upon request of Lender or any other
person or entity succeeding to the interest of Lender as a result of such
enforcement, automatically become the lessee or tenant of Lender or said
successor in interest, without change in the terms or other provisions of
said lease, tenant contract or rental agreement; provided, however, that
neither Lender nor any such successor in interest shall be bound by (i) any
payment of rental or additional rental for more than one (1) month in
advance, except prepayments in the nature of security for the performance
by said lessee or tenant of its obligations under such lease, tenant
contract or rental agreement (and then only if such prepayments have been
deposited with and are under the control of Lender); or (ii) any amendment
or modification of said lease, tenant contract or rental agreement made
without the express written consent of Lender or said successor in
interest.
(e) Notwithstanding any other provisions of this Deed, Borrower
shall not hereafter enter into any lease, tenant contact, rental agreement,
franchise agreement, management contract or other contract, license or
permit affecting the Premises or any part thereof, except upon the
following conditions: (i) each such instrument shall contain a provision
that the rights of the parties thereunder are expressly subordinate to all
of the rights and title of Lender under this Deed; and (ii) any such
instrument shall contain a provision whereby the parties thereunder
expressly recognize and agree that, notwithstanding such subordination,
Lender may sell the premises in the manner provided in Article II, and
thereby, at the option of Lender, sell the same subject to such instrument.
1.08 Security Agreement.
(a) With respect to the machinery, apparatus, equipment,
fittings, fixtures, building supplies and materials, articles of personal
property, chattels, chattel paper, documents, inventory, accounts, farm
products, consumer goods and general intangibles referred to or described
in this Deed, or in any way connected with the use and enjoyment of the
Premises, this Deed is hereby made and declared to be a security agreement
encumbering each and every item of such property included herein as a part
of the Premises in compliance with the provisions of the Uniform Commercial
Code as enacted in the State of Georgia. Upon request by Lender, at any
time and from time to time, a financing statement or statements reciting
this Deed to be a security agreement affecting all of such property shall
be executed by Borrower and Lender and appropriately filed. The remedies
for any violation of the covenants, terms and conditions of the security
agreement contained in this Deed shall be (i) as prescribed herein, or (ii)
as prescribed by general law, or (iii) as prescribed by the specific
statutory consequences now or hereafter enacted and specified in said
Uniform Commercial Code, all at Lender's sole election. Borrower and
Lender agree that the filing of any such financing statement or statements
in the records normally having to do with personal property shall not in
any way affect the agreement of Borrower and Lender that everything used in
connection with the production of income from the Premises or adapted for
use therein or which is described or reflected in this Deed, is, and at all
times and for all purposes and in all proceedings, both legal and
equitable, shall be regarded as part of the real estate conveyed hereby
regardless of whether (i) any such item is physically attached to the
improvements, (ii) serial numbers are used for the better identification of
certain items capable of being thus identified in an exhibit to this Deed,
or (iii) any such item is referred to or reflected in any such financing
statement or statements so filed at any time. Similarly, the mention in
any such financing statement or statements of the rights in and to (i) the
proceeds of any fire and/or hazard insurance policy, or (ii) any award in
eminent domain proceedings for a taking or for loss of value, or (iii)
Borrower's interest as lessor in any present or future lease or rights to
income growing out of the use and/or occupancy of the Premises, whether
pursuant to lease or otherwise, shall not in any way alter any of the
rights of Lender as determined by this Deed or affect the priority of
Lender's security interest granted hereby or by any other recorded
document, it being understood and agreed that such mention in such
financing statement or statements is solely for the protection of Lender in
the event any court shall at any time hold with respect to the foregoing
clauses (i), (ii) or (iii) of this sentence, that notice of Lender's -
priority of interest, to be effective against a particular class of
persons, must be filed in the Uniform Commercial Code records.
(b) Borrower warrants that (i) Borrower's name, identity or
corporate structure and residence or principal place of business are as set
forth in subparagraph 1.08(c) hereof; (ii) Borrower has been using or
operating under such name, identity or corporate structure without change
for the time period set forth in subparagraph 1.08(c) hereof; and (iii) the
location of the Collateral is upon the Land. Borrower covenants and agrees
that Borrower will furnish Lender with notice of any changes in the matters
addressed by clauses (i) or (iii) of this subparagraph 1.08(b) within
thirty (30) days of the effective date of such changes and Borrower will
promptly execute any financing statements or other instruments deemed
necessary by Lender to prevent any filed financing statement from becoming
misleading or losing its perfected status.
(c) The information contained in this subparagraph 1.08(c) is
provided in order that this Deed shall comply with the requirements of the
Uniform Commercial Code, as enacted in the State of Georgia, for
instruments to be filed as financing statements. The name of the "Debtor"
and the "Secured Party", the identity or corporate structure and residence
or principal place of business of "Debtor", and the time period for which
"Debtor" has been using or operating under such name and identity or
corporate structure without change, are as set forth in Schedule 1 of
Exhibit C attached hereto and made a part hereof; the mailing address of
the "Secured Party" from which information concerning the security interest
may be obtained, and the mailing address of "Debtor", are as set forth in
Schedule 2 of Exhibit C attached hereto; and a statement indicating the
types or describing the items of collateral is set forth above.
1.09 Further Assurances; After-Acquired Property. At any time,
and from time to time, upon request by Lender, Borrower will execute and
deliver to Lender and, where appropriate, cause to be recorded and/or filed
and from time to time thereafter to be re-recorded and or refiled at such
time and in such offices and places as shall be reasonably required by
Lender, any and all such other and further deeds to secure debt, mortgages,
deeds of trust, security agreements, financing statements, continuation
statements, instruments of further assurance, certificates and other
documents as may, in the reasonable opinion of Lender, be necessary or
desirable in order to effectuate, complete or perfect, or to continue and
preserve (i) the obligation of Borrower under the Note and under this Deed
and (ii) the security interest created by this Deed as a first and prior
security interest upon and security title in and to all of the Premises,
whether now owned or hereafter acquired by Borrower. Upon any failure by
Borrower so to do, Lender may execute, record, file, re-record and/or
refile any and all such deeds to secure debt, security agreements,
financing statements, continuation statements, instruments, certificates
and documents for and in the name of Borrower, and Borrower hereby
irrevocably appoints Lender the agent and attorney-in-fact of Borrower so
to do. The security title of this Deed and the security interest created
hereby will automatically attach, without further act, to all
after-acquired property attached to or used in the operation of the
Premises or any part thereof.
1.10 Expenses. Borrower will pay or reimburse Lender, upon
demand therefor, all attorney's fees, costs and expenses reasonably
incurred by Lender in any suit, action, legal proceeding or dispute of any
kind in which Lender is made a party or appears as party plaintiff or
defendant, affecting the Indebtedness, this Deed or the interest created
herein, or the Premises, including, but not limited to, the exercise of the
power of sale contained in this Deed, any condemnation action involving the
Premises or any action to protect the security thereof, and any such
amounts paid by Lender shall be added to the Indebtedness and shall be
secured by this Deed.
1.11 Estoppel Affidavits. Borrower, upon ten (10) days' prior
written notice, shall furnish Lender a written statement, duly
acknowledged, setting forth, to the knowledge of Borrower, the unpaid
principal of, and interest on, the Indebtedness, stating whether or not any
offsets or defenses exist against the Indebtedness, or any portion thereof,
and, if such offsets or defenses exist, stating in detail the specific
facts relating to each such offset or defense.
1.12 Subrogation. To the full extent of the Indebtedness,
Lender is hereby subrogated to the liens, claims and demands, and to the
rights of the owners and holders of each and every lien, claim, demand and
other encumbrance on the Premises which is paid or satisfied, in whole or
in part, out of the proceeds of the Indebtedness, and the respective liens,
claims, demands and other encumbrances shall be, and each of them is
hereby, preserved and shall pass to and be held by Lender as additional
collateral and further security for the Indebtedness, to the same extent
they would have been preserved and would have been passed to and held by
Lender had they been duly and legally assigned, transferred, set over and
delivered unto Lender by assignment, notwithstanding the fact that any
instrument providing public notice of the same may be satisfied and
cancelled of record.
1.13 Books, Records, Accounts and Annual Reports. Borrower
shall keep and maintain or shall cause to be kept and maintained, at
Borrower's cost and expense, proper and accurate books, records and
accounts reflecting all items of income and expense in connection with the
operation of the Premises and in connection with any services, equipment or
furnishings provided in connection with the operation of the premises.
Lender, by Lender's agents, accountants and attorneys, shall have the right
from time to time to examine such books, records and accounts at the office
of Borrower or such other person or entity maintaining such books, records
and accounts, to make copies or extracts thereof as Lender shall desire and
to discuss Borrower's affairs, financings and accounts with Borrower and
with the officers and principals of Borrower, at such reasonable times as
may be requested by Lender. Borrower will furnish to Lender annually
within ninety (90) days after the end of each of Borrower's fiscal years an
audited financial statement for the Premises for such fiscal year sworn to
by Borrower, satisfactory to Lender, itemizing items of income and expense,
containing a profit and loss statement, a balance sheet, a certified rent
roll and all supporting schedules covering the operation of the Premises,
all in reasonable detail and certified as being true and correct by the
Borrower or its general partner Borrower will furnish to Lender, at any
time within thirty (30) days after demand by Lender, unaudited statements,
certified by Borrower's principal financial or accounting officer, covering
such financial matters as Lender may reasonably request, including, without
limitation, monthly operating statements with respect to the Premises.
Notwithstanding the foregoing provisions of this paragraph, in the event a
Default has occurred hereunder or under any other Loan Document, Lender
shall have the right to require that such annual financial statement shall
be an audited statement prepared by an independent certified public
accountant, satisfactory to Lender, and containing the unqualified
certification of such accountant who shall have examined and certified the
accuracy of such audit.
1.14 Limit of Validity. If, from any circumstances whatsoever,
fulfillment of any provision of this Deed or of the Note, at the time
performance of such provision shall be due, shall involve transcending the
limit of validity presently prescribed by any applicable usury statute or
any other applicable law, with regard to obligations of like character and
amount, then, ipso facto, the obligation to be fulfilled shall be reduced
to the limit of such validity, so that in no event shall any exaction be
possible under this Deed or under the Note that is in excess of the current
limit of such validity, but such obligation shall be fulfilled to the limit
of such validity. The provisions of this paragraph 1.14 shall control
every other provision of this Deed and of the Note.
1.15 No Default Affidavits. At Lender's request, all payments
made under the Note or hereunder shall be accompanied by the affidavit of
Borrower or a principal financial or accounting officer of Borrower, dated
within five (5) days of the delivery of such payment to Lender, swearing
that he knows of no Default (as hereinafter defined), nor of any
circumstances which after notice or lapse of time or both would constitute
a Default, which has occurred and is continuing or, if any such Default has
occurred and is continuing, specifying the nature and period of existence
thereof and the action Borrower has taken or proposes to take with respect
thereto and, except as otherwise specified, stating that Borrower has
fulfilled all of Borrower's obligations under this Deed which are required
to be fulfilled on or prior to the date of such affidavit.
1.16 Use and Management of Premises. Borrower shall at all
times operate the Premises as described in Exhibit D, attached hereto and
by this reference made a part hereof. Borrower shall not be permitted to
alter or change the use of the Premises or to abandon the Premises without
the prior written consent of Lender.
1.17 Conveyance of Premises. Borrower hereby acknowledges to
Lender that (i) the identity and expertise of Borrower were and continue to
be material circumstances upon which Lender has relied in connection with,
and which constitute valuable consideration to Lender for, the extending to
Borrower of the Indebtedness evidenced by the Note and (ii) any changes in
such identity or expertise could materially impair or jeopardize the
security for the payment of the Note granted to Lender by this Deed.
Borrower therefore covenants and agrees with Lender, as part of the
consideration for the extending to Borrower of the Indebtedness evidenced
by the Note, that (i) no person or entity other than Charles H. Lesley
shall be the general partner of Borrower or shall manage or control the
business affairs of Borrower and that (ii) Borrower shall not encumber,
pledge, sell, convey, transfer or assign without the prior written consent
of Lender, which consent shall not be unreasonably withheld, any or all of
its interest in the Premises. Upon request by Borrower, Lender will
consider any requested transfer and evaluate the general credit standing,
management ability and other factors deemed material by Lender and will
either approve or deny the requested transfer. However, such approval or
denial will be at the reasonable discretion of Lender. In the event Lender
approves such transfer, a transfer fee in an amount equal to one percent
(1%) of the original principal amount of the Note will be charged by
Lender. In the event, without obtaining Lender's prior written consent,
(i) any person or entity other than Charles H. Lesley shall become a
general partner of Borrower or obtain the power to manage or control the
business affairs of Borrower or (ii) the Borrower shall sell, assign,
transfer or further pledge, hypothecate or otherwise encumber the Premises
or any of its interest therein, then Lender, at its option and without
notice, may declare the entire Indebtedness immediately due and payable in
full, whereupon it shall be so due and payable. No approval of Lender
shall be required for transfers of limited partnership interests in
Borrower to the extent that the transfers do not affect the ability of
Charles H. Lesley to manage and control Borrower.
1.18 Acquisition of Collateral. Borrower shall not acquire any
portion of the personal property covered by this Deed subject to any
security interest, conditional sales contract, title retention arrangement
or other charge or lien taking precedence over the security title and lien
of this Deed.
1.19 Repairs and Reconstruction.
(a) Notwithstanding paragraph 1.03(b) and paragraph 1.05, if any
portion or portions of the Premises are damaged or destroyed or are the
subject of a partial condemnation other than as described in subparagraph
1.19(a)(v), and such damage, destruction or condemnation results in the
need for repair, rebuilding or restoration work to be performed on the
Premises (such repair, rebuilding or restoration being herein called the
"Work"), Lender shall allow Borrower to use the amount by which the
proceeds of all insurance policies, judgments, settlements, or awards
exceed the cost, if any, to Lender for the recovery thereof (said net
amount being hereinafter called the "Proceeds") for the Work, so long as
the following conditions have been met:
(i) No Default or Event of Default exists hereunder or under any
of the agreements, documents or instruments now or hereafter
evidencing, securing or otherwise relating to the Note or this Deed or
the Indebtedness;
(ii) Borrower shall have delivered evidence satisfactory to
Lender that the affected improvements may be reconstructed in
accordance with all applicable zoning, building code, and other
governmental requirements and that, upon completion of the Work, the
condition of the affected improvements will be at least equal in value
and general utility to that which existed on the date of this Deed;
(iii) Borrower shall have delivered evidence satisfactory to
Lender that sufficient funds, including the Proceeds, are available to
perform the Work and that the Work is capable of completion prior to
the maturity of the Note; and
(iv) In the event of a casualty loss, and Borrower has delivered
evidence satisfactory to Lender that business income insurance
proceeds payable to Borrower as a result of the damage or destruction,
income from the Property or any other funds of Borrower are sufficient
to cover debt service on the Note during the period the Work is being
performed. In the event of a condemnation loss, Borrower has
delivered evidence satisfactory to Lender that income from the
Property business income insurance proceeds payable to Borrower as a
result of the damage or destruction or any other funds of Borrower,
sufficient to cover debt service on the Note during the period the
Work is being performed.
(v) In the event of damage or a taking by condemnation, the
condemnation must not affect the following portions of the Premises:
(A) any portion or portions of the buildings or other
structures located on the Land or other support or foundation of
any portion or portions of the buildings or structures on the
Land;
(B) ten percent (10%) or more of the parking area of the
Premises; or
(C) any portion or portions of the Land which, when so
damaged or taken, would result either in (1) a lack of access to
the Collateral from the publicly dedicated rights-of-way now
adjoining the Land, or (2) failure of the Collateral to comply
with any building code, zoning or other governmental laws or
regulations.
(vi) the cost to complete the Work, as determined by Lender in
its sole discretion, is completely covered by insurance or is covered
by additional money deposited by Borrower with Lender.
(b) If the conditions set forth in subparagraph 1.19(a) are
satisfied, Lender shall make the Proceeds available to Borrower for the
Work only upon the following terms and conditions:
(i) Borrower shall execute and deliver to Lender a copy of a
contract with a contractor acceptable to Lender setting forth a fixed
price for the Work and a completion date acceptable to Lender;
(ii) Borrower shall demonstrate to Lender that the Proceeds are
at least equal to the fixed price of the Work as set forth in said
contract or shall deposit with Lender funds in the amount by which
such fixed price exceeds the Proceeds;
(ii) The Proceeds, plus any additional funds deposited by
Borrower, shall be received and held by Lender and disbursed in
accordance with safeguards used by Lender in connection with its
construction loans, including, without limitation, the following, and
Borrower shall reimburse Lender for costs and expenses incurred in
connection with such disbursements:
(A) Requests for disbursements will be accompanied by lien
waivers satisfactory to Lender covering the portion of the
Work for which payment or reimbursements is being requested,
and by evidence that no mechanics' or other liens have been
filed of record since the date of the previous disbursement,
unless the same has been released of record;
(B) No uncured default on the part of Borrower shall exist
hereunder or under any of the agreements, documents or
instruments now or hereafter evidencing, securing or
otherwise relating to the Note or this Deed or the
Indebtedness;
(C) The Work shall be supervised by an architect or engineers
and performed in accordance with plans and specifications
prepared by such architect or engineer and reasonably
acceptable to Lender;
(D) The final request for disbursement shall be accompanied by a
copy of such certificate or certificates as are required by
law to render the occupancy of the improvements on the
Premises legal; and
(E) Upon completion of and final payment for the Work, the
remaining Proceeds, at the option of Lender, either shall be
applied to the Indebtedness in such order as Lender shall
elect or shall be paid over to Borrower; provided, however,
that in either event all remaining funds deposited by
Borrower for excess costs shall be refunded to Borrower.
(iv) Borrower otherwise shall comply with the terms and
conditions of this Deed and the agreements, documents or instruments
now or hereafter evidencing, securing or otherwise relating to the
Note or this Deed or the Indebtedness during the performance of the
Work.
(c) In the event any one (1) or more of the conditions set forth
in subparagraph 1.19(a) is not satisfied, Lender may elect, at its sole
option and in its sole discretion, to apply the Proceeds against the
balance of the Indebtedness, whether or not due and in whatever order
Lender elects, and if Lender elects to apply such proceeds to the principal
payment due under the Note at maturity or to monthly payments thereunder,
the then outstanding principal balance of the Loan shall be reamortized
(based on a 30-year amortization schedule) and the monthly payments
adjusted accordingly.
(d) If an Event of Default shall occur hereunder and, to the
extent permitted hereby, not be cured, or if Borrower shall fail diligently
to pursue and complete the Work, Lender may, at its sole option and its
sole discretion, apply any undisbursed Proceeds and any of Borrower's
deposits against the balance of the Indebtedness, and if Lender elects to
apply such Proceeds to the principal payment due under the Note at maturity
or to monthly payments thereunder, regular monthly payments thereunder
shall continue to be due without interruption and shall be reduced in
accordance with subparagraph 1.19(c) above. Lender shall have no
obligation to pay interest to Borrower on any amounts held by Lender
pursuant to this paragraph 1.19.
ARTICLE II
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2.01 Default. The terms "Default", "Defaults" or "Event of
Default", wherever used in this Deed, shall mean any one or more of the
following events:
(a) Subject to the five-day period for notice and cure in
Paragraph 16 of the Note, failure by Borrower to pay as and when due and
payable any portion of the Indebtedness; or
(b) Failure by Borrower duly to observe or perform any other
term, covenant, condition or agreement of this Deed; or
(c) Failure by Borrower duly to observe or perform any term,
covenant, condition or agreement in any loan agreement, assignment of
leases or any other agreement now or hereafter evidencing, securing or
otherwise relating to the Note or this Deed or the Indebtedness; or
(d) Any warranty of Borrower contained in this Deed or in any
loan agreement, assignment of leases or any other agreement now or
hereafter evidencing or securing or otherwise relating to the Note or this
Deed or the Indebtedness proves to be untrue or misleading in any material
respect; or
(e) The filing by Borrower or any endorser or guarantor of the
Note of a voluntary petition in bankruptcy or the filing by Borrower or any
such endorser or guarantor of any petition or answer seeking or acquiescing
in any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief for itself under any present or future
federal, state or other law or regulation relating to bankruptcy,
insolvency or other relief for debtors, or Borrower's or any such
endorser's or guarantor's seeking or consenting to or acquiescing in the
appointment of any trustee, receiver or liquidator of Borrower, such
endorser or guarantor, or of all or any substantial part of the premises or
of any other property or assets of Borrower, such endorser or guarantor, or
of any or all of the income, rents, issues, profits or revenues thereof, or
the making by Borrower, or any endorser or guarantor, of any general
assignment for the benefit of creditors, or the admission in writing by
Borrower, or any such endorser or guarantor, of its inability to pay its
debts generally as they become due or the commission by Borrower or any
such endorser or guarantor of an act of bankruptcy; or
(f) The filing of a petition against Borrower, or any endorser
or guarantor of the Note, seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under
any present or future federal, state or other law or regulation relating to
bankruptcy, insolvency or other relief for debtors or the appointment of
any trustee, receiver or liquidator of Borrower, or of any such endorser or
guarantor or of all or any substantial part of the Premises or of any or
all of the income, rents, issues, profits or revenues thereof unless such
petition shall be dismissed within thirty (30) days after such filing, but
in any event prior to the entry of an order, judgment or decree approving
such petition; or
(g) The Premises are subjected to actual or threatened waste, or
any part thereof is removed, demolished or materially altered without the
prior written consent of Lender; or
(h) Borrower or any endorser or guarantor of the Note (if a
corporation) is liquidated or dissolved or its charter expires or is
revoked, or Borrower or such endorser or guarantor (if a partnership or
business association) is dissolved or partitioned and not reconstituted
within sixty (60) days of such dissolution; or
(i) Borrower sells, assigns, conveys or transfers or contracts
to sell, assign, convey or further pledges, hypothecates or otherwise
encumbers the Premises 50% or more of the partnership interests of Borrower
or 50% or more of the stock of Borrower, except in accordance with
paragraph 1.17 of this Deed.
2.02 Acceleration of Maturity. If a Default shall have
occurred, then the entire Indebtedness shall, at the option of Lender,
immediately become due and payable without further notice or demand, time
being of the essence of this Deed; and no omission on the part of Lender to
exercise such option when entitled to do so shall be construed as a waiver
of such right.
2.03 Right to Enter and Take Possession.
(a) If a Default shall have occurred, Borrower, upon demand of
Lender, shall forthwith surrender to Lender the actual possession of the
Premises and if, and to the extent permitted by law, Lender itself, or by
such officers or agents as it may appoint, may enter and take possession of
all of the Premises without the appointment of a receiver or an application
therefor, and may exclude Borrower and its agents and employees wholly
therefrom, and may have joint access with Borrower to the books, papers and
accounts of Borrower.
(b) If Borrower shall for any reason fail to surrender or
deliver the Premises or any part thereof after such demand by Lender,
Lender may obtain a judgment or decree conferring upon Lender the right to
immediate possession or requiring Borrower to deliver immediate possession
of the Premises to Lender, and Borrower hereby specifically covenants and
agrees that Borrower will not oppose, contest or otherwise hinder or delay
Lender in any action or proceeding by Lender to obtain such judgment or
decree. Borrower will pay to Lender, upon demand, all expenses of
obtaining such judgment or decree, including reasonable fees to its
attorneys and all such expenses and fees shall, until paid, become part of
the Indebtedness and shall be secured by this Deed.
(c) Upon every such entering upon or taking of possession,
Lender may hold, store, use, operate, manage and control the Premises and
conduct the business thereof, and, from time to time (i) make all necessary
and proper maintenance, repairs, renewals, replacements, additions,
betterments and improvements thereto and thereon and purchase or otherwise
acquire additional fixtures, personally and other property; (ii) insure or
keep the Premises insured; (iii) manage and operate the Premises and
exercise all rights and powers of Borrower to the same extent as Borrower
could in its own name or otherwise act with respect to the same; and (iv)
enter into any and all agreements with respect to the exercise by others of
any of the powers herein granted to Lender, all as Lender from time to time
may determine to be in its best interest. Lender may collect and receive
all the income, rents, issues, profits and revenues from the Premises,
including those past due as well as those accruing thereafter, and Lender
may apply any moneys and proceeds received by Lender, in whatever order or
priority Lender in its sole discretion may determine, to the payment of (i)
all expenses of taking, holding, managing and operating the Premises
(including compensation for the services of all persons employed for such
purposes); (ii) the cost of all such maintenance, repairs, renewals,
replacements, additions, betterments, improvements, purchases and
acquisitions; (iii) the cost of such insurance; (iv) such taxes,
assessments and other similar charges as Lender may at its option pay; (v)
other proper charges upon the Premises or any part thereof; (vi) the
reasonable fees, expenses and disbursements of the attorneys of Lender;
(vii) accrued interest; (viii) deposits required in paragraph 1.04 and
other sums required to be paid under this Deed; or (ix) overdue
installments of principal. Anything in this paragraph 2.03 to the contrary
notwithstanding, Lender shall not be obligated to discharge or perform the
duties of a landlord to any tenant or incur any liability as the result of
any exercise by Lender of its rights under this Deed, and Lender shall be
liable to account only for the rents, incomes, issues, profits and revenues
actually received by Lender.
(d) In the event that all such interest, deposits and principal
installments and other sums due under any of the terms, covenants,
conditions and agreements of this Deed shall be paid and all Defaults shall
be cured, and as a result thereof, Lender surrenders possession of the
Premises to Borrower, the same right of taking possession shall continue to
exist if any subsequent Default shall occur.
2.04 Performance by Lender. If Borrower shall Default in the
payment, performance or observance of any term, covenant or condition of
this Deed, Lender may, at its option, pay, perform or observe the same, and
all payments made or costs or expenses incurred by Lender in connection
therewith shall be secured hereby and shall be, without demand, immediately
repaid by Borrower to Lender with interest thereon at the default rate
provided in the Note. Lender shall be the sole judge of the necessity for
any such actions and of the amounts to be paid. Lender is hereby empowered
to enter and to authorize others to enter upon the Premises or any part
thereof for the purpose of performing or observing any such defaulted term,
covenant or condition without thereby becoming liable to Borrower or any
person in possession holding under Borrower.
2.05 Receiver. If a Default shall have occurred, Lender, upon
application to a court of competent jurisdiction, shall be entitled as a
matter of strict right, without notice, and without regard to the adequacy
or value of any security for the Indebtedness or the solvency of any party
bound for its payment, to the appointment of a receiver to take possession
of and to operate the Premises and to collect and apply the incomes, rents,
issues, profits and revenues thereof. The receiver shall have all of the
rights and powers permitted under the laws of the State of Georgia.
Borrower will pay to Lender upon demand all expenses, including receiver's
fees, attorney's fees, costs and agent's compensation, incurred pursuant to
the provisions of this paragraph 2.05, and any such amounts paid by Lender
shall be added to the Indebtedness and shall be secured by this Deed.
2.06 Enforcement.
(a) If a Default shall have occurred, Lender, at its option, may
sell the Premises or any part of the Premises at one or more public sale or
sales before the door of the courthouse of the county in which the Land or
any part of the Land is situated, to the highest bidder for cash, in order
to pay the Indebtedness, and all expenses of sale and of all proceedings in
connection therewith, including reasonable attorney's fees, after
advertising the time, place and terms of sale once a week for four (4)
weeks immediately preceding such sale (but without regard to the number of
days) in a newspaper in which Sheriff's sales are advertised in said
county. At any such public sale, Lender may execute and deliver to the
purchaser a conveyance of the Premises or any part of the Premises in fee
simple, with full warranties of title and, to this end, Borrower hereby
constitutes and appoints Lender the agent and attorney-in-fact of Borrower
to make such sale and conveyance, and thereby to divest Borrower of all
right, title and equity that Borrower may have in and to the Premises and
to vest the same in the purchaser or purchasers at such sale or sales, and
all the acts and doings of said agent and attorney-in-fact are hereby
ratified and confirmed and any recitals in said conveyance or conveyances
as to facts essential to a valid sale shall be binding upon Borrower. The
aforesaid power of sale and agency hereby granted are coupled with an
interest and are irrevocable by death or otherwise, are granted as
cumulative of the other remedies provided hereby or by law for collection
of the Indebtedness and shall not be exhausted by one exercise thereof but
may be exercised until full payment of all of the Indebtedness. In the
event of any sale under this Deed by virtue of the exercise of the powers
herein granted, or pursuant to any order in any judicial proceeding or
otherwise, the Premises may be sold as an entirety or in separate parcels
and in such manner or order as Lender, in its sole discretion, may elect,
and if Lender so elects, Lender may sell the personal property covered by
this Deed at one or more separate sales in any manner permitted by the
Uniform Commercial Code of the State of Georgia, and one or more exercises
of the powers herein granted shall not extinguish nor exhaust such powers,
until the entire Premises are sold or the Indebtedness is paid in full. If
the Indebtedness is now or hereafter further secured by any chattel
mortgages, pledges, contracts of guaranty, assignments of lease or other
security instruments, Lender may at its option exhaust the remedies granted
under any of said security instruments either concurrently or
independently, and in such order as Lender may determine.
(b) If a Default shall have occurred, Lender may, in addition to
and not in abrogation of the rights covered under subparagraph 2.06(a),
either with or without entry or taking possession as herein provided or
otherwise, proceed by a suit or suits in law or in equity or by any other
appropriate proceeding or remedy (i) to enforce payment of the Note or the
performance of any term, covenant, condition or agreement of this Deed or
any other right and (ii) to pursue any other remedy available to it, all as
Lender at its sole discretion shall elect.
2.07 Purchase by Lender. Upon any foreclosure sale or sales of
all or any portion of the Premises under the power herein granted, Lender
may bid for and purchase the Premises and shall be entitled to apply all or
any part of the Indebtedness as a credit to the purchase price.
2.08 Application of Proceeds of Sale. In the event of a
foreclosure or a sale of all or any portion of the Premises under the power
herein granted, the proceeds of said sale shall be applied, in whatever
order Lender in its sole discretion may decide, to the expenses of such
sale and of all proceedings in connection therewith, including attorney's
fees, to insurance premiums, liens, assessments, taxes and charges
including utility charges advanced by Lender, to payment of the outstanding
principal balance of the Indebtedness, or to the accrued interest on all of
the foregoing; and the remainder, if any, shall be paid to Borrower or to
the person or entity lawfully entitled thereto.
2.09 Borrower as Tenant Holding Over. In the event of any such
foreclosure sale or sales under the power herein granted, Borrower shall be
deemed a tenant holding over and shall forthwith deliver possession to the
purchaser or purchasers at such sale or be summarily dispossessed according
to provisions of law applicable to tenants holding over.
2.10 Waiver of Appraisement, Valuation, etc. Borrower agrees,
to the full extent permitted by law, that in case of a Default on the part
of Borrower hereunder, neither Borrower nor anyone claiming through or
under Borrower will set up, claim or seek to take advantage of any
moratorium, reinstatement, forbearance, appraisement, valuation, stay,
extension, homestead, exemption or redemption laws now or hereafter in
force, in order to prevent or hinder the enforcement or foreclosure of this
Deed, or the absolute sale of the Premises or the delivery of possession
thereof immediately after such sale to the purchaser at such sale, and
Borrower, for itself and all who may at any time claim through or under it,
hereby waives to the full extent that it may lawfully so do, the benefit of
all such laws, and any and all right to have the assets subject to the
security interest of this Deed marshalled upon any foreclosure or sale
under the power herein granted.
2.11 Waiver of Homestead. Borrower hereby waives and renounces
all homestead and exemption rights provided for by the Constitution and the
laws of the United States and of any state, in and to the Premises as
against the collection of the Indebtedness, or any part thereof.
2.12 Leases. Lender, at its option, is authorized to foreclose
this Deed subject to the rights of any tenants of the Premises, and the
failure to make any such tenants parties to any such foreclosure
proceedings and to foreclose their rights will not be, nor be asserted to
be by Borrower, a defense to any proceedings instituted by Lender to
collect the Indebtedness.
2.13 Discontinuance of Proceedings. In case Lender shall have
proceeded to enforce any right, power or remedy under this Deed by
foreclosure, entry or otherwise or in the event Lender commences
advertising of the intended exercise of the sale under power provided
hereunder, and such proceeding or advertisement shall have been withdrawn,
discontinued or abandoned for any reason, or shall have been determined
adversely to Lender, then in every such case (i) Borrower and Lender shall
be restored to their former positions and rights, (ii) all rights, powers
and remedies of bender shall continue as if no such proceeding had been
taken, (iii) each and every Default declared or occurring prior or
subsequent to such withdrawal, discontinuance or abandonment shall and
shall be deemed to be a continuing Default and (iv) neither this Deed, nor
the Note, nor the Indebtedness, nor any other instrument concerned
therewith, shall be or shall be deemed to have been reinstated or otherwise
affected by such withdrawal, discontinuance or abandonment; and Borrower
hereby expressly waives the benefit of any statute or rule of law now
provided, or which may hereafter be provided, which would produce a result
contrary to or in conflict with the above.
2.14 Remedies Cumulative. No right, power or remedy conferred
upon or reserved to Lender by this Deed is intended to be exclusive of any
other right, power or remedy, but each and every such right, power and
remedy shall be cumulative and concurrent and shall be in addition to any
other right, power and remedy given hereunder or now or hereafter existing
at law, in equity or by statute.
2.15 Waiver.
(a) No delay or omission by Lender or by any holder of the Note
to exercise any right, power or remedy accruing upon any breach or Default
shall exhaust or impair any such right, power or remedy or shall be
construed to be a waiver of any such breach or Default, or acquiescence
therein, and every right, power and remedy given by this Deed to Lender may
be exercised from time to time and as often as may be deemed expedient by
Lender. No consent or waiver, expressed or implied, by Lender to or of any
breach or Default by Borrower in the performance of the obligations of
Borrower hereunder shall be deemed or construed to be a consent or waiver
to or of any other breach or Default in the performance of the same or any
other obligation of Borrower hereunder. Failure on the part of Lender to
complain of any act or failure to act or to declare a Default, irrespective
of how long such failure continues, shall not constitute a waiver by Lender
of its rights hereunder or impair any rights, powers or remedies of Lender
hereunder.
(b) No act or omission by Lender shall release, discharge,
modify, change or otherwise affect the original liability under the Note,
this Deed or any other obligation of Borrower or any subsequent purchaser
of the Premises or any part thereof, or any maker, co-signer, endorser,
surety or guarantor, or preclude Lender from exercising any right, power or
privilege herein granted or intended to be granted in the event of any
Default then made or of any subsequent Default, or alter the security
title, security interest or lien of this Deed except as expressly provided
in an instrument or instruments executed by Lender. Without limiting the
generality of the foregoing, Lender may (i) grant forbearance or an
extension of time for the payment of all or any portion of the
Indebtedness; (ii) take other or additional security for the payment of the
Indebtedness; (iii) waive or fail to exercise any right granted hereunder
or in the Note; (iv) release any part of the Premises from the security
interest or lien of this Deed or otherwise may change any of the terms,
covenants, conditions or agreements of the Note or this Deed; (v) consent
to the filing of any map, plat or replat affecting the Premises; (vi)
consent to the granting of any easement or other right affecting the
Premises; (vii) make or consent to any agreement subordinating the security
title, security interest or lien hereof; or (viii) take or omit to take any
action whatsoever with respect to the Note, this Deed, the Premises or any
document or instrument evidencing, securing or in any way relating to the
Indebtedness; all without releasing, discharging, modifying, changing or
affecting any such liability, or precluding Lender from exercising any such
right, power or privilege or affecting the security title, security
interest or lien of this Deed. In the event of the sale or transfer by
operation of law or otherwise of all or any part of the Premises, Lender,
without notice, is hereby authorized and empowered to deal with any such
vendee or transferee with reference to the Premises or the Indebtedness, or
with reference to any of the terms, covenants, conditions or agreements
hereof, as fully and to the same extent as it might deal with the original
parties hereto and without in any way releasing and/or discharging any
liabilities, obligations or undertakings.
2.16 Suits to Protect the Premises. After first giving notice
to Borrower as herein provided, Lender shall have the power to institute
and maintain such suits and proceedings as it may deem expedient (i) to
prevent any impairment of the Premises by any acts which may be unlawful or
constitute a Default under this Deed, (ii) to preserve or protect its
interest in the Premises and in the incomes, rents, issues, profits and
revenues arising therefrom and (iii) (after consultation with Borrower) to
restrain the enforcement of or compliance with any legislation or other
governmental enactment, rule or order that may be unconstitutional or
otherwise invalid, if the enforcement of or compliance with such enactment,
rule or order would impair the security hereunder or be prejudicial to the
interest of Lender.
2.17 Proof of Claim. In the case of any receivership,
insolvency, bankruptcy, reorganization, arrangement, adjustment,
composition or other proceedings affecting Borrower, its creditors or its
property, Lender, to the extent permitted by law, shall be entitled to file
such proofs of claim and other documents as may be necessary or advisable
in order to have the claims of Lender allowed in such proceeding for the
entire amount of the Indebtedness at the date of the institution of such
proceedings and for any additional amount of the Indebtedness after such
date.
2.18 Waiver of Borrower's Rights. BY EXECUTION OF THIS DEED AND
BY INITIALING THIS PARAGRAPH 2.18, BORROWER EXPRESSLY: (A) ACKNOWLEDGES
THE RIGHT OF LENDER TO ACCELERATE THE INDEBTEDNESS EVIDENCED BY THE NOTE
AND ANY OTHER INDEBTEDNESS AND THE POWER OF ATTORNEY GIVEN HEREIN TO LENDER
TO SELL THE PREMISES BY NONJUDICIAL FORECLOSURE UPON DEFAULT BY BORROWER
WITHOUT ANY JUDICIAL HEARING AND WITHOUT ANY NOTICE OTHER THAN SUCH NOTICE
(IF ANY) AS IS SPECIFICALLY REQUIRED TO BE GIVEN UNDER THE PROVISIONS OF
THIS DEED; (B) WAIVES ANY AND ALL RIGHTS WHICH BORROWER MAY HAVE UNDER THE
CONSTITUTION OF THE UNITED STATES OF AMERICA (INCLUDING, WITHOUT
LIMITATION, THE FIFTH AND FOURTEENTH AMENDMENTS THEREOF), THE VARIOUS
PROVISIONS OF THE CONSTITUTIONS FOR THE SEVERAL STATES, OR BY REASON OF ANY
OTHER APPLICABLE LAW, (1) TO NOTICE AND TO JUDICIAL HEARING PRIOR TO THE
EXERCISE BY LENDER OF ANY RIGHT OR REMEDY HEREIN PROVIDED TO LENDER, EXCEPT
SUCH NOTICE (IF ANY) AS IS SPECIFICALLY REQUIRED TO BE GIVEN UNDER THE
PROVISIONS OF THIS DEED AND (2) CONCERNING THE APPLICATION, RIGHTS OR
BENEFITS OF ANY STATUTE OF LIMITATION OR ANY MORATORIUM, REINSTATEMENT,
MARSHALLING, FORBEARANCE, APPRAISEMENT, VALUATION, STAY, EXTENSION,
HOMESTEAD, EXEMPTION OR REDEMPTION LAWS; (C) ACKNOWLEDGES THAT BORROWER HAS
READ THIS DEED AND ANY AND ALL QUESTIONS OF BORROWER REGARDING THE LEGAL
EFFECT OF THIS DEED AND ITS PROVISIONS HAVE BEEN EXPLAINED FULLY TO
BORROWER, AND BORROWER HAS CONSULTED WITH COUNSEL OF BORROWER'S CHOICE
PRIOR TO EXECUTING THIS DEED AND INITIALING THIS PARAGRAPH 2.18; AND (D)
ACKNOWLEDGES THAT ALL WAIVERS OF THE AFORESAID RIGHTS OF BORROWER HAVE BEEN
MADE KNOWINGLY, INTENTIONALLY AND WILLINGLY BY BORROWER AS PART OF A
BARGAINED FOR LOAN TRANSACTION AND THAT THIS DEED IS VALID AND ENFORCEABLE
BY LENDER AGAINST BORROWER IN ACCORDANCE WITH ALL THE TERMS AND CONDITIONS
HEREOF.
INITIALED BY BORROWER:
----------------------
ARTICLE III
3.01 Successors and Assigns. This Deed shall inure to the
benefit of and be binding upon Borrower and Lender and their respective
heirs, executors, legal representatives, successors, successors-in-title
and assigns. Whenever a reference is made in this Deed to "Borrower" or
"Lender", such reference shall be deemed to include a reference to the
heirs, executors, legal representatives, successors, general partners,
successors-in-title and assigns of Borrower and Lender, as the case may be.
The provisions of this paragraph 3.01 are subject to the restrictions on
transfer contained in paragraph 1.17.
3.02 Terminology. All personal pronouns used in this Deed
whether used in the masculine, feminine or neuter gender, shall include all
other genders; the singular shall include the plural, and vice versa.
Titles of articles and paragraphs are for convenience only and neither
limit nor amplify the provisions of this Deed, and all references herein to
articles, paragraphs or subparagraphs shall refer to the corresponding
articles, paragraphs, or subparagraphs of this Deed, unless specific
reference is made to articles, paragraphs or subparagraphs of another
document or instrument.
3.03 Severability. If any provision of this Deed or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Deed and the application
of such provisions to other persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law.
3.04 Applicable Law. This Deed shall be interpreted, construed
and enforced according to the laws of the State of Georgia.
3.05 Notices. Any and all notices, elections or demands
permitted or required to be made under this Deed shall be in writing,
signed by the party giving such notice, election or demand, and shall be
delivered personally, or sent by registered or certified United States
mail, postage prepaid, to the other party at the address set forth below,
or at such other address within the continental United States of America as
may have theretofore been designated in writing. The date of any such
notice, election or demand shall be the date of delivery thereof (or
initial attempted delivery if the same is refused or is otherwise not
accepted or deliverable) whether delivered personally or by mail as
aforesaid. For the purposes of this Deed:
The address of Borrower is:
West Stewarts Mill Associates, Ltd.
1815 The Exchange
Suite 200
Atlanta, Georgia 30339
With a copy to:
James A. Fleming
Long, Aldridge & Norman
2 Concourse Parkway
Suite 750
Atlanta, Georgia 30328
The address of Lender is:
Confederation Life Insurance Company
321 Bloor Street East
Toronto, Canada M4W lH1
Attention: Diane Lucci
Mortgage Administration Department
With a copy to:
Standard Mortgage Corporation
5871 Glenridge Drive
Suite 200
Atlanta, Georgia 30328
Attention: Joseph Montgomery
and
Alston & Bird
100 Galleria Parkway
Suite 1200
Atlanta, Georgia 30339
Attention: A. James Elliott
Each party has the right to substitute a different recipient of notice for
any one recipient of notice set forth herein, which notice of substitution
shall be in writing as provided herein.
3.06 Replacement of Note. Upon receipt of evidence reasonably
satisfactory to Borrower of the loss, theft, destruction or mutilation of
the Note, and in the case of any such loss, theft or destruction, upon
delivery of an indemnity agreement reasonably satisfactory to Borrower or,
in the case of any such mutilation, upon surrender and cancellation of the
Note, Borrower will execute and deliver, in lieu thereof, a replacement
Note, identical in form and substance to the Note and dated as of the date
of the Note and upon such execution and delivery all references in this
Deed to the Note shall be deemed to refer to such replacement Note.
3.07 Exculpation and Limitation. Except as set forth in
paragraph 7 of the Note and paragraph XXV of the Assignment of Lessor's
Interest in Lease, Lender expressly agrees that the personal liability of
Borrower under the Note and with respect to the Indebtedness evidenced by
the Note, and under this Deed and under any other instrument given to
evidence or secure the obligations of Borrower under the Note, shall be
strictly and absolutely limited to the Premises.
3.08 Assignment. This Deed is assignable by Lender, and any
assignment hereof by Lender shall operate to vest in the assignee all
rights and powers herein conferred upon and granted to Lender.
3.09 Time of the Essence. Time is of the essence with respect
to each and every covenant, agreement and obligation of Borrower under this
Deed, the Note and any and all other instruments now or hereafter
evidencing, securing or otherwise relating to the Indebtedness.
3.10 Consents and Approvals. Wherever the consent or approval
of Lender is required by this Deed, such consent or approval shall not be
unreasonably withheld.
3.11 Right to Notice and Cure. Notwithstanding anything to the
contrary herein contained or contained in the Note, Lender agrees that it
will not accelerate the maturity of the Indebtedness and will not exercise
any of its other rights and remedies hereunder or under the Note or under
any of the Loan Documents as a result of the occurrence of a default or
Event of Default hereunder or under the Note unless Lender has first mailed
written notice of such default or Event of Default to Borrower, to the
address of Borrower set forth herein, and unless Borrower has failed to
cure such default or Event of Default within the times hereinafter
permitted. If such default or Event of Default is a monetary default or
Event of Default (i.e., may be cured by the payment of a sum certain),
Borrower shall have a period of five (5) days within which to cure such
default or Event of Default. As to monetary Defaults, Borrower shall be
entitled to only one (1) such notice of default and opportunity to cure as
provided in this paragraph in any consecutive twelve (12) month period. If
such default or Event of Default is not a monetary default or Event of
Default, Borrower shall have a period of thirty (30) days within which to
cure such default or Event of Default; provided, however, if such default
or Event of Default is not susceptible to cure within thirty (30) days,
Lender shall not be entitled to exercise any of such remedies if Borrower
initiates cure of such default or Event of Default within the thirty-day
period and diligently pursues to completion cure of such default or Event
of Default within a reasonable time thereafter. Each of the cure periods
herein set forth shall commence on the date of mailing of such notice by
Lender to borrower. Borrower shall not be entitled to any notice and
opportunity to cure provided in this paragraph for Events of Default
specified in subparagraphs (e), (f), (h), and (i) of paragraph 2.01 of this
Deed.
[SIGNATURES APPEAR ON PAGE 24]
IN WITNESS WHEREOF, Borrower has executed this Deed under seal,
as of the day and year first above written.
BORROWER:
Signed, sealed and delivered
in the presence of: WEST STEWARTS MILL ASSOCIATES,
LTD., a Georgia limited partnership
by its sole general partner
___________________________
Witness
____________________________ By: /s/ Charles H. Lesley (SEAL)
Notary Public ------------------------
Charles H. Lesley
My Commission expires:
____________________________
(NOTARY SEAL)
<PAGE>
EXHIBIT A
---------
TRACT A
- -------
ALL THAT TRACT OR PARCEL OF LAND lying, situated and being in Land Lots 129
and 130 of the 2nd District, 5th Section, Douglas County, Georgia, which
tract is more particularly described as follows:
TO FIND THE POINT OF BEGINNING, commence at the common corner of Land Lots
129, 130, 159 and 160 of said District and Section; running thence along
the westerly land lot line of Land Lot 129 South 01 degrees 24' 28" East
637.36 feet to an iron pin placed and THE POINT OF BEGINNING; FROM SAID
POINT OF BEGINNING AS THUS ESTABLISHED, thence South 63 degrees 09' 44"
East 152.49 feet to an iron pin found on the northwesterly right-of-way
line of Georgia Highway No. 5 (at which point said road has an 80-foot
right-of-way); thence along the northwesterly right-of-way line of Georgia
Highway No. 5 and along the arc of a curve to the left (said curve being
subtended by a chord bearing South 17 degrees 08' 50" West and having a
chord distance of 94.49 feet) an arc distance of 94.56 feet to a point
located on said right-of-way line; thence continuing along said
right-of-way line South 14 degrees 32' 55" West 115.98 feet to a point
located on said right-of-way line; thence leaving said right-of-way line
South 88 degrees 46' 22" West 324.59 feet to a point; thence South 01
degrees 13' 37" East 5.00 feet to a point; thence South 88 degrees 46' 23"
West 285.00 feet to a point; thence North 08 degrees 46' 23" East 470.13
feet to an iron pin placed; thence South 89 degrees 36' 17" East 391.54
feet to an iron pin placed; thence South 01 degrees 19' 10" East 140.00
feet to an iron pin found; thence South 63 degrees 00' 18" East 71.62 feet
to an iron pin placed that is THE POINT OF BEGINNING; said tract or parcel
containing 5.53 acres (being designated "Tract B"), per plat of survey
prepared for West Stewarts Mill Associates, Ltd. and Confederation Life
Insurance Company by Crawford-Williams Assoc., Inc., dated August 11, 1986,
last revised July 27, 1987, and bearing the certification of Douglas C.
Crawford, Georgia Registered Land Surveyor No. 1833.
TRACT B
- -------
ALL THAT TRACT OR PARCEL OF LAND situated, lying and being in Land Lots 129
and 130 of the 2nd District, 5th Section, Douglas County, Georgia, and
being more particularly described as follows:
BEGINNING at a point in the centerline of a branch (which point is located
South 01 degrees 39' 46" East a distance of 281.69 feet from the common
corner of Land Lots 129, 130, 159 and 160, said District, Section and
County, as measured along the easterly land lot line of said Land Lot 130);
thence in a southeasterly direction along the centerline of said branch and
following the meanderings thereof generally along the following courses and
distances: South 80 degrees 42' 14" East 50.76 feet; South 70 degrees 45'
11" East 39.61 feet; South 60 degrees 22' 46" East 85.20 feet; South 45
degrees 00' 00" East 49.46 feet; North 81 degrees 47' 08" East 40.38 feet;
North 88 degrees 08' 56" East 23.90 feet; South 75 degrees 57' 53" East
80.38 feet to a point in the westerly right-of-way line of Georgia Highway
5 (an 80-foot right-of-way); thence South 36 degrees 04' 12" West along
said westerly right-of-way line 47.13 feet to a point; thence South 35
degrees 59' 28" West, continuing along said westerly right-of-way line,
49.95 feet to a point; thence South 36 degrees 02' 07" West, continuing
along said westerly right-of-way line, 71.37 feet to a right-of-way
monument; thence southwesterly, continuing along said westerly right-of-way
line, along a curve to the left (said curve having a chord length of 200.99
feet on a bearing of South 28 degrees 19' 04" West) an arc distance of
201.69 feet to an iron pin found, which iron pin is located northeasterly
591.70 feet, as measured along said westerly right-of-way line, from the
intersection of said westerly right-of-way line with the northerly
right-of-way line of West Stewarts Mill Boulevard (a 90-foot right-of-way);
thence North 63 degrees 09' 44" West, leaving said.westerly right-of-way
line, 152.55 feet to an iron pin placed in the westerly line of Land Lot
129 (which is also the easterly line of Land Lot 130), said District,
Section and County; thence North 63 degrees 00' 19-West 71.62 feet to an
iron pin found; thence North 01 degrees 19' 10" West 140.00 feet to an iron
pin placed; thence North 01 degrees 15' 53" West 105.17 feet to an iron pin
found; thence South 79 degrees 27' 11" East 65.27 feet to an iron pin found
in the easterly line of said Land Lot 130 (which is also the westerly line
of Land Lot 129); thence North 01 degrees 39' 46" West along said easterly
land lot line 89.95 feet to THE POINT OF BEGINNING; said tract containing
2.27 acres as shown on a survey for West Stewarts Mill Associates, Ltd. and
Confederation Life Insurance Company, prepared by Crawford-Williams Assoc.,
Inc., dated July 2, 1987, and bearing the certification of Douglas C.
Crawford, Georgia Registered Land Surveyor No. 1833.
TOGETHER WITH:
As to both Tracts A and B above:
- -------------------------------
All of the rights, benefits and privileges appertaining to such Tracts
under and pursuant to that certain Declaration of Reciprocal Easements and
Restrictions, dated December 19, 1985, by West Stewarts Mill Associates,
Ltd., a Georgia limited partnership, recorded in Deed Book 496, page 26,
records of Douglas County, Georgia, as amended by that certain First
Amendment to Declaration of Reciprocal Easements and Restrictions, dated
September 16, 1986, by West Stewarts Mill Associates, Ltd., a Georgia
limited partnership, recorded in Deed Book 528, page 452, aforesaid
records.
<PAGE>
EXHIBIT B
---------
Permitted Title Exceptions
1. Taxes and assessments for the year 1987 and subsequent years.
2. Rights of tenants in possession as tenants only under unrecorded
leases.
3. Rights of upper and lower riparian owners in and to the waters of
creeks or branches, if any, crossing or adjoining the property and the
natural flow thereof free from diminution or pollution.
4. Declaration of Reciprocal Easements executed by West Stuarts Mill
Associates, Ltd., dated May 23, 1986, and recorded at Deed Book 496,
page 26, Douglas County, Georgia, records, as modified by First
Amendment to Declaration of Reciprocal Easements and Restrictions
dated September 16, 1986, by West Stuarts Mill Associates, Ltd., a
Georgia limited partnership, filed September 17, 1986, at 12:23 p.m.
at Deed Book 528, page 452, aforesaid records.
5. Right-of-Way Deed and Agreement Regarding Right-of-Way Deeds and
Escrow Funds between Department of Transportation, State of Georgia,
and West Stuarts Mill Associates, Ltd., both being dated January 15,
1986, and filed January 31, 1986, at 3:28 p.m. at Deed Book 500, page
474, and Deed Book 500, page 476, respectively, aforesaid records.
6. The following as shown on plat of survey entitled "As Built-Park
Plaza") prepared by Douglas C. Crawford, Georgia Registered Land
Surveyor No. 1833, of Crawford-Williams, Assoc., Inc., dated August
11, 986, and last revised September 10, 1986, and supplemented by
surveyor's report dated December 22, 1986:
(a) 20-foot sanitary sewer line, with manholes, crossing western
portion of subject property.
(b) Fire hydrant located along southern property boundary.
<PAGE>
EXHIBIT C
---------
Schedule 1
("Description of "Debtor" and "Secured Party")
A. Debtor
1. Name and identity:
West Stewarts Mill Associates, Ltd., a Georgia limited partnership
whose sole general partner is Charles H. Lesley
2. The residence or principal place of business of Debtor in the
State of Georgia is located at:
185 The Exchange
Suite 200
Atlanta, Georgia 30339
3. Debtor has been using or operating under said name and identity
without change since September 4, 1985.
B. Secured Party.
CONFEDERATION LIFE INSURANCE COMPANY, a mutual insurance company
incorporated in Canada.
Schedule 2
----------
(Notice of Mailing Address of "Debtor" and "Secured Party")
1. The mailing address of Debtor is:
West Stewarts Mill Associates, Ltd.
185 The Exchange
Suite 200
Atlanta, Georgia 30339
2. The mailing address of Secured Party is:
Confederation Life Insurance Company
321 Bloor Street East
Toronto, Canada, M4W lH1
Attention: Diane Lucci
Mortgage Administration Department
<PAGE>
EXHIBIT D
---------
The Premises shall be used for a neighborhood retail center.
<PAGE>
FIRST AMENDMENT TO DEED TO SECURE
DEBT AND SECURITY AGREEMENT
THIS FIRST AMENDMENT, made and entered into this 27th day of
November, 1987, by and between WEST STEWARTS MILL ASSOCIATES, LTD., a
Georgia limited partnership (hereinafter referred to as "Borrower"), and
CONFEDERATION LIFE INSURANCE COMPANY, a mutual insurance company
incorporated in Canada (hereinafter referred to as "Lender"),
W I T N E S S E T H:
WHEREAS, on August 6, 1987, Borrower and Lender entered into that
certain Deed to Secure Debt and Security Agreement (hereinafter referred to
as the "Security Instrument"), which Security Instrument was recorded in
Deed Book 571, Page 388, Douglas County, Georgia records; and
WHEREAS, Borrower has requested, and Lender has agreed, that
Subparagraph 2.01(i) of the Security Instrument be modified to reflect more
clearly the parties intent concerning conveyance and encumbrance of
partnership interests in Borrower; and
WHEREAS, Borrower has requested, and Lender has agreed, that the
Note, as that term is defined in the Security Instrument, be amended by an
instrument entitled "First Amendment to Real Estate Note" to reflect a
different due date for payment of monthly installments of principal and
interest; and
WHEREAS, the parties hereto now desire to amend the Security
Instrument to modify Subparagraph 2.01(i) therein and to reflect the
execution of the First Amendment to Real Estate Note.
NOW, THEREFORE, for and in consideration of the sum of Ten and
No/100 Dollars ($10.00), each paid to the other, and other good and
valuable considerations, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Subparagraph 2.01(i) of the Security Instrument, appearing
on Page 16 thereof, is hereby deleted in its entirety and
there is substituted in lieu thereof the following
subparagraph:
(i) Borrower sells, assigns, conveys or transfers or
contracts to sell, assign, convey or further pledges,
hypothecates or otherwise encumbers the Premises, except in
accordance with Paragraph 1.17 of this Deed.
2. Subparagraph (a) of the Security Instrument, appearing at
the bottom of Page 2 and continuing on the top of Page 3 of
the Security Instrument, is hereby deleted in its entirety
and there is substituted in lieu thereof the following
paragraph:
(a) The debt evidenced by that certain real estate note,
dated of even date herewith, made by Borrower to the
order of Lender, as amended by First Amendment to Real
Estate Note dated November __, 1987, in the principal
face amount of Three Million Seven Hundred Twenty-Five
Thousand and No/100 Dollars ($3,725,000.00) with the
final payment being due on or before September 10,
2001, together with any and all renewals,
modifications, consolidations and extensions of the
Indebtedness evidenced thereby (hereinafter referred to
as the "Note"); and
3. Except as specifically amended by Paragraphs 1 and 2 above,
all other terms and conditions of the Security Instrument
shall remain in full force and effect.
IN WITNESS WHEREOF, Borrower and Lender have executed this First
Amendment to Deed to Secure Debt and Security Agreement, under seal, as of
the day and year first above written.
Signed, sealed and delivered
in the presence of: BORROWER
WEST STEWARTS MILL ASSOCIATES,
_____________________________ LTD., a Georgia limited
Unofficial Witness partnership
_____________________________ By:/s/ Charles H. Lesley (SEAL)
Notary Public ---------------------
Charles H. Lesley,
General Partner
My Commission Expires:
[NOTARY SEAL]
Signed, sealed and delivered
in the presence of: LENDER
CONFEDERATION LIFE INSURANCE
______________________________ COMPANY, a mutual insurance
Unofficial Witness company incorporated in Canada
______________________________ By:/s/ J.C. Curtis
Notary Public ---------------------------
Title: J.C. CURTIS
INV. V.P.-INSURANCE INV.
My Commission Expires: [CORPORATE SEAL]
[NOTARY SEAL] By:/s/ Heather A.T. Hunter
-----------------------------
H.A.T. Hunter
ASSISTANT V.P.-U.S. INVESTMENTS
<PAGE>
PROVINCE OF ONTARIO )
) SS:
JUDICIAL DISTRICT OF YORK )
BEFORE ME, a Notary Public in and for the said Judicial District
and Province, personally appeared the above named J.C. CURTIS and H.A.T.
HUNTER known to me to be the Investment Vice-President, Insurance
Investments and Assistant Vice-President, U.S. Investments respectively, of
Confederation Life Insurance Company, and acknowledged the signing of the
foregoing instrument to be their, voluntary act and deed, and the voluntary
act and deed of the said Confederation Life Insurance Company.
IN TESTIMONY WHEREOF I have hereunto subscribed my name and
affixed my notarial seal on the 27th day of November, 1987.
___________________________________
A NOTARY PUBLIC in and for the Province of
Ontario
<PAGE>
SECOND AMENDMENT TO DEED TO SECURE DEBT
AND SECURITY AGREEMENT
THIS SECOND AMENDMENT TO DEED TO SECURE DEBT AND SECURITY AGREEMENT
(the "Second Amendment") is made and entered into as of this 1st day of
November, 1993, by and between WEST STEWARTS MILL ASSOCIATES, L.P.
(successor by name change to West Stewarts Mill Associates, Ltd.), a
Georgia limited partnership ("Borrower") and CONFEDERATION LIFE INSURANCE
COMPANY, a mutual insurance company incorporated in Canada ("Lender").
W I T N E S S E T H:
WHEREAS, Borrower executed that certain Deed to Secure Debt and
Security Agreement in favor of Lender dated August 6, 1987 and recorded at
Deed Book 571, Page 388 of the Douglas County, Georgia records, as amended
by that certain First Amendment to Deed to Secure Debt and Security
Agreement by and between Lender and Borrower dated November 27, 1987 and
recorded at Deed Book S89, Page 208, aforesaid records (the "Security
Deed"), which Security Deed encumbers the real property described on
Exhibit A attached hereto and made a part hereof (the "Property"); and
WHEREAS. Borrower has requested and Lender has agreed to modify the
Note secured by the Security Deed as more particularly hereinafter set
forth.
NOW THEREFORE, for and in consideration of the covenants and
agreements contained herein, Ten and No/100 Dollars ($10.00) and other good
and valuable consideration. the receipt and sufficiency of which are hereby
acknowledged by Lender and Borrower, Lender and Borrower hereby agree as
follows.
1. NOTE MODIFICATIONS. The description of the Indebtedness contained
in subparagraph (a) located at the bottom of page 2 and continuing on the
top of page 3 of the Security Deed is hereby revised to read as follows:
(a) The debt evidenced by that certain Real Estate Note, dated
August 6, 1987, made by Borrower to the order of Lender in the
principal face amount of Three Million Seven Hundred Twenty-Five
Thousand and No/100 Dollars ($3,725,000.00) with final payment
being due on or before September 10, 2001, as amended by that
certain First Amendment to Real Estate Note dated November 27,
1987 by and between Lender and Borrower, as further amended by
that certain Modification of Real Estate Note dated November 21,
1988 by and between Lender and Borrower, and as further modified
by that certain Third Amendment to Real Estate Note of even date
by and between Lender and Borrower, together with any and all
renewals, modifications, consolidations and extensions of the
Indebtedness evidence thereby (hereinafter referred to as the
"Note").
All references to the Note contained in the Security Deed and any other
documents or agreements executed in connection therewith shall be deemed to
include references to the Note as modified by the instruments referenced
herein.
2. REAFFIRMATION. Except as modified by this Second Amendment, the
terms and conditions of the Security Deed, as amended, remain in full force
and effect, the same being republished and confirmed hereby.
IN WITNESS WHEREOF, the duly authorized representatives of Lender and
Borrower have executed this Agreement under seal as of the day and year
first above written.
As to Lender signed, sealed and LENDER:
delivered in the presence of:
CONFEDERATION LIFE INSURANCE
_______________________________ COMPANY, a mutual insurance
Unofficial Witness company incorporated in Canada
_______________________________ By: /s/ Ross D. Friend
Notary Public -------------------------
Name: Ross D. Friend
-----------------------
Title: Legal Vice President
----------------------
My Commission Expires:
By: /s/ Kevin Ellis
Notary Public -------------------------
Name: Kevin Ellis
_______________________________ -----------------------
Title: Manager Mortgage
Investments
----------------------
(NOTARY SEAL)
As to Borrower signed, sealed BORROWER:
AND delivered in the presence of:
WEST STEWARTS MILL ASSOCIATES,
L.P. (successor by name change
_______________________________ to West Stewarts Mill
Unofficial Witness Associates, Ltd.), a Georgia
limited partnership
_______________________________ By: /s/ Charles H. Lesley (SEAL)
Notary Public ---------------------
Name: Charles H. Lesley
its sole general partner
My Commission Expires:
_______________________________
(NOTARY SEAL)
ESCROW AGREEMENT
THIS ESCROW AGREEMENT ("Agreement") is made as of this 1st day of
November, 1993, by and between CONFEDERATION LIFE INSURANCE COMPANY, a
mutual life insurance company incorporated in Canada ("Lender"), WEST
STEWARTS MILL ASSOCIATES, L.P., a Georgia limited partnership ("Borrower")
and SHOPTAW-JAMES, INC., a Georgia corporation ("Escrow Agent").
W I T N E S S E T H:
WHEREAS, Borrower executed that certain Real Estate Note dated August
6, 1987 in favor of Lender in the original principal amount of Three
Million Seven Hundred Twenty-Five Thousand and No/100 Dollars
($3,725,000.00), as amended by that certain First Amendment to Real Estate
Note ("First Amendment") dated November 27, 1987 by and between Lender and
Borrower, and as further amended by that certain Modification of Real
Estate Note ("Second Amendment") dated November 21, 1988 by and between
Lender and Borrower, and as further amended by that certain Third Amendment
to Real Estate Note ("Third Amendment") dated as of the date hereof by and
between Lender and Borrower (as so amended, the "Note"); and
WHEREAS, the Note is secured by (among other things) that certain Deed
to Secure Debt and Security Agreement dated August 6, 1987, executed by
Borrower in favor of Lender and recorded at Deed Book 571, Page 388 of the
Douglas County, Georgia records, as amended by that certain First Amendment
to Deed to Secure Debt and Security Agreement dated November 27, 1987 by
and between Borrower and Lender and recorded at Deed Book 589, Page 208,
aforesaid records, and as further amended by that certain Second Amendment
to Deed to Secure Debt and Security Agreement dated as of the date hereof
by and between Borrower and Lender (as so amended, the "Security Deed"),
which Security Deed encumbers certain improved commercial real estate
located in Douglas County, Georgia described on Exhibit A attached hereto
and made a part hereof (the "Property"), which Property is generally known
as Park Plaza Shopping Center.
WHEREAS, in consideration of Lender's agreement to modify the interest
rate and payment schedule under the Note as contemplated by the Third
Amendment, Lender has requested and Borrower has agreed to deposit with
Escrow Agent the Security Deposits and Net Operating Income from the
Property to be held and disbursed in the manner hereinafter set forth.
NOW THEREFORE, for and in consideration of the premises, the mutual
covenants and agreements set forth herein, and in the Third Amendment, Ten
and No/100 Dollars ($10.00) and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by Lender,
Borrower and Escrow Agent, the parties hereto hereby agree as follows:
1. Appointment of Escrow Agent. Borrower and Lender do hereby
appoint Escrow Agent to perform the duties of Escrow Agent hereunder, and
Escrow Agent hereby accepts such appointment and agrees to perform the
duties and obligations imposed upon it by this Agreement.
2. Payments to Escrow Agent. Commencing on November 20, 1993 and
within twenty (20) days of the end of each calendar month thereafter
through the date on which all amounts evidenced or secured by the Note and
Security Deed have been paid in full (the "Escrow Term"), Borrower shall
deliver to Escrow Agent the Net Operating Income and all Security Deposits
related to the Property.
All amounts paid by Borrower to Escrow Agent hereunder shall be
held and disbursed by Escrow Agent in the manner hereinafter set forth.
Borrower's payment of Net Operating Income due on or before November 20,
1993 shall be for the month of October, 1993. Escrow Agent hereby
acknowledges receipt of $9,717.83 in Security Deposits from Borrower.
3. Disbursement of Escrow Funds. So long as no Event of Default
shall have occurred and be continuing under the Note or the Security Deed,
Lender and Borrower agree that the Escrow Funds shall be used to refund
Security Deposits to tenants which have not forfeited same under their
lease at the Property and pay such tenant improvement costs, leasing
commissions paid to third parties and Charter Properties, Inc., Borrower's
legal fees pertaining specifically to the leasing of space at the Property
or property management, and major repairs and replacements of the
improvements located on the Property which are reasonable and customary in
the market in which the Property is located ("Capital Expenditures"), and
improvements to the Property which are approved by Lender in its sole and
absolute discretion. In order to obtain a disbursement of Escrow Funds,
Borrower shall deliver a written request to Escrow Agent and Lender (a
"Funding Request") containing such documentation, evidence and lien waivers
(in the case of brokerage fees or expenses for construction, maintenance or
repairs) as Lender shall reasonably request ("Backup Documentation") to
substantiate the expenses to be funded from the Escrow Funds and satisfy
any lien rights associated with such items of expense. Disbursements of
the Escrow Funds under this Agreement shall thereafter be made by Escrow
Agent only upon receipt of written directions from Lender approving in
whole or in part the Funding Request. Within ten (10) calendar days of
receipt of any Funding Request, Lender shall notify Escrow Agent of the
amount, and the manner in which Escrow Funds are to be distributed.
Lender, at its option, may require Escrow Agent to distribute Escrow Funds
to Borrower, or directly to any third parties who are entitled to receive
any portion of the Escrow Funds. Lender shall not be obligated to request
disbursements of the Escrow Funds more often than once in any calendar
month; provided, however, Lender hereby agrees that it shall also review
and approve (or disapprove) a Funding Request within ten (10) days of a
written request by Borrower containing the Backup Documentation and a fully
executed lease for space at the Property.
Except as set forth in Section 6.6 of said Third Amendment, in
addition to disbursements for Capital Expenditures and Security Deposits,
in the event the Escrow Funds (excluding Security Deposits which have not
been forfeited by any tenant) shall exceed One Hundred Thousand Dollars
($100,000) at the end of any calendar quarter during the Escrow Term, the
amount of Escrow Funds in excess of said $100,000 shall be paid to Lender
and applied against the outstanding principal balance under the Note.
4. Escrow Funds as Security for Loan. The Escrow Funds shall
constitute additional collateral for the indebtedness and obligations of
Borrower under the Note and Security Deed. Borrower does hereby grant to
Lender security title and a continuing, general lien upon and security
interest in the Escrow Funds in order to secure Borrower's obligations
under the Note and Security Deed. Upon any default by Borrower under the
Note or the Security Deed which extends beyond any applicable grace or cure
period provided under the Note or the Security Deed, Lender may, at its
option, notify Escrow Agent that such default has occurred and direct
Escrow Agent to immediately deliver all or any portion of the Escrow Funds
to Lender. Escrow Agent shall be entitled and is hereby directed to rely
solely on directions from Lender with respect to the occurrence of such a
default and any disbursement of the Escrow Funds to Lender as a result
thereof.
5. Investment of Escrow Funds. Escrow Agent shall promptly deposit
any Escrow Funds in an interest-bearing account with The Chattahoochee
National Bank and shall leave said funds deposited in such account until
disbursed as provided in this Agreement. Interest accruing from time to
time with respect to the Escrow Funds shall be reported for federal and
state income tax purposes as income of Borrower. All interest earned on
the Escrow Funds shall remain in and become part of the Escrow Funds.
Borrower hereby represents and warrants that its Federal Employer
Identification Number is 58-1651242.
6. Payment of Escrow Funds to Lender. Lender and Borrower hereby
agree that in the event any amounts of the Escrow Funds are disbursed to
Lender pursuant to Section 6.5(b) of the Third Amendment, no prepayment
premium shall be payable to Lender under the Note solely as a result of
such amounts being paid in advance of the maturity date of the Note.
7. Escrow Agent Fees. Escrow Agent shall be entitled to a fee of
$350.00 per year as compensation for its holding and administration of the
Escrow Funds. Escrow Agent shall deduct said compensation from the Escrow
Funds held under this Agreement.
8. Substitute Escrow Agent. Upon written agreement of Lender and
Borrower, Lender and Borrower, at their discretion, may appoint a
substitute escrow agent at any time hereafter upon written notice to Escrow
Agent. Such new escrow agent shall thereupon become successor to the
Escrow Agent and shall be vested with all powers, duties and obligations
herein conferred upon Escrow Agent in the same manner and to the same
extent as if originally named herein. Upon appointment of a new escrow
agent and a transfer by Escrow Agent to such new escrow agent of the Escrow
Funds, Shoptaw-James, Inc. shall be released from and relieved from all
obligations and liability arising hereunder from and after the date of such
transfer.
9. Release and Indemnity. Lender and Borrower hereby release and
discharge Escrow Agent from all matters with respect to the subject matter
hereof (except for Escrow Agent's negligence or intentional wrongdoing) and
agree that in performing any of its duties hereunder, Escrow Agent shall
not incur any liability to anyone for any damages, losses or expenses,
except for those caused by Escrow Agent's negligence or intentional
wrongdoing, and without limiting the generality of the foregoing, Escrow
Agent shall not incur any liability with respect to (a) any action taken or
omitted in good faith with respect to any questions relating to the duties
and responsibilities of the Escrow Agent under this Agreement, or (b) any
action taken or omitted in reliance upon any instrument, including any
written notice or instruction provided for in this Agreement, not only as
to its due execution and the validity and effectiveness of its provisions,
but also as to the truth and accuracy of any information contained therein,
which the Escrow Agent shall in good faith believe to be genuine, to have
been signed or presented by a proper person or persons, and to conform with
the provisions of this Agreement. Lender and Borrower, jointly and
severally, hereby agree to indemnify and hold harmless Escrow Agent against
any and all loss, claims, damages, liabilities and expenses, which may be
imposed upon Escrow Agent or incurred by Escrow Agent in connection with
its acceptance of the appointment as Escrow Agent hereunder, or the
performance of its duties hereunder, except with respect to its negligence
or intentional wrongdoing.
10. Disputes. Notwithstanding anything contained in this Agreement
to the contrary, in the event of any dispute between Lender and Borrower,
or in the event that Escrow Agent is given contrary instructions by Lender
and Borrower, Escrow Agent, at its option, shall be permitted to tender
into the registry of the Superior Court of Cobb County, Georgia all monies
held by it, together with such documents and pleadings as it may deem
appropriate, and interplead Lender and Borrower with respect thereto,
whereupon Escrow Agent's liabilities and obligations hereunder shall be
terminated.
11. Time of Essence. Time is of the essence of each and every
provision in this Agreement.
12. Binding. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective representatives,
heirs, successors, and assigns; provided, however, that Escrow Agent may
not delegate any of its duties, obligations, or responsibilities hereunder
to any other person or entity without the prior written consent of Lender
and Borrower.
13. Notices. Any notice, request, demand, instruction, or other
communication (a "Notice") to be given to any party concerning this
Agreement may be given by the party or its counsel and shall be deemed to
have been properly sent and given when delivered by hand or when sent by
certified mail, return receipt requested, or by reputable courier service.
If delivered by hand, a Notice shall be deemed to have been sent, given,
and received when actually received by the addressee. If sent by certified
mail, a Notice shall be deemed to have been sent and given when properly
deposited with the United States Postal Service, with the proper address
and postage paid therewith, and shall be deemed to have been received on
the third (3rd) business day following the date of such deposit, whether or
not actually received by addressee. If sent by courier service, a Notice
shall be deemed to have been sent and given when actually delivered by said
courier service. The addresses to which Notices shall be sent are:
If to Borrower: West Stewarts Mill Associates, L.P.
c/o Charter Properties, Inc.
1815 The Exchange
Suite 100
Atlanta, Georgia 30339
Attn: Mr. Charles H. Lesley, President
If to Lender: Confederation Life Insurance Company
260 Interstate North
Atlanta, Georgia 30339
Attn: Ms. Peggy A. Ramsey
With a copy to: Confederation Life Insurance Company
260 Interstate North
Atlanta, Georgia 30339
Attn: Monty S. Levy, Esq., Assistant Counsel
If to Escrow Agent: Shoptaw-James, Inc.
5871 Glenridge Drive
Suite 200
Atlanta, Georgia 30339
Attn: Mr. Larry Brown
Each party shall have the right to change the address to which Notices to
it are to be sent by giving written notice of said change to the other
parties as provided in this Section. If any Notice actually shall not be
received by the addressee due to said addressee's failure or refusal to
furnish to the other party an accurate current address or due to the
addressee's failure or refusal to accept a delivery tendered at the address
specified in or pursuant to this Section, then, in such event, said Notice
conclusively shall be deemed to have been received by addressee on the
earlier to occur of (a) the time specified in this Section, or (b) when a
delivery attempt was made to the address specified in or pursuant to this
Section.
14. Participation in Negotiation and Preparation. The parties
acknowledge that each party and its counsel have participated in the
negotiation and preparation of this Agreement. This Agreement shall be
construed without regard to any presumption or other rule requiring
construction against the party causing the Agreement to be drafted.
15. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Georgia.
16. Third Amendment. The terms and provision of the Third Amendment
are incorporated herein by this reference and made a part hereof in the
same manner as if set forth herein in full. In the event of any conflict
between the terms of this Agreement and the terms of said Third Amendment,
the terms of the Third Amendment shall control and be binding.
17. Capitalized Terms. The capitalized terms used in this Agreement
shall have the meaning attributed to them in the Third Amendment unless
otherwise defined herein.
IN WITNESS WHEREOF, the duly authorized representatives of Lender,
Borrower and Escrow Agent have executed this Agreement under seal as of the
date first written above.
LENDER:
CONFEDERATION LIFE INSURANCE
COMPANY, a mutual insurance company
incorporated in Canada
By:/s/ Ross D. Friend
--------------------------------
Name: Ross D. Friend
------------------------------
Title: Legal Vice President
-----------------------------
By:/s/ Kevin Ellis
--------------------------------
Name: Kevin Ellis
------------------------------
Title: Manager Mortgage Investments
-----------------------------
BORROWER:
WEST STEWARTS MILL ASSOCIATES, L.P.
(successor by name change to West Stewarts
Mill Associates, Ltd.), a Georgia limited
partnership
By: /s/ Charles H. Lesley (SEAL)
--------------------------
Name: Charles H. Lesley,
its sole general partner
ESCROW AGENT:
SHOPTAW-JAMES, INC.
By:/s/ Larry D. Brown
--------------------------------
Name: Larry D. Brown
------------------------------
Title: Vice President
-----------------------------
Attest:/s/ Rebecca J. Dumont
----------------------------
Name: Rebecca J. Dumont
------------------------------
Title: Associate Manager - Loan
Servicing
-----------------------------
(CORPORATE SEAL)<PAGE>
EXHIBIT A
---------
TRACT A
- -------
ALL THAT TRACT OR PARCEL OF LAND lying, situated and being in Land Lots 129
and 130 of the 2nd District, 5th Section, Douglas County, Georgia, which
tract is more particularly described as follows:
TO FIND THE POINT OF BEGINNING, commence at the common corner of Land Lots
129, 130, 159 and 160 of said District and Section; running thence along
the westerly land lot line of Land Lot 129 South 01 degrees 24' 28" East
637.36 feet to an iron pin placed and THE POINT OF BEGINNING; FROM SAID
POINT OF BEGINNING AS THUS ESTABLISHED, thence South 63 degrees 09' 44"
East 152.49 feet to an iron pin found on the northwesterly right-of-way
line of Georgia Highway No. 5 (at which point said road has an 80-foot
right-of-way); thence along the northwesterly right-of-way line Of Georgia
Highway No. 5 and along the arc of a curve to the left (said curve being
subtended by a chord bearing South 17 degrees 08' 50" West and having a
chord distance of 94.49 feet) an arc distance of 94.56 feet to a point
located on said right-of-way line; thence continuing along said
right-of-way line South 14 degrees 32' 55" West 115.98 feet to a point
located on said right-of-way line; thence leaving said right-of-way line
South 88 degrees 46' 22" West 324.59 feet to a point; thence South 01
degree 13' 37" East 5.00 feet to a point; thence South 88 degrees 46' 23"
West 285.00 feet to a point; thence North 08 degrees 46' 23" East 470.13
feet to an iron pin placed; thence South 89 degrees 36' 17" East 391.54
feet to an iron pin placed; thence South 01 degree 19' 10" East 140.00 feet
to an iron pin found; thence South 63 degrees 00' 18" East 71.62 feet to an
iron pin placed that is THE POINT OF BEGINNING; said tract or parcel
containing 5.53 acres (being designated "Tract B"), per plat of survey
prepared for West Stewarts Mill Associates, Ltd. and Confederation Life
Insurance Company by Crawford-Williams Assoc., Inc., dated August 11, 1986,
last revised July 27, 1987, and bearing the certification of Douglas C.
Crawford, Georgia Registered Land Surveyor No. 1833.
TRACT B
- -------
ALL THAT TRACT OR PARCEL OF LAND situated, lying and being in Land Lots 129
and 130 of the 2nd District, 5th Section, Douglas County, Georgia, and
being more particularly described as follows:
BEGINNING at a point in the centerline of a branch (which point is located
South 01 degrees 39' 46" East a distance of 281.69 feet from the common
corner of Land Lots 129, 130, 159 and 160, said District, Section and
County, as measured along the easterly land lot line of said Land Lot 130);
thence in a southeasterly direction along the centerline of said branch and
following the meanderings thereof generally along the following courses and
distances: South 80 degrees 42' 14" East 50.76 feet; South 70 degrees 45'
11" East 39.61 feet: South 60 degrees 22' 46" East 85.20 feet; South 45
degrees 00' 00" East 49.46 feet; North 81 degrees 47' 08" East 40.38 feet;
North 88 degrees 08' 56" East 23.90 feet; South 75 degrees 57' 53" East
80.38 feet to a point in the westerly right-of-way line of Georgia Highway
5 (an 80-foot right-of-way); thence South 36 degrees 04' 12" West along
said westerly right-of-way line 47.13 feet to a point; thence South 35
degrees 59' 28" West, continuing along said westerly right-of-way line,
49.95 feet to a point; thence South 36 degrees 02' 07" West, continuing
along said westerly right-of-way line, 71.37 feet to a right-of-way
monument; thence southwesterly, continuing along said westerly right-of-way
line, along a curve to the left (said curve having a chord length of 200.99
feet on a bearing of South 28 degrees 19' 04" West) an arc distance of
201.69 feet to an iron pin found, which iron pin is located northeasterly
591.70 feet, as measured along said westerly right-of-way line, from the
intersection of said westerly right-of-way line with the northerly
right-of-way line of West Stewarts Mill Boulevard (a 90-foot right-of-way);
thence North 63 degrees 09' 44" West, leaving said westerly right-of-way
line, 152.55 feet to an iron pin placed in the westerly line of Land Lot
129 (which is also the easterly line of Land Lot 130), said District,
Section and County; thence North 63 degrees 00' 19" West 71.62 feet to an
iron pin found; thence North 01 degree 19' 10" West 140.00 feet to an iron
pin placed; thence North 01 degree 15' 53" West 105.17 feet to an iron pin
found; thence South 79 degrees 27' 11" East 65.27 feet to an iron pin found
in the easterly line of said Land Lot 130 (which is also the westerly line
of Land Lot 129); thence North 01 degree 39' 46" West along said easterly
land lot line 89.95 feet to THE POINT OF BEGINNING; said tract containing
2.27 acres as shown on a survey for West Stewarts Mill Associates, Ltd. and
Confederation Life Insurance Company, prepared by Crawford-Williams Assoc.,
Inc., dated July 2, 1987, and bearing the certification of Douglas C.
Crawford, Georgia Registered Land Surveyor No. 1833.
TOGETHER WITH:
As to both Tracts A and B above:
- -------------------------------
All of the rights, benefits and privileges appertaining to such Tracts
under and pursuant to that certain Declaration of Reciprocal Easements and
Restrictions, dated December 19, 1985, by West Stewarts Mill Associates,
Ltd., a Georgia limited partnership, recorded in Deed Book 496, page 26,
records of Douglas County, Georgia, as amended by that certain First
Amendment to Declaration of Reciprocal Easements and Restrictions, dated
September 16, 1986, by West Stewarts Mill Associates, Ltd., a Georgia
limited partnership, recorded in Deed Book 528, page 452, aforesaid
records.
PROMISSORY NOTE
$10,670,000.00 New York, New York
July 31, 1996
FOR VALUE RECEIVED MABLETON VILLAGE ASSOCIATES, L.L.C., a Georgia
limited liability company, as maker, having its principal place of business
c/o Charter Properties, Inc., 4501 Circle 75 Parkway, Suite A-1164,
Atlanta, Georgia 30339 ("Borrower"), hereby unconditionally promises to pay
to the order of Lehman Brothers Holdings Inc. d/lo/a Lehman Capital, a
Division of Lehman Brothers Holdings Inc., a Delaware corporation, having
an address at Three World Financial Center, 200 Vesey Street, New York, New
York 10285 ("Lender"), or at such other place as the holder hereof may from
time to time designate in writing, the principal sum of Ten Million Six
Hundred Seventy Thousand and No/00 Dollars ($10,670,000.00), in lawful
money of the United States of America with interest thereon to be computed
from the date of this Note at the Applicable Interest Rate (defined below),
and to be paid in installments as follows:
1. PAYMENT TERMS
A payment of interest only on July 30, 1996;
The Constant Monthly Payment (hereinafter defined) on the first day of
September, 1996 and on the first day of each calendar month thereafter up
to and including the first day of August, 2006;
each of the payments to be applied as follows:
(i) first, to the payment of interest computed at the Applicable
Interest Rate; and
(ii) the balance toward the reduction of the principal sum;
and the balance of the principal sum and all interest thereon shall be due
and payable on the first day of August, 2006 (the "Maturity Date").
Interest on the principal sum of this Note shall be calculated on the basis
of a three hundred sixty (360) day year based on twelve (12) thirty (30)
day months except that interest due and payable for a period of less than a
full month shall be calculated by multiplying the actual number of days
elapsed in such period by a daily rate based on said 360-day year.
2. INTEREST
The term "Applicable Interest Rate" as used in the Security Instrument
(defined below) and this Note shall mean an interest rate equal to nine and
twenty-two one hundredths percent (9.22%) per annum.
The term "Constant Monthly Payment" as used herein shall mean a
payment equal to $87,547.60.
3. DEFAULT AND ACCELERATION
(a) The whole of the principal sum of this Note, (b) interest,
default interest, late charges and other sums, as provided in this Note,
the Security Instrument or the Other Security Documents (defined below),
(c) all other monies agreed or provided to be paid by Borrower in this
Note, the Security Instrument or the Other Security Documents, (d) all sums
advanced pursuant to the Security Instrument to protect and preserve the
Property (defined below) and the lien and the security interest created
thereby, and (e) all sums advanced and costs and expenses incurred by
Lender in connection with the Debt (defined below) or any part thereof, any
renewal, extension, or change of or substitution for the Debt or any part
thereof, or the acquisition or perfection of the security therefor, whether
made or incurred at the request of Borrower or Lender (all the sums
referred to in (a) through (e) above shall collectively be referred to as
the "Debt") shall without notice become immediately due and payable at the
option of Lender if any payment required in this Note is not paid prior to
the tenth (10) day after the date when due or on the Maturity Date or on
the happening of any other default, after the expiration of any applicable
notice and grace periods, herein or under the terms of the Security
Instrument or any of the Other Security Documents (collectively, an "Event
of Default").
4. DEFAULT INTEREST
Borrower does hereby agree that upon the occurrence of an Event of
Default, Lender shall be entitled to receive and Borrower shall pay
interest on the entire unpaid principal sum at a rate (the "Default Rate")
equal to (i) the greatest of (a) the Applicable Interest Rate plus three
percent (3%) or (b) the Prime Rate (as hereinafter defined) plus four
percent (4%) or (ii) the maximum interest rate that Borrower may by law
pay, whichever is lower. The Default Rate shall be computed from the
occurrence of the Event of Default until the earlier of the date upon which
the Event of Default is cured or the date upon which the Debt is paid in
full. Interest calculated at the Default Rate shall be added to the Debt,
and shall be deemed secured by the Security Instrument. This clause,
however, shall not be construed as an agreement or privilege to extend the
date of the payment of the Debt, nor as a waiver of any other right or
remedy accruing to Lender by reason of the occurrence of any Event of
Default.
The "Prime Rate" shall mean the annual rate of interest publicly
announced by Citibank, N.A. in New York, New York, as its base rate, as
such rate shall change from time to time. If Citibank, N.A. ceases to
announce a base rate, Prime Rate shall mean the rate of interest published
in The Wall Street Journal from time to time as the Prime Rate. If more
than one Prime Rate is published in The Wall Street Journal for a day, the
average of the Prime Rates shall be used, and such average shall be rounded
up to the nearest one-quarter of one percent (.25%). If The Wall Street
Journal ceases to publish the "Prime Rate" the Lender shall select an
equivalent publication that publishes such "Prime Rate", and if such prime
rates are no longer generally published or are limited, regulated or
administered by a governmental or quasi-governmental body, then Lender
shall select a comparable interest rate index.
5. PREPAYMENT
Provided no Event of Default exists, the principal balance of this
Note may be prepaid, in whole but not in part, upon: (i) not less than 30
days and not more than 45 days prior written notice (the "Prepayment
Notice") to Lender specifying the scheduled payment date on which
prepayment is to be made (the "Prepayment Date"); (ii) payment of all
accrued and unpaid interest on the outstanding principal balance of this
Note to and including the Prepayment Date together with a payment of all
interest which would have accrued on the principal balance of this Note to
and including the first day of the calendar month immediately following the
Prepayment Date, if such prepayment occurs on a date which is not the first
day of a calendar month (the "Shortfall Interest Payment"); (iii) payment
of all other sums then due under this Note, the Security Instrument and the
Other Security Documents and (iv) payment of a prepayment consideration
(the "Prepayment Consideration") in an amount equal to the greater of: (A)
one (1%) percent of the principal amount of this Note being prepaid; and
(B) the present value of a series of payments each equal to the Payment
Differential (hereinafter defined) and payable on each monthly payment date
over the remaining original term of this Note and on the Maturity Date
discounted at the Reinvestment Yield (hereinafter defined) for the number
of months remaining from the Prepayment Date to each such monthly payment
date and the Maturity Date. The term "Reinvestment Yield" as used herein
shall be equal to the lesser of (a) the yield on the U.S. Treasury issue
(primary issue) with a maturity date closest to the Maturity Date, or (b)
the yield on the U.S. Treasury issue (primary issue) with a term equal to
the remaining average life of the Debt, with each such yield being based on
the bid price for such issue as published in The Wall Street Journal on the
date that is 14 days prior to the Prepayment Date set forth in the
Prepayment Notice (or, if such bid price is not published on that date, the
next preceding date on which such bid price is so published) and converted
to a monthly compounded nominal yield. The term "Payment Differential" as
used herein shall be equal to (z) the Applicable Interest Rate minus the
Reinvestment Yield, divided by (y) 12 and multiplied by (z) the principal
sum outstanding after application of the Constant Monthly Payment due on
such Prepayment Date, provided that the Payment Differential shall in no
event be less than zero. In no event, however, shall Lender be required to
reinvest any prepayment proceeds in U.S. Treasury obligations or otherwise.
Lender shall notify Borrower of the amount, and the basis of determination,
of the required Prepayment Consideration. If a Prepayment Notice is given
by Borrower to Lender pursuant to this Article 5, the principal balance of
this Note and the other sums required under this Article shall be due and
payable on the Prepayment Date.
Lender shall not be obligated to accept any prepayment of the
principal balance of this Note unless it is accompanied by all sums due in
connection therewith. Notwithstanding anything contained herein to the
contrary, provided no Event of Default exists, no Prepayment Consideration
shall be due in connection with a complete or partial prepayment resulting
from the application of insurance proceeds or condemnation awards pursuant
to Sections 3.3 and 3.6 of the Security Instrument. In the event of any
permitted partial prepayment of the principal balance of this Note, the
amount of principal prepaid (but not including any Prepayment Consideration
or interest) shall be applied to the principal last due under this Note and
shall not release Borrower from the obligation to pay the Constant Monthly
Payments next becoming due under this Note and the Constant Monthly Payment
shall not be adjusted or recalculated as a result of such partial
prepayment.
If a Default Prepayment (defined herein) occurs, Borrower shall pay to
Lender the entire Debt, including, without limitation, the Prepayment
Consideration.
For purposes of this Note, the term "Default Prepayment" shall mean a
prepayment of the principal amount of this Note made during the continuance
of any Event of Default or after an acceleration of the Maturity Date under
any circumstances, including, without limitation, a prepayment occurring in
connection with reinstatement of the Security Instrument provided by
statute under foreclosure proceedings or exercise of a power of sale, any
statutory right of redemption exercised by Borrower or any other party
having a statutory right to redeem or prevent foreclosure, any sale in
foreclosure or under exercise of a power of sale or otherwise.
6. SECURITY
This Note is secured by the Security Instrument and the Other Security
Documents. The term "Security Instrument" as used in this Note shall mean
the Deed to Secure Debt and Security Agreement dated the date hereof in the
principal sum of $10,670,000 given by Borrower to (or for the benefit of)
Lender covering the fee estate of Borrower in certain premises located in
Cobb County, State of Georgia, and other property, as more particularly
described therein (collectively, the "Property") and intended to be duly
recorded in said County. The term "Other Security Documents" as used in
this Note shall mean all and any of the documents other than this Note or
the Security Instrument now or hereafter executed by Borrower and/or others
and by or in favor of Lender, which wholly or partially secure or guarantee
payment of this Note including, but not limited to, that certain Loan
Agreement dated the date hereof between Borrower and Lender. Whenever
used, the singular number shall include the plural, the plural number shall
include the singular, and the words "Lender" and "Borrower" shall include
their respective successors, assigns, heirs, executors and administrators.
All of the terms, covenants and conditions contained in the Security
Instrument and the Other Security Documents are hereby made part of this
Note to the same extent and with the same force as if they were fully set
forth herein.
7. SAVINGS CLAUSE
This Note is subject to the express condition that at no time shall
Borrower be obligated or required to pay interest on the principal balance
due hereunder at a rate which could subject Lender to either civil or
criminal liability as a result of being in excess of the maximum interest
rate which Borrower is permitted by applicable law to contract or agree to
pay. If by the terms of this Note, Borrower is at any time required or
obligated to pay interest on the principal balance due hereunder at a rate
in excess of such maximum rate, the Applicable Interest Rate or the Default
Rate, as the case may be, shall be deemed to be immediately reduced to such
maximum rate and all previous payments in excess of the maximum rate shall
be deemed to have been payments in reduction of principal and not on
account of the interest due hereunder. All sums paid or agreed to be paid
to Lender for the use, forbearance, or detention of the Debt, shall, to the
extent permitted by applicable law, be amortized, prorated, allocated, and
spread throughout the full stated term of the Note until payment in full so
that the rate or amount of interest on account of the Debt does not exceed
the maximum lawful rate of interest from time to time in effect and
applicable to the Debt for so long as the Debt is outstanding.
8. LATE CHARGE
If any sum payable under this Note is not paid prior to the tenth
(10th) day after the date on which it is due, Borrower shall pay to Lender
upon demand an amount equal to the lesser of five percent (5%) of the
unpaid sum or the maximum amount permitted by applicable law to defray the
expenses incurred by Lender in handling and processing the delinquent
payment and to compensate Lender for the loss of the use of the delinquent
payment and the amount shall be secured by the Security Instrument and the
Other Security Documents.
9. NO ORAL CHANGE
This Note may not be modified, amended, waived, extended, changed,
discharged or terminated orally or by any act or failure to act on the part
of Borrower or Lender, but only by an agreement in writing signed by the
party against whom enforcement of any modification, amendment, waiver,
extension, change, discharge or termination is sought.
10. JOINT AND SEVERAL LIABILITY
If Borrower consists of more than one person or party, the obligations
and liabilities of each person or party shall be joint and several.
11. WAIVERS
Borrower and all others who may become liable for the payment of all
or any part of the Debt do hereby severally waive presentment and demand
for payment, notice of dishonor, protest and notice of protest and
non-payment and all other notices of any kind. No release of any security
for the Debt or extension of time for payment of this Note or any
installment hereof, and no alteration, amendment or waiver of any provision
of this Note, the Security Instrument or the Other Security Documents made
by agreement between Lender or any other person or party shall release,
modify, amend, waive, extend, change, discharge, terminate or affect the
liability of Borrower, and any other person or entity who may become liable
for the payment of all or any part of the Debt, under this Note, the
Security Instrument or the Other Security Documents. No notice to or
demand on Borrower shall be deemed to be a waiver of the obligation of
Borrower or of the right of Lender to take further action without further
notice or demand as provided for in this Note, the Security Instrument or
the Other Security Documents. If Borrower is a partnership, the agreements
herein contained shall remain in force and applicable, notwithstanding any
changes in the individuals comprising the partnership, and the term
"Borrower," as used herein, shall include any alternate or successor
partnership, but any predecessor partnership and their partners shall not
thereby be released from any liability. If Borrower is a corporation, the
agreements contained herein shall remain in full force and applicable
notwithstanding any changes in the shareholders comprising, or the officers
and directors relating to, the corporation, and the term "Borrower" as used
herein, shall include any alternative or successor corporation, but any
predecessor corporation shall not be relieved of liability hereunder.
(Nothing in the foregoing sentence shall be construed as a consent to, or a
waiver of, any prohibition or restriction on transfers of interests in such
partnership which may be set forth in the Security Instrument or any Other
Security Document.)
12. TRANSFER
Upon the transfer of this Note, Borrower hereby waiving notice of any
such transfer, Lender may deliver all the collateral mortgaged, granted,
pledged or assigned pursuant to the Security Instrument and the Other
Security Documents, or any part thereof, to the transferee who shall
thereupon become vested with all the rights herein or under applicable law
given to Lender with respect thereto, and Lender shall thereafter forever
be relieved and fully discharged from any liability or responsibility in
the matter; but Lender shall retain all rights hereby given to it with
respect to any liabilities and the collateral not so transferred.
13. WAIVER OF TRIAL BY JURY
BORROWER HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER
IN CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN
EVIDENCED BY THIS NOTE, THE APPLICATION FOR THE LOAN EVIDENCED BY THIS
NOTE, THIS NOTE, THE SECURITY INSTRUMENT OR THE OTHER SECURITY DOCUMENTS OR
ANY ACTS OR OMISSIONS OF LENDER, ITS OFFICERS, EMPLOYEES, DIRECTORS OR
AGENTS IN CONNECTION THEREWITH.
14. EXCULPATION
(a) Except as otherwise provided herein, in the Security Instrument
or in the Other Security Documents, Lender shall not enforce the liability
and obligation of Borrower to perform and observe the obligations contained
in this Note or the Security Instrument by any action or proceeding wherein
a money judgment shall be sought against Borrower, except that Lender may
bring a foreclosure action, action for specific performance or other
appropriate action or proceeding to enable Lender to enforce and realize
upon this Note, the Security Instrument, the Other Security Documents, and
the interest in the Property, the Rents (as defined in the Security
Instrument) and any other collateral given to Lender created by this Note,
the Security Instrument and the Other Security Documents; provided,
however, that any judgment in any such action or proceeding shall be
enforceable against Borrower only to the extent of Borrower's interest in
the Property, in the Rents and in any other collateral given to Lender.
Lender, by accepting this Note and the Security Instrument, agrees that it
shall not, except as otherwise provided in Section 11.10 of the Security
Instrument, sue for, seek or demand any deficiency judgment against
Borrower in any such action or proceeding, under or by reason of or under
or in connection with this Note, the Other Security Documents or the
Security Instrument. The provisions of this Article shall not, however,
(i) constitute a waiver, release or impairment of any obligation evidenced
or secured by this Note, the Other Security Documents or the Security
Instrument; (ii) impair the right of Lender to name Borrower as a party
defendant in any action or suit for judicial foreclosure and sale under the
Security Instrument; (iii) affect the validity or enforceability of any
indemnity, guaranty, master lease or similar instrument made in connection
with this Note, the Security Instrument, or the Other Security Documents;
(iv) impair the right of Lender to obtain the appointment of a receiver;
(v) impair the enforcement of the Assignment of Leases and Rents executed
in connection herewith; (vi) impair the right of Lender to obtain a
deficiency judgment or judgment on the Note against Borrower if necessary
to obtain any insurance proceeds or condemnation awards to which Lender
would otherwise be entitled under the Security Instrument; provided
however, Lender shall only enforce such judgment against the insurance
proceeds and/or condemnation awards; or (vii) impair the right of Lender to
enforce the provisions of Sections 11.10, 13.2, 13.3 and 13.4 of the
Security Instrument.
(b) Notwithstanding the provisions of this Article 14 to the
contrary, Borrower shall be personally liable to Lender for the Losses (as
defined in the Security Instrument) it incurs due to: (i) fraud or
intentional misrepresentation by Borrower or any other person or entity in
connection with the execution and the delivery of this Note, the Security
Instrument or the Other Security Documents; (ii) Borrower's misapplication
or misappropriation of Rents received by Borrower after the occurrence of
an Event of Default; (iii) Borrower's misapplication or misappropriation of
tenant security deposits or Rents collected in advance; (iv) the
misapplication or the misappropriation of insurance proceeds or
condemnation awards; (v) Borrower's failure to pay Taxes (as defined in the
Security Instrument), Insurance Premiums (as defined in the Security
Instrument), Other Charges (as defined in the Security Instrument) (except
to the extent that sums sufficient to pay such amounts have been deposited
in escrow with Lender pursuant to the terms of the Security Instrument),
charges for labor or materials or other charges that can create liens on
the Property; or (vi) Borrower's failure to comply with the provisions of
Section 4.2, 12.1 or 12.2 of the Security Instrument.
(c) Notwithstanding the foregoing, the agreement of Lender not to
pursue recourse liability as set forth in Subsection (a) above SHALL BECOME
NULL AND VOID and shall be of no further force and effect in the event of
Borrower's default under Section 3.11, 4.3, 8.1, 8.2, 8.3 or 8.4 of the
Security Instrument of the Security Instrument, or if the Property or any
part thereof shall become an asset in (i) a voluntary bankruptcy or
insolvency proceeding, or (ii) an involuntary bankruptcy or insolvency
proceeding which is not dismissed within ninety (90) days of filing.
(d) Nothing herein shall be deemed to be a waiver of any right which
Lender may have under Section 506(a), 506(b), 1111(b) or any other
provision of the U.S. Bankruptcy Code to file a claim for the full amount
of the indebtedness secured by the Security Instrument or to require that
all collateral shall continue to secure all of the indebtedness owing to
Lender in accordance with this Note, the Security Instrument and the Other
Security Documents.
15. AUTHORITY
Borrower (and the undersigned representative of Borrower, if any)
represents that Borrower has full power, authority and legal right to
execute and deliver this Note, the Security Instrument and the Other
Security Documents and that this Note, the Security Instrument and the
Other Security Documents constitute valid and binding obligations of
Borrower.
16. APPLICABLE LAW
This Note shall be governed, construed, applied and enforced in
accordance with the laws of the State of New York.
17. SERVICE OF PROCESS
(a) (i) Borrower will maintain a place of business or an agent for
service of process in Atlanta, Georgia and give prompt notice to Lender of
the address of such place of business and of the name and address of any
new agent appointed by it, as appropriate. Borrower further agrees that
the failure of its agent for service of process to give it notice of any
service of process will not impair or affect the validity of such service
or of any Judgment based thereon. If, despite the foregoing, there is for
any reason no agent for service of process of Borrower available to be
served, and if it at that time has no place of business in Atlanta,
Georgia, then Borrower irrevocably consents to service of process by
registered or certified mail, postage prepaid, to it at its address given
in or pursuant to the first paragraph hereof.
(ii) Borrower initially and irrevocably designates James Fleming,
Esq., with offices on the date hereof at One Midtown Plaza, 1360 Peachtree
Street, N.E., Suite 930, Atlanta, Georgia 30309, to receive for and on
behalf of Borrower service of process in Atlanta, Georgia with respect to
this Note.
(b) With respect to any claim or action arising hereunder or under
the Security Instrument or the Other Security Documents, Borrower (a)
irrevocably submits to the nonexclusive jurisdiction of the courts of the
State in which the Property is located, the State of New York and the
United States District Court located in the Borough of Manhattan in New
York, New York and the county in which the Property is located, and
appellate courts from any thereof, and (b) irrevocably waives any objection
which it may have at any time to the laying on venue of any suit, action or
proceeding arising out of or relating to this Note brought in any such
court, irrevocably waives any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient
forum.
(c) Nothing in this Note will be deemed to preclude Lender from
bringing an action or proceeding with respect hereto in any other
jurisdiction.
18. COUNSEL FEES
In the event that it should become necessary to employ counsel to
collect the Debt or to protect or foreclose the security therefor, Borrower
also agrees to pay all reasonable fees and expenses of Lender, including,
without limitation, reasonable attorney's fees for the services of such
counsel whether or not suit be brought. To the extent this Note, the
Security Instrument or any of the Other Security Documents provides for
Lender's ability or right to recover attorney's fees, such fees shall be
limited to Lender's reasonable attorney's fees actually incurred.
19. NOTICES
All notices or other written communications hereunder shall be deemed
to have been properly given (i) upon delivery, if delivered in person or by
facsimile transmission with receipt acknowledged by the recipient thereof,
(ii) one (1) Business Day (defined below) after having been deposited for
overnight delivery with any reputable overnight courier service, or (iii)
three (3) Business Days after having been deposited in any post office or
mail depository regularly maintained by the U.S. Postal Service and sent
by registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
If to Borrower: c/o Charter Properties, Inc.
4501 Circle 75 Parkway, Suite A-1164
Atlanta, Georgia 30339
Attention: Charles H. Lesley
Facsimile No. (770) 984-2696
With a copy to: Fleming, Drummond & Ray, L.C.
One Midtown Plaza, Suite 930
1360 Peachtree Street, N.E.
Atlanta, Georgia 30309
Attention: James Fleming, Esq.
Facsimile No. (404) 892-0445
If to Lender: Lehman Brothers Holdings Inc.
d/b/a Lehman Capital, a Division
of Lehman Brothers Holdings Inc.
Three World Financial Center
200 Vesey Street
New York, New York 10285
Attention: John Herman
Facsimile No. (212) 528-6659
With a copy to: Stroock & Stroock & Lavan
Seven Hanover Square
New York, New York 10004
Attention: William Campbell, Esq.
Facsimile No. (212) 806-6006
or addressed as such party may from time to time designate by written
notice to the other parties.
Either party by notice to the other may designate additional or
different addresses for subsequent notices or communications.
"Business Day" shall mean a day upon which commercial banks are not
authorized or required by law to close in New York, New York.
20. MISCELLANEOUS
(a) Wherever pursuant to this Note (i) Lender exercises any right
given to it to approve or disapprove, (ii) any arrangement or term is to be
satisfactory to Lender, or (iii) any other decision or determination is to
be made by Lender, the decision of Lender to approve or disapprove, all
decisions that arrangements or terms are satisfactory or not satisfactory
and all other decisions and determinations made by Lender, shall be in the
sole and absolute discretion of Lender and shall be final and conclusive,
except as may be otherwise expressly and specifically provided herein.
(b) Wherever pursuant to this Note it is provided that Borrower pay
any costs and expenses, such costs and expenses shall include, but not be
limited to, legal fees and disbursements of Lender, whether of retained
firms, the reimbursement for the expenses of in-house staff, or otherwise.
IN WITNESS WHEREOF, Borrower has duly executed this Note as of the day
and year first above written.
MABLETON VILLAGE ASSOCIATES, L.L.C., a Georgia
limited liability company
By: Lesley-Mableton, Inc., a Georgia
corporation and its sole Manager
By:/s/ Charles H. Lesley
-----------------------------
Charles H. Lesley
President
(Corporate Seal)
PREPARED BY AND UPON
RECORDATION RETURN TO:
Stroock & Stroock & Lavan
7 Hanover Square
New York, New York 10004
Attn: Lorraine Henderson
=================================================================
-------------------------
DEED TO SECURE DEBT AND
SECURITY AGREEMENT
-------------------------
by and between
MABLETON VILLAGE ASSOCIATES, L.L.C.
(Borrower)
to
LEHMAN BROTHERS HOLDINGS INC. D/B/A LEHMAN CAPITAL,
A DIVISION OF LEHMAN BROTHERS HOLDINGS INC.
(Lender)
Dated: July 31, 1996
Location: Cobb County, Atlanta, Georgia
=================================================================
THE NAMES OF THE DEBTOR AND THE SECURED PARTY, THE MAILING ADDRESS OF
THE SECURED PARTY FROM WHICH INFORMATION CONCERNING THE SECURITY INTEREST
MAY BE OBTAINED, THE MAILING ADDRESS OF THE DEBTOR AND A STATEMENT
INDICATING THE TYPES, OR DESCRIBING THE ITEMS, OF COLLATERAL, ARE AS
DESCRIBED IN SECTION 16 HEREOF IN COMPLIANCE WITH THE REQUIREMENTS OF
ARTICLE 9, SECTION 402 OF THE UNIFORM COMMERCIAL CODE, TITLE 11 OF THE CODE
OF GEORGIA.
THE FINAL MATURITY DATE OF THIS INSTRUMENT IS AUGUST 1, 2006
--------------------------------------------------
METROPOLITAN TITLE AGENCY, INC.
--------------------------------------------------
950 COBB PARKWAY
SUITE 300
MARIETTA, GEORGIA 30062
(770) 421-8281
(770) 427-6725 FAX
<PAGE>
TABLE OF CONTENTS
Page
1 GRANTING CLAUSE. . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.1 PROPERTY MORTGAGED. . . . . . . . . . . . . . . . . . . . . . .
1.2 ASSIGNMENT OF RENTS . . . . . . . . . . . . . . . . . . . . . .
1.3 SECURITY AGREEMENT. . . . . . . . . . . . . . . . . . . . . . .
1.4 PLEDGE OF MONIES HELD . . . . . . . . . . . . . . . . . . . . .
2 DEBT AND OBLIGATIONS SECURED . . . . . . . . . . . . . . . . . . . . .
2.1 DEBT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.2 OTHER OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . .
2.3 DEBT AND OTHER OBLIGATIONS. . . . . . . . . . . . . . . . . . .
2.4 PAYMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . .
3 BORROWER COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . .
3.1 PAYMENT OF DEBT . . . . . . . . . . . . . . . . . . . . . . . .
3.2 INCORPORATION BY REFERENCE. . . . . . . . . . . . . . . . . . .
3.3 INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.4 PAYMENT OF TAXES, ETC.. . . . . . . . . . . . . . . . . . . . .
3.5 ESCROW FUND . . . . . . . . . . . . . . . . . . . . . . . . . .
3.6 CONDEMNATION. . . . . . . . . . . . . . . . . . . . . . . . . .
3.7 LEASES AND RENTS. . . . . . . . . . . . . . . . . . . . . . . .
3.8 MAINTENANCE OF PROPERTY . . . . . . . . . . . . . . . . . . . .
3.9 WASTE . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.10 COMPLIANCE WITH LAWS. . . . . . . . . . . . . . . . . . . . . .
3.11 BOOKS AND RECORDS . . . . . . . . . . . . . . . . . . . . . . .
3.12 PAYMENT FOR LABOR AND MATERIALS . . . . . . . . . . . . . . . .
3.13 PROPERTY MANAGEMENT . . . . . . . . . . . . . . . . . . . . . .
3.14 PERFORMANCE OF OTHER AGREEMENTS . . . . . . . . . . . . . . . .
3.15 CHANGE OF NAME, IDENTITY OR STRUCTURE . . . . . . . . . . . . .
3.16 EXISTENCE . . . . . . . . . . . . . . . . . . . . . . . . . . .
4 SPECIAL COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . .
4.1 PROPERTY USE. . . . . . . . . . . . . . . . . . . . . . . . . .
4.2 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.3 Single Purpose Entity . . . . . . . . . . . . . . . . . . . . .
4.4 RESTORATION . . . . . . . . . . . . . . . . . . . . . . . . . .
4.5 LOCK BOX ACCOUNT. . . . . . . . . . . . . . . . . . . . . . . .
5 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . .
5.1 WARRANTY OF TITLE . . . . . . . . . . . . . . . . . . . . . . .
5.2 AUTHORITY . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.3 LEGAL STATUS AND AUTHORITY. . . . . . . . . . . . . . . . . . .
5.4 VALIDITY OF DOCUMENTS . . . . . . . . . . . . . . . . . . . . .
5.5 LITIGATION. . . . . . . . . . . . . . . . . . . . . . . . . . .
5.6 STATUS OF PROPERTY. . . . . . . . . . . . . . . . . . . . . . .
5.7 NO FOREIGN PERSON . . . . . . . . . . . . . . . . . . . . . . .
5.8 SEPARATE TAX LOT. . . . . . . . . . . . . . . . . . . . . . . .
5.9 ERISA COMPLIANCE. . . . . . . . . . . . . . . . . . . . . . . .
5.10 LEASES. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.11 FINANCIAL CONDITION . . . . . . . . . . . . . . . . . . . . . .
5.12 BUSINESS PURPOSES . . . . . . . . . . . . . . . . . . . . . . .
5.13 TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.14 MAILING ADDRESS . . . . . . . . . . . . . . . . . . . . . . . .
5.15 NO CHANGE IN FACTS OR CIRCUMSTANCES . . . . . . . . . . . . . .
5.16 DISCLOSURE. . . . . . . . . . . . . . . . . . . . . . . . . . .
5.17 THIRD PARTY REPRESENTATIONS . . . . . . . . . . . . . . . . . .
5.18 ILLEGAL ACTIVITY. . . . . . . . . . . . . . . . . . . . . . . .
6 OBLIGATIONS AND RELIANCES. . . . . . . . . . . . . . . . . . . . . . .
6.1 RELATIONSHIP OF BORROWER AND LENDER . . . . . . . . . . . . . .
6.2 NO RELIANCE ON LENDER . . . . . . . . . . . . . . . . . . . . .
6.3 NO LENDER OBLIGATIONS . . . . . . . . . . . . . . . . . . . . .
6.4 RELIANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . .
7 FURTHER ASSURANCES . . . . . . . . . . . . . . . . . . . . . . . . . .
7.1 RECORDING OF SECURITY INSTRUMENT, ETC.. . . . . . . . . . . . .
7.2 FURTHER ACTS, ETC.. . . . . . . . . . . . . . . . . . . . . .
7.3 CHANGES IN TAX, DEBT, CREDIT AND
DOCUMENTARY STAMP LAWS . . . . . . . . . . . . . . . . . . .
7.4 ESTOPPEL CERTIFICATES . . . . . . . . . . . . . . . . . . . . .
7.5 SPLITTING OF SECURITY INSTRUMENT. . . . . . . . . . . . . . . .
7.6 REPLACEMENT DOCUMENTS . . . . . . . . . . . . . . . . . . . . .
8 DUE ON SALE/ENCUMBRANCE. . . . . . . . . . . . . . . . . . . . . . . .
8.1 LENDER RELIANCE . . . . . . . . . . . . . . . . . . . . . . . .
8.2 NO SALE/ENCUMBRANCE . . . . . . . . . . . . . . . . . . . . . .
8.3 SALE/ENCUMBRANCE DEFINED. . . . . . . . . . . . . . . . . . . .
8.4 LENDER'S RIGHTS . . . . . . . . . . . . . . . . . . . . . . . .
9 PREPAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.1 PREPAYMENT BEFORE EVENT OF DEFAULT. . . . . . . . . . . . . . .
9.2 PREPAYMENT ON CASUALTY AND CONDEMNATION . . . . . . . . . . . .
9.3 PREPAYMENT AFTER EVENT OF DEFAULT . . . . . . . . . . . . . . .
10 DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10.1 EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . .
10.2 LATE PAYMENT CHARGE . . . . . . . . . . . . . . . . . . . . . .
10.3 DEFAULT INTEREST. . . . . . . . . . . . . . . . . . . . . . . .
11 RIGHTS AND REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . . .
11.1 REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . . . . .
11.2 APPLICATION OF PROCEEDS . . . . . . . . . . . . . . . . . . . .
11.3 RIGHT TO CURE DEFAULTS. . . . . . . . . . . . . . . . . . . . .
11.4 ACTIONS AND PROCEEDINGS . . . . . . . . . . . . . . . . . . . .
11.5 RECOVERY OF SUMS REQUIRED TO BE PAID. . . . . . . . . . . . . .
11.6 EXAMINATION OF BOOKS AND RECORDS. . . . . . . . . . . . . . . .
11.7 OTHER RIGHTS, ETC.. . . . . . . . . . . . . . . . . . . . . . .
11.8 RIGHT TO RELEASE ANY PORTION OF THE PROPERTY. . . . . . . . . .
11.9 VIOLATION OF LAWS . . . . . . . . . . . . . . . . . . . . . . .
11.10 RECOURSE AND CHOICE OF REMEDIES . . . . . . . . . . . . . . . .
11.11 RIGHT OF ENTRY. . . . . . . . . . . . . . . . . . . . . . . . .
12 ENVIRONMENTAL HAZARDS. . . . . . . . . . . . . . . . . . . . . . . . .
12.1 ENVIRONMENTAL REPRESENTATIONS AND WARRANTIES. . . . . . . . . .
12.2 ENVIRONMENTAL COVENANTS . . . . . . . . . . . . . . . . . . . .
12.3 LENDER'S RIGHTS . . . . . . . . . . . . . . . . . . . . . . . .
13 INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . .
13.1 GENERAL INDEMNIFICATION . . . . . . . . . . . . . . . . . . . .
13.2 INTANGIBLE TAX. . . . . . . . . . . . . . . . . . . . . . . . .
13.3 ERISA INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . .
13.4 ENVIRONMENTAL INDEMNIFICATION . . . . . . . . . . . . . . . . .
13.5 DUTY TO DEFEND; ATTORNEYS' FEES AND
OTHER FEES AND EXPENSES. . . . . . . . . . . . . . . . . . .
14 WAIVERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14.1 WAIVER OF COUNTERCLAIM. . . . . . . . . . . . . . . . . . . . .
14.2 MARSHALLING AND OTHER MATTERS . . . . . . . . . . . . . . . . .
14.3 WAIVER OF NOTICE. . . . . . . . . . . . . . . . . . . . . . . .
14.4 WAIVER OF STATUTE OF LIMITATIONS. . . . . . . . . . . . . . . .
14.5 SOLE DISCRETION OF LENDER . . . . . . . . . . . . . . . . . . .
14.6 SURVIVAL. . . . . . . . . . . . . . . . . . . . . . . . . . . .
14.7 WAIVER OF TRIAL BY JURY . . . . . . . . . . . . . . . . . . . .
15 EXCULPATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15.1 EXCULPATION . . . . . . . . . . . . . . . . . . . . . . . . . .
15.2 RESERVATION OF CERTAIN RIGHTS . . . . . . . . . . . . . . . . .
15.3 EXCEPTIONS TO EXCULPATION . . . . . . . . . . . . . . . . . . .
15.4 RECOURSE. . . . . . . . . . . . . . . . . . . . . . . . . . . .
15.5 BANKRUPTCY CLAIMS . . . . . . . . . . . . . . . . . . . . . . .
16 NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16.1 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17 SERVICE OF PROCESS . . . . . . . . . . . . . . . . . . . . . . . . . .
17.1 CONSENT TO SERVICE. . . . . . . . . . . . . . . . . . . . . . .
17.2 SUBMISSION TO JURISDICTION. . . . . . . . . . . . . . . . . . .
17.3 JURISDICTION NOT EXCLUSIVE. . . . . . . . . . . . . . . . . . .
18 APPLICABLE LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18.1 CHOICE OF LAW . . . . . . . . . . . . . . . . . . . . . . . . .
18.2 USURY LAWS. . . . . . . . . . . . . . . . . . . . . . . . . . .
18.3 PROVISIONS SUBJECT TO APPLICABLE LAW. . . . . . . . . . . . . .
19 SECONDARY MARKET . . . . . . . . . . . . . . . . . . . . . . . . . . .
19.1 TRANSFER OF LOAN. . . . . . . . . . . . . . . . . . . . . . . .
20 COSTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20.1 PERFORMANCE AT BORROWER'S EXPENSE . . . . . . . . . . . . . . .
20.2 ATTORNEY'S FEES FOR ENFORCEMENT . . . . . . . . . . . . . . . .
21 DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21.1 GENERAL DEFINITIONS . . . . . . . . . . . . . . . . . . . . . .
22 MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . .
22.1 NO ORAL CHANGE. . . . . . . . . . . . . . . . . . . . . . . . .
22.2 LIABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . .
22.3 INAPPLICABLE PROVISIONS . . . . . . . . . . . . . . . . . . . .
22.4 HEADINGS, ETC.. . . . . . . . . . . . . . . . . . . . . . . . .
22.5 DUPLICATE ORIGINALS; COUNTERPARTS . . . . . . . . . . . . . . .
22.6 NUMBER AND GENDER . . . . . . . . . . . . . . . . . . . . . . .
22.7 SUBROGATION . . . . . . . . . . . . . . . . . . . . . . . . . .
22.8 ENTIRE AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . .
23 STATE SPECIFIC PROVISIONS. . . . . . . . . . . . . . . . . . . . . . .
23.1 GEORGIA PROVISIONS. . . . . . . . . . . . . . . . . . . . . . .
<PAGE>
THIS DEED TO SECURE DEBT AND SECURITY AGREEMENT (the "Security
Instrument") is made as of the 31st day of July, 1996, by MABLETON VILLAGE
ASSOCIATES, L.L.C., a Georgia limited liability company, having its
principal place of business at c/o Charter Properties, Inc., 4501 Circle 75
Parkway, Suite A-1164, Atlanta, Georgia 30339 as mortgagor ("Borrower") to
LEHMAN BROTHERS HOLDINGS INC. (d/b/a Lehman Capital, a division of Lehman
Brothers Holdings Inc.), a Delaware corporation, having an address at Three
World Financial Center, 200 Vesey Street, New York, New York 10285, as
mortgagee ("Lender").
RECITALS:
Borrower by its promissory note of even date herewith given to
Lender is indebted to Lender in the principal sum of TEN MILLION SIX
HUNDRED SEVENTY THOUSAND AND 00/100 DOLLARS ($10,670,000.00) in lawful
money of the United States of America (the note together with all
extensions, renewals, modifications, substitutions and amendments thereof
shall collectively be referred to as the "Note"), with interest from the
date thereof at the rates set forth in the Note, principal and interest to
be payable in accordance with the terms and conditions provided in the
Note.
Borrower desires to secure the payment of the Debt (as defined in
Article 2) and the performance of all of its obligations under the Note and
the Other Obligations (as defined in Article 2).
1 - GRANTING CLAUSE
1.1 PROPERTY MORTGAGED. Borrower does hereby irrevocably
grant, bargain, sell, pledge, assign, warrant, transfer and convey to
Lender the following property, rights, interests and estates now owned, or
hereafter acquired by Borrower (collectively, the "Property"):
(a) Land. The real property described in Exhibit A attached
hereto and made a part hereof (the "Land");
(b) Additional Land. All additional lands, estates and
development rights hereafter acquired by Borrower for use in connection
with the Land and the development of the Land and all additional lands and
estates therein which may, from time to 4
subject to the lien of this Security Instrument;
(c) Improvements. The buildings, structures, fixtures,
additions, enlargements, extensions, modifications, repairs, replacements
and improvements now or hereafter erected or located on the Land (the
"Improvements");
(d) Easements. All easements, rights-of-way or use, rights,
strips and gores of land, streets, ways, alleys, passages, sewer rights,
water, water courses, water rights and powers, air rights and development
rights, and all estates, rights, titles, interests, privileges, liberties,
servitudes, tenements, hereditaments and appurtenances of any nature
whatsoever, in any way now or hereafter belonging, relating or pertaining
to the Land and the Improvements and the reversion and reversions,
remainder and remainders, and all land lying in the bed of any street, road
or avenue, opened or proposed, in front of or adjoining the Land, to the
center line thereof and all the estates, rights, titles, interests, dower
and rights of dower, curtesy and rights of curtesy, property, possession,
claim and demand whatsoever, both at law and in equity, of Borrower of, in
and to the Land and the Improvements and every part and parcel thereof,
with the appurtenances thereto;
(e) Fixtures and Personal Property. All machinery, equipment,
fixtures (including, but not limited to, all heating, air conditioning,
plumbing, lighting, communications and elevator fixtures) and other
property of every kind and nature whatsoever owned by Borrower, or in which
Borrower has or shall have an interest, now or hereafter located upon the
Land and the Improvements, or appurtenant thereto, and usable in connection
with the present or future operation and occupancy of the Land and the
Improvements and all building equipment, materials and supplies of any
nature whatsoever owned by Borrower, or in which Borrower has or shall have
an interest, now or hereafter located upon the Land and the Improvements,
or appurtenant thereto, or usable in connection with the present or future
operation and occupancy of the Land and the Improvements (collectively, the
"Personal Property"), and the right, title and interest of Borrower in and
to any of the Personal Property which may be subject to any security
interests, as defined in the Uniform Commercial Code, as adopted and
enacted by the state or states where any of the Property is located (the
"Uniform Commercial Code"), superior in lien to the lien of this Security
Instrument and all proceeds and products of the above;
(f) Leases and Rents. All leases and other agreements
affecting the use, enjoyment or occupancy of the Land and the Improvements
heretofore or hereafter entered into, whether before or after the filing by
or against Borrower of any petition for relief under 11 U.S.C. Section 101
et seq., as the same may be amended from time to time (the "Bankruptcy
Code") (the "Leases") and all right, title and interest of Borrower, its
successors and assigns therein and thereunder, including, without
limitation, cash or securities deposited thereunder to secure the
performance by the lessees of their obligations thereunder and all rents,
additional rents, revenues, issues and profits (including all oil and gas
or other mineral royalties and bonuses) from the Land and the Improvements
whether paid or accruing before or after the filing by or against Borrower
of any petition for relief under the Bankruptcy Code (the "Rents") and all
proceeds from the sale or other disposition of the Leases and the right to
receive and apply the Rents to the payment of the Debt;
(g) Condemnation Awards. All awards or payments, including
interest thereon, which may heretofore and hereafter be made with respect
to the Property, whether from the exercise of the right of eminent domain
(including but not limited to any transfer made in lieu of or in
anticipation of the exercise of the right), or for a change of grade, or
for any other injury to or decrease in the value of the Property;
(h) Insurance Proceeds. All proceeds of and any unearned
premiums on any insurance policies covering the Property, including,
without limitation, the right to receive and apply the proceeds of any
insurance, judgments, or settlements made in lieu thereof, for damage to
the Property;
(i) Tax Certiorari. All refunds, rebates or credits in
connection with a reduction in real estate taxes and assessments charged
against the Property as a result of tax certiorari or any applications or
proceedings for reduction;
(j) Conversion. All proceeds of the conversion, voluntary or
involuntary, of any of the foregoing including, without limitation,
proceeds of insurance and condemnation awards, into cash or liquidation
claims;
(k) Rights. The right, in the name and on behalf of Borrower,
to appear in and defend any action or proceeding brought with respect to
the Property and to commence any action or proceeding to protect the
interest of Lender in the Property;
(l) Agreements. All agreements, contracts, certificates,
instruments, franchises, permits, licenses, plans, specifications and other
documents, now or hereafter entered into, and all rights therein and
thereto, respecting or pertaining to the use, occupation, construction,
management or operation of the Land and any part thereof and any
Improvements or respecting any business or activity conducted on the Land
and any part thereof and all right, title and interest of Borrower therein
and thereunder, including, without limitation, the right, upon the
happening of any default hereunder, to receive and collect any sums payable
to Borrower thereunder;
(m) Trademarks. All tradenames, trademarks, servicemarks,
logos, copyrights, goodwill, books and records and all other general
intangibles relating to or used in connection with the operation of the
Property; and
(n) Other Rights. Any and all other rights of Borrower in and
to the items set forth in Subsections (a) through (m) above.
1.2 ASSIGNMENT OF RENTS. Borrower hereby absolutely and
unconditionally assigns to Lender Borrower's right, title and interest in
and to all current and future Leases and Rents; it being intended by
Borrower that this assignment constitutes a present, absolute assignment
and not an assignment for additional security only. Nevertheless, subject
to the terms of this Section 1.2 and Section 3.7, Lender grants to Borrower
a revocable license to collect and receive the Rents. Borrower shall hold
the Rents, or a portion thereof sufficient to discharge all current sums
due on the Debt, for use in the payment of such sums.
1.3 SECURITY AGREEMENT. This Security Instrument is both a
real property deed to secure debt and a "security agreement" within the
meaning of the Uniform Commercial Code. The Property includes both real
and personal property and all other rights and interests, whether tangible
or intangible in nature, of Borrower in the Property. By executing and
delivering this Security Instrument, Borrower hereby grants to Lender, as
security for the Obligations (defined in Section 2.3), a security interest
in the Property to the full extent that the Property may be subject to the
Uniform Commercial Code.
1.4 PLEDGE OF MONIES HELD. Borrower hereby pledges to Lender
any and all monies now or hereafter held by Lender, including, without
limitation, any sums deposited in the Escrow Fund (as defined in Section
3.5), Net Proceeds (as defined in Section 4.4), the Lock-Box Account (as
defined in Section 4.5) and condemnation awards or payments described in
Section 3.6, as additional security for the Obligations until expended or
applied as provided in this Security Instrument.
CONDITIONS TO GRANT
TO HAVE AND TO HOLD the above granted and described Property unto
and to the use and benefit of Lender, in fee simple and the successors and
assigns of Lender, forever;
PROVIDED, HOWEVER, these presents are upon the express condition
that, if Borrower shall well and duly pay to Lender the Debt at the time
and in the manner provided in the Note and this Security Instrument, shall
well and truly perform the Other Obligations as set forth in this Security
Instrument and shall well and truly abide by and comply with each and every
covenant and condition set forth herein and in the Note, these presents and
the estate hereby granted shall be cancelled and surrendered.
2 - DEBT AND OBLIGATIONS SECURED
2.1 DEBT. This Security Instrument and the grants, assignments
and transfers made in Article 1 are given for the purpose of securing the
following, in such order of priority as Lender may determine in its sole
discretion (the "Debt"):
(a) the payment of the indebtedness evidenced by the Note in
lawful money of the United States of America;
(b) the payment of interest, default interest, late charges and
other sums, as provided in the Note, this Security Instrument or the Other
Security Documents (defined below);
(c) Prepayment Consideration (as defined in the Note);
(d) the payment of all other moneys agreed or provided to be
paid by Borrower in the Note, this Security Instrument or the Other
Security Documents;
(e) the payment of all sums advanced pursuant to this Security
Instrument to protect and preserve the Property and the lien and the
security interest created hereby; and
(f) the payment of all sums advanced and costs and expenses
incurred by Lender in connection with the Debt or any part thereof, any
renewal, extension, or change of or substitution for the Debt or any part
thereof, or the acquisition or perfection of the security therefor, whether
made or incurred at the request of Borrower or Lender.
2.2 OTHER OBLIGATIONS. This Security Instrument and the
grants, assignments and transfers made in Article 1 are also given for the
purpose of securing the following (the "Other Obligations"):
(a) the performance of all other obligations of Borrower
contained herein;
(b) the performance of each obligation of Borrower contained in
any other agreement given by Borrower to Lender which is for the purpose of
further securing the obligations secured hereby, and any amendments,
modifications and changes thereto; and
(c) the performance of each obligation of Borrower contained in
any renewal, extension, amendment, modification, consolidation, change of,
or substitution or replacement for, all or any part of the Note, this
Security Instrument or the Other Security Documents.
2.3 DEBT AND OTHER OBLIGATIONS. Borrower's obligations for the
payment of the Debt and the performance of the Other Obligations shall be
referred to collectively below as the "Obligations."
2.4 PAYMENTS. Unless payments are made in the required amount
in immediately available funds at the place where the Note is payable,
remittances in payment of all or any part of the Debt shall not, regardless
of any receipt or credit issued therefor, constitute payment until the
required amount is actually received by Lender in funds immediately
available at the place where the Note is payable (or any other place as
Lender, in Lender's sole discretion, may have established by delivery of
written notice thereof to Borrower) and shall be made and accepted subject
to the condition that any check or draft may be handled for collection in
accordance with the practice of the collecting bank or banks. Acceptance
by Lender of any payment in an amount less than the amount then due shall
be deemed an acceptance on account only, and the failure to pay the entire
amount then due, subject to applicable notice and cure periods, shall be
and continue to be an Event of Default (defined below).
3 - BORROWER COVENANTS
Borrower covenants and agrees that:
3.1 PAYMENT OF DEBT. Borrower will pay the Debt at the time
and in the manner provided in the Note and in this Security Instrument.
3.2 INCORPORATION BY REFERENCE. All the covenants, conditions
and agreements contained in (a) the Note and (b) all and any of the
documents other than the Note or this Security Instrument now or hereafter
executed by Borrower and/or others and by or in favor of Lender, which
wholly or partially secure or guaranty payment of the Note (the "Other
Security Documents"), are hereby made a part of this Security Instrument to
the same extent and with the same force as if fully set forth herein.
3.3 INSURANCE. (a) Borrower shall obtain and maintain, or
cause to be maintained, insurance for Borrower and the Property providing
at least the following coverages:
(i) comprehensive all risk insurance on the Improvements and the
Personal Property, including contingent liability from Operation of
Building Laws, Demolition Costs and Increased Cost of Construction
Endorsements, in each case (A) in an amount equal to 100% of the "Full
Replacement Cost," which for purposes of this Security Instrument
shall mean actual replacement value (exclusive of costs of
excavations, foundations, underground utilities and footings and
exclusive of that portion of the Building occupied by KMart so long as
K-Mart is entitled under its lease to self-insure or obtain its own
hazard/all risk insurance for such Building) with a waiver of
depreciation, but the amount shall in no event be less than the
outstanding principal balance of the Note; (B) containing an agreed
amount endorsement with respect to the Improvements and Personal
Property waiving all co-insurance provisions; (C) providing for no
deductible in excess of the lesser of $10,000.00 and one percent (1%)
of the face value of such policy; and (D) containing an "Ordinance or
Law Coverage" or "Enforcement" endorsement if any of the Improvements
or the use of the Property shall at any time constitute legal
non-conforming structures or uses. The Full Replacement Cost shall
be redetermined from time to time (but not more frequently than once
in any twenty-four (24) calendar months) at the request of Lender by
an appraiser or contractor designated and paid by Borrower and
approved by Lender, or by an engineer or appraiser in the regular
employ of the insurer. After the first appraisal, additional
appraisals may be based on construction cost indices customarily
employed in the trade. No omission on the part of Lender to request
any such ascertainment shall relieve Borrower of any of its
obligations under this Subsection. In addition, Borrower shall
obtain (y) flood hazard insurance if any portion of the Improvements
is currently or at any time in the future located in a federally
designated "special flood hazard area", flood hazard insurance in an
amount equal to the lesser of (a) the outstanding principal balance of
the Note or (b) the maximum amount of such insurance available under
the National Flood Insurance Act of 1968, the Flood Disaster
Protection Act of 1973 or the National Flood Insurance Reform Act of
1994, as each may be amended or such greater amount as Lender shall
require; and (z) earthquake insurance in amounts and in form and
substance satisfactory to Lender in the event the Property is located
in an area with a high degree of seismic activity, provided that the
insurance pursuant to clauses (y) and (z) hereof shall be on terms
consistent with the comprehensive all risk insurance policy required
under this Subsection 3.3(a)(i) except that the deductible on such
insurance shall not be in excess of five percent (5%) of the appraised
value of the Property;
(ii) commercial general liability insurance against claims for
personal injury, bodily injury, death or property damage occurring
upon, in or about the Property, such insurance (A) to be on the
so-called "occurrence" form with a combined single limit of not less
than $2,000,000 or, if any of the Improvements contain elevators,
$5,000,000.00; (B) to continue at not less than the aforesaid limit
until required to be changed by Lender in writing by reason of changed
economic conditions making such protection inadequate; and (C) to
cover at least the following hazards: (1) premises and operations; (2)
products and completed operations on an "if any" basis; (3)
independent contractors; (4) blanket contractual liability for all
written and oral contracts; and (5) contractual liability covering the
indemnities contained in Article 13 hereof to the extent the same is
available;
(iii) business income insurance (A) with loss payable to Lender;
(B) covering all risks required to be covered by the insurance
provided for in Subsection 3.3(a)(i); (C) containing an extended
period of indemnity endorsement which provides that after the physical
loss to the Improvements and Personal Property has been repaired, the
continued loss of income will be insured until such income either
returns to the same level it was at prior to the loss, or the
expiration of twenty-four (24) months from the date of the loss,
whichever first occurs, and notwithstanding that the policy may expire
prior to the end of such period; and (D) in an amount equal to 100% of
the projected gross income from the Property for a period of twelve
(12) months. The amount of such business income insurance shall be
determined prior to the date hereof and at least once each year
thereafter based on Borrower's reasonable estimate of the gross income
from the Property for the succeeding twenty-four (24) month period.
All insurance proceeds payable to Lender pursuant to this Subsection
shall be held by Lender and shall be applied to the obligations
secured hereunder from time to time due and payable hereunder and
under the Note; provided, however, that nothing herein contained shall
be deemed to relieve Borrower of its obligations to pay the
obligations secured hereunder on the respective dates of payment
provided for in the Note except to the extent such amounts are
actually paid out of the proceeds of such business income insurance;
(iv) at all times during which structural construction, repairs
or alterations are being made with respect to the Improvements (A)
owner's contingent or protective liability insurance covering claims
not covered by or under the terms or provisions of the above mentioned
commercial general liability insurance policy; and (B) the insurance
provided for in Subsection 3.3(a)(i) written in a so-called builder's
risk completed value form (1) on a non-reporting basis, (2) against
all risks insured against pursuant to Subsection 3.3(a)(i), (3)
including permission to occupy the Property, and (4) with an agreed
amount endorsement waiving co-insurance provisions;
(v) workers' compensation, subject to the statutory limits of
the state in which the Property is located, and employer's liability
insurance with a limit of at least $1,000,000.00 per accident and per
disease per employee, and $1,000,000.00 for disease aggregate in
respect of any work or operations on or about the Property, or in
connection with the Property or its operation (if applicable);
(vi) comprehensive boiler and machinery insurance, if
applicable, in amounts as shall be reasonably required by Lender on
terms consistent with the commercial general liability insurance
policy required under Subsection 3.3(a) (ii);
(vii) umbrella liability insurance in an amount not less than
$6,000,000.00 per occurrence on terms consistent with the commercial
general liability insurance policy required under Subsection
3.3(a)(ii);
(viii) motor vehicle liability coverage for all owned and
non-owned vehicles, including rented and leased vehicles containing
minimum limits per occurrence of $5,000,000.00; and
(ix) Intentionally deleted;
(x) such other insurance and in such amounts as Lender from time
to time may reasonably request against such other insurable hazards
which at the time are commonly insured against for property similar to
the Property located in or around the region in which the Property is
located.
(b) All insurance provided for in Subsection 3.3(a) hereof shall
be obtained under valid and enforceable policies (the "Policies" or in the
singular, the "Policy"), and shall be subject to the approval of Lender as
to insurance companies, amounts, forms, deductibles, loss payees and
insureds. The Policies shall be issued by financially sound and
responsible insurance companies authorized to do business in the state in
which the Property is located and approved by Lender. The insurance
companies must have an investment grade rating for claims paying ability
assigned by Moody's Investors Service, Inc. and Standard & Poor's
Corporation, and in the event such insurance companies are rated by Fitch
Investors Service, Inc. and Duff & Phelps Credit Rating Service, Inc. and
Duff & Phelps Credit Rating Company, and if there are any Securities
(defined in 19.1 below) issued which have been assigned a rating by a
credit rating agency approved by Lender (a "Rating Agency"), the insurance
company shall have a claims paying ability rating by such Rating Agency
equal to or greater than the rating of the highest class of the Securities
(each such insurer shall be referred to below as a "Qualified Insurer").
The Policies described in Subsections 3.3(a)(i), (iii), (iv)(B) and (vi)
shall designate Lender as loss payee. Not less than thirty (30) days
prior to the expiration dates of the Policies theretofore furnished to
Lender pursuant to Subsection 3.3(a), certified copies of the Policies
marked "premium paid" or accompanied by evidence satisfactory to Lender of
payment of the premiums due thereunder (the "Insurance Premiums"), shall be
delivered by Borrower to Lender; provided, however, that in the case of
renewal Policies, Borrower may furnish Lender with binders therefor to be
followed by the original Policies when issued.
(c) Borrower shall not obtain (i) any umbrella or blanket
liability or casualty Policy unless, in each case, such Policy is approved
in advance in writing by Lender and Lender's interest is included therein
as provided in this Security Instrument and such Policy is issued by a
Qualified Insurer, or (ii) separate insurance concurrent in form or
contributing in the event of loss with that required in Subsection 3.3(a)
to be furnished by, or which may be reasonably required to be furnished by,
Borrower. In the event Borrower obtains separate insurance or an umbrella
or a blanket Policy, Borrower shall notify Lender of the same and shall
cause certified copies of each Policy to be delivered as required in
Subsection 3.3(a). Any blanket insurance Policy shall specifically
allocate to the Property the amount of coverage from time to time required
hereunder and shall otherwise provide the same protection as would a
separate Policy insuring only the Property in compliance with the
provisions of Subsection 3.3(a).
(d) All Policies of insurance provided for or contemplated by
Subsection 3.3(a), except for the Policy referenced in Subsection
3.3(a)(v), shall name Lender and Borrower as the insured or additional
insured, as their respective interests may appear, and in the case of
property damage, boiler and machinery, flood and earthquake insurance,
shall contain a so-called New York standard non-contributing mortgagee
clause in favor of Lender providing that the loss thereunder shall be
payable to Lender.
(e) All Policies of insurance provided for in Subsection 3.3(a)
shall contain clauses or endorsements to the effect that:
(i) no act or negligence of Borrower, or anyone acting for
Borrower, or of any tenant under any Lease or other occupant, or
failure to comply with the provisions of any Policy which might
otherwise result in a forfeiture of the insurance or any part thereof,
shall in any way affect the validity or enforceability of the
insurance insofar as Lender is concerned;
(ii) the Policy shall not be materially changed (other than to
increase the coverage provided thereby) or cancelled without at least
30 days' written notice to Lender and any other party named therein as
an insured; and
(iii) each Policy shall provide that the issuers thereof shall
give written notice to Lender if the Policy has not been renewed
thirty (30) days prior to its expiration; and
(iv) Lender shall not be liable for any Insurance Premiums
thereon or subject to any assessments thereunder.
(f) Borrower shall furnish to Lender, on or before thirty (30)
days after the close of each of Borrower's fiscal years, a statement
certified by Borrower or a duly authorized officer of Borrower of the
amounts of insurance maintained in compliance herewith, of the risks
covered by such insurance and of the insurance company or companies which
carry such insurance and, if requested by Lender, verification of the
adequacy of such insurance by an independent insurance broker or appraiser
acceptable to Lender.
(g) If at any time Lender is not in receipt of written evidence
that all insurance required hereunder is in full force and effect, Lender
shall have the right, without notice to Borrower to take such action as
Lender deems necessary to protect its interest in the Property, including,
without limitation, the obtaining of such insurance coverage as Lender in
its sole discretion deems appropriate, and all expenses incurred by Lender
in connection with such action or in obtaining such insurance and keeping
it in effect shall be paid by Borrower to Lender upon demand and until paid
shall be secured by this Security Instrument and shall bear interest in
accordance with Section 10.3 hereof.
(h) If the Property shall be damaged or destroyed, in whole or
in part, by fire or other casualty, Borrower shall give prompt notice of
such damage to Lender and shall promptly commence and diligently prosecute
the completion of the repair and restoration of the Property as nearly as
possible to the condition the Property was in immediately prior to such
fire or other casualty, with such alterations as may be approved by Lender
(the "Restoration") and otherwise in accordance with Section 4.4 of this
Security Instrument. Borrower shall pay all costs of such Restoration
whether or not such costs are covered by insurance. Lender may, but shall
not be obligated to make proof of loss if not made promptly by Borrower;
(i) In the event of foreclosure of this Security Instrument, or
other transfer of title to the Property in extinguishment in whole or in
part of the Debt all right, title and interest of Borrower in and to such
policies then in force concerning the Property and all proceeds payable
thereunder shall thereupon vest in the purchaser at such foreclosure or
Lender or other transferee in the event of such other transfer of title.
3.4 PAYMENT OF TAXES, ETC. Borrower shall promptly pay all
taxes, assessments, water rates, sewer rents, governmental impositions, and
other charges, including without limitation vault charges and license fees
for the use of vaults, chutes and similar areas adjoining the Land, now or
hereafter levied or assessed or imposed against the Property or any part
thereof (the "Taxes"), all ground rents, maintenance charges and similar
charges, now or hereafter levied or assessed or imposed against the
Property or any part thereof (the "Other Charges"), and all charges for
utility services provided to the Property as same become due and payable.
Borrower will deliver to Lender, promptly upon Lender's request, evidence
satisfactory to Lender that the Taxes, Other Charges and utility service
charges have been so paid or are not then delinquent. Borrower shall not
suffer and shall promptly cause to be paid and discharged any lien or
charge whatsoever which may be or become a lien or charge against the
Property. Except to the extent sums sufficient to pay all Taxes and Other
Charges have been deposited with Lender in accordance with the terms of
this Security Instrument, Borrower shall furnish to Lender paid receipts
for the payment of the Taxes and Other Charges prior to the date the same
shall become delinquent.
3.5 ESCROW FUND. In addition to the initial deposits with
respect to Taxes and Insurance Premiums made by Borrower to Lender on the
date hereof to be held by Lender in escrow, Borrower shall pay to Lender on
the first day of each calendar month (a) one-twelfth of an amount which
would be sufficient to pay the Taxes payable, or estimated by Lender to be
payable, during the next ensuing twelve (12) months and (b) one-twelfth of
an amount which would be sufficient to pay the Insurance Premiums due for
the renewal of the coverage afforded by the Policies upon the expiration
thereof (the amounts in (a) and (b) above shall be called the "Escrow
Fund"). Borrower agrees to notify Lender immediately of any changes to
the amounts, schedules and instructions for payment of any Taxes and
Insurance Premiums of which it has obtained knowledge and authorizes Lender
or its agent to obtain the bills for Taxes and Other Charges directly from
the appropriate taxing authority. The Escrow Fund and the payments of
interest or principal or both, payable pursuant to the Note shall be added
together and shall be paid as an aggregate sum by Borrower to Lender.
Lender will apply the Escrow Fund to payments of Taxes and Insurance
Premiums required to be made by Borrower pursuant to Sections 3.3 and 3.4
hereof. If the amount of the Escrow Fund shall exceed the amounts due for
Taxes and Insurance Premiums pursuant to Sections 3.3 and 3.4 hereof,
Lender shall, in its discretion, return any excess to Borrower or credit
such excess against future payments to be made to the Escrow Fund. In
allocating such excess, Lender may deal with the person shown on the
records of Lender to be the owner of the Property. If the Escrow Fund is
not sufficient to pay the items set forth in (a) and (b) above, Borrower
shall promptly pay to Lender, upon demand, an amount which Lender shall
estimate as sufficient to make up the deficiency. The Escrow Fund shall
not constitute a trust fund and may be commingled with other monies held by
Lender. No earnings or interest on the Escrow Fund shall be payable to
Borrower.
3.6 CONDEMNATION. Borrower shall promptly give Lender notice
of the actual or threatened commencement of any condemnation or eminent
domain proceeding and shall deliver to Lender copies of any and all papers
served in connection with such proceedings. Lender may participate in any
such proceedings, and Borrower shall from time to time deliver to Lender
all instruments requested by it to permit such participation. Borrower
shall, at its expense, diligently prosecute any such proceedings, and shall
consult with Lender, its attorneys and experts, and cooperate with them in
the carrying on or defense of any such proceedings. Notwithstanding any
taking by any public or quasi-public authority through eminent domain or
otherwise (including but not limited to any transfer made in lieu of or in
anticipation of the exercise of such taking), Borrower shall continue to
pay the Debt at the time and in the manner provided for its payment in the
Note and in this Security Instrument and the Debt shall not be reduced
until any award or payment therefor shall have been actually received and
applied by Lender, after the deduction of expenses of collection, to the
reduction or discharge of the Debt. Lender shall not be limited to the
interest paid on the award by the condemning authority but shall be
entitled to receive out of the award interest at the rate or rates provided
herein or in the Note. If the Property or any portion thereof is taken by
a condemning authority, Borrower shall promptly commence and diligently
prosecute the Restoration of the Property and otherwise comply with the
provisions of Section 4.4 of this Security Instrument. If the Property is
sold, through foreclosure or otherwise, prior to the receipt by Lender of
the award or payment, Lender shall have the right, whether or not a
deficiency judgment on the Note shall have been sought, recovered or
denied, to receive the award or payment, or a portion thereof sufficient to
pay the Debt.
3.7 LEASES AND RENTS. (a) Except as otherwise consented to by
Lender, all Leases shall be written on the standard form of lease which
shall have been approved by Lender. Upon request, Borrower shall furnish
Lender with executed copies of all Leases. No material changes may be
made to the Lender-approved standard lease without the prior written
consent of Lender. In addition, all renewals of Leases and all proposed
leases shall provide for rental rates and terms comparable to existing
local market rates and terms and shall be arms-length transactions with
bona fide, independent third party tenants. All proposed leases and
renewals of existing Leases other than Minor Leases (hereinafter defined)
shall be subject to the prior approval of Lender and its counsel, at
Borrower's expense. All Leases shall provide that they are subordinate to
this Security Instrument and that the lessee agrees to attorn to Lender.
Borrower (i) shall observe and perform all the obligations imposed upon the
lessor under the Leases and shall not do or permit to be done anything to
impair the value of the Leases as security for the Debt; (ii) shall
promptly send copies to Lender of all notices of default which Borrower
shall send or receive thereunder; (iii) shall enforce all of the terms,
covenants and conditions contained in the Leases upon the part of the
lessee thereunder to be observed or performed, short of termination
thereof; Borrower may terminate, however, Minor Leases as the result of a
default by lessee thereunder; (iv) shall not collect any of the Rents more
than one (1) month in advance; (v) shall not execute any other assignment
of the lessor's interest in the Leases or the Rents; (vi) shall not alter,
modify or change the terms of the Leases without the prior written consent
of Lender, or cancel or terminate the Leases (except that as to Minor
Leases only, Lender's consent [not to be unreasonably withheld or delayed]
shall be required only as to alterations, modifications or changes in
material lease terms and any cancellation or termination of a Minor Lease)
or accept a surrender thereof or convey or transfer or suffer or permit a
conveyance or transfer of the Land or of any interest therein so as to
effect a merger of the estates and rights of, or a termination or
diminution of the obligations of, lessees thereunder; (vii) shall not
alter, modify or change the terms of any guaranty, letter of credit or
other credit support with respect to the Leases (the "Lease Guaranty") or
cancel or terminate such Lease Guaranty without the prior written consent
of Lender; and (viii) shall not consent to any assignment of or subletting
under the Leases not in accordance with their terms, without the prior
written consent of Lender.
(b) Notwithstanding the provisions of Subsection 3.7(a) above,
renewals of existing commercial Leases and proposed leases for commercial
space shall not be subject to the prior approval of Lender provided all of
the following conditions are satisfied: (i) the rental income pursuant to
the renewal Lease or proposed lease is not more than five percent (5%) of
the total rental income for the in-line stores, (ii) the renewal Lease or
proposed lease covers less than five (5%) of the in-line store space, in
the aggregate, (iii) the renewal Lease or proposed lease covers less than
five percent (5%) of the total net rentable space in the Property, in the
aggregate ((i), (ii) and (iii), "Minor Leases"), (iv) the renewal Lease or
proposed lease shall have a lease term not to exceed eight (8) years
including options to renew, (v) no rent credits, free rents or concessions
have been granted under the renewal Lease or proposed lease, (vi) the
renewal Lease or proposed lease shall provide for rental rates and terms
comparable to existing local market rates and terms, (vii) the renewal
Lease or proposed lease shall be an arms-length transaction with a bona
fide, independent third party tenant, and (viii) the renewal Lease or
proposed lease shall satisfy such additional criteria as shall be required
by Lender in its sole discretion and of which Borrower has been notified by
Lender. Borrower shall deliver to Lender copies of all Leases which are
entered into pursuant to the preceding sentence together with Borrower's
certification that it has satisfied all of the conditions of the preceding
sentence within thirty (30) days after the execution of the Lease.
(c) To the extent permitted by law, Borrower shall promptly
deposit with Lender any and all monies representing security deposits under
the Leases, whether or not Borrower actually received such monies (the
"Security Deposits"). Lender shall hold the Security Deposits in
accordance with the terms of the respective Lease, and shall only release
the Security Deposits in order to return a tenant's Security Deposit to
such tenant if such tenant is entitled to the return of the Security
Deposit under the terms of the Lease and is not otherwise in default under
the Lease. To the extent required by Applicable Laws (defined below),
Lender shall hold the Security Deposits in an interest bearing account
selected by Lender in its sole discretion. In the event Lender is not
permitted by law to hold the Security Deposits, Borrower shall deposit the
Security Deposits into an account with a federally insured institution as
approved by Lender.
3.8 MAINTENANCE OF PROPERTY. Borrower shall cause the Property
to be maintained in a good and safe condition and repair. The
Improvements and the Personal Property shall not be removed, demolished or
materially altered (except for normal replacement of the Personal Property)
without the consent of Lender. Borrower shall promptly repair, replace or
rebuild any part of the Property which may be destroyed by any casualty, or
become damaged, worn or dilapidated or which may be affected by any
proceeding of the character referred to in Section 3.6 hereof and shall
complete and pay for any structure at any time in the process of
construction or repair on the Land. Borrower shall not initiate, join in,
acquiesce in, or consent to any change in any private restrictive covenant,
zoning law or other public or private restriction, limiting or defining the
uses which may be made of the Property or any part thereof. If under
applicable zoning provisions the use of all or any portion of the Property
is or shall become a nonconforming use, Borrower will not cause or permit
the nonconforming use to be discontinued or abandoned without the express
written consent of Lender.
3.9 WASTE. Borrower shall not commit or suffer any waste of
the Property or make any change in the use of the Property which will in
any way materially increase the risk of fire or other hazard arising out of
the operation of the Property, or take any action that might invalidate or
give cause for cancellation of any Policy, or do or permit to be done
thereon anything that may in any way impair the value of the Property or
the security of this Security Instrument. Borrower will not, without the
prior written consent of Lender, permit any drilling or exploration for or
extraction, removal, or production of any minerals from the surface or the
subsurface of the Land, regardless of the depth thereof or the method of
mining or extraction thereof.
3.10 COMPLIANCE WITH LAWS. (a) Borrower shall promptly comply
with all existing and future federal, state and local laws, orders,
ordinances, governmental rules and regulations or court orders affecting
the Property, or the use thereof including, but not limited to, the
Americans with Disabilities Act ("ADA") (collectively, the "Applicable
Laws").
(b) Borrower shall from time to time, upon Lender's request,
provide Lender with evidence satisfactory to Lender that the Property
complies with all Applicable Laws or is exempt from compliance with
Applicable Laws.
(c) Notwithstanding any provisions set forth herein or in any
document regarding Lender's approval of alterations of the Property,
Borrower shall not alter the Property in any manner which would increase
Borrower's responsibilities for compliance with Applicable Laws without the
prior written approval of Lender. Lender's approval of the plans,
specifications, or working drawings for alterations of the Property shall
create no responsibility or liability on behalf of Lender for their
completeness, design, sufficiency or their compliance with Applicable Laws.
The foregoing shall apply to tenant improvements constructed by Borrower
or by any of its tenants. Lender may condition any such approval upon
receipt of a certificate of compliance with Applicable Laws from an
independent architect, engineer, or other person acceptable to Lender.
(d) Borrower shall give prompt notice to Lender of the receipt
by Borrower of any notice related to a violation of any Applicable Laws and
of the commencement of any proceedings or investigations which relate to
compliance with Applicable Laws.
(e) Borrower will take appropriate measures to prevent and will
not engage in or knowingly permit any illegal activities at the Property.
3.11 BOOKS AND RECORDS. (a) Borrower and any Guarantors
(defined in Subsection 10.1(f)) and Indemnitors (defined in Subsection
10.1(q)), if any, shall keep adequate books and records of account in
accordance with generally accepted accounting principles, consistently
applied ("GAAP"), or in accordance with other methods acceptable to Lender
in its sole discretion, consistently applied and furnish to Lender:
(i) quarterly operating statements of the Property [together
with a property balance sheet for such quarter], prepared and
certified by Borrower in the form required by Lender, detailing the
revenues received, the expenses incurred and the net operating income
before and after debt service (principal and interest) and major
capital improvements for that quarter and containing appropriate year
to date information, and containing a comparison for such quarter with
the annual budget delivered pursuant to Subsection 3.11(a)(v), within
thirty (30) days after the end of each fiscal quarter;
(ii) monthly certified rent rolls signed and dated by Borrower,
detailing the names of all tenants of the Improvements, the portion of
Improvements occupied by each tenant, the base rent and any other
charges payable under each Lease and the term of each Lease, including
the expiration date, and any other information as is reasonably
required by Lender, within thirty (30) days after the end of each
fiscal quarter;
(iii) an annual operating statement of the Property detailing
the total revenues received, total expenses incurred, total cost of
all capital improvements, total debt service and total cash flow, and
containing a comparison for such period with the annual budget
delivered pursuant to Subsection 3.11(a)(v), to be prepared and
certified by Borrower in the form required by Lender, or if required
by Lender, an audited annual operating statement prepared and
certified by an independent certified public accountant acceptable to
Lender, within ninety (90) days after the close of each fiscal year of
Borrower;
(iv) an annual balance sheet and profit and loss statement of
Borrower, any Guarantors and any Indemnitors in the form required by
Lender, prepared and certified by the respective Borrower, Guarantors
and/or Indemnitors, or if required by Lender, audited financial
statements prepared by an independent certified public accountant
acceptable to Lender, within ninety (90) days after the close of each
fiscal year of Borrower, Guarantors and Indemnitors, as the case may
be;
(v) an annual operating budget presented on a monthly basis
consistent with the quarterly and annual operating statements
described above for the Property, including cash flow projections for
the upcoming year, and all proposed capital replacements and
improvements at least fifteen (15) days prior to the start of each
calendar year; and
(vi) copies of Borrower's federal income tax returns within
fifteen (15) days of the date such returns are filed.
(b) Upon reasonable request from Lender, Borrower, its
affiliates, any Guarantor and any Indemnitor shall furnish to Lender:
(i) a property management report for the Property, showing the
number of inquiries made and/or rental applications received from
tenants or prospective tenants and deposits received from tenants and
any other information requested by Lender, in reasonable detail and
certified by Borrower (or an officer, general partner or principal of
Borrower if Borrower is not an individual) under penalty of perjury to
be true and complete, but no more frequently than quarterly; and
(ii) an accounting of all security deposits held by Borrower,
any manager of the Property or any other party on behalf of or for the
benefit of Borrower in connection with any Lease of any part of the
Property, including the name and identification number of the accounts
in which such security deposits are held, the name and address of the
financial institutions in which such security deposits are held and
the name of the person to contact at such financial institution, along
with any authority or release necessary for Lender to obtain
information regarding such accounts directly from such financial
institutions.
(c) Borrower, its affiliates, any Guarantor and any Indemnitor
shall furnish Lender with such other additional financial or management
information as may, from time to time, be required by Lender in form and
substance satisfactory to Lender.
(d) Borrower, its affiliates, any Guarantor and any Indemnitor
shall furnish to Lender and its agents convenient facilities for the
examination and audit of any such books and records. Within a reasonable
time after request by Lender, Borrower, its affiliates, any Guarantor and
any Indemnitor shall provide any other information with respect to the
Property and the financial condition of Borrower, its affiliates, any
Guarantor and any Indemnitor as Lender may from time to time request.
3.12 PAYMENT FOR LABOR AND MATERIALS. Borrower will promptly
pay when due all bills and costs for labor, materials, and specifically
fabricated materials incurred in connection with the Property and never
permit to exist beyond the due date thereof in respect of the Property or
any part thereof any lien or security interest, even though inferior to the
liens and the security interests hereof, and in any event never permit to
be created or exist in respect of the Property or any part thereof any
other or additional lien or security interest other than the liens or
security interests hereof, except for the Permitted Exceptions (defined
below).
3.13 PROPERTY MANAGEMENT. In the event that Lender reasonably
determines that the Property is not being managed in accordance with
generally accepted management practices for properties similar to the
Property, Lender shall deliver written notice thereof to Borrower, which
notice shall specify with particularity the grounds for Lender's
determination. If Lender determines that the conditions specified in
Lender's notice are not remedied to Lender's reasonable satisfaction by
Borrower within thirty (30) days from receipt of such notice or that
Borrower has failed to diligently undertake correcting such conditions
within such thirty (30) day period, Borrower shall, at Lender's direction,
terminate any existing management agreement for the Property and/or enter
into a property management agreement reasonably acceptable to Lender with a
management company reasonably acceptable to Lender.
3.14 PERFORMANCE OF OTHER AGREEMENTS. Borrower shall observe
and perform each and every term to be observed or performed by Borrower
pursuant to the terms of any agreement or recorded instrument affecting or
pertaining to the Property, or given by Borrower to Lender for the purpose
of further securing an obligation secured hereby and any amendments,
modifications or changes thereto.
3.15 CHANGE OF NAME, IDENTITY OR STRUCTURE. Borrower will not
change Borrower's name, identity (including its trade name or names) or, if
not an individual, Borrower's corporate, partnership or other structure
without notifying Lender of such change in writing at least thirty (30)
days prior to the effective date of such change and, in the case of a
change in Borrower's structure, without first obtaining the prior written
consent of Lender. Borrower will execute and deliver to Lender, prior to
or contemporaneously with the effective date of any such change, any
financing statement or financing statement change required by Lender to
establish or maintain the validity, perfection and priority of the security
interest granted herein. At the request of Lender, Borrower shall execute
a certificate in form satisfactory to Lender listing the trade names under
which Borrower intends to operate the Property, and representing and
warranting that Borrower does business under no other trade name with
respect to the Property.
3.16 EXISTENCE. Borrower will continuously maintain its
existence and its rights to do business in the state where the Property is
located together with its franchises and trade names.
4 - SPECIAL COVENANTS
Borrower covenants and agrees that:
4.1 PROPERTY USE. The Property shall be used only as a
shopping center and for no other use without the prior written consent of
Lender, which consent may be withheld in Lender's sole and absolute
discretion.
4.2 ERISA. (a) It shall not engage in any transaction which
would cause any obligation, or action taken or to be taken, hereunder (or
the exercise by Lender of any of its rights under the Note, this Security
Instrument and the Other Security Documents) to be a non-exempt (under a
statutory or administrative class exemption) prohibited transaction under
the Employee Retirement Income Security Act of 1974, as amended ("ERISA").
(b) Borrower further covenants and agrees to deliver to Lender
such certifications or other evidence from time to time throughout the term
of the Security Instrument, as requested by Lender in its sole discretion,
that (i) Borrower is not an "employee benefit plan" as defined in Section
3(3) of ERISA, which is subject to Title I of ERISA, or a "governmental
plan" within the meaning of Section 3(32) of ERISA; (ii) Borrower is not
subject to state statutes regulating investments and fiduciary obligations
with respect to governmental plans; and (iii) one or more of the following
circumstances is true:
(A) Equity interests in Borrower are publicly offered
securities, within the meaning of 29 C.F.R. Section
2510.3-101(b)(2);
(B) Less than 25 percent of each outstanding class of
equity interests in Borrower are held by "benefit plan investors"
within the meaning of 29 C.F.R. Section 2510.3-101(f)(2); or
(C) Borrower qualifies as an "operating company" or a "real
estate operating company" within the meaning of 29 C.F.R.
Section 2510.3-101(c) or (e) or an investment company registered
under The Investment Company Act of 1940.
4.3 Single Purpose Entity. It has not and shall not:
(a) engage in any business or activity other than the ownership,
operation and maintenance of the Property, and activities incidental
thereto;
(b) acquire or own any material assets other than (i) the
Property, and (ii) such incidental Personal Property as may be necessary
for the operation of the Property;
(c) merge into or consolidate with any person or entity or
dissolve, terminate or liquidate in whole or in part, transfer or otherwise
dispose of all or substantially all of its assets or change its legal
structure, without in each case Lender's consent;
(d) fail to preserve its existence as an entity duly organized,
validly existing and in good standing (if applicable) under the laws of the
jurisdiction of its organization or formation, or without the prior written
consent of Lender, amend, modify, terminate or fail to comply with the
provisions of Borrower's Partnership Agreement, Articles or Certificate of
Incorporation or similar organizational documents, as the case may be, as
same may be further amended or supplemented, if such amendment,
modification, termination or failure to comply would adversely affect the
ability of Borrower to perform its obligations hereunder, under the Note or
under the Other Security Documents;
(e) own any subsidiary or make any investment in, any person or
entity without the consent of Lender;
(f) commingle its assets with the assets of any of its general
partners, affiliates, principals or of any other person or entity;
(g) incur or assume any debt, secured or unsecured, direct or
contingent (including guaranteeing any obligation), other than the Debt,
except in the ordinary course of its business of owning and operating the
Property, provided that such debt is paid when due, and in any event,
except for the Debt, not incur or assume any indebtedness for borrowed
money or which is evidenced by a promissory note;
(h) become insolvent and fail to pay its debts and liabilities
from its assets as the same shall become due;
(i) fail to maintain its records, books of account and bank
accounts separate and apart from those of the general partners, principals
and affiliates of Borrower, the affiliates of a general partner of
Borrower, and any other person or entity;
(j) enter into any contract or agreement with any general
partner, principal or affiliate of Borrower, Guarantor or Indemnitor, or
any general partner, principal or affiliate thereof, except upon terms and
conditions that are intrinsically fair and substantially similar to those
that would be available on an arms-length basis with third parties other
than any general partner, principal or affiliate of Borrower, Guarantor or
Indemnitor, or any general partner, principal or affiliate thereof;
(k) seek the dissolution or winding up in whole, or in part, of
Borrower;
(l) maintain its assets in such a manner that it will be costly
or difficult to segregate, ascertain or identify its individual assets from
those of any general partner, principal or affiliate of Borrower, or any
general partner, principal or affiliate thereof or any other person;
(m) hold itself out to be responsible for the debts of another
person;
(n) make any loans or advances to any third party, including any
general partner, principal or affiliate of Borrower, or any general
partner, principal or affiliate thereof;
(o) fail to file its own tax returns;
(p) agree to, enter into or consummate any transaction which
would render Borrower unable to furnish the certification or other evidence
referred to in Section 4.2(b) hereof;
(q) fail either to hold itself out to the public as a legal
entity separate and distinct from any other entity or person or to conduct
its business solely in its own name in order not (i) to mislead others as
to the identity with which such other party is transacting business, or
(ii) to suggest that Borrower is responsible for the debts of any third
party (including any general partner, principal or affiliate of Borrower,
or any general partner, principal or affiliate thereof);
(r) fail to maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in light
of its contemplated business operations; or
(s) file or consent to the filing of any petition, either
voluntary or involuntary, to take advantage of any applicable insolvency,
bankruptcy, liquidation or reorganization statute, or make an assignment
for the benefit of creditors.
The foregoing covenants shall apply to the manager of Borrower
(the "Manager"); however, as pertains to the Manager only, where the term
"Property" is used in this Section 4.3, such reference shall, instead, be
to the Manager's interest in Borrower.
4.4 RESTORATION. The following provisions shall apply in
connection with the Restoration of the Property:
(a) If the Net Proceeds shall be less than $250,000.00 and the
costs of completing the Restoration shall be less than $250,000.00, the Net
Proceeds will be disbursed by Lender to Borrower upon receipt, provided
that all of the conditions set forth in Subsection 4.4(b)(i) are met and
Borrower delivers to Lender a written undertaking to expeditiously commence
and to satisfactorily complete with due diligence the Restoration in
accordance with the terms of this Security Instrument.
(b) If the Net Proceeds are equal to or greater than $250,000.00
or the costs of completing the Restoration is equal to or greater than
$250,000.00 Lender shall make the Net Proceeds available for the
Restoration in accordance with the provisions of this Subsection 4.4(b).
The term "Net Proceeds" for purposes of this Section 4.4 shall mean: (i)
the net amount of all insurance proceeds received by Lender pursuant to
Subsections 3.3(a)(i), (iv), (vi) and (vii) of this Security Instrument as
a result of such damage or destruction, after deduction of its reasonable
costs and expenses (including, but not limited to, reasonable counsel
fees), if any, in collecting same ("Insurance Proceeds"), or (ii) the net
amount of all awards and payments received by Lender with respect to a
taking referenced in Section 3.6 of this Security Instrument, after
deduction of its reasonable costs and expenses (including, but not limited
to, reasonable counsel fees), if any, in collecting same ("Condemnation
Proceeds"), whichever the case may be.
(i) The Net Proceeds shall be made available to Borrower for the
Restoration provided that each of the following conditions are met:
(A) no Event of Default shall have occurred and be
continuing under the Note, this Security Instrument or any of the
Other Security Documents;
(B) (1) in the event of the Net Proceeds are Insurance
Proceeds, less than fifty percent (50%) of the total floor area
of the Improvements has been damaged, destroyed, or rendered
unusable as a result of such fire or other casualty or (2) in the
event the Net Proceeds are Condemnation Proceeds, less than ten
(10%) of the land constituting the Property is taken, and such
land is located along the perimeter or periphery of the Property,
and some portion of the Improvements is located in such land;
(C) Leases demising in the aggregate a percentage amount
equal to or greater than the Rentable Space Percentage
(hereinafter defined) of the total rentable space in the Property
which has been demised under executed and delivered Leases in
effect as of the date of the occurrence of such fire or other
casualty or taking, whichever the case may be, shall remain in
full force and effect during and after the completion of the
Restoration, and Borrower furnishes to Lender evidence
satisfactory to Lender that K Mart Corporation and Foodmax of
Georgia (a wholly-owned subsidiary of Bruno's, Inc.) and Big B's,
Inc. shall continue to develop, own and operate their respective
department stores, etc. at the Property notwithstanding the
occurrence of any such fire or other casualty or taking,
whichever the case may be, and will make all necessary repairs
and restorations thereto at their sole cost and expense. The
term "Rentable Space Percentage" shall mean (1) in the event the
Net Proceeds are Insurance Proceeds, a percentage amount equal to
fifty percent (50%) and (2) in the event the Net Proceeds are
Condemnation Proceeds, a percentage amount equal to ninety
percent (90%);
(D) Borrower shall commence the Restoration as soon as
reasonably practicable (but in no event later than thirty (30)
days after such damage or destruction or taking, whichever the
case may be, occurs) and shall diligently pursue the same to
satisfactory completion;
(E) Lender shall be satisfied that any operating deficits,
including all scheduled payments of principal and interest under
the Note and the Applicable Interest Rate (as defined in the
Note), which will be incurred with respect to the Property as a
result of the occurrence of any such fire or other casualty or
taking, whichever the case may be, will be covered out of (1) the
Net Proceeds, (2) the insurance coverage referred to in
Subsection 3.3(a)(iii), if applicable, or (3) by other funds of
Borrower;
(F) Lender shall be satisfied that, upon the completion of
the Restoration, the Debt Service Coverage Ratio (as defined
herein) shall be at least 1.25 to 1.00, as determined by Lender
in its sole and absolute discretion;
(G) Lender shall be satisfied that the Restoration will be
completed on or before the earliest to occur of (1) twelve (12)
months prior to the Maturity Date (as defined in the Note), (2)
twelve (12) months after the occurrence of such fire or other
casualty or taking, whichever the case may be, (3) the earliest
date required for such completion under the terms of any Leases
which are required in accordance with the provisions of this
Subsection 4.4(b) to remain in effect subsequent to the
occurrence of such fire or other casualty or taking, whichever
the case may be, and the completion of the Restoration or under
the terms of K Mart and Foodmax of Georgia (a wholly owned
subsidiary of Bruno's, Inc.) and Big B's, Inc. or (4) such time
as may be required under applicable zoning law, ordinance, rule
or regulation in order to repair and restore the Property to the
condition it was in immediately prior to such fire or other
casualty or to as nearly as possible the condition it was in
immediately prior to such taking, as applicable;
(H) the Property and the use thereof after the Restoration
will be in compliance with and permitted under all applicable
zoning laws, ordinances, rules and regulations;
(I) the Restoration shall be done and completed by Borrower
in an expeditious and diligent fashion and in compliance with all
applicable governmental laws, rules and regulations (including,
without limitation, all applicable Environmental Laws) defined
below; and
(J) such fire or other casualty or taking, as applicable,
does not result in the loss of access to the Property or the
Improvements.
The term "Debt Service Coverage Ratio" as used herein shall mean
the ratio of (a) the NOI (hereinafter defined) produced by the operation of
the Property during the twelve (12) calendar month period immediately
preceding the calculation to (b) the Constant Monthly Payments (as defined
in the Note) that would be due under the Note for the twelve (12) calendar
month period immediately following the calculation.
The term "NOI" as used herein shall mean the gross income derived
from the operation of the Property, less Expenses (hereinafter defined).
NOI shall include only Rents and such other income, including any rent loss
or business income insurance proceeds, laundry, parking, vending or
concession income, which are actually received by Borrower of its agents or
representatives and Expenses actually paid or payable on an accrual basis
during the twelve (12) month period ending one month prior to the date on
which the NOI is being calculated, as set forth on operating statements
satisfactory to Lender. NOI shall be calculated on a cash basis in
accordance with customary accounting principles applicable to real estate.
Notwithstanding the foregoing, NOI shall not include (a)
condemnation or insurance proceeds (excluding rent or business income
insurance proceeds); (b) any proceeds from the sale, exchange, transfer,
financing or refinancing of all or any portion of the Property; (c) amounts
received from tenants as a security deposit; or (d) any other type of
income otherwise includable in NOI but paid directly by any tenant to a
person or entity other than Borrower or its agents or representatives.
The term "Expenses" as used herein shall mean the aggregate of
the following items: (a) real estate taxes, general and special assessments
or similar charges; (b) sales, use and personal property taxes; (c)
management fees of not less than five percent (5%) of the gross income
derived from the operation of the Property and disbursements for management
services whether such services are performed at the Property or off-site;
(d) wages, salaries, pension costs and all fringe and other
employee-related benefits and expenses, up to and including (but not above)
the level of the on-site manager, engaged in the repair, operation and
maintenance of the Property and service to tenants and on-site personnel
engaged in audit and accounting functions performed by Borrower; (e)
insurance premiums including, but not limited to, casualty, liability, rent
and fidelity insurance premiums; (f) cost of all electricity, oil, gas,
water, steam, HVAC and any other energy, utility or similar item and
overtime services, the cost of building and cleaning supplies, and all
other administrative, management, ownership, operating, advertising,
marketing and maintenance expenses incurred in connection with the
operation of the Property; (g) cost of necessary cleaning, repair,
replacement, maintenance, decoration or painting of existing improvements
on the Property (including, without limitation, parking lots and roadways),
of like kind and quantity or such kind or quality which is necessary to
maintain the Property to the same standards as competitive properties of
similar size and location of the Property, together with adequate reserves
for the repair and replacement of capital improvements on the Property
acceptable to Lender; (h) the cost of such other maintenance materials,
HVAC repairs, parts and supplies, and all equipment to be used in the
ordinary course of business, which is not capitalized in accordance with
GAAP; (i) cost of leasing commissions and tenant concessions payable to
Lender pursuant to Leases in effect for the Property; (j) legal, accounting
and other professional expenses incurred in connection with the Property;
(k) casualty losses to the extent not reimbursed by a third party; and (l)
all amounts that should be reserved, as reasonably determined by Borrower
with approval by the Lender in its reasonable discretion, for repair or
maintenance of the Property and to maintain the value of the Property
including replacement reserves of no less than $.15 per square foot of
rentable space. The Expenses shall be based on the above-described items
actually incurred or payable on an accrual basis in accordance with GAAP by
Borrower during the twelve (12) month period ending one month prior to the
date on which the NOI is to be calculated (except the capital expenses and
reserves set forth in Subsection (g) above), with customary adjustments for
items such as taxes and insurance which accrue but are paid periodically,
as adjusted by Lender to reflect projected adjustments for the subsequent
twelve (12) month period beginning on the date on which the NOI is to be
calculated.
Notwithstanding the foregoing, the term "Expenses" shall not
include (i) depreciation or amortization or any other non-cash item of
expense unless approved by Lender; (ii) interest, principal, fees, costs
and expense reimbursements of Lender in administrating the loan evidenced
by the Note or exercising remedies under this Security Instrument or the
Other Security Documents; or (iii) any expenditure (other than leasing
commissions and tenant concessions) properly treated as a capital item
under GAAP and such expenditure is treated by Borrower as a capital item in
Borrower's financial statements.
(ii) The Net Proceeds shall be held by Lender and, until
disbursed in accordance with the provisions of this Subsection 4.4(b),
shall constitute additional security for the Obligations. The Net
Proceeds shall be disbursed by Lender to, or as directed by, Borrower
from time to time during the course of the Restoration, upon receipt
of evidence satisfactory to Lender that (A) all materials installed
and work and labor performed (except to the extent that they are to be
paid for out of the requested disbursement) in connection with the
Restoration have been paid for in full, and (B) there exist no notices
of pendency, stop orders, mechanic's or materialman's liens or notices
of intention to file same, or any other liens or encumbrances of any
nature whatsoever on the Property arising out of the Restoration which
have not either been fully bonded to the satisfaction of Lender and
discharged of record or in the alternative fully insured to the
satisfaction of Lender by the title company insuring the lien of this
Security Instrument.
(iii) All plans and specifications required in connection with
the Restoration shall be subject to prior review and acceptance in all
respects by Lender and by an independent consulting engineer selected
by Lender (the "Casualty Consultant"). Lender shall have the use of
the plans and specifications and all permits, licenses and approvals
required or obtained in connection with the Restoration. The identity
of the contractors, subcontractors and materialmen engaged in the
Restoration, as well as the contracts under which they have been
engaged, shall be subject to prior review and acceptance by Lender and
the Casualty Consultant. All costs and expenses incurred by Lender in
connection with making the Net Proceeds available for the Restoration
including, without limitation, reasonable counsel fees and
disbursements and the Casualty Consultant's fees, shall be paid by
Borrower.
(iv) In no event shall Lender be obligated to make disbursements
of the Net Proceeds in excess of an amount equal to the costs actually
incurred from time to time for work in place as part of the
Restoration, as certified by the Casualty Consultant, minus the
Casualty Retainage. The term "Casualty Retainage" as used in this
Subsection 4.4(b) shall mean an amount equal to 10% of the costs
actually incurred for work in place as part of the Restoration, as
certified by the Casualty Consultant, until the Restoration has been
completed. The Casualty Retainage shall in no event, and
notwithstanding anything to the contrary set forth above in this
Subsection 4.4(b), be less than the amount actually held back by
Borrower from contractors, subcontractors and materialmen engaged in
the Restoration. The Casualty Retainage shall not be released until
the Casualty Consultant certifies to Lender that the Restoration has
been completed in accordance with the provisions of this Subsection
4.4(b) and that all approvals necessary for the re-occupancy and use
of the Property have been obtained from all appropriate governmental
and quasi-governmental authorities, and Lender receives evidence
satisfactory to Lender that the costs of the Restoration have been
paid in full or will be paid in full out of the Casualty Retainage,
provided, however, that Lender will release the portion of the
Casualty Retainage being held with respect to any contractor,
subcontractor or materialman engaged in the Restoration as of the date
upon which the Casualty Consultant certifies to Lender that the
contractor, subcontractor or materialman has satisfactorily completed
all work and has supplied all materials in accordance with the
provisions of the contractor's, subcontractor's or materialman's
contract, and the contractor, subcontractor or materialman delivers
the lien waivers and evidence of payment in full of all sums due to
the contractor, subcontractor or materialman as may be reasonably
requested by Lender or by the title company insuring the lien of this
Security Instrument. If required by Lender, the release of any such
portion of the Casualty Retainage shall be approved by the surety
company, if any, which has issued a payment or performance bond with
respect to the contractor, subcontractor or materialman.
(v) Lender shall not be obligated to make disbursements of the
Net Proceeds more frequently than once every calendar month.
(vi) If at any time the Net Proceeds or the undisbursed balance
thereof shall not, in the opinion of Lender, be sufficient to pay in
full the balance of the costs which are estimated by the Casualty
Consultant to be incurred in connection with the completion of the
Restoration, Borrower shall deposit the deficiency (the "Net Proceeds
Deficiency") with Lender before any further disbursement of the Net
Proceeds shall be made. The Net Proceeds Deficiency deposited with
Lender shall be held by Lender and shall be disbursed for costs
actually incurred in connection with the Restoration on the same
conditions applicable to the disbursement of the Net Proceeds, and
until so disbursed pursuant to this Subsection 4.4(b) shall constitute
additional security for the Obligations. The excess, if any, of the
Net Proceeds and the remaining balance, if any, of the Net Proceeds
Deficiency deposited with Lender after the Casualty Consultant
certifies to Lender that the Restoration has been completed in
accordance with the provisions of this Subsection 4.4(b), and the
receipt by Lender of evidence satisfactory to Lender that all costs
incurred in connection with the Restoration have been paid in full,
shall be remitted by Lender to Borrower, provided no Event of Default
shall have occurred and shall be continuing under the Note, this
Security Instrument or any of the Other Security Documents.
(c) All Net Proceeds not required (i) to be made available for
the Restoration or (ii) to be returned to Borrower as excess Net Proceeds
pursuant to Subsection 4.4(b)(vi) may be retained and applied by Lender
toward the payment of the Debt whether or not then due and payable in such
order, priority and proportions as Lender in its discretion shall deem
proper or, at the discretion of Lender, the same may be paid, either in
whole or in part, to Borrower for such purposes as Lender shall designate,
in its discretion. If Lender shall receive and retain Net Proceeds, the
lien of this Security Instrument shall be reduced only by the amount
thereof received and retained by Lender and actually applied by Lender in
reduction of the Debt.
4.5 LOCK BOX ACCOUNT. (a) (i) Upon the occurrence of an Event
of Default or (ii) if any time the Debt Service Coverage Ratio of the
Property shall fall below 1.15:1.00, Lender shall have the right, upon
written notice to Borrower to require that, from and after the next
succeeding date of payment of an installment of principal and interest
under the Note, all Rents with respect to the Property, at Lender's
discretion, be paid directly to the manager of the Property (or another
third party selected by Lender) and deposited daily by the manager of the
Property (or another third party selected by Lender) in the name designated
by Lender directly to a designated lock-box account (the "Lock-Box
Account"), opened by Lender at a bank (the "Lock-Box Bank"), which account
shall be within the exclusive control of Lender.
(b) Upon receipt of notice from Lender as set forth in
Subsection (a) above, Borrower shall enter into a lock-box agreement with
Lender in a form reasonably satisfactory to Lender, which form shall
substantially reflect the provisions of this Section. Promptly following
delivery of the notice referred to in (a), Lender and Borrower will
negotiate diligently and in good faith a lock-box agreement substantially
reflecting the provisions of this Section. Notwithstanding anything to the
contrary contained in this Section, if in Lender's judgment, the manager's
(or Borrower's) performance in collecting Rents shall decline, then upon
receipt of written notice from Lender, Borrower shall promptly instruct
each tenant under any Lease to make all payments under such Lease, (y) if
by wire transfer, to the Lock-Box Account and (z) if by check, money order
or similar manner of payment, by mail to a designated lock-box (the
"Lock-Box") within the exclusive control of Lender.
(c) The lock-box agreement referred to in Subsection (b) above
shall provide that amounts deposited into the Lock-Box shall be collected
and deposited daily by the Manager (or, if required by Lender pursuant to
the final sentence of Subsection (b) above, by the Lock-Box Bank) into the
Lock-Box Account. Amounts on deposit in the Lock-Box Account on any date
of payment of an installment of principal and interest under the Note shall
be applied in the following order of priority: (i) to pay any Taxes, Other
Charges or Insurance Premiums then due and payable; (ii) to pay the
Property's pro rata share of the Lock-Box Bank's fees; (iii) to pay
interest and principal due on such date with respect to the Note; (iv) to
replenish all reserves and escrow funds required to be paid by Borrower to
Lender under the Note, the Security Instrument and the Other Security
Documents; and (vi) to Borrower.
5 - REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Lender that:
5.1 WARRANTY OF TITLE. Borrower has good title to the Property
and has the right to transfer, grant, bargain, sell, pledge, assign,
warrant, transfer and convey the same and that Borrower possesses an
unencumbered fee simple absolute estate in the Land and the Improvements
and that it owns the Property free and clear of all liens, encumbrances and
charges whatsoever except for those exceptions shown in the title insurance
policy insuring the lien of this Security Instrument (the "Permitted
Exceptions"). Borrower shall forever warrant, defend and preserve the
title and the validity and priority of the lien of this Security Instrument
and shall forever warrant and defend the same to Lender against the claims
of all persons whomsoever.
5.2 AUTHORITY. Borrower (and the undersigned representative of
Borrower, if any) has full power, authority and legal right to execute this
Security Instrument, and to transfer, grant, bargain, sell, pledge, assign,
warrant, transfer and convey the Property pursuant to the terms hereof and
to keep and observe all of the terms of this Security Instrument on
Borrower's part to be performed.
5.3 LEGAL STATUS AND AUTHORITY. Borrower (a) is duly organized,
validly existing and in good standing under the laws of its state of
organization or incorporation; (b) is duly qualified to transact business
and is in good standing in the State where the Property is located; and (c)
has all necessary approvals, governmental and otherwise, and full power and
authority to own the Property and carry on its business as now conducted
and proposed to be conducted. Borrower now has and shall continue to have
the full right, power and authority to operate and lease the Property, to
encumber the Property as provided herein and to perform all of the other
obligations to be performed by Borrower under the Note, this Security
Instrument and the Other Security Documents.
5.4 VALIDITY OF DOCUMENTS. (a) The execution, delivery and
performance of the Note, this Security Instrument and the Other Security
Documents and the borrowing evidenced by the Note (i) are within the
corporate/partnership power of Borrower; (ii) have been authorized by all
requisite corporate/partnership action; (iii) have received all necessary
approvals and consents, corporate, governmental or otherwise; (iv) will not
violate, conflict with, result in a breach of or constitute (with notice or
lapse of time, or both) a default under any provision of law, any order or
judgment of any court or governmental authority, the articles of
incorporation, by-laws, partnership or trust agreement, or other governing
instrument of Borrower, or any indenture, agreement or other instrument to
which Borrower is a party or by which it or any of its assets or the
Property is or may be bound or affected; (v) will not result in the
creation or imposition of any lien, charge or encumbrance whatsoever upon
any of its assets, except the lien and security interest created hereby;
and (vi) will not require any authorization or license from, or any filing
with, any governmental or other body (except for the recordation of this
instrument in appropriate land records in the State where the Property is
located and except for Uniform Commercial Code filings relating to the
security interest created hereby); and (b) the Note, this Security
Instrument and the Other Security Documents constitute the legal, valid and
binding obligations of Borrower.
5.5 LITIGATION. There is no action, suit or proceeding,
judicial, administrative or otherwise (including any condemnation or
similar proceeding), pending or, to the best of Borrower's knowledge,
threatened or contemplated against, or affecting, Borrower, a Guarantor, if
any, an Indemnitor, if any, or the Property that has not been disclosed to
Lender or is not adequately covered by insurance, as determined by Lender
in its sole and absolute discretion.
5.6 STATUS OF PROPERTY. (a) No portion of the Improvements is
located in an area identified by the Secretary of Housing and Urban
Development or any successor thereto as an area having special flood
hazards pursuant to the National Flood Insurance Act of 1968 or the Flood
Disaster Protection Act of 1973, as amended, or any successor law, or, if
located within any such area, Borrower has obtained and will maintain the
insurance prescribed in Section 3.3 hereof.
(b) Borrower has obtained all necessary certificates, licenses
and other approvals, governmental and otherwise, necessary for the
operation of the Property and the conduct of its business and all required
zoning, building code, land use, environmental and other similar permits or
approvals, all of which are in full force and effect as of the date hereof
and not subject to revocation, suspension, forfeiture or modification.
(c) The Property and the present and contemplated use and
occupancy thereof are in full compliance with all Applicable Laws,
including, without limitation, zoning ordinances, building codes, land use
and environmental laws, laws relating to the disabled (including, but not
limited to, the ADA) and other similar laws.
(d) The Property is served by all utilities required for the
current or contemplated use thereof. All utility service is provided by
public utilities and the Property has accepted or is equipped to accept
such utility service.
(e) All public roads and streets necessary for service of and
access to the Property for the current or contemplated use thereof have
been completed, are serviceable and all-weather and are physically and
legally open for use by the public.
(f) The Property is served by public water and sewer
(g) The Property is free from damage caused by fire or other
casualty.
(h) All costs and expenses of any and all labor, materials,
supplies and equipment used in the construction of the Improvements have
been paid in full.
(i) Borrower has paid in full for, and is the owner of, all
furnishings, fixtures and equipment (other than tenants' property) used in
connection with the operation of the Property, free and clear of any and
all security interests, liens or encumbrances, except the lien and security
interest created hereby.
(j) All liquid and solid waste disposal, septic and sewer
systems located on the Property are in a good and safe condition and repair
and in compliance with all Applicable Laws.
(k) All Improvements lie within the boundary of the Land.
5.7 NO FOREIGN PERSON. Borrower is not a "foreign person"
within the meaning of Section 1445(f)(3) of the Internal Revenue Code of
1986, as amended and the related Treasury Department regulations, including
temporary regulations.
5.8 SEPARATE TAX LOT. The Property is assessed for real estate
tax purposes as one or more wholly independent tax lot or lots, separate
from any adjoining land or improvements not constituting a part of such lot
or lots, and no other land or improvements is assessed and taxed together
with the Property or any portion thereof.
5.9 ERISA COMPLIANCE. (a) As of the date hereof and
throughout the term of this Security Instrument, (i) Borrower is not and
will not be an "employee benefit plan" as defined in Section 3(3) of ERISA,
which is subject to Title I of ERISA, and (ii) the assets of Borrower do
not and will not constitute "plan assets" of one or more such plans for
purposes of Title I of ERISA; and
(b) As of the date hereof and throughout the term of this
Security Instrument (i) Borrower is not and will not be a "governmental
plan" within the meaning of Section 3(32) of ERISA and (ii) transactions by
or with Borrower are not and will not be subject to state statutes
applicable to Borrower regulating investments of and fiduciary obligations
with respect to governmental plans.
5.10 LEASES. (a) Borrower is the sole owner of the entire
lessor's interest in the Leases; (b) the Leases are valid and enforceable;
(c) the terms of all alterations, modifications and amendments to the
Leases are reflected in the certified occupancy statement delivered to and
approved by Lender; (d) none of the Rents reserved in the Leases have been
assigned or otherwise pledged or hypothecated; (e) none of the Rents have
been collected for more than one (1) month in advance; (f) the premises
demised under the Leases have been completed and the tenants under the
Leases have accepted the same and have taken possession of the same on a
rent-paying basis; (g) there exist no offsets or defenses to the payment of
any portion of the Rents; (h) no Lease contains an option to purchase,
right of first refusal to purchase, or any other similar provision; (i) no
person or entity has any possessory interest in, or right to occupy, the
Property except under and pursuant to a Lease; (j) each Lease is
subordinate to this Security Instrument, either pursuant to its terms or a
recorded subordination agreement; and (k) no Lease has the benefit of a
non-disturbance agreement that would be considered unacceptable to prudent
institutional lenders.
5.11 FINANCIAL CONDITION. (a) Borrower is solvent, and no
bankruptcy, reorganization, insolvency or similar proceeding under any
state or federal law with respect to Borrower has been initiated, and (b)
it has received reasonably equivalent value for the granting of this
Security Instrument.
5.12 BUSINESS PURPOSES. The loan evidenced by the Note is
solely for the business purpose of Borrower, and is not for personal,
family, household, or agricultural purposes.
5.13 TAXES. Borrower, any Guarantor and any Indemnitor have
filed all federal, state, county, municipal, and city income and other tax
returns required to have been filed by them and have paid all taxes and
related liabilities which have such returns or pursuant to any assessments
received by them. Neither Borrower, any Guarantor nor any Indemnitor knows
of any basis for any additional assessment in respect of any such taxes and
related liabilities for prior years.
5.14 MAILING ADDRESS. Borrower's mailing address, as set
forth-in the opening paragraph hereof or as changed in accordance with the
provisions hereof, is true and correct.
5.15 NO CHANGE IN FACTS OR CIRCUMSTANCES. All information in
the application for the loan submitted to Lender (the "Loan Application")
and in all financing statements, rent rolls, reports, certificates and
other documents submitted in connection with the Loan Application or in
satisfaction of the terms thereof, are accurate, complete and correct in
all respects. There has been no adverse change in any condition, fact,
circumstance or event that would make any such information inaccurate,
incomplete or otherwise misleading.
5.16 DISCLOSURE. Borrower has disclosed to Lender all material
facts and has not failed to disclose any material fact that could cause any
representation or warranty made herein to be materially misleading.
5.17 THIRD PARTY REPRESENTATIONS. Each of the representations
and the warranties made by each Guarantor and Indemnitor herein or in any
Other Security Document(s) is true and correct in all material respects.
5.18 ILLEGAL ACTIVITY. No portion of the Property has
been or will be purchased with proceeds of any illegal activity.
6 - OBLIGATIONS AND RELIANCES
6.1 RELATIONSHIP OF BORROWER AND LENDER. The relationship
between Borrower and Lender is solely that of debtor and creditor, and
Lender has no fiduciary or other special relationship with Borrower, and no
term or condition of any of the Note, this Security Instrument and the
Other Security Documents shall be construed so as to deem the relationship
between Borrower and Lender to be other than that of debtor and creditor.
6.2 NO RELIANCE ON LENDER. The general partners, principals and
(if Borrower is a trust) beneficial owners of Borrower are experienced in
the ownership and operation of properties similar to the Property, and
Borrower and Lender are relying solely upon such expertise and business
plan in connection with the ownership and operation of the Property.
Borrower is not relying on Lender's expertise, business acumen or advice in
connection with the Property.
6.3 NO LENDER OBLIGATIONS. (a) Notwithstanding the provisions
of Subsections 1.1(f) and (l) or Section 1.2, Lender is not undertaking the
performance of (i) any obligations under the Leases; or (ii) any
obligations with respect to such agreements, contracts, certificates,
instruments, franchises, permits, trademarks, licenses and other documents.
(b) By accepting or approving anything required to be observed,
performed or fulfilled or to be given to Lender pursuant to this Security
Instrument, the Note or the Other Security Documents, including without
limitation, any officer's certificate, balance sheet, statement of profit
and loss or other financial statement, survey, appraisal, or insurance
policy, Lender shall not be deemed to have warranted, consented to, or
affirmed the sufficiency, the legality or effectiveness of same, and such
acceptance or approval thereof shall not constitute any warranty or
affirmation with respect thereto by Lender.
6.4 RELIANCE. Borrower recognizes and acknowledges that in
accepting the Note, this Security Instrument and the Other Security
Documents, Lender is expressly and primarily relying on the truth and
accuracy of the warranties and representations set forth in Article 5
without any obligation to investigate the Property and notwithstanding any
investigation of the Property by Lender; that such reliance existed on the
part of Lender prior to the date hereof; that the warranties and
representations are a material inducement to Lender in accepting the Note,
this Security Instrument and the Other Security Documents; and that Lender
would not be willing to make the loan evidenced by the Note, this Security
Instrument and the Other Security Documents and accept this Security
Instrument in the absence of the warranties and representations as set
forth in Article 5.
7 - FURTHER ASSURANCES
7.1 RECORDING OF SECURITY INSTRUMENT, ETC. Borrower forthwith
upon the execution and delivery of this Security Instrument and thereafter,
from time to time, will cause this Security Instrument and any of the Other
Security Documents creating a lien or security interest or evidencing the
lien hereof upon the Property and each instrument of further assurance to
be filed, registered or recorded in such manner and in such places as may
be required by any present or future law in order to publish notice of and
fully to protect and perfect the lien or security interest hereof upon, and
the interest of Lender in, the Property. Borrower will pay all taxes,
filing, registration or recording fees, and all expenses incident to the
preparation, execution, acknowledgment and/or recording of the Note, this
Security Instrument, the Other Security Documents, any note or deed to
secure debt supplemental hereto, any security instrument with respect to
the Property and any instrument of further assurance, and any modification
or amendment of the foregoing documents, and all federal, state, county and
municipal taxes, duties, imposts, assessments and charges arising out of or
in connection with the execution and delivery of this Security Instrument,
any deed to secure debt supplemental hereto, any security instrument with
respect to the Property or any instrument of further assurance, and any
modification or amendment of the foregoing documents, except where
prohibited by law so to do.
7.2 FURTHER ACTS, ETC. Borrower will, at the cost of Borrower,
and without expense to Lender, do, execute, acknowledge and deliver all and
every such further acts, deeds, conveyances, mortgages, assignments,
notices of assignments, transfers and assurances as Lender shall, from time
to time, reasonably require, for the better assuring, conveying, assigning,
transferring, and confirming unto Lender the property and rights hereby
mortgaged, granted, bargained, sold, conveyed, confirmed, pledged,
assigned, warranted and transferred or intended now or hereafter so to be,
or which Borrower may be or may hereafter become bound to convey or assign
to Lender, or for carrying out the intention or facilitating the
performance of the terms of this Security Instrument or for filing,
registering or recording this Security Instrument, or for complying with
all Applicable Laws. Borrower, on demand, will execute and deliver and
hereby authorizes Lender to execute in the name of Borrower or without the
signature of Borrower to the extent Lender may lawfully do so, one or more
financing statements, chattel mortgages or other instruments, to evidence
more effectively the security interest of Lender in the Property. Borrower
grants to Lender an irrevocable power of attorney coupled with an interest
for the purpose of exercising and perfecting any and all rights and
remedies available to Lender at law and in equity, including without
limitation such rights and remedies available to Lender pursuant to this
Section 7.2.
7.3 CHANGES IN TAX, DEBT, CREDIT AND DOCUMENTARY STAMP LAWS.
(a) If any law is enacted or adopted or amended after the date of this
Security Instrument which deducts the Debt from the value of the Property
for the purpose of taxation or which imposes a tax, either directly or
indirectly, on the Debt or Lender's interest in the Property, Borrower will
pay the tax, with interest and penalties thereon, if any. If Lender is
advised by counsel chosen by it that the payment of tax by Borrower would
be unlawful or taxable to Lender or unenforceable or provide the basis for
a defense of usury, then Lender shall have the option by written notice of
not less than ninety (90) days to declare the Debt immediately due and
payable.
(b) Borrower will not claim or demand or be entitled to any
credit or credits on account of the Debt for any part of the Taxes or Other
Charges assessed against the Property, or any part thereof, and no
deduction shall otherwise be made or claimed from the assessed value of the
Property, or any part thereof, for real estate tax purposes by reason of
this Security Instrument or the Debt. If such claim, credit or deduction
shall be required by law, Lender shall have the option, by written notice
of not less than ninety (90) days, to declare the Debt immediately due and
payable.
(c) If at any time the United States of America, any State
thereof or any subdivision of any such State shall require revenue or other
stamps to be affixed to the Note, this Security Instrument, or any of the
Other Security Documents or impose any other tax or charge on the same,
Borrower will pay for the same, with interest and penalties thereon, if
any.
7.4 ESTOPPEL CERTIFICATES. (a) After request by Lender,
Borrower, within ten (10) days, shall furnish Lender or any proposed
assignee with a statement, duly acknowledged and certified, setting forth
(i) the amount of the original principal amount of the Note, (ii) the
unpaid principal amount of the Note, (iii) the rate of interest of the
Note, (iv) the terms of payment and maturity date of the Note, (v) the date
installments of interest and/or principal were last paid, (v) that, except
as provided in such statement, there are no defaults or events which with
the passage of time or the giving of notice or both, would constitute an
event of default under the Note or the Security Instrument, (vi) that the
Note and this Security Instrument are valid, legal and binding obligations
and have not been modified or if modified, giving particulars of such
modification, (vii) whether any offsets or defenses exist against the
obligations secured hereby and, if any are alleged to exist, a detailed
description thereof, (viii) that all Leases are in full force and effect
and (provided the Property is not a residential multifamily property) have
not been modified (or if modified, setting forth all modifications), (ix)
the date to which the Rents thereunder have been paid pursuant to the
Leases, (x) whether or not, to the best knowledge of Borrower, any of the
lessees under the Leases are in default under the Leases, and, if any of
the lessees are in default, setting forth the specific nature of all such
defaults, (xi) the amount of security deposits held by Borrower under each
Lease and that such amounts are consistent with the amounts required under
each Lease, and (xii) as to any other matters reasonably requested by
Lender and reasonably related to the Leases, the obligations secured
hereby, the Property or this Security Instrument.
(b) Borrower shall deliver to Lender, promptly upon request,
duly executed estoppel certificates from any one or more lessees as
required by Lender attesting to such facts regarding the Lease as Lender
may require, including but not limited to attestations that each Lease
covered thereby is in full force and effect with no defaults thereunder on
the part of any party, that none of the Rents have been paid more than one
month in advance, and that the lessee claims no defense or offset against
the full and timely performance of its obligations under the Lease.
(c) Upon any transfer or proposed transfer contemplated by
Section 19.1 hereof, at Lender's request, Borrower, any Guarantors and any
Indemnitors shall provide an estoppel certificate to the Investor (defined
in Section 19.1) or any prospective Investor in such form, substance and
detail as Lender, such Investor or prospective Investor may require.
7.5 SPLITTING OF SECURITY INSTRUMENT. This Security Instrument
and the Note shall, at any time until the same shall be fully paid and
satisfied, at the sole election of Lender, be split or divided into two or
more notes and two or more security instruments, each of which shall cover
all or a portion of the Property to be more particularly described therein.
To that end, Borrower, upon written request of Lender and Lender's delivery
of the original Note to Borrower, shall execute, acknowledge and deliver,
or cause to be executed, acknowledged and delivered by the then owner of
the Property, to Lender and/or its designee or designees substitute notes
and security instruments in such principal amounts, aggregating not more
than the then unpaid principal amount of this Security Instrument, and
containing terms, provisions and clauses similar to those contained herein
and in the Note, and such other documents and instruments as may be
required by Lender.
7.6 REPLACEMENT DOCUMENTS. Upon receipt of an affidavit of an
officer of Lender as to the loss, theft, destruction or mutilation of the
Note or any Other Security Document which is not of public record, and, in
the case of any such mutilation, upon surrender and cancellation of such
Note or Other Security Document, Borrower will issue, in lieu thereof, a
replacement Note or Other Security Document, dated the date of such lost,
stolen, destroyed or mutilated Note or Other Security Document in the same
principal amount thereof and otherwise of like tenor.
8 - DUE ON SALE/ENCUMBRANCE
8.1 LENDER RELIANCE. Borrower acknowledges that Lender has
examined and relied on the experience of Borrower and its general partners,
principals and (if Borrower is a trust) beneficial owners in owning and
operating properties such as the Property in agreeing to make the loan
secured hereby, and will continue to rely on Borrower's ownership of the
Property as a means of maintaining the value of the Property as security
for repayment of the Debt and the performance of the Other Obligations.
Borrower acknowledges that Lender has a valid interest in maintaining the
value of the Property so as to ensure that, should Borrower default in the
repayment of the Debt or the performance of the Other Obligations, Lender
can recover the Debt by a sale of the Property.
8.2 NO SALE/ENCUMBRANCE. Borrower agrees that Borrower shall
not, without the prior written consent of Lender, sell, convey, mortgage,
grant, bargain, encumber, pledge, assign, or otherwise transfer the
Property or any part thereof or permit the Property or any part thereof to
be sold, conveyed, mortgaged, granted, bargained, encumbered, pledged,
assigned, or otherwise transferred.
8.3 SALE/ENCUMBRANCE DEFINED. A sale, conveyance, mortgage,
grant, bargain, encumbrance, pledge, assignment, or transfer within the
meaning of this Article 8 shall be deemed to include, but not limited to,
(a) an installment sales agreement wherein Borrower agrees to sell the
Property or any part thereof for a price to be paid in installments; (b) an
agreement by Borrower leasing all or a substantial part of the Property for
other than actual occupancy by a space tenant thereunder or a sale,
assignment or other transfer of, or the grant of a security interest in,
Borrower's right, title and interest in and to any Leases or any Rents; (c)
if Borrower, any Guarantor, any Indemnitor, or any general partner of
Borrower, Guarantor or Indemnitor is a corporation, the voluntary or
involuntary sale, conveyance, transfer or pledge of such corporation's
stock (or the stock of any corporation directly or indirectly controlling
such corporation by operation of law or otherwise) or the creation or
issuance of new stock by which an aggregate of more than 10% of such
corporation's stock shall be vested in a party or parties who are not now
stockholders; and (d) if Borrower, any Guarantor or Indemnitor or any
general partner of Borrower, any Guarantor or Indemnitor is a limited or
general partnership or joint venture, the change, removal or resignation of
a general partner or managing partner, or the transfer or pledge of the
partnership interest of any general partner or managing partner or any
profits or proceeds relating to such partnership interest or the transfer
of more than 49% in the aggregate of any limited partnership interests in
Borrower whether in one transfer or a series of transfers. Notwithstanding
the foregoing, transfer by devise or descent or by operation of law upon
the death of a partner or stockholder of Borrower, any Guarantor or
Indemnitor or any general partner thereof shall not be deemed to be a sale,
conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment, or
transfer within the meaning of this Article 8.
8.4 LENDER'S RIGHTS. Lender reserves the right to condition the
consent required hereunder upon a modification of the terms hereof and on
assumption of the Note, this Security Instrument and the Other Security
Documents as so modified by the proposed transferee, payment of a transfer
fee of one percent (1%) of the principal balance of the Note and all of
Lender's reasonable out-of-pocket expenses (exclusive of its overhead) and
reasonable attorney's fees actually incurred in connection with such
transfer, the approval by a Rating Agency of the proposed transferee, the
proposed transferee's continued compliance with the covenants set forth in
Sections 4.2 and 4.3 hereof, or such other conditions as Lender shall
determine in its sole discretion to be in the interest of Lender. Upon any
assumption to which Lender consents, the Indemnitors (hereinafter defined)
shall be released of their obligations under the Note and the Other
Security Documents, provided that in no event shall the Indemnitors be
released of their obligations, liabilities and/or indemnifications under
the Environmental Indemnity (hereinafter defined). Lender shall not be
required to demonstrate any actual impairment of its security or any
increased risk of default hereunder in order to declare the Debt
immediately due and payable upon Borrower's sale, conveyance, mortgage,
grant, bargain, encumbrance, pledge, assignment, or transfer of the
Property without Lender's consent. This provision shall apply to every
sale, conveyance, mortgage, grant, bargain, encumbrance, pledge,
assignment, or transfer of the Property regardless of whether voluntary or
not, or whether or not Lender has consented to any previous sale,
conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment, or
transfer of the Property.
9 - PREPAYMENT
9.1 PREPAYMENT BEFORE EVENT OF DEFAULT. The Debt may be prepaid
only in strict accordance with the express terms and conditions of the Note
including the payment of any prepayment consideration.
9.2 PREPAYMENT ON CASUALTY AND CONDEMNATION. Provided no Event
of Default exists under the Note, this Security Instrument or the Other
Security Documents, in the event of any prepayment of the Debt pursuant to
the terms of Sections 3.3 or 3.6 hereof, no Prepayment Consideration
(defined in the Note) shall be due in connection therewith, but Borrower
shall be responsible for all other amounts due under the Note, this
Security Instrument and the Other Security Documents.
9.3 PREPAYMENT AFTER EVENT OF DEFAULT. If a Default Prepayment
(defined below) occurs, Borrower shall pay to Lender the entire Debt,
including without limitation, the Prepayment Consideration (as defined in
the Note). For purposes of this Section 9.3, the term "Default Prepayment"
shall mean a prepayment of the principal amount of the Note made after the
occurrence of any Event of Default or an acceleration of the Maturity Date
(as defined in the Note) under any circumstances, including, without
limitation, a prepayment occurring in connection with reinstatement of this
Security Instrument provided by statute under foreclosure proceedings or
exercise of a power of sale, any statutory right of redemption exercised by
Borrower or any other party having a statutory right to redeem or prevent
foreclosure, any sale in foreclosure or under exercise of a power of sale
or otherwise.
10 - DEFAULT
10.1 EVENTS OF DEFAULT. The occurrence of any one or more of
the following events shall constitute an "Event of Default":
(a) if any portion of the Debt is not paid prior to the tenth
(10th) day after the same is due or if the entire Debt is not paid on or
before the Maturity Date;
(b) if any of the Taxes or Other Charges is not paid when the
same is due and payable except to the extent sums sufficient to pay such
Taxes and Other Charges have been deposited with Lender in accordance with
the terms of this Security Instrument;
(c) if the Policies are not kept in full force and effect, or if
the Policies are not delivered to Lender upon request or Borrower has not
delivered evidence of the renewal of the Policies thirty (30) days prior to
their expiration as provided in Section 3.3(b);
(d) if Borrower violates or does not comply with any of the
provisions of Section 3.7 or 4.3 or Articles 8, 12 or 13;
(e) if any representation or warranty of Borrower, Indemnitor or
any person guaranteeing payment of the Debt or any portion thereof or
performance by Borrower of any of the terms of this Security Instrument (a
"Guarantor"), or any general partner, principal or beneficial owner of any
of the foregoing, made herein or in the Environmental Indemnity (defined
below) or any guaranty, or in any certificate, report, financial statement
or other instrument or document furnished to Lender shall have been false
or misleading in any material respect when made;
(f) if (i) Borrower or any general partner of Borrower, or any
Guarantor or Indemnitor shall commence any case, proceeding or other action
(A) under any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization,
conservatorship or relief of debtors, seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or
its debts, or (B) seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any substantial
part of its assets, or Borrower or any general partner of Borrower, or any
Guarantor or Indemnitor shall make a general assignment for the benefit of
its creditors; or (ii) there shall be commenced against Borrower or any
general partner of Borrower, or any Guarantor or Indemnitor any case,
proceeding or other action of a nature referred to in clause (i) above
which (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of ninety (90) days; or (iii) there shall be
commenced against Borrower or any general partner of Borrower, or any
Guarantor or Indemnitor any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or similar
process against all or any substantial part of its assets which results in
the entry of any order for any such relief which shall not have been
vacated, discharged, or stayed or bonded pending appeal within ninety (90)
days from the entry thereof; or (iv) Borrower or any general partner of
Borrower, or any Guarantor or Indemnitor shall take any action in
furtherance of, or indicating its consent to, approval of, or acquiescence
in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v)
Borrower or any general partner of Borrower, or any Guarantor or Indemnitor
shall generally not, or shall be unable to, or shall admit in writing its
inability to, pay its debts as they become due;
(g) if Borrower shall be in default under any other mortgage,
deed of trust, deed to secure debt or other security agreement covering any
part of the Property whether it be superior or junior in lien to this
Security Instrument;
(h) if the Property becomes subject to any mechanic's,
materialman's or other lien other than a lien for local real estate taxes
and assessments not then due and payable and the lien shall remain
undischarged of record (by payment, bonding or otherwise) for a period of
thirty (30) days after the date upon which Borrower first receives actual
notice of such filing;
(i) if any federal tax lien is filed against the Property and
same is not discharged of record within thirty (30) days after the date
upon which Borrower first receives actual notice of such filing;
(j) if (i) Borrower fails to timely provide Lender with the
written certification and evidence referred to in Section 4.2 hereof, or
(ii) Borrower consummates a transaction which would cause this Security
Instrument or Lender's exercise of its rights under this Security
Instrument, the Note or the Other Security Documents to constitute a
nonexempt prohibited transaction under ERISA or result in a violation of a
state statute regulating governmental plans, subjecting Lender to liability
for a violation of ERISA or a state statute;
(k) if any default occurs under that certain environmental
indemnity agreement dated the date hereof given by Borrower and Charles H.
Lesley, John H. Wagener, John Barge, Paul P. Moore and Philip R. Curtis
(collectively, "Indemnitor") to Lender (the "Environmental Indemnity") and
such default continues after the expiration of applicable notice and grace
periods, if any;
(l) if any default occurs under any guaranty or indemnity
executed in connection herewith and such default continues after the
expiration of applicable grace periods, if any;
(m) if for more than ten (10) days after notice from Lender,
Borrower shall continue to be in default under any other term, covenant or
condition of the Note, this Security Instrument or the Other Security
Documents in the case of any default which can be cured by the payment of a
sum of money or for thirty (30) days after notice from Lender in the case
of any other default, provided that if such default cannot reasonably be
cured within such thirty (30) day period and Borrower shall have commenced
to cure such default within such thirty (30) day period and thereafter
diligently and expeditiously proceeds to cure the same, such thirty (30)
day period shall be extended for so long as it shall require Borrower in
the exercise of due diligence to cure such default, it being agreed that no
such extension shall be for a period in excess of ninety (90) days; or
(n) if any default occurs under that certain Replacement Reserve
and Security Agreement dated the date hereof between Borrower and Lender.
10.2 LATE PAYMENT CHARGE. If any monthly installment of
principal and interest is not paid prior to the fifth (5th) day after the
date on which it is due, Borrower shall pay to Lender upon demand an amount
equal to the lesser of five percent (5%) of such unpaid portion of the
outstanding monthly installment of principal and interest then due or the
maximum amount permitted by applicable law, to defray the expense incurred
by Lender in handling and processing such delinquent payment and to
compensate Lender for the loss of the use of such delinquent payment, and
such amount shall be secured by this Security Instrument and the Other
Security Documents.
10.3 DEFAULT INTEREST. Borrower does hereby agree that upon the
occurrence of an Event of Default, Lender shall be entitled to receive and
Borrower shall pay interest on the entire principal amount of the Note at a
rate (the "Default Rate") equal to: (a) the greater of (i) the Applicable
Interest Rate (as defined in the Note) plus three percent (3%) or (ii) the
Prime Rate (as defined in the Note) plus four percent (4%) or (b) the
maximum interest rate that Borrower may by law pay, whichever is
lower. The Default Rate shall be computed from the occurrence of the Event
of Default until the earlier of the date upon which the Event of Default is
cured or the date upon which the Debt is paid in full. Interest calculated
at the Default Rate shall be added to the Debt, and shall be deemed secured
by this Security Instrument. This clause, however, shall not be construed
as an agreement or privilege to extend the date of the payment of the Debt,
nor as a waiver of any other right or remedy accruing to Lender by reason
of the occurrence of any Event of Default.
11 - RIGHTS AND REMEDIES
11.1 REMEDIES. Upon the occurrence of any Event of Default,
Borrower agrees that Lender may take such action, without notice or demand,
as it deems advisable to protect and enforce its rights against Borrower
and in and to the Property, including, but not limited to, the following
actions, each of which may be pursued concurrently or otherwise, at such
time and in such order as Lender may determine, in its sole discretion,
without impairing or otherwise affecting the other rights and remedies of
Lender:
(a) declare the entire unpaid Debt to be immediately due and
payable;
(b) institute proceedings, judicial or otherwise, for the
complete foreclosure of this Security Instrument under any applicable
provision of law in which case the Property or any interest therein may be
sold for cash or upon credit in one or more parcels or in several interests
or portions and in any order or manner;
(c) with or without entry, to the extent permitted and pursuant
to the procedures provided by applicable law, institute proceedings for the
partial foreclosure of this Security Instrument for the portion of the Debt
then due and payable, subject to the continuing lien and security interest
of this Security Instrument for the balance of the Debt not then due,
unimpaired and without loss of priority;
(d) sell for cash or, to the extent permitted by law, upon
credit the Property or any part thereof and all estate, claim, demand,
right, title and interest of Borrower therein and rights of redemption
thereof, pursuant to power of sale or otherwise, at one or more sales, as
an entity or in parcels, at such time and place, upon such terms and after
such notice thereof as may be required or permitted by law;
(e) institute an action, suit or proceeding in equity for the
specific performance of any covenant, condition or agreement contained
herein, in the Note or in the Other Security Documents;
(f) recover judgment on the Note either before, during or, to
the extent permitted by law, after any proceedings for the enforcement of
this Security Instrument or the Other Security Documents;
(g) apply for the appointment of a receiver, trustee, liquidator
or conservator of the Property, without notice and without regard for the
adequacy of the security for the Debt and without regard for the solvency
of Borrower, any Guarantor, Indemnitor or of any person, firm or other
entity liable for the payment of the Debt;
(h) subject to any applicable law, the license granted to
Borrower under Section 1.2 shall automatically be revoked and Lender may
enter into or upon the Property, either personally or by its agents,
nominees or attorneys and dispossess Borrower and its agents and servants
therefrom, without liability for trespass, damages or otherwise and exclude
Borrower and its agents or servants wholly therefrom, and take possession
of all books, records and accounts relating thereto and Borrower agrees to
surrender possession of the Property and of such books, records and
accounts to Lender upon demand, and thereupon Lender may (i) use, operate,
manage, control, insure, maintain, repair, restore and otherwise deal with
all and every part of the Property and conduct the business thereat; (ii)
complete any construction on the Property in such manner and form as Lender
deems advisable; (iii) make alterations, additions, renewals, replacements
and improvements to or on the Property; (iv) exercise all rights and powers
of Borrower with respect to the Property, whether in the name of Borrower
or otherwise, including, without limitation, the right to make, cancel,
enforce or modify Leases, obtain and evict tenants, and demand, sue for,
collect and receive all Rents of the Property and every part thereof; (v)
require Borrower to pay monthly in advance to Lender, or any receiver
appointed to collect the Rents, the fair and reasonable rental value for
the use and occupation of such part of the Property as may be occupied by
Borrower; (vi) require Borrower to vacate and surrender possession of the
Property to Lender or to such receiver and, in default thereof, Borrower
may be evicted by summary proceedings or otherwise; and (vii) apply the
receipts from the Property to the payment of the Debt, in such order,
priority and proportions as Lender shall deem appropriate in its sole
discretion after deducting therefrom all expenses (including reasonable
attorneys' fees) incurred in connection with the aforesaid operations and
all amounts necessary to pay the Taxes, Other Charges, insurance and other
expenses in connection with the Property, as well as just and reasonable
compensation for the services of Lender, its counsel, agents and employees;
(i) exercise any and all rights and remedies granted to a
secured party upon default under the Uniform Commercial Code, including,
without limiting the generality of the foregoing: (i) the right to take
possession of the Personal Property or any part thereof, and to take such
other measures as Lender may deem necessary for the care, protection and
preservation of the Personal Property, and (ii) request Borrower at its
expense to assemble the Personal Property and make it available to Lender
at a convenient place acceptable to Lender. Any notice of sale,
disposition or other intended action by Lender with respect to the Personal
Property sent to Borrower in accordance with the provisions hereof at least
five (5) days prior to such action, shall constitute commercially
reasonable notice to Borrower;
(j) apply any sums then deposited in the Escrow Fund and any
other sums held in escrow or otherwise by Lender in accordance with the
terms of this Security Instrument or any Other Security Document to the
payment of the following items in any order in its uncontrolled discretion:
(i) Taxes and Other Charges;
(ii) Insurance Premiums;
(iii) Interest on the unpaid principal balance of the Note;
(iv) Amortization of the unpaid principal balance of the Note;
(v) All other sums payable pursuant to the Note, this Security
Instrument and the Other Security Documents, including without limitation
advances made by Lender pursuant to the terms of this Security Instrument;
(k) surrender the Policies maintained pursuant to Article 3
hereof, collect the unearned Insurance Premiums and apply such sums as a
credit on the Debt in such priority and proportion as Lender in its
discretion shall deem proper, and in connection therewith, Borrower hereby
appoints Lender as agent and attorney-in-fact (which is coupled with an
interest and is therefore irrevocable) for Borrower to collect such
Insurance Premiums;
(l) pursue such other remedies as Lender may have under
applicable law;
(m) apply the undisbursed balance of any Net Proceeds Deficiency
deposit, together with interest thereon, to the payment of the Debt in such
order, priority and proportions as Lender shall deem to be appropriate in
its discretion; or
(n) require a Lock-Box Account pursuant to Section 4.5 and apply
all sums in the Lock-Box Account to the payment of the Debt, in such order,
priority and proportions as Lender shall deem appropriate in its
discretion.
In the event of a sale, by foreclosure, power of sale, or otherwise, of
less than all of the Property, this Security Instrument shall continue as a
lien and security interest on the remaining portion of the Property
unimpaired and without loss of priority. Notwithstanding the provisions of
this Section 11.1 to the contrary, if any Event of Default as described in
clause (i) or (ii) of Subsection 10.1(f) shall occur, the entire unpaid
Debt shall be automatically due and payable, without any further notice,
demand or other action by Lender.
11.2 APPLICATION OF PROCEEDS. The purchase money, proceeds and
avails of any disposition of the Property, or any part thereof, or any
other sums collected by Lender pursuant to the Note, this Security
Instrument or the Other Security Documents, may be applied by Lender to the
payment of the Debt in such priority and proportions as Lender in its
discretion shall deem proper.
11.3 RIGHT TO CURE DEFAULTS. Upon the occurrence of any Event
of Default or if Borrower fails to make any payment or to do any act as
herein provided, Lender may, but without any obligation to do so and
without notice to or demand on Borrower and without releasing Borrower from
any obligation hereunder, make or do the same in such manner and to such
extent as Lender may deem necessary to protect the security hereof. Lender
is authorized to enter upon the Property for such purposes, or appear in,
defend, or bring any action or proceeding to protect its interest in the
Property or to foreclose this Security Instrument or collect the Debt, and
the cost and expense thereof (including reasonable attorneys' fees to the
extent permitted by law), with interest as provided in this Section 11.3,
shall constitute a portion of the Debt and shall be due and payable to
Lender upon demand. All such costs and expenses incurred by Lender in
remedying such Event of Default or such failed payment or act or in
appearing in, defending, or bringing any such action or proceeding shall
bear interest at the Default Rate, for the period after notice from Lender
that such cost or expense was incurred to the date of payment to Lender.
All such costs and expenses incurred by Lender together with interest
thereon calculated at the Default Rate shall be deemed to constitute a
portion of the Debt and be secured by this Security Instrument and the
Other Security Documents and shall be immediately due and payable upon
demand by Lender therefor.
11.4 ACTIONS AND PROCEEDINGS. Lender has the right to appear in
and defend any action or proceeding brought with respect to the Property
and to bring any action or proceeding, in the name and on behalf of
Borrower, which Lender, in its discretion, decides should be brought to
protect its interest in the Property.
11.5 RECOVERY OF SUMS REQUIRED TO BE PAID. Lender shall have
the right from time to time to take action to recover any sum or sums which
constitute a part of the Debt as the same become due, without regard to
whether or not the balance of the Debt shall be due, and without prejudice
to the right of Lender thereafter to bring an action of foreclosure, or any
other action, for a default or defaults by Borrower existing at the time
such earlier action was commenced.
11.6 EXAMINATION OF BOOKS AND RECORDS. Lender, its agents,
accountants and attorneys shall have the right to examine the records,
books, management and other papers of Borrower and its affiliates or of any
Guarantor or Indemnitor which reflect upon their financial condition, at
the Property or at any office regularly maintained by Borrower, its
affiliates or any Guarantor or Indemnitor where the books and records are
located. Lender and its agents shall have the right to make copies and
extracts from the foregoing records and other papers. In addition, Lender,
its agents, accountants and attorneys shall have the right to examine and
audit the books and records of Borrower and its affiliates or of any
Guarantor or Indemnitor pertaining to the income, expenses and operation of
the Property during reasonable business hours at any office of Borrower,
its affiliates or any Guarantor or Indemnitor where the books and records
are located. This Section 11.6 shall apply throughout the term of the Note
and without regard to whether an Event of Default has occurred or is
continuing.
11.7 OTHER RIGHTS, ETC. (a) The failure of Lender to insist
upon strict performance of any term hereof shall not be deemed to be a
waiver of any term of this Security Instrument. Borrower shall not be
relieved of Borrower's obligations hereunder by reason of (i) the failure
of Lender to comply with any request of Borrower, any Guarantor or any
Indemnitor to take any action to foreclose this Security Instrument or
otherwise enforce any of the provisions hereof or of the Note or the Other
Security Documents, (ii) the release, regardless of consideration, of the
whole or any part of the Property, or of any person liable for the Debt or
any portion thereof, or (iii) any agreement or stipulation by Lender
extending the time of payment or otherwise modifying or supplementing the
terms of the Note, this Security Instrument or the Other Security
Documents.
(b) It is agreed that the risk of loss or damage to the Property
is on Borrower, and Lender shall have no liability whatsoever for decline
in value of the Property, for failure to maintain the Policies, or for
failure to determine whether insurance in force is adequate as to the
amount of risks insured. Possession by Lender shall not be deemed an
election of judicial relief, if any such possession is requested or
obtained, with respect to any Property or collateral not in Lender's
possession.
(c) Lender may resort for the payment of the Debt to any other
security held by Lender in such order and manner as Lender, in its
discretion, may elect. Lender may take action to recover the Debt, or any
portion thereof, or to enforce any covenant hereof without prejudice to the
right of Lender thereafter to foreclose this Security Instrument. The
rights of Lender under this Security Instrument shall be separate, distinct
and cumulative and none shall be given effect to the exclusion of the
others. No act of Lender shall be construed as an election to proceed
under any one provision herein to the exclusion of any other provision.
Lender shall not be limited exclusively to the rights and remedies herein
stated but, subject to the nonrecourse and exculpation provisions described
in the Note, this Security Instrument or the Other Security Documents,
shall be entitled to every right and remedy now or hereafter afforded at
law or in equity.
11.8 RIGHT TO RELEASE ANY PORTION OF THE PROPERTY. Lender may
release any portion of the Property for such consideration as Lender may
require without, as to the remainder of the Property, in any way impairing
or affecting the lien or priority of this Security Instrument, or improving
the position of any subordinate lienholder with respect thereto, except to
the extent that the obligations hereunder shall have been reduced by the
actual monetary consideration, if any, received by Lender for such release,
and may accept by assignment, pledge or otherwise any other property in
place thereof as Lender may require without being accountable for so doing
to any other lienholder. This Security Instrument shall continue as a lien
and security interest in the remaining portion of the Property.
11.9 VIOLATION OF LAWS. If the Property is not in compliance
with Applicable Laws, Lender may impose additional requirements upon
Borrower in connection herewith including, without limitation, monetary
reserves or financial equivalents.
11.10 RECOURSE AND CHOICE OF REMEDIES. Notwithstanding any
other provision of this Security Instrument, including but not limited to
Article 15 hereof, Lender and other Indemnified Parties (defined in Section
13.1 below) are entitled to enforce the obligations of Borrower, Guarantor
and Indemnitor contained in Sections 13.2, 13.3 and 13.4 without first
resorting to or exhausting any security or collateral and without first
having recourse to the Note or any of the Property, through foreclosure or
acceptance of a deed in lieu of foreclosure or otherwise, and in the event
Lender commences a foreclosure action against the Property, Lender is
entitled to pursue a deficiency judgment with respect to such obligations
against Borrower, Guarantor and Indemnitor. The provisions of Sections
13.2, 13.3 and 13.4 are exceptions to any non-recourse or exculpation
provisions in the Note, this Security Instrument or the Other Security
Documents, and Borrower, Guarantor and Indemnitor are fully and personally
liable for the obligations pursuant to Sections 13.2, 13.3 and 13.4. The
liability of Borrower, Guarantor and Indemnitor pursuant to Sections 13.2,
13.3 and 13.4 hereof are not limited to the original principal amount of
the Note. Notwithstanding the foregoing, nothing herein shall inhibit or
prevent Lender from foreclosing pursuant to this Security Instrument or
exercising any other rights and remedies pursuant to the Note, this
Security Instrument and the Other Security Documents, whether
simultaneously with foreclosure proceedings or in any other sequence. A
separate action or actions may be brought and prosecuted against Borrower,
whether or not action is brought against any other person or entity or
whether or not any other person or entity is joined in the action or
actions. In addition, Lender shall have the right but not the obligation
to join and participate in, as a party if it so elects, any administrative
or judicial proceedings or actions initiated in connection with any matter
addressed in Article 12 or Section 13.4.
11.11 RIGHT OF ENTRY. Lender and its agents shall have the
right to enter and inspect the Property at all reasonable times.
12 - ENVIRONMENTAL HAZARDS
12.1 ENVIRONMENTAL REPRESENTATIONS AND WARRANTIES. To the best
of Borrower's knowledge, after due inquiry: (a) there are no Hazardous
Substances (defined below) or underground storage tanks in, on, or under
the Property, except those that are both (i) in compliance with
Environmental Laws (defined below) and with permits issued pursuant thereto
and (ii) fully disclosed to Lender in writing pursuant to the written
reports resulting from the environmental assessments of the Property
delivered to Lender (the "Environmental Report"); (b) there are no past,
present or threatened Releases (defined below) of Hazardous substances in,
on, under or from the Property except as described in the Environmental
Report; (c) there is no threat of any Release of Hazardous Substances
migrating to the Property except as described in the Environmental Report;
(d) there is no past or present non-compliance with Environmental Laws, or
with permits issued pursuant thereto, in connection with the Property
except as described in the Environmental Report; (e) Borrower does not know
of, and has not received, any written or oral notice or other communication
from any person or entity (including but not limited to a governmental
entity) relating to Hazardous Substances or Remediation (defined below)
thereof, of possible liability of any person or entity pursuant to any
Environmental Law, other environmental conditions in connection with the
Property, or any actual or potential administrative or judicial proceedings
in connection with any of the foregoing; and (f) Borrower has truthfully
and fully provided to Lender, in writing, any and all information relating
to conditions in, on, under or from the Property that is known to Borrower
and that is contained in Borrower's files and records, including but not
limited to any reports relating to Hazardous Substances in, on, under or
from the Property and/or to the environmental condition of the Property.
"Environmental Law" means any present and future federal, state
and local laws, statutes, ordinances, rules, regulations and the like, as
well as common law, relating to protection of human health or the
environment, relating to Hazardous Substances, relating to liability for or
costs of Remediation or prevention of Releases of Hazardous Substances or
relating to liability for or costs of other actual or threatened danger to
human health or the environment. "Environmental Law" includes, but is not
limited to, the following statutes, as amended, any successor thereto, and
any regulations promulgated pursuant thereto, and any state or local
statutes, ordinances, rules, regulations and the like addressing similar
issues: the Comprehensive Environmental Response, Compensation and
Liability Act; the Emergency Planning and Community Right-to-Know Act; the
Hazardous Substances Transportation Act; the Resource Conservation and
Recovery Act (including but not limited to Subtitle I relating to
underground storage tanks); the Solid Waste Disposal Act; the Clean Water
Act; the Clean Air Act; the Toxic Substances Control Act; the Safe Drinking
Water Act; the Occupational Safety and Health Act; the Federal Water
Pollution Control Act; the Federal Insecticide, Fungicide and Rodenticide
Act; the Endangered Species Act; the National Environmental Policy Act; and
the River and Harbors Appropriation Act. "Environmental Law" also
includes, but is not limited to, any present and future federal, state and
local laws, statutes, ordinances, rules, regulations and the like, as well
as common law: conditioning transfer of property upon a negative
declaration or other approval of a governmental authority of the
environmental condition of the property; requiring notification or
disclosure of Releases of Hazardous Substances or other environmental
condition of the Property to any governmental authority or other person or
entity, whether or not in connection with transfer of title to or interest
in property; imposing conditions or requirements in connection with permits
or other authorization for lawful activity; relating to nuisance, trespass
or other causes of action related to the Property; and relating to wrongful
death, personal injury, or property or other damage in connection with any
physical condition or use of the Property.
"Hazardous Substances" include but are not limited to any and all
substances (whether solid, liquid or gas) defined, listed, or otherwise
classified as pollutants, hazardous wastes, hazardous substances, hazardous
materials, extremely hazardous wastes, or words of similar meaning or
regulatory effect under any present or future Environmental Laws or that
may have a negative impact on human health or the environment, including
but not limited to petroleum and petroleum products, asbestos and
asbestos-containing materials, polychlorinated biphenyls, lead, radon,
radioactive materials, flammables and explosives.
"Release" of any Hazardous Substance includes but is not limited
to any release, deposit, discharge, emission, leaking, spilling, seeping,
migrating, injecting, pumping, pouring, emptying, escaping, dumping,
disposing or other movement of Hazardous Substances.
"Remediation" includes but is not limited to any response,
remedial, removal, or corrective action, any activity to cleanup, detoxify,
decontaminate, contain or otherwise remediate any Hazardous Substance, any
actions to prevent, cure or mitigate any Release of any Hazardous
Substance, any action to comply with any Environmental Laws or with any
permits issued pursuant thereto, any inspection, investigation, study,
monitoring, assessment, audit, sampling and testing, laboratory or other
analysis, or evaluation relating to any Hazardous Substances or to anything
referred to in Article 12.
12.2 ENVIRONMENTAL COVENANTS. Borrower covenants and agrees
that: (a) all uses and operations on or of the Property, whether by
Borrower or any other person or entity, shall be in compliance with all
Environmental Laws and permits issued pursuant thereto; (b) there shall be
no Releases of Hazardous Substances in, on, under or from the Property; (c)
there shall be no Hazardous Substances in, on, or under the Property,
except those that are both (i) in compliance with all Environmental Laws
and with permits issued pursuant thereto and (ii) fully disclosed to Lender
in writing; (d) Borrower shall keep the Property free and clear of all
liens and other encumbrances imposed pursuant to any Environmental Law,
whether due to any act or omission of Borrower or any other person or
entity (the "Environmental Liens"); (e) Borrower shall, at its sole cost
and expense, fully and expeditiously cooperate in all activities pursuant
to Section 12.3 below, including but not limited to providing all relevant
information and making knowledgeable persons available for interviews; (f)
Borrower shall, at its sole cost and expense, perform any environmental
site assessment or other investigation of environmental conditions in
connection with the Property, pursuant to any reasonable written request of
Lender (including but not limited to sampling, testing and analysis of
soil, water, air, building materials and other materials and substances
whether solid, liquid or gas), and share with Lender the reports and other
results thereof, and Lender and other Indemnified Parties shall be entitled
to rely on such reports and other results thereof; (g) Borrower shall, at
its sole cost and expense, comply with all reasonable written requests of
Lender to (i) reasonably effectuate Remediation of any condition (including
but not limited to a Release of a Hazardous Substance) in, on, under or
from the Property; (ii) comply with any Environmental Law; (iii) comply
with any directive from any governmental authority; and (iv) take any other
reasonable action necessary or appropriate for protection of human health
or the environment; (h) Borrower shall not do or allow any tenant or other
user of the Property to do any act that materially increases the dangers to
human health or the environment, poses an unreasonable risk of harm to any
person or entity (whether on or off the Property), impairs or may impair
the value of the Property, is contrary to any requirement of any insurer,
constitutes a public or private nuisance, constitutes waste, or violates
any covenant, condition, agreement or easement applicable to the Property;
and (i) Borrower shall immediately notify Lender in writing of (A) any
presence or Releases or threatened Releases of Hazardous Substances in, on,
under, from or migrating towards the Property; (B) any non-compliance with
any Environmental Laws related in any way to the Property; (C) any actual
or potential Environmental Lien; (D) any required or proposed Remediation
of environmental conditions relating to the Property; and (E) any written
or oral notice or other communication which Borrower becomes aware from any
source whatsoever (including but not limited to a governmental entity)
relating in any way to Hazardous Substances or Remediation thereof,
possible liability of any person or entity pursuant to any Environmental
Law, other environmental conditions in connection with the Property, or any
actual or potential administrative or Judicial proceedings in connection
with anything referred to in this Article 12. Any failure of Borrower to
perform its obligations pursuant to this Section 12.2 shall constitute an
Event of Default.
12.3 LENDER'S RIGHTS. Lender and any other person or entity
designated by Lender, including but not limited to any receiver, any
representative of a governmental entity, and any environmental consultant,
shall have the right, but not the obligation, to enter upon the Property at
all reasonable times to assess any and all aspects of the environmental
condition of the Property and its use, including but not limited to
conducting any environmental assessment or audit (the scope of which shall
be determined in Lender's sole and absolute discretion) and taking samples
of soil, groundwater or other water, air, or building materials, and
conducting other invasive testing. Borrower shall cooperate with and
provide access to Lender and any such person or entity designated by
Lender.
13 - INDEMNIFICATION
13.1 GENERAL INDEMNIFICATION. Borrower shall, at its sole cost
and expense, protect, defend, indemnify, release and hold harmless the
Indemnified Parties from and against any and all claims, suits, liabilities
(including, without limitation, strict liabilities), actions, proceedings,
obligations, debts, damages, losses, costs, expenses, diminutions in value,
fines, penalties, charges, fees, expenses, Judgments, awards, amounts paid
in settlement, punitive damages, foreseeable and unforeseeable
consequential damages, of whatever kind or nature (including but not
limited to attorneys' fees and other costs of defense) (the "Losses")
imposed upon or incurred by or asserted against any Indemnified Parties and
directly or indirectly arising out of or in any way relating to any one or
more of the following: (a) ownership of this Security Instrument, the
Property or any interest therein or receipt of any Rents; (b) any amendment
to, or restructuring of, the Debt, and the Note, this Security Instrument,
or any Other Security Documents; (c) any and all lawful action that may be
taken by Lender in connection with the enforcement of the provisions of
this Security Instrument or the Note or any of the Other Security
Documents, whether or not suit is filed in connection with same, or in
connection with Borrower, any Guarantor or Indemnitor and/or any partner,
joint venturer or shareholder thereof becoming a party to a voluntary or
involuntary federal or state bankruptcy, insolvency or similar proceeding;
(d) any accident, injury to or death of persons or loss of or damage to
property occurring in, on or about the Property or any part thereof or on
the adjoining sidewalks, curbs, adjacent property or adjacent parking
areas, streets or ways; (e) any use, nonuse or condition in, on or about
the Property or any part thereof or on the adjoining sidewalks, curbs,
adjacent property or adjacent parking areas, streets or ways; (f) any
failure on the part of Borrower to perform or be in compliance with any of
the terms of this Security Instrument; (g) performance of any labor or
services or the furnishing of any materials or other property in respect of
the Property or any part thereof; (h) the failure of any person to file
timely with the Internal Revenue Service an accurate Form 1099-B, Statement
for Recipients of Proceeds from Real Estate, Broker and Barter Exchange
Transactions, which may be required in connection with the Security
Instrument, or to supply a copy thereof in a timely fashion to the
recipient of the proceeds of the transaction in connection with which this
Security Instrument is made; (i) any failure of the Property to be in
compliance with any Applicable Laws; (j) the enforcement by any Indemnified
Party of the provisions of this Article 13; (k) any and all claims and
demands by reason of any to perform or agreements contained in any Lease;
(l) the payment of any commission, charge or brokerage fee to anyone which
may be payable in connection with the funding of the loan evidenced by the
Note and secured by this Security Instrument; or (m) any misrepresentation
made by Borrower in this Security Instrument or any Other Security
Document. Any amounts payable to Lender by reason of the application of
this Section 13.1 shall become immediately due and payable and shall bear
interest at the Default Rate from the date loss or damage is sustained by
Lender until paid. For purposes of this Article 13, the term "Indemnified
Parties" means Lender and any person or entity who is or will have been
involved in the origination of the loan secured hereby, any person or
entity who is or will have been involved in the servicing of the loan
secured hereby, any person or entity in whose name the encumbrance created
by this Security Instrument is or will have been recorded, persons and
entities who may hold or acquire or will have held a full or partial
interest in the loan secured hereby (including, but not limited to,
Investors or prospective Investors in the Securities, have held a full or
partial interest in the loan secured hereby for the benefit of third
parties) as well as the respective directors, officers, shareholders,
partners, employees, agents servants, representatives, contractors,
subcontractors, affiliates, subsidiaries, participants, successors and
assigns of any and all of the foregoing (including but not limited to any
other person or entity who holds or acquires or will have held a
participation or other full or partial interest in the loan secured hereby
or the Property, whether during the term of the loan secured hereby or as a
part of or following a foreclosure of the loan secured hereby and
including, but not limited to, any successors by merger, consolidation or
acquisition of all or a substantial portion of Lender's assets and
business).
13.2 INTANGIBLE TAX. Borrower shall, at its sole cost and
expense, protect, defend, indemnify, release and hold harmless the
Indemnified Parties from and against any and all Losses imposed upon or
incurred by or asserted against any Indemnified Parties and directly or
indirectly arising out of or in any way relating to any tax on the making
and/or recording of this Security Instrument, the Note or any of the Other
Security Documents.
13.3 ERISA INDEMNIFICATION. Borrower shall, at its sole cost
and expense, protect, defend, indemnify, release and hold harmless the
Indemnified Parties from and against any and all Losses (including, without
limitation, attorneys' fees and costs incurred in the investigation,
defense, and settlement of Losses incurred in correcting any prohibited
transaction or in the sale of a prohibited loan, and in obtaining any
individual prohibited transaction exemption under ERISA that may be
required, in Lender's sole discretion) that Lender may incur, directly or
indirectly, as a result of a default under Section 4.2 or 5.9 or Subsection
4.3(p).
13.4 ENVIRONMENTAL INDEMNIFICATION. Borrower shall, at its sole
cost and expense, protect, defend, indemnify, release and hold harmless the
Indemnified Parties from and against any and all Losses and costs of
Remediation (whether or not performed voluntarily), engineers' fees,
environmental consultants' fees, and costs of investigation (including but
not limited to sampling, testing, and analysis of soil, water, air,
building materials and other materials and substances whether solid, liquid
or gas) imposed upon or incurred by or asserted against any Indemnified
Parties, and directly or indirectly arising out of or in any way relating
to any one or more of the following: (a) any presence of any Hazardous
Substances in, on, above, or under the Property; (b) any past, present or
threatened Release of Hazardous Substances in, on, above, under or from the
Property; (c) any activity by Borrower, any person or entity affiliated
with Borrower or any tenant or other user of the Property in connection
with any actual, proposed or threatened use, treatment, storage, holding,
existence, disposition or other Release, generation, production,
manufacturing, processing, refining, control, management, abatement,
removal, handling, transfer or transportation to or from the Property of
any Hazardous Substances at any time located in, under, on or above the
Property; (d) any activity by Borrower, any person or entity affiliated
with Borrower or any tenant or other user of the Property in connection
with any actual or proposed Remediation of any Hazardous Substances at any
time located in, under, on or above the Property, whether or not such
Remediation is voluntary or pursuant to court or administrative order,
including but not limited to any removal, remedial or corrective action;
(e) any past or present non-compliance or violations of any Environmental
Laws (or permits issued pursuant to any Environmental Law) in connection
with the Property or operations thereon, including but not limited to any
failure by Borrower, any person or entity affiliated with Borrower or any
tenant or other user of the Property to comply with any order of any
governmental authority in connection with any Environmental Laws; (f) the
imposition, recording or filing of any Environmental Lien encumbering the
Property; (g) any administrative processes or proceedings or judicial
proceedings in any way connected with any matter addressed in Article 12
and this Section 13.4; (h) any past, present or threatened injury to,
destruction of or loss of natural resources in any way connected with the
Property, including but not limited to costs to investigate and assess such
injury, destruction or loss; (i) any acts of Borrower or other users of the
Property in arranging for disposal or treatment, or arranging with a
transporter for transport for disposal or treatment, of Hazardous
Substances owned or possessed by such Borrower or other users, at any
facility or incineration vessel owned or operated by another person or
entity and containing such or any similar Hazardous Substance; (j) any acts
of Borrower or other users of the Property, in accepting any Hazardous
Substances for transport to disposal or treatment facilities, incineration
vessels or sites selected by Borrower or such other users, from which there
is a Release, or a threatened Release of any Hazardous Substance which
causes the incurrence of costs for Remediation; (k) any personal injury,
wrongful death, or property damage arising under any statutory or common
law or tort law theory, including but not limited to damages assessed for
the maintenance of a private or public nuisance or for the conducting of an
abnormally dangerous activity on or near the Property; and (1) any
misrepresentation or inaccuracy in any representation or warranty or
material breach or failure to perform any covenants or other obligations
pursuant to Article 12. This indemnity shall survive any termination,
satisfaction or foreclosure of this Security Instrument.
13.5 DUTY TO DEFEND: ATTORNEYS' FEES AND OTHER FEES AND
EXPENSES. Upon written request by any Indemnified Party, Borrower shall
defend such Indemnified Party (if requested by any Indemnified Party, in
the name of the Indemnified Party) by attorneys and other professionals
approved by the Indemnified Parties. Notwithstanding the foregoing, any
Indemnified Parties may, in their sole and absolute discretion, engage
their own attorneys and other professionals to defend or assist them, and,
at the option of Indemnified Parties, their attorneys shall control the
resolution of claim or proceeding. Upon demand, Borrower shall pay or, in
the sole and absolute discretion of the Indemnified Parties, reimburse, the
Indemnified Parties for the payment of reasonable fees and disbursements of
attorneys, engineers, environmental consultants, laboratories and other
professionals in connection therewith.
14 - WAIVERS
14.1 WAIVER OF COUNTERCLAIM. Borrower hereby waives the right
to assert a counterclaim, other than a mandatory or compulsory
counterclaim, in any action or proceeding brought against it by Lender
arising out of or in any way connected with this Security Instrument, the
Note, any of the Other Security Documents, or the Obligations.
14.2 MARSHALLING AND OTHER MATTERS. Borrower hereby waives, to
the extent permitted by law, the benefit of all appraisement, valuation,
stay, extension, reinstatement and redemption laws now or hereafter in
force and all rights of marshalling in the event of any sale hereunder of
the Property or any part thereof or any interest therein. Further,
Borrower hereby expressly waives any and all rights of redemption from sale
under any order or decree of foreclosure of this Security Instrument on
behalf of Borrower, and on behalf of each and every person acquiring any
interest in or title to the Property subsequent to the date of this
Security Instrument and on behalf of all persons to the extent permitted by
applicable law.
14.3 WAIVER OF NOTICE. Borrower shall not be entitled to any
notices of any nature whatsoever from Lender except with respect to matters
for which this Security Instrument specifically and expressly provides for
the giving of notice by Lender to Borrower and except with respect to
matters for which Lender is required by applicable law to give notice, and
Borrower hereby expressly waives the right to receive any notice from
Lender with respect to any matter for which this Security Instrument does
not specifically and expressly provide for the giving of notice by Lender
to Borrower.
14.4 WAIVER OF STATUTE OF LIMITATIONS. Borrower hereby
expressly waives and releases to the fullest extent permitted by law, the
pleading of any statute of limitations as a defense to payment of the Debt
or performance of its Other Obligations.
14.5 SOLE DISCRETION OF LENDER. Wherever pursuant to this
Security Instrument (a) Lender exercises any right given to it to approve
or disapprove, (b) any arrangement or term is to be satisfactory to Lender,
or (c) any other decision or determination is to be made by Lender, the
decision of Lender to approve or disapprove, all decisions that
arrangements or terms are satisfactory or not satisfactory and all other
decisions and determinations made by Lender, shall be in the sole and
absolute discretion of Lender and shall be final and conclusive, except as
may be otherwise expressly and specifically provided herein.
14.6 SURVIVAL. The indemnifications made pursuant to Sections
13.3 and 13.4 and the representations and warranties, covenants, and other
obligations arising under Article 12, shall continue indefinitely in full
force and effect and shall survive and shall in no way be impaired by: any
satisfaction or other termination of this Security Instrument, any
assignment or other transfer of all or any portion of this Security
Instrument or Lender's interest in the Property (but, in such case, shall
benefit both Indemnified Parties and any assignee or transferee), any
exercise of Lender's rights and remedies pursuant hereto including but not
limited to foreclosure or acceptance of a deed in lieu of foreclosure, any
exercise of any rights and remedies pursuant to the Note or any of the
Other Security Documents, any transfer of all or any portion of the
Property (whether by Borrower or by Lender following foreclosure or
acceptance of a deed in lieu of foreclosure or at any other time), any
amendment to this Security Instrument, the Note or the Other Security
Documents, and any act or omission that might otherwise be construed as a
release or discharge of Borrower from the obligations pursuant hereto.
14.7 WAIVER OF TRIAL BY JURY. BORROWER HEREBY Waives, TO THE
FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE,
RELATING DIRECTLY OR INDIRECTLY TO THE LOAN EVIDENCED BY THE NOTE, THE
APPLICATION FOR THE LOAN EVIDENCED BY THE NOTE, THE NOTE, THIS SECURITY
INSTRUMENT OR THE OTHER SECURITY DOCUMENTS OR ANY ACTS OR OMISSIONS OF
LENDER, ITS OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN CONNECTION
THEREWITH.
15 - EXCULPATION
15.1 EXCULPATION. Except as otherwise provided, Lender shall
not enforce the liability and obligation of Borrower to perform and observe
the obligations contained in the Note or this Security Instrument by any
action or proceeding wherein a money judgment shall be sought against
Borrower, except that Lender may bring a foreclosure action, action for
specific performance or other appropriate action or proceeding to enable
Lender to enforce and realize upon this Security Instrument, the Other
Security Documents, and the interest in the Property, the Rents and any
other collateral given to Lender created by this Security Instrument and
the Other Security Documents; provided, however, that any judgment in any
action or proceeding shall be enforceable against Borrower only to the
extent of Borrower's interest in the Property, in the Rents and in any
other collateral given to Lender. Lender, by accepting the Note and this
Security Instrument, agrees that it shall not, except as otherwise provided
in Section 11.10, sue for, seek or demand any deficiency judgment against
Borrower in any action or proceeding, under or by reason of or under or in
connection with the Note, the Other Security Documents or this Security
Instrument.
15.2 RESERVATION OF CERTAIN RIGHTS. The provisions of Section
15.1 shall not (a) constitute a waiver, release or impairment of any
obligation evidenced or secured by the Note, the Other Security Documents
or this Security Instrument; (b) intentionally deleted; (c) impair the
right of Lender to name Borrower as a party defendant in any action or suit
for judicial foreclosure and sale under this Security Instrument; (d)
affect the validity or enforceability of any indemnity, guaranty, master
lease or similar instrument made in connection with the Note, this Security
Instrument, or the Other Security Documents; (e) impair the right of Lender
to obtain the appointment of a receiver; (f) impair the enforcement of the
Assignment of Leases and Rents executed in connection herewith; (g) impair
the right of Lender to obtain a deficiency Judgment or judgment on the Note
against Borrower if necessary to obtain any insurance proceeds or
condemnation awards to which Lender would be otherwise entitled under this
Security Instrument, provided, however, Lender shall only enforce such
judgment against the insurance proceeds and/or condemnation awards; or (h)
impair the right of Lender to enforce the provisions of Sections 11.10,
13.2, 13.3 and 13.4 of this Security Instrument.
15.3 EXCEPTIONS TO EXCULPATION. Notwithstanding the provisions
of this Article to the contrary, Borrower shall be personally liable to
Lender for the Losses it incurs due to: (i) fraud or intentional
misrepresentation by Borrower or any other person or entity in connection
with the execution and the delivery of the Note, this Security Instrument
or the Other Security Documents; (ii) Borrower's misapplication or
misappropriation of Rents received by Borrower after the occurrence of an
Event of Default; (iii) Borrower's misappropriation of tenant security
deposits or Rents collected in advance; (iv) the misapplication or the
misappropriation of insurance proceeds or condemnation awards; (v)
Borrower's failure to pay Taxes, Insurance Premiums, Other Charges (except
to the extent that sums sufficient to pay such amounts have been deposited
in escrow with Lender pursuant to the terms of this Security Instrument),
charges for labor or materials or other charges that can create liens on
the Property (provided, however, that the liability under this clause (v)
shall not exceed the amount of gross income derived from the Property
(after actual payment of principal and interest under the Note received by
Borrower during the twelve (12) months preceding each such failure to pay);
or (vi) Borrower's failure to comply with the provisions of Sections 4.2,
12.1 or 12.2 of this Security Instrument.
15.4 RECOURSE. Notwithstanding the foregoing, the agreement of
Lender not to pursue recourse liability as set forth in Section 15.1 above
SHALL BECOME NULL AND VOID and shall be of no further force and effect in
the event of Borrower's default under Section 3.11, 4.3, 8.1, 8.2, 8.3 or
8.4 of this Security Instrument or if the Property or any part thereof
shall become an asset in (i) a voluntary bankruptcy or insolvency
proceeding, or (ii) an involuntary bankruptcy or insolvency proceeding
which is not dismissed within ninety (90) days of filing.
15.5 BANKRUPTCY CLAIMS. Nothing herein shall be deemed to be a
waiver of any right which Lender may have under Sections 506(a), 506(b),
1111(b) or any other provisions of the Bankruptcy Code to file a claim for
the full amount of the Debt secured by this Security Instrument or to
require that all collateral shall continue to secure all of the Debt owing
to Lender in accordance with the Note, this Security Instrument and the
Other Security Documents.
16 - NOTICES
16.1 NOTICES. All notices or other written communications
hereunder shall be deemed to have been properly given (i) upon delivery, if
delivered in person or by facsimile transmission with receipt acknowledged
by the recipient thereof, (ii) one (1) Business Day (defined below) after
having been deposited for overnight delivery with any reputable overnight
courier service, or (iii) three (3) Business Days after having been
deposited in any post office or mail depository regularly maintained by the
U.S. Postal Service and sent by registered or certified mail, postage
prepaid, return receipt requested, addressed as follows:
If to Borrower: c/o Charter Properties, Inc.
4501 Circle 75 Parkway, Suite A-1164
Atlanta, Georgia 30339
Attention: Charles H. Lesley
Facsimile No. (770) 984-2696
With a copy to: Fleming, Drummond & Ray, L.C.
One Midtown Plaza, Suite 930
1360 Peachtree Street, N.E.
Atlanta, Georgia 30309
Attention: James Fleming, Esq.
Facsimile No. (404) 892-0445
If to-Lender: Lehman Brothers Holdings Inc.
d/b/a Lehman Capital, a Division
of Lehman Brothers Holdings Inc.
Three World Financial Center
200 Vesey Street
New York, New York 10285
Attention: John Herman
Facsimile No. (212) 528-6659
With a copy to: Stroock & Stroock & Lavan
Seven Hanover Square
New York, New York 10004
Attention: William Campbell, Esq
Facsimile No. (212) 806-6006
or addressed as such party may from time to time designate by written
notice to the other parties.
Either party by notice to the other may designate additional or
different addresses for subsequent notices or communications.
For purposes of this Subsection, "Business Day" shall mean a day
on which commercial banks are not authorized or required by law to close in
New York, New York.
17 - SERVICE OF PROCESS
17.1 CONSENT TO SERVICE. (a) Borrower will maintain a place of
business or an agent for service of process in Atlanta, Georgia and give
prompt notice to Lender of the address of such place of business and of the
name and address of any new agent appointed by it, as appropriate.
Borrower further agrees that the failure of its agent for service of
process to give it notice of any service of process will not impair or
affect the validity of such service or of any judgment based thereon. If,
despite the foregoing, there is for any reason no agent for service of
process of Borrower available to be served, and if it at that time has no
place of business in Atlanta, Georgia, then Borrower irrevocably consents
to service of process by registered or certified mail, postage prepaid, to
it at its address given in or pursuant to the first paragraph hereof.
(b) Borrower initially and irrevocably designates James Fleming,
Esq., with offices on the date hereof at Fleming, Drummond & Ray, L.C., One
Midtown Plaza, 1360 Peachtree Street, N.E., Suite 930, Atlanta, Georgia
30309 to receive for and on behalf of Borrower service of process in
Atlanta, Georgia with respect to this Security Instrument.
17.2 SUBMISSION TO JURISDICTION. With respect to any claim or
action arising hereunder or under the Note or the Other Security Documents,
Borrower (a) irrevocably submits to the nonexclusive jurisdiction of the
courts of the State of New York and the State where the Property is located
and the United States District Court located in the Borough of Manhattan in
New York, New York and the county in which the Property is located, and
appellate courts from any thereof, and (b) irrevocably waives any objection
which it may have at any time to the laying on venue of any suit, action or
proceeding arising out of or relating to this Security Instrument brought
in any such court, irrevocably waives any claim that any such suit, action
or proceeding brought in any such court has been brought in an inconvenient
forum.
17.3 JURISDICTION NOT EXCLUSIVE. Nothing in this Security
Instrument will be deemed to preclude Lender from bringing an action or
proceeding with respect hereto in any other Jurisdiction.
18 - APPLICABLE LAW
18.1 CHOICE OF LAW. THIS SECURITY INSTRUMENT SHALL BE DEEMED
TO BE A CONTRACT ENTERED INTO PURSUANT TO THE LAWS OF THE STATE OF NEW YORK
AND SHALL IN ALL RESPECTS BE GOVERNED, CONSTRUED, APPLIED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, PROVIDED HOWEVER, THAT
WITH RESPECT TO THE CREATION, PERFECTION, PRIORITY AND ENFORCEMENT OF THE
LIEN OF THIS SECURITY INSTRUMENT, AND THE DETERMINATION OF DEFICIENCY
JUDGMENTS, THE LAWS OF THE STATE WHERE THE PROPERTY IS LOCATED SHALL APPLY.
18.2 USURY LAWS. This Security Instrument and the Note are
subject to the express condition that at no time shall Borrower be
obligated or required to pay interest on the Debt at a rate which could
subject the holder of the Note to either civil or criminal liability as a
result of being in excess of the maximum interest rate which Borrower is
permitted by applicable law to contract or agree to pay. If by the terms
of this Security Instrument or the Note, Borrower is at any time required
or obligated to pay interest on the Debt at a rate in excess of such
maximum rate, the rate of interest under the Security Instrument and the
Note shall be deemed to be immediately reduced to such maximum rate and the
interest payable shall be computed at such maximum rate and all prior
interest payments in excess of such maximum rate shall be applied and shall
be deemed to have been payments in reduction of the principal balance of
the Note. All sums paid or agreed to be paid to Lender for the use,
forbearance, or detention of the Debt shall, to the extent permitted by
applicable law, be amortized, prorated, allocated, and spread throughout
the full stated term of the Note until payment in full so that the rate or
amount of interest on account of the Debt does not exceed the maximum
lawful rate of interest from time to time in effect and applicable to the
debt for so long as the Debt is outstanding.
18.3 PROVISIONS SUBJECT TO APPLICABLE LAW. All rights, powers
and remedies provided in this Security Instrument may be exercised only to
the extent that the exercise thereof does not violate any applicable
provisions of law and are intended to be limited to the extent necessary so
that they will not render this Security Instrument invalid, unenforceable
or not entitled to be recorded, registered or filed under the provisions of
any applicable law. If any term of this Security Instrument or any
application thereof shall be invalid or unenforceable, the remainder of
this Security Instrument and any other application of the term shall not be
affected thereby.
19 - SECONDARY MARKET
19.1 TRANSFER OF LOAN. Lender may, at any time, sell, transfer
or assign the Note, this Security Instrument and the Other Security
Documents, and any or all servicing rights with respect thereto, or grant
participations therein or issue mortgage pass-through certificates or other
securities evidencing a beneficial interest in a rated or unrated public
offering or private placement (the "Securities"). Lender may forward to
each purchaser, transferee, assignee, servicer, participant, investor in
such Securities or any Rating Agency rating such Securities (all of the
foregoing entities collectively referred to as the "Investor") and each
prospective Investor, all documents and information which Lender now has or
may hereafter acquire relating to the Debt and to Borrower, any Guarantor,
any Indemnitor and the Property, whether furnished by Borrower, any
Guarantor, any Indemnitor or otherwise, as Lender determines necessary or
desirable. Borrower, any Guarantor and any Indemnitor agree to cooperate
with Lender in connection with any transfer made or any Securities created
pursuant to this Section, including, without limitation, the delivery of an
estoppel certificate required in accordance with Subsection 7.4(c) hereof
and such other documents as may be reasonably requested by Lender.
Borrower shall also furnish and Borrower, any Guarantor and any Indemnitor
consent to Lender furnishing to such Investors or such prospective
Investors or Rating Agency any and all information concerning the Property,
the Leases, the financial condition of Borrower, any Guarantor and any
Indemnitor as may be requested by Lender, any Investor or any prospective
Investor or Rating Agency in connection with any sale, transfer or
participation interest.
20 - COSTS
20.1 PERFORMANCE AT BORROWER'S EXPENSE. Borrower acknowledges
and confirms that Lender shall impose certain administrative processing
and/or commitment fees in connection with (a) the extension, renewal,
modification, amendment and termination of its loans, (b) the release or
substitution of collateral therefor, (c) obtaining certain consents,
waivers and approvals with respect to the Property, or (d) the review of
any Lease or proposed lease or the preparation or review of any
subordination, non-disturbance agreement (the occurrence of any of the
above shall be called an "Event"). Borrower further acknowledges and
confirms that it shall be responsible for the payment of all costs of
reappraisal of the Property or any part thereof, whether required by law,
regulation, Lender or any governmental or quasi-governmental authority.
Borrower hereby acknowledges and agrees to pay, immediately, with or
without demand, all such fees (as the same may be increased or decreased
from time to time), and any additional fees of a similar type or nature
which may be imposed by Lender from time to time, upon the occurrence of
any Event or otherwise. Wherever it is provided for herein that Borrower
pay any costs and expenses, such costs and expenses shall include, but not
be limited to, all legal fees and disbursements of Lender, whether of
retained firms, the reimbursement for the expenses of in-house staff or
otherwise.
20.2 ATTORNEY'S FEES FOR ENFORCEMENT. (a) Borrower shall pay
all legal fees incurred by Lender in connection with (i) the preparation of
the Note, this Security Instrument and the Other Security Documents and
(ii) the items set forth in Section 20.1 above, and (b) Borrower shall pay
to Lender on demand any and all expenses, including legal expenses and
attorneys' fees, incurred or paid by Lender in protecting its interest in
the Property or Personal Property or in collecting any amount payable
hereunder or in enforcing its rights hereunder with respect to the Property
or Personal Property, whether or not any legal proceeding is commenced
hereunder or thereunder and whether or not any default or Event of Default
shall have occurred and is continuing, together with interest thereon at
the Default Rate from the date paid or incurred by Lender until such
expenses are paid by Borrower.
21 - DEFINITIONS
21.1 GENERAL DEFINITIONS. Unless the context clearly indicates
a contrary intent or unless otherwise specifically provided herein, words
used in this Security Instrument may be used interchangeably in singular or
plural form and the word "Borrower" shall mean "each Borrower and any
subsequent owner or owners of the Property or any part thereof or any
interest therein," the word "Lender" shall mean "Lender and any subsequent
holder of the Note," the word "Note" shall mean "the Note and any other
evidence of indebtedness secured by this Security Instrument," the word
"person" shall include an individual, corporation, partnership, trust,
unincorporated association, government, governmental authority, and any
other entity, the word "Property" shall include any portion of the Property
and any interest therein, and the phrases "attorneys' fees", "legal fees"
and "counsel fees" shall include any and all attorneys', paralegal and law
clerk fees and disbursements, including, but not limited to, fees and
disbursements at the pre-trial, trial and appellate levels incurred or paid
by Lender in protecting its interest in the Property, the Leases and the
Rents and enforcing its rights hereunder.
22 - MISCELLANEOUS PROVISIONS
22.1 NO ORAL CHANGE. This Security Instrument, and any
provisions hereof, may not be modified, amended, waived, extended, changed,
discharged or terminated orally or by any act or failure to act on the part
of Borrower or Lender, but only by an agreement in writing signed by the
party against whom enforcement of any modification, amendment, waiver,
extension, change, discharge or termination is sought.
22.2 LIABILITY. If Borrower consists of more than one person,
the obligations and liabilities of each such person hereunder shall be
joint and several. This Security Instrument shall be binding upon and
inure to the benefit of Borrower and Lender and their respective successors
and assigns forever.
22.3 INAPPLICABLE PROVISIONS. If any term, covenant or
condition of the Note or this Security Instrument is held to be invalid,
illegal or unenforceable in any respect, the Note and this Security
Instrument shall be construed without such provision.
22.4 HEADINGS, ETC. The headings and captions of various
Sections of this Security Instrument are for convenience of reference only
and are not to be construed as defining or limiting, in any way, the scope
or intent of the provisions hereof.
22.5 DUPLICATE ORIGINALS; COUNTERPARTS. This Security
Instrument may be executed in any number of duplicate originals and each
duplicate original shall be deemed to be an original. This Security
Instrument may be executed in several counterparts, each of which
counterparts shall be deemed an original instrument and all of which
together shall constitute a single Security Instrument. The failure of any
party hereto to execute this Security Instrument, or any counterpart
hereof, shall not relieve the other signatories from their obligations
hereunder.
22.6 NUMBER AND GENDER. Whenever the context may require, any
pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns and pronouns shall include the
plural and vice versa.
22.7 SUBROGATION. If any or all of the proceeds of the Note
have been used to extinguish, extend or renew any indebtedness heretofore
existing against the Property, then, to the extent of the funds so used,
Lender shall be subrogated to all of the rights, claims, liens, titles, and
interests existing against the Property heretofore held by, or in favor of,
the holder of such indebtedness and such former rights, claims, liens,
titles, and interests, if any, are not waived but rather are continued in
full force and effect in favor of Lender and are merged with the lien and
security interest created herein as cumulative security for the repayment
of the Debt, the performance and discharge of Borrower's obligations
hereunder, under the Note and the Other Security Documents and the
performance and discharge of the Other Obligations.
22.8 ENTIRE AGREEMENT. The Note, this Security Instrument and
the Other Security Documents constitute the entire understanding and
agreement between Borrower and Lender with respect to the transactions
arising in connection with the Debt and supersede all prior written or oral
understandings and agreements between Borrower and Lender with respect
thereto. Borrower hereby acknowledges that, except as incorporated in
writing in the Note, this Security Instrument and the Other Security
Documents, there are not, and were not, and no persons are or were
authorized by Lender to make, any representations, understandings,
stipulations, agreements or promises, oral or written, with respect to the
transaction which is the subject of the Note, this Security Instrument and
the Other Security Documents.
23 - STATE SPECIFIC PROVISIONS
23.1 GEORGIA PROVISIONS. (a) Notwithstanding anything to the
contrary elsewhere in this Security Instrument, if an Event of Default
shall have occurred, Lender, at its option, may sell the Property or any
part of the Property at one or more public sale or sales before the door of
the courthouse of the county in which the Land or any part of the Land is
situated, to the highest bidder for cash, in order to pay the Debt and all
expenses of sale and of all proceedings in connection therewith, including
reasonable attorneys' fees after advertising the time, place and terms of
sale once a week for four (4) weeks immediately preceding such sale (but
without regard to the number of days) in a newspaper in which Sheriff's
sales are advertised in said county. At any such public sale, Lender (or
any person on behalf of Lender) may bid and purchase at such sale and may
execute and deliver to the purchaser a conveyance of the Property or any
part of the Property in fee simple with full warranties of title, and to
this end Borrower hereby constitutes and appoints Lender the agent and
attorney-in-fact of Borrower to make such sale and conveyance, and thereby
to divest Borrower of all right, title and equity that Borrower may have in
and to the Property and to vest the same in the purchaser or purchasers at
such sale or sales, and all the acts and doings of said agent and attorney-
in-fact are hereby ratified and confirmed and any recitals in said
conveyance or conveyances as to facts essential to a valid sale shall be
binding upon Borrower, and Borrower agrees that such conveyance shall be
effectual to bar any equity of redemption of Borrower in and to the
Property. The aforesaid power of sale and agency hereby granted are
coupled with an interest and are irrevocable by death or otherwise, are
granted as cumulative of the other remedies provided hereby or by law for
collection of the Debt and shall not be exhausted by one exercise thereof
but may be exercised until full payment of all of the Debt. In the event
of any sale under this Security Instrument by virtue of the exercise of the
powers herein granted, or pursuant to any order in any judicial proceeding
or otherwise, the Property may be sold as an entirety or in separate
parcels and in such manner or order as Lender in its sole discretion may
elect, and if Lender so elects, Lender may sell the personal property
covered by this Security Instrument at one or more separate sales in any
manner permitted by the Uniform Commercial Code of the State of Georgia.
If the Debt is now or hereafter further secured by any chattel mortgages,
pledges, contracts of guaranty, assignments of lease or other security
instruments, Lender may at its option exhaust the remedies granted under
any of said security instruments either concurrently or independently, and
in such order as Lender may determine. One or more exercises of any of the
powers herein granted shall not extinguish nor exhaust such powers, until
the entire Property is sold or the Debt is paid in full.
(b) Upon a sale of all or any portion of the Property under the
power of sale herein granted, the proceeds of said sale, together with any
other sums which then may be held by Lender under this Security Instrument,
shall be applied, in whatever order Lender in its sole discretion may
decide, to the Debt and to the expenses of such sale and of all proceedings
in connection therewith (including, without limitation, reasonable
attorneys' fees), including, without limitation, insurance premiums, liens,
assessments, taxes and charges (including, without limitation, utility
charges advanced by Lender), and accrued interest on all of the foregoing;
and the remainder, if any, shall be paid to Borrower, or to the person or
entity lawfully entitled thereto.
(c) Borrower further covenants that in case of a sale as
hereinabove provided, Borrower, or any person in possession under Borrower,
shall then become and be tenants holding over and shall forthwith deliver
possession to the purchaser at such sale, or be summarily dispossessed, in
accordance with the provisions of law applicable to tenants holding over.
(d) This conveyance is intended to operate and is to be
construed as (i) a security agreement as required under the Uniform
Commercial Code of the State of Georgia and (ii) a deed passing the title
to the Property to Lender and is made under those provisions of the
existing laws of the State of Georgia relating to deeds to secure debt, and
not as a mortgage, and is given to secure the Debt, any and all additional
advances made by Lender to protect or preserve the Property or the lien or
security title hereof on the Property, or for taxes, assessments or
insurance premiums as herein provided (whether or not the original Borrower
remains the owner of the Premises at the time of such advances), and any
and all other sums owed by Borrower to Lender hereunder, under the Note, or
under any of the Other Security Documents. Accordingly, all references
herein to the "lien of this deed", and words of similar import shall be
deemed to refer to "the security title and security interest created by
this deed", and all references herein to the "mortgaging" of property, or
words of similar import, shall be deemed to refer to "the granting of
security title and security interest in" such property. Should the
indebtedness secured by this Security Instrument be paid according to the
tenor and effect thereof when the same shall become due and payable, and
should Borrower perform all covenants herein contained in a timely manner,
then this Security Instrument shall be cancelled and surrendered.
23.2 WAIVER OF BORROWER'S RIGHTS. (a) THIS SECURITY
INSTRUMENT, BORROWER EXPRESSLY: (A) THE RIGHT TO ACCELERATE THE
INDEBTEDNESS EVIDENCED AND THE POWER OF ATTORNEY GIVEN HEREIN TO LENDER
PREMISES BY NONJUDICIAL FORECLOSURE UPON DEFAULT BY BORROWER WITHOUT ANY
JUDICIAL HEARING AND WITHOUT ANY NOTICE OTHER THAN SUCH NOTICE (IF ANY) BY
EXECUTION OF ACKNOWLEDGES BY THE NOTE TO SELL THE BY BORROWER NONJUDICIAL
FORECLOSURE UPON DEFAULT BY BORROWER JUDICIAL HEARING AND WITHOUT ANY
NOTICE OTHER THAN (IF ANY) AS IS SPECIFICALLY REQUIRED TO BE GIVEN UNDER
THE PROVISIONS OF THIS SECURITY INSTRUMENT; (B) WAIVES ANY AND ALL RIGHTS
WHICH BORROWER MAY HAVE UNDER THE CONSTITUTION OF THE UNITED STATES
(INCLUDING THE FIFTH AND FOURTEENTH AMENDMENTS THEREOF), THE VARIOUS
PROVISIONS OF THE CONSTITUTIONS FOR THE SEVERAL STATES, OR BY REASON OF ANY
OTHER APPLICABLE LAW, TO NOTICE AND TO JUDICIAL HEARING PRIOR TO THE
EXERCISE BY LENDER OF ANY RIGHT OR REMEDY HEREIN PROVIDED TO LENDER, EXCEPT
SUCH NOTICE (IF ANY) AS IS SPECIFICALLY REQUIRED TO BE PROVIDED IN THIS
SECURITY INSTRUMENT; (C) ACKNOWLEDGES THAT BORROWER HAS READ THIS SECURITY
INSTRUMENT AND ANY AND ALL QUESTIONS REGARDING THE LEGAL EFFECT OF THIS
SECURITY INSTRUMENT AND ITS PROVISIONS HAVE BEEN EXPLAINED FULLY TO
BORROWER, AND BORROWER HAS CONSULTED WITH COUNSEL OF BORROWER'S CHOICE
PRIOR TO EXECUTING AND INITIALING THIS SECURITY INSTRUMENT; (D)
ACKNOWLEDGES THAT ALL WAIVERS OF THE AFORESAID RIGHTS OF BORROWER HAVE BEEN
MADE KNOWINGLY, INTENTIONALLY AND WILLINGLY BY BORROWER AS PART OF A
BARGAINED FOR LOAN TRANSACTIONS; AND (E) ACKNOWLEDGES THAT THE NOTE, THIS
SECURITY INSTRUMENT AND ALL OF THE DOCUMENTS GIVEN TO SECURE THE NOTE ARE
VALID, BINDING AND ENFORCEABLE IN ACCORDANCE WITH THEIR RESPECTIVE TERMS.
(b) BORROWER, FOR ITSELF AND ITS SUCCESSORS AND ASSIGNS, WAIVES
ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY LAWSUIT, PROCEEDING,
COUNTERCLAIM OR ANY OTHER LITIGATION OR PROCEEDING (I) BROUGHT BY BORROWER
OR ITS SUCCESSORS OR ASSIGNS, LENDER OR ITS SUCCESSORS OR ASSIGNS OR ANY
OTHER PERSON RELATING IN ANY NAY TO (A) THE DEBT, (B) THIS SECURITY
INSTRUMENT, (C) COLLATERAL FOR THE LOAN, (D) THE NOTE, OR (E) ANY OTHER
SECURITY DOCUMENT, OR (II) TO WHICH LENDER IS A PARTY. NO PARTY WILL SEER
TO CONSOLIDATE ANY SUCH ACTION IN WHICH A JURY TRIAL HAS NOT BEEN WAIVED,
WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN
WAIVED. BORROWER HEREBY AGREES THAT THIS AGREEMENT CONSTITUTES A WRITTEN
CONSENT TO NAIVER OF TRIAL BY JURY, AND SAID BORROWER DOES HEREBY
CONSTITUTE AND APPOINT LENDER ITS TRUE AND LAWFUL ATTORNEY-IN-FACT, WHICH
APPOINTMENT IS COUPLED WITH AN INTEREST, AND DOES HEREBY AUTHORIZE AND
EMPOWER LENDER, IN THE NAME, PLACE AND STEAD OF BORROWER, TO FILE THIS
AGREEMENT WITH A CLERK OR JUDGE OF ANY COURT OF COMPETENT JURISDICTION AS A
STATUTORY WRITTEN CONSENT TO WAIVER OF TRIAL BY JURY. THE PROVISIONS OF
THIS SECTION HAVE BEEN FULLY DISCUSSED BY THE PARTIES HERETO, AND THESE
PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS. NO PARTY HAS IN ANY WAY
AGREED WITH OR REPRESENTED TO ANY OTHER PARTY THAT THE PROVISIONS OF THIS
SECTION WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.
BORROWER'S INITIALS:__________________
<PAGE>
IN WITNESS WHEREOF, this Security Instrument has been executed by
Borrower the day and year first above written.
MABLETON VILLAGE ASSOCIATES,
L.L.C., a Georgia limited liability
company
By: Lesley-Mableton, Inc., a
Georgia corporation and its sole
Manager
By:/s/ Charles H. Lesley
--------------------------
Charles H. Lesley
President
[CORPORATE SEAL]
Signed, sealed and delivered
in the presence of:
____________________________
Unofficial Witness
____________________________
Notary Public
(Notary Seal)
My Commission Expires:________
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountant, we hereby consent to the incorporation by
reference in this Form 8-K of our report dated February 28, 1997 on the
financial statements of Kranzco Realty Trust and our report dated November
10, 1997 on the financial statements of Georgia Properties, included in
this Form 8-K, into the Company's previously filed Registration Statements
on Form S-3 (File Nos. 33-75554 and 33-72076) and on Form S-8 (File Nos 33-
56990 and 33-94294).
Philadelphia, Pa.
November 24, 1997
