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Exhibit 10.38
Allstate Insurance Company
Loan No. 122397
MORTGAGE, ASSIGNMENT OF LEASES,
RENTS AND CONTRACTS, SECURITY AGREEMENT
AND FIXTURE FILING
FROM
INLAND SOUTHEAST STONY CREEK, L.L.C., AS MORTGAGOR
TO
ALLSTATE INSURANCE COMPANY, AS MORTGAGEE
DATED: January 5, 2004
LOAN AMOUNT: $14,162,000
PROPERTY ADDRESS:
STONEY CREEK MARKETPLACE
17130 MERCANTILE BOULEVARD
NOBLESVILLE, INDIANA
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TABLE OF CONTENTS
<Table>
<Caption>
ARTICLE SECTION DESCRIPTION
PAGE NUMBER
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<S> <C>
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I.
COVENANTS OF MORTGAGOR........................................5
1.01. Performance of
Obligations Secured............................5
1.02.
Insurance.....................................................5
1.03.
Condemnation..................................................7
1.04. Damage to
property............................................8
1.05. Escrow Fund for
Condemnation and Insurance Proceeds..........10
1.06. Taxes, Liens and
other Items.................................11
1.07. Assignment of
Leases, Contracts, Rents and profits...........12
1.08. Due on Sale or
Encumbrance...................................16
1.09. Preservation and
Maintenance of property.....................16
1.10. Use of
property..............................................17
1.11. Alterations and
Additions....................................17
1.12. Offset
Certificates..........................................18
1.13. Mortgagee's
Costs and Expenses...............................18
1.14. Protection of
Security; Costs and Expenses...................19
1.15. Mortgagor's
Covenants Respecting Collateral..................20
1.16. Covenants
Regarding Financial Statements.....................23
1.17. Environmental
Covenants......................................24
1.18.
Further Assurances...........................................25
1.19. Mortgagor's
Continued Existence..............................26
II.
EVENTS OF DEFAULT............................................26
2.01. Monetary and
Performance Defaults............................26
2.02. Bankruptcy,
Insolvency, Dissolution..........................27
2.03.
Misrepresentation............................................27
2.04. Default under
Subordinate Loans..............................27
2.05.
Liens........................................................27
2.06.
Judgments....................................................27
2.07.
Leases.......................................................28
2.08. Mortgagor's
Continued Existence..............................28
2.09. Breach of Due on
Sale or Encumbrance Provision...............28
2.10. Default under
Related Agreements.............................28
III.
REMEDIES.....................................................28
3.01.
Acceleration.................................................28
3.02.
Entry........................................................28
3.03. Judicial
Action..............................................30
3.04.
Foreclosure..................................................30
3.05. Rescission of
Notice of Default..............................33
3.06. Mortgagee's
Remedies Respecting Collateral...................33
3.07. Proceeds of
Sales........................................... 33
3.08. Condemnation and
Insurance Proceeds..........................34
</Table>
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<Table>
<Caption>
ARTICLE SECTION DESCRIPTION
PAGE NUMBER
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3.09. Waiver of
Marshalling, Rights of Redemption, Homestead
and Valuation..............................................34
3.10. Remedies
Cumulative..........................................35
3.11.
Nonrecourse..................................................35
3.12. Evasion of
Prepayment Premium................................37
IV.
MISCELLANEOUS................................................37
4.01.
Severability.................................................37
4.02. Certain Charges
and Brokerage Fees...........................37
4.03.
Notices......................................................38
4.04. Mortgagor Not
Released; Certain Mortgagee Acts...............39
4.05.
Inspection...................................................40
4.06. Release or
Reconveyance or Cancellation......................40
4.07. Statute of
Limitations.......................................40
4.08.
Interpretation.............................................. 40
4.09.
Captions.....................................................41
4.10.
Consent......................................................41
4.11. Delegation to
Subagents .....................................41
4.12.
Successors and
Assigns.......................................41
4.13. Governing
Law................................................41
4.14. Changes in
Taxation .........................................41
4.15. Maximum Interest
Rate........................................41
4.16. Time of
Essence..............................................42
4.17. Reproduction of
Documents....................................42
4.18. No Oral
Modifications........................................42
4.19. Further
Assurance............................................42
</Table>
ii
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MORTGAGE, ASSIGNMENT OF LEASES, RENTS AND CONTRACTS,
SECURITY AGREEMENT AND FIXTURE FILING
THIS MORTGAGE,
ASSIGNMENT OF LEASES, RENTS AND CONTRACTS, SECURITY
AGREEMENT AND FIXTURE FILING is made as of
January 5, 2004, from INLAND
SOUTHEAST STONY CREEK, L.L.C., a Delaware
limited liability company
("Mortgagor"), whose mailing address is
2901 Butterfield Road, Oakbrook,
Illinois 60523, in favor of ALLSTATE
INSURANCE COMPANY, an Illinois insurance
corporation ("Mortgagee") whose mailing
address is c/o Allstate Investments,
LLC, Allstate Plaza South, Suite G5C, 3075
Sanders Road, Northbrook,
Illinois, 60062.
In consideration
of the indebtedness herein recited and as security for
payment and performance of the payment of
both principal and interest and the
other obligations set forth below,
Mortgagor has granted, conveyed, bargained,
sold, alienated, enfeoffed, released,
confirmed, transferred, pledged, warranted
and mortgaged, and by these presents does
hereby grant, convey, bargain, sell,
alien, enfeoff, release, confirm, transfer,
pledge, warrant and mortgage unto
Mortgagee, all of Mortgagor's estate,
right, title and interest in, to and under
that certain real property located in
Noblesville, County of Hamilton, State of
Indiana, more particularly described in
EXHIBIT A attached hereto and
incorporated herein by this reference (the
"Land");
TOGETHER with
all of Mortgagor's now or hereafter acquired 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 Mortgagor in and to
the streets and roads, opened or
proposed, abutting the Land to the center
lines thereof, all rights of reversion
(including, without limitation, the right
of reversion retained in that certain
Limited Warranty Deed recorded with the
Hamilton County Recorder of Deeds as
Instrument No. 2000-57951 and re-recorded
as Instrument No. 2001-25776), 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, all
lateral support, alley and drainage
rights, all revenues, income, rents, cash
or security deposits, advance rental
deposits, profits, royalties, 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 Mortgagor 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,
without limitation, all concurrency
rights, permits, prepaid utilities and
impact fees of any nature, storm water
drainage rights and reservations, sanitary
sewer rights and reservations,
potable water rights and reservations,
allocations of traffic trips, use, rights
and reservations, law enforcement, library,
park and educational fees, uses,
rights and reservations, and any tax and
utility refunds and rebates,
irrespective of the time period to which
such refunds and rebates relate),
including all Mortgagor's right, title and
interest in all fixtures,
attachments, partitions, machinery,
equipment, building materials, appliances
and goods of every nature whatever, whether
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 Mortgage, be deemed to
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be real property and, whether affixed or
annexed thereto or not, be deemed
conclusively to be real property; and
Mortgagor agrees to execute and deliver,
from time to time, such further instruments
and documents as may be required by
Mortgagee to confirm the legal operation
and effect of this Mortgage on any of
the foregoing. All of the foregoing
property described in this Section (the
"Improvements") together with the Land and
the hereinafter defined Collateral,
shall be hereinafter referred to as the
"Property").
MORTGAGOR HEREBY
FURTHER GRANTS to Mortgagee a security interest in, and
assigns, all of Mortgagor's now existing or
hereafter acquired right, title and
interest in the following with the
understanding and intention that this
Mortgage shall also constitute a security
agreement pursuant to the Uniform
Commercial Code of the State of
Indiana.
(A) All equipment,
fixtures, inventory, goods, farm 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
Property now or any time hereafter owned or
acquired by Mortgagor, wherever
located and all products thereof whether in
possession of Mortgagor or whether
located on the Property or elsewhere;
(B) To the extent such
general intangibles are assignable, all general
intangibles relating to the Property or the
design, development, operation,
management and use of the Property (other
than trademarks that contain the word
"Inland"), including, but not limited to,
(1) all names under which or by which
the Property may at any time be owned and
operated or any variant thereof, and
all goodwill in any way relating to the
Property and all service marks and
logotypes used in connection therewith, (2)
all permits, licenses,
authorizations, variances, land use
entitlements, approvals, consents,
clearances, and rights obtained from
governmental agencies issued or obtained in
connection with the Property, (3) all
permits, licenses, approvals, consents,
authorizations, franchises and agreements
issued or obtained in connection with
the construction, use, occupation or
operation of the property, (4) all
materials prepared for filing or filed with
any governmental agency, and (5) all
of the books and records of Mortgagor in
any way relating to construction or
operation of the Property;
(C) All shares of stock or
partnership interest or other evidence of
ownership of any part of the Property that
is owned by Mortgagor in common with
others, including all water stock relating
to the 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
Property provided, however, that the
foregoing shall not include any ownership
interests in Mortgagor;
(D) All accounts, deposit
accounts, supporting obligations,
letter-of-credit rights, tax or insurance
escrows or other escrows held pursuant
to or in connection with this Mortgage or
otherwise in connection with the
Property, accounts receivable, instruments,
documents, documents of title,
general intangibles, rights to payment and
contract rights of every kind, all of
Mortgagor'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
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bonds now or anytime hereafter arising from
construction on the Land or the use
or enjoyment of the Property to the extent
such are assignable;
(E) All condemnation and
eminent domain proceeds (including payments in
lieu thereof) and insurance proceeds
related to the Property;
TOGETHER with
all additions to, substitutions for and the products of all
of the above, and all proceeds therefrom,
whether cash proceeds or noncash
proceeds, received when any such property
(or the proceeds thereof) is sold,
used, exchanged, leased, licensed, or
otherwise disposed of, whether voluntarily
or involuntarily. Such proceeds shall
include any of the foregoing specifically
described property of Mortgagor acquired
with cash proceeds. Together with, and
without limiting the above items, all
Goods, Accounts, Documents, Instruments,
Money, Chattel Paper, Deposit Accounts,
Letter-of-Credit Rights, Investment
Property, Equipment and General Intangibles
arising from or used in connection
with the Property, as those terms are
defined in the Uniform Commercial Code
from time to time in effect in the state in
which the Property is located. (All
of the foregoing including such products
and proceeds thereof, are collectively
referred to as "Collateral".)
To the extent
any of the Collateral described herein is personal property
owned by a tenant of the Property, then the
security interest therein granted by
this Mortgage shall extend only to the
reversionary interest of Mortgagor, if
any, to such personal property.
MORTGAGOR HEREBY
WARRANTS AND REPRESENTS that it is the owner in fee title
to the Property (and the Collateral) free
and clear of all liens and
encumbrances except for: the lien for
current real estate taxes not yet due and
payable; and such other encumbrances as are
set forth in EXHIBIT C attached
hereto and incorporated herein by this
reference.
The personal
property in which Mortgagee has a security interest includes
goods which are or shall become fixtures on
the Property. This Mortgage is
intended to serve as a fixture filing
pursuant to the terms of the applicable
provisions of the Uniform Commercial Code
of the State of Indiana and the
provisions of Exhibit B are, for that
purpose, incorporated herein. This filing
is to be recorded in the real estate
records of the appropriate city, town or
county in which the Property is located. In
that regard, the following
information is provided:
Names of Debtor:
Inland Southeast Stony Creek, L.L.C., a
Delaware limited liability company
Organizational
Number
of Debtor
3733893
Address of
Debtor:
See Section 4.03 hereof
Name of Secured
Party:
Allstate Insurance Company,
an Illinois insurance corporation
Address of
Secured Party: See Section 4.03
hereof.
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Mortgagor hereby
represents, warrants and agrees that at the time of
execution of this Mortgage and so long as
any payments or performance obligation
of the Mortgage, Note (as defined herein)
or the Related Agreements (as defined
herein) shall remain outstanding, (i) there
is not and will not be any financing
statement other than those granting a
security interest in favor of Mortgagee
covering the Collateral, the Property, or
any part thereof, on file in any
public office, including, without
limitation, the office of the Secretary of
State of the State of Delaware, the
Secretary of State of the State of Indiana,
or the clerks office in any county in which
the Property or Collateral are
located; (ii) that none of the Collateral
is in the possession of anyone other
than Mortgagor; and (iii) that all of the
Collateral has been in continuous,
exclusive possession of Mortgagor.
TO HAVE AND TO
HOLD the Property hereby conveyed or mentioned and intended
so to be, unto Mortgagee, its successors
and assigns, forever subject to and for
the purposes and uses herein set forth.
This Mortgage secures:
(A) The repayment of the
indebtedness evidenced by that certain Mortgage
Note (the "Note") of even date herewith
with a maturity date of January 1, 2011,
executed by Mortgagor and payable to the
order of Mortgagee, in the principal
sum of FOURTEEN MILLION ONE HUNDRED SIXTY
TWO THOUSAND DOLLARS ($14,162,000),
with interest thereon as provided therein
and all late charges, loan fees,
commitment fees, Prepayment Premium (as
described in the Note), and all
extensions, renewals, modifications,
amendments and replacements of the Note;
(B) The payment of all
other sums which may be advanced by or otherwise
be due to Mortgagee under any provision of
this Mortgage or under any other
instrument or document referred to in
clause (C) below or otherwise, with
interest thereon at the rate provided
herein or therein;
(C) The performance of
each and every covenant and agreement of
Mortgagor contained (1) herein, in the
Note, or in any note evidencing a Future
Advance (as hereinafter defined), and (2)
in the obligations of Mortgagor upon
any and all pledge or other security
agreements, loan agreements, disbursement
agreements, supplemental agreements,
environmental indemnity agreements (the
foregoing shall not include the Commitment
Letter between Mortgagor and
Mortgagee), assignments (both present and
collateral) and all instruments of
indebtedness or security now or hereafter
executed by Mortgagor in connection
with any indebtedness referred to in
clauses (A), (B), (D), (E) or (F) of this
Section (including but not limited to the
Assignment of Leases and Rents of even
date herewith from Mortgagor to Mortgagee
(the "Assignment of Leases and
Rents") or for the purpose of supplementing
or amending this Mortgage or any
instrument secured hereby (all of the
foregoing in this clause(C), as the same
may be amended, modified or supplemented
from time to time, together with the
Note and this Mortgage, being referred to
hereinafter as "Related Agreements")
and all costs and expenses, including
reasonable attorneys' and paralegals' fees
with respect to all such documents,
including, without limitation, the
negotiation and drafting of any loan
settlement or workout agreement;
(D) All costs, expenses,
losses, damages and other charges sustained or
incurred by Mortgagee because of: (1)
Mortgagor's default in payment or
performance, as the case may be,
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of any provision contained in this Mortgage
or in any Related Agreement; (2)
defense of actions instituted by Mortgagor
or a third party against Mortgagee
arising out of or related to the loan
evidenced by the Note (the "Loan"), or in
the realizing upon, protecting, perfecting
or defending the Property or the
Collateral; or (3) actions brought or
defended by Mortgagee in enforcing
Mortgagee's security interest in the
Property or the Collateral. All of these
costs and expenses include reasonable
attorneys' fees and paralegals' fees,
whether incurred with respect to
collection, litigation, bankruptcy proceedings,
interpretation, dispute, negotiation,
trial, appeal, defensive actions
instituted by a third party against
mortgagee, or enforcement or any judgment
based upon the Note, this Mortgage, or any
of the Related Agreements, whether or
not suit is brought to collect such amounts
or to enforce such rights or, if
brought, is prosecuted to judgment;
(E) All costs, expenses,
and amounts arising under or pursuant to any
indemnity contained within the Note, this
Mortgage, or in any of the Related
Agreements, or in any separate agreement
executed by Mortgagor in favor of
Mortgagee; and
(F) The repayment of any
other loans or advances, with interest thereon,
hereafter made to Mortgagor (or any
successor in interest to Mortgagor as the
owner of the Property or any part thereof)
by Mortgagee when the promissory note
evidencing the loan or advance specifically
states that said note is secured by
this Mortgage, together with all
extensions, renewals, modifications, amendments
and replacements thereof (herein and in the
Related Agreements "Future
Advance"), provided that notwithstanding
anything herein to the contrary, the
total amount secured by this Mortgage,
including the amounts due under the Note
and capitalized interest, costs and
impositions, shall not exceed in the
aggregate $100,000,000. The parties hereby
acknowledge and intend that all such
advances, including Future Advances
whenever hereafter made, shall be a lien
from the time this Mortgage is
recorded.
ARTICLE I
COVENANTS OF MORTGAGOR
To protect the
security of this Mortgage, and as additional consideration
to Mortgagee, Mortgagor covenants, warrants
and agrees as follows:
1.01.
PERFORMANCE OF
OBLIGATIONS SECURED. Mortgagor 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, any Prepayment
Premium 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 Mortgagor 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 Mortgage, Mortgagor shall
keep the Property insured against all risks
or hazards as Mortgagee may
reasonably require. Such insurance shall be
in policy form, amount and coverage
reasonably satisfactory to Mortgagee,
including, but not limited to:
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(A) Fire and extended
coverage on an "all risk" replacement cost basis,
in an amount equal to the insurable value
of the Improvements, without
coinsurance or deducting for depreciation,
containing a waiver of subrogation
clause and a deductible amount acceptable
to Mortgagee;
(B) General public
liability insurance, in such form, amount and
deductible satisfactory to Mortgagee, and
naming Mortgagee c/o Mortgagee's
servicing agent, if any, as additional
insured covering Mortgagee's interest in
the Property;
(C) Business interruption
or rent loss insurance endorsement in an
amount at least equal to 100 percent of the
sum of: annual debt service on the
Note, the annual debt service on any other
financing permitted by Mortgagee,
ground rents, if any, and operating
expenses (without contribution from
Mortgagor for a period of 12 months),
including, without limitation, real estate
taxes and assessments and insurance, for
the Property;
(D) Flood insurance
(whether or not available through the National Flood
Insurance Program) sufficient to cover any
damage which may be anticipated in
the event of flood unless Mortgagor has
provided Mortgagee evidence satisfactory
to Mortgagee that no portion of the
Property is located within the boundaries of
the 100 year flood plain (Flood Zone
A);
(E) "Dram shop" insurance
if alcoholic beverages are sold on the
Property;
(F) Boiler and machinery
insurance when risks covered thereby are
present and Mortgagee requires such
insurance; and
(G) Earthquake insurance
if Mortgagee requires such insurance.
The insurance
coverages described in subsections (A), (C), (D), (F), and
(G) above shall name Mortgagee c/o
Mortgagee's servicing agent, if any, under a
standard noncontributory mortgagee loss
payable clause (and naming Mortgagee as
loss payee for rent loss coverage) or
otherwise directly insure Mortgagee's
interest in the Property. All losses under
said insurance shall be payable to
Mortgagee in the manner provided in
Sections 1.04 and 1.05 hereof. 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 Key
Rating Guide and authorized to do
business in the state in which the Property
is located. All policies of
insurance shall provide that they will not
be canceled or modified without 30
days' prior written notice to Mortgagee.
True copies of the above mentioned
insurance policies or evidence of such
insurance (in the form of Accord Form 27)
satisfactory to Mortgagee shall be
delivered to and held by Mortgagee. True
copies of all renewal and replacement
policies or evidences of such insurance
forms (Accord Form 27) thereof shall be
delivered to Mortgagee at least 30 days
before the expiration of the expiring
policies. If any renewal or replacement
policy is not obtained as required herein,
Mortgagee is authorized to obtain the
same in Mortgagor's name and at Mortgagor's
expense. Mortgagee 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 Mortgagor hereby expressly assumes full
responsibility therefor and all
liability, if any, with respect
thereto.
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1.03.
CONDEMNATION.
(A) Immediately upon
obtaining knowledge of the commencement or threat
of any action in connection with (1) any
condemnation, (2) any other taking of
the Property or any part thereof by any
public authority or private entity
having the power of eminent domain, or (3)
any conveyance in lieu of such
condemnation or taking of the Property or
any part thereof ("Condemnation"),
Mortgagor shall notify Mortgagee in writing
but in no event later than ten (10)
days after Mortgagor obtains knowledge of
the commencement of or threat or
likelihood of a Condemnation. Mortgagee
shall have the right, but not the
obligation, to participate in any
proceedings relating to any Condemnation and
may, in its sole discretion, consent or
withhold its consent to any settlement,
adjustment, or compromise of any claims
arising from the Condemnation and no
such settlement, adjustment or compromise
shall be final or binding upon
Mortgagee without Mortgagee's prior
consent.
(B) Except as expressly
provided in Section 1.03(C), if all or part of
the Property is taken by Condemnation and
Mortgagee in its reasonable judgment
determines that the remainder of the
Property, if any, cannot be operated as an
economically viable entity at substantially
the same level of operations as
immediately prior to such Condemnation,
then all proceeds of the Condemnation
("Condemnation Proceeds") shall be paid
over to Mortgagee and shall be applied
first toward reimbursement of the costs and
expenses (including reasonable
attorneys' and paralegals' fees) of
Mortgagee, if any, in connection with the
recovery of such Condemnation Proceeds, and
then, in the sole and absolute
discretion of Mortgagee and without regard
to the adequacy of its security under
this Mortgage, shall be applied against all
amounts due hereunder or under the
Note and any remaining Condemnation
Proceeds shall be released to Mortgagor.
Partial prepayment of the Note under this
Section 1.03(B) with Condemnation
Proceeds shall not be subject to the
Prepayment Premium; however, such partial
prepayment shall not entitle Mortgagor to
prepay the portion of the Note
remaining unpaid after application of the
Condemnation Proceeds. Full or partial
prepayment of the balance shall continue to
be subject to the terms and
conditions of the Note, including the
No-Prepayment Period and the Prepayment
Premium described therein.
(C) If less than all of
the Property is taken by Condemnation and
Mortgagee in its reasonable judgment
determines that the remainder of the
Property can be operated as an economically
viable entity at substantially the
same level of operations as immediately
prior to such Condemnation, then
Mortgagor shall diligently restore the
Property to a condition and use as close
as possible to its condition immediately
prior to the Condemnation and all
Condemnation Proceeds shall be made
available to Mortgagor for such restoration.
If the estimated cost of restoration, as
reasonably determined by Mortgagee, is
equal to or less than One Hundred Fifty
Thousand Dollars ($150,000), all
Condemnation Proceeds shall be released
directly to Mortgagor for restoration of
the Property. If the estimated cost of
restoration exceeds One Hundred Fifty
Thousand Dollars ($150,000), all
Condemnation Proceeds shall be deposited into
an escrow fund in accordance with Section
1.05 below. Mortgagee shall have the
right to obtain an opinion of an
independent contractor or engineer satisfactory
to Mortgagee, at Mortgagor's expense, to
estimate the cost to restore the
remaining portion of the Property. If the
amount of the Condemnation Proceeds is
not sufficient to restore the Property
based on the opinion of an independent
contractor or engineer, subject to revision
as restorations are made, Mortgagor
shall
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be obligated to pay the difference toward
the restoration of the Property, prior
to the disbursement of any Condemnation
Proceeds to, or for the account of,
Mortgagor.
(D) If an Event of Default
exists at any time from the time of a
Condemnation through the completion of
restoration and payment of any
Condemnation Proceeds, the use of the
Condemnation Proceeds shall be governed by
the remedies set forth in Article III
below. If an event has occurred which with
notice, the passage of time, or both, could
become an Event of Default, then,
the Condemnation Proceeds shall be held by
Mortgagee or in the Escrow Fund (as
defined below), as applicable, pending cure
of such event prior to the
expiration of any applicable cure or grace
period. The application of any
Condemnation Proceeds to the indebtedness
secured hereby shall not cure or waive
any Event of Default hereunder, or
invalidate any act done pursuant to any
notice thereof.
1.04.
DAMAGE TO
PROPERTY.
(A) Promptly upon
obtaining knowledge of any damage to the Property or
any part thereof with an estimated cost of
restoration in excess of Fifty
Thousand Dollars ($50,000), but in no event
later than ten (10) days after
Mortgagor obtains such knowledge, Mortgagor
shall notify Mortgagee of such
damage in writing. Mortgagor shall
diligently restore the Property to the same
condition that existed immediately prior to
the damage whether or not insurance
proceeds are sufficient for such
restoration. All proceeds of any insurance on
the Property ("Insurance Proceeds")
received by Mortgagor shall be applied to
such restoration. Mortgagee shall have the
right to obtain an opinion of an
independent contractor or engineer
satisfactory to Mortgagee, at Mortgagor's
expense, to estimate the cost to restore
the Property to its original condition,
which opinion may be revised as
restorations are made. If the amount of the
Insurance Proceeds is not sufficient to
restore the Property based on an
independent contractor's or engineer's
opinion, subject to revision as
restorations are made, Mortgagor shall be
obligated to pay the difference toward
the restoration of the Property, prior to
the application of any Insurance
Proceeds to such restoration as provided
herein.
(B) If the estimated cost
of restoration is equal to or less than One
Hundred Fifty Thousand Dollars ($150,000),
Mortgagor shall promptly settle and
adjust any claims under the insurance
policies which insure against such risks
and, upon receipt of the Insurance
Proceeds, Mortgagee shall deliver such to
Mortgagor for use in restoration of the
Property.
(C) If the estimated cost
of restoration is greater than One Hundred
Fifty Thousand Dollars ($150,000),
Mortgagee 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 Mortgagee without its
prior consent. Upon settlement of insurance
claims, and if Mortgagor can
demonstrate to the reasonable satisfaction
of Mortgagee that the projected ratio
of Net Operating Income, as defined below,
to annual debt service due under the
Notes and any other notes secured by the
Property ("Debt Coverage Ratio") will
be at least one hundred five percent (105%)
for the twelve (12) months
immediately following reconstruction of the
Property, the Insurance Proceeds
shall be deposited into an escrow fund in
accordance with Section 1.05 below.
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As used in this
Mortgage, "Net Operating Income" shall mean:
(i) all gross operating
revenues anticipated to be received during the
following twelve-month period based on
leases in effect as of the date of
calculation and only for such time as those
leases are contracted to remain in
effect without expiration by their terms or
optional termination by the tenant
(unless the tenant has waived its
termination rights in writing or the term of
the lease has been extended in writing),
including without limitation all
amounts to be received from tenants as
payment of operating expenses (including
real estate taxes and insurance and/or
other operating expenses reimbursed by
tenants) but not including refundable
deposits, lease termination payments,
excess tenant improvement and leasing
commission payments included as additional
rent, principal or interest payments
received by Mortgagor on loans to tenants
and fees and reimbursements for work
performed for tenants by Mortgagor, LESS:
(ii)
all amounts,
calculated on a pro forma basis, for the operation or
maintenance of the Property for the
following 12 month period, including ground
rents, the cost of property management
(which shall be no less than four percent
of gross revenues), maintenance, cleaning,
security, landscaping, parking
maintenance and utilities, and other costs
and expenses approved in writing by
Mortgagee and amounts reasonably estimated
by Mortgagee for the payment of real
estate taxes and assessments and other
taxes related to the operation of the
Property, insurance premiums, necessary
repairs and future replacements of
equipment; payments under the Note shall
not be included in Net Operating
Income.
Notwithstanding
the foregoing, if any of the Related Agreements require a
historical calculation of Net Operating
Income, it shall be calculated on a cash
basis for the previous twelve-month period
as of the date of such calculation.
(D) If in the reasonable
judgment of Mortgagee the conditions of Section
1.04(C) cannot be satisfied, then at any
time from and after the occurrence of
the damage, upon written notice to
Mortgagor, Mortgagee may declare the entire
balance of the Note and/or any Future
Advances then outstanding and accrued and
unpaid interest thereon, and all other sums
or payments required thereunder or
under this Mortgage, without any Prepayment
Premium (provided there is no Event
of Default hereunder), to be immediately
due and payable, and all Insurance
Proceeds shall be applied by Mortgagee
first to the reimbursement of any costs
or expenses incurred by Mortgagee in
connection with the damage or the
determination to be made hereunder, and
then to the payment of the indebtedness
secured by this Mortgage in such order as
Mortgagee may determine in its sole
discretion.
(E) Notwithstanding any
provision herein to the contrary, if an Event of
Default exists at any time from the time of
damage through the completion of
restoration and the final release of any
Insurance Proceeds to Mortgagor, the
use of the Insurance Proceeds shall be
governed by the remedies set forth in
Article III below. If an event has occurred
which with notice, the passage of
time, or both, could become an Event of
Default, then the Insurance Proceeds
shall be held by Mortgagee or in the Escrow
Fund, as applicable, pending cure of
such event prior to the expiration of any
applicable cure or grace period. The
application of any Insurance Proceeds to
the indebtedness secured hereby shall
not cure or waive any Event of Default
hereunder or invalidate any act done
pursuant to any notice thereof.
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1.05.
ESCROW FUND FOR
CONDEMNATION AND INSURANCE PROCEEDS.
(A) In the circumstances
indicated above in subsections 1.03(C) and
1.04(C), all Condemnation Proceeds and
Insurance Proceeds ("Proceeds") shall be
deposited in an interest bearing escrow
fund ("Escrow Fund"). The escrow agent
and the form of the escrow agreement shall
be reasonably satisfactory to
Mortgagee and Mortgagor. The costs and fees
of such escrow agent shall be paid
by Mortgagor. If the amount of the Proceeds
is not sufficient to restore the
Property based on an independent
contractor's or engineer's opinion obtained by
Mortgagee at Mortgagor's expense, subject
to revision as restorations are made,
Mortgagor shall be obligated to deposit in
the Escrow Fund the difference
between the contractor's or engineer's
estimate and the amount of the Proceeds
or deliver to the escrow agent an
irrevocable, unconditional letter of credit
issued in the amount of such difference in
a form and by a financial institution
acceptable to Mortgagee or other cash
equivalent acceptable to Mortgagee.
Mortgagor's funds, if necessary, and the
Proceeds shall be deposited into the
Escrow Fund and shall not be released by
the escrow agent unless used to restore
the Property to its original condition and
unless a disbursement agent
satisfactory to Mortgagee and Mortgagor
approves such disbursements from time to
time. The escrow agreement shall provide
that the escrow agent shall only
disburse funds to Mortgagor so long as the
restoration work is being diligently
performed by Mortgagor and only after (1)
Mortgagor has delivered to Mortgagee
and Mortgagee has approved the plans and
specifications for the restoration of
the Property; (2) Mortgagor has executed a
contract acceptable to Mortgagee with
a general contractor acceptable to
Mortgagee for the restoration of the
Property; (3) the general contractor has
submitted lien waivers and/or releases,
executed by the general contractor and all
subcontractors and suppliers which
may be partial to the extent of partial
payments and which, in the case of
releases, may be contingent upon payment if
the escrow agent makes payment
directly to such contractor, subcontractor
or supplier; (4) Mortgagor has
furnished Mortgagee with an endorsement to
its title policy showing no
additional exceptions; and (5) Mortgagor
has deposited its funds in the Escrow
Fund as provided in this Section and has
submitted such other documents and
information as may be reasonably requested
by Mortgagee to determine that the
work to be paid for has been performed in
accordance with the plans and
specifications reasonably approved by
Mortgagee. If any requisition for payment
of work performed is for an amount which
would result in the remaining balance
of the Escrow Fund to be insufficient to
complete the remainder of the
restoration, Mortgagor shall advance the
requisite amount in cash to the Escrow
Fund immediately upon written request from
the disbursement agent or Mortgagee.
Any failure by Mortgagor to satisfy any of
the conditions to the disbursement of
Proceeds set forth in this Section upon
demand by Mortgagee shall constitute a
Performance Default, as hereinafter
defined.
(B) Any Condemnation
Proceeds and any interest thereon remaining in the
Escrow Fund after payment of the costs to
complete the restoration of the
Property pursuant to the approved plans and
specifications and the costs of the
escrow agent and other costs described in
Section 1.05(A) shall be paid first,
to Mortgagor to the extent of any funds of
Mortgagor's contributed to the
restoration pursuant to Section 1.05(A) (so
long as there is no Event of Default
or an event which with notice, the passage
of time, or both, could become an
Event of Default); thereafter any remaining
Condemnation Proceeds shall be
returned to Mortgagor (i) if in Mortgagee's
sole discretion (reasonably
exercised) the restoration of the Property
has been completed in a satisfactory
manner and with satisfactory results and
(ii) so long as there is no Event of
Default or an event which with notice, the
passage of time, or both, could
become an
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Event of Default. If the conditions of
Section 1.05(B)(i) are not satisfied,
then any remaining Condemnation Proceeds
shall be applied to the partial payment
or prepayment of the Note without payment
of any Prepayment Premium; provided,
however, that any such partial prepayment
shall not entitle Mortgagor to prepay
the portion of the Note remaining unpaid
after application of the Proceeds.
Prepayment of the balance shall continue to
be subject to the terms and
conditions of the Note, including the
No-Prepayment Period and the Prepayment
Premium described therein. If an Event of
Default exists, the use of the
Condemnation Proceeds shall be governed by
Article III below. If, however, an
event exists which with notice, the passage
of time, or both, could become an
Event of Default, the remaining balance in
the Escrow Fund shall be held by the
escrow agent pending cure of the event
prior to the expiration of any applicable
cure or grace period.
(C) Any Insurance Proceeds
and any interest thereon remaining in the
Escrow Fund after payment of the costs to
complete the restoration of the
Property pursuant to the approved plans and
specifications and the costs of the
escrow agent and other costs described in
Section 1.05(A) shall be paid first,
to Mortgagor to the extent of any funds of
Mortgagor's contributed to the
restoration pursuant to Section 105)(A) (so
long as there is no Event of Default
or an event which with notice, the passage
of time, or both, could become an
Event of Default); thereafter any remaining
Insurance Proceeds shall be returned
to Mortgagor (i) if in Mortgagee's sole
discretion (reasonably exercised) the
restoration of the Property has been
completed in a satisfactory manner and with
satisfactory results and (ii) so long as
there is no Event of Default or an
event which with notice, the passage of
time, or both, could become an Event of
Default. If the conditions of Section
1.05(C)(i) are not satisfied, then any
remaining Insurance Proceeds shall be
applied to the partial payment or
prepayment of the Note without payment of
any Prepayment Premium; provided,
however, that any such partial prepayment
shall not entitle Mortgagor to prepay
the portion of the Note remaining unpaid
after application of the Proceeds.
Prepayment of the balance shall continue to
be subject to the terms and
conditions of the Note, including the
No-Prepayment Period and the Prepayment
Premium described therein. If an Event of
Default exists, the use of the
Insurance Proceeds shall be governed by
Article III below. If, however, an event
exists which with notice, the passage of
time, or both, could become an Event of
Default, the remaining balance in the
Escrow Fund shall be held by the escrow
agent pending cure of the event prior to
the expiration of any applicable cure
or grace period.
1.06.
TAXES, LIENS AND OTHER
ITEMS.
(A) Mortgagor shall pay or
cause to be paid 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 Property (collectively,
"Impositions") by making payment prior to
delinquency directly to the payee thereof
and promptly furnish copies of paid
receipts for these to Mortgagee. Mortgagor
shall promptly discharge or bond any
lien or encumbrance on the Property whether
or not said lien or encumbrance has
or may attain priority over this Mortgage.
This Mortgage shall be the sole
encumbrance on the Property and, if with
the consent of Mortgagee it is not the
sole encumbrance, then it shall be prior to
any and all other liens or
encumbrances on the Property. Mortgagor may
in good faith and with due diligence
protest the payment of any Imposition which
it believes unwarranted or excessive
and may defer payment of such Imposition
pending conclusion of such contest if
legally permitted to do so, provided that
the priority of this Mortgage and
Mortgagee's security is not materially
and
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adversely affected and that Mortgagor shall
have furnished Mortgagee or the
taxing authority such security as may be
required.
(B) As further security
for the payment of the Note and the payment of
real estate taxes, regular or special
assessments and insurance premiums,
Mortgagor shall be required to deposit
one-twelfth (1/12) of the annual amounts
of such items as estimated by Mortgagee,
with each monthly payment on the Note,
so that Mortgagee will hold a sufficient
amount to pay all such charges not less
than thirty (30) days prior to the date on
which such items become due and
payable. Mortgagee shall be furnished
evidence to allow it to estimate such
amounts, including paid receipts or annual
insurance premium statements,
assessment notices and tax receipts. All
funds so deposited shall, until applied
to the payment of the aforesaid items, as
hereinafter provided, be held by
Mortgagee without interest (except to the
extent required under applicable law)
and may be commingled with other funds of
Mortgagee. All funds so deposited
shall be applied to the payment of the
aforesaid items only upon the
satisfaction of the following conditions:
(1) no Event of Default or event,
which with notice or the passage of time or
both could become an Event of
Default, shall have occurred; (2) Mortgagee
shall have sufficient funds to pay
the full amounts of such items (which funds
may include amounts paid solely for
such purpose by Mortgagor in addition to
the escrowed funds); and (3) Mortgagor
shall have furnished Mortgagee with prior
written notification that such items
are due and with the bills and invoices
therefor in sufficient time to pay the
same before any penalty or interest
attaches and before policies of insurance
lapse, as the case may be, and shall have
deposited any additional funds as
Mortgagee may determine as necessary to pay
such items.
(C) Mortgagee expressly
disclaims any obligation to pay the aforesaid
items unless and until Mortgagor complies
with all of the provisions set forth
in subsections 1.06(A) and (B). Mortgagor
hereby pledges and grants a security
interest in any and all monies now or
hereafter deposited pursuant to subsection
1.06(B) as additional security for the Note
and Related Agreements. If any Event
of Default shall have occurred, or if the
Note shall be accelerated as herein
provided, all funds so deposited may, at
Mortgagee's option, be applied as
determined solely by Mortgagee or to cure
said Event of Default or as provided
in this Section 1.06. In no event shall
Mortgagor claim any credit against the
principal and interest due hereunder for
any payment or deposit for any of the
aforesaid items.
1.07.
ASSIGNMENT OF LEASES,
CONTRACTS, RENTS AND PROFITS.
(A) Mortgagor hereby
absolutely, presently and unconditionally grants,
assigns, transfers, conveys and sets over
to Mortgagee, subject to all of the
terms, covenants and conditions set forth
herein, all of Mortgagor's right,
title and interest in and to the following
whether arising under the Leases (as
defined herein), by statute, at law, in
equity, or in any other way:
(1) All of the leases
of the Property which are in effect on the
date hereof and
all leases 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") and all guaranties
thereunder;
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(2) All of the rents,
income, profits, revenue, security deposits,
judgments,
Condemnation Proceeds, Insurance Proceeds, unearned insurance
premiums, all
termination and/or cancellation payments received by
Mortgagor in
connection with any Lease, proceeds from the surrender, sale
or other
disposition of any Lease, any other fees or sums payable to
Mortgagor or any
other person as landlord and any award or payment in
connection with
any enforcement action of any Lease, including, without
limitation, any
award to Mortgagor 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 Mortgagor'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");
and
(3) All contracts,
agreements, management, operating and
maintenance
agreements, warranties, licenses, permits, guaranties and sales
contracts
relating to the Property and the Collateral entered into by, or
inuring to the
benefit of, Mortgagor (the "Contracts").
(B) Notwithstanding the
provisions of subsection 1.07(A), so long as no
Event of Default has occurred and is
continuing hereunder, and, subject to
subsection 1.07(F) and Article III,
Mortgagor shall have a license to manage the
Property; to collect, receive and use all
Rents and Profits in accordance with
the terms of the Leases; to let the
Property subject to the terms hereof and to
take all actions which a reasonable and
prudent landlord would take in enforcing
the provisions of the Leases and Contracts;
provided, however, that all amounts
so collected shall be applied toward
operating expenses, real estate taxes and
insurance relating to the Property, capital
repair items necessary to the
operation of the Property on a current
basis, and the payment of sums due and
owing under the Note and this Mortgage
prior to any other expenditure or
distribution by Mortgagor. From and after
the occurrence of an Event of Default
(whether or not Mortgagee shall have
exercised Mortgagee's option to declare the
Note immediately due and payable), such
license shall be automatically revoked
without any action required by Mortgagee.
Any amounts received by Mortgagor or
its agents in the performance of any acts
prohibited by the terms of this
Mortgage, 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 Mortgage and any amounts
received by Mortgagor as rents,
income, issues or profits from the Property
from and after the occurrence of an
Event of Default under this Mortgage, the
Note, or any of the other Related
Agreements, shall be held by Mortgagor as
trustee for Mortgagee and all such
amounts shall be accounted for to Mortgagee
and shall not be commingled with
other funds of the Mortgagor. Any person
acquiring or receiving all or any
portion of such trust funds shall acquire
or receive the same in trust for
Mortgagee as if such person had actual or
constructive notice that such funds
were impressed with a trust in accordance
herewith.
(C) Upon the occurrence of
an Event of Default, Mortgagee 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 to all tenants under the
Leases to pay all Rents and Profits to
Mortgagee upon demand and without further
consent or other action by Mortgagor.
Mortgagor irrevocably appoints Mortgagee
its true and lawful attorney, at the option
of Mortgagee at any time after the
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occurrence of an Event of Default, to
demand, receive and enforce payment, to
give receipts, releases and satisfactions,
and to sue, either in the name of
Mortgagor or in the name of Mortgagee, for
all such Rents and Profits and apply
the same to the indebtedness secured by
this Mortgage.
(D) Neither the foregoing
assignment of Rents and Profits, Leases and
Contracts to Mortgagee nor the exercise by
Mortgagee of any of its rights or
remedies under Article III shall be deemed
to make Mortgagee a
"mortgagee-in-possession" or otherwise
liable in any manner with respect to the
Property, unless Mortgagee, in person or by
agent, assumes actual possession
thereof. Nor shall appointment of a
receiver for the Property by any court at
the request of Mortgagee or by agreement
with Mortgagor, or the entering into
possession of the Property by such
receiver, be deemed to make Mortgagee a
"mortgagee-in-possession" or otherwise
liable in any manner with respect to the
Property, Collateral or any of the Rents
and Profits.
(E) In the event Mortgagee
collects and receives any Rents and Profits
under this Section 1.07 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) Mortgagor shall not,
without the prior written consent of Mortgagee,
(1) enter into any lease, extend or renew
any Lease (other than extensions or
renewals in accordance with the terms of a
lease approved by Mortgagee), or
consent to or permit the assignment or
subletting of any Leases (other than
assignments or subleases in accordance with
the terms of a lease approved by
Mortgagee), or amend or terminate any
Lease; (2) alter, modify, change or
terminate the terms of any guaranties of
any Leases; (3) create or permit any
lien or encumbrance which, upon
foreclosure, would be superior to any such
Leases or in any other manner impair
Mortgagee'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
their due date. Notwithstanding the
foregoing, so long as no Event of Default
has occurred and is continuing
hereunder, Mortgagor may enter into Leases,
extend or renew Leases, and permit
the assignment or sublease of Leases which
demise 10,000 rentable square feet or
less for a term of five years or less
("Non-material Leases"), provided they are
on rental rates, including rental
concessions, at least equal to that charged
for comparable properties within the
Property's submarket area, have been
negotiated at arm's length, and do not
contain material modifications to the
form of lease previously approved by
Mortgagee. Mortgagor may also amend
Non-material Leases without Mortgagee's
prior written consent if, in Mortgagor's
prudent business judgment, such amendments
are necessary and do not impair the
value of the Property. Mortgagee will not
unreasonably withhold or delay its
consent to any item submitted to it for
approval pursuant to subsections
1.07(F)(1) or (2) above. Any lease
submitted for Mortgagee's consent shall, at
Mortgagee's option, be accompanied by a
Subordination, Nondisturbance and
Attornment Agreement in Mortgagee's then
current form or another form reasonably
acceptable to Mortgagee.
(G) Mortgagor shall
promptly give notice to Mortgagee of any default
under any of the Leases meeting the
criteria of a lease for which Mortgagee's
consent would have been required pursuant
to Section 1.07(F) regardless of
whether such Leases were executed before or
after the date of this Mortgage,
together with a complete copy of any
notices delivered to or by
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the tenant as a result of such default.
Mortgagee shall have the right, but not
the obligation, to cure any default of
Mortgagor under any of the Leases and all
amounts disbursed in connection with said
cure shall be deemed to be
indebtedness secured hereby.
(H) Mortgagee shall have
the right to approve any lease forms used by
Mortgagor for lease of space in the
Property.
(I) Mortgagor hereby
represents, warrants and agrees that:
(1) Mortgagor has the
right, power and capacity to make this assignment
and that no person, firm or corporation or
other entity other than Mortgagor has
or will have any right, title or interest
in or to the Leases or the Rents and
Profits.
(2) Mortgagor shall, at
its sole cost and expense, perform and discharge
all of the obligations and undertakings of
the landlord under the Leases.
Mortgagor 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.
(J) Mortgagee 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. Mortgagor shall and
does hereby agree to indemnify Mortgagee
for and to defend and hold Mortgagee
harmless from any and all liability, loss
or damage which Mortgagee may or might
incur under the Leases or under or by
reason of this assignment, and from any
and all claims whatsoever which may be
asserted against Mortgagee by reason of
any alleged obligations or undertakings on
Mortgagee's part to perform or
discharge any of the terms, covenants or
agreements contained in the Leases;
provided, however, that the foregoing
indemnity shall not apply to the extent
any of the foregoing arises wholly or in
substantial part from the gross
negligence or willful misconduct of
Mortgagee. Should Mortgagee 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' and paralegals' fees at all
trial and appellate levels and whether suit
be brought or not, shall be secured
by this Mortgage; and Mortgagor shall
reimburse Mortgagee therefor immediately
upon demand, and upon failure of Mortgagor
to do so, Mortgagee may declare all
sums so secured to be immediately due and
payable.
(K) Mortgagee 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 Mortgagee
pursuant to the powers and rights granted
it herein shall be deemed to be a
waiver by Mortgagee of its other rights and
remedies under the Note, this
Mortgage and the Related Agreements, and
this assignment is made and accepted
without prejudice to any of the other
rights and remedies possessed by Mortgagee
under the terms thereof. The right of
Mortgagee to collect said indebtedness and
to enforce any other security therefor held
by it may be exercised by Mortgagee
either prior to, simultaneously with, or
subsequent to any action taken by it
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hereunder. It is the intent of both
Mortgagor and Mortgagee that this assignment
be supplementary to, and not in
substitution or derogation of, any other
provision contained in this Mortgage giving
Mortgagee 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
Mortgagee shall cause or constitute a
merger of the interests of the tenant and
Mortgagor 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) Mortgagor agrees, from
time to time, to execute and deliver, upon
demand, all assignments and any and all
other writings as Mortgagee may
reasonably deem necessary or desirable to
carry out the purpose and intent
hereof, or to enable Mortgagee to enforce
any right or rights hereunder.
1.08.
DUE ON SALE OR
ENCUMBRANCE. Neither Mortgagor nor its sole member,
shall, without the prior written consent of
Mortgagee: (i) create, effect,
consent to, suffer to exist, assume, incur,
permit (voluntarily or
involuntarily, by operation of law or
otherwise) any direct or indirect
conveyance, sale, assignment, transfer,
grant, lien, pledge, mortgage, security
interest or other encumbrance or
disposition (each of the foregoing defined as
"Transfer") of the Property or an interest
therein; (ii) be divested of its
title to the Property or any interest
therein; (iii) enter into a contract to
sell or grant any option to purchase that
results in a transfer of possession or
equitable title to the Property or any
portion thereof prior to the payment of
the Note in accordance with its terms; (iv)
enter into any lease giving the
tenant any option to purchase the Property
or any portion thereof; (v) permit or
suffer any Transfer of any direct or
indirect ownership interest in the
Mortgagor or any indemnitor or guarantor
under this Mortgage or any Related
Agreement; (vi) permit or suffer any
Transfer of any ownership interest in any
direct or indirect owner of a legal or
beneficial interest in the Mortgagor
(including, without limitation its
partners, members, trustees, beneficiaries or
shareholders); (vii) permit or suffer the
merger, dissolution, liquidation, or
consolidation of the Mortgagor or any of
the direct or indirect owners of
Mortgagor or the conversion of one type of
legal entity into another type of
legal entity. Except as expressly consented
to in writing by Mortgagee,
Mortgagor shall not incur any additional
indebtedness (secured or unsecured,
direct or contingent) other than unsecured
debt or trade payables incurred in
the ordinary course of business in
connection with the operation of the
Property. Upon the occurrence of any of the
prohibited actions specified herein,
then Mortgagee shall have the right, at its
option, to declare the indebtedness
secured by this Mortgage immediately due
and payable, irrespective of the
maturity date specified in the Note.
1.09.
PRESERVATION AND
MAINTENANCE OF PROPERTY. Mortgagor shall hire
competent and responsible property managers
who shall be reasonably acceptable
to Mortgagee. Mortgagor, at its sole cost
and expense, shall keep the Property
and every part thereof in good condition
and repair, in accordance with sound
and prudent 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 Property.
All repairs, replacements and
renewals shall be at least equal in quality
to the original Improvements.
Mortgagor shall not permit or commit any
waste, impairment, or deterioration of
the Property, nor commit, suffer or permit
any act upon or use of the Property
in
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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 Property or
bring or keep any article in the 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.
Mortgagor shall promptly bond or discharge
any mechanics' liens against the
Property.
1.10
USE OF PROPERTY.
Except as may have been previously agreed in
writing by Mortgagee, Mortgagor shall
continue to operate the Property for the
purposes for which it was used on the date
hereof and for no other purpose.
Mortgagor shall not make or suffer any
improper or offensive use of the Property
or any part thereof and will not use or
permit to be used any part of the
Property for any dangerous, noxious,
offensive or unlawful trade or business or
for any purpose which will reduce the value
of the Property in any respect or
will cause the Property or any part thereof
or interest therein to be subject to
forfeiture. Mortgagor at its expense will
promptly comply with all rights of way
or use, privileges, franchises, servitudes,
licenses, easements, tenements,
hereditaments and appurtenances forming a
part of the Property and all
instruments relating or evidencing the
same, in each case, to the extent
compliance therewith is required of
Mortgagor under the terms thereof. Mortgagor
will not take any action which results in a
forfeiture or termination of the
rights afforded to Mortgagor under any such
instruments and will not, without
the prior written consent of Mortgagee,
amend in any material respect any of
such instruments. Mortgagor shall at all
times comply with all laws affecting
the Property and comply with any
instruments of record at the time in force
affec
