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JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY / Boston Properties - Note Consolidation, Extension & Modification Agreement
EXHIBIT 10.44
CONSOLIDATION, EXTENSION AND
MODIFICATION AGREEMENT
THIS AGREEMENT MADE as of the 11th day of May, 1988, by and between KENVIC ASSOCIATES ("Mortgagor"), a New York general partnership having its principal office and place of business at 875 Third Avenue, New York, New York 10022 and JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY ("Mortgagee"), a Massachusetts corporation having its principal office at John Hancock Place, Post Office Box 111, Boston, Massachusetts 02117, Attention: City Mortgage and
--------- Real Estate Department .
W I T N E S S E T H T H A T:
WHEREAS, Mortgagor is on the date of delivery hereof the owner of fee title to the premises described in Schedule A hereto, including the Declarations, Declaration of Zoning Lot Restrictions, and the easements more particularly described in such Schedule A (collectively, the "Land");
WHEREAS, Mortgagor is on the date of delivery hereof the owner of the fee interest in all buildings, structures, and other improvements now or hereafter located on the Land; and
WHEREAS, Mortgagee is on the date of delivery hereof the owner and holder of the following mortgages (collectively, the "Existing Mortgages"):
(a) the mortgages (collectively, "Mortgage A"), described in Schedule
B hereto as assigned, consolidated, spread, modified and extended as set
forth in such Schedule B; on which there is the unpaid principal sum of
$105,660,435.32, and
(b) Mortgage ("Mortgage B"), dated the date hereof, from Mortgagor to
Mortgagee, securing a note, dated May 12, 1988, in the original principal
amount of $71,339,564.68, which Mortgage B is intended to be recorded in
the Office of the City Register of New York County (the "Register's
Office") prior to the recordation of this Consolidation, Extension and
Modification Agreement, dated as
of May 11, 1988, between Mortgagor and Mortgagee (the "Consolidation
Agreement");
WHEREAS, all of the notes and bonds secured by the Existing Mortgages (the "Existing Notes") have been transferred to Mortgagee and Mortgagee is at the time of delivery hereof the owner and holder of all of the Existing Notes;
WHEREAS, Mortgagor acknowledges and certifies that there is now due and owing on the Existing Notes, and secured by the Existing Mortgages, the aggregate unpaid principal amount of $180,000,000, interest thereon having been paid to date;
WHEREAS, Mortgagor acknowledges and certifies that there are no defenses or offsets to any of the Existing Notes or the Existing Mortgages;
WHEREAS, the lien of the Existing Mortgages has been spread to encumber the easements, declarations and other matters and Mortgagor's rights therein and thereunder (collectively, the "Easements"), more particularly described in Schedule A, Parcel B;
AND WHEREAS, it has been agreed by and between Mortgagor and Mortgagee that the Existing Notes shall be consolidated and modified as hereinafter set forth so as to constitute a single indebtedness and that the Existing Mortgages shall be consolidated, extended and modified as hereinafter set forth so as to constitute a single first lien on the Mortgaged Premises (as hereinafter defined), securing the Notes (as hereinafter defined), in the total amount of $180,000,000 (the Existing Mortgages, as so consolidated, extended and modified, being herein called the "Mortgage", and the Existing Notes, as so consolidated and modified in the FORM of Exhibit 1 attached hereto, together with any notes or other securities issued in exchange therefor or in replacement thereof, being herein called the "Notes");
NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein contained, and in order to secure the payment of the principal and premium, if any, and interest on the Notes, the payment of all other indebtedness which the Mortgage by its terms secures and compliance with all of the terms thereof and of
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the Notes, to consolidate the liens of the Existing Mortgages and, as so consolidated, to modify the terms, provisions, covenants and conditions of the Existing Mortgages, to consolidate the Existing Notes and, as so consolidated, to modify the terms of the Existing Notes, including the time and manner of payment of the principal and premium, if any, and interest on each thereof and modify the amounts of such interest, all as herein set forth, and in order to confirm the liens of the Existing Mortgages, as so consolidated, and to effect and further confirm the grant, bargain, sale, mortgage, warrant, pledge, assignment, transfer and conveyance to Mortgagee, and to its successors and assigns, of the property described in the Granting Clause of the Mortgage, Mortgagor agrees with Mortgagee as follows:
Part A. Consolidation, Extension and Modification of Existing Notes.
------- ----------------------------------------------------------- The obligations evidenced and represented by the Existing Notes are hereby consolidated each with the other so as to constitute a single indebtedness in the amount of $180,000,000, and, as so consolidated, the Existing Notes are hereby extended, modified and restated to (a) bear interest from May 12, 1988 at
- the rate of 9.75% per annum; (b) bear interest, while any default exists
- hereunder, at the rate of 14.75% per annum; (c) provide that interest only,
- computed from May 12, 1988 to and including May 31, 1988, shall be paid in arrears on June 1, 1988; (d) provide for payment in (i) 60 monthly installments
- - of interest only on the first day of each calendar month commencing July 1, 1988, each such installment to be in the amount of $1,462,500, and (ii) 60
-- monthly installments of combined principal and interest on the first day of each calendar month commencing July 1, 1993, each of the first 59 of such installments to be in the amount of $1,546,500 and the final such installment to be in an amount sufficient to pay the entire unpaid principal amount thereof together with interest accrued thereon or otherwise payable in respect thereof as provided in the Notes; (e) provide for the application of each installment of
- combined principal and interest, first, to the payment of interest accrued on the unpaid principal amount thereof, and, then, to the reduction of the unpaid principal amount thereof; (f) be payable in full on June 1, 1998; (g) be subject
- - to prepayment as provided in Article 1 of the Mortgage; and (h) be in the form
- of Exhibit 1 attached hereto.
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Part B. Consolidation, Extension and Modification of Existing
------ ----------------------------------------------------- Mortgages. The liens of the Existing Mortgages are hereby consolidated each with - --------- the other so as to constitute a single first mortgage with the same , intent and like effect as if one mortgage covering all of the Mortgaged Premises had been executed and delivered by Mortgagor to secure the consolidated indebtedness in the principal amount of $180,000,000, and, as so consolidated, the Existing Mortgages are each hereby modified and amended in their respective entireties to read as follows (capitalized terms hereafter appearing shall have the respective meanings set forth in this Consolidation Agreement, except as otherwise specified), provided that the execution and delivery of the Mortgage shall not
-------- in any manner impair the lien of the Existing Mortgages and such lien shall continue in full force and effect:
TO SECURE THE PAYMENT when and as due and payable of the principal of and premium, if any, and interest on the Notes outstanding on the date of recordation of the Consolidation Agreement in the aggregate principal amount of $180,000,000, and to secure the payment of all other indebtedness which this Mortgage by its terms secures and compliance with all of the terms hereof and of the Notes, Mortgagor does hereby grant, bargain, sell, mortgage, warrant, pledge, assign, transfer and convey to Mortgagee, and to its successors and assigns, the following property (the "Mortgaged Premises"):
(a) the Land, including, without limitation, the Easements;
(b) all additional lands, estates and development rights hereafter acquired by Mortgagor 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 time, by supplemental mortgage or otherwise, be expressly made subject to the lien hereof;
(c) the improvements, structures and buildings and any alterations thereto or replacements thereof, now or hereafter erected upon the Land, all fixtures, fittings, appliances, apparatus, equipment, machinery, material and articles of personal property and replacements thereof, now or at any time hereafter affixed to, attached to, placed upon or used in any way in connection with the complete and comfortable use, enjoyment, occupancy or operation of the Land or such improvements,
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structures or buildings, including, without limitation, partitions, furnaces, boilers, oil burners, radiators and piping, coal stokers, plumbing and bathroom fixtures, refrigeration, air conditioning and sprinkler systems, wash-tubs, sinks, gas and electric fixtures, stoves, ranges, ovens, disposals, dishwashers, hood and fan combinations, carpeting, drapes, lobby furnishings, awnings, screens, window shades, elevators, motors, dynamos, refrigerators, kitchen cabinets, incinerators, kitchen equipment, laundry equipment (including, without limitation, washers and dryers), plants and shrubbery, pool furniture and equipment, exercise equipment and all other equipment and machinery, appliances, fittings, and fixtures of every kind located in or used in the operation of the improvements, structures or buildings standing on such premises, together with any and all replacements thereof and additions thereto (collectively, the "Improvements"), excluding however trade fixtures and other articles of personal property owned by tenants under the Space Leases (as defined below);
(d) all leases, whether written or oral, of the Land or the Improvements, or any part thereof or interest therein, now or hereafter entered into by Mortgagor (the "Space Leases"), and all right, title and interest of the Mortgagor, 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 the right upon the happening of any default hereunder to receive and collect the rents or maintenance charges thereunder;
(e) all agreements, contracts, certificates, instruments, franchises, permits, licenses 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 Mortgaged Premises and any part thereof and any structures or buildings thereon (now or hereafter erected) or respecting any business or activity conducted on the Mortgaged Premises and any part thereof and all right, title and interest of Mortgagor therein and thereunder, including, without limitation, the right upon the happening of any default hereunder, to receive and collect any sums payable to Mortgagor thereunder;
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(f) all development rights, air rights, all rights of way or use, streets, ways, alleys, passages, sewer rights, water courses, water rights, privileges, franchises, servitudes, easements, tenements, hereditaments and appurtenances now or hereafter belonging or appertaining to any of the foregoing;
(g) all rents, issues and profits, if any, arising from any of the foregoing; and
(h) all proceeds of the conversion, voluntary or involuntary, of any of the foregoing into cash or liquidated claims, including, without limitation, proceeds of insurance and condemnation awards.
AND without limiting any of the other provisions of this Mortgage, Mortgagor expressly grants to Mortgagee, as secured party, a security interest in all of those portions of the Mortgaged Premises which are or may be subject to the New York Uniform Commercial Code provisions applicable to secured transactions.
NOTWITHSTANDING anything in this Mortgage to the contrary, the maximum amount of principal indebtedness as consolidated (exclusive of any interest, premium or sums as may be advanced by Mortgagee pursuant hereto) secured by this Mortgage on execution, or which by any contingency may be secured by this Mortgage at any time hereafter, is the principal amount of $180,000,000.
TO HAVE AND TO HOLD the Mortgaged Premises unto Mortgagee, its successors and assigns forever.
Mortgagor and Mortgagee agree that the Corner Parcel (as defined in Section 2.10) and the Mortgagor's interest therein (including Mortgagor's leasehold estate and its beneficial and contractual rights, title and interest in and to the fee of the Corner Parcel) do not constitute part of the Mortgaged Premises, and the lien of this Mortgage shall not and is not intended to cover any portion of the Corner Parcel or interest therein other than the easements, air rights and declarations set forth in Schedule A, Parcel B to the extent they burden the Corner Parcel and benefit the premises described in Schedule A, Parcel A.
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ARTICLE 1
The Notes
---------
1.01. Payment of Notes. Mortgagor will duly and punctually pay (a)
---------------- - the principal of and premium, if any, and interest on the Notes at the time outstanding in accordance with the terms thereof and hereof, and (b) when and as
- due and payable from time to time as provided herein, all other sums payable hereunder or secured hereby, together with, to the extent permitted by applicable law, interest at the rate of 14.75% per annum on any such sums as shall not be paid when due and payable from the date when due and payable (whether during a grace period, if any, or otherwise) until payment thereof.
1.02. Exchange of Notes. Mortgagor will issue, in exchange for any
----------------- Note or Notes surrendered to it for such purpose, a new Note or Notes, in such denomination or denominations and payable to the order of such person or persons as the holder may request, dated the date to which interest has been paid on the surrendered Note or Notes, in aggregate principal amount equal to the aggregate unpaid principal amount of the surrendered Note or Notes, having a like maturity date, providing for monthly installments of interest only or monthly installments of combined principal and interest, as the case may be, each such installment on each new Note to be in an amount which bears the same proportion to the aggregate amount of monthly installments of interest only or monthly installments of combined principal and interest, as the case may be, payable on the surrendered Note or Notes that the principal amount of such new Note bears to the aggregate unpaid principal amount of the surrendered Note or Notes and otherwise substantially in the form of Exhibit 1 hereto, with appropriate variations where necessary. No such exchange shall be deemed to be an extinguishment or cancellation of the indebtedness evidenced by the Note or Notes surrendered for exchange or any part of such indebtedness or be deemed to be the creation or substitution of new indebtedness, it being expressly understood and agreed that each such new Note shall merely be evidence of the indebtedness or portion thereof theretofore evidenced by the surrendered Note or Notes.
1.03. Replacement of Notes. Upon receipt of evidence, together with
-------------------- an indemnity, both reasonably
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satisfactory to Mortgagor of the loss, theft, destruction or mutilation of any Note and, in the case of any such mutilation, upon surrender and cancellation of such Note, Mortgagor, at its expense, will issue, in lieu thereof, and with like effect as provided in section 1.02, a new Note, dated the date to which interest on such lost, stolen, destroyed or mutilated Note has been paid, in principal amount equal to the unpaid principal amount thereof and otherwise of like tenor.
1.04. Amortization Schedule. Upon any exchange or replacement of any
--------------------- Note by the holder thereof pursuant to section 1.02 or 1.03, Mortgagor will deliver to such holder an amortization schedule with respect to such Note prepared by Financial Publishing Company of Boston (or a similar organization offering comparable services and satisfactory to such holder), setting forth the amounts of principal and interest payable on such Note on each date on which an installment is due after the date of such Note.
1.05. Prepayment of Notes. (a) If the Notes are paid prior to the
------------------- stated maturity date thereof for any reason other than as a result of (i) a
- declaration or acceleration following the occurrence of an Event of Default (as hereinafter defined), (ii) the application by Mortgagee of any net insurance
-- proceeds received by it following any damage to or destruction of the Mortgaged Premises, or (iii) the application by Mortgagee of any net award received by it
--- following a Taking (as hereinafter defined) (collectively, a "Non-Voluntary Prepayment"), Mortgagor hereby agrees to pay the premium provided herein and in the Notes. Mortgagor acknowledges that Mortgagee, in making the loan evidenced by the Notes (the "loan") is relying on Mortgagor's creditworthiness and its agreement to repay the Notes in strict accordance with the terms set forth therein. Mortgagor acknowledges that Mortgagee would not make the loan without full and complete assurance by Mortgagor of its agreement to abide by the terms thereof and its further agreement not to voluntarily prepay all or any part of the principal of the Notes prior to the final maturity date thereof, except as set forth herein and in the Notes. Therefore, any prepayment of the Notes other than a Non-Voluntary Prepayment will prejudice Mortgagee's ability to meet its obligations and to earn the return on the funds advanced to Mortgagor, which Mortgagee intended and expected to earn when it agreed to make the loan and will also result
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in other loss and additional expenses to Mortgagee. Accordingly, in recognition of the foregoing and in consideration of Mortgagee making the loan at the interest rate and for the term set forth in the Notes, Mortgagor hereby expressly (x) waives any and all rights it may have under applicable law to
- voluntarily prepay without charge or premium all or any part of the Notes, and (y) agrees that if, for any reason other than a Non-Voluntary Prepayment, - prepayment of all or any part of the principal of the Notes is made by or on behalf of Mortgagor, then Mortgagor or any other party making any such prepayment shall be obligated to pay, concurrently therewith, a premium in the amount set forth below, and the payment of such premium shall be a condition to the making of such prepayment and shall be secured by this Mortgage. Without limiting the scope of the foregoing provisions, the provisions of this paragraph shall constitute both a waiver of any right Mortgagor may have to repay the loan without charge and an agreement by Mortgagor to pay the premium set forth below except in the event of a Non-Voluntary Prepayment, and Mortgagor hereby declares that Mortgagee's agreement to make the loan to Mortgagor at the interest rate and for the term set forth in the Notes constitutes adequate consideration for this waiver and agreement by Mortgagor. Notwithstanding anything contained in this subparagraph to the contrary, Mortgagor shall not have the right to voluntarily prepay the Notes prior to June 1, 1993.
(b) On June 1, 1993 and on any day thereafter, upon not less than 30 nor more than 60 days' prior written notice to Mortgagee, Mortgagor may, at its option, prepay the entire (but not less than the entire) aggregate principal amount of the Notes at the time outstanding, at the principal amount so prepaid, together with unpaid interest on the Notes accrued to the date of such prepayment, plus a premium equal to the greater of:
(i) the product obtained by multiplying (x) the difference obtained
-
by subtracting from 9.75% the yield rate on United States Treasury Notes
due on or about the maturity date of the Notes as such yield rate is
reported in The Wall Street Journal or other similar publication on the
-----------------------
fifth business day preceding the prepayment date or, if no yield rate on
United States Treasury Notes is obtainable, at the yield rate of the issue
most closely equivalent to United States Treasury Notes,
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as determined by Mortgagee in its sole discretion and (y) the number of
-
years and fraction thereof remaining from the prepayment date to the
scheduled maturity date of the Notes, and (z) the amount of the prepaid
-
principal balance; and
(ii) 1% of the amount of the prepaid principal balance.
(c) On January 15, 1998 and on any day thereafter, upon not less than 30 days' prior written notice and on the condition that Mortgagor is not at the time of such notice or at any time thereafter in default under this Mortgage or the Notes, Mortgagor may prepay the entire (but not less than the entire) aggregate principal amount of the Notes at the time outstanding, at the principal amount so prepaid, together with unpaid interest on the Notes accrued to the date fixed for such prepayment, without premium.
(d) The entire unpaid and outstanding aggregate principal amount of the Notes shall mature and become due and payable on the date fixed for prepayment, together with the applicable premium and interest accrued and unpaid on such date except that any notice of prepayment given by Mortgagor may be withdrawn by Mortgagor, provided that (i) no withdrawal of a prepayment notice
-------- - has been made during the preceding 24 months and (ii) all costs and expenses of
-- Mortgagee and Mortgagor incurred in connection with such notice of prepayment and such withdrawal, including, without limitation, attorneys' fees, shall have been paid in full and indemnified against by Mortgagor.
(e) Except as specifically set forth in this section 1.05 and in Article 3 of this Mortgage, the Notes may not be prepaid in whole or in part.
ARTICLE 2
Ownership, Condition, etc., of Mortgaged Premises
-------------------------------------------------
2.01. Title to Mortgaged Premises; etc. Mortgagor represents and
-------------------------------- warrants that (a) it is the absolute owner of the legal and beneficial title to
- the Land and the Improvements and to all other property included with-
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in the Mortgaged Premises and has good and marketable title in fee simple absolute to the Mortgaged Premises, subject in each case only to the items set forth in Schedule C to the Consolidation Agreement (the "Permitted Encumbrances"), (b) it has good and lawful right, power and authority to execute
- this Mortgage and to mortgage the Mortgaged Premises and to assign its right, title and interest as landlord under the Space Leases, all as provided herein, (c) this Mortgage and the Consolidation Agreement have been duly executed and - delivered by the duly authorized general partners of Mortgagor, and each constitutes the legal, valid and binding obligation of Mortgagor, enforceable in accordance with its terms, (d) except as otherwise consented to in writing by
- Mortgagee, all Space Leases are subject and subordinate to this Mortgage and (e)
- Mortgagor at its expense will warrant and defend to Mortgagee such title to the Mortgaged Premises and the lien and interest of Mortgagee thereon and therein against all claims and demands and will maintain and preserve such lien and will keep this Mortgage a first lien upon and a first priority security interest in the Mortgaged Premises, subject only to Permitted Encumbrances and prior, at all times, to all Space Leases.
2.02. Title Insurance Proceeds. All proceeds received by Mortgagee
------------------------ for any loss under the title insurance policy or policies delivered to Mortgagee prior to or concurrently with the execution and delivery of this Mortgage or otherwise in connection with this Mortgage, or under any title insurance policy or policies delivered to Mortgagee in substitution therefor or in replacement thereof, shall be the property of Mortgagee.
2.03. Recordation. Mortgagor, at its expense, will at all times
----------- cause this Mortgage and any instruments amendatory hereof or supplemental hereto and any instruments of assignment hereof or thereof (and any appropriate financing statements or other instruments and continuations thereof with respect to any thereof) to be recorded, registered and filed and to be kept recorded, registered and filed, in such manner and in such places, and will pay all such recording, registration, filing fees and other charges, and will comply with all such statutes and regulations as may be required by law in order to establish, preserve, perfect and protect the lien of this Mortgage as a valid, direct first mortgage lien on and first priority perfected security interest in the Mortgaged Premises, subject only to Permitted Encum-
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brances. Mortgagor will pay or cause to be paid, and will indemnify Mortgagee and each holder of any Note in respect of, all taxes (including interest and penalties) at any time payable in connection with the filing and recording of this Mortgage and any and all supplements and amendments thereto. Mortgagor, at its expense, will furnish to Mortgagee, upon request, an opinion of counsel satisfactory to Mortgagee, specifying the action taken by Mortgagor to comply with this section 2.03 since the date of this Mortgage or the last such request hereunder, or stating that no such action is necessary.
2.04. Payment of Impositions, etc. Subject to section 2.07 (relating
--------------------------- to permitted contests), Mortgagor will pay or cause to be paid within thirty (30) days after the same becomes a lien, but in any event before the same would become delinquent and before any fine, penalty, interest or cost may be added for non-payment, all taxes, assessments, water and sewer rates, charges, license fees, inspection fees and other governmental levies or payments, of every kind and nature whatsoever, general and special, ordinary and extraordinary, unforeseen as well as foreseen, which at any time may be assessed, levied, confirmed, imposed or which may become a lien upon the Mortgaged Premises, or any portion thereof, or which are payable with respect thereto, or upon the rents, issues, income or profits thereof, or on the occupancy, operation, use, possession or activities thereof, whether any or all of the same, be levied directly or indirectly or as excise taxes or as income taxes, and all taxes, assessments or charges which may be levied on the Notes, or the interest thereon (collectively, the "Impositions"). Mortgagor will deliver to Mortgagee, upon request, copies of official receipts or other satisfactory proof evidencing such payments.
2.05. Insurance and Legal Requirements. Subject to section 2.07
-------------------------------- (relating to permitted contests), Mortgagor, at its expense, will comply, or cause compliance with
(a) all provisions of any insurance policy covering or applicable to
the Mortgaged Premises or any part thereof, all requirements of the issuer
of any such policy, and all orders, rules, regulations and other
requirements of the National Board of Fire Underwriters (or any other body
exercising similar functions) applicable to or affecting the Mortgaged
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Premises or any part thereof or any use or condition of the Mortgaged
Premises or any part thereof (collectively, the "Insurance Requirements"),
and
(b) all laws, statutes, codes, acts, ordinances, orders, judgments,
decrees, injunctions, rules, regulations, permits, licenses,
authorizations, directions and requirements of all governments,
departments, commissions, boards, courts, authorities, agencies, officials
and officers, foreseen or unforeseen, ordinary or extraordinary, and all
instruments of record, which now or at any time hereafter may be applicable
to the Mortgaged Premises or any part thereof, or any of the adjoining
sidewalks, curbs, vaults and vault space, if any, streets or ways, or any
use or condition of the Mortgaged Premises or any part thereof
(collectively, the "Legal Requirements");
whether or not compliance therewith shall require structural changes in or interference with the use and enjoyment of the Mortgaged Premises or any part thereof.
2.06. Liens, etc. Mortgagor will not directly or indirectly create
---------- or permit or suffer to be created or to remain, and will promptly discharge or cause to be discharged, any mortgage, lien, encumbrance or charge on, pledge of, security interest in or conditional sale or other title retention agreement with respect to the Mortgaged Premises or any part thereof or the Land or the interest of Mortgagor or Mortgagee therein or any rents or other sums arising therefrom, other than (a) Permitted Encumbrances, (b) liens of mechanics,
- - materialmen, suppliers or vendors or rights thereto incurred in the ordinary course of the business of Mortgagor for sums not yet due or any such liens or rights thereto which are at the time being contested as permitted by section 2.07, provided, that adequate provision for the payment of such sums shall have
-------- been made and (c) one or more mortgages which are completely subject and
- subordinate to this Mortgage, provided that (i) the net annual income from
-------- - operations of the Mortgaged Premises (which shall mean the income after deducting all operating expenses, provisions for all taxes and reserves and all other proper deductions, provided that for purposes of calculating the net
-------- annual income from operations no deduction shall be made for (x) debt service on
- this Mortgage or any subordinate mortgage, (y) depreciation on the Improvements
- and
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(z) the amortization of any expenses incurred for real estate brokerage - commissions and tenant improvements in connection with the leasing of space in the Mortgaged Premises) as determined solely by Mortgagee based upon statements prepared by certified public accountants acceptable to Mortgagee (which statements may be for the most recent 12-month period available), shall be not less than 110% of the sum of (1) the annual payments of principal and interest
- required to be made by Mortgagor to Mortgagee pursuant to the terms of this Mortgage and the Notes secured hereby and (2) the annual payments of principal
- and interest required to be made pursuant to the terms of all such subordinate mortgages and the notes secured thereby, (ii) each such mortgage and all right,
-- title and interest thereunder of the mortgagee thereunder, including, without limitation, any rights to insurance proceeds, condemnation awards and assignment of occupancy leases, shall at all times be and remain subject and subordinate to this Mortgage and to the right, title and interest of Mortgagee hereunder and under any other instruments and agreements delivered in connection therewith and to any modifications or supplements hereto or thereto as of the date of such subordinate mortgage, (iii) each such mortgage shall prohibit the mortgagee
--- thereunder from joining as parties defendant, in any suit to enforce its rights thereunder, any tenant under any Space Lease, unless the prior written consent of Mortgagee is obtained, (iv) each such mortgage shall not violate or conflict
-- with the terms of any Space Lease, and (v) Mortgagor shall deliver a copy of
- each such mortgage to Mortgagee for Mortgagee's inspection at least 15 days prior to Mortgagor's entering into each such mortgage. Mortgagor will not postpone the payment of any sums for which liens of mechanics, materialmen, suppliers or vendors or rights thereto have been incurred (unless such liens or rights thereto are at the time being contested as permitted by section 2.07), or enter into any contract under which payment of such sums is postponable (unless such contract expressly provides for the legal, binding and effective waiver of any such liens or rights thereto), in either case, for more than 120 days after the completion of the action giving rise to such liens or rights thereto.
2.07. Permitted Contests. After prior written notice to Mortgagee,
------------------ Mortgagor at its expense may contest, or cause to be contested, by appropriate legal proceedings conducted in good faith and with due dili-
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gence, the amount or validity or application, in whole or in part, of any Imposition, Legal Requirement or Insurance Requirement or any lien, encumbrance or charge referred to in section 2.06, provided, that (a) in the case of an
-------- - unpaid Imposition, lien, encumbrance or charge, such proceedings shall suspend the collection thereof from Mortgagor, Mortgagee, the Mortgaged Premises and any rent or other income therefrom and shall not interfere with the payment of any such rent or income, (b) neither the Mortgaged Premises nor any rent or other
- income therefrom nor any part thereof or interest therein would be in any danger of being sold, forfeited, lost or interfered with, (c) in the case of a Legal
- Requirement, neither Mortgagor nor Mortgagee would be in any danger of any civil or criminal liability for failure to comply therewith, (d) Mortgagor shall have
- furnished such security, if any, as may be required in the proceedings or as may reasonably be requested by Mortgagee, (e) the nonpayment of the whole or any
- part of any Imposition will not result in the delivery of a tax deed to the Mortgaged Premises or any part thereof because of such non-payment, (f) the
- payment of any sums required to be paid under the Notes or under this Mortgage (other than any unpaid Imposition, lien, encumbrance or charge at the time being contested in accordance with this section 2.07) shall not be interfered with or otherwise affected, and (g) in the case of any Insurance Requirement, the
- failure of Mortgagor to comply therewith shall not affect the validity of any insurance required to be maintained by Mortgagor under section 3.01.
2.08. Deposits for Impositions. Mortgagor will pay or cause to be
------------------------ paid, to Mortgagee or at the option of Mortgagee, to an escrow agent designated by Mortgagee, on dates upon which interest on the Notes is payable, such amounts as Mortgagee from time to time estimates are necessary to create and maintain a reserve fund to be held by Mortgagee or such escrow agent without interest, except such interest as may be required by applicable law, from which, subject to this section 2.08, to pay before the same become due, all Imposition...
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