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HomeMy WebLinkAbout09-7368FARA A. SOBEL, ESQUIRE ROBERT T. COHEN & ASSOCIATES 102 Browning Lane, Bldg. C-3 Cherry Hill, NJ 08003 Attorney ID No.: 77093 Avatar Income Fund I, LLC 100 Wall Street Seattle, WA 98121 COURT OF COMMON PLEAS CUMBERLAND COUNTY Plaintiff vs. Frank Nocito, individually 80 Eastwoods Road Roxbury, CT 06783 and Carlyle Gables Properties, Inc. 2210 Camp Swatara Road Myerstown, PA 17067 and Harrisburg Gables Properties, Inc 2210 Camp Swatara Road Myerstown, PA 17067 Defendants DOCKET NO.: (A -'M3(oS civil lerw CIVIL ACTION NOTICE TO DEFEND COMPLAINT IN MORTGAGE FORECLOSURE NOTICE You have been sued in court. If you wish to defend against the claims set forth in the following pages, you must take action within twenty (20) days after this complaint and notice are served, by entering a written appearance personally or by attorney and filing in writing with the court your defenses or objections to the claims set forth against you. You are warned that if you fail to do so the case may proceed without you and a judgment may be entered against you by the court without further notice for any money claimed in the complaint or for any other claim or relief requested by the plaintiff. You may lose money or property or other rights important to you. AVISO Le han demandado a usted en la corte. Si usted quiere defenderse de estas demandas expuestas en las paginas siguientes, usted tiene veinte (20) dias de plazo al partir de la fecha de la demanda y la notifiacion. Hace falta asentar una comparencia escrita o en persona o con un abogado y entregar a la corte en forma escrita sus defensas o sus objectiones a las demandas en contra de su persona. Sea avisado que si usted no se defiende, la corte tomara medidas y puede continuar la demanda en contra suya sin previo aviso o notificacion. Ademas, la corte puede decidir a favor del demandante y requiere que usted cumpla con todas las provisioner de esta demanda. Usted puede perer dinero o sus propiedades u otros derechos importantes para usted You should take this paper to your lawyer at once. If you do not have a lawyer or cannot afford one, go to or telephone the office set forth below to find out where you can get legal help. Lieva esta demanda a un abogado inmediatamente. Si no tiene abogado o si no tiene el dinero suficiente de pagar tal servicio, vaya en persona o llame por telefona a la officina cuya direccion se encuentra escrita abajo para averiguar donde se puede con- seguir asistencia legal. CUMBERLAND COUNTY LAWYER REFERRAL SERVICE 4THFLOOR, CUMBERLAND COUNTY COURTHOUSE CARLISLE, PA 17013 (717) 240-6200 FARA A. SOBEL, ESQUIRE ROBERT T. COHEN & ASSOCIATES 102 Browning Lane, Bldg. C-3 Cherry Hill, NJ 08003 Attorney ID No.: 77093 Avatar Income Fund I, LLC 100 Wall Street Seattle, WA 98121 Plaintiff vs. Frank Nocito 80 Eastwoods Road Roxbury, CT 06783 and Carlyle Gables Properties, Inc. 2210 Camp Swatara Road Myerstown, PA 17067 and Harrisburg Gables Properties, Inc. 2210 Camp Swatara Road Myerstown, PA 17067 Defendants COURT OF COMMON PLEAS CUMBERLAND COUNTY DOCKET NO: CIVIL ACTION COMPLAINT IN MORTGAGE FORECLOSURE 1. Plaintiffs are Avatar Income Fund I, LLC, a Delaware Limited Liability Company, as well as Plaintiff's successors and assigns, with offices at the above address. 2. Defendants are Frank Nocito, an adult individual, with offices at the above captioned address, and Carlyle Gables Properties Inc. Hereinafter "Carlyle" and Harrisburg Gables Properties Inc. Hereinafter "Harrisburg" and who are the true owners and mortgagors of the two premises located at 1240 Harrisburg Pike, Carlisle, PA 17013 and 7800 Linglestown Road, Harrisburg, PA 17112. A more particular description of the premises is included in Exhibit "A" attached hereto and incorporated by reference. 3. On or about April 14, 2005, Defendants executed a Note in favor Plaintiff's Avatar Income Fund I, LLC in the original principal amount of $6,450,000.00 plus interest. A true and correct copy of the Note is attached hereto and incorporated by reference as Exhibit "B". 4. Additionally on that same date, April 14, 2005, Defendant, Frank Nocito executed an unconditional personal guaranty for the amount of $6,450,000.00 in favor of Plaintiff, Avatar Income Fund I, LLC. A true and correct copy of same is attached hereto as Exhibit "C". 5. Additionally on that same date April 14, 2005, as security for the obligations under the Promissory Note, Defendants on the same day granted a mortgage on the two premises in favor of Plaintiff specifically, 1240 Harrisburg Pike, Carlisle, PA 17013 that mortgage is recorded in Dauphin County, Book No. 1904, page 3795 and 7800 Linglestown Road, Harrisburg, PA 17112, that mortgage is recorded in Cumberland County, Book No. 5975, page 433. The Note and the Mortgage have not been assigned. (Copies of each mortgage are attached hereto as Exhibit "D"). 6. Defendants are the true owners and mortgagors of the two premises located at 1240 Harrisburg Pike, Carlisle, PA 17013 and 7800 Linglestown road, Harrisburg, PA 17112, known as Tax Parcel No. 68-020-009 with legal description attached hereto as Exhibit "A". 7. Plaintiff and Defendants had entered into approximately three Loan Modification and Forbearance Agreements, which entended the maturity date of the Note. On or about February 15, 2007, Defendants, "Carlyle", "Harrisburg" and "FN" executed a Loan Modification and Forbearance Agreement in favor of Plaintiff, and extending the maturity date of the Note to March 10, 2007. A copy of the Forbearance Agreement is attached hereto as Exhibit "E". 8. As of February 1, 2009 Defendants have defaulted on their obligations, as set forth Exhibits "A" through "E" respectively. 9. By reason of the said default Defendants, jointly and severally, are liable to Plaintiffs on the accelerated amount, as follows: Original Balance $6,450,000.00 Balance After Modification Agreement $5,200,000.00 Principal Amount Due After Credit of Payments Made $3,390,250.00 Interest at 11 % $ 64,154.58 Total through October 2009 $ 31,077.29 per month Default Interest at 10% $ 56,504.16 Total through October 2009 $ 28,252.08 per month Attorney Fees 15% of the Amount Outstanding Balance Per Note & Mortgage $ 529,812.55 Costs and Appraisals $ 23,174.91 TOTAL $4,061,896.20 Per diem Regular Interest Rate $1,035.91 Per diem Default Interest Rate $941.74 10. The attorney's fees set forth above are in conformity with the Mortgage documentation and law and will be collected in the event judgment is entered against Defendants and they do not reinstate the mortgage or pay the same of prior to Sheriff Sale. If they do either only reasonable and actually incurred fees will be charged as allowed by law. 11. Despite repeated demand Defendants failed and refused to pay the amount due Plaintiffs. WHEREFORE, Plaintiffs pray this Honorable Court enter judgment in mortgage foreclosure in its favor against Defendants and assess damages in the amount of $4,061,896.20 plus costs of suit, interest per the Note and Mortgage, post judgment interest per the Note and advances as may be made and a judicial sale of the Premises. Respectfully submitted, Robert T. Cohen & Associates ar A. Soliel; Esquire orney I.D. No.: 77093 102 Browning Lane, Bldg C-3 Cherry Hill, NJ 08003 Phone: (856) 216-7300 Fax: (856) 216-7459 E-mail: rtcohenlaw@joimail.com Dated: 161 1? '? FARA A. SOBEL, ESQUIRE ROBERT T. COHEN & ASSOCIATES 102 Browning Lane, Bldg. C-3 Cherry Hill, NJ 08003 Attorney ID No.: 77093 Attorney for Plaintiff(s) Avatar Income Fund I, LLC 100 Wall Street Seattle, WA 98121 COURT OF COMMON PLEAS CUMBERLAND COUNTY Plaintiff vs. Frank Nocito 80 Eastwoods Road Roxbury, CT 06783 and Carlyle Gables Properties, Inc. 2210 Camp Swatara Road Myerstown, PA 17067 and Harrisburg Gables Properties, Inc 2210 Camp Swatara Road Myerstown, PA 17067 Defendants DOCKET NO.: CIVIL ACTION CERTIFICATION OF ADDRESSES Fara A. Sobel, Esquire, certifies to the best of her knowledge, information, and belief, that the address of the Plaintiff is 100 Wall Street, Seattle, WA 98121 and that the last known address(es) of the Defendant(s) is/ are as follows: Frank Nocito Carlyle Gables Properties, Inc. 80 Eastwood Road 2210 Camp Swatara Road Roxury, CT 06783 Myerstown, PA 17067 Harrisburg Gables Properties, Inc. 2210 Camp Swatara Road Myerstown, PA 17067 (SIGNATURE ON THE NEXT PAGE) Respectfully submitted, ROBERT T. COHEN & ASSOCIATES - S Fa A. Sobel, Esquire Attorney ID NO. 77093 102 Browning Lane, Bldg C-3 Cherry Hill, NJ 08003 Phone (856) 216-7300 Fax (856) 216-7459 E-mail: rtohenlaw@joimail.com Dated: la l a, `C?? SWORN AND SUBSCRIBED BEFORE ME, A NOTARY PUBLIC OF THE STATE OF NEW JERSEY THIS /01AA DAY OF Oc AAk- ?--• f 200 JEAN GRIFFITH NOTARY PUBLIC OF NEW JERSEY MY COMMISSION EXPIRES JULY 25, 2011 FARA A. SOBEL, ESQUIRE ROBERT T. COHEN & ASSOCIATES 102 Browning Lane, Bldg. C-3 Cherry Hill, NJ 08003 Attorney ID No.: 77093 Avatar Income Fund I, LLC 100 Wall Street Seattle, WA 98121 Attorney for Plaintiff(s) COURT OF COMMON PLEAS CUMBERLAND COUNTY Plaintiff vs. Frank Nocito 80 Eastwoods Road Roxbury, CT 06783 and Carlyle Gables Properties, Inc. 2210 Camp Swatara Road Myerstown, PA 17067 and Harrisburg Gables Properties, Inc. 2210 Camp Swatara Road Myerstown, PA 17067 Defendants DOCKET NO.: CIVIL ACTION ENTRY OF APPEARANCE TO THE PROTHONOTARY: Please enter my appearance for and on behalf of the Plaintiff, Avator Income Fund I, LLC, in the above-referenced matter. Respectfully submitted, ROBERT T. COHEN & ASSOCIATES al Farb( Sobel, Esquire Atthey ID NO. 77093 102 Browning Lane, Bldg C-3 Cherry Hill, NJ 08003 Phone (856) 216-7300 Fax (856) 216-7459 E-mail: rtohenlaw@joimail.com Dated: 16. 1 a -(S I VERIFICATION STATE OF WASHINGTON SS COUNTY OF KING I, Jerry Zevenbergen, being duly sworn according to law, hereby deposes and says: 1. I am the corporate officer on behalf of the Plaintiff in the above captioned matter and am making this affidavit in support of the Complaint in Mortgage Foreclosure against Defendants. 2. The facts set forth in the foregoing Complaint are true and correct to the best of my knowledge, information and belief. 3. The documents attached to the Complaint are true and correct copies of the original documents to the best of my knowledge, infor lion, and behalf. R NBERGE Sworn to and Subscribed before me this 2- $ day of Se P4cmbe r, 2009. ??' AC , X rl Notary Public NUMBER: 123933-NCH ALL THAT CERTAIN tract of land, together with all buildings and other improvements thereon erected, Situate in West Hanover Township, Dauphin County, Pennsylvania, more particularly bounded and described in accordance with an ALTA/ACSM Land Title Survey for Harrisburg Gables Property, Inc., dated 9-16-2003, prepared by Akens Engineering Associates, Inc., as follows, to wit: BEGINNING atthe Southwesternmost comer of saidlot, atthe centerline intersection ofLinglestown Road S.R. 0039 and Fairville Avenue T-526, at a found P.K. Nail; thence progressing along Fairville Avenue, the following five courses and distances: (1) North 05 degrees 14 minutes 30 seconds East, a distance of 223.62 feet to a point; (2) thence progressing North 04 degrees 18 minutes 30 seconds East, a distance of 345.84 feet to a point; (3) thence progressing North 16 degrees 15 minutes 00 seconds East, a distance of 146.09 feet to a point; (4) thence progressing North 26 degrees 36 minutes 00 seconds East, a distance of 287.32 feet to a point; (5) thence progressing North 19 degrees 29 minutes 00 seconds East, a distance of 81.91 feet to a point; thence progressing South 62 degrees 11 minutes 19 seconds East, a distance of 308.20 feet to a found iron pin; thence progressing South 03 degrees 30 minutes 33 seconds West, a distance of 1,104.49 feet to a found P.K. Nail in the centerline of Linglestown. Road S.R.0039 thence progressing along Linglestown Road S.R. 0039, North 65 degrees 30 minutes 00 seconds West, a distance of 492.61 feet to a found P.K. Nail, the point of beginning. SAID tract containing 460,429 square feet, 10.57 acres, Less Right of Way Area containing 50,049 square feet, 1.15 acres leaving a net acreage containing 410,3 80 square feet, 9.42 acres, and being located in West Hanover Township, Dauphin County, Pennsylvania. BEING Parcel No. 68-020-009. BEING THE SAME PREMISES WHICH All American Plazas, Inc., by Deed dated 10/3/2003 and recorded in Dauphin County, Pennsylvania in Deed Book 5241, Page I, granted and conveyed unto Harrisburg Gables Properties, Inc., a Delaware Corporation, in fee. SCHEDULE "C" NUMBER: 123938-NCH ALL THAT CERTAIN tract of land, together with all buildings and other improvements thereon. erected, Situate in Middlesex Township,, Cumberland County, Pennsylvania, bounded and described in accordance with an ALTA/ACSM Land Title Survey, prepared by Akens Engineering, Inc., dated 9-16-2003, as follows, to wit: BEGINNING at a spike in the Northerly right-of-way line of U.S. Route 11 'and the Southwesterly line of land now or formerly of Carlisle Country Club; thence progressing along the said right-of-way line of U.S. Route 11 along a curve to the left having a radius of 3,342 feet, an are length of 355.87 feet, and a chord bearing and distance of South 74 degrees 48, minutes 14 seconds West, 355.70 feet to a pipe found; thence progressing North 14 degrees 37 minutes 00 seconds West, a distance of 150.15 feet to a spike; thence progressing South 69 degrees 52 minutes 36 seconds West, a distance of 200.06 feet to a concrete monument; thence progressing North 38 degrees 57 minutes 00 seconds West, a distance of 400.00 feet to a spike; thence progressing North 69 degrees 52 minutes 36 seconds East, a distance of 200.06 feet to an iron pin; thence progressing North 38 degrees 57 minutes 00 seconds West, a distance of 349.70 feet to an iron pin located in the banks of the Conodoguinet Creek; thence progressing along the banks of the Conodoguinet Creek, North 51 degrees 22 minutes 24 , seconds East, a distance of 259.57 feet to a point along lands now or formerly of Carlisle Country Club; thence progressing (1) two {2) courses and distances: (1) thence progressing South 39 degrees 47 minutes 32 seconds East, a distance of 868.45 feet to a railroad spike; (2) thence progressing South 35 degrees 51 minutes 32 seconds East, a distance of 160.20 feet to the point of beginning. CONTAINING 338,398 square feet or 7.77 acres. BEING, the same premises which All American Plazas, Inc., a Pennsylvania'Corporation, by Deed dated 10-3-2003 and recorded 11-3-2003 at Cumberland County, Pennsylvania in Deed Book 260 page 786, granted and conveyed unto Carlyle Gables Properties, Inc., as agent for All American Plazas, Inc., in fee. EXHIBIT "B" COMMERCIAL PROMISSORY NOTE (BALLOON PAYMENT) April IL 2005 LOAN NO. 200507 $6,450,000.00 REPRESENTATIONS/WARRANTY. Maker represents and warrants to AVATAR INCOME FUND I, LLC, a Delaware limited liability company, its successors and assigns ("Holder") that the loan, evidenced by this Note is for commercial, investment or business purposes only and is not for personal, family or household purposes. 2. PROMISE TO PAY: For value received, Maker promises to pay the sum of SIX MILLION FOUR HUNDRED FIFTY THOUSAND AND N01100 ($6,450,000.00 U.S.) Plus interest to the order of Holder. , SECURITY. This Note is secured by those certain Mortgages, Deed of Trust, Assignment of Leases and Rents, Security Agreements and Fixture Filings (collectively, the "Mortgage"), as well as other security documents (the Mortgage and such other security documents, collectively the "Security Instruments"), all of even date, executed by Maker covering and relating to those certain properties located in Dauphin, Cumberland and Berks Counties, Pennsylvania, and Hanover County, Virginia which properties are mole particularly described in the Mortgages, Deed of Trust and exhibits thereto (the "Property"). 4. INTEREST. Maker promises to pay interest on the unpaid principal balance of the loan evidenced by this Note from the date hereof until repayment in full, at the rate per annum equal to the "Interest Rate". The "Interest Rate," prior to-the occurrence of an Event of Default, shall be the greater of (i) eleven percent (11%) per annum or (ii) a variable rate per annum calculated by adding the Margin to the Index. As used herein, (a) the "Margin" is seven (7) percentage points; and b) the "Index" is the national prime rate as stated in the Money Rates section of The Wall Street Journal ("Journal'), as published on the Rate Adjustment Date, or if no Journal is published on the Rate Adjustment Date, then on the nearest prior publication date, and if a range of rates is listed, the highest rate in the range. The variable rate per annum shall be adjusted on each "Rate Adjustment Date." As used herein, "Rate Adjustment Date" means 1st of the month, which is the month after the date of this Note and each month thereafter. All interest shall be calculated for the actual number of days elapsed over a year assumed to consist of 360 days. In the event that the Journal stops publishing the national prime rate, the Index shall be the prime or reference rate of any bank with assets over $100;000,000 as selected by Holder. Interest for any partial month that this Note is executed and delivered shall be payable in advance and shall be computed on the basis of a 360-day year and shall be equal to the sum of a per diem interest charge (for each day the principal balance hereof is outstanding during such partial month) equal to the product of (a) 1/360 and (b) the, Interest Rate and (c) the outstanding principal balance hereunder for the day in question, on the unpaid principal balance until the unpaid principal has been paid in full. 5. PAYMENTS. A. Time and Place of Payments. Maker shall pay interest only payments computed on a 360 day year f each and every month with payments due on the first day of each calendar month beginning on June 1, 2005, to Avatar Income Fund I, LLC, 100 Wall Street, Seattle, WA 98121, or other such place as Holder may designate. If, during the term of the loan, Maker makes a principal payment, the monthly payment amount for the succeeding months shall be adjusted to reflect interest computed on the reduced principal balance. The monthly payments will be applied first to the payment of late charges, fees and costs incurred by Holder and/or sums advanced under this Note and the Security Instruments, then to interest, and the balance, if any, to reduction of the principal. balance. B. Reserves. In addition to the monthly interest only payment, Holder reserves the right to collect monthly, and Maker agrees to pay when so requested by Holder, an amount equal to 1/12x` of the annual taxes, assessments, if any, and insurance for the Property, as reserves. C. Late Charges. If Holder has not received the full amount of any monthly payment by the end of five (5) calendar days after the date it is due, Maker shall promptly pay a late charge to Holder in the amount of C:\Documents and Settings\UserWy Documents\My Documents\nocito\ALL AMERICAN PLAZASall american currentlavatar\revised loan does 4-12-05\allAmericancompliance\allamericanNote,doe COMMERCIAL NOTE - 1 Vision Form SNT09WA Rev. 05!24199 ten percent (10%) of the overdue payment. Maker agrees this late charge is to compensate Holder for damages Holder will suffer in servicing the loan including extra expenses involved in handling delinquent payments. Maker agrees that the actual damages suffered will be extremely difficult and impractical to ascertain and the sum of ten percent (10%) of the overdue payment is fair and reasonable. 6. MATURITY DATE. The unpaid principal advances made by Holder and any accrued interest shall be due in full on November 1, 2005 (the "Maturity Date") with an option to extend for an additional.6 months which the terns of are outlined in the loan application. Maker understands and agrees to pay a late charge of ten percent (10%) of the principal amount then owing if Maker fails to pay all sums due under this Note on the Maturity Date. 7. MAKER'S FAILURE TO PAY/PERFORM AS REQUIRED. A. Events of Default. Any one of the following occurrences shall constitute an "Event of Default" under this Note: 1. The failure by Maker to timely make any payment due under this Note in accordance with the terms of this Note; or 2. The failure to comply with any non-monetary provision in this Note; or 3. The occurrence of a default under any of the Security Irrtruments; or 4. A transfer of the Property occurs which is prohibited by the Mortgage. B. Remedies. Upon the occurrence of any Event of Default under this Note or the Security Instruments: 1. The entire unpaid principal balance, advances, any unpaid interest, and any other amounts owing under this Note shall, at the option of Holder and without notice or demand to Maker, immediately become due and payable; and 2. Holder shall have and may exercise any and all rights and remedies available at law or in equity and also any and all rights and remedies provided in the Security Instruments. The remedies of Holder, as provided in this Note and in the Security Instruments, shall be cumulative and concurrent, and may be pursued singularly, successively or together, at the sole discretion of Holder, and may be exercised as often as occasion therefor shall arise. 3. Default Interest. After failure to make payment, monthly, balloon or otherwise or any other default under this Note and Security Instruments securing this Note, this Note shall bear interest at the rate of ten percent (10%) over the Interest Rate stated in Paragraph 4. Q. Due on Sale/Transfer. Section of the Mortgages which provides as follows is incorporated into this Note: "Mortgagee shall have the right, at its option, to declare any indebtedness and obligations under the Note and this Mortgage, irrespective of the maturity date specified therein, immediately due and payable in full without forfeiture of any prepayment charge if. (1) Mortgagor or any one or more of the persons comprising Mortgagor sells, enters into a contract of sale, conveys, alienates or encumbers the Property or any portion thereof or any fractional undivided interest therein, (2) suffers Mortgagor's title or any interest therein to be divested or encumbered, whether voluntary or involuntary, (3) leases for a term of more than six years (including option to renew), leases with an option to sell, or changes or permits to be changed the character or use of the Property without Mortgagee's written consent (4) there is any merger, consolidation or dissolution involving the sale or transfer of all or substantially all of the assets of Mortgagor, any general partner of Mortgagor or any manager of a limited liability company Mortgagor; (5) there is any direct or indirect transfer (at one time or over any period of time) of 25% or more of the voting stock of (i) a corporate Mortgagor, (ii) any corporate general partner of Mortgagor, or (iii) any corporation which is the direct or indirect owner of 25% or more of the beneficial interest in Mortgagor or any general partner of Mortgagor; (6) there is any direct or indirect transfer of any general partnership interest if Mort gagor's is a general or limited partnership; (7) there is any direct or indirect the transfer (at C:1Documents and SettingAUser\My Documents\My Documentslnocito\ALL AMERICAN PLAZA9.all american current avatarlrevised loan docs 4-12-051allAmericancompliance1a11americanNote.doc COMMERCIAL NOTE - 2 s Vision Form SNT09WA Rev. 05/24/99 one time or over anyperiod of time) of 25% or more of the membership interests of (i) a limited liability company Mortgagor, (ii) any limited liability company general partner of Mortgagor, or (iii) any limited liability company which is the direct or indirect owner of 25% or more of the beneficial interest of Mortgagor or any general partner of Mortgagor, or (8) there is any direct or indirect transfer of any interest in any manager of a limited liability company Mortgagor. 'This provision shall apply to each and every sale, transfer, encumbrance or conveyance, regardless whether or not Mortgagee has consented to, or waived, Mortgagee's rights hereunder, whether by action or non action, in connection with any previous sale, transfer or conveyame." D. No Waiver by Note Holder. No act of omission or commission of Holder, including specifically any failure to exercise any right, remedy or recourse shall be deemed to be a waiver or release of any right, remedy or recourse by Holder. A waiver or release with reference to any one event shall not be construed as continuing, as a bar to, or as a waiver or release of, any subsequent right, remedy or recourse as to any subsequent event. 9. NOTICES. Unless otherwise required by law, all notices under this Note shall be in writing and shall be deemed delivered upon personal delivery to the authorized representative(s) of either Maker or Holder or upon mailing either by certified mail, return receipt requested, postage prepaid, or first class mail. Notices shall be addressed to Maker or Holder at the following address or at such other addresses as may be designated by written notice given hereunder. MAKER: C/OAll American Plazas, Inc PO Box 302 Bethel, PA 19507 HOLDER: Avatar Income Fund I, LLC 100 Wall Street Seattle, WA 98121 Attn: Michelle Mittie Phone No. 206 728-5900 Fax No. 206 728-5993 10. GOVERNING LAW and SEVERABILITY. This Note is made pursuant to, and shall be construed and governed by the laws of the Commonwealth of Pennsylvania. If any provision of this Note or of the Security Instruments is construed or interpreted by a court of competent jurisdiction to be void, invalid or unenforceable, such decision shall not affect the remaining provisions of this Note or the Security Instruments. 11. TIME IS OF THE ESSENCE. Time is of the essence of this Note. 12. ASSIGNMENT. Holder may assign all or a portion of its rights, title and interest in this Note to any person, firm, corporation or other entity without the consent of Maker. Maker may not assign any of its right, title or interest in this Note. w 13. OBLIGATIONS OF PERSONS UNDER THIS NOTE. If more than one person signs this Note, each person signs as a Maker, unless otherwise stated and shall be fully, jointly, severally and personally obligated to keep all of the promises made in this Note, including the promise to pay all sums due and owing. 14. WAIVERS. Maker and all guarantors, endorsers and sureties hereby waive all valuation and appraisement privileges, presentment and demand for payment, protest, notice of protest and nonpayment, dishonor and notice of dishonor, bringing of suit, lack of diligence or delays in collection or enforcement of this Note and notice of the intention to accelerate, the release of any party liable, the release of any security for the debt, the taking of any additional security and any other forbearance and further agree that this Note and any or all payments coming due hereunder may be extended or renewed from time to time without in any way C:\Documents and Settings\User\My Documents\My Documents\nocito\ALL AMERICAN PLAZASall american current\avatar\revised loan docs 4-12-05\allAmericancompliance\allamericanNote.doc COMMERCIAL NOTE - 3 -'S Vision Form SNT09WA Rev. 05124199 affecting or diminishing their liability under this Note. Maker further waives, to the fullest extent permitted by law, the right to plead any and all statutes of limitations as a defense to any demand on this Note, or on the Security Instruments, or any lease assignment, guaranty or other agreement now or hereafter securing this Note. 15. HEADINGS. The subject headings of the paragraphs of this Note are included for purposes of convenience only, and shall not affect the construction or interpretation of any of its provisions. . 16. ATTORNEYS FEES AND COSTS. Maker promises to pay all costs, expenses and attorney's fees incurred by Holder in the exercise of any remedy (with or without litigation) under this Note, Mortgage and/or other Security Instruments, in any proceeding for the collection of the debt evidenced by this Note (including in house document preparation fees), in any foreclosure of the Mortgage or the realization upon any other security securing this Note, in protecting or sustaining the lien or priority of said Mortgage, Security Instruments or said other security, or in any litigation or controversy arising from or connected with this Note, the Mortgage or other security for this Note. Said proceedings include, without limitation, any probate, bankruptcy, receivership, injunction, arbitration, mediation or other proceeding, including post judgment collection proceedings or any appeal from or petition for review of any of the foregoing, in which Holder prevails. Maker shall also pay all of Holder's costs and attorney's fees incurred in connection with any demand, work-out, settlement, compromise, or other activity in which Holder engages to collect any portion of this debt not paid when due or as a result of any Event of Default of Maker. If a judgment is obtained thereon which includes an award of attorney's fees, such attorney's fees, costs and expenses shall be in such amount as the court shall deem reasonable, which judgment shall bear interest at the Default Rate from the date it is rendered to and including the date of payment to Holder. "Costs and expenses" shall include, but are not limited to appraisal fees, inspection fees and costs of a title report. 17. NO DEDUCTIONS. All payments of principal of and interest on the Note shall be made without the right of set-off and without deduction of any present or future taxes, levies, duties, imposts, deductions, charges or withholdings imposed by any existing or future law, rule, regulation, treaty, directive or requirement, whether or not having the force of law, which amounts shall be paid by Maker. Maker will pay the amounts necessary such that the gross amount of the principal and interest received by Holder is not less than that required by this Note. 18. ABSENCE OF USURY, PAYMENTS IN MONEY. (a) All agreements herein are expressly limited so that in no contingency or event whatsoever, whether by reason of advancement of the proceeds hereof, acceleration of maturity of the unpaid principal balance hereof, or otherwise, shall the amount paid or agreed to be paid to Holder for the use, forbearance of detention of the money to be advanced hereunder exceed the highest lawful rate permissible under applicable law. If, from any. circumstances whatsoever, fulfillment of any provision in this Note or in any. Security Instruments at the time performance of such provision shall be due, shall involve transcending the limit of validity prescribed by law that a court of competent jurisdiction may deem applicable hereto, then, ipso facto, the obligation to be fulfilled shall be reduced to the limit of such validity and if from any circumstance Holder shall ever receive as interest an amount that would exceed the highest lawful rate, such amount that would be excessive interest shall be applied to the reduction of the unpaid principal balance due hereunder in the inverse order of maturity and not to the payment of interest. (b) All amounts payable under this Note are payable in lawful money of the United States, without notice, demand, offset or deduction. Checks will constitute payment only when collected. Any amount paid on this Mote shall be applied first to the, costs of collection with respect to the Note or Security Instruments, then to payment of accrued but unpaid interest on this Note, then toward the outstanding principal balance of this Note. 19. SEVERABILITY. The parties hereto intend and believe that each provision in this Note comports with all applicable local, state and federal laws and judicial decisions. However, if any provision or provisions, or if any portion of any provision or provisions, in this Note is found by a court of law to be in violation of any applicable local, state or federal ordinance, statute, law, administrative or judicial decision, or to be illegal, invalid, unlawful, void or unenforceable as written, then it is the intent of all parties hereto that such portion, provision or provisions shall be given force to the fullest possible extent that they are legal, valid C:\Documents and Settings\User\My Documents\My Documents\nocito\AL.L AMERICAN PLAZARall american current\avatar\revised loan docs 4-12-05\all4,mericaiicompliance\allamericanNote.doc COMMERCIAL NOTE - 4 E:.;:*, Y;ion Form SNT09WA Rev. 05/24/99 and enforceable, that the remainder of this Note shall be construed as if such illegal, invalid, unlawful, void or unenforceable portion, provision or provisions were not contained therein, and that the rights, obligations and interest of Maker and Holder under the remainder of this Note shall continue in full force and effect. 20. TAX. If, by the laws of the United States of America, or of any state or local jurisdiction having jurisdiction over Maker, any tax is due or becomes due in respect of the issuance of this Note or the issuance or recording of the Security Instruments or any other security interest created thereby, Maker covenants and agrees to pay such tax in the manner required by any such law. Maker further covenants to hold harmless and agrees to indemnify Holder against any liability incurred by reason of the imposition of any tax on the issuance of this Note or the issuance or recording of the Security Instruments or any other security interest created thereby. 21. DELAY OR OMISSION. No delay or omission on the part of Holder hereunder or under any Security Instruments given to secure this Note (including the Mortgage) shall operate as a waiver of such right or of any other right hereunder or under any Security Instrument. No single or partial exercise of any power hereunder or under the Security Instruments shall preclude other or further exercises thereof or the exercise of any other power. Holder shall at all times have the right to proceed against any portion of the security for this Note in such order and in such manner as Holder may consider appropriate, without waiving any rights with respect to any of the security. 22. ENTIRE AGREEMENT. This Note and the Security Instruments contain the entire agreement of the parties with respect to the loan. No prior agreement, statement, or promise, written or oral, made by any party to this Note or the Security Instruments that is not contained in this Note and/or the Security Instruments shall be binding or valid. 23. CONFESSION OF JUDGMENT. This Section sets forth a warrant of authority for any attorney to confess judgment against Maker and to execute upon said judgment by garnishment, levy, or any other type of execution against Maker's bank accounts or other personal property, real property, or intangible property. In granting this warrant of attorney to confess judgment against Maker and to execute upon said judgment against Maker, Maker knowingly, intelligently, voluntarily, and unconditionally waives any and all rights Maker has or may have to notice and a prior judicial proceeding under the respective constitution and laws of the United States and the Commonwealth of Pennsylvania to determine Maker's rights and liabilities. Maker further knowingly, intelligently, voluntarily, and unconditionally acknowledges that Holder may, after the occurrence of an Event of Default, obtain a judgment against Maker for all sums due under this Note without the prior knowledge or consent by Maker and without any opportunity of Maker to raise any defense, setoff, counterclaim, or other claim that Maker may have. This knowing, intelligent, and voluntary waiver applies to a judgment being entered by confession against Maker as well as. to the execution of that judgment by garnishment, levy, or any other type of execution against Maker's bank accounts or other personal property, real property, or intangible property. Upon the occurrence of an Event of Default, Maker irrevocably authorizes and empowers any attorney of any court of record to appear for Maker in any and all actions and (a) to enter judgment against Maker for the amount due under this Note or (b) to confess judgment against Maker for the amount due under this Note; and, in either case, the amount due under this Note shall include the unpaid principal sum, interest, and all sums owed by Maker to Holder pursuant to the terms of this Note and any of the Security Instruments, including costs and reasonable attorneys' fees in the amount of fifteen (15%) percent of the outstanding balance of all of the amounts set forth above, but in no event shall attorney's fees be less than $5,000.00. Upon the occurrence of an Event of Default, Maker further irrevocably authorizes and empowers any attorney of any court of record to appear for and enter judgment against Maker and in favor of Holder in an action of replevin or any other action to recover possession of any of the collateral or to confess judgment against Maker in an action for replevin or in any other action to recover possession of any of the collateral. All confessions of judgment set forth in this Section shall be with release of procedural errors, waivers of appeals, and without stay of execution; and Maker waives all relief from any and all appraisement or exemption or action wherein judgment is to be confessed. If a copy of this Note, verified by an official or an officer of Holder, shall be filed in any proceeding or action wherein judgment is to be confessed, it shall not be necessary to file the original of this Note and such verified copy shall be sufficient warrant for any C:\Documents and Settings\User\My Documents\My Documents\nocitoULL AMERICAN PLAZARall american current\avatar\revised loan docs 4-12-05\allAmericancompliance\allamericanNote.doc COMMERCIAL NOTE - 5 ViSon Form SNT09WA Rev. 05/24199 attorney of any court of record to appear for and confess judgment against Maker as provided in this Note. Judgment may be confessed from time to time under the aforesaid powers and no single exercise of the aforesaid powers to confess judgment, or a series of judgments, shall be deemed to exhaust the power, whether or not such exercise shall be held by any court to be invalid, avoidable, or void, but the power shall continue undiminished and it may be exercised from time to time as, after, and as Holder shall elect until such time as Holder shall have received payment in full of all sums due under this Note and under the Security Instruments, together with interest, costs, and fees. 24. WAIVER OF JURY TRIAL. Holder and Maker acknowledge that disputes arising under this Note and the Security Instruments are likely to be complex, that trial before a judge is more appropriate than trial before a jury, and that they desire to streamline and minimize the cost of resolving such disputes. Therefore, Holder and Maker, as an independent covenant, irrevocably waive all rights to a trial by jury in any action, counterclaim, dispute, or proceeding based upon, or related to, the subject matter of this Note and the Security Instruments and grants the judge presiding over any such action, counterclaim, dispute, or proceeding full power and authority to determine all questions of fact. This waiver applies to all claims against all parties to such actions and proceedings including those involving Holder or Holder's parent, affiliates, or related entities, or any officer, director, shareholder, member, attorney, or partner of any of them. It also applies whether such dispute or proceeding arises under this Note and the Security Instruments, any other agreement, note, paper, instrument, or document heretofore or hereafter executed, or any other contract, whether similar or dissimilar and whether or not it arises from intentional or unintentional conduct, from fraud, other improper action, or failure to act, or from other reasons. This Section shall be deemed a covenant of Maker and shall be enforceable independently of all other provisions of this Note and the Security Instruments. This waiver is knowingly, intentionally, and voluntarily made by Maker, and Maker acknowledges that neither Holder nor any person acting on behalf of Holder has made any representations to induce this waiver of trial by jury or in any way to modify or nullify its effect. Maker further acknowledges that it has been represented (or has had the opportunity to be represented) in connection with the signing of this Note and in the making of this waiver by independent legal counsel, selected of its own free will, and that it has had the opportunity to discuss this waiver with counsel. Maker further acknowledges that it has read and understands the meaning and ramifications of this waiver provision. 25. JURISDICTION AND VENUE. Maker irrevocably and unconditionally waives any defense of improper venue or inconvenience of forum in any actions under this Note, and any rights to claim immunity in respect of itself or any of its property or assets, including immunity from jurisdiction, immunity from attachment prior to entry of judgment, immunity from attachment in aid of execution of judgment, and immunity from execution or judgment, all in respect of any legal suit, action, or proceeding arising out of, or relating to, this Note. Maker irrevocably consents to the exclusive jurisdiction of the Courts of Common Pleas of Pennsylvania and/or the United States District Court for the Eastern District of Pennsylvania in any disputes, actions, or proceedings between Holder and Maker, whether arising under this Note or under any other agreement or undertaking; and Maker irrevocably consents to service of process by certified mail, return receipt requested, to Maker at the address set forth in Section 9 of this Note. Maker shall not in any litigation between Maker and Holder object to the venue of the action or claim that the forum is inconvenient. Maker waives the right to interpose any defense, set-off, or counterclaim of any nature or description in any litigation in which Holder and Maker shall be adverse parties, arising out of or relating to any sums due under this Note, the Security Instruments, the collateral securing this Note, or any of the other matters contained in this Note or the Security Instruments; provided, however, that nothing contained in this Section shall in any manner prevent or preclude Holder from bringing any one or more actions against Maker in any jurisdiction in the United States or elsewhere. Maker's consent, in advance, to the jurisdiction of the State or Federal courts of the Commonwealth of Pennsylvania is a material inducement for Holder to make the loan to Maker evidenced by this Note. 26. Interest After Judgment After entry of a judgment on this Note or any of the Security Instruments or a judgment in mortgage foreclosure under the Mortgage, interest shall continue to accrue under said judgment, this Note, the Mortgage and the Security Instruments at the rate setforth in this Note. CADocuments and SettingslUserWy Documents\My Docui-nmts\nocitolALL AMERICAN PLAZA9all american currentlavatarlrevised loan docs 4-12-051allAmericancompliancelallamericanNote.doc COMMERCIAL NOTE - 6 IM10 Vision Form SNT09WA Rev. 05/24199 IN WITNESS WHEREOF,* the undersigned have executed this document. MAKER: Y Do 11 V' Pp , r chard i fifer, Presi Frystown Gable ropert' Inc chard 'tAifer, Pr;' ent Harrisbur G le Pro , Richard Mitstifer, Pre ' ent zz;Nertia? Richard M st fer, Presi t All eri Pla s Inc Richard Mitstifer Pre ent r V CADocuments and Settings\UserWly Documents\My DocumentslnocitoULL AMERICAN PLAZA`.all american curTenAavatar\revised loan docs 4-12-051aHAmericancompliancelallamericanNote.doc COMMERCIAL NOTE - 7 W:; s Vision Form SNT09WA Rev. 05124199 EXHIBIT "C" UNCONDITIONAL GUARANTY OF PAYMENT AND PERFORMANCE THIS UNCONDITIONAL GUARANTY OF PAYMENT AND PERFORMANCE (this "Guaranty"), made as of April, 2005, BY Frank Nocito . ("Guarantor"), whose notice address 80 Eastwoods Rd, Roxbury, CT 06783 _LAA in favor of AVATAR INCOME FUND Is LLC, whose notice address is 100 Wall Street, Seattle, WA 98121 ("Lender"). WITNESSETH: WHEREAS, Doswell Virginia Properties, Inc,, Frystown Gables Properties, Inc, Carlyle Gables Properties, Inc All American Plazas Inc and Harrisburg Gables Properties, Inc ( "Borrowers"), have obtained a Loan in the principal amount of Six Million Four Hundred Fifty Thousand and No/100 ($6,450,000.00) (the "Loan") from Lender; and , WHEREAS, the Loan is evidenced by a Note dated of even date herewith (the "Note"), executed by Borrower and payable to the order of Lender in the stated principal amount of Six Million Four Hundred Fifty Thousand and No/100 ($6,450,000.00) and is secured by, inter alfa, Six (5) Mortgages, One (1) Deed of Trust, Assignment of Leases and Rents, Security Agreements and Fixture Filings, one (1) from each. Borrower, dated of even date. herewith (collectively, the "Mortgage") encumbering that certain real property situated in the; Commonwealth of Pennsylvania, and State of Virginia as more particularly described in the Mortgages and Deed of Trust, together with. the buildings, structures and other improvements now or hereafter located thereon (said real property, buildings, structures and other improvements being hereinafter collectively referred to as the "Property") and by other documents and instruments (the Note, the. Mortgage and such other documents and instruments, as the same may from time to time be amended, consolidated, renewed or replaced, being collectively referred to herein as the "Loan Documents"); and WHEREAS, as a condition to its accepting the Note and making the Loan, Lender has required that Guarantor guarantee to Lender payment and performance of all obligations of Borrower under the Loan Documents; and WHEREAS, Guarantor is an entity related to, controlled by or under common control with Borrower and the obtaining of the Loan is of substantial benefit to Guarantor and, therefore, Guarantor desires to guarantee to Lender payment and pezJfc,-mance of all obligations of Borrower under the Loan Documents. NOW, THEREFORE, to induce Lender to amend the Loan and in consideration of the foregoing premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Guarantor hereby covenants and agrees for the benefit of Lender, as follows: 1. Guarantees. (a) GuaranN of PMment Guarantor, does hereby unconditionally guarantee to Lender the full and prompt payment. of the Note when due, whether by acceleration or otherwise, with such interest as may accrue thereon and such prepayment fees and other charges as may be due in connection therewith, either before or after maturity thereof. (b) Guaranty of Performance. Guarantor does hereby unconditionally guarantee to Lender the full and prompt payment and performance of any and all obligations whatsoever of Borrower to Lender under the terms of the » + Note and any other Loan Documents, whether such obligations now exist or arise hereafter. (c) Guarantor Obligations. Guarantor does hereby agree that if the Note is not paid by Borrower in accordance with its terms for any reason whatsoever, or if any and all sums which are now or may hereafter become due from Borrower to Lender under the Loan Documents are not paid by Boirower in accordance with their terms for any reason whatsoever, Guarantor will immediately make such payments. Guarantor further agrees to pay Lender all expenses (including, without limitation, reasonable attorneys' fees) paid or incurred by Lender in endeavoring to collect all or any portion of the indebtedness evidenced by the Note, to enforceany other obligations guaranteed hereby, or to enforce this Guaranty. CADocuments and SettingsMseAMy DocumentslMy DocumentAnocitolALL AMERICAN PLAZAS\all american currentlavatarlrevised loan does 4-12-05WIAmericancomplianceWlamericanGuaranty.doc SM Vision Form SGT01 WA Rev. 06/10199 (d) Loan Documents. The provisions of this Guaranty shall extend and be applicable to all renewals, replacements, amendments, extensions, consolidations and modifications of the Loan Documents, and any and all references herein to the Loan Documents or any of them shall be deemed to include any such renewals, replacements, amendments, extensions, consolidations or modifications thereof. (e) Liability of Guarantor. This is a guaranty of payment and performance and not of collection. The liability of Guarantor under this Guaranty shall be direct and immediate and not conditional or contingent upon the pursuit of any remedies against Borrower or any other person (including, without limitation, other guarantors, if any), nor against the Property or any other property (whether real or personal), rights, estates and interests now or at any time hereafter securing the payment of the Note and/or the other obligations of Borrower under the Loan Documents whether held by Lender or by any person or entity on Lender's behalf or for Lender's account (the "Collateral"). Guarantor waives any right to require that an action be brought against Borrower or any other person or to require that resort be had to any Collateral or to any balance of any deposit account or credit on the books of Lender in favor of Borrower or any other person. In the event, on account of the Bankruptcy Reform Act of 1978, as amended, or any other debtor relief law (whether statutory, common law, case law or otherwise) of any jurisdiction whatsoever, now or hereafter in effect, which may be or become applicable, Borrower shall be relieved of or fail to incur any debt, obligation or liability as provided in the Loan Documents, Guarantor shall nevertheless be fully liable therefor. In the event of an Event of Default under and as defined in the Loan Documents which is not cured within any applicable grace or cure period (an "Event of Default"), Lender shall have the right to enforce its rights, powers and remedies (including, without limitation, foreclosure of all or any portion of the Collateral) thereunder or hereunder, in any order, and all rights, powers and remedies available to Lender in such event shall be nonexclusive and cumulative of all other rights, powers and remedies provided thereunder or hereunder or by law or in equity. If the indebtedness and obligations guaranteed hereby are partially paid or discharged by reason of the exercise of any of the remedies available to Lender, this Guaranty. shall nevertheless remain in full force and . effect, and Guarantor shall remain liable for all remaining indebtedness and obligations guaranteed hereby, even though any rights which Guarantor may have against Borrower may be destroyed or diminished by the exercise of any such remedy; and if the indebtedness and obligations guaranteed hereby are otherwise partially paid or discharged for any reason, including voluntary payment or prepayment, application of insurance proceeds or condemnation awards, additional financing or refinancing, or sale of the Collateral or a portion thereof, with or without the consent or cooperation of Lender, this Guaranty shall nevertheless remain in full force and effect, and Guarantor shall remain liable for all remaining indebtedness and obligations guaranteed hereby. No exculpatory or similar provision of the Loan . Documents which limits, or relieves Borrower or any other person or entity from, any personal or direct liability of Borrower under the Loan Documents shall limit or relieve Guarantor from any such liability, it being the intention of the parties hereto that Guarantor be liable for all obligations of Borrower under any provision of the Loan Documents notwithstanding any such exculpatory or similar provision. The obligations of Guarantor and the rights of Lender hereunder are in addition to the obligations of Guarantor and the rights of Lender under any other guaranty or indemnity agreement given by Guarantor to Lender in connection with the Loan, and payments made under one guaranty or indemnity agreement shall not reduce the liabilities and obligations of Guarantor under any other guaranty or indemnity agreement. 2. Reinstatement of Obligations. If at any time all or any part of any payment made by Guarantor or received by Lender from Guarantor under or with respect to, this Guaranty is or must be rescinded or returned for any reason whatsoever (including, but not limited to, the insolvency, bankruptcy or reorganization of Guarantor or Borrower), then the obligations of Guarantor hereunder shall, to the extent of the payment rescinded or returned, be deemed to have continued in existence, notwithstanding such previous payment made by Guarantor, or receipt of payment by Lender, and the obligations of Guarantor hereunder shall continue to be effective or be reinstated, as the case may be, as to such payment; all as though such previous payment by Guarantor had never been made. 3. Waivers by Guarantor. To the extent permitted bylaw, Guarantor Pereby waives and agrees not to assert or take advantage of (as a defense or otherwise): (a) Any right to require Lender to. proceed against Borrower or any other person or to proceed against or exhaust any security held by Lender at any time or to pursue any other remedy in Lender's power or under any other agreement before proceeding against Guarantor hereunder, (b) The defense of the statute of limitations in any action hereunder, -2- C.\Documents and SettingslUserlMy DocumentslPvly DocumantAnocito\ALL AMERICAN PLAZA51211 american currentlavatarlrevised loan docs 412-051allAmericancompliancelAllamericanGu: ranty.doc SW Vision Form SGTO1 WA Rev. 0611W99 (c) Any defense that may arise by reason of the incapacity, lack of authority, death or disability of any other person or persons or the failure of Lender to file or enforce a claim against the estate (in administration, bankruptcy or any other proceeding) of any other person or persons; (d) Any failure on the part of Lender to ascertain the extent or nature of the Collateral or any insurance or other rights with respect thereto, or the liability of any party liable for the Loan Documents or the obligations evidenced or secured thereby; (e) Demand, presentment for payment, notice of nonpayment, protest, notice of protest and all other notices of any kind, or the lack of any thereof, including, without limiting the generality of the foregoing, notice of the existence, creation or incurring of any new or additional indebtedness or obligation or of any action or non-action on the part of Borrower, Lender, any endorser or creditor of Borrower`or of Guarantor or on the part of any other person whomsoever under this or any other instrument in connection with any obligation or evidence of indebtedness held by Lender, (f) Any defense based upon an election of remedies by Lender; (g) Any right or claim or right to cause a marshalling of the assets of Guarantor; (h) Any principle or provision of law, statutory or otherwise, which is or might be in conflict with the terms and provisions of this Guaranty; (i) Any duty on the part of Lender to disclose to Guarantor any facts Lender may now or hereafter know about Borrower or the Property, regardless of whether Lender has reason to believe that any such facts materially increase the risk beyond that which Guarantor intends to assume or has reason to believe that such facts are unknown to Guarantor or has a reasonable opportunity to communicate such facts to Guarantor, it being understood and agreed that Guarantor is fully responsible for being and keeping informed of the financial condition of Borrower, of the condition of the Property and of any and all circumstances bearing on the risk that liability may be incurred by Guarantor hereunder; . (j) Any lack of notice of disposition or of manner of disposition of any Collateral; (k) Failure to properly record any document or any other lack of due diligence by Lender in creating or perfecting a security interest in or collection, protection or realization upon any Collateral or in obtaining reimbursement or performance from any person or entity now or hereafter liable for the Loan Documents or any obligation secured thereby; (1) The inaccuracy of any representation or other provision contained in any Loan Document; (m) Any sale or assignment of the Loan Documents, in whole or in part; (n) Any sale or. assignment by Borrower of the Collateral, or any portion thereof or interest therein, whether or notconsented to by Lender, (o) Any invalidity, irregularity or unenforceability, in whole or in part, of any one or more of the Loan Documents; (p) Any lack of commercial reasonableness in dealing with any of the Collateral; (q) Any deficiencies in the Collateral or any deficiency in the ability of Lender to collect or to obtain performance from any persons or entities now or hereafter liable for the payment and performance of any obligation hereby guaranteed; (r) An assertion or claim that the automatic stay provided by 11 U.S.C. §362 (arising upon the voluntary or involuntary bankruptcy proceeding of Borrower) or any other stay provided under any other debtor'relief law (whether statutory, common law, case law or otherwise) of any jurisdiction whatsoever, now or hereafter in effect, which may be or become applicable, shall operate or be interpreted to stay, interdict, condition, reduce or inhibit the ability of Lender to enforce any of its rights, whether now or hereafter required, which Lender may have against Guarantor or the Collateral; -3- COocuments and SettingAUserWy DocumentsWy DocumentAnocitoULL AMERICAN PLAZAS\a11 american currenflavatarWevised loan does 4-12-031allAmericancompliance\AllamericanJuaranty.doc 3:.3 Vision Form SGT01 WA Rev. 06/10/99 ' (s) Any modifications of the Loan Documents or any obligation of Borrower relating to the Loan by operation of law or by action of any court, whether pursuant to the Bankruptcy Reform Act of 1978, as amended, or any other debtor relief law (whether statutory, common law, case law or otherwise) of any jurisdiction whatsoever, now or hereafter in effect, or otherwise; (t) Any change in the composition of Borrower, including, without limitation, the withdrawal of Guarantor as a partner of Borrower; (u) The release of Borrower or of any other person or entity from performance or observance of any of the agreements, covenants, terms or conditions contained in any of the Loan Documents by operation of law, Lender's voluntary act or otherwise; and (v) Any action, occurrence, event or matter consented to by Guarantor under Section 4(h) hereof, under any other provision hereof, or otherwise. 4. General Provisions. (a) Fully Recourse. All of the terms and provisions of this Guaranty are recourse obligations of Guarantor and not restricted by any limitation on personal liability. (b) Condition of Borrower. Guarantor warrants and represents that Guarantor is fully aware of the financial condition of Borrower and is executing and delivering this Guaranty based solely upon Guarantor's own independent investigation, of all matters pertinent hereto, and that Guarantor is not relying in any manner upon any representation or statement of Lender. Guarantor wan-ants, represents and agrees that Guarantor is in a position to obtain, and Guarantor hereby assumes full responsibility for obtaining, any additional information concerning the.financial condition of Borrower and any other matter pertinent hereto, and that Guarantor is not relying upon Lender to furnish, and shall have no right to require Lender to obtain or disclose, any information with respect to the indebtedness or obligations guaranteed hereby, the financial condition or character of Borrower or the ability of Borrower to pay the indebtedness or perform the obligations guaranteed hereby, the existence of any Collateral or security for any or all of such indebtedness or obligations, the existence or nonexistence of any other guaranties of all or any part of such indebtedness or obligations, any actions or non-action on the part of Lender, Borrower or any other person or entity, or any other matter, fact or occurrence whatsoever. By executing this Guaranty, Guarantor acknowledges and knowingly accepts the full range of risks encompassed within a contract of guaranty. (c) SurvivaL This Guaranty shall be deemed to be continuing in nature and shall remain in full force and effect and shall survive the exercise of any remedy by Lender under the Mortgage or any of the other Loan Documents, including, without limitation, any foreclosure or deed in lieu thereof, even if, as a part of such remedy, tha Loan is paid or satisfied in full. (d) No Subrogation; No Recourse Against Lender. Notwithstanding the satisfaction by Guarantor of any liability hereunder, Guarantor shall not have any right of subrogation, contribution, reimbursement or indemnity whatsoever or any right of recourse to or with respect to the assets or property of Borrower or to any Collateral. In connection with the foregoing, Guarantor expressly waives any and all rights of subrogation to Lender against Borrower, and Guarantor hereby waives any rights to enforce any remedy which Lender may have against Borrower and any right to participate in any Collateral. In addition to and without in any way limiting the foregoing, Guarantor hereby subordinates any and all indebtedness of Borrower now or hereafter owed to Guarantor to all indebtedness of Borrower to Lender, and agrees with Lender that Guarantor shall not demand or accept any payment of principal or interest from Borrower, shall not claim any offset or other reduction of Guarantor's obligations hereunder because of any such indebtedness and shall not take any action to obtain any of the Collateral. Further, Guarantor shall not have any right of recourse against Lender by reason of any action Lender may take or omit to take under the provisions of this Guaranty or under the provisions of any of the Loan Documents. (e) Reservation of Rights. Nothing contained in this Guaranty shall prevent or in. any way diminish or interfere with any rights or remedies, including, without limitation, the right to contribution, which Lender may have against Borrower, Guarantor- or any other party under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (codified at Title 42 U.S.C. §9601 et seq.), as. it may be amended from time to time, or any other applicable federal, state or local laws, all such rights being hereby expressly reserved. -4- C:\Documents and SettingAUserlMy DocumentsWy Documents\nocito'ALL AMERICAN PiAZASlall american currentt lavatarlrevised loan docs 4-12-051aIIAmericancompliance\AllamericanGuar2nty.doc OW Vision Pam SGT01 WA Rev. 08/10198 (f) Financial Statements. Guarantor hereby agrees, as a material inducement to Lender to make the Loan to Borrower, to furnish to Lender promptly upon demand by Lender current and dated financial statements detailing the assets and liabilities of Guarantor certified by Guarantor, in form and substance acceptable to Lender. Guarantor hereby warrants and represents unto Lender that any and all balance sheets, net worth statements and other financial data which have heretofore been given or may hereafter be given to Lender with respect to Guarantor did or will at the time of such delivery fairly and accurately present the financial condition of Guarantor. (g) Rights Cumulative. Lender's rights under this Guaranty shall be in addition to all rights of Lender under the Note, the Mortgage and the other Loan Documents. . (h) Consents. Guarantor hereby consents and agrees that Lender may at any time, and from time to time, without notice to or further consent from Guarantor, either with or without consideration: release and surrender the Collateral or any portion thereof; substitute for any Collateral held by or on behalf of Lender other Collateral of like kind, or of any kind; make overadvances or increase the amount of the Loan; agree to modify the terms of any one or more of the Loan Documents; extend or renew the Note for any period; grant releases, compromises and indulgences with respect to anyone or more of the Loan Documents and to any persons or entities now or hereafter liable thereunder or hereunder; release any other guarantor or endorser of or other person or entity liable upon the Note or any other of the Loan Documents; or take or fail to take any action of any type whatsoever. No such action which Lender shall take or fail to take in connection with the Loan Documents or any Collateral, nor any course of dealing with Borrower or any other person, shall limit, impair or release Guarantor's obligations hereunder; affect this Guaranty in any way or afford Guarantor any recourse against Lender. Nothing contained in this section shall be construed to require Lender to take or refrain from taking any action referred to herein. (i) Entire Apnement• Amendment: SeverabilThis Guaranty contains the entire agreement between the parties respecting the matters herein set forth and supersedes all prior agreements, whether written or oral, between the parties respecting such matters; and Guarantor and. Lender acknowledge that there are no contemporaneous oral agreements with respect to the subject matter hereof. This Guaranty may not be changed, modified or amended, except by a meriting executed by the parties hereto; and no obligation of Guarantor can be released or waived by Lender or any agent of Lender, except by a writing duly executed by Lender. A determination that any provision of this Guaranty is unenforceable or invalid shall not affect the enforceability or validity of any other provision, and any determination that the application of any provision of this Guaranty to any person or circumstance is illegal or unenforceable shall not affect the enforceability or validity of such provision as it may apply to any other persons or circumstances. 0) Governing Law• Binding Effect: Assigment• Waiver of Acceptance. This Guaranty shall be governed. by and construed in accordance with the laws of the Commonwealth of Pennsylvania, except to the extent that the applicability of any of such laws may now or hereafter be preempted by Federal law, in which case such Federal law shall so govern and be controlling. The provisions of this Guaranty shall be binding upon Guarantor and the heirs, executors, legal representatives, successors and assigns of Guarantor and shall inure to the benefit of Lender, the heirs, executors, legal representatives, successors and assigns of Lender. This Guaranty shall in no event be impaired by any change which may arise by reason of the death of Borrower or Guarantor, if individuals, or by reason of the dissolution of Borrower or Guarantor, if Borrower or Guarantor is a corporation or partnership. Guarantor has executed this Guaranty individually and not as a partner of Borrower or any other guarantor. This Guaranty is assignable by Lender, and any full or partial assignment hereof by Lender shall operate'to vest in the assignee all rights and powers herein conferred upon and granted to Lender and so assigned by Lender. Guarantor expressly waives notice of transfer or assignment of this Guaranty and acknowledges that the failure by Lender to give any such notice shall not affect the liabilities of Guarantor hereunder. Notwithstanding the foregoing, Guarantor shall not assign any of its rights or obligations under this Guaranty. Guarantor hereby waives any acceptance of this Guaranty by Lender, and this Guaranty shall immediately be binding upon Guarantor. (k) Notice. All notices, demands, requests or other communications to be sent by one party to the other hereunder or required by law shall be in writing and shall be deemed to have been validly given or served by delivery of the same in person to the intended addressee, or by. depositing the same with Federal Express or another reputable private courier service for next business day delivery to the intended addressee at its address set forth on the first page of this Guaranty or at such other address as may be designated by such party as herein provided, or by depositing the same in the United States mail, postage prepaid, registered or certified mail, return receipt requested, addressed to the intended addressee at its address set forth on the first page of this Guaranty or at such other address as may be designated by such -5- UDocuments and SettingAUseAMy DocumentslMy DocumentAnocitoULL AMERICAN PLAZAS1all american cnrrentlavatarlrevised Ions dots 4-12-05\aII4mericancompliancelAllamerieanGuaranty.doc C',:7, Vision Form SGT01 WA Rey- .08/10/99 party as herein provided. All notices, demands and requests shall be effective upon such personal delivery, or one (1) business day after being deposited with the private courier service, or two (2) business days after being deposited in the United States mail as required above. Rejection or other refusal to accept or the inability to deliver because of changed address of which no notice was given as herein required shall be deemed to be receipt of the notice, demand or request sent. By giving to the other party hereto at least fifteen (15) days prior written notice thereof in accordance with the provisions hereof, the parties hereto shall have the right from time to time to change their respective addresses and each shall have the right to specify as its address any other address within the United States of America. (1) No Waiver. Time of Essence: Business Day. The failure of any party hereto to enforce any right or remedy hereunder, or to promptly enforce any such right or remedy, shall not constitute a waiver thereof nor give rise to any estoppel against such party nor excuse any of the parties hereto from their respective obligations hereunder. Any waiver of such right or remedy must be in writing and signed by the party to be bound. This Guaranty is subject to enforcement at law or in equity, including actions for damages or specific performance. Time is of the essence hereof. The term "business day" as used herein shall mean a weekday, Monday through Friday; except a legal holiday or a day on which banking institutions in Philadelphia, Pennsylvania are authorized by law to be closed. (m) Captions for Convenience: Pronouns. The captions and headings of the sections and paragraphs of this Guaranty are for convenience of reference only and shall not be construed in interpreting the provisions hereof. All personal pronouns used herein, whether used in the masculine, feminine or neuter gender, shall include all other genders; and the singular shall include the plural and vice versa. (n) Attorneys' Fees. In the event it is necessary for Lender to retain the services of an attorney or any other consultants in order to enforce this Guaranty, or any portion thereon Guarantor agrees to pay to Lender any and all costs and expenses, including, without limitation, attorneys' fees, incurred by Lender as a result thereof and such costs, fees and expenses shall be payable to Lender upon demand. (o) Successive Actions. A separate right of action, hereunder shall arise each time Lender acquires knowledge of any failure of payment or performance of any matter guaranteed by Guarantor under this Guaranty. Separate and successive actions may be brought hereunder to enforce any of the provisions hereof at any time and from time to time. No action hereunder shall preclude any subsequent action, and Guarantor hereby waives and covenants not to assert any defense in the nature of splitting of causes of action or merger of judgments. (p) Reliance. Lender would not make the Loan to Borrower without this Guaranty. Accordingly, Guarantor intentionally and unconditionally enters into the covenants and agreements as set forth above and understands that, in reliance upon and in consideration of such covenants and agreements, the Loan shall be.. made and, as part and parcel thereof, specific monetary and other obligations have been, are being and shall be entered into which would not be made or entered into but for such reliance. (q) Confession of Judgment. This Section 4(q) sets forth a warrant of authority for any attorney to confess judgment against Guarantor and to execute upon said judgment by garnishment, levy, or any other, type of execution against Guarantor's bank accounts or*other personal property, real property, or intangible property. In granting this warrant of attorney to confess judgment against Guarantor and to execute upon said judgment against Guarantor, Guarantor knowingly, intelligently, voluntarily, and unconditionally waives any and all rights Guarantor has or may have to notice and a prior judicial proceeding under the respective constitution and laws of the United States and the Commonwealth of Pennsylvania to determine Guarantor's rights and liabilities. Guarantor further knowingly, intelligently, voluntarily, and unconditionally acknowledges that Lender may, after the occurrence of an Event of Default, obtain a judgment against Guarantor for all sums due under this Guaranty without the prior knowledge or consent by Guaraator and without any opportunity of Guarantor to raise any defense, setoff, counterclaim, or other claim that Guarantor may have. This knowing, intelligent, and voluntary waiver applies to a judgment being entered by confession against Guarantor as well as to the execution of that judgment by garnishment, levy, or any other type of execution against Guarantor's bank accounts or other personal property, real property, or intangible property. Upon the occurrence of an Event of Default, Guarantor irrevocably authorizes and empowers any attorney of any court of record to appear for Guarantor in any and all actions and (a) to enter judgment against Guarantor for the amount due under this Guaranty or (b) to confess judgment against Guarantor for the amount due under this Guaranty; and, in either case, the amount due under this Guaranty shall include the unpaid. principal sum, interest, and all sums owed by Guarantor to Lender pursuant to the terms of this Guaranty and any of the other Loan Documents, including costs and attorneys' fees in -6- C:1Documents and SettingAUserWy Documents;\My Documents\no6to\ALL AMERICAN PLAZAS1all american currentlavataArevised loan does 4-12-051a11Americancompiiance\AllamericanGuaranty.doe M3 Vision Form SGTOIWA Rev. 06/10/99 the amount of fifteen (15%) percent of the outstanding balance of all of the amounts set forth above, but in no event shall attorneys' fees be less than $5,000.00. Upon the occurrence of an Event of Default, Guarantor further irrevocably authorizes and empowers any attorney of any court of record to appear for and enter judgment against Guarantor and in favor of Lender in an action of replevin or any other action to recover possession of any of the Collateral or to confess judgment against Guarantor in an action for replevin or in any other action to recover possession of any of the Collateral, All confessions of judgment or amicable actions set forth in this Section shall be with release of procedural errors, waivers of appeals, and without stay of execution; and Guarantor waives all relief from any and all appraisement or exemption or action wherein judgment is to be confessed. If a copy of this Guaranty, verified by an official or an officer of Lender, shall be filed in any proceeding or action wherein judgment is to be confessed, it shall not be necessary to file fhe original of this Guaranty and such verified copy shall be sufficient warrant for any attorney of any court of record to appear for and confess judgment against Guarantor as provided in this Guaranty. Judgment may be confessed from time to time under the aforesaid powers and no single exercise of the aforesaid powers to confess judgment, or a series of judgments, shall be deemed to exhaust the power, whether or not such exercise shall be held by any court to be invalid, avoidable, or void, but the power shall continue undiminished and it may be exercised from time to time as, after, and as Lender shall elect until such time as Lender shall have received payment in full of all sums due under this Guaranty and under the other Loan Documents, together with interest, costs, and fees. (r) Jurisdiction and Venue. Guarantor irrevocably. and unconditionally waives any defense of improper venue or inconvenience of forum in any actions under this Guaranty, and any rights to claim immunity in respect of itself or any of its property or assets, including immunity from jurisdiction, .immunity from attachment prior to entry of judgment, immunity from attachment in aid of execution of judgment, and immunity from execution or judgment, all in respect of any legal suit, action, or'proceeding arising out of, or relating to, this Guaranty. Guarantor irrevocably consents to the exclusive jurisdiction of the Courts of Common Pleas of Pennsylvania and/or the United States District Court for the Eastern District of Pennsylvania in any disputes, actions, or proceedings between Lender and Guarantor, whether arising under this Guaranty or under any other agreement or undertaking; and Guarantor irrevocably consents to service of process by certified mail, return ' receipt requested, to Guarantor at the address set forth on page 1 of this Guaranty. Guarantor shall not in any litigation between Guarantor and Lender object to the venue of the action or.clalm that the forum is inconvenient. Guarantor waives the right to. interpose any defense, set-off, or counterclaim of any nature or description in any Litigation in which Lender and Guarantor shall be adverse parties, arising out of or relating to any sums due under this Guaranty, the other Loan Documents, the Collateral securing this Guaranty, or any of the other matters contained in this Guaranty or the other Loan Documents; provided, however, that nothing contained in this Section 4(r) shall in any manner prevent or preclude Lender from bringing any one or more actions against Guarantor in any jurisdiction in the United States or elsewhere. Guarantor's consent, in advance, to the jurisdiction of the State or Federal courts of the Commonwealth of Pennsylvania is a material inducement for Lender to make the loan to Guarantor evidenced by this Guaranty. (s) Waiver of Jury Trial. Lender and Guarantor acknowledge that disputes arising under this Guaranty and the other Loan Documents are likely to be complex, that trial before a judge is more appropriate than trial before a jury, and that they desire to streamline and minimize the cost of resolving such disputes. Therefore, Lender and Guarantor, as an independent covenant, irrevocably waive all rights to a trial by jury in any action, counterclaim, dispute, or proceeding based upon, or related to, the subject matter of this Guaranty and the other Loan Documents and grants the judge presiding over any such action, counterclaim, dispute, or proceeding full power and authority to determine all questions of fact. This waiver applies to all claims against all parties to such actions and proceedings including those involving Lender or Lender's parent, affiliates, or related entities, or any officer, director, shareholder, member, attorney, or partner of any of them. It also applies whether such dispute or proceeding arises under this Guaranty and the other. Loan Documents, any other agreement, note, paper, instrument, or document heretofore or hereafter executed, or any other contract, whether similar or dissimilar and whether or not it arises from intentional or unintentional conduct, from fraud, other improper action, or failure to act, or from other reasons. This Section shall be deemed a covenant of Guarantor and shall be enforceable independently of all other provisions of this Guaranty and the other Loan Documents. This. waiver is knowingly, intentionally, and voluntarily made by Guarantor, and Guarantor acknowledges that neither the Lender nor any person acting on behalf of the Lender has made any representations to induce this waiver of trial by jury or in any way to modify or nullify its effect. Guarantor further acknowledges that it has been represented (or has had the opportunity to be represented) in connection with the signing of this Guaranty and in the making of this waiver by independent legal counsel, selected of its own free will, and that it has had the opportunity to discuss -7- CADocuments and SetlingAUserWy DocumentsWy Documentslnodto\ALL AMERICAN PLAZAS\211 american currenNavatarWevised loan docs 4-12-O-\allAmericancompliancelAliamericauGuaranty.doe E.".3 Vision Form SGTOIWA Rev. 08/10/99 this waiver with counsel. Guarantor further acknowledges that it has read and understands the meaning and ramifications of this waiver provision. (t) Interest After Judgment After entry of a judgment on this Guaranty or any other Loan Documents or a.Judgment in mortgage foreclosure under the Mortgage, interest shall continue to accrue under said judgment, this Guaranty, the Mortgage and the other Loan Documents at the rate set forth in the Note. (u) Waiver by Guarantor. Guarantor covenants and agrees that, upon the commencement of a voluntary or involuntary bankruptcy proceeding by .or against Borrower, Guarantor shall not seek or cause Borrower or any other person or entity to seek a supplemental stay or other relief, whether injunctive or otherwise, pursuant to 11 U.S.C. § 105 or any other provision of the Bankruptcy Reform Act of 1978, as amended, or any other debtor relief law, (whether statutory, .common law, case law or otherwise) of any jurisdiction whatsoever, now or hereafter in effect, which may be or become applicable, to stay, interdict, condition, reduce or inhibit the ability of Lender to enforce any rights of Lender against Guarantor or the Collateral by virtue of this Guaranty or otherwise. IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of th nda . and year first above wrift-n. BY: BY: i -8- C:\Documents and SettingAUseAMy Documents\My Documentg\nocito\ALL AMERICAN PLAZAS\211 merican currentlavataArevised loan does 4-17A5\ailAmeric?-ncompliance\AllamericanGuaranty.doc f Vision Form SGT01 WA Rev. 06/10199 EXHIBIT "D" :J RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: Avatar Income Fund I 100 Wall Street Seattle, WA 98121 Attention: r', n ? 25 81P I 10 19 J4 Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing LOAN NO. 200507 This Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing ("Mortgage or Security Instrument") is made this day of April, 2005 MORTGAGOR: Carlyle Gables Properties, Inc., a Delaware Corporation whose address is C/O All American Plazas Inc-PO Box 302, Bethel, PA 19507 MORTGAGEE: AVATAR INCOME FUND I, LLC, a Delaware limited liability company, whose address is 100 Wall Street, Seattle, WA 98121. Mortgagor hereby IRREVOCABLY . GRANTS, BARGAINS, SELLS, CONVEYS, TRANSFERS AND ASSIGNS TO MORTGAGEE, all of Mortgagor's present and future estate, right, title and claim and interest, either in law or equity, in and to the real property located in Cumberland County, Pennsylvania (the "Property"), a complete legal description of which is on Exhibit "A" attached hereto and incorporated herein. t Tax Parcel Nos. 21-17-2694-005 TOGETHER WITH all buildings, structures, improvements, and articles of property now or hereafter attached to, or used.or adapted for use in. the operation of, the Property, including, but not limited to, all heating equipment, piping and plumbing fixtures, cooling, ventilating, sprinkling and vacuum cleaning systems, fire extinguishing apparatus, 'cabinets, ` window coverings, all landscaping; and all interest of any owner of the Property in any of such items replaced, added to or hereafter acquired in any. manner whatsoever, all of which property mentioned in this paragraph shall be deemed part of the realty and not severable wholly or in part without material injury to the Property; TOGETHER WITH the lands, easements, appurtenances, rents, royalties, receipts, water, mineral, oil and/or gas rights and profits; and CADocuments and Settings\UserWy DocumentsNy DocumentAnocito\ALL AMERICAN PLAZASall american current\avatar\revised loan does 4-12-051a11americanloanapp11Al1americanMTG-CarlyleGab.doc BK 19 O4 FG3 795 TOGETHER WITH all present and future right, title and interest of Mortgagor in and to all furniture, equipment, and other tangible personal property on or used in the operation of the Property, including, but not limited to: accounts, general intangibles, chattel paper, deposit accounts, money, rents, daily receipts, income, accounts receivable, instruments and documents (as those terms are defined in the Pennsylvania Uniform Commercial Code) and all other agreements arising in connection with or derived from the Property or the ownership, use, maintenance, management, operation,` marketing, leasing, occupancy, or financing of the Property, permits, approvals, and other governmental authorizations, improvement plans and specifications and architectural drawings, agreements with contractors, subcontractors, suppliers, designers,, architects, engineers, leasing agents, consultants and property managers, warranties, guaranties, indemnities and insurance policies, together with insurance payments and unearned insurance premiums, claims, demands, awards, settlements and other payments arising or resulting from or otherwise relating to any insurance or any loss or destruction of, injury or damage to, the taking or condemnation (or conveyance in lieu of condemnation) or public use of any of the Property, leases, rental agreements; license agreements, service and maintenance agreements, purchase and sale agreements and purchase options, together with advance payments, security deposits and other amounts paid to or deposited with Mortgagor under any such agreements, bonds, deferred payments, refunds, rebates, discounts; escrow proceeds, sale proceeds and other rights to the 'payment of money, trade names, trademarks, goodwill and all supplements, modifications, amendments, renewals, - extensions, replacements of or to any of such property (the "Intangibles"). THIS MORTGAGE IS MADE FOR THE PURPOSE OF SECURING PERFORMANCE of each covenant, agreement, term and condition of Mortgagor contained herein and the prompt payment of the sum of SIX MILLION FOUR HUNDRED FIFTY THOUSAND AND N01100 ($6,450,000.00 U.S.), with interest thereon according to the terms of a Commercial Promissory Note, of even date, payable to Mortgagee and made by Mortgagon(the "Note"); all renewals, modifications or extensions thereof, and also such further sums as may be'advanced or loaned by Mortgagee to Mortgagor, together with interest thereon at such rate as shall be stated in the Note. THIS MORTGAGE IS ALSO MADE FOR THE .PURPOSE of securing prompt and complete performance of each and every obligation, covenant and agreement of Mortgagor contained in any other instrument heretofore or hereafter executed by Mortgagor having reference to or arising out of the indebtedness represented by the Note, or given as security for the Note (collectively, the "Related Agreements"). ARTICLE 1 COVENANTS AND WARRANTIES MORTGAGOR COVENANTS AND AGREES AS FOLLOWS: 1.1 Performance of Obligations Secured. Mortgagor shall promptly pay when due all monthly payments of interest and/or principal, late charges (and reserves) on the indebtedness evidenced by the Note and shall further perform fully and in a timely manner all other obligations SK 19 6-4i G3796 -2- of Mortgagor contained herein or in any of the Related Agreements. All sums payable by Mortgagor hereunder shall be paid without demand, counterclaim, offset, deduction or defense and Mortgagor waives all rights now or hereinafter conferred by statute or otherwise to any such demand, counterclaim, offset, deduction or defense. 1.2 Warranties of Title. Mortgagor is seized in fee simple of the Property and owns every part thereof; there are no liens or encumbrances against or upon the same, including but not limited to, leases, except as disclosed to Mortgagee, and none will be created by Mortgagor during the tern of this Mortgage. Mortgagor represents that Mortgagor is not in violation of any governmental requirement or in default under any agreement to which it is bound, or which affects it or any of the Property, and the execution, delivery and performance of this. Mortgage, the Note, or any of the Related Agreements in accordance with their terms and the use and occupancy of the Property will not :violate any governmental requirement, or conflict with, be inconsistent with or result in any default under, any of the provisions of any articles, bylaws, mortgage, security instrument, easement, restriction of record, contract, agreement or instrument of any kind to which Mortgagor is bound or which affects it or any of the Property. Further, Mortgagor warrants that there are no proceedings of any kind pending, or, to the knowledge of Mortgagor, threatened against or affecting Mortgagor, the Property (including any attempt or threat by any governmental authority to condemn or rezone all or any portion of the Property), or involving the validity, enforceability or priority of this Mortgage, the Note or any of the Related Agreements or enjoining or preventing or threatening to enjoin or prevent the use and occupancy of the Property or the performance by Mortgagor of its obligations hereunder; and there are no rent controls, governmental moratoria or environmental controls presently in existence, or, to the knowledge of Mortgagor, threatened or affecting the Property. Mortgagor represents that Mortgagor has the right and authority to execute this Mortgage and will forever warrant and defend the Property unto Mortgagee, its successors and assigns, against every person whomsoever lawfully claiming or to claim the same or any part thereof. Mortgagor's warranties of title extend to after-acquired property whether acquired as replacements for property now owned by Mortgagor, as additional items of property. attached to or used or adapted for use in the operation of the Property, or otherwise, all of which property shall be owned by Mortgagor outright, free of liens or encumbrances. 1.3 Use of Proceeds: The monies received from Mortgagee shall be used for business purposes and not for personal, family or household purposes: 1.4 `Secur ty Aueement/Fixture Financing Statement. This Mortgage shall be deemed to be a Security Agreement pursuant to the Pennsylvania Uniform Commercial.Code ("UCC" ). Mortgagor hereby grants Mortgagee a security interest in any and all items of personal property and goods, as defined in the UCC (goods) and intangibles described herein or in any Financing Statement subsequently filed with the Pennsylvania Secretary of State or the county recorder of the county in which the Property is located and which are not herein effectively made part of the real property and in all additions thereto, substitutions therefor and proceeds thereof, for the purpose of securing all indebtedness and other obligations of Mortgagor secured by this Mortgage. This Mortgage constitutes a Financing Statement filed as a fixture filing in the official records of the county recorder of the county in which the Property is located with respect to any. BK 1 9314 'o- 3797 -3- and all fixtures included on or within the Property as used herein and with respect to any goods or other personal property that may now be or hereafter become such fixtures. Mortgagor (i) agrees to execute and deliver and (ii) authorizes Mortgagee to file and/or record financing and continuation statements covering the Property from time to time and in such form as Mortgagee may require to perfect and continue the perfection of Mortgagee's lien or security interest with respect to the Property. Mortgagor shall pay all costs of filing such statements and renewals. and releases thereof and shall pay all reasonable costs and expenses of any record searches for financing statements Mortgagee may reasonably require. Upon the occurrence of any default of Mortgagor hereunder, Mortgagee shall have the rights and remedies of a secured party under the Pennsylvania Uniform Commercial Code, as well as all other rights and remedies available under this Mortgage or at law or in equity. Mortgagor may from time to time replace items of personal property and fixtures constituting a part of the Property, provided that (1) the replacements for such items of personal property or fixtures are of equivalent value and quality; and (2) Mortgagor has good and clear title to such replacement property free and clear of any and all liens, encumbrances, security interests, ownership interests, claims of title (contingent or otherwise), or charges of any kind, or the rights of any conditional sellers, vendors or any other third parties in or to such replacement property; and (3) at the option of Mortgagee, Mortgagor will provide at no cost to Mortgagee a satisfactory opinion of counsel to the effect that the Mortgage constitutes a valid and subsisting fast lien on and security interest in such replacement property and is not subject to being subordinated or the priority thereof affected under any applicable law, including but not limited to the provisions of the Pennsylvania Uniform Commercial Code. 1.5 Maintenance of Property; Compliance with Laws. Mortgagor shall maintain the buildings and other improvements on the Property in good condition and repair; not remove or demolish any building thereon; complete or restore promptly and in good workmanlike manner any building which may be constructed, damaged or destroyed thereon and pay when due all claims for labor performed and materials furnished therefor; not commit or permit waste thereof, comply with all requirements of the federal, state and local authorities and all other laws; ordinances, regulations, covenants, conditions and restrictions now or hereafter respecting the Property or the use thereof and pay all fees or charges of any kind in connection therewith. Proof of impairment of security shall be unnecessary in any suit, action or proceeding under this paragraph. Mortgagor shall permit Mortgagee and its agents the opportunity to annually inspect the Property, including the interior of any structures, at reasonable times and after three (3) days' written notice, or immediately, without notice if an Event of Default has occurred. 1.6 No Junior Financinu. Mortgagor hereby represents that, as of the date hereof, there are no encumbrances to secure debt junior to this Mortgage, and that there are to be none as of the date when this Mortgage is recorded. 1.7 Insurance. Mortgagor shall provide, maintain and deliver to Mortgagee: (a) a policy of fire insurance and extended coverage insurance insuring all the Property to the full insurable replacement value against loss or damage by fire and other risks embraced by coverage -4- Bt l9i'? 3798 of the type now known as the broad form of extended coverage, including, but not limited to, vandalism and malicious mischief, and against such other risks and hazards as Mortgagee may from time to time reasonably request; and (b) such other insurance as Mortgagee may from time to time reasonably request against the same or other insurable hazards. All insurance shall contain waiver of subrogation clauses and loss payable clauses (without contribution) in favor of Mortgagee. Mortgagor shall deliver all policies to Mortgagee, which delivery shall constitute an assignment to Mortgagee of all return premiums. Mortgagor shall keep the above insurance and such other coverage reasonably requested by Mortgagee with carrier(s), in amounts and in form at all times reasonably satisfactory to Mortgagee, which carrier(s), amounts and form shall not be changed without the prior written consent of Mortgagee. All insurance policies shall be non- cancelable and not subject to material change by any party without thirty (30) days prior written notice to Mortgagee. Mortgagee may, at its option, require Mortgagor to maintain said required policies in Mortgagor's possession in lieu of delivering said policies to Mortgagee, in which event, said policies shall be kept available by Mortgagor at all times for return to Mortgagee or for inspection by Mortgagee, its agents or insurers, and said requirement may be withdrawn by Mortgagee at any time. If Mortgagor obtains earthquake, flood or any other hazard insurance, or any other insurance on the Property and such insurance is not specifically required by Mortgagee, then such insurance shall name Mortgagee under a standard mortgage endorsement as loss payee and be subject to all of the provisions of this Section 1.7. Mortgagor further assigns to Mortgagee any return premiums, refunds or other repayments upon any insurance at any time provided for the benefit of Mortgagee, and Mortgagee may at any time collect said return premiums, repayments, or refunds, . notwithstanding that no sum secured hereby be overdue when such right to collection be asserted The amount collected under any fire or other insurance policy may be applied by Mortgagee upon any indebtedness secured hereby and in such order as Mortgagee may determine, or at option of Mortgagee the entire amount so collected or any part thereof may be released to Mortgagor. Such application or release shall ,not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. 1.8 Discharge of Liens. Mortgagor shall pay when due all rents, taxes, assessments and encumbrances, charges or liens affecting said property or any part thereof, which appear to be `prior or superior hereto. Mortgagee may, at its option (but is not obligated to do so), pay any such sums, however, Mortgagee shall not be liable to Mortgagor for failure to exercise such option. 1.9 Actions; Indemnity; Modification, Costs. Mortgagor shall appear in, and defend any suit, action or proceeding that might affect the priority or enforceability of this Mortgage or the value of this Mortgage, or the Property itself or the rights and powers of Mortgagee. Should Mortgagee elect also to appear in or defend any such suit, action or proceeding, or be made a parry to such by reason of the Mortgage, or elect to prosecute such action as appears necessary to preserve said value, Mortgagor shall indemnify and, on demand, reimburse Mortgagee for, any and all loss, damage, expense or cost, including cost of evidence of title and attorney's fees, -5- K l 9C ??b )799 arising out of or incurred in connection with any such suit, action, or proceeding. Mortgagor shall pay all costs and expenses of Mortgagee, including attorney's fees incurred in connection with any amendment, modification or extension hereof or of the Note or any other agreement affecting the Property, including a request to consent to a transfer of any interest in the Property. Mortgagor shall pay all costs and expenses incurred by Mortgagee in enforcing this Mortgage, the Note, or Related Agreements and any costs of suit, costs of evidence of title and attorney's fees in any suit, action or proceeding brought by Mortgagee to foreclose this Mortgage. The sum of all such expenditures referred to in this paragraph or incurred in exercise of rights or options otherwise granted to Mortgagee in this Mortgage shall be secured by this Mortgage with interest as provided in the Note, and shall be due and payable on demand. 1.10 Condemnation Assignment of Rights. (a) Mortgagor shall within three (3) business days of its receipt of notice thereof, notify Mortgagee of any action or proceeding relating to any condemnation or other taking, whether direct or indirect, of the Property, or part thereof, and Mortgagor shall, after consultation with and subject to Mortgagee's approval, appear in and prosecute any such action or proceeding. Upon Mortgagor's failure to act in accordance with Mortgagee's prior approval, Mortgagor authorizes Mortgagee, at Mortgagee's option, as attorney in fact for Mortgagor (such appointment as attorney in fact is coupled with an interest), to commence, appear in and prosecute, in Mortgagee's or Mortgagor's name, any action or proceeding relating to any condemnation or other taking of the Property, and to settle or compromise any claim in connection with such condemnation or other taking. The proceeds of any award, payment or claim for damages, direct or consequential, in connection with any condemnation or other taking of the Property, or part thereof, or for conveyances in lieu of condemnation, are hereby assigned to and shall be paid to Mortgagee in accordance with the provisions of Section 1.10(b) below. Mortgagee is authorized (but is under no obligation) to collect any such proceeds. (b) Mortgagee may, in its sole discretion, elect to (i) apply the net proceeds of any condemnation award (after deduction of Mortgagee's reasonable costs and expenses, if any, in collecting the same) in reduction of Mortgagor's indebtedness to Mortgagee in such order and manner as Mortgagee may, elect, whether due or not or (b) make the proceeds available to Mortgagor for the restoration or repair of the Property. Any implied covenant in this Mortgage restricting the right of Mortgagee to make such an election is waived by Mortgagor. M (c) Provided no Event of Default then exists` and Mortgagor certifies as to same, if Mortgagee in its sole and absolute discretion elects to make all or any part of the net proceeds of the condemnation award (after deduction of Mortgagee's reasonable costs and expenses, if any, in collecting the same) available to Mortgagor for restoration or repair, then any excess proceeds remaining after completion of such repair shall be distributed first to Mortgagor to the extent Mortgagor has deposited funds with Mortgagee for such repair with the balance applied against the indebtedness pursuant to the Note. Notwithstanding the foregoing, it shall be a condition precedent to any disbursement of net condemnation proceeds held by Mortgagee hereunder that Mortgagee shall have approved (i) all plans and specifications for any proposed repair or restoration, (ii) the construction schedule and (iii) the architect's and general contractor's -6- -P 0 B{190L'r.j800 contract for all restoration. Mortgagee may establish other conditions reasonably necessary to assure the work is fully completed in a good and workmanlike manner free of all liens or claims by reason thereof, and in compliance with all applicable laws, rules and regulations. At Mortgagee's option, the net condemnation proceeds shall be disbursed pursuant to a construction escrow acceptable to Mortgagee. (d) Assignment of Proceeds. Mortgagor hereby absolutely and irrevocably assigns to Mortgagee, and authorizes the payor to pay to Mortgagee, the following claims, causes of action, awards, payments and rights to payment: (i) all awards of damages and all other compensation payable directly or indirectly because of a condemnation, proposed condemnation or taking for public or private use which affects all or part of the Property or any interest in it; and (ii) all other awards, claims and causes of action, arising out of any warranty affecting all or any part of the Property, or for damage or injury to or decrease _in value of all or part of the Property or any interest in it; and (iii) all proceeds of any insurance policies payable because of damage or loss sustained to all or part of the Property, whether required pursuant to this Mortgage or otherwise maintained by Mortgagor; and (iv) all interest which may accrue on any of the foregoing. 1.11 No Impairment of Security. Mortgagor shall not, without first obtaining Mortgagee's written consent, change the general nature of the occupancy of the Property or initiate or acquiesce in any zoning reclassification, or do or suffer any act or thing which would impair the security for the indebtedness secured hereby or Mortgagee's lien upon the Property. 1.12 Financial Statements. Rent Rolls. Mortgagor shall keep and maintain, at all times at Mortgagor's address stated above, or such other place as Mortgagee may approve in writing, and provide Mortgagee. upon request, complete and accurate books of accounts and records adequate to reflect correctly the results of the operation of the Property and copies of all written contracts, leases and other instruments which affect the Property. Such books, records, contracts, leases and other instruments shall be subject to examination and inspection at any reasonable time by Mortgagee. Within sixty (60) days of Mortgagor's fiscal year end, Mortgagor shall, upon Mortgagee's written request, furnish operating statements for the Property, including an income statement and financial statements for Mortgagor. Mortgagor shall also furnish personal financial statements for any individual maker or guarantor of any obligations secured hereby. Annually, Mortgagor shall supply a current rent schedule for the Property and expiration dates for each of the leases, together with an itemized list of moneys held as security deposits and the identity of the institution wherein such funds are deposited. Upon request by Mortgagee, Mortgagor will also supply copies of all of the leases. -7- OKI904PL)J301 1.13 Inspection. Mortgagor warrants and agrees that after three (3) days written notice by Mortgagee, Mortgagee may at a reasonable time during regular business hours, make or cause to be made, entry upon and inspection of the Property, Improvements or any part thereof in person or by agent, or immediately, without notice; if an Event of Default has occurred. 1.14 Hazardous Materials. (a) No Hazardous Materials on Property. Mortgagor represents and warrants that, except as specified herein, to the best of its knowledge after all appropriate inquiry, and covenants there are not, nor will there be, for so long as any of Mortgagor's indebtedness pursuant to the Note remains outstanding, any Hazardous Materials (as defined below) generated, released, stored, buried or deposited over, beneath, in or upon the Property or on or beneath the surface of adjacent property, except as such Hazardous Materials may be used, stored or transported in connection with the permitted uses of the Property and then only to the, extent permitted by law after obtaining all necessary permits and licenses therefor; provided, however, Mortgagor's obligation with respect to parties not within its control (including tenants) shall be to cause the Property to come into compliance with all applicable Hazardous Materials Laws upon discovering a violation of this provision by any such party. "Hazardous Materials" shall mean and include any pollutants; flammables, explosives, petroleum (including crude oil) or, any fraction thereof, radioactive materials, hazardous wastes, dangerous or toxic substances or related materials, including substances defined as or included in the definition of toxic or hazardous substances, wastes, or materials under nv ronment or state the protection laws, of public health and safety, . guidance which relate to pollution, the and cor limiting, prohibiting or otherwise regulating the presence, sale, recycling, generation, manufacture, use, transportation, disposal, release, storage, treatment of, or response or exposure to, toxic or hazardous substances, wastes or materials. Such laws, ordinances and regulations are hereinafter collectively referred to as the "Hazardous Materials Laws." (b) Compliance with Laws. Mortgagor shall, and Mortgagor shall use all commercially reasonable efforts to cause its employees, agents, tenants, contractors and subcontractors. of Mortgagor to keep and maintain the Property in compliance with, and not cause or knowingly permit the Property to be in violation of, any applicable Hazardous Materials Laws. Neither Mortgagor nor any employees, agents, tenants, contractors or subcontractors ` of Mortgagor or any other persons occupying or present on the Property shall use, generate, manufacture, store or dispose of on, under or about the Property or transport to or from the Property any Hazardous Materials, except as such Hazardous Materials may be used, stored or transported in connection with the permitted uses of the Property and then only to the extent permitted by law after obtaining all necessary permits and licenses therefor; provided, however, Mortgagor's obligation with respect to parties not within its control (including tenants) shall be to cause the Property to come into compliance with all applicable Hazardous Materials Laws upon discovering a violation of this provision by any such party. (c) Hazardous Materials Claims. Mortgagor shall immediately advise Mortgagee in writing of: (i) any notices received by Mortgagor (whether such notices are from the Environmental -8- 8K 190Li. G3002. Protection Agency, or any other federal, state or local governmental agency or regional office thereofl of the violation or potential violation of any applicable Hazardous Materials Laws occurring on or about the Property; (ii) any and all enforcement, cleanup, removal or other governmental or regulatory actions instituted, completed or threatened relating to the Property pursuant to any Hazardous Materials Laws; (iii) all claims made or threatened by any third party against Mortgagor or the Property relating to damage, contribution, cost recovery compensation, loss or injury resulting from any Hazardous Materials (the matters set forth in clauses (i), (ii) and (iii) above are hereinafter referred to as "Hazardous Materials Claims"); and (iv) Mortgagor's discovery of any occurrence or condition on any real property adjoining or in the vicinity of the Property that could cause the Property or any part thereof to be subject to any Hazardous Materials Claims. Mortgagee shall have the right but not the obligation to join and participate in, as a part} if it so elects, any legal proceedings or actions initiated in connection with any Hazardous Materials Claims and Mortgagor shall pay to Mortgagee, upon demand, all attorneys' and consultants' fees incurred by Mortgagee in connection therewith. (d) Indemni Mortgagor shall be solely responsible for, and shall indemnify, defend and hold harmless Mortgagee, its directors, officers, employees, agents, successors and assigns from and against, any claim, demand, lawsuit, loss, damage, cost, expense or liability directly or indirectly arising out of or attributable to the use, generation, storage, release, threatened release, discharge, disposal or presence of Hazardous Materials on, under or about the Property (whether occurring prior to or during the term of the Loan or otherwise and regardless of by whom caused, whether by Mortgagor or any predecessor in title or any owner of land adjacent to the Property or any other third party, or any employee, agent, tenant, contractor or subcontractor of Mortgagor or any predecessor in title or any such adjacent land owner or any third person) including, without limitation: (i) claims of third parties (including governmental agencies) for injury or death to any person or for damage or destruction of any property; (ii) claims for response costs, clean-up costs, costs and expenses of removal and restoration, including fees of attorneys and experts, and costs of determining the existence of Hazardous Materials and reporting same to any governmental agency; (iii) any and all other claims for expenses or obligations, including attorneys' fees, costs, and other expenses; (iv) any and all penalties threatened, sought or imposed on account of a violation of any Hazardous Materials Laws; and (v) all fees of any consultants, attorneys and engineering firms retained in connection with monitoring the obligations of Mortgagor under this Mortgage. The foregoing. indemnity by Mortgagor shall not, however, apply to the extent that any such cl demand, lawsuit, loss, damage, cost, expense or liability is directly or indirectly the result of the intentional misconduct of Mortgagee or any of Mortgagee's employees, agents; successors or assigns. . (e) Removal of Hazardous Materials. Mortgagor, at its sole cost and expense, shall, with due care; in a safe manner and in accordance with all applicable laws, detain the spread of, ameliorate and remove from the Property any Hazardous Materials contamination located on or beneath the Property and monitor or cause to be monitored the levels of Hazardous Materials on, under or about the Property or in the ground water to the extent required by and in accordance with the terms and procedures required by any federal, state or local governmental agency having jurisdiction including, without limitation, any Regional Water Quality Control Board and the Environmental Protection Agency. -9- 9K1901IIG3803 (fl Environmental Assessments. Mortgagee may, in its sole discretion, if it has a reasonable belief to suspect that a violation of the provisions of this Section 1.14 has occurred, require Mortgagor, at its sole cost and expense, to perform or cause to be performed, such studies or assessments of the Property, as Mortgagee may deem necessary or appropriate or desirable, to determine the status of environmental conditions on and about the Property, which studies and assessments shall be for the benefit of Mortgagee and be prepared in - accordance with the specifications established by Mortgagee. (g) Inspection and. Testing. Mortgagor hereby confirms. the right of Mortgagee (or a receiver appointed by Mortgagee) to enter upon and inspect all or any portion of the Property for the purpose of determining the existence, location, nature and magnitude of any past or present release or threatened release of any Hazardous Materials into, onto, beneath, or from the Property. Such inspections and the tests and studies performed in connection therewith are collectively called the "Tests and Studies." All costs and expenses incurred by Mortgagee pursuant to this Section 1.14(8) including, without limitation, costs of consultants and contractors, costs of repair of any physical injury to the Property normal and customary to the Tests and Studies, court costs and attorneys' fees, whether incurred in litigation or not and whether before or after judgment, shall be payable by Mortgagor and, to the extent advanced or incurred by Mortgagee, shall be reimbursed to Mortgagee by Mortgagor upon demand. Any and all of such costs and expenses advanced by Mortgagee, together with interest thereon at the rate then in effect under the Note, shall be secured by this Mortgage and shall enjoy the same priority as the original principal amount of the Note. - ARTICLE 2 ASSIGNMENT OF LEASES, RENTS AND PROFITS 2.1 Attornment and Estoppel Certificate. Mortgagor shall include in every Lease or rental agreement an attornment and estoppel provision a nd sha11 provide Mortgagee with an Attornment and Estoppel Certificate in a form acceptable to Mortgagee from every tenant, of the Property. Y 2.2 Assignment of Rents. All of Mortgagor's interest in any leases or other occupancy agreements pertaining to the Property now existing or hereafter entered into, and all of the rents, ;.royalties, issues, profits, revenue, income and other benefits of the Property arising from the use or enjoyment of all or any portion thereof or from any lease or agreement pertaining to occupancy of any portion of the Property now existing or hereafter entered into, whether now due, past due, or, to become due, and including all prepaid rents and security deposits (the "Rents and Profits"), are hereby absolutely, presently and unconditionally assigned, transferred, conveyed and set over to Mortgagee to be applied by Mortgagee in payment of the principal and interest and all other sums payable on the Note, and of all other sums payable under this Mortgage. Prior to the occurrence of an Event of Default (hereinafter defined), Mortgagor shall have a license to collect .and receive all Rents and Profits, which license shall be terminable at the option of Mortgagee, without regard to the adequacy of its security hereunder and without written notice to or demand upon Mortgagor, upon the occurrence of an Event of Default. It is understood and agreed that neither the foregoing assignment of Rents and Profits to Mortgagee nor the exercise by Mortgagee of any of its rights or remedies under Article 4 hereof shall be deemed to make -10- BK190-4`r%?804 Mortgagee a "mortgagee-in-possession" or otherwise responsible or liable in any manner with respect to the Property, the use, occupancy, enjoyment or operation of all or any portion thereof, unless and until 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 or any part thereof by such receiver, be deemed to make Mortgagee a "mortgagee-in-possession" or otherwise responsible or liable in any manner with respect to the Property or the use, occupancy, enjoyment or operation of all or any portion thereof. Upon the occurrence of an Event of Default, this provision shall constitute a direction and demand to each lessee under any lease and each guarantor of any lease to pay all Rents and Profits to Mortgagee without proof of the default relied upon. Mortgagor hereby irrevocably authorizes each lessee and guarantor to rely upon and comply with any notice or demand by Mortgagee for the payment to Mortgagee of any Rents and Profits due or to become due. Mortgagor hereby irrevocably appoints Mortgagee its true and lawful attorney-in-fact, with full power of substitution and with full power for Mortgagee in its own name and capacity or in the name and capacity of Mortgagor to demand and collect any and all Rents and Profits and to. file any claim or take any other action or proceeding and make any settlement regarding the Leases; provided however, Mortgagee shall exercise such power of attorney unless and until Mortgagor is in default of any payment or in breach of any material term or provision herein. 2.3 Warranties. (a) Mortgagor warrants as to each lease now covering all or any part of the Property that: (1) each lease is in full force and effect; (2) no default exists on the part of the lessee thereunder or Mortgagor; (3) no rent has been collected more than one month in advance; (4) no lease or any interest therein has been previously assigned or pledged; (5) no lessee under any lease has any defense, setoff or counterclaim against Mortgagor; (6) all rent due to date under each lease has been collected and no concession has been granted to any lessee in the form of a waiver, release, reduction,' discount or other alteration of rent due or to become due; and (7) the interest of the lessee under each lease is as lessee only, with no options to purchase or rights of first refusal. All the foregoing warranties shall be deemed to be reaffirmed and to continue until performance in full of the obligations under this Mortgage. Mortgagee shall not be bound by any oral or written assignment, surrender, release, waiver, cancellation, amendment or modification of the Lease made without the written consent of Mortgagee. (b) Without the prior written consent of Mortgagee, Mortgagor shall not (1) accept prepayments of rent exceeding one month under any leases of any part of the Property; (2) take any action under or with respect to any such leases which would decrease the monetary obligations of the lessee thereunder or otherwise materially decrease the obligations of the lessee or the rights or remedies of the lessor; (3) modify or amend any such leases or, except where the lessee is in default, cancel or terminate the same or accept a surrender of the leased premises, provided, however, that Mortgagor may renew, modify or amend leases in the ordinary course of business so long as such action does not decrease the monetary ' obligations of the lessee thereunder, or otherwise decrease the obligations of the lessee -or the rights or remedies of the lessor; (4) consent to the assignment or subletting. of the whole or any portion of the lessee's -11- BK190'4 G3805 interest under any lease which has a term of more than five years; (5) create or permit any lien or encumbrance which, upon foreclosure, would be superior to any such leases; or (6) in any other manner impair Mortgagee's rights and interest with respect to the Rents and Profits. 2.4 Performance of Landlord Obligations. Mortgagor shall at all tunes perform the obligations of lessor under all such leases. Mortgagor shall not execute any further assignment of any of the Rents and Profits or any interest therein or suffer or permit any such assignment to occur by operation of law. 2.5 ' Mortgagee's Rights. Mortgagee shall be deemed to be the creditor of each lessee in respect of any assignments for the benefit of creditors and any bankruptcy, arrangement, reorganization, insolvency, dissolution, receivership or other debtor-relief proceedings affecting such lessee (without obligation on the part of Mortgagee, however, to file timely claims in such proceedings or otherwise pursue creditor's rights therein). Mortgagee shall have the right to assign Mortgagor's right, title and interest in any leases to any subsequent holder of this Mortgage or any participating interest therein or to any person acquiring title to all or any part of the Property through foreclosure or otherwise. Any subsequent assignee shall have all the rights and powers herein provided to Mortgagee. Mortgagee shall have the authority in the event of default, as Mortgagor's attorney-in-fact, such authority being coupled with an interest and irrevocable, to sign the name of Mortgagor and to bind Mortgagor on all papers and documents relating to the operation, leasing and maintenance of the Property. ARTICLE 3 EVENTS OF DEFAULT The following shall each constitute an "Event of Default": 3.1 Failure to make any payment of principal or interest under the Note or any Related Agreement, when due and payable, whether at maturity or by acceleration or as part of 'any prepayment or otherwise, or default in the performance of any of the covenants or agreements of Mortgagor contained in.the Note, or default in the performance of any of the covenants or agreements of Mortgagor contained herein or in any Related Agreement, after the expiration of the period of time, if any, permitted for cure of such default thereunder. 3.2 The appointment, pursuant to an order of a court of competent jurisdiction of a trustee, receiver, or liquidator of the Property or any part `thereof, or of Mortgagor, or any termination or voluntary suspension of the transaction of business of Mortgagor, or any attachment, execution or other judicial seizure of all or any substantial portion of Mortgagor's assets which attachment, execution or seizure is not discharged within thirty (30) days. 3.3 Mortgagor shall file a voluntary case under any applicable bankruptcy, insolvency, debtor relief, or other similar law now, or hereafter in effect, or shall consent to the appointment of or taking possession by a receiver, liquidator, trustee, or similar official, of Mortgagor or for any part of the Property or any substantial part of Mortgagor's property, or shall make any general -12- SKi904IF63O06 assignment for the benefit of.Mortgagor's creditors, or shall fail generally to pay Mortgagor's debts as they become due or shall take any action in furtherance of any of the foregoing. 3.4 The entry by a court having jurisdiction of a decree or order for relief in respect of Mortgagor, in any involuntary case brought under any bankruptcy, insolvency, debtor relief, or similar law now or hereafter in effect, or Mortgagor shall consent to or shall fail to oppose any such proceeding, or any such court shall enter a decree or order appointing a receiver, liquidator, trustee, or similar official, of Mortgagor or for any part of the Property or any substantial part of Mortgagor's property, or ordering the winding up or liquidation of the affairs of Mortgagor, and such decree or order shall not be dismissed within sixty (60) days after the entry thereof. 3.5 Default under the terms of any agreement of guaranty relating to the indebtedness evidenced by the Note or Related Agreements or the revocation, limitation or termination of the obligations of any guarantor of the Note or Related Agreement, except in accordance with the express written terms of the instrument of guaranty. 3.6 If Mortgagor is other than a natural person, without the prior written consent of Mortgagee in each case, (a) the dissolution or termination of existence of Mortgagor voluntarily or involuntarily, whether by reason of death of Mortgagor or a general partner. of Mortgagor or otherwise; (b) the amendment or modification in any respect of Mortgagor's agreement of partnership or its corporate resolutions relating to this transaction, or (c) the distribution of any of Mortgagor's capital which may impair Mortgagee's interest in the Property or which adversely impacts Mortgagor's ability to repay the indebtedness, except for distribution of the proceeds of the loan secured hereby and cash from operations; as used herein, cash from operations shall mean any cash of Mortgagor earned from operation of the Property, but not from a sale or refinancing of the Property or from borrowing, available after paying all ordinary and necessary current expenses of Mortgagor, including expenses incurred in the maintenance of the Property, and after establishing reserves to meet current or reasonably expected obligations of Mortgagor. 3.7 Any representation, warranty, or disclosure made to Mortgagee by Mortgagor or any guarantor of any indebtedness secured hereby in connection with or as an inducement to the making of the loan evidenced by the Note or in connection with or as an inducement to the making of any further advance, this Mortgage or any of the Related Agreements, proving to be false or misleading in any material respect as of the time the same was made,- whether or not any such representation or disclosure appears as part of this Mortgage. ARTICLE 4 REMEDIES Upon the occurrence of an Event of Default, Mortgagee shall have the following rights and remedies: 4.1 Performance Option of MortgM. Should Mortgagor fail to make any payment or to do any act as herein provided, Mortgagee may, but without obligation so to do and without notice to or demand upon Mortgagor and without releasing Mortgagor from any obligation ?/ -13- BK ! 190h,1`3U07 hereof (a) make or do the same in such manner and to such extent as either may deem necessary in the exercise of its absolute discretion to protect the security hereof, Mortgagee being authorized to enter upon the Property for such purposes; (b) commence, appear in and defend any suit, action or proceeding purporting to affect the security hereof or the rights or powers of Mortgagee; (c) pay, purchase, contest or compromise any encumbrance, charge of lien which, in the judgment of either, appears to be prior or superior hereto; and (d) in exercising any such power, incur any liability, expend whatever amounts in its absolute discretion it may deem necessary therefor, .including cost of evidence of title, employ counsel and pay reasonable fees. 4.2 Repayment of Advances and Interest_.. Mortgagor shall immediately repay upon .demand, all sums expended or advanced hereunder by or on behalf of Mortgagee, with interest from the date of such advance or expenditure as provided in the Note (but not in any event to exceed the maximum interest rate permissible by law) until paid; and the repayment therefor shall be secured hereby, it being agreed by Mortgagor that any such expenditure or advance is to protect the security hereof and constitutes a part of the loan transaction in connection with which the Note was executed. In addition, Mortgagor agrees to pay all costs and expenses incurred by Mortgagee in any action or foreclosure to enforce the terms of the Note, Mortgage or Related Agreement(s) together with reasonable attorney's fees. 4.3 Appointment of Receiver. Mortgagee shall be entitled (without notice and without regard to the adequacy of any security for the indebtedness secured hereby) to the appointment of a receiver of the rents and profits of the Property, and such receiver shall have, in addition to all the rights and powers customarily given to and exercised by such receiver, all the rights and powers granted to Mortgagee contained herein. 4.4 Ems. Mortgagee, at its option, may in person or by agent or by court-appointed receiver, enter upon, take possession of, manage and operate the Property or any part thereof and do all things necessary or appropriate in Mortgagee's sole discretion in connection therewith, including, but not limited to making, enforcing or modifying any leases now or hereinafter in effect on the Property or any part thereof, evicting tenants, fixing or modifying rents, contracting for and making repairs and alterations, and otherwise doing any act or incurring any cost or expense which Mortgagee deems proper to protect the security hereof. Mortgagee may further, with or without so taking possession, in its own name or in the name of Mortgagor, sue for or otherwise collect and receive the Rents and Profits, including those `past due and unpaid, and apply the same' less costs and expenses of operation and collection, including reasonable attorney's fees, upon any indebtedness secured hereby, and in such order as Mortgagee may determine. The entering upon and taking possession of the Property, or any part thereof, and the collection of any Rents and Profits and the application thereof as aforesaid shall not cure or waive any default theretofore or thereafter occurring or affect any notice or default hereunder or invalidate any act done pursuant to any such default or notice, and, notwithstanding continuance in possession of the Property or any part thereof by Mortgagee, Mortgagor or a receiver, and the collection, receipt and application of the Rents and Profits. Mortgagee shall be entitled to exercise every right provided for in this Mortgage or by law or in equity upon or after the occurrence of a default. -14- 8K190"?G 3 08 4.5 Due on Sale/Transfer. Mortgagee shall have the right, at its option, to declare any indebtedness and obligations under the Note and this Mortgage, irrespective of the maturity date specified therein, immediately due and payable in full without forfeiture of any prepayment charge if. (1) Mortgagor or any one or more of the persons comprising Mortgagor sells, enters into a contract of sale, conveys, alienates or encumbers the Property or any portion thereof or any fractional undivided interest therein, (2) suffers Mortgagor's title or any interest therein to be divested or encumbered, whether voluntary or involuntary, (3) leases for a term of more than six years (including option to renew), leases with an option to sell, or changes or permits to be changed the character. or use of the Property without Mortgagee's written consent (4) there is any merger; consolidation or dissolution involving the sale or transfer of all or substantially all of the assets of Mortgagor, any "general partner of Mortgagor or any, manager of a limited liability company Mortgagor; (5) there is any direct or indirect transfer (at one time or over any period of time) of 25%'ormore of the voting stock of (i) a corporate Mortgagor, (ii) any corporate general partner of Mortgagor, or (iii) any corporation which is the direct or indirect owner of 25% or more of the beneficial interest in Mortgagor or any general partner of Mortgagor; (6) there is any direct or indirect transfer of any general partnership interest if Mortgagor's is a general or limited partnership; (7) there is any direct or indirect the transfer (at one time or over any period of time) of 25% or more of the membership interests of.. (i) a limited liability company Mortgagor, (ii) any limited liability company general partner of Mor tgagor, or (iii) any limited liability company which is the direct or indirect owner of 25% or more of the beneficial interest of Mortgagor or any general partner of Mortgagor, or (8) there is any direct or indirect transfer of any interest in any manager of a limited liability company Mortgagor. This provision shall apply to each and every sale, transfer, encumbrance or conveyance, regardless whether or not Mortgagee has consented to, or waived, Mortgagee's rights hereunder, whether by action or non action, in connection with any previous sale, transfer or conveyance. 4.6 Pursue Remedies. When any obligation secured herein or any part thereof shall become due, whether by acceleration or otherwise, Mortgagee may, either with or without entry or taking possession as herein provided or otherwise, proceed by suitor suits at law or, in equity or by any other approptiate proceeding or remedy to: (a) accelerate the maturity of and enforce payment of the indebtedness due under the Note; (b) enforce the performance of any term, covenant, condition or agreement of Mortgagor under any of the Related Agreements; (c) foreclose the lien hereof. for the indebtedness pursuant to the Note or part thereof by commencement of action to sell the Property as an entirety or otherwise, as Mortgagee may determine; and/or (d) pursue any other right or remedy available to it under the Note or any Related Agreement, by law and in equity. Notwithstanding any statute or rule of law to the contrary, the failure to join any tenant or tenants of the Property as party defendant or defendants in any foreclosure action or the failure of any such order or judgment to foreclose their rights shall not be asserted by Mortgagor as a defense in any civil action instituted to collect (a) the obligations secured herein, or any part thereof or (b) any deficiency remaining unpaid after foreclosure and sale of the Property. 4.7 Intentionally Omitted. -15- BK 1 90cil UU _ 809 4.8 Mixed Collateral. Upon the occurrence of an Event of Default under this Mortgage, Mortgagee, pursuant to appropriate statutory provisions, shall have an option to proceed with respect to both the real property portion of the Property and any personal property in accordance with its rights, powers and remedies with respect to such real property. Such option shall be revocable by Mortgagee as to all or any portion of the personal property at any time prior to the sale of the remainder of the Property. Should Mortgagee elect to sell the personal property or any part thereof which is real property or which Mortgagee has elected to treat as real property or which maybe sold together with the real property, as provided above, Mortgagee shall give such' notice 'of default and election to sell as may then be required by law. The parties agree that if Mortgagee shall elect to proceed with respect to any portion of the personal property separately from such real property, five (5) days notice of the sale of the personal property shall be reasonable notice. The reasonable expenses of retaking, holding, preparing for sale, selling and the like incurred by Mortgagee shall include, but not be limited to, reasonable attorneys' fees, costs and expenses, and other expenses incurred by Mortgagee. 4.9 Intentionally Omitted. 4.10 Rights and Remedies Cumulative. Mortgagee shall have all powers, rights and remedies under applicable law whether or not specifically or generally granted or described in this Mortgage. Nothing contained herein shall be construed to impair or to restrict such powers, rights and remedies or to preclude any procedures or process otherwise available to a mortgagee in the State in which the Property is located. Mortgagee shall be entitled to enforce the payment and performance of the indebtedness owed pursuant to Note and all obligations secured hereunder and to exercise all rights and powers under this Mortgage or under any other Related Agreements or other agreement or any laws now or hereafter in force, notwithstanding the fact that some or all of the indebtedness owed pursuant to Note and all obligations secured hereunder may now or hereafter be otherwise secured, whether by mortgage, pledge, lien, assignment or otherwise. Neither the acceptance of this Mortgage nor its enforcement, whether by court action or other powers contained herein, shall prejudice or in any manner affect Mortgagee's right to realize upon or enforce any other rights or security now or hereafter held by Mortgagee. Mortgagee shall be entitled to enforce this Mortgage and any other rights or security now or hereafter held by Mortgagee in such order and manner as Mortgagee may in its absolute discretion determine. No remedy herein conferred upon or reserved to Mortgagee is intended to be exclusive of any other remedy contained herein or by law provided or permitted, but each shall to the extent permitted by law be cumulative and in addition to every other remedy given hereunder or now or hereafter existing at law or in equity. ' Every power or remedy given by any of the Related Agreements to Mortgagee, or to which Mortgagee may be otherwise entitled, 'may be exercised, concurrently or independently, from time to time and as often as may be deemed expedient by Mortgagee, -and Mortgagee may pursue, inconsistent remedies. ? By exercising or by failing to exercise any right, option or election hereunder, Mortgagee shall not be deemed to have waived any provision hereof or to have released Mortgagor from any of the obligations secured hereby unless such waiver or release is in writing and signed by Mortgagee. The waiver by Mortgagee of Mortgagor's failure to perform or observe any term, covenant or condition referred to or contained herein to be perform or observed by Mortgagor shall not be deemed to be a waiver of such term, covenant or condition or of any subsequent failure of Mortgagor to perform or observe the same or any other such term, covenant or sK 1904FIG J8 10 condition referred to or contained herein, and no custom or practice which may develop between Mortgagor and Mortgagee during the term hereof shall be deemed a waiver of or in any way affect the right of Mortgagee to insist upon the performance by Mortgagor of the obligations secured hereby in strict accordance with the terms hereof or of any Related Agreements. 4.11 Intentionally Omitted. 4.12 Intentionally Omitted. 4.13 Waiver of Marshaling. Mortgagor, for itself and for all persons hereafter claiming through or under it or who may at any time hereafter become holders of liens junior to the lien of this Mortgage, hereby expressly waives and releases all rights to direct the order in which any of the Property shall be sold in the event of any sale or sales pursuant hereto and to have any of the Property and/or any -other property now or hereafter constituting security for any of the indebtedness secured by this Mortgage, marshaled upon any foreclosure of this Mortgage or of any other security for any of said indebtedness. 4.14 Remedies " Cumulative. No remedy herein conferred upon or reserved. to Mortgagee is intended to be exclusive of any other remedy herein or by law provided, but each shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute. If there exists additional security for the performance of the obligations secured hereby, the holder of the Note, at its sole option, and without limiting or affecting any of its rights or remedies hereunder, may exercise any of the rights and remedies to which it may be entitled hereunder either concurrently with whatever rights and remedies it may have in connection with such other security or in such order as it may determine. Any application of any amounts or any portion thereof held by Mortgagee at any time as additional security hereunder, to any indebtedness secured hereby shall not extend or postpone the due dates of any payments due, from Mortgagor to Mortgagee hereunder or under the Note or any of the Related Agreements, or change the amounts of any such payments or otherwise be construed to cure or waive any default or notice of default hereunder or invalidate any act done pursuant to any such default or notice. 4.15 Attorney's Fees and Costs. Mortgagor promises to pay all costs, expenses and attorneys' fees incurred. by Mortgagee in the exercise of any remedy (with or without litigation) under the Note, Mortgage or other security instrument, in any proceeding for the collection of the debt evidenced by this Note, in any foreclosure of the Mortgage or the realization upon any other security securing this Note, in protecting or sustaining the lien or priority of said Mortgage or said other security, or in any litigation or controversy arising from or connected with the -Note, the Mortgage or other security for this Note. Said proceedings include, without limitation; any probate, bankruptcy, receivership, injunction, arbitration, mediation or other proceeding, or any appeal from or petition for review of any of the foregoing, in which Mortgagee prevails. Mortgagor shall also pay all of Mortgagee's costs and attorney's fees incurred in connection with any demand, work-out, settlement, compromise, or other activity in which Mortgagee engages to collect any portion of this debt not paid when. due or as a result of any Event of Default of Mortgagor. If a judgment is obtained thereon which includes an award of attorney's fees, such BK 1904FG38 I I - -17 attorney's fees, costs and expenses shall be in such amount as the court shall deem reasonable, which judgment shall bear interest at the Default Rate as defined in the Note from the date it is rendered to and including the date of payment to Mortgagee. "Costs and expenses" shall include, but are not limited to appraisal fees, inspection fees and costs of a title report. 4.16 Confession of Judgment for Possession. Upon the occurrence of an Event of Default, Mortgagor authorizes and empowers any attorney or attorneys of any court of the Commonwealth of Pennsylvania to appear for Mortgagor and, as attorney for Mortgagor, to file any actions in ejectment and/or for possession of the Property and to confess judgment in ejectment and/or possession therein against Mortgagor in favor of Mortgagee. For so doing, this Mortgage or a copy of,this Mortgage verified by affidavit shall be a - sufficient warrant. Thereupon, a writ of possession may issue immediately for the possession of any or all of the Property, without any prior writ or proceeding whatsoever. Mortgagee may bring such action in ejectment and confess judgment before or after: (a) the institution of foreclosure proceedings under this Mortgage, (b) the entry of judgment under this Mortgage or under the. Note or any documents that evidence or secure this Mortgage, or (c) a sheriffs sale of any of the Property. This authority to confess judgment shall not be exhausted by one or more exercises thereof. ARTICLE 5 MISCELLANEOUS 5.1 Severability. In the event any one or more of the provisions contained in this Mortgage shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Mortgage, but this Mortgage shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein. 5.2 Mortgagor Not Released. Extension of the time for payment or modification of the terms of payment of any sums secured by this Mortgage granted by Mortgagee to any successor in interest of Mortgagor shall not operate to release, in any manner, the liability of the original Mortgagor. Without affecting the liability of any person, including Mortgagor, for the payment of any indebtedness secured hereby, or the lien of this Mortgage on the remainder of the Property for the full amount of any such indebtedness and liability unpaid, Mortgagee may, from time to time and without' notice (a) release any person liable for the 'payment of any of the indebtedness, (b) extend the time or otherwise alter the terms of payment of any of the indebtedness, (c) accept additional real or personal property of any kind as security therefor, whether evidenced by mortgages,' security agreements or any other instruments of security,' or (d) alter, substitute or release any property securing the indebtedness. 5.3 No Waiver. No delay or omission to exercise any right, power or remedy accruing to Mortgagee on any breach or default of Mortgagor hereunder shall impair any such right, power, or remedy of Mortgagee, nor shall it be construed to be a waiver of any other or subsequent breach or default. Any waiver, permit, consent or approval of any kind by Mortgagee must be in writing and shall be effective only to the extent specifically set forth in that writing. BK19011IFG3812 -18- 5.4 Mortgage's Actions not a Cure of Default. The taking of any action by Mortgagee under the authority of this Mortgage, including, but not being limited to, the entering upon, taking' possession of and management and operation of the Property, the collection of rents and profits thereof, or the proceeds of fire and other insurance policies or compensation or awards for any taking or damage of the Property, and the application or release thereof as aforesaid, shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. 5.5 Time. Time is of the essence hereof in connection with all obligations of Mortgagor herein and in any of the Related Agreements. 5.6 Notices. All notices or other communications desired or required hereunder shall • be sent in the manner and to the addresses for the parties as set forth in the Note. 5.7 Reconveyance. Upon the payment in full of all sums secured by this Mortgage, Mortgagee shall reconvey the Property without warranty to the person or persons legally entitled thereto and shall surrender this Mortgage and the Note evidencing the indebtedness secured by this Mortgage to Mortgagor. Mortgagor shall pay all costs of recordation, if any. 5.8 Successors and Assigns. All of the grants, obligations, covenants, and terms and conditions herein shall run with the land and shall apply to and bind the heirs, administrators, executors, legal representatives, successors and assigns of Mortgagor and inure to the benefit of the endorsees, successors and assigns of Mortgagee. In the event Mortgagor is composed of more than one party, the obligations, covenants, agreements, and warranties contained herein as well as the obligations arising therefrom are and shall be joint and several as to each such party. 5.9 Governing} Law. This Mortgage is made pursuant to, and shall be construed and governed by, the laws of the Commonwealth of Pennsylvania. 5.10 No Third Party Benefits. This Mortgage, the Note and the other Related Agreements are made for the sole benefit of Mortgagee and its successors and assigns, and convey no other, legal interest to any party under or by reason of any of the foregoing. Whether or not Mortgagee elects to employ any or all of the rights, powers or remedies available to it under any of the foregoing, Mortgagee shall have no obligation or liability of any kind to any Eird party by reason of any of the foregoing or any of Mortgagee's actions or omissions pursuant thereto or otherwise in connection with this transaction. 5.11 Interest After Default. If any payment due hereunder or under the Note is not paid when due, either at stated or accelerated maturity or pursuant to any of the terms hereof, then and in such event, Mortgagor shall pay interest thereon from and after the date on which such payment first becomes due at the default interest rate provided for in the Note and such interest shall be due and payable, on demand, at such rate until the entire amount due is paid to Mortgagee, whether or not any action shall have been taken or proceeding commenced to recover the same or to foreclose this Mortgage. Nothing in this Section or in any other provision of this LK 190LFG13 13 -19- 1, Mortgage or the Related Agreements shall constitute an extension of the time of payment of the indebtedness. After entry of a judgment on the Note or any of the Related Agreements or a judgment in mortgage foreclosure hereunder, interest shall continue to accrue under said judgment, the Note, this Mortgage and the Related Agreements at the default interest rate set forth in the Note. This Mortgage shall not, solely for purpose of determining interest payable, merge with any judgment on the Note or any other Loan Document or a judgment in mortgage foreclosure under this Mortgage. 5.12 Future Advances. This Mortgage secures present and future advances made pursuant to this Mortgage and the lien of such future advances shall relate back to the date of this Mortgage. Without limiting the foregoing, this Mortgage secures all advances made by Lender of any kind or nature determined in 42 Pa C.S.A.§ 8144. 5.13 Jurisdiction and Venue. Mortgagor irrevocably and unconditionally waives any defense of improper venue or inconvenience of forum in any actions under this Mortgage, and any rights to claim immunity in respect of itself or any of its property or, assets, including immunity from jurisdiction, immunity from attachment prior to entry of judgment, immunity from attachment in aid of execution of judgment, and immunity from execution or judgment, all in respect of any legal suit, action, or proceeding arising out of, or relating to, this Mortgage. Mortgagor irrevocably consents to the exclusive jurisdiction of the Courts of Common Pleas of Pennsylvania and/or the United States District Court for the Eastern District of Pennsylvania in any disputes, actions, or proceedings between Mortgagee and Mortgagor, whether arising under this Mortgage or under any other agreement or undertaking; and Mortgagor irrevocably consents to service of process by certified mail, return receipt requested, to Mortgagor at the address set forth in the introductory paragraph of this Mortgage. Mortgagor shall not in any litigation between Mortgagor and Mortgagee object to the venue of the action or claim that the forum is inconvenient: Mortgagor waives the right to interpose any defense, set-off, or counterclaim of any nature or description in any litigation in which Mortgagee and Mortgagor shall be adverse parties, arising out of or relating to any sums due under this Mortgage, the Related. Agreements, the Property, the Collateral, or any of the other matters contained in this Mortgage or the Related Agreements; provided, however, that nothing contained in this Section 5.13 shall in any manner prevent or preclude Mortgagee from bringing anyone or more actions against Mortgagor in any jurisdiction in the United States or elsewhere. Mortgagor's consent, in advance, to the jurisdiction of the State or Federal courts of the Commonwealth of Pennsylvania is a material inducement for Mortgagee to make the Loan to Mortgagor. 5.14 Waiver of Jury Trial Mortgagee and Mortgagor acknowledge that disputes arising under this Mortgage and the Related Agreements are likely to be complex, that trial before a judge is more appropriate than trial before a jury, and that they desire to streamline and minimize the cost of resolving such disputes. Therefore, Mortgagee and Mortgagor, as an independent covenant, irrevocably waive all rights to a trial by jury in any action, counterclaim, dispute, or proceeding based upon, or related to, the subject matter of this Mortgage and the Related Agreements and grants the judge presiding over BK 19 01-? r'G` J 8 14 -20- any such action, counterclaim, dispute, or proceeding full power and authority to determine all questions of fact. This waiver applies to all claims against all parties to such actions and proceedings including those involving Mortgagee or Mortgagee's parent, affiliates, or related entities, or any officer, director, shareholder, member, attorney, or partner of any of them. It also applies whether such dispute or proceeding arises under this Mortgage and the Related Agreements, any other agreement, Note, paper, instrument, or document heretofore'or hereafter executed, or any other contract, whether similar or dissimilar and whether or not it, arises from intentional or unintentional conduct,` from fraud, other improper action, or failure to act, or from other reasons. This Section 5.14 shall be deemed a covenant of Mortgagor and shall be enforceable independently of all other provisions of this Mortgage. and the Related Agreements. This waiver is knowingly, intentionally, and voluntarily made by Mortgagor, and Mortgagor acknowledges that neither Mortgagee` nor any Person acting on behalf of Mortgagee has made any representations to induce this waiver of trial by jury or in any way to modify or nullify its effect. Mortgagor further acknowledges that it has been represented (or has had the opportunity to be represented) in connection with the signing of this Mortgage and in the making of this waiver by independent legal counsel, selected of its own free will, and that it has had the opportunity to discuss this waiver with counsel. Mortgagor further acknowledges that it has read and understands the meaning and ramifications of this waiver provision. 5.15 Mortzaeor Waivers. Section 4.16 of this Mortgage provides for the remedy of confession of judgment in ejectment. In granting this warrant of attorney to confess judgment against Mortgagor and to execute upon said judgment against Mortgagor, Mortgagor knowingly, intelligently, voluntarily, and unconditionally waives any and all rights Mortgagor has or may have to notice and a prior judicial proceeding under the respective constitution and laws of the United States of America and the Commonwealth of Pennsylvania to determine Mortgagor's rights and liabilities. Mortgagor further, knowingly, intelligently, voluntarily, and unconditionally acknowledges that Mortgagee may, after the occurrence of an Event of Default, obtain a judgment for possession of the Property without the prior knowledge or consent by Mortgagor and without any opportunity of Mortgagor to raise any defense, setoff, counterclaim, or other claim that Mortgagor may have. IN WITNESS WHEREOF, intending to be legally bound and intending this to be a sealed instrument, Mortgagor has executed this Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing as of the day and year first written above. Carlyle Gables Properties, Inc NESS Richard Mitstifer, P ident WITNESS BKf904FG3015 -21- COMMONWEALTH OF PENNSYLVANIA ss. COUNTY OF /?D/yrGt??l On " Adlt. I , 2005, before me, a Notary Public, personally appeared Richard Mitstifer, known, or satisfactorily proven, to me to be he person whose name is subscribed to the foregoing instrument and who acknowledged the execution of same for the purposes therein set forth. - IN WITNESS WHEREOF, I hereunto set my. han and official seal. NOTARY PUBLIC My Commission Expires: COMMONWEALTH OF PENNSYLVANIA NOTARIAL SEAL Public MARK CHALPHIN, Notary Norristown Soro, Montgomery Co. The address of the Lender is: my Commission Expires May 26, 2008 BKI904PG3016 -22- ALL THAT CERTAIN tract of land, together with all buildings and other improvements thereon erected, Situate in Middlesex Township, Cumberland County, Pennsylvania, bounded and described in accordance with an ALTA/ACSM Land Title Survey, prepared by Akens Engineering, Inc., dated 9-16-2003, as follows,.to wit: BEGINNING at a spike in the Northerly right-of-way line of U.S. Route 11 and the Southwesterly line of land now or, formerly of Carlisle Country Club; thence progressing along the said right-of-way line of U.S. Route 11 along 'a curve to the left having a radius of 3,342 feet, an are length of 355.87 feet, and a chord bearing and distance of South 74 degrees 48 minutes 14 seconds West, 355.70 feet to a pipe found; thence progressing North 14 degrees 37 minutes 00 seconds West, a distance of 150.15 feet to a spike; thence progressing South 69 degrees 52 minutes 36 seconds West, a distance of 200.06 feet to a concrete monument; thence progressing North 38 degrees 57 minutes 00 seconds West, a distance of 400.00 feet to a spike; thence progressing North 69 degrees 52 minutes 36 seconds East, a distance of 200.06 feet to an iron pin; thence progressing North 38 degrees 57 minutes 00 seconds West, a distance of 349.70 feet to an iron pin located in the banks of the Conodoguinet Creek; thence progressing along the banks of the Conodoguinet Creek, North 51 degrees 22 minutes 24 seconds East, a distance of 259.57 feet to a point along lands now or formerly of Carlisle Country Club; thence progressing the following two (2) courses and distances: (1) thence progressing South 39 degrees 47 minutes 32 seconds East, a distance of 868.45 feet to a railroad spike; (2) thence progressing South 35 degrees 51 minutes 32 seconds East, a distance of 160.20 feet to the point of beginning. a CONTAINING 338,398 square feet or 7.77 acres. BEING the same premises which All American Plazas, Inc., a Pennsylvania Corporation, by Deed dated 10-3-2003 and recorded 11-3-2003 at Cumberland County, Pennsylvania in Deed Book 260 page 786, granted and conveyed unto Carlyle Gables Properties, Inc., as agent for All American Plazas, Inc., in fee. I CertiB this to be recd :?e In Cumberlalli_j 8KI904PG3817 U_/ RECORDING REQUESTED BY AND VWIEN RECORDED MAIL TO: Avatar Income Fund I 100 Wall Street . Seattle, WA 98121 Attention: _ )6?/? RECEIVED 1005 NA Y - 3 4 10: 3 9 RECORpEpS n; ??E COL'N l'( OF Mortgage,' Assignment of Leases and Rents, Security Agreement and Fixture Filing LOAN NO. 200507 This Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing ("Mortgage or Security Instrument") is made this day of April, 2005 MORTGAGOR: Harrisburg Gables Properties, Inc., a Delaware Corporation.. whose address is C/O All American Plazas Inc-PO Box 302, Bethel, PA 19507 MORTGAGEE: AVATAR INCOME FUND I, LLC, a Delaware limited liability company, whose address is 100 Wall Street, Seattle, WA 98121. Mortgagor hereby IRREVOCABLY GRANTS, BARGAINS, SELLS, CONVEYS, TRANSFERS AND ASSIGNS TO MORTGAGEE, all of Mortgagor's present and future estate, right, title and claim and interest, either in laws or equity, in and to the real property located in Dauphin County, Pennsylvania (the Property), a complete legal description of which is on Exhibit "A" attached hereto and incorporated herein. Tax Parcel Nos. 68-020-009 TOGETHER WITH all buildings, structures, improvements; and articles of property now or- hereafter attached to, or used or adapted for use in the operation of, the Property, including, but not limited to, all heating equipment, piping' and plumbing fixtures, cooling, ventilating, sprinkling and vacuum cleaning systems, fire extinguishing apparatus, cabinets, window coverings, all landscaping; and all, interest of any owner of the Property in any of such items replaced, added to or hereafter acquired in any 'manner whatsoever, all of which property mentioned in this paragraph shall be deemed part of the realty and not severable wholly or in part without material injury to the Property; TOGETHER WITH the lands, easements, appurtenances, rents, royalties, receipts, water, mineral, oil and/or gas rights and profits; and C:\Documents and Settings\User\My Documents\My DocumentAnocito\ALL AMERICAN PLAZASAI american cuirent\avatarkevised loan docs 4-12-05\AllamericanMTG-ClarksFerry\MlamericanMTG-Harrisburg.doe ?? OK5975 433 TOGETHER WITH all present and future right, title and interest of Mortgagor in and to all furniture, equipment, and other tangible personal property on or used in the operation of the Property, including, but not limited to: accounts, general intangibles, chattel paper, deposit accounts; money, rents, daily receipts, income, accounts receivable, instruments and documents (as those terms are defined in the Pennsylvania Uniform Commercial Code) and all other agreements arising in connection with or derived from the Property or the ownership, use, maintenance, management, operation, marketing, leasing, occupancy, or financing of the Property, permits, approvals, and other governmental authorizations, improvement plans and specifications and architectural drawings, agreements with contractors, subcontractors, suppliers, designers, architects, engineers, leasing agents, consultants and property managers, `warranties, guaranties, indemnities and insurance policies, together with insurance payments and unearned insurance premiums, claims, demands, awards, settlements and other payments arising or resulting from or otherwise relating to any insurance or any loss or destruction.of, injury or damage to, the taking or condemnation (or conveyance in lieu of condemnation) or public use. of any of the Property,, leases, rental agreements, license agreements, service and maintenance agreements, purchase and sale agreements and purchase options, together with advance payments, security deposits and other amounts paid to or deposited with Mortgagor under any such agreements, bonds, deferred payments, refunds, rebates, discounts, escrow proceeds, sale proceeds and other rights to the payment of money, trade names, trademarks, goodwill and all supplements, modifications, amendments, renewals, extensions, replacements of or to any of such property (the "Intangibles"). THIS MORTGAGE IS MADE FOR THE PURPOSE OF SECURING PERFORMANCE of each covenant, agreement, term and condition of Mortgagor contained herein and the prompt payment of the sum of SIX MILLION FOUR HUNDRED FIFTY THOUSAND AND N01100 ($6,450,000.00 U.S.), with interest thereon according to the terms of a Commercial Promissory Note, of even date, payable to Mortgagee and made by Mortgagor.(the "Note"); all renewals, modifications or extensions thereof; and also such further sums as may be advanced or loaned by Mortgagee to Mortgagor, together with interest thereon at such rate as shall be stated in the Note. F THIS MORTGAGE IS ALSO MADE FOR THE PURPOSE of securing prompt and complete performance of each and every obligation, covenant and agreement of Mortgagor contained in any other instrument heretofore or hereafter executed by Mortgagor having reference to or arising out of the indebtedness represented by the Note, or given as security for the Note (collectively, the "Related Agreements"). ARTICLE 1 COVENANTS AND WARRANTIES MORTGAGOR COVENANTS AND AGREES AS FOLLOWS: 1.1 Performance of Obligations Secured. Mortgagor shall promptly pay when due all monthly payments of interest and/or principal, late charges (and reserves) on the indebtedness evidenced by the Note and shall further perform fully and in a timely manner all other obligations -2- BK5975rG 434 of Mortgagor contained herein or in any of the Related Agreements. All sums payable by Mortgagor hereunder shall be paid without demand, counterclaim, offset, deduction or defense and Mortgagor waives all rights now or hereinafter conferred by statute or otherwise to any such demand, counterclaim, offset, deduction or defense. '1.2 Warranties of Title. Mortgagor is seized in fee simple of the Property and owns every part thereof; there are no liens or encumbrances against or upon the same, including but not limited to, leases, except as disclosed to Mortgagee, and none will be created by Mortgagor during the term of this Mortgage. Mortgagor represents that Mortgagor is not in violation of any governmental requirement or in default under any. agreement to which it is bound, or which affects it or any of the Property, and the execution, delivery and performance of this Mortgage, the Note, or any of the Related Agreements in accordance with their terms and the use and occupancy of the Property will not violate any governmental requirement, or conflict with, be inconsistent with or result in ` any default under, any of the provisions of any articles, bylaws, mortgage, security instrument, easement, restriction of record,.contract, agreement or instrument: of any kind to which Mortgagor is bound or which affects it or any of the Property, Further, Mortgagor warrants that there are no. proceedings of any kind pending, or, to the knowledge of Mortgagor, threatened, against or affecting Mortgagor, the Property (including any attempt or threat by any governmental authority to condemn or rezone all or any portion of the Property), or involving the validity, enforceability or priority of this Mortgage, the Note or any of the Related Agreements or enjoining or preventing or threatening to enjoin or prevent the use and occupancy of the Property or the performance by Mortgagor of its obligations hereunder, and there are no rent controls, governmental moratoria or environmental controls presently in existence, or, to the knowledge of Mortgagor, threatened or affecting the Property. Mortgagor represents that Mortgagor has the right and authority to execute this Mortgage and will forever warrant and defend the Property unto Mortgagee, its successors and assigns, against every person whomsoever lawfully claiming or to claim the same or any part thereof. Mortgagor's warranties of title extend to after-acquired property whether acquired as replacements for property now owned by Mortgagor, as additional items of property attached to or used or adapted for use in the r operation of the Property, or otherwise, all of which property shall be owned by Mortgagor outright, free of liens or encumbrances. 1.3 Use of Proceeds. The monies received from Mortgagee shall be used for business purposes and not for personal, family or household purposes. 1.4 Security Agreement/Fixture Financing Statement. This Mortgage shall be deemed to be a Security Agreement pursuant to the Pennsylvania Uniform Commercial Code ("UCC"). Mortgagor hereby grants Mortgagee a security interest in any and all items of personal property and goods, as defined in the UCC (goods) and. intangibles described herein or in. any Financing Statement subsequently filed with the Pennsylvania Secretary of State or the county recorder of the county in which the Property is located and which are not herein effectively made part of the real property and in all additions thereto, substitutions therefor and proceeds thereof, for the purpose of securing all indebtedness and other obligations of Mortgagor secured by this Mortgage. This Mortgage constitutes a Financing Statement filed as a fixture filing in the official records of the county recorder of the county in which the Property is located with respect to any -3- BK5975PG 1435 and all fixtures included on or within the Property as used herein and with respect to any goods or other personal property that may now be or hereafter become such fixtures. Mortgagor (i) agrees to execute and deliver and (ii) authorizes Mortgagee to file and/or record financing and continuation statements covering the Property from time to time and in such form as Mortgagee may require to perfect and continue the perfection of Mortgagee's lien or security interest with respect to the Property. Mortgagor shall pay all costs of filing such statements and renewals and releases thereof and shall pay all reasonable costs and expenses of any record searches for financing` statements Mortgagee may reasonably require. Upon the occurrence of any default of Mortgagor hereunder, Mortgagee shall have the rights and remedies of a secured party under the Pennsylvania Uniform Commercial Code, as well as all other rights and remedies available under this Mortgage or at law or in equity. Mortgagor may from time to time replace items of personal property and fixtures constituting a part of the Property, provided that (1) the replacements for such items of personal property or fixtures are of equivalent value and quality; and (2). Mortgagor has good and clear title to such replacement property free and clear of any and all liens, encumbrances, security interests, ownership interests, claims of title (contingent or otherwise), or charges of any kind, or the rights of any conditional sellers, vendors or any other third parties in or to such replacement property; and (3) at the option of Mortgagee, Mortgagor will provide at no cost to Mortgagee a satisfactory opinion of counsel to the effect that the Mortgage constitutes a valid and subsisting first lien on and security interest in such replacement property and is not subject to being subordinated or the priority thereof affected under any applicable law, including but not limited to the provisions of the Pennsylvania Uniform Commercial Code. 1.5 Maintenance of Property, Compliance with Laws. Mortgagor shall maintain the buildings and other improvements on the 'Property in good condition and repair; not remove or demolish any building.thereon; complete or restore promptly and in good workmanlike manner any building which may be constructed, damaged or destroyed thereon and pay when due, all claims for labor performed and materials furnished therefor; not commit or permit waste thereof; comply with all requirements of the federal, state and local authorities and all other laws, ordinances, regulations, covenants, conditions and restrictions now or hereafter respecting the Property or the use thereof and pay all fees or charges of any kind in connection therewith. Proof of impairment of security shall be unnecessary in any suit, action or proceeding under this paragraph. Mortgagor shall permit Mortgagee and its agents the opportunity to annually inspect the Property, including the interior of any structures, at reasonable times and after three (3) days' written notice, or immediately, without notice if an Event of Default has occurred. 1.6 No Junior Financing. Mortgagor hereby represents that, as of the date hereof, there are no encumbrances to secure debt junior to this Mortgage, and that there are to.be none as of the date when this Mortgage is recorded. 1.7 Insurance. Mortgagor shall provide, maintain and deliver to Mortgagee: (a) a policy of fire insurance and extended coverage insurance insuring all the Property to the full insurable replacement value against loss or damage by fire and other risks embraced by coverage -4- FK5975PG 436 of the type now known as the broad form of extended coverage, including, but not limited to, vandalism and malicious mischief, and against such other risks and hazards as Mortgagee may from time to time reasonably request; and (b) such other insurance as Mortgagee may from time to time reasonably request against the same or other insurable hazards. All insurance shall contain waiver of subrogation clauses and loss payable clauses (without contribution) in favor of Mortgagee. Mortgagor shall deliver all policies to Mortgagee, which delivery shall constitute an assignment to Mortgagee of all return premiums. Mortgagor shall keep the above insurance and such other coverage reasonably requested by Mortgagee with carver(s), in amounts and in form at all times reasonably satisfactory to. Mortgagee, which carrier(s), amounts and form shall not be changed without the prior written consent of Mortgagee. All insurance policies shall be non- cancelable and not subject to material change by any party without thirty (30) days prior written notice to Mortgagee. Mortgagee may, at its option, require Mortgagor to maintain said required policies in Mortgagor's possession in lieu of delivering said policies to Mortgagee, in which event, said policies shall be kept available by Mortgagor at all times for return to Mortgagee or for inspection by Mortgagee, its agents or insurers, and said requirement may be withdrawn by Mortgagee at any time. If Mortgagor obtains earthquake, flood or any other hazard insurance, or any other insurance on the Property and such insurance is not specifically required by Mortgagee, then such insurance shall name Mortgagee under a standard mortgage endorsement as loss payee and be subject to all of the provisions of this Section 1.7. Mortgagor further assigns to Mortgagee any return premiums, refunds or other repayments upon any insurance at any time provided for the benefit of Mortgagee, and Mortgagee may at any time collect said return premiums, repayments, or refunds, notwithstanding that no sum secured hereby be overdue when such right to collection be asserted. The amount collected under any fire or other insurance policy may be applied by Mortgagee upon any indebtedness secured hereby and in such order as Mortgagee may, determine, or at option of Mortgagee the entire amount so collected or any part thereof may be released to Mortgagor. Such application or release shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. 1.8 Discharge of Liens. Mortgagor shall pay when due all rents, taxes, assessments and encumbrances, charges or liens affecting said property or any part thereof, which appear to be prior or superior hereto. Mortgagee may, at its option (but is not obligated to do so), pay any such sums, however, Mortgagee shall not be liable to Mortgagor for failure to exercise such option. 1.9 Actions; Indemnily' Modification, Costs. Mortgagor shall appear in and defend any suit, action or proceeding that might affect the priority or enforceability of this Mortgage or the value of this Mortgage, or the Property itself or the rights and powers of Mortgagee. Should Mortgagee elect also to appear in or defend any such suit, action or proceeding, or be made a party to such by reason of the Mortgage, or elect to prosecute such action as appears necessary to preserve said value, Mortgagor shall indemnify and, on demand, reimburse Mortgagee for, any and all loss, damage, expense or cost, including cost of evidence of title and attorney's fees, -5- BK5975PG 437 arising out of or incurred in connection with any such suit, action, or proceeding. Mortgagor shall pay all costs and expenses of Mortgagee, including attorney's fees incurred in connection with any amendment, modification or extension hereof or of the Note or any other agreement affecting the Property, including a request to consent to a transfer of any interest in the Property. Mortgagor shall pay all costs, and expenses incurred by Mortgagee in enforcing this Mortgage, the Note, or Related Agreements and any costs of suit, costs of evidence of title and attorney's fees in any suit, action or proceeding brought by Mortgagee to foreclose this Mortgage. The sum of all such expenditures referred to in this paragraph or incurred in exercise of rights or options otherwise granted to Mortgagee- in this Mortgage shall be secured by this Mortgage with interest as provided in the Note, and shall be due and payable on demand. 1.10 Condemnation Assignment of Rights. (a) Mortgagor shall within three (3) business days of its receipt of notice thereof, notify Mortgagee of any action or proceeding relating to any condemnation or other taking, whether direct or indirect, of the Property, or part thereof, and Mortgagor shall, after consultation with and subject to Mortgagee's approval, appear in and prosecute any such action or proceeding. Upon Mortgagor's failure to act in.accordance with Mortgagee's. prior approval, Mortgagor authorizes Mortgagee, at Mortgagee's option, as attorney in fact for Mortgagor (such . appointment as attorney in fact is coupled with an interest), to commence, appear in and prosecute, in Mortgagee's or Mortgagor's name, any action or proceeding relating to any condemnation or other taking of the Property, 'and to settle or compromise any claim in connection with such condemnation or other taking. The proceeds of any award, payment or claim for damages; direct or consequential, in connection with any condemnation or other taking of the Property, or part thereof, or for conveyances in lieu of condemnation, are hereby assigned to and shall be paid to Mortgagee in accordance with the provisions of :Section 1.10(b) below. Mortgagee is authorized (but is under no obligation) to collect any such proceeds. (b) Mortgagee may, in its sole discretion, elect to (i) apply the net proceeds of any condemnation award (after deduction of Mortgagee's reasonable costs and expenses, if any, in collecting the same) in reduction of Mortgagor's indebtedness to Mortgagee in such order and manner as Mortgagee may elect, whether due or not or (b) make the proceeds available to Mortgagor for the restoration or repair of the Property. Any implied covenant in this Mortgage restricting the right of Mortgagee to make such an election is waived by Mortgagor. (c) Provided no Event of Default then exists and Mortgagor certifies as to same, if Mortgagee in its sole and absolute discretion elects to make all or any part of the net proceeds _ of the condemnation award (after deduction of Mortgagee's reasonable costs and expenses, if any, in collecting the same) available to Mortgagor for restoration or repair, then any excess proceeds remaining after completion of such repair shall be distributed first to Mortgagor to the extent Mortgagor has deposited funds with Mortgagee for such repair with the balance applied against the indebtedness pursuant to the Note. Notwithstanding the foregoing, it shall be a condition precedent to any disbursement of net condemnation proceeds held by Mortgagee hereunder that Mortgagee shall have approved (i) all plans and specifications for any proposed repair or restoration, (ii) the construction schedule and (iii) the architect's and general contractor's -6 BK5975PG 438 contract for all restoration. Mortgagee may establish other conditions reasonably necessary to assure the work is fully completed in a good and workmanlike manner free of all liens or claims by reason thereof, and in compliance with all applicable laws, rules and regulations. At Mortgagee's option, the net condemnation proceeds shall be disbursed pursuant to a construction escrow acceptable to Mortgagee. (d) Assignment of Proceeds. Mortgagor hereby absolutely and irrevocably assigns to Mortgagee, and authorizes the payor to pay to Mortgagee, the following claims, causes of action, awards, payments and rights to payment: (i) all awards of damages and all other compensation payable directly or indirectly because of a condemnation, proposed condemnation or taking for public or private use which affects all or part of the Property or any interest in it; and (ii) all other awards,. claims and causes of action, arising out of any warranty affecting all or any part of the Property, or for damage or injury to or decrease in value of all or part of the Property or any interest in it; and all proceeds of any insurance policies payable because of damage or loss sustained to all or part of the Property, whether required pursuant to this Mortgage or otherwise maintained by Mortgagor; and (iv) all interest which may accrue on any of the foregoing. 1.11 No Impairment of Security. Mortgagor shall not, without first obtaining Mortgagee's written consent, change the general nature of the occupancy of the Property or initiate or acquiesce in any zoning reclassification, or do or suffer any act or thing which would impair the security for the indebtedness secured hereby or Mortgagee's lien upon the Property. 1.12 Financial Statements. Rent Rolls. Mortgagor shall keep and maintain at all times at Mortgagor's address stated above, or such other place as Mortgagee may approve in writing, and provide Mortgagee upon request, complete and accurate books of accounts and records adequate to reflect correctly the results of the operation of the Property and copies of all written contracts, leases and other instruments which affect the Property. Such books, records, contracts, leases and other instruments shall be subject to examination and inspection at any reasonable time by Mortgagee. Within` sixty (60) days of Mortgagor's fiscal year end, Mortgagor shall, upon Mortgagee's written request, furnish operating statements for the Property, including an income statement and financial statements for Mortgagor. Mortgagor shall also furnish personal financial statements for any individual maker or guarantor of any obligations secured hereby. Annually, Mortgagor shall supply a current rent schedule for the Property and expiration dates for each of the leases, together with an itemized list of moneys held as security deposits and the identity of the institution wherein such funds are deposited. Upon request by Mortgagee, Mortgagor will also supply copies of all of the leases. -7- BK5975PG 439 1.13 Inspection. Mortgagor warrants and agrees that after three (3) days written notice by Mortgagee, Mortgagee may at a reasonable time during regular business hours, make or cause to be made, entry upon and inspection of the Property, Improvements or any part thereof in person or by agent, or immediately, without notice, if an Event of Default has occurred. 1.14 Hazardous Materials. (a) No Hazardous Materials on Property. Mortgagor represents and warrants that, except as specified herein, to. the best of its knowledge after all appropriate inquiry, ' and covenants there are not, nor, will there be, for so long as any of Mortgagor's indebtedness pursuant to the Note remains outstanding, any Hazardous Materials (as defined below) generated, released, stored, buried or deposited over, beneath, in or upon the Property or on or beneath the Materials may - surface of adjacent property, except.. as such Hazardous Mate Y be used, stored or transported in connection with the permitted uses Hof the Property and then only to the extent permitted by law after obtaining all necessary permits and licenses therefor; provided, however, Mortgagor's obligation with respect to parties not within its control (including tenants) shall be to cause the Property to come into compliance with all applicable Hazardous Materials Laws upon discovering a violation of this provision by any such party. "Hazardous Materials" shall mean and include any pollutants, flammables, explosives, petroleum (including crude oil) or any fraction thereof, radioactive materials, hazardous wastes, dangerous or toxic substances or related materials, including substances defined as or included in the definition of toxic or hazardous substances, wastes, or materials under any federal, state or local laws, ordinances, regulations or guidance which relate to pollution, the environment or the protection of public health and safety, or limiting, prohibiting or otherwise regulating the presence, sale, recycling, generation, manufacture, use, transportation, disposal, release, storage, treatment of, or response or exposure to, toxic or hazardous substances, wastes or materials. Such laws, ordinances and regulations are hereinafter collectively referred to as the "Hazardous Materials Laws:" (b) Compliance with Laws. Mortgagor shall, and, Mortgagor shall use all commercially reasonable efforts to cause its employees, agents, tenants, contractors and subcontractors of Mortgagor to keep and maintain the Property in compliance with, and not cause or knowingly permit the Property to be in violation of, any applicable Hazardous Materials Laws. Neither Mortgagor nor any employees, agents, tenants, contractors or subcontractors of Mortgagor or any other persons occupying or present on the Property shall use, generate, manufacture, store or dispose of on, under or about the Property or transport to or from the Property any Hazardous Materials, except as such Hazardous Materials may be used, stored or transported in connection with the permitted uses of the Property and then only to the extent permitted by law after obtaining all necessary permits and licenses therefor; provided, however, Mortgagor's obligation with respect . to parties not within its control (including tenants) shall be to cause , the Property to come into compliance with all applicable Hazardous Materials Laws upon discovering' a violation of this provision by any such party. (c) Hazardous Materials Claims. Mortgagor shall immediately advise Mortgagee in writing of: (i) any notices received by Mortgagor (whether such notices are from the Environmental _g BK5975PG 440 Protection Agency, or any other federal, state or local governmental agency or regional office thereof) of the violation or potential violation of any applicable Hazardous Materials Laws occurring on or about the Property; _ (ii) any and all enforcement, cleanup, removal or other governmental or regulatory actions instituted, completed or threatened relating to the Property pursuant to any Hazardous Materials Laws; (iii) all claims made or threatened by any third party against Mortgagor or the Property relating to damage, contribution, cost recovery compensation, loss or injury resulting from any Hazardous Materials (the matters set forth in clauses (i), (ii) and (iii) above are hereinafter referred to as "Hazardous Materials Claims"); and (iv) Mortgagor's discovery of any occurrence or condition on any real property. adjoining. or in the vicinity of the Property that could cause the Property or any part thereof to be subject to any Hazardous Materials Claims. Mortgagee shall have the right but not the obligation to j oin and participate in, as a party if , it so elects any legal proceedings or actions initiated in connection with any Hazardous Materials Claims and Mortgagor shall pay to Mortgagee, upon demand, all attorneys and consultants fees incurred by Mortgagee in connection therewith. (d) bdemni Mortgagor shall be solely responsible for, and shall indemnify, defend and hold harmless Mortgagee, its directors, officers, employees, agents, successors and assigns from and against, any claim, demand, lawsuit, loss, damage, cost, expense or liability directly or indirectly arising out of or attributable to the use, generation, storage; release, threatened release, discharge, disposal or presence of Hazardous Materials on, under or about the Property (whether occurring prior to or during the term of the Loan or otherwise and regardless of by whom caused, whether by Mortgagor or any predecessor in title or any owner of land adjacent to the Property or any other third party, or any employee, agent, tenant, contractor or subcontractor of Mortgagor or any predecessor in title or any such adjacent land owner or any third person) including, without limitation: (i) claims of third parties (including governmental agencies) for injury or death to any person or for damage or destruction of any property; (ii) claims for response costs, clean-up costs, costs and expenses of removal and restoration, including fees of attorneys and experts, and costs of determining the existence of Hazardous Materials and reporting same to any governmental agency; (iii) any and all other claims for expenses or obligations, including attorneys' fees, costs, and other expenses; (iv) any and all penalties threatened, sought or imposed on account of a violation of any Hazardous Materials Laws; and (v) all fees of any consultants, attorneys and engineering firms retained in connection with monitoring the obligations of Mortgagor under this Mortgage. The foregoing indemnity by Mortgagor shall not, however, apply to the extent that any such cl demand, lawsuit," loss, `damage, cost, expense or liability is directly or indirectly the result of the intentional misconduct of Mortgagee or any of Mortgagee's employees, agents, successors' or assigns: (e) Removal of Hazardous Materials. Mortgagor, at its sole cost and expense, shall, with due care, in. a safe manner and in accordance with allapplicable laws, detain the spread of, ameliorate and remove from the Property any Hazardous Materials contamination located on or beneath the Property and monitor or cause to be monitored the levels of Hazardous Materials on, under or about the Property or in the ground water to the extent required by and in accordance with the terns and procedures required by any federal, state or local governmental agency having jurisdiction including; : without limitation, any Regional Water Quality Control Board and the Environmental Protection Agency. -9- BK5975PG 441 (f) Environmental Assessments. Mortgagee may, in its sole discretion, if it has a reasonable belief to suspect that a violation of the provisions of this Section 1.14 has occurred, require Mortgagor, at its sole cost and expense, to perform or cause to be.performed, such studies or assessments of the Property, as Mortgagee may deem necessary or appropriate or desirable, to determine the status of environmental conditions on and about the Property, which studies and assessments shall be for the benefit of Mortgagee and be prepared in accordance with the specifications established by Mortgagee. (g) Inspection and Testing. Mortgagor hereby confirms the right of Mortgagee (or a receiver appointed by Mortgagee) to enter upon and inspect all or any portion of the Property for the purpose of determining the existence, locution, nature and magnitude of any past or present release or threatened release of any Hazardous Materials into, onto, beneath, or from the Property. Such inspections and the tests and studies performed in connection therewith are collectively called the "Tests and Studies." All costs and expenses incurred by Mortgagee pursuant to this Section 1.14(g) including, without limitation, costs. of consultants and contractors, costs of repair of any physical injury to the Property normal and customary to the Tests and Studies, court costs and attorneys' fees, whether incurred in litigation or not and whether before or after judgment, shall be payable by Mortgagor and, to the extent advanced or incurred by Mortgagee, shall be reimbursed to Mortgagee by Mortgagor upon demand. Any and all of such costs and expenses advanced by Mortgagee, together with interest thereon at the rate then in effect under the Note, shall be secured by this Mortgage and shall enjoy the same priority as the original principal amount of the Note. ARTICLE 2 ASSIGNMENT OF LEASES, RENTS AND PROFITS 2.1 Attornment and Estoppel Certificate. Mortgagor shall include in every Lease or rental agreement an attornment and estoppel provision and shall provide Mortgagee with an Attomment and Estoppel Certificate in a form acceptable to Mortgagee from every tenant of the Property. 2.2 Assignment of Rents. All of Mortgagor's interest in any leases or other occupancy agreements pertaining to the Property now existing or hereafter entered into, and all of the rents, royalties, issues, profits, revenue, income and other benefits of the Property arising from the use or enjoyment of all or any portion thereof or from any.lease or agreement pertaining to occupancy of any portion of the Property now existing or hereafter entered into; whether now due, past due, or to become due, and including all prepaid rents and security deposits (the "Rents and Profits"), are hereby absolutely, presently and unconditionally assigned, transferred, conveyed and set over to Mortgagee to be applied by Mortgagee in payment of the principal and interest and all other sums payable on the Note, and of all other sums payable under this Mortgage. Prior to the occurrence of an Event of Default (hereinafter defined), Mortgagor shall have a license to collect and receive all Rents and Profits, which license shall be terminable at the option of Mortgagee, without regard to the adequacy of its security hereunder and without written notice to or demand upon Mortgagor, upon the occurrence of an Event of Default. It is understood and agreed that neither the foregoing assignment of Rents and Profits to Mortgagee nor the exercise by Mortgagee of any of its rights or remedies under Article 4 hereof shall be deemed to make -10- BK5975FG 442 Mortgagee a "mortgagee-in-possession" or otherwise responsible or liable in any manner with respect to the Property, the use, occupancy, enjoyment or operation of all or any portion thereof, unless and until 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 or any part thereof by such receiver, be deemed to make Mortgagee a "mortgagee-in-possession" or otherwise responsible or liable in any manner with respect to the Property or the use, occupancy, enjoyment or operation of all or any portion thereof. Upon the occurrence of an Event of Default, this provision shall ' constitute a direction and demand to each lessee under any lease and each guarantor of any lease to pay all Rents and Profits to Mortgagee without proof of the default relied upon. Mortgagor hereby irrevocably authorizes each lessee and guarantor to rely upon and comply with any notice or demand by Mortgagee for the payment to Mortgagee of any Rents and Profits due or to become due.. Mortgagor hereby irrevocably appoints Mortgagee its true and lawful attorney-in-fact, with full power of substitution and with full power for Mortgagee in its own name and capacity or in the name and capacity of Mortgagor to demand and collect any and all Rents and Profits and to file any claim or take any other action or proceeding and make any settlement regarding the Leases; provided however, Mortgagee shall exercise such power of attorney unless and until Mortgagor is in default of any payment or in breach of any material term or provision herein. 2.3 Warranties. (a) Mortgagor warrants as to each lease now covering all or any part of the Property that: (1) each lease is in full force and effect; (2) no default exists on the part of the lessee thereunder or Mortgagor; (3) no rent has been collected more than one month in advance; (4) no lease or any interest therein has been previously assigned or pledged; (5) no lessee under any lease has any defense, setoff or counterclaim against Mortgagor; (6) all rent due to date under each lease. has been collected and no concession has been granted to any lessee in the form of a waiver, release, reduction, discount or other alteration of rent due or to become due; and (7) the interest of the lessee under each lease is as lessee only, with no options to purchase or rights of first refusal. All the foregoing warranties shall be deemed to be reaffirmed and to continue until performance in full of the obligations under this Mortgage. Mortgagee shall not be bound. by any oral or written assignment, surrender, release, waiver, cancellation, amendment or modification of the Lease made without the written consent of Mortgagee. (b) Without the prior written consent of Mortgagee, Mortgagor shall not (1) accept prepayments of rent exceeding one month under any leases of any part of the Property; (2) take any action under or with respect to any such leases which would decrease the monetary obligations of the lessee thereunder or otherwise materially decrease the obligations of the lessee or the rights or remedies of the lessor; (3) modify or amend any such leases or, except where the lessee is in default, cancel or terminate the same or accept a surrender of the leased premises, provided, however, that Mortgagor may renew, modify or amend leases in the ordinary course of business so long as such action does not decrease the monetary obligations of the lessee thereunder, or otherwise decrease the obligations of the lessee or the rights or remedies of the lessor; (4) consent to the assignment or subletting of the whole or any portion of the lessee's -11- BK5975PG 443 interest under any lease which has a term of more than five years; (5) create or permit any lien or encumbrance which, upon foreclosure, would be superior to any such leases; or (6) in any other manner impair Mortgagee's rights and interest with respect to the Rents and Profits. 2.4 Performance of Landlord Obligations. Mortgagor shall at all times perform the obligations of lessor under all such leases. Mortgagor shall not execute any further assignment of any of the Rents and Profits or any interest therein or suffer or permit any such assignment to occur by operation of law. 2.5 Mortgagee's Rights. Mortgagee shall be deemed to be the creditor of each lessee in respect of any. assignments for the benefit of creditors and any. bankruptcy, arrangement, reorganization; insolvency, dissolution, receivership or other debtor-relief proceedings affecting such lessee (without obligation on the part of Mortgagee, however, to file timely claims in such proceedings or otherwise pursue creditor's rights therein). Mortgagee shall have the right to assign Mortgagor's right, title and interest in any leases to any subsequent holder of this Mortgage or any participating interest therein or to any person acquiring title to all or any part of the Property through foreclosure or otherwise. Any subsequent assignee shall have all the rights and powers herein provided to Mortgagee. Mortgagee shall have the authority in the event of default, as Mortgagor's attorney-in-fact, such authority being coupled with an interest and irrevocable, to sign the name of Mortgagor and to bind Mortgagor on all papers and documents relating to the operation, leasing and maintenance of the Property. ARTICLE 3 EVENTS OF DEFAULT The following shall each constitute an "Event of Default": 3.1 Failure to make any payment of principal or interest under the Note or any Related Agreement, when due and payable, whether at maturity or by acceleration or as part of any prepayment or ,otherwise, or default in the performance of any of the covenants or agreements of Mortgagor contained in the Note, or default in the performance of any of the covenants or agreements of Mortgagor contained herein or in any Related Agreement, after the expiration of the period of time, if any, permitted for cure of such default thereunder. 3.2 The appointment, pursuant to an order of a court of competent jurisdiction of a trustee, receiver, or liquidator of the Property or any part thereof, or of Mortgagor, or any termination or voluntary suspension of the transaction of business of Mortgagor, or any attachment,- execution or other judicial seizure of all or any substantial portion of Mortgagor's assets which attachment, execution or seizure is not discharged within thirty (30) days. 3.3 Mortgagor shall file a voluntary case. under any applicable bankruptcy, insolvency, debtor relief, or other similar law now or hereafter in effect, or shall consent to the appointment of or taking possession by a receiver, liquidator, trustee, or similar official, of Mortgagor or for any part of the Property or any substantial part of Mortgagor's property, or shall make any general -12- GK5975PG 444 assignment for the benefit of Mortgagor's creditors, or shall fail generally to pay Mortgagor's debts as they become due or shall take any action in furtherance of any of the foregoing. . 3.4 The entry by a court having jurisdiction of a decree or order for relief in respect of Mortgagor, in any involuntary case brought under any bankruptcy, insolvency, debtor relief, or similar law now'or hereafter in effect, or Mortgagor shall consent, to or shall fail to oppose any such proceeding, or any such court shall enter a decree or order appointing a receiver, liquidator, trustee, or similar official, of Mortgagor or for any part of the Property or any substantial part of Mortgagor's property, or ordering the winding up or liquidation of the affairs of Mortgagor, and such decree or order shall not be dismissed within sixty (60) days after the entry thereof. 3.5 Default undefthe terms of any agreement of guaranty relating to the indebtedness evidenced by the Note or Related Agreements or the revocation, limitation or tennination of the obligations of any guarantor of the Note or Related Agreement, except in accordance with the express written terms of the instrument of guaranty. 3.6 If Mortgagor is other than a natural person, without the prior written consent of Mortgagee in each case, (a) the dissolution or termination of existence of Mortgagor voluntarily or involuntarily, whether by reason of death of Mortgagor or a general partner of Mortgagor or otherwise; (b) the amendment or modification in any respect of Mortgagor's agreement. of partnership or its corporate resolutions relating to this transaction, or (c) the distribution of any of Mortgagor's capital which may impair Mortgagee's.interest in the Property or which adversely impacts Mortgagor's ability to repay the indebtedness, except for distribution of the proceeds of the loan secured hereby and cash from operations; as used herein, cash from operations shall mean any cash of Mortgagor earned from operation of the Property, but not from a sale or refinancing of the Property or from borrowing, available after paying all ordinary and necessary current expenses of Mortgagor, including expenses incurred in the maintenance of the Property, and after establishing reserves to meet current or reasonably expected obligations of Mortgagor. 3.7 Any representation, warranty, or disclosure made to Mortgagee by Mortgagor or any guarantor of any indebtedness secured hereby in connection with or as an inducement to the making of the loan evidenced by the Note or in connection with or as an inducement to the making of any further advance, this Mortgage or any of the Related Agreements, proving to be false or misleading in any material respect as of the time the same was made, whether or not any such representation or disclosure appears as part of this Mortgage. ARTICLE 4 REMEDIES Upon the occurrence of an Event of Default, Mortgagee shall have the following rights and remedies: 4.1 Performance Option of Mortgagee. Should Mortgagor fail to make any payment or to do any act as herein provided, Mortgagee may, but without obligation so to do and without notice to or demand upon Mortgagor and without releasing Mortgagor from any obligation -13- BK5975PG 445 hereof: (a) make or do the same in such manner and to such extent as either may deem necessary in the exercise of its absolute discretion to protect the security hereof, Mortgagee being authorized to enter upon the Property for such purposes; (b) commence, appear in and defend any suit, action or proceeding purporting to affect the security hereof or the rights or powers of Mortgagee; (c) pay, purchase, contest or compromise any encumbrance, charge of lien which, in the judgment of either, appears to be prior or superior hereto; and (d) in exercising any such power, incur any liability, expend whatever amounts in its absolute discretion it may deem necessary therefor, including cost of evidence of title, employ counsel and pay reasonable fees. 4.2 Repayment of Advances and Interest. Mortgagor shall immediately repay upon demand, all sums expended or advanced hereunder by or on behalf of Mortgagee, with interest , from the date of such advance or expenditure as provided in the Note (but not in any event to exceed the maximum interest rate permissible by law) until paid, and the repayment therefor shall be secured hereby, it being agreed by Mortgagor that any such expenditure or advance is to protect the security hereof and constitutes a part of the loan transaction in connection with which the Note was executed. In addition, Mortgagor agrees to pay all costs and expenses incurred by Mortgagee in any action or foreclosure to enforce the terms of the Note, Mortgage or Related Agreement(s) together with reasonable attorney's fees. 4.3 Appointment of Receiver. Mortgagee shall be entitled (without notice and without regard to the adequacy of any security for the indebtedness secured hereby) to the appointment of a receiver of the rents and profits of the Property, and such receiver shall have, in addition to all the rights and powers customarily given to and exercised by such receiver, all the rights and powers granted to Mortgagee contained herein. 4.4 Entr . Mortgagee, at its option, may in person or by agent or by court-appointed receiver, enter upon, take possession of, manage'and operate the Property or any part thereof and do all things necessary or appropriate in Mortgagee's sole discretion in connection therewith, including, but not limited to making, enforcing or modifying any leases now or hereinafter in effect on the Property or any part thereof,' evicting tenants, fixing or modifying rents, contracting for and making repairs and alterations, and otherwise doing any act or incurring any cost or expense which Mortgagee deems proper to protect the security hereof. Mortgagee may further, with or without so taking possession, in its own name or in the name of Mortgagor, sue for or otherwise collect and receive the Rents and Profits, including those past due and unpaid, and apply the same less costs and expenses of operation and collection, including reasonable attorney's fees, upon any indebtedness secured hereby, and in such order as Mortgagee may determine. The entering upon and taking possession of the Property, or any part thereof, and the collection of -any Rents and Profits and the application thereof as aforesaid shall not cure or waive any default theretofore or thereafter occurring or affect any notice or default hereunder or invalidate any act done pursuant to any such default or notice, and, notwithstanding continuance in possession of the Property or any part thereof by Mortgagee, Mortgagor or a receiver, and the collection, receipt and application of the Rents and Profits. Mortgagee shall be entitled to exercise every right provided for in this Mortgage or by law or in equity upon or after the occurrence of a default. -14- BX5975PG 446 4.5 Due on Sale/Transfer. Mortgagee shall have the right, at its option, to declare any indebtedness and obligations under the Note and this Mortgage, irrespective of the maturity date specified therein, immediately due and payable in full without forfeiture of any prepayment charge if: (1) Mortgagor or any one or more of the persons comprising Mortgagor sells, enters into a contract of sale, conveys, alienates or encumbers the Property or any portion thereof or any fractional undivided interest therein, (2) suffers Mortgagor's title or any interest therein to be divested or encumbered, whether voluntary or involuntary, (3) leases for a term of more than six years (including option to renew), leases with an option to sell, or changes or permits to be changed the character or use of the Property without Mortgagee's written consent (4) there is any merger, consolidation or dissolution involving the sale or transfer of all or substantially all of the assets of Mortgagor, any general partner of Mortgagor or any manager -of a limited liability company Mortgagor; (5) there is any direct or indirect transfer (at one time or over any period of time) of 25% or.more of the voting stock of (i) a corporate Mortgagor, (ii) any corporate general partner of Mortgagor, or (iii) any corporation which is the direct. or indirect owner of 25% or more of the beneficial interest in Mortgagor or any general partner of Mortgagor; (6) there is. any direct or indirect transfer of any general partnership interest if Mortgagor's is a general or limited partnership; (7) there is any direct or indirect the transfer (at one time or over any period of time) of 25% or more of the membership interests of (i) a limited liability company Mortgagor, (ii) any limited liability company general partner of Mortgagor, or (iii) any limited liability company ,which is the direct or indirect owner of 25%0 or more of the beneficial interest of Mortgagor or any general partner of Mortgagor, or (8) there is any direct or indirect transfer of any interest in any manager of a limited liability company Mortgagor. This provision shall apply to each and every sale, transfer, encumbrance or conveyance, regardless whether or not Mortgagee has consented to, or waived, Mortgagee's rights hereunder, whether by action or non action, in connection with any previous sale, transfer or conveyance. 4.6 Pursue Remedies. When any obligation secured herein or any part thereof shall become due, whether by acceleration or otherwise; Mortgagee may, either with or without entry or taking possession as herein provided or otherwise, proceed by suit or suits at law or in equity or by any other appropriate proceeding or remedy to: (a) accelerate the maturity of and enforce payment of the indebtedness due under the Note; (b) enforce the performance of any -term, covenant, condition or. agreement of Mortgagor under any of the. Related Agreements; (c) ' foreclose the lien hereof for the indebtedness pursuant to the Note or part thereof by commencement of action to sell the Property as an entirety or otherwise,< as Mortgagee may determine; and/or (d) pursue any other right or remedy available to it under the Note or any Related Agreement, by law and in equity. Notwithstanding any statute or rule of law to the contrary, the failure to join any tenant or tenants of the Property as party defendant or defendants in any foreclosure action or the failure of any such order or judgment to foreclose their rights shall not be asserted by Mortgagor as a defense in any civil action instituted to collect (a) the obligations secured herein, or any part thereof or (b) any deficiency remaining unpaid after foreclosure and sale of the Property. 4.7 Intentionally Omitted. -15- BK5975PG 447 4.8 Mixed Collateral. Upon the occurrence of an Event of Default under this Mortgage, Mortgagee, pursuant to appropriate statutory provisions; shall have an option to proceed with respect to both the real property portion of the Property and any personal property in accordance with its rights, powers and remedies with respect to such real property. Such option shall be revocable by Mortgagee as to all or any portion of the personal property at any time prior to the sale of the remainder of the Property. Should Mortgagee elect to sell the personal property or any part thereof which is real property or which Mortgagee has elected to treat as real property or which may be sold together with the real property as provided above, Mortgagee shall give such notice of default and election to sell as may then be required by law. The parties agree that if Mortgagee shall elect to proceed with respect to any portion of the personal property separately from such real property, five (5) days notice of the sale of the personal property shall be reasonable notice. The reasonable expenses of retaking, holding, preparing for sale, selling and the like incurred by Mortgagee shall include, but not be limited to, reasonable, attorneys' fees, costs and expenses, and other expenses incurred by Mortgagee. 4.9 Intentionally Omitted. 4.10 " Rights and Remedies Cumulative: Mortgagee shall have all powers, rights and remedies under applicable law whether or not specifically or generally granted or described in this Mortgage. Nothing contained herein shall be construed to impair or to restrict such powers, rights and remedies or to preclude any procedures or process otherwise available to a mortgagee in the State in which the Property is located. Mortgagee shall be entitled to enforce the payment and performance of the indebtedness owed pursuant to Note and all obligations secured hereunder and to exercise all rights and powers under this Mortgage or under any other Related Agreements or other agreement or any laws now or hereafter in force, notwithstanding the fact that some or all of the indebtedness owed pursuant to Note and all obligations secured hereunder may now or hereafter be otherwise secured, whether by mortgage, pledge, lien, assignment or otherwise. Neither the acceptance of this Mortgage nor its enforcement, whether by court action or other powers contained herein, shall prejudice or in any manner affect Mortgagee's right to realize .upon or enforce any other rights or security now or hereafter held by Mortgagee. Mortgagee shall be entitled to enforce this Mortgage and any other rights or security now or hereafter held by Mortgagee in such order and manner as Mortgagee may in its absolute discretion determine. No remedy herein conferred upon or reserved to Mortgagee is intended to be exclusive of any other remedy contained herein or by law provided or permitted, but each shall to the extent permitted by law be cumulative and in addition to every other remedy given hereunder or now or hereafter existing at law or in equity. Every power or remedy given by any of the Related Agreements to Mortgagee, or to which ' Mortgagee may be otherwise entitled, may be exercised, concurrently or independently, from time to time and as often as may be deemed 'expedient by Mortgagee, and Mortgagee. may pursue inconsistent remedies. By exercising or by failing to exercise : any right, option or election hereunder, Mortgagee shall not be deemed to have waived any provision hereof or to have released Mortgagor from any of the obligations secured hereby unless such waiver or release is in writing and signed by Mortgagee. The waiver by Mortgagee of Mortgagor's failure to perform or observe any term, covenant or condition referred to or contained herein to be perform or observed by Mortgagor shall not be deemed to be a waiver of such term, covenant or condition or of any subsequent failure of Mortgagor to perform or observe the same or any other such term, covenant or -16- BK5975PG 448 condition referred to or contained herein, and no custom or practice which may develop between Mortgagor and Mortgagee during the term hereof shall be deemed a waiver of or in any way affect the right of Mortgagee to insist upon the performance by Mortgagor of the obligations secured hereby in strict accordance with the terms hereof or of any Related Agreements. 4.11 Intentionally Omitted. 4.12 Intentionally Omitted. 4.13 Waiver of Marshaling. Mortgagor, for itself and for all persons hereafter claiming through or under it or who may at any time hereafter become holders of liens junior to the lien of this Mortgage, hereby expressly waives and releases all rights to direct the order in which any of the Property shall be sold in the event of any sale or sales pursuant hereto and to have any of the Property' and/or any other property now or hereafter constituting security for any of the indebtedness secured. by this Mortgage, marshaled upon any foreclosure of this Mortgage or of any other security for any of said indebtedness. 4.14 Remedies Cumulative. No remedy herein conferred upon or reserved to Mortgagee is intended to be exclusive, of any other remedy herein or by law provided, but each shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute. If there exists additional security for the performance of the obligations secured hereby, the holder of the Note, at its sole option, and without limiting or affecting any of its rights or remedies hereunder, may exercise any of the entitled hereunder either concurrently with whatever rights and remedies to which it may be rights and remedies it may have in connection with such other security or in such order as it may determine. Any application of any amounts or any portion thereof held by Mortgagee at any time as additional security hereunder, to any indebtedness secured hereby shall not extend or postpone the due dates of any payments due from Mortgagor to Mortgagee hereunder or under the Note or any of the Related Agreements, or change the amounts of any such payments or otherwise be construed to cure or waive any default or notice of default hereunder or invalidate any act done pursuant to any such default or notice. 4.15 Attorney's Fees and Costs. Mortgagor promises to pay all costs, expenses and attorneys' fees incurred by Mortgagee in the exercise of any remedy (with or without litigation) under the Note, Mortgage or other security instrument, in any proceeding for the collection of the debt evidenced by this Note, in any foreclosure of the Mortgage or the realization upon any other security securing this Note, in protecting or sustaining the lien or priority of said.Mortgage or said other security, or in any litigation or controversy arising from or connected with the Note, the Mortgage or other security for this Note. Said proceedings include, without limitation, any probate, bankruptcy, receivership, injunction, arbitration, mediation or other proceeding, or any appeal from or petition for review of any of the foregoing, in which Mortgagee prevails. Mortgagor shall also pay all of Mortgagee's costs and attorney's fees incurred in connection with any demand, work-out, settlement, compromise, or other activity in which Mortgagee engages to collect any portion of this debt not paid when due or as a result of any Event of Default of Mortgagor. If a judgment is obtained thereon which includes an award of attorney's fees, such -17- BK5975PG 449 attorney's fees, costs and expenses shall be in such amount as the court shall deem reasonable, which judgment shall bear interest at the Default Rate as defined in the Note from the date it is rendered to and including the date of payment to Mortgagee. "Costs and expenses" shall include, but are not limited to appraisal fees, inspection fees and costs of a title report. 4.16 Confession of Judgment for Possession. Upon the occurrence of an Event of Default, Mortgagor authorizes and empowers any attorney or attorneys of any court of the Commonwealth of Pennsylvania to appear for Mortgagor and, as attorney for Mortgagor, to file any actions in ejectment and/or-for possession of the Property and to confess judgment in ejectment and/or possession therein against Mortgagor in favor of Mortgagee. For so doing, this Mortgage or a copy of this Mortgage verified by affidavit shall be a sufficient warrant. Thereupon, a writ of possession may issue immediately for the possession of any or all of the Property, without any prior writ or proceeding whatsoever. Mortgagee may bring such action in ejectment and confess judgment before or after: (a) the institution of foreclosure proceedings under this Mortgage, (b) the entry of judgment under this Mortgage or under the Note or any documents that evidence or secure this Mortgage, or (c) a sheriffs sale of any of the Property. This authority to confess judgment shall not be exhausted by one or more exercises thereof. ARTICLE 5 MISCELLANEOUS 5.1 Severability. In the event any one or more of the provisions contained in this Mortgage shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Mortgage, but this Mortgage shall be construed as if such invalid, illegal or unenforceable provision.had never been contained herein. 5.2 Mortgagor Not Released. Extension of the time for payment or modification of the terms of payment of any sums secured by this Mortgage granted by Mortgagee to any successor in interest of Mortgagor shall not operate to release, in any manner, the liability of the original Mortgagor. Without affecting the liability of any person, including Mortgagor, for the payment of any indebtedness secured hereby, or the lien of this Mortgage on the remainder, of the Property for the full amount of any such indebtedness and liability unpaid, Mortgagee may, from time to time and. without notice (a) release any person liable for the payment of any of the indebtedness, (b) extend the time or otherwise alter the terms of payment of any of the indebtedness, (c) accept additional real or personal property of any kind. as security therefor, whether evidenced by mortgages, security agreements or any other instruments of security, or (d) alter, substitute or release any property securing the indebtedness. 5.3 No Waiver.. No delay or omission to exercise any right, power or remedy accruing to Mortgagee on any breach or default of Mortgagor hereunder shall impair any such right, power, or remedy of Mortgagee, nor shall it be construed to be a waiver of any other or subsequent breach or default. Any waiver, permit, consent or approval of any kind by Mortgagee must be in writing and shall be effective only to the extent specifically set forth in that writing. -18- 6K5975PG Lt50 . 5.4 Mortgagee's Actions not a Cure of Default. The taking of any action by Mortgagee under the authority of this Mortgage, including, but not being limited to, the.entering upon, taking possession of and management and operation of the Property, the collection of rents and profits thereof, or the proceeds of fire and other insurance policies or compensation or awards for any taking or damage of the Property, and the application or release thereof as aforesaid, shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. 5.5 Time. Time is of the essence hereof in connection with all obligations of , Mortgagor herein and in any of the Related Agreements. 5.6 Notices. All notices or other communications desired or required hereunder shall be sent in the manner and to the addresses for the parties as set forth in the Note. 5.7 Reconveyance. Upon the payment in full of all sums secured by this Mortgage, , Mortgagee shall reconvey the Property without warranty to the person or persons legally entitled thereto and shall surrender this Mortgage and the Note evidencing the indebtedness secured by this Mortgage to Mortgagor. Mortgagor shall pay all costs of recordation, if any. 5.8 Successors and Assigns. All of the grants, obligations, covenants, and terms and conditions herein shall run with the land and shall apply to and bind the heirs, administrators, executors, legal representatives, successors and assigns of Mortgagor and inure to the benefit of the endorsees, successors and assigns of Mortgagee. In the event Mortgagor is composed of more than one party, the obligations, covenants, agreements, and warranties contained herein as well as the obligations arising therefrom are and shall be joint and several as to each such party. 5.9 Governing Law. This Mortgage is made pursuant to, and shall be construed and governed by; the laws of the Commonwealth of Pennsylvania. - a 5.10 No Third Party Benefits. This Mortgage, the Note and the other Related Agreements are made for the sole benefit of Mortgagee and its ' successors and assigns, and convey no other legal interest to any party under or by reason of any of the foregoing. Whether or not Mortgagee elects to employ any or all of the rights, powers or remedies available to it under any of the foregoing, Mortgagee shall have no obligation or liability of any kind to any third party. by reason' of any of the foregoing or any of Mortgagee's actions or omissions pursuant thereto or otherwise in connection with this transaction. 5.11 Interest After Default. If any payment due hereunder or under the Note is not paid when due, either, at stated or accelerated maturity or pursuant to any of the terms hereof, then and in such event, Mortgagor shall pay interest thereon from and after the date on which such payment first becomes due at the default interest rate provided for in the Note and such interest shall be due and payable,' on demand, at such rate until the entire amount due is paid to Mortgagee, whether or not any action shall have been taken or proceeding commenced to recover the same or to foreclose this Mortgage. Nothing in this Section or in any other provision of this -19- OK5975PG 451 Mortgage or the Related Agreements shall constitute an extension of the time of payment of the indebtedness. After entry of a judgment on the Note or any of the Related Agreements or a judgment in mortgage foreclosure hereunder, interest shall continue to accrue under said judgment, the Note, this Mortgage and the Related Agreements at the default interest rate set forth in the Note. This Mortgage shall not, solely for purpose of determining interest payable, merge with any judgment on the Note or any other Loan Document or a judgment in mortgage foreclosure under this Mortgage.: 5.12 Future Advances. This Mortgage secures present and future advances made pursuant to this Mortgage and the lien of such future advances shall relate back to the date of this - Mortgage. Without limiting the foregoing, this Mortgage secures all advances made by Lender of any kind or nature determined in 42 Pa C.S.A.§ 8144. 5.13 Jurisdiction and Venue. Mortgagor irrevocably and unconditionally waives any defense of improper venue or inconvenience of forum in any actions under this Mortgage, and any rights to claim immunity in respect of itself or any of its property or assets, including immunity from jurisdiction, immunity from attachment prior to entry of judgment, immunity from attachment in aid of execution of judgment, and immunity from execution or judgment, all in respect of any legal suit, action, or proceeding arising out of, or relating to, this Mortgage. Mortgagor irrevocably consents to the exclusive jurisdiction of the Courts of Common Pleas of Pennsylvania and/or the United States District Court for the Eastern District of Pennsylvania in any disputes, actions, or proceedings between Mortgagee and Mortgagor, whether arising under this Mortgage or under any other agreement or undertaking; and Mortgagor irrevocably consents to service of process by certified mail, return receipt requested, to Mortgagor at the address set forth in the introductory paragraph of this Mortgage. Mortgagor shall not in any litigation between Mortgagor and Mortgagee object to the venue of the action or claim that the forum.is inconvenient. Mortgagor waives the right to interpose any defense, set-off, or counterclaim . of any nature or description in any litigation in which Mortgagee and Mortgagor shall be adverse parties, arising out of or relating to any sums due under this Mortgage, the ]Related Agreements, the Property, the Collateral, or any of the other matters contained in this Mortgage or the Related Agreements; provided, however, that nothing contained in this Section 5.13 shall in any manner prevent or preclude Mortgagee from bringing any one or more actions against Mortgagor in any jurisdiction in the'United States or elsewhere.' Mortgagor's consent, in advance, to the jurisdiction of the State or Federal courts of the Commonwealth of Pennsylvania is a material inducement for Mortgagee to make the Loan to Mortgagor. 5.14 Waiver of Jury Trial. Mortgagee and Mortgagor acknowledge that disputes j arising under this Mortgage and the Related Agreements are likely to be complex, thattrial before a judge is more appropriate than trial before a jury, and that they desire to streamline and minimize the cost of resolving such disputes. Therefore, Mortgagee and Mortgagor, irrevocably waive all rights to a trial by jury in as an independent covenant any action, counterclaim, dispute, or proceeding based upon, or related to, the subject matter of this Mortgage and the Related Agreements and grants the judge presiding over -20- BK5975PG 452 any such action, counterclaim, dispute, or proceeding full power and authority to determine all questions of fact. This waiver applies to all claims against all parties to such actions and proceedings including those involving Mortgagee or Mortgagee's parent, affiliates, or related entities, or any officer, director, shareholder, member, attorney, or partner of any of them. It also applies whether such dispute or proceeding arises under this Mortgage and the Related Agreements, any other agreement, Note, paper, instrument, or document heretofore or hereafter executed, or any other contract, whether similar or dissimilar and whether or not it arises from intentional or unintentional conduct, from fraud, other improper action, or failure to act, or from other reasons. This Section 5.14 shall be deemed a covenant of Mortgagor and shall be enforceable independently of all other provisions of this-Mortgage and the Related Agreements. This waiver is knowingly, intentionally, and voluntarily made by Mortgagor, and Mortgagor acknowledges that neither Mortgagee nor any Person acting on behalf of Mortgagee has made any representations to induce this waiver of trial by jury or in anyway to modify or nullify its effect. Mortgagor further acknowledges that it has been represented (or has had the opportunity to be represented) in connection with the signing of this Mortgage and in the making of this waiver by independent legal counsel, selected of its own free will, and that it has had the opportunity to discuss this waiver with counsel. Mortgagor further acknowledges that it has read and understands the meaning and ramifications of this waiver provision. 5.15 Mortgaaor Waivers. Section 4.16 of this Mortgage provides for the remedy of confession of judgment in ejectment. In granting this warrant of attorney to confess judgment against Mortgagor and to execute upon said judgment against Mortgagor, Mortgagor knowingly, intelligently, voluntarily, and unconditionally waives any and all rights Mortgagor has or may have to notice and a prior judicial proceeding under the respective constitution and laws of the United States of America and the Commonwealth of Pennsylvania to determine Mortgagor's rights and liabilities. Mortgagor further knowingly, intelligently,' voluntarily, and unconditionally acknowledges that Mortgagee may, after the occurrence of an Event of Default, obtain a judgment for possession of the Property without the prior knowledge or consent by Mortgagor and without any opportunity of Mortgagor to raise any defense, setoff, counterclaim, or other claim that Mortgagor may have. IN WITNESS WHEREOF, intending to be legally bound and intending this to be a sealed instrument, Mortgagor has executed this Mortgage, Assignment of Leases and Rents, , Security Agreement and Fixture Filing as of the day and year first written above. Harrisbur Gab s Pr , WITNESS Richard 'tstifer, Pr WITNESS -21 BK5975PG 453 Commonwealth of Pennsylvania County of Montgomery On this 14th day of April, 2005, before me, the undersigned officer, personally appeared Richard Mitstifer, who acknowledged himself to be President of Harrisburg Gables Properties, Inc., and, being duly authorized, subscribed to the within instrument as such officer, and acknowledged that he executed the same for the purposes therein contained. .. ail ... .. Norary Public COMMONWEALTH OF PENNSYLVANIA NoTARrAi, s?AL MARK CHALPHiN. NeftW Pubft The address of the Lender is: Norrtstmm Bore, ltop' - --- r C P. My ? Zvi. 2? , Avatar Income Fund I, LLG 100 Wall Street Seattle, WA 98121 t tserat f CE;TTIFY Md Mb &=xnut to rameje f 6n ",.a Nwxrdert OMN On behalf of Lender Of Dwpliin C->W:. PerMYNaft Jmnes FA Zuga% Esq. na:•r:::uao?` y BK5975PG 454 SCHEDULE "C" ,NUMBER: 123933-NCH ALL THAT CERTAIN tract of land, together with all buildings and other improvements thereon erected, Situate in West Hanover Township, Dauphin County, Pennsylvania, more particularly bounded and described in accordance with an ALTA/ACSM Land Title Survey for Harrisburg Gables Property, Inc., dated 9-16-2003, prepared by Akens Engineering Associates, Inc., as follows, to wit: BEGINNING at the Southwesternmost corner of said lot, at the centerline intersection ofLinglestown Road S.R. 0039 and Fairville Avenue T-526, at a found P.K. Nail; thence progressing along Fairville Avenue, the following five courses and. distances: (1) North 05 degrees 14 minutes 3 0 seconds East, a distance of 223.62 feet to a point; (2) thence progressing North 04 degrees 18 minutes 30 seconds East, a distance, of 345.84 feet to a point; (3) thence progressing North 16 degrees 15 minutes 00 seconds East, a distance of 146.09 feet to a point; (4) thence progressing North 26 degrees 36 minutes 00 seconds East, a distance of 287.32 feet to a point; (5) thence progressing North 19 degrees 29 minutes 00 seconds East, a distance of 81.91 feet to a point; thence progressing South 62 degrees 11 minutes 19 seconds East, a distance of 308.20 feet to a found iron pin; thence progressing South 03 degrees 30 minutes 33 seconds West, a distance of 1,104.4} feet to afound P.K. Nail in the centerline of Linglestown Road S.R. 0039; thence progressing along Linglestown Road S.R. 0039, North 65 degrees 30 minutes 00 seconds West, a distance of 492.61 feet to a found P.K. Nail, the point of beginning. SAID tract containing 460,429 square feet, 10.57 acres, Less Right of Way Area containing 50,049 square feet, 1.15 acres leaving a net acreage containing 410,3 80 square feet, 9.42 acres, and being located in West Hanover Township, Dauphi County, Pennsylvania. BEING Parcel No. 68-020-009. BEING THE ,SAME PREMISES WHICH All American Plazas, Inc., by Deed dated 10/3/2003 and recorded in Dauphin County, Pennsylvania in Deed Book 5241, Page 1 , granted and conveyed unto Harrisburg Gables Properties, Inc., a Delaware Corporation, in fee. BK5975PG 455 EXHIBIT "E" RECORDING REQUESTED BY: Avatar Income Fund I LLC and WHEN RECORDED MAIL TO: Avatar Income Fund I LLC 100 Wall Street Seattle, WA 98121 LOAN MODIFICATION AND FORBEARANCE AGREEMENT THIS AGREEMENT is made this 15th day of February 2007, by and between Avatar Income Fund I LLC, a Delaware Limited Liability Company (Lender) and All American Plaza, Inc., Carlyle Gables Properties, Inc., Harrisburg Gables Properties, Inc., Doswel Virginia Properties, Inc. (collectively Borrower). RECITALS A. WHEREAS Lender has loaned to Borrower certain monies evidenced by a Promissory Note (the Note) dated April 14, 2005 for $6,450,000.00, which is secured by a, Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing by and between All American Plazas, Inc. (Mortgagor) and Avatar Income Fund I, LLC (Mortgagee) recorded in Deed Book 04571, Page 1478 on May 3, 2005, official records of Berks County, Commonwealth of Pennsylvania which encumbers certain real property more particularly described in Exhibit A attached hereto and incorporated herein (the Property); and B. WHEREAS Lender to further secure the Note, the Grantor executed a Deed of Trust (the Deed of Trust) by and between Doswell Virginia Properties, Inc. (Grantor) and Avatar Income Fund I LLC, (Grantee) recorded as instrument No. 050019224 records of Hanover County, State of Virginia, Further secured by 5 Mortgages, Assignment of Leases and Rents, Security Agreements and Fixture Filings as follows: Mortgage by and between All American Plazas, Inc. (Mortgagor) and Avatar Income Fund I, LLC (Mortgagee) (a) Mortgage by and between Harrisburg Gables Properties, Inc. (Mortgagor) and Avatar Income Fund I LLC (Mortgagee) recorded in Deed Book 5975, page 433 on May 3, 2005, official records of Dauphin County, Commonwealth of Pennsylvania. (b) Mortgage by and between Carlyle Gables Properties Inc. (Mortgagor) and Avatar Income Fund LLC (Mortgagee) recorded in Deed Book 1904, page 3705 on April 26, 2005, official records of Cumberland County, Commonwealth of Pennsylvania (c) Mortgage by and between All American Plazas Inc. (Mortgagor) and Avatar Income Fund I LLC (Mortgagee) recorded in Deed Book 5975, page 327 on May 3, 2005, official records of Dauphin County, Commonwealth of Pennsylvania (which encumbers certain real property more particularly described in Exhibit A attached to each of the aforementioned recorded documents (the Property); and C. WHEREAS the Note was due on November 1, 2005 and was extended byway of a prior Loan Modification and Forbearance Agreement making the full outstanding principal and all accrued interest, if any, due on or by April 1, 2006 (the First Modification Agreement), and . D. WHEREAS on April 1, 2006 Borrower committed a second default by failing to satisfy allsums due Lender. On or about June 29, 2006 Lender and Borrower entered into a second Loan Modification and Forbearance Agreement in which Lender and Borrower agreed infer alia that Lender was not waiving any of its rights under any documents executed by and between Lender and Borrower and Borrower acknowledged the principal balance due Lender as of June 29, 2006 was the swn of $5,200,000.00 (hereinafter referred to as the Second Modification Agreement); and E. WHEPXAS the Second Modification Agreement required payment in full on or by November 2, 2006 and further stated the following. ABorrower hereby acknowledges that as of December 8,.2006, the unpaid principal balance of the Note is $6, 200,000.00. Other than the Loan Modification and Forbearance Agreement and the Second Modification Agreement, there have been no other modifications of the Note. There is a late charge of $1,040,000.00 due as a result of the default occurring on the due date set forth in the Second Loan Modification, being discounted by Lender from $1,040,000.00 to $312000.00, provided however that if Borrower defaults under any terms of the Note and/or Deed of Trust and/or other Loan Documents executed in favor of Avatar Income Fund I LLC, including but not limited to the Loan Modification and Forbearance Agreement being executed even date herewith the full amount of the discount of $728,000.00 shall be immediately due and payable to Lender. The new discounted amount is referred to herein as the Discounted Late Charge, shall be paid upon the execution of this Agreement. As consideration for the extension of the Due Date of the Note, Borrower shall pay the following at the time this Agreement is executed. Borrower hereby acknowledges committing a default under the Second Modification Agreement and that in addition to all other sums due Lender the sum of $728,000.00 is now immediately due and payable to Lender. F. WHEREAS Borrower is currently in default; and G. WHEREAS as of December 8, 2006 the principal balance due and owing was the sum of $5,200,000.00, as well as a late fee equal to $1,040,000.00. NOW, THEREFOR, for good and valuable consideration, the receipt and sufficiency" ZL66 'ON WdLZ:E LOOZ '9l '9aA of which are hereby acknowledged, Borrower and Lender agree as follows: 1. Borrower hereby acknowledges that as of December 8, 2006 the unpaid principal balance of the Note is $5,200,000.00. Other than the First Modification Agreement and the Second Modification Agreement, there have been no other modifications of the Note. There is a late charge of $1,040,000.00 due as a result of the default occurring on the due date set forth in the Loan Modification and Forbearance Agreement being discounted by Lender from $1,040,000.00 to $312,000.00, provided however that if Borrower defaults under any terms of the Note and/or Deed of Trust and/or other Loan Documents executed in favor of Avatar Income Fund I LLC, including but not limited to the Loan Modification and Forbearance Agreement being executed even date herewith the full amount of the discount of $728,000.00 shall be immediately due and payable to Lender. The new discounted amount is referred to herein as the Discounted Late Charge. • In addition to the fees set forth below pursuant to the terms of this Agreement the date by which all outstanding principal and all accrued interest, if any is due, shall be May 1, 2007. As consideration for the extension of the Due Date of the Note, Borrower shall pay the following at the time this Agreement is executed but no later than :February 16, 2007. A. Lenders legal fees in the sum of $2,750.00; and B. December 2006, January 2007 and February 2007 payments via wire transfer 2. Borrower shall repay the principal balance and the Interest Rate prior to the occurrence of the event of Default and the payments of interest only shall be a variable rate per annum calculated by adding the Margin to the Index. As used herein (a) the Margin is seven (7) percentage points; and (b) the Index is the national prime rate as stated in the Money Rates section of The Wall Street Journal (Journal), as published on the Rate Adjustment Date, or if no journal is published on the Rate Adjustment Date, then on the nearest prior publication date, and if a range of rates is listed, the highest rate in the range. The variable rate per annum shall be adjusted on each Rate Adjustment Date. As used herein, Rate Adjustment Date means 151 of the month, which is the month after the date of this Note and each month thereafter. All interest shall be calculated for the actual number of days elapsed over a year assumed to consist of 360 days. In the event that the Journal stops publishing the national prime rate, the Index shall be the prime or reference rate of any bank with assets over $100,000.00 as selected by Holder. Interest for any partial month that this Agreement is executed and delivered shall be payable in advance and shall be computed on the basis of a 360 day year and shall be equal to the sum of a per diem interest charge (for each day the principal balance hereof is outstanding during such partial month) equal to the product of (a) 1/360 and (b) the Interest Rate and (c) the outstanding principal balance hereunder for the day in questions, on the unpaid principal balance until the unpaid principal has been paid in full. ti 'd ZC6Z 'ON WdCZ:e 1002 '91 'qad - - Lender hereby agrees to the amendment t ffii terms of the Note to the extent o specifically set forth in this Agreement, but only on the condition stated above, and on the further condition that the amendment shall not prejudice any present or future rights, remedies, benefits, or powers belonging or accruing to Lender under the terms of the Note as hereby amended or of the Deed of Trust, and that Lender has not and is not waiving any of its rights and remedies contained in any agreement and/or document executed by Borrower in favor of the Lender and/or by and between Lender and Borrower and/or available to Lender at law or in equity. THIS LOAN IS PAYABLE IN FULL ON MAY 1 2007. AT MATURITY, YOU MUST REPAY THE ENTIRE PRINCIPAL BALANCE OF THE LOAN AND UNPAID INTEREST DUE. THE LENDER IS UNDER NO OBLIGATION TO iZEFINANCE Tfm LOAN AT THE TIME. YOU WILL SORE BE REQUIRED TO MAKE PAYMENT OUT OF OTHER ASSETS YOU MAY OWN, OR YOU WILL HAVE TO FIND A LENDER WILLING TO LEND YOU THE MONEY AT PREVAILING MARKET RATES, WHICH MAY BE CONSIDERABLE HIGHER THAN THE INTEREST RATE ON THIS LOAN. 4. In the evenf. thp Principal sum of $5 ?000 00 and aH ae d i r t t if - i , - c ae n eres -, & T, s paid in full by Borrower to Lender on or by March 10, 2007, Lender will, accept in lieu of the Late Fees and penalties set forth in. the First and Second Loan Modification and Forbearance Agreement, the sum of $260,000.00 a fee equal to five (5%) percent of $5,200,000.00. - If the outstanding principal and accrued interest, if any, is paid after March 10, 2007 and paid on or by May 1, 2007, the Lender will accept, in lieu of the Late Fees and penalties set forth in First and Second Loan modifications and Forbearance Agreement, the sum of $312,000.00 equaling six (6%) percent of the outstanding principal balance. In the event the aforementioned sums are not paid in accordance with the terms of this Paragraph 4, the entire late fee of $1,040,000.00 and the principal ' ees, cos and penalties and shall accrue interest at the default interest rate set froth in any agreement and/or document executed by Borrower in favor of the Lender and/or any loan document, including but not limited to the Note. 5. Except as otherwise provided in this Agreement, the Loan Modification and Forbearance Agreement, the Second Loan. Modification Agreement, the Note and Deed of Trust, Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing shall remain in full force and effect, unaffected, unchanged, and unimpaired by reason of the foregoing extension and amendment. 6. In this Agreement, whenever the context so require, the masculine gender includes the feminine and/or neuter, and the singular number includes the plural. ' ' 5 d 6166 0N V9del:[ LOOT '91 'qoj I 7. Borrower and Guarantor agree to waive any claim they may have against Lender and release Lender and its employees and agents from any and all claims which Borro'w'er may have against Lender, its agents, and employees. This release shall be actions, fm, damages, losses, dMfw, i an eman s z5f whatsoever character, nature and kind, known or unknown, suspected or unsuspected, hereinabove specified to be. so barred. In fiutherance of this intention, the Borrower expressly waives any and all rights and benefits conferred upon them by the provision of Section 1542 of the California Civil Code, which are as follows: A general release does not extend to claims which.the creditor does not know or suspect to exist in his favor at the release, time of gx=Wne the which his settlement with the debtor. 8. Borrower waives any right to trial by jury on an claim, demand, action or cause o action arising under this agreement, the loan documents or any other document or instrument referred to therein or delivered in connection therewith, or in any way connected with or related to incidental to the' dealings of Borrower with respect to this Agreement, the loan documents or any other document or instrument referred to therein or delivered in connection therewith, or the transactions related thereto, in each case whether sounding in contract or tort or otherwise. Borrower agrees and consents th-t such daim, dea%w?d, aetion er eause of action shaH be decided by C-ou, t trial without a jury, and that any party to this Agreement may file an original counterpart or a coy of this section with any Court has written evidence of the consent of Borrower to the waiver of their right to trial by j11U.'Borrower acknowledges that they h-Ve Lad an opportunity to consult with counsel regarding this section, that they fully understand its terms, content and effect, and that they voluntarily and knowingly agree to the terms of this section. 9. This Agreement is governed by the laws of the State of Washington. . n upon en ers mspe n an approval o the property encumbered by the Deed of Trust. Assignment of Leases and Rents, Security Agreement and Fixture Filing.. 12. The payment of the Promissory Note dated April 14, 2005 for $6,450,000.00 is guaranteed by Frank Nicito, Guaranty dated April 14, 2005 by signing this Agreement agrees that the above referenced Guaranty shall be extended and modified to guaranty all obligations of All American Plazas, Inc., Carlyle Gables Properties, Inc., Harrisburg Properties, Inc., and Doswell Virginia Properties, Inc, to Avatar Income Fund I LLC under this Loan Modification and Forbearance Agreement. All other terms and conditions of the April 14, 2005 Guaranty shall remain in full force and affect. 9 'd ZLH 'ON WdB? LOOZ 13. No Waiver. Failure of the Lender to exercise any of their rights shall not impair any of their rights nor be deemed a waiver thereof, and no waiver of any of their rights shall be deemed to apply to any other such rights, nor shall it be effective unless in writing and signed by the party waiving the right. The acceptance by Lender of any in writing that the acceptance waives the default or Event of Default or states further conditions which must be satisfied to constitute such a waiver. The failure of Lender to following an Event of Default or to exercise any other option or privilege granted to Lender hereunder in any one or more instances, shall not constitute a waiver of any such default, but such option or privilege shall remain continuously in force. 14. Waiver by Grantor. Grantor waives, on behalf of itself and all persons now or hereafter interest in the Property, all rights under all appraisement, homestead, moratorium, valuation, exemption, stay, extension and marshalling statues, laws or equities now or hereafter existing an agrees that no defense based on any thereof will be asserted in any action enforcing this Loan Modification and Forbearance Agreement. _ Grantor represents and covenants that the Rrop?M owned used or claimed b Grantor as a business or residential homestead or as exemption from forced sale and disclaims and renounces all and every such claim thereto. 15. To e extent owe by w, Borrower waives eman an notices in connection with the Agreement, including presentment, demand, protest; and notice of dishonor. Borrower also waives any defenses based upon any claim that Lender did not obtain any guarantee; did not obtain, perfect, or maintain alien upon collateral; impaired collateral; or did not obtain the fair market value of collateral at a sale. LENDERIHOLDER: Avatar Income Fund LLC J BORRb Doswell I inla P $, Ino. Carlyle Ga I Pro es, c. By, BY. Attest: Attes All Ame ca PI In . sy: Attest- V?Vl it L 'd ZL66 'ON WW:E coot '9l '9aj . I Harrisbu a es o rti , inc. By: Attest: P vil a 'd ZL66 'ON ME:E LOU '91'q;J OFAVMM 20 OCT 26 PM 4% 03 CUMR "?'aU CADUNN PENNSYLVAW 418.50 Po A7'H CV--P- 16L.311 P-T* a39(o1(A (David (l). Bueff Prothonotary xirkS. Sohonage, E SQ, Solicitor q4nee X Simpson 1st Deputy Prothonotary Irene E. W orrow 2nd Deputy Prothonotary Office of the prothonotary Cumber(and County, Bennsykania Dq-ap%" CIVIL TERM ORDER OF TERMINATION OF COURT CASES AND NOW THIS 30T" DAY OF OCTOBER, 2012, AFTER MAILING NOTICE OF INTENTION TO PROCEED AND RECEIVING NO RESPONSE - THE ABOVE CASE IS HEREBY TERMINATED WITH PREJUDICE IN ACCORDANCE WITH PA R.C.P. 230.2. BY THE COURT, DAVID D. BUELL PROTHONOTARY (717) 240-6195 • Fax (717) 240-6573