Preview
FILED: SUFFOLK COUNTY CLERK 02/23/2024 12:52 PM INDEX NO. 604801/2024
NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 02/23/2024
EXHIBIT B
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RECORD & RETURN TO:
FLUSHING BANK
225 Park Avenue South, 2nd Floor
New York, NY 10003
District: 0200
Section: 843.00
Block: 02.00
Lot(s): 026.003
County: Suffolk
Street Address: 28 Sawgrass Drive
Bellport, New York 11713
The Loan secured by this lien was made under a United States Small Business
Administration (SBA) nationwide program which uses tax dollars to assist small
business owners. If the United States is seeking to enforce this document, then under
SBA regulations:
a) When SBA is the holder of the Note, this document and aft documents evidencing or
securing this Loan will be construed in accordance with federal law.
b) Lender or SBA may use local or state procedures for purposes such as filing papers,
recording documents, giving notice, foreclosing liens, and other purposes . By using
these procedures, SBA does not waive any federal immunity from local or state control,
penalty, tax, or liability. No Borrower or Guarantor may claim or assert against SBA any
local or state law to deny any obligation of Borrower, or defeat any claim of SBA with
respect to this Loan.
c )Any clause in this document requiring arbitration is not enforceable when SBA is the
holder of the Note secured by this instrument.
MORTGAGE AND SECURITY AGREEMENT
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THIS MORTGAGE AND SECURITY AGREEMENT (the Mortgage''} made as of
the 19th day of May, 2021, by 28 SAWGRASS DR LLC, a New York limited liability company,
having an office located at 28 Sawgrass Drive, Bellport, New York 11713 (the "Mortgagor") to
FLUSHING BANK , having an office at 225 Park Avenue South, 2nd Floor, New York, New York
10003 (the "Lender").
W I T N E S S E I H:
WHEREAS, Mortgagor is the owner of a fee estate in the premises collectively described
hereinabove and in Schedule A attached hereto and made a part hereof (the "Premises"); and
WHEREAS, the Mortgagor, together with AGC MACHINE CORPORATION (collectively,
the “Borrower") is indebted to the Lender in the principal sum of ONE MILLION FIVE
HUNDRED THIRTY THOUSAND AND 00/100 ($1,530,000.00) DOLLARS with interest
thereon, computed from the date hereof, as evidenced by a certain SBA note of even date
herewith (the "Note").
WHEREAS , THE Borrower executed a certain Loan Agreement dated as of the date
hereof (the "Loan Agreement").
This Mortgage covers property not to be improved by one or more structures
containing in the aggregate not more than six residential dwelling units,
each having their own separate cooking facilities
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NOW THEREFORE, in consideration of the mutual covenants contained herein and in
order to secure the payment in full of the indebtedness evidenced by the Note, including without
limitation, principal, interest, late charges, prepayment premiums and all other fees, charges
and sums which may or shall become due under the Note, the Loan Agreement, this Mortgage
or under any swap agreements, interest rate cap or floor agreements or similar arrangements
relating to the Note and the performance of all the provisions hereof and of the Note and any
renewals, extensions, modifications or replacements thereof, (collectively, all such obligations
are hereinafter referred to as the "Debt" or "Indebtedness”), Mortgagor hereby confirms and
acknowledges that it has mortgaged, given, granted, bargained, sold, aliened, enfeoffed,
conveyed, confirmed and assigned, and by these presents does mortgage, give, grant, bargain,
sell, alien, enfeoff, convey, confirm and assign unto Lender forever ait right, title and interest of
Mortgagor now owned, or hereafter acquired, in and to the following property, rights and
interests (such property, rights and interests being hereinafter collectively referred to as the
“Mortgaged Property”):
(a) the Premises;
(b) ail buildings and other structures and improvements now or hereafter
located on the Premises (the "Improvements");
(c) all of the estate, right, title, claim or demand of any nature whatsoever of
Mortgagor, either in law or in equity, in possession or expectancy, in and to the Premises
and Improvements or any part thereof;
(d) all easements , rights-of-way , strips and gores of land, vaults, streets,
ways, alleys, passages, sewer rights, waters, water courses, water rights and powers,
and all estates, rights, titles, interests, privileges, liberties, tenements, hereditaments,
and appurtenances, revision or revisions, remainder or remainders of any nature
whatsoever, in any way belonging, relating or pertaining to the Premises (including,
without limitation, any and all development rights, air rights or similar or comparable
rights of any nature whatsoever now or hereafter appurtenant to the Premises or now or
hereafter transferred to the Premises) and all land lying in the bed of any street , road or
avenue, opened or proposed, in front of or adjoining the Premises to the center line
thereof;
(e) all machinery, apparatus, equipment, fittings, fixtures and other property
of every kind and nature whatsoever and all additions thereto and renewals and
replacements thereof, and all substitutions therefor now owned or hereafter acquired by
Borrower, or in which Borrower has or shall have an interest, now or hereafter located
upon or in, or attached to, any portion of the Mortgaged Property and improvements, or
appurtenances thereto, and used or usable in connection with the present or future
operation and occupancy of the Mortgaged Property and Improvements and all building
equipment, materials and supplies of any nature whatsoever owned by Borrower, or in
which Borrower has or shall have an interest, now or hereafter located upon the
Premises and Improvements (collectively , the "Equipment") (other than fixtures,
equipment, machinery or other property of tenants under any lease of or rental
agreement for space in the Premises and Improvements), including the interest of
Borrower in all of the aforesaid which are subject to lease agreements or other service
contracts (but excluding the interest of the lessor or owner of such items), and including
all extensions, additions, improvements, betterments, after-acquired property, renewals,
replacements and substitutions, or proceeds from a sale of any of the foregoing, and the
right, title and interest of Borrower in and to any of the Equipment which may be subject
to any security agreements (as defined In the Uniform Commercial Code of the State in
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which the Premises and Improvements is located; the "Uniform Commercial Code") ,
superior in iien to the lien of this Mortgage and all proceeds and products of any of the
above, and all inventory, accounts, chattel paper, documents, equipment, fixtures, farm
products, consumer goods and general intangibles constituting proceeds acquired with
cash proceeds of any of the property described hereinabove, all of which are hereby
declared and shall be deemed to be fixtures and accessions to, and a part of, the
Premises and Improvements as between the parties hereto and all persons claiming by,
through or under them, and which shall be deemed to be a portion of the security for the
indebtedness herein described and to be secured by this Mortgage;
(f) all awards or payments, including interest thereon, and the right to
receive the same, which may be made with respect to the Premises, Improvements and
Equipment, whether from the exercise of the right of eminent domain (including any
transfer made in lieu of the exercise of said right), for a change in grade or for any other
injury to or decrease in the value of the Mortgaged Property and Improvements and the
reasonable attorneys' fees, costs and disbursements incurred by Lender in connection
with the collection of such award or payment;
(g) the interest of the owner of the Mortgaged Property in and to ail leases
and other agreements affecting the use or occupancy of the Mortgaged Property and
Improvements or any part thereof now or hereafter entered into (including any such
agreements entered into after filing by or against Borrower of a petition for relief under
11 U.S.C §101 et seq. (the "Bankruptcy Code", as the same may be amended from time
to time) (the "Leases") and absolutely and presently the right to receive and apply the
income, rents, issues, cash collateral, revenues, royalties, benefits and profits of the
Mortgaged Property and Improvements from time to time accruing, including, without
limitation, all payments under Leases or tenancies, proceeds of insurance, additional
rents, lease termination fees, tenant security deposits and escrow funds paid or accruing
before or after the filing by or against Borrower of a petition for relief under the
Bankruptcy Code (the "Rents") to the payment of the Debt; reserving only the right,
power and authority given to Borrower as a licensor to collect and apply the same prior
to the occurrence of an event of default hereunder and so long as the same are not
subjected to garnishment, ievy, attachment or lien;
(h) all proceeds of and any unearned premiums on any insurance policies
covering the Premises and Improvements (whether or not such policies are specifically
required hereunder and/or the requirement for such policies had been theretofore
waived or deferred by Lender), including, without limitation, the right to receive and apply
the proceeds of any insurance, judgments, or settlements made in lieu thereof, for
damage to the Premises and Improvements;
(i) the right, in the name and on behalf of Mortgagor, to appear in and
defend any action or proceeding brought with respect to the Premises and
Improvements and to commence any action or proceeding to protect the interest of
Lender in the Premises and Improvements; and
(j) all refunds, rebates or credits in connection with the reduction of Taxes
(hereinafter defined) as a result of tax certiorari or any applications or proceedings for
deduction;
(k) all trade names, trademark, service mark, logos, copyrights, goodwill,
books and records and other general intangible specifics to or used in connection with
the operation of the Mortgaged Property; and
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(I) alf rights and appurtenances whatsoever, in any way belonging, relating
or appertaining to any of the Mortgaged Property and Improvements hereinabove
mentioned or which hereafter shall in any way belong, relate or be appurtenant thereto,
whether now owned or hereafter acquired by Mortgagor.
TO HAVE AND TO HOLD the above granted and described Premises and
Improvements unto and to the proper use and benefit of Lender , and the successors and
assigns of Lender, forever.
PROVIDED, HOWEVER, these presents are upon the express condition that, if
Borrower shall weli and truly pay to Lender the Debt at the time and in the manner provided in
the Note and this Mortgage and shall well and truly perform all other obligations as set forth
herein and each term and condition hereof and in the Note, these presents and the estate
hereby granted shall cease, terminate and be void.
AND Borrower covenants and agrees with and represents and warrants to Lender as
follows:
ARTICLE I. GENERAL PROVISIONS
1.1 Payment of Debt. Borrower will pay the Debt at the time and in the manner
provided for its payment in the Note and in this Mortgage.
1.2 Warranty of Title: Other Representations and Warranties. Mortgagor represents
and warrants to, and covenants with, Lender that:
(a) Mortgagor is the owner of all right, title and interest in and to the
Premises, the Improvements, the Equipment and the entire Mortgaged Property, free and clear
of all liens, mortgages and other encumbrances, except for the title exceptions shown in the title
insurance policy insuring the lien of this Mortgage.
(b) This Mortgage is, and shall remain and constitute at all times hereafter, a
first priority mortgage lien against the Premises;
(c) Mortgagor has good title to the Premises, the Improvements, and the
balance of the Mortgaged Property, except for title exceptions shown in the title insurance policy
insuring the line of this Mortgage
(d) (i) Borrower is now, and after giving effect to this Mortgage, will be in a
solvent condition, (ii) there has been no material adverse change in the financial condition of
Borrower, any guarantor of the Debt (a "Guarantor") or the performance by Borrower of any of
the terms of this Mortgage since the date of Borrower's application for the loan secured hereby ,
(iii) Borrower is not in default under any note, loan or security agreement to which it is a party,
(iv) the execution and delivery of this Mortgage by Borrower does not constitute a "fraudulent
conveyance" within the meaning of the Bankruptcy Code as now constituted or under any other
applicable statute, (v) no bankruptcy or insolvency proceedings are pending or contemplated by
or against Borrower, and (vi) there are no existing, threatened or pending actions or
proceedings affecting any portion of the Mortgaged Property except for possible negligence
actions or proceedings which are fully covered by insurance.
(e) Mortgagor (and the undersigned representative of Mortgagor, if any) (i)
has full power, authority and legal right to execute this Mortgage, and to mortgage, give, grant,
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bargain, sell, alien, enfeoff, convey, confirm and assign the Mortgaged Property pursuant to the
terms hereof and to keep and observe all of the terms of this Mortgage on Mortgagor's part to
be performed, (ii) is duly organized, validly existing and in good standing under the laws of its
state of organization, (iii) is duly qualified to transact business and in good standing in the State
where the Mortgaged Property is located, and (iv) has all necessary approvals, government and
otherwise, and full power as authority to own the Mortgaged Property and carry on its business
as now conducted or proposed to be conducted.
(f) (i) Mortgagor does not own and will not own any encumbered asset or
property other than (aa) the Mortgaged Property, and (bb) incidental personal property
necessary for the ownership or operation of the Mortgaged Property; (ii) Mortgagor will not
engage in any business other than ownership, management and operation of the Mortgaged
Property and Mortgagor wili conduct and operate its business as presently conducted and
operated; (iii) Borrower shall not incur any indebtedness, secured or unsecured, direct or
indirect, absolute or contingent (including guaranteeing any obligation), other than (aa) the Debt,
and (bb) trade and operational debt incurred in the ordinary course of business with trade
creditors and in amounts as are normal and reasonable under the circumstances; (iv) Borrower
has not made and will not make any loans or advances to any third party; (v) Borrower will be,
and at all times will hold itself out to the public as, a legal entity separate and distinct from any
other entity; and (vi) Borrower will maintain adequate capital for the normal obligations
reasonably foreseeable In a business of its size and character and in light of its contemplated
business operations.
1.3. Insurance,
(a) Mortgagor wifi keep the improvements insured with (i) "ail risks" extended
coverage against loss or damage by fire, vandalism, malicious mischief and such other hazards
as Lender shall from time to time require, in amounts approved by Lender, which amounts shall
in no event be less than 100% of the full replacement cost of the improvements (without
deduction for physical depreciation and exclusive of excavations, footings and foundations,
landscaping and paving), with an agreed amount endorsement and replacement cost
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endorsement and shall be sufficient to meet ail applicable co insurance requirements, (ii) boiler,
machinery and sprinkler leakage insurance covering physical damage to the Improvements and
any other major components of any central HVAC system and such other equipment as Lender
may require (without exclusion for explosion), (iii) business income insurance sufficient to cover
one (1) year's gross receipts from the Mortgaged Property from the date of such calamity and
loss, (iv) comprehensive public liability insurance, including broad form property damage,
blanket contractual and personal injury coverage; (iv) ordinance or law coverage to compensate
for the cost of development and increased cost of construction if any portion of the
Improvements are non-conforming under applicable law, including broad form property damage,
blanket contractual and personal injury coverage; and (v) such other forms of insurance
coverage with respect to the Premises and Improvements as Lender shall from time to time
require in amounts approved by Lender. During any period of construction, renovation or
restoration of the Improvements, Mortgagor shall maintain "all builder’s risk" insurance, in a form
acceptable to Lender. If the Mortgaged Property is improved, and any portion thereof is located
in the then applicable 100 year flood plain or in a Federally designated "special flood hazard
area", in addition to the other policies of insurance required under this paragraph and/or any
other policies of insurance obtained by Mortgagor, whether or not required hereunder, including,
without limitation, any insurance Mortgagor elects to obtain notwithstanding a prior waiver or
deferral of such requirement by Lender (the "Policies"), a flood insurance policy acceptable in ail
.
respects to Lender shall be delivered by Mortgagor to Lender If no portion of the Mortgaged
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Property is located in the then applicable 100 year flood plain or in a Federally designated
"special flood hazard area" such fact shall be substantiated by a certificate in form satisfactory
to Lender from a licensed surveyor, appraiser or professional engineer or other qualified person
satisfactory to Lender in accordance with applicable regulations.
(b) Mortgagor shall at all times comply with and shall cause the
Improvements and the use, occupancy, operation, maintenance, alteration, repair and
restoration thereof to comply with the terms, conditions, stipulations and requirements of the
Policies. Ail Policies shail be issued by insurers having a minimum policy holders rating of "A"
and a financial class of VII or better per the latest rating publication of Property and Casualty
Insurers by A.M. Best Company, Inc. and who are lawfully doing business in the State in which
the Mortgaged Property is located and are otherwise acceptable in all respects to Lender All .
Policies shail, with respect to the Premises and the Improvements, contain the standard Lender
non-contribution clause endorsement or its equivalent and, with respect to the Equipment,
contain a lender’s loss payable clause endorsement or an equivalent endorsement, All Policies
shall name Lender as the person to which all payments made by the insurer thereunder shall be
paid, naming Lender as an additional insured on required liability policies and otherwise in form
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and substance satisfactory in all respects to Lender Mortgagor hereby assigns the proceeds of
the Policies to Lender and directs and hereby authorizes each insurance company to make
payment for loss directly to Lender, as its interest may appear. All Policies shall provide that the
coverages evidenced thereby shall not be terminated or materially modified without thirty (30)
days prior written notice to Lender. Borrower shall pay the premiums for the Policies as the
same become due and payable. At the request of Lender, Mortgagor will deliver the Policies to
Lender. Not later than ten (10) days prior to the expiration date of each of the Policies,
Mortgagor will deliver to Lender a renewal policy or certificates of renewal marked premium
"
paid" or accompanied by other evidence of payment of premium satisfactory to Lender. If at any
time Lender is not in receipt of written evidence that all insurance required hereunder is in full
force and effect, Lender shai! have the right, without notice to Mortgagor, to take such action as
Lender deems necessary to protect its interest in the Premises and improvements, including,
without limitation, the obtaining of such insurance coverage as Lender in its sole discretion
deems appropriate, and all expenses incurred by Lender in connection with such action or in
obtaining such insurance and keeping it in effect shall be paid by Mortgagor to Lender upon
demand and until paid shall be secured by this Mortgage in accordance with Article 2.7 hereof,
(c) (i) If the Premises and Improvements shall be damaged or destroyed, in
whole or in part, by fire, or other casualty Mortgagor shall give prompt notice thereof to Lender.
Lender shall, in its sole and absolute discretion, either retain and apply the insurance proceeds
toward the payment of the Debt whether or not then due and payable in such priority and
proportions as Lender in its sole discretion shall deem proper or make any or all of the
insurance proceeds received by Lender pursuant to the provisions of this Mortgage as a result
of such damage or destruction after deduction of its reasonable costs and expenses, if any, in
collecting the same (the "Net Proceeds") available for the repair and restoration of the
Improvements, provided that (aa) no Event of Default shall exist under the Note or this
Mortgage at the time of the casualty or any requested disbursement hereunder, (bb) Mortgagor
shall proceed with the repair and restoration of the Improvements as nearly as possible to the
condition the Improvements were in immediately prior to such fire or other casualty promptly
after the insurance claims are settled, (cc) no lease demising more than twenty five percent
(25%) of the net rentable area of the Improvements (a "Key Lease") has been terminated by
reason of such casualty; (dd) the loan to value ratio of the restored Improvements as estimated
in Lender's soie discretion does not exceed the loan to value ratio as of the date hereof; (ee) the
Net Proceeds, together with additional funds provided by Borrower if necessary, are sufficient to
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reconstruct or restore the Improvements according to plans and specifications approved by
Lender or its Inspecting Engineer (as hereinafter defined), which approval shall not be
unreasonably withheld or delayed if such plans and specifications substantially conform to the
plans for the existing Improvements and which plans and specifications shall comply with local
building codes and all other applicable laws, ordinances, rules and regulations, (ff) not more
than forty (40%) percent of the Improvements have been damaged or destroyed as determined
by the Lender in its sole discretion and (gg) Lender has determined that all approved restoration
work can be completed not later than one hundred eighty (180) days prior to the maturity of the
Note or by such earlier date as may be required under the Leases or pursuant to applicable law.
(ii) Upon satisfaction of each of the provisions of subsection 1.3(c), the Net
Proceeds may be disbursed, if determined by Lender, to Mortgagor to pay for the costs of repair
and restoration of the Improvements in the manner hereinafter set forth. The Net Proceeds
shall be held by Lender in escrow until expended in connection with the repair and restoration of
the Improvements, it being agreed that any Net Proceeds so held by Lender may be
commingled with the general funds of Lender, shall not bear interest, and shall constitute
additional security for the payment of the Debt. The Net Proceeds shall be paid by Lender to, or
as directed by, Mortgagor from time to time during the course of the repair and restoration, upon
receipt of evidence satisfactory to Lender that (aa) ail materials installed and work and labor
performed (except to the extent that they are to be paid for out of the requested payment) in
connection with the repair and restoration have been paid for in full, (bb) there exists no notice
of intention, mechanics or other liens and encumbrances on the Mortgaged Property and
Improvements arising out of the repair and restoration, and (cc) the balance of the Net Proceeds
plus the balance of any deficiency deposits made by Mortgagor pursuant to the provisions of
this paragraph hereinafter set forth shall be sufficient to pay in full the balance of the cost of the
repair and restoration. The repair and restoration shall be done and completed by Mortgagor in
an expeditious and diligent fashion and in compliance with all applicable laws, rules and
regulations, and all plans and specifications required in connection with the repair and
restoration shall be subject to review and approval in all respects by an independent inspecting
engineer selected by Lender (the "Inspecting Engineer"). The Mortgagor shall, prior to any
repair and restoration, furnish to Lender for its approval: (1) complete plans and specifications
for the repair and restoration, with satisfactory evidence of the approval thereof (i) by all
governmental authorities whose approval is required and (ii) by an architect satisfactory to the
Lender (hereinafter the "Architect") and which shall be accompanied by the Architect's signed
estimate, bearing the Architect's seal, of the entire cost of completing the repair and restoration;
(2) certified or photostatic copies of all permits and approvals required by law in connection with
the commencement and conduct of the repair and restoration; and (3) a surety bond or guaranty
shall be in form satisfactory to the Lender and shall be signed by surety or sureties who are
acceptable to the Lender, and in an amount not less than the Architect’s estimate of the entire
cost of completing the repair and restoration, less the amount of insurance proceeds and
Lender deposits, if any, then held by the Lender for application toward the cost of the repair and
restoration. All costs and expenses incurred by Lender in connection with making the Net
Proceeds available for the repair and restoration, including, without limitation, an administrative
fee of $500 for each advance, counsel fees, travel fees and the Inspecting Engineer's fees
incurred by Lender, shall be paid by Mortgagor, In no event shall Lender be obligated to make
disbursements of the Net Proceeds in excess of an amount equal to the costs actually incurred
for work in place as part of the repair and restoration, as certified by the Inspecting Engineer,
minus 10% of such costs (the "Retainage"), Lender shall not be obligated to make
disbursements of the Net Proceeds more than once every thirty (30) days, The Retainage shall
not be released until the Inspecting Engineer certifies that the repair and restoration have been
completed in accordance with the provisions of Article 1.3, and Lender receives evidence
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satisfactory to Lender that the costs of the repair and restoration have been paid in full or will be
paid in full out of the Retainage. If at any time the Net Proceeds, or the undisbursed balance
thereof, shall not, in the opinion of Lender, be sufficient to pay in full the balance of the costs
which will be incurred in connection with the completion of the repair and restoration, Mortgagor
shall deposit the deficiency with Lender before any further disbursement of the Net Proceeds
shall be made, which deficiency deposit may be commingled with the general funds of Lender,
shall not bear interest and shall be disbursed for costs actually incurred in connection with the
repair and restoration on the same conditions applicable to the Net Proceeds. Any such
deficiency deposit until disbursed pursuant to this paragraph shall constitute additional security
for the payment of the Debt.
(d) Ail insurance proceeds received by Lender and not disbursed for the repair
and restoration pursuant to the provisions of this Article 1.3 shall be retained and applied by
Lender toward the payment of the Debt whether or not then due and payable in such priority
and proportions as Lender in its discretion shall deem proper or, at the discretion of Lender, the
same may be paid, either in whole or in part, to Mortgagor for such purposes as Lender shall
designate. If Lender shall receive and retain such insurance proceeds, the lien of this Mortgage
shall be reduced only by the amount thereof received and retained by Lender and actually
applied by Lender in reduction of the Debt.
(e) The provisions of subsection 4 of Section 254 of the Real Property Law of
New York covering the insurance of buildings against loss by fire shall not apply to this
Mortgage.
1.4. Payment of Taxes, etc, (a) Mortgagor shail pay all real and personal
property taxes, assessments, water rates, sewer rents and other charges, including vault
charges and license fees for the use of vaults, chutes and similar areas adjoining the Mortgaged
Property, now or hereafter levied, imposed or assessed against the Mortgaged Property
(collectively, the "Taxes") prior to the date upon which any fine, penalty, interest or cost may be
added thereto or imposed by law for the nonpayment thereof, and, in the absence of such timely
payment, Lender in its sole discretion, may, but shall not be obligated to, pay same (all such
payments to be secured hereby in accordance with Article 2.7 hereof), and Mortgagor shall
reimburse Lender upon demand for such expenditures, Mortgagor shall deliver to Lender,
within thirty (30) days of payment, receipts bills, canceled checks and other evidence
satisfactory to Lender evidencing the payment of the Taxes prior to the date upon which any
fine, penalty, interest or cost may be added thereto or imposed by law for the nonpayment
thereof. Upon the establishment of any Escrow Fund for Taxes, the Mortgagor shall
immediately pay any accrued and unpaid Taxes,
(b) After prior notice to Lender, in the case of any material item, Mortgagor,
at its own expense, may contest by appropriate legal proceeding, promptly initiated and
conducted in good faith and with due diligence, the amount or validity or application whole or in
part of any of the Taxes, provided that (i) no Event of Default then exists under the Note or this
Mortgage, (ii) Mortgagor is permitted to do so under the provisions of any mortgage or deed of
trust superior in lien to the Mortgage and under the provisions of the any ground lease
encumbered hereby, if any, (iii) such proceeding shail suspend the collection of the Taxes from
Mortgagor and from the Mortgaged Property, (iv) such proceeding shall be permitted under and
be conducted in accordance with the provisions of any other instrument to which Mortgagor or
the Mortgaged Property is subject and shall not constitute a default thereunder, (v) neither the
Mortgaged Property nor any part thereof or interest therein will in the opinion of Lender be in
danger of being sold, forfeited, terminated, canceled or lost, (vi) Mortgagor shall have set aside
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adequate reserves for the payment of the Taxes, together with all interest and penalties
thereon, and (vii) Mortgagor shall have furnished such security as may be required in the
proceeding, or as may be requested by Lender to insure the timely payment of any such Taxes,
together with all interest and penalties thereon.
1.5. Escrow Fund, (a) If required by the Lender at any time, Borrower will pay
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to Lender, together with each monthly installment due under the Note, one twelfth of an amount
(the "Escrow Fund") which would be sufficient to pay, on the first (1S() day of the month
preceding the month in which they become due, the Taxes and/or the premiums on all Policies
(the "Premiums") payable, or estimated by Lender to be payable, during the ensuing twelve (12)
months. Lender will apply the Escrow Fund to the payment of Taxes and/or the Premiums
which are required to be paid by Borrower pursuant to the provisions of this Mortgage. If the
amount of the Escrow Fund shall exceed the amount of the Taxes and the Premiums payable
by Borrower pursuant to the provisions of this Mortgage, Lender shall, in its discretion, (i) return
any excess to Borrower, or (ii) credit such excess against future payments to be made to the
Escrow Fund. If the Escrow Fund is not sufficient to pay the Taxes and/or the Premiums, as the
same become payable, Borrower shall pay to Lender, upon request, an amount which Lender
shall estimate as sufficient to make up the deficiency. Lender reserves the right to immediately
increase without notice to monthly payments required by the Borrower for Taxes and/or
Premiums upon Lender’s determination that existing monthly payments are not sufficient to pay
future Taxes and/or Premiums. Until expended or applied as above provided, any amounts in
the Escrow Fund may be commingled with the general funds of Lender, shall constitute
additional security for the Debt and shall not bear interest The collection of such deposits by
Lender shall not relieve Borrower of any of the obligations of Borrower under any provision of
this Mortgage. Provided (i) there are sufficient amounts in the Escrow Fund, (ii) no Event of
Default exists under this Mortgage and (iii) Lender is not otherwise constrained or prohibited
from making such payment, Lender shall pay the Taxes and Premiums as they become due by
their respective due dates.
(b) To the extent permitted by applicable law, if a Default occurs under any of
the provisions of this Mortgage, Lender shall have the right to apply the balance of any funds
deposited with it, or its designee, accumulated to pay Taxes and Premiums, either as a credit
against the Debt or to the payment of any other charges payable hereunder.
1.6. Condemnation. Borrower shall promptly provide notice to Lender of the
actual or threatened commencement of any condemnation or eminent domain proceedings and
shall deliver to Lender copies of any and all pleadings and papers served in connection with
such proceedings. Lender may at its option participate in such proceedings. Notwithstanding
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any taking by any public or quasi public authority through eminent domain or otherwise,
Borrower shall continue to pay the Debt at the time and in the manner provided for its payment
in the Note and this Mortgage and the Debt shall not be reduced until any award or payment
therefor shall have been actually received and applied by Lender to the discharge of the Debt.
Lender may apply the entire amount of any such award or payment to the discharge of the Debt
whether or not then due and payable in such order, priority and proportions as Lender in its
discretion shall deem proper. If Lender receives and retains such award or payment and
applies it to the Debt, the lien of this Mortgage shall be affected only by a reduction of the
amount of said lien by the amount of such award or payment so received and retained by
Lender. Borrower shall at its expense file and prosecute its claim or claims for any such award
or payment in good faith and with due diligence and cause the same to be collected and paid
over to Lender. Borrower hereby irrevocably authorizes and empowers Lender, in the name of
Borrower or otherwise, to collect and receipt for any such award or payment and to file and
9
FILED: SUFFOLK COUNTY CLERK 02/23/2024 12:52 PM INDEX NO. 604801/2024
NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 02/23/2024
prosecute such claim or claims. Although it is hereby expressly agreed that the same shall not
be necessary in any event, Borrower shall, upon demand of Lender, at the sole cost and
expense of the Borrower, make, execute and deliver any and all assignments and other
instruments sufficient for the purpose of assigning any such award or payment to Lender, free
and clear of any encumbrances of any kind or nature whatsoever. If the Mortgaged Property is
sold, through foreclosure or otherwise, prior to the receipt by Lender of such award or payment,
Lender shall have the right, whether or not a deficiency judgment on the Note shall have been
sought, recovered or denied, to receive such award or payment, or a portion thereof sufficient to
pay the Debt, whichever is less, and Borrower shall pay over to Lender said award or payment
as, if and when Borrower receives same, to the extent of any deficiency found to be due upon
such sale, with interest thereon, whether or not a deficiency judgment on this Mortgage shall
have been sought or recovered or denied, and of the attorneys' fees, costs and disbursements
incurred by Lender in connection with the collection of such award or payment. Lender shall not
be limited to the interest paid on the award by the condemning authority and shall be entitled to
reserve interest on the amount at the interest rate provided for in the Note.
1.7. Leases and Rents, (a) Mortgagor absolutely and irrevocably assigns to
Lender the Rents, and Mortgagor grants to Lender the right to enter upon and to take
possession of the Mortgaged Property for the purpose of collecting the same and to let the
Mortgaged Property, or any part thereof, and to apply the Rents after payment of all necessary
charges and expenses on account to the Debt, reserving only to Mortgagor the conditional right,
as a licensee, to collect, use and enjoy the Rents until an Event of Default shall occur
hereunder. In exercising such conditional right, Mortgagor shall be entitled to collect and
receive such Rent and agrees to use such Rents in payment of principal and interest becoming
due under the Note and in payment of Taxes and Premiums becoming due hereunder, but such
right of Mortgagor may be revoked by Lender upon the occurrence of Event of Default under the
terms of the Note or this Mortgage and thereafter Lender may let the Mortgaged Property or any
part thereof and may retain and apply the Rents toward payment of the Debt in such order,
priority and proportions as Lender, in its discretion, shall deem proper , or toward the operation,
maintenance and repair of the Mortgaged Property, and irrespective of whether Lender shall
have commenced a foreclosure of this Mortgage or shall have applied or arranged for the
appointment of a receiver. Lender shall not be obligated to give to Mortgagor prior notice of
such revocation of the right to let and collect the Rents,
(b) In addition to the rights which Lender may have herein, if an Event of any
Default occurs under this Mortgage, Lender, at its option, may require Mortgagor to pay monthly
in advance to Lender, or any receiver appointed to collect the Rents, the fair and reasonable
rental value for the use and occupation of such part of the Mortgaged Property as may be in
actual possession of Mortgagor. Upon default in any such payment, Mortgagor will vacate and
surrender possession of the Mortgaged Property to Lender, or to such receiver, and, in default
thereof, Mortgagor may be evicted by summary proceedings or otherwise. Nothing contained in
this paragraph shall be construed as imposing on Lender a
Preview
FILED: SUFFOLK COUNTY CLERK 02/23/2024 12:52 PM INDEX NO. 604801/2024 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 02/23/2024 EXHIBIT B FILED: SUFFOLK COUNTY CLERK 02/23/2024 12:52 PM INDEX NO. 604801/2024 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 02/23/2024 RECORD & RETURN TO: FLUSHING BANK 225 Park Avenue South, 2nd Floor New York, NY 10003 District: 0200 Section: 843.00 Block: 02.00 Lot(s): 026.003 County: Suffolk Street Address: 28 Sawgrass Drive Bellport, New York 11713 The Loan secured by this lien was made under a United States Small Business Administration (SBA) nationwide program which uses tax dollars to assist small business owners. If the United States is seeking to enforce this document, then under SBA regulations: a) When SBA is the holder of the Note, this document and aft documents evidencing or securing this Loan will be construed in accordance with federal law. b) Lender or SBA may use local or state procedures for purposes such as filing papers, recording documents, giving notice, foreclosing liens, and other purposes . By using these procedures, SBA does not waive any federal immunity from local or state control, penalty, tax, or liability. No Borrower or Guarantor may claim or assert against SBA any local or state law to deny any obligation of Borrower, or defeat any claim of SBA with respect to this Loan. c )Any clause in this document requiring arbitration is not enforceable when SBA is the holder of the Note secured by this instrument. MORTGAGE AND SECURITY AGREEMENT - THIS MORTGAGE AND SECURITY AGREEMENT (the Mortgage''} made as of the 19th day of May, 2021, by 28 SAWGRASS DR LLC, a New York limited liability company, having an office located at 28 Sawgrass Drive, Bellport, New York 11713 (the "Mortgagor") to FLUSHING BANK , having an office at 225 Park Avenue South, 2nd Floor, New York, New York 10003 (the "Lender"). W I T N E S S E I H: WHEREAS, Mortgagor is the owner of a fee estate in the premises collectively described hereinabove and in Schedule A attached hereto and made a part hereof (the "Premises"); and WHEREAS, the Mortgagor, together with AGC MACHINE CORPORATION (collectively, the “Borrower") is indebted to the Lender in the principal sum of ONE MILLION FIVE HUNDRED THIRTY THOUSAND AND 00/100 ($1,530,000.00) DOLLARS with interest thereon, computed from the date hereof, as evidenced by a certain SBA note of even date herewith (the "Note"). WHEREAS , THE Borrower executed a certain Loan Agreement dated as of the date hereof (the "Loan Agreement"). This Mortgage covers property not to be improved by one or more structures containing in the aggregate not more than six residential dwelling units, each having their own separate cooking facilities FILED: SUFFOLK COUNTY CLERK 02/23/2024 12:52 PM INDEX NO. 604801/2024 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 02/23/2024 NOW THEREFORE, in consideration of the mutual covenants contained herein and in order to secure the payment in full of the indebtedness evidenced by the Note, including without limitation, principal, interest, late charges, prepayment premiums and all other fees, charges and sums which may or shall become due under the Note, the Loan Agreement, this Mortgage or under any swap agreements, interest rate cap or floor agreements or similar arrangements relating to the Note and the performance of all the provisions hereof and of the Note and any renewals, extensions, modifications or replacements thereof, (collectively, all such obligations are hereinafter referred to as the "Debt" or "Indebtedness”), Mortgagor hereby confirms and acknowledges that it has mortgaged, given, granted, bargained, sold, aliened, enfeoffed, conveyed, confirmed and assigned, and by these presents does mortgage, give, grant, bargain, sell, alien, enfeoff, convey, confirm and assign unto Lender forever ait right, title and interest of Mortgagor now owned, or hereafter acquired, in and to the following property, rights and interests (such property, rights and interests being hereinafter collectively referred to as the “Mortgaged Property”): (a) the Premises; (b) ail buildings and other structures and improvements now or hereafter located on the Premises (the "Improvements"); (c) all of the estate, right, title, claim or demand of any nature whatsoever of Mortgagor, either in law or in equity, in possession or expectancy, in and to the Premises and Improvements or any part thereof; (d) all easements , rights-of-way , strips and gores of land, vaults, streets, ways, alleys, passages, sewer rights, waters, water courses, water rights and powers, and all estates, rights, titles, interests, privileges, liberties, tenements, hereditaments, and appurtenances, revision or revisions, remainder or remainders of any nature whatsoever, in any way belonging, relating or pertaining to the Premises (including, without limitation, any and all development rights, air rights or similar or comparable rights of any nature whatsoever now or hereafter appurtenant to the Premises or now or hereafter transferred to the Premises) and all land lying in the bed of any street , road or avenue, opened or proposed, in front of or adjoining the Premises to the center line thereof; (e) all machinery, apparatus, equipment, fittings, fixtures and other property of every kind and nature whatsoever and all additions thereto and renewals and replacements thereof, and all substitutions therefor now owned or hereafter acquired by Borrower, or in which Borrower has or shall have an interest, now or hereafter located upon or in, or attached to, any portion of the Mortgaged Property and improvements, or appurtenances thereto, and used or usable in connection with the present or future operation and occupancy of the Mortgaged Property and Improvements and all building equipment, materials and supplies of any nature whatsoever owned by Borrower, or in which Borrower has or shall have an interest, now or hereafter located upon the Premises and Improvements (collectively , the "Equipment") (other than fixtures, equipment, machinery or other property of tenants under any lease of or rental agreement for space in the Premises and Improvements), including the interest of Borrower in all of the aforesaid which are subject to lease agreements or other service contracts (but excluding the interest of the lessor or owner of such items), and including all extensions, additions, improvements, betterments, after-acquired property, renewals, replacements and substitutions, or proceeds from a sale of any of the foregoing, and the right, title and interest of Borrower in and to any of the Equipment which may be subject to any security agreements (as defined In the Uniform Commercial Code of the State in 2 FILED: SUFFOLK COUNTY CLERK 02/23/2024 12:52 PM INDEX NO. 604801/2024 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 02/23/2024 which the Premises and Improvements is located; the "Uniform Commercial Code") , superior in iien to the lien of this Mortgage and all proceeds and products of any of the above, and all inventory, accounts, chattel paper, documents, equipment, fixtures, farm products, consumer goods and general intangibles constituting proceeds acquired with cash proceeds of any of the property described hereinabove, all of which are hereby declared and shall be deemed to be fixtures and accessions to, and a part of, the Premises and Improvements as between the parties hereto and all persons claiming by, through or under them, and which shall be deemed to be a portion of the security for the indebtedness herein described and to be secured by this Mortgage; (f) all awards or payments, including interest thereon, and the right to receive the same, which may be made with respect to the Premises, Improvements and Equipment, whether from the exercise of the right of eminent domain (including any transfer made in lieu of the exercise of said right), for a change in grade or for any other injury to or decrease in the value of the Mortgaged Property and Improvements and the reasonable attorneys' fees, costs and disbursements incurred by Lender in connection with the collection of such award or payment; (g) the interest of the owner of the Mortgaged Property in and to ail leases and other agreements affecting the use or occupancy of the Mortgaged Property and Improvements or any part thereof now or hereafter entered into (including any such agreements entered into after filing by or against Borrower of a petition for relief under 11 U.S.C §101 et seq. (the "Bankruptcy Code", as the same may be amended from time to time) (the "Leases") and absolutely and presently the right to receive and apply the income, rents, issues, cash collateral, revenues, royalties, benefits and profits of the Mortgaged Property and Improvements from time to time accruing, including, without limitation, all payments under Leases or tenancies, proceeds of insurance, additional rents, lease termination fees, tenant security deposits and escrow funds paid or accruing before or after the filing by or against Borrower of a petition for relief under the Bankruptcy Code (the "Rents") to the payment of the Debt; reserving only the right, power and authority given to Borrower as a licensor to collect and apply the same prior to the occurrence of an event of default hereunder and so long as the same are not subjected to garnishment, ievy, attachment or lien; (h) all proceeds of and any unearned premiums on any insurance policies covering the Premises and Improvements (whether or not such policies are specifically required hereunder and/or the requirement for such policies had been theretofore waived or deferred by Lender), including, without limitation, the right to receive and apply the proceeds of any insurance, judgments, or settlements made in lieu thereof, for damage to the Premises and Improvements; (i) the right, in the name and on behalf of Mortgagor, to appear in and defend any action or proceeding brought with respect to the Premises and Improvements and to commence any action or proceeding to protect the interest of Lender in the Premises and Improvements; and (j) all refunds, rebates or credits in connection with the reduction of Taxes (hereinafter defined) as a result of tax certiorari or any applications or proceedings for deduction; (k) all trade names, trademark, service mark, logos, copyrights, goodwill, books and records and other general intangible specifics to or used in connection with the operation of the Mortgaged Property; and 3 FILED: SUFFOLK COUNTY CLERK 02/23/2024 12:52 PM INDEX NO. 604801/2024 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 02/23/2024 (I) alf rights and appurtenances whatsoever, in any way belonging, relating or appertaining to any of the Mortgaged Property and Improvements hereinabove mentioned or which hereafter shall in any way belong, relate or be appurtenant thereto, whether now owned or hereafter acquired by Mortgagor. TO HAVE AND TO HOLD the above granted and described Premises and Improvements unto and to the proper use and benefit of Lender , and the successors and assigns of Lender, forever. PROVIDED, HOWEVER, these presents are upon the express condition that, if Borrower shall weli and truly pay to Lender the Debt at the time and in the manner provided in the Note and this Mortgage and shall well and truly perform all other obligations as set forth herein and each term and condition hereof and in the Note, these presents and the estate hereby granted shall cease, terminate and be void. AND Borrower covenants and agrees with and represents and warrants to Lender as follows: ARTICLE I. GENERAL PROVISIONS 1.1 Payment of Debt. Borrower will pay the Debt at the time and in the manner provided for its payment in the Note and in this Mortgage. 1.2 Warranty of Title: Other Representations and Warranties. Mortgagor represents and warrants to, and covenants with, Lender that: (a) Mortgagor is the owner of all right, title and interest in and to the Premises, the Improvements, the Equipment and the entire Mortgaged Property, free and clear of all liens, mortgages and other encumbrances, except for the title exceptions shown in the title insurance policy insuring the lien of this Mortgage. (b) This Mortgage is, and shall remain and constitute at all times hereafter, a first priority mortgage lien against the Premises; (c) Mortgagor has good title to the Premises, the Improvements, and the balance of the Mortgaged Property, except for title exceptions shown in the title insurance policy insuring the line of this Mortgage (d) (i) Borrower is now, and after giving effect to this Mortgage, will be in a solvent condition, (ii) there has been no material adverse change in the financial condition of Borrower, any guarantor of the Debt (a "Guarantor") or the performance by Borrower of any of the terms of this Mortgage since the date of Borrower's application for the loan secured hereby , (iii) Borrower is not in default under any note, loan or security agreement to which it is a party, (iv) the execution and delivery of this Mortgage by Borrower does not constitute a "fraudulent conveyance" within the meaning of the Bankruptcy Code as now constituted or under any other applicable statute, (v) no bankruptcy or insolvency proceedings are pending or contemplated by or against Borrower, and (vi) there are no existing, threatened or pending actions or proceedings affecting any portion of the Mortgaged Property except for possible negligence actions or proceedings which are fully covered by insurance. (e) Mortgagor (and the undersigned representative of Mortgagor, if any) (i) has full power, authority and legal right to execute this Mortgage, and to mortgage, give, grant, 4 FILED: SUFFOLK COUNTY CLERK 02/23/2024 12:52 PM INDEX NO. 604801/2024 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 02/23/2024 bargain, sell, alien, enfeoff, convey, confirm and assign the Mortgaged Property pursuant to the terms hereof and to keep and observe all of the terms of this Mortgage on Mortgagor's part to be performed, (ii) is duly organized, validly existing and in good standing under the laws of its state of organization, (iii) is duly qualified to transact business and in good standing in the State where the Mortgaged Property is located, and (iv) has all necessary approvals, government and otherwise, and full power as authority to own the Mortgaged Property and carry on its business as now conducted or proposed to be conducted. (f) (i) Mortgagor does not own and will not own any encumbered asset or property other than (aa) the Mortgaged Property, and (bb) incidental personal property necessary for the ownership or operation of the Mortgaged Property; (ii) Mortgagor will not engage in any business other than ownership, management and operation of the Mortgaged Property and Mortgagor wili conduct and operate its business as presently conducted and operated; (iii) Borrower shall not incur any indebtedness, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation), other than (aa) the Debt, and (bb) trade and operational debt incurred in the ordinary course of business with trade creditors and in amounts as are normal and reasonable under the circumstances; (iv) Borrower has not made and will not make any loans or advances to any third party; (v) Borrower will be, and at all times will hold itself out to the public as, a legal entity separate and distinct from any other entity; and (vi) Borrower will maintain adequate capital for the normal obligations reasonably foreseeable In a business of its size and character and in light of its contemplated business operations. 1.3. Insurance, (a) Mortgagor wifi keep the improvements insured with (i) "ail risks" extended coverage against loss or damage by fire, vandalism, malicious mischief and such other hazards as Lender shall from time to time require, in amounts approved by Lender, which amounts shall in no event be less than 100% of the full replacement cost of the improvements (without deduction for physical depreciation and exclusive of excavations, footings and foundations, landscaping and paving), with an agreed amount endorsement and replacement cost - endorsement and shall be sufficient to meet ail applicable co insurance requirements, (ii) boiler, machinery and sprinkler leakage insurance covering physical damage to the Improvements and any other major components of any central HVAC system and such other equipment as Lender may require (without exclusion for explosion), (iii) business income insurance sufficient to cover one (1) year's gross receipts from the Mortgaged Property from the date of such calamity and loss, (iv) comprehensive public liability insurance, including broad form property damage, blanket contractual and personal injury coverage; (iv) ordinance or law coverage to compensate for the cost of development and increased cost of construction if any portion of the Improvements are non-conforming under applicable law, including broad form property damage, blanket contractual and personal injury coverage; and (v) such other forms of insurance coverage with respect to the Premises and Improvements as Lender shall from time to time require in amounts approved by Lender. During any period of construction, renovation or restoration of the Improvements, Mortgagor shall maintain "all builder’s risk" insurance, in a form acceptable to Lender. If the Mortgaged Property is improved, and any portion thereof is located in the then applicable 100 year flood plain or in a Federally designated "special flood hazard area", in addition to the other policies of insurance required under this paragraph and/or any other policies of insurance obtained by Mortgagor, whether or not required hereunder, including, without limitation, any insurance Mortgagor elects to obtain notwithstanding a prior waiver or deferral of such requirement by Lender (the "Policies"), a flood insurance policy acceptable in ail . respects to Lender shall be delivered by Mortgagor to Lender If no portion of the Mortgaged 5 FILED: SUFFOLK COUNTY CLERK 02/23/2024 12:52 PM INDEX NO. 604801/2024 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 02/23/2024 Property is located in the then applicable 100 year flood plain or in a Federally designated "special flood hazard area" such fact shall be substantiated by a certificate in form satisfactory to Lender from a licensed surveyor, appraiser or professional engineer or other qualified person satisfactory to Lender in accordance with applicable regulations. (b) Mortgagor shall at all times comply with and shall cause the Improvements and the use, occupancy, operation, maintenance, alteration, repair and restoration thereof to comply with the terms, conditions, stipulations and requirements of the Policies. Ail Policies shail be issued by insurers having a minimum policy holders rating of "A" and a financial class of VII or better per the latest rating publication of Property and Casualty Insurers by A.M. Best Company, Inc. and who are lawfully doing business in the State in which the Mortgaged Property is located and are otherwise acceptable in all respects to Lender All . Policies shail, with respect to the Premises and the Improvements, contain the standard Lender non-contribution clause endorsement or its equivalent and, with respect to the Equipment, contain a lender’s loss payable clause endorsement or an equivalent endorsement, All Policies shall name Lender as the person to which all payments made by the insurer thereunder shall be paid, naming Lender as an additional insured on required liability policies and otherwise in form . and substance satisfactory in all respects to Lender Mortgagor hereby assigns the proceeds of the Policies to Lender and directs and hereby authorizes each insurance company to make payment for loss directly to Lender, as its interest may appear. All Policies shall provide that the coverages evidenced thereby shall not be terminated or materially modified without thirty (30) days prior written notice to Lender. Borrower shall pay the premiums for the Policies as the same become due and payable. At the request of Lender, Mortgagor will deliver the Policies to Lender. Not later than ten (10) days prior to the expiration date of each of the Policies, Mortgagor will deliver to Lender a renewal policy or certificates of renewal marked premium " paid" or accompanied by other evidence of payment of premium satisfactory to Lender. If at any time Lender is not in receipt of written evidence that all insurance required hereunder is in full force and effect, Lender shai! have the right, without notice to Mortgagor, to take such action as Lender deems necessary to protect its interest in the Premises and improvements, including, without limitation, the obtaining of such insurance coverage as Lender in its sole discretion deems appropriate, and all expenses incurred by Lender in connection with such action or in obtaining such insurance and keeping it in effect shall be paid by Mortgagor to Lender upon demand and until paid shall be secured by this Mortgage in accordance with Article 2.7 hereof, (c) (i) If the Premises and Improvements shall be damaged or destroyed, in whole or in part, by fire, or other casualty Mortgagor shall give prompt notice thereof to Lender. Lender shall, in its sole and absolute discretion, either retain and apply the insurance proceeds toward the payment of the Debt whether or not then due and payable in such priority and proportions as Lender in its sole discretion shall deem proper or make any or all of the insurance proceeds received by Lender pursuant to the provisions of this Mortgage as a result of such damage or destruction after deduction of its reasonable costs and expenses, if any, in collecting the same (the "Net Proceeds") available for the repair and restoration of the Improvements, provided that (aa) no Event of Default shall exist under the Note or this Mortgage at the time of the casualty or any requested disbursement hereunder, (bb) Mortgagor shall proceed with the repair and restoration of the Improvements as nearly as possible to the condition the Improvements were in immediately prior to such fire or other casualty promptly after the insurance claims are settled, (cc) no lease demising more than twenty five percent (25%) of the net rentable area of the Improvements (a "Key Lease") has been terminated by reason of such casualty; (dd) the loan to value ratio of the restored Improvements as estimated in Lender's soie discretion does not exceed the loan to value ratio as of the date hereof; (ee) the Net Proceeds, together with additional funds provided by Borrower if necessary, are sufficient to 6 FILED: SUFFOLK COUNTY CLERK 02/23/2024 12:52 PM INDEX NO. 604801/2024 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 02/23/2024 reconstruct or restore the Improvements according to plans and specifications approved by Lender or its Inspecting Engineer (as hereinafter defined), which approval shall not be unreasonably withheld or delayed if such plans and specifications substantially conform to the plans for the existing Improvements and which plans and specifications shall comply with local building codes and all other applicable laws, ordinances, rules and regulations, (ff) not more than forty (40%) percent of the Improvements have been damaged or destroyed as determined by the Lender in its sole discretion and (gg) Lender has determined that all approved restoration work can be completed not later than one hundred eighty (180) days prior to the maturity of the Note or by such earlier date as may be required under the Leases or pursuant to applicable law. (ii) Upon satisfaction of each of the provisions of subsection 1.3(c), the Net Proceeds may be disbursed, if determined by Lender, to Mortgagor to pay for the costs of repair and restoration of the Improvements in the manner hereinafter set forth. The Net Proceeds shall be held by Lender in escrow until expended in connection with the repair and restoration of the Improvements, it being agreed that any Net Proceeds so held by Lender may be commingled with the general funds of Lender, shall not bear interest, and shall constitute additional security for the payment of the Debt. The Net Proceeds shall be paid by Lender to, or as directed by, Mortgagor from time to time during the course of the repair and restoration, upon receipt of evidence satisfactory to Lender that (aa) ail materials installed and work and labor performed (except to the extent that they are to be paid for out of the requested payment) in connection with the repair and restoration have been paid for in full, (bb) there exists no notice of intention, mechanics or other liens and encumbrances on the Mortgaged Property and Improvements arising out of the repair and restoration, and (cc) the balance of the Net Proceeds plus the balance of any deficiency deposits made by Mortgagor pursuant to the provisions of this paragraph hereinafter set forth shall be sufficient to pay in full the balance of the cost of the repair and restoration. The repair and restoration shall be done and completed by Mortgagor in an expeditious and diligent fashion and in compliance with all applicable laws, rules and regulations, and all plans and specifications required in connection with the repair and restoration shall be subject to review and approval in all respects by an independent inspecting engineer selected by Lender (the "Inspecting Engineer"). The Mortgagor shall, prior to any repair and restoration, furnish to Lender for its approval: (1) complete plans and specifications for the repair and restoration, with satisfactory evidence of the approval thereof (i) by all governmental authorities whose approval is required and (ii) by an architect satisfactory to the Lender (hereinafter the "Architect") and which shall be accompanied by the Architect's signed estimate, bearing the Architect's seal, of the entire cost of completing the repair and restoration; (2) certified or photostatic copies of all permits and approvals required by law in connection with the commencement and conduct of the repair and restoration; and (3) a surety bond or guaranty shall be in form satisfactory to the Lender and shall be signed by surety or sureties who are acceptable to the Lender, and in an amount not less than the Architect’s estimate of the entire cost of completing the repair and restoration, less the amount of insurance proceeds and Lender deposits, if any, then held by the Lender for application toward the cost of the repair and restoration. All costs and expenses incurred by Lender in connection with making the Net Proceeds available for the repair and restoration, including, without limitation, an administrative fee of $500 for each advance, counsel fees, travel fees and the Inspecting Engineer's fees incurred by Lender, shall be paid by Mortgagor, In no event shall Lender be obligated to make disbursements of the Net Proceeds in excess of an amount equal to the costs actually incurred for work in place as part of the repair and restoration, as certified by the Inspecting Engineer, minus 10% of such costs (the "Retainage"), Lender shall not be obligated to make disbursements of the Net Proceeds more than once every thirty (30) days, The Retainage shall not be released until the Inspecting Engineer certifies that the repair and restoration have been completed in accordance with the provisions of Article 1.3, and Lender receives evidence 7 FILED: SUFFOLK COUNTY CLERK 02/23/2024 12:52 PM INDEX NO. 604801/2024 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 02/23/2024 satisfactory to Lender that the costs of the repair and restoration have been paid in full or will be paid in full out of the Retainage. If at any time the Net Proceeds, or the undisbursed balance thereof, shall not, in the opinion of Lender, be sufficient to pay in full the balance of the costs which will be incurred in connection with the completion of the repair and restoration, Mortgagor shall deposit the deficiency with Lender before any further disbursement of the Net Proceeds shall be made, which deficiency deposit may be commingled with the general funds of Lender, shall not bear interest and shall be disbursed for costs actually incurred in connection with the repair and restoration on the same conditions applicable to the Net Proceeds. Any such deficiency deposit until disbursed pursuant to this paragraph shall constitute additional security for the payment of the Debt. (d) Ail insurance proceeds received by Lender and not disbursed for the repair and restoration pursuant to the provisions of this Article 1.3 shall be retained and applied by Lender toward the payment of the Debt whether or not then due and payable in such priority and proportions as Lender in its discretion shall deem proper or, at the discretion of Lender, the same may be paid, either in whole or in part, to Mortgagor for such purposes as Lender shall designate. If Lender shall receive and retain such insurance proceeds, the lien of this Mortgage shall be reduced only by the amount thereof received and retained by Lender and actually applied by Lender in reduction of the Debt. (e) The provisions of subsection 4 of Section 254 of the Real Property Law of New York covering the insurance of buildings against loss by fire shall not apply to this Mortgage. 1.4. Payment of Taxes, etc, (a) Mortgagor shail pay all real and personal property taxes, assessments, water rates, sewer rents and other charges, including vault charges and license fees for the use of vaults, chutes and similar areas adjoining the Mortgaged Property, now or hereafter levied, imposed or assessed against the Mortgaged Property (collectively, the "Taxes") prior to the date upon which any fine, penalty, interest or cost may be added thereto or imposed by law for the nonpayment thereof, and, in the absence of such timely payment, Lender in its sole discretion, may, but shall not be obligated to, pay same (all such payments to be secured hereby in accordance with Article 2.7 hereof), and Mortgagor shall reimburse Lender upon demand for such expenditures, Mortgagor shall deliver to Lender, within thirty (30) days of payment, receipts bills, canceled checks and other evidence satisfactory to Lender evidencing the payment of the Taxes prior to the date upon which any fine, penalty, interest or cost may be added thereto or imposed by law for the nonpayment thereof. Upon the establishment of any Escrow Fund for Taxes, the Mortgagor shall immediately pay any accrued and unpaid Taxes, (b) After prior notice to Lender, in the case of any material item, Mortgagor, at its own expense, may contest by appropriate legal proceeding, promptly initiated and conducted in good faith and with due diligence, the amount or validity or application whole or in part of any of the Taxes, provided that (i) no Event of Default then exists under the Note or this Mortgage, (ii) Mortgagor is permitted to do so under the provisions of any mortgage or deed of trust superior in lien to the Mortgage and under the provisions of the any ground lease encumbered hereby, if any, (iii) such proceeding shail suspend the collection of the Taxes from Mortgagor and from the Mortgaged Property, (iv) such proceeding shall be permitted under and be conducted in accordance with the provisions of any other instrument to which Mortgagor or the Mortgaged Property is subject and shall not constitute a default thereunder, (v) neither the Mortgaged Property nor any part thereof or interest therein will in the opinion of Lender be in danger of being sold, forfeited, terminated, canceled or lost, (vi) Mortgagor shall have set aside 8 FILED: SUFFOLK COUNTY CLERK 02/23/2024 12:52 PM INDEX NO. 604801/2024 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 02/23/2024 adequate reserves for the payment of the Taxes, together with all interest and penalties thereon, and (vii) Mortgagor shall have furnished such security as may be required in the proceeding, or as may be requested by Lender to insure the timely payment of any such Taxes, together with all interest and penalties thereon. 1.5. Escrow Fund, (a) If required by the Lender at any time, Borrower will pay - to Lender, together with each monthly installment due under the Note, one twelfth of an amount (the "Escrow Fund") which would be sufficient to pay, on the first (1S() day of the month preceding the month in which they become due, the Taxes and/or the premiums on all Policies (the "Premiums") payable, or estimated by Lender to be payable, during the ensuing twelve (12) months. Lender will apply the Escrow Fund to the payment of Taxes and/or the Premiums which are required to be paid by Borrower pursuant to the provisions of this Mortgage. If the amount of the Escrow Fund shall exceed the amount of the Taxes and the Premiums payable by Borrower pursuant to the provisions of this Mortgage, Lender shall, in its discretion, (i) return any excess to Borrower, or (ii) credit such excess against future payments to be made to the Escrow Fund. If the Escrow Fund is not sufficient to pay the Taxes and/or the Premiums, as the same become payable, Borrower shall pay to Lender, upon request, an amount which Lender shall estimate as sufficient to make up the deficiency. Lender reserves the right to immediately increase without notice to monthly payments required by the Borrower for Taxes and/or Premiums upon Lender’s determination that existing monthly payments are not sufficient to pay future Taxes and/or Premiums. Until expended or applied as above provided, any amounts in the Escrow Fund may be commingled with the general funds of Lender, shall constitute additional security for the Debt and shall not bear interest The collection of such deposits by Lender shall not relieve Borrower of any of the obligations of Borrower under any provision of this Mortgage. Provided (i) there are sufficient amounts in the Escrow Fund, (ii) no Event of Default exists under this Mortgage and (iii) Lender is not otherwise constrained or prohibited from making such payment, Lender shall pay the Taxes and Premiums as they become due by their respective due dates. (b) To the extent permitted by applicable law, if a Default occurs under any of the provisions of this Mortgage, Lender shall have the right to apply the balance of any funds deposited with it, or its designee, accumulated to pay Taxes and Premiums, either as a credit against the Debt or to the payment of any other charges payable hereunder. 1.6. Condemnation. Borrower shall promptly provide notice to Lender of the actual or threatened commencement of any condemnation or eminent domain proceedings and shall deliver to Lender copies of any and all pleadings and papers served in connection with such proceedings. Lender may at its option participate in such proceedings. Notwithstanding - any taking by any public or quasi public authority through eminent domain or otherwise, Borrower shall continue to pay the Debt at the time and in the manner provided for its payment in the Note and this Mortgage and the Debt shall not be reduced until any award or payment therefor shall have been actually received and applied by Lender to the discharge of the Debt. Lender may apply the entire amount of any such award or payment to the discharge of the Debt whether or not then due and payable in such order, priority and proportions as Lender in its discretion shall deem proper. If Lender receives and retains such award or payment and applies it to the Debt, the lien of this Mortgage shall be affected only by a reduction of the amount of said lien by the amount of such award or payment so received and retained by Lender. Borrower shall at its expense file and prosecute its claim or claims for any such award or payment in good faith and with due diligence and cause the same to be collected and paid over to Lender. Borrower hereby irrevocably authorizes and empowers Lender, in the name of Borrower or otherwise, to collect and receipt for any such award or payment and to file and 9 FILED: SUFFOLK COUNTY CLERK 02/23/2024 12:52 PM INDEX NO. 604801/2024 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 02/23/2024 prosecute such claim or claims. Although it is hereby expressly agreed that the same shall not be necessary in any event, Borrower shall, upon demand of Lender, at the sole cost and expense of the Borrower, make, execute and deliver any and all assignments and other instruments sufficient for the purpose of assigning any such award or payment to Lender, free and clear of any encumbrances of any kind or nature whatsoever. If the Mortgaged Property is sold, through foreclosure or otherwise, prior to the receipt by Lender of such award or payment, Lender shall have the right, whether or not a deficiency judgment on the Note shall have been sought, recovered or denied, to receive such award or payment, or a portion thereof sufficient to pay the Debt, whichever is less, and Borrower shall pay over to Lender said award or payment as, if and when Borrower receives same, to the extent of any deficiency found to be due upon such sale, with interest thereon, whether or not a deficiency judgment on this Mortgage shall have been sought or recovered or denied, and of the attorneys' fees, costs and disbursements incurred by Lender in connection with the collection of such award or payment. Lender shall not be limited to the interest paid on the award by the condemning authority and shall be entitled to reserve interest on the amount at the interest rate provided for in the Note. 1.7. Leases and Rents, (a) Mortgagor absolutely and irrevocably assigns to Lender the Rents, and Mortgagor grants to Lender the right to enter upon and to take possession of the Mortgaged Property for the purpose of collecting the same and to let the Mortgaged Property, or any part thereof, and to apply the Rents after payment of all necessary charges and expenses on account to the Debt, reserving only to Mortgagor the conditional right, as a licensee, to collect, use and enjoy the Rents until an Event of Default shall occur hereunder. In exercising such conditional right, Mortgagor shall be entitled to collect and receive such Rent and agrees to use such Rents in payment of principal and interest becoming due under the Note and in payment of Taxes and Premiums becoming due hereunder, but such right of Mortgagor may be revoked by Lender upon the occurrence of Event of Default under the terms of the Note or this Mortgage and thereafter Lender may let the Mortgaged Property or any part thereof and may retain and apply the Rents toward payment of the Debt in such order, priority and proportions as Lender, in its discretion, shall deem proper , or toward the operation, maintenance and repair of the Mortgaged Property, and irrespective of whether Lender shall have commenced a foreclosure of this Mortgage or shall have applied or arranged for the appointment of a receiver. Lender shall not be obligated to give to Mortgagor prior notice of such revocation of the right to let and collect the Rents, (b) In addition to the rights which Lender may have herein, if an Event of any Default occurs under this Mortgage, Lender, at its option, may require Mortgagor to pay monthly in advance to Lender, or any receiver appointed to collect the Rents, the fair and reasonable rental value for the use and occupation of such part of the Mortgaged Property as may be in actual possession of Mortgagor. Upon default in any such payment, Mortgagor will vacate and surrender possession of the Mortgaged Property to Lender, or to such receiver, and, in default thereof, Mortgagor may be evicted by summary proceedings or otherwise. Nothing contained in this paragraph shall be construed as imposing on Lender a