EXHIBIT 10.24
DEED OF TRUST
BETWEEN THE CORT JOINT VENTURE
AND
NATIONSBANK, N.A.
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Xxxxx X. Xxxxxx, Esq.
Xxxxxxxx Xxxxxxx LLP
NationsBank Plaza - Suite 5200
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000-0000
INSTRUCTIONS TO RECORDER:
Index this document as
(i) a deed of trust;
(ii) an assignment of rents;
(iii) a security agreement; and
(iv) a fixture filing
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DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY AGREEMENT
AND FIXTURE FILING
STATE OF GEORGIA
COUNTY OF XXXXXX
THIS DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND
FIXTURE FILING (the "Security Instrument") is made and entered into as of the
30th day of July, 1998, by XXXXX/ORANGE COUNTY ASSOCIATES, a Georgia joint
venture comprised of Xxxxx Development Corporation, a Georgia corporation, and
Xxxxx Operating Partnership, L.P., a Delaware limited partnership ("Borrower"),
in favor of CHICAGO TITLE COMPANY, with an address of 00000 Xxx Xxxxxx, Xxxxxx,
Xxxxxxxxxx 00000 ("Trustee"), and NATIONSBANK, N.A., a national banking
corporation, together with its successors and assigns ("Lender").
ARTICLE 1 - CERTAIN DEFINITIONS; GRANTING CLAUSES; SECURED INDEBTEDNESS
Section 1.1. Certain Definitions and Reference Terms. In addition to
other terms defined herein, each of the following terms shall have the meaning
assigned to it:
"Promissory Note": Promissory Note dated of even date herewith made
by Borrower payable to the order of Lender in the principal face amount of FOUR
MILLION EIGHT HUNDRED SEVENTY-FIVE THOUSAND AND NO/100 DOLLARS ($4,875,000.00),
bearing interest at a variable rate as therein provided, and finally maturing on
July 30, 1999, unless extended to January 30, 2000, pursuant to the terms of
said Note, which, by this reference, is made a part hereof.
Section 1.2. Property. The Borrower, in consideration of the
indebtedness herein recited, irrevocably grants, conveys
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and assigns to the Trustee and the Trustee's successors and assigns, in trust,
with power of sale, all of the following described land, real property
interests, buildings, improvements, fixtures, furniture and appliances and other
personal property: (a) the real estate (herein called the "Land") described in
Exhibit A which is attached hereto and incorporated herein by reference, and (i)
all improvements now or hereafter situated or to be situated on the Land (herein
together called the "Improvements"); and (ii) all right, title and interest of
Borrower, now owned or hereafter acquired, in and to (1) all streets, roads,
alleys, easements, rights-of-way, licenses, rights of ingress and egress,
vehicle parking rights and public places, existing or proposed, abutting,
adjacent, used in connection with or pertaining to the Land or the Improvements;
(2) any strips or gores between the Land and abutting or adjacent properties;
(3) all options to purchase or lease the Land or the Improvements or any portion
thereof or interest therein, and any greater estate in the Land or the
Improvements; (4) all claims, actions and causes of action, both in law and in
equity, with respect to the Property or the Improvements; and (5) all water and
water rights, timber, crops and mineral interests on or pertaining to the Land
(the Land, Improvements and other rights, titles and interests referred to in
this clause (a) being herein sometimes collectively called the "Premises"); (b)
all fixtures, equipment, systems, machinery, furniture, furnishings, appliances,
inventory, goods, building and construction materials, supplies, and articles of
personal property, of every kind and character, now owned or hereafter acquired
by Borrower, which are now or hereafter attached to or situated in, on or about
the Land or the Improvements, or used in or necessary to the complete and proper
planning, development, use, occupancy or operation thereof, or acquired (whether
delivered to the Land or stored elsewhere) for use or installation in or on the
Land or the Improvements, and all renewals and replacements of, substitutions
for and additions to the foregoing (the properties referred to in this clause
(b) being herein sometimes collectively called the "Accessories," all of which
are hereby declared to be permanent accessions to the Land); (c) all (i) plans
and specifications for the Improvements; (ii) Borrower's rights, but not
liability for any breach by Borrower, under all commitments (including any
commitment for financing to pay any of the secured indebtedness, as defined
below), insurance policies, contracts and agreements for the design,
construction, operation or inspection of the Improvements and other contracts
and general intangibles (including but not limited to trademarks, trade names,
goodwill and symbols) related to the Premises or the Accessories or the
operation thereof; (iii) deposits (including but not limited to Borrower's
rights in tenants' security deposits, deposits with respect to utility services
to the Premises, and any deposits or reserves hereunder
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or under any other Loan Document for taxes, insurance or otherwise), rebates or
refunds of impact fees or other taxes, assessments or charges, money, accounts,
instruments, documents, notes and chattel paper arising from or by virtue of any
transactions related to the Premises or the Accessories; (iv) permits, licenses,
franchises, certificates, development rights, commitments and rights for
utilities, and other rights and privileges obtained in connection with the
Premises or the Accessories; (v) leases, rents, royalties, bonuses, issues,
profits, revenues and other benefits of the Premises and the Accessories
(without derogation of Article 3 hereof); (vi) oil, gas and other hydrocarbons
and other minerals produced from or allocated to the Land and all products
processed or obtained therefrom, and the proceeds thereof; and (vii)
engineering, accounting, title, legal, and other technical or business data
concerning the Property which are in the possession of Borrower or in which
Borrower can otherwise grant a security interest; and (d) all (i) proceeds of or
arising from the properties, rights, titles and interests referred to above in
this Section 1.2, including but not limited to proceeds of any sale, lease or
other disposition thereof, proceeds of each policy of insurance relating thereto
(including premium refunds), proceeds of the taking thereof or of any rights
appurtenant thereto, including change of grade of streets, curb cuts or other
rights of access, by eminent domain or transfer in lieu thereof for public or
quasi-public use under any law, and proceeds arising out of any damage thereto;
(ii) all claims, actions and causes of action, both in law and in equity, with
respect to the Property or the Improvements; and (iii) other interests of every
kind and character which Borrower now has or hereafter acquires in, to or for
the benefit of the properties, rights, titles and interests referred to above in
this Section 1.2 and all property used or useful in connection therewith,
including but not limited to rights of ingress and egress and remainders,
reversions and reversionary rights or interests; and if the estate of Borrower
in any of the property referred to above in this Section 1.2 is a leasehold
estate, this conveyance shall include, and the lien and interest created hereby
shall encumber and extend to, all other or additional title, estates, interests
or rights which are now owned or may hereafter be acquired by Borrower in or to
the property demised under the lease creating the leasehold estate; TO HAVE AND
TO HOLD the foregoing rights, interests and properties, and all rights, estates,
powers and privileges appurtenant thereto (herein collectively called the
"Property"), to the use, benefit and behoof of Lender, forever, in fee simple
subject to the Permitted Encumbrances (as hereafter defined).
Section 1.3. Security Interest. As additional collateral and further
security for the indebtedness secured hereby, to the fullest extent permitted by
applicable law,
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Borrower hereby assigns and grants to Lender a security interest in all of the
Property which constitutes personal property or fixtures (herein sometimes
collectively called the "Collateral"). In addition to its rights hereunder or
otherwise, Lender shall have all of the rights of a secured party under the
Uniform Commercial Code as adopted in the State of California, or under the
Uniform Commercial Code in force in any other state to the extent the same is
applicable law.
Section 1.4. Note, Loan Documents, Other Obligations. This Security
Instrument is made to secure and enforce the payment and performance of the
following promissory notes, obligations, indebtedness and liabilities and all
renewals, extensions, supplements, increases, and modifications thereof in whole
or in part from time to time: (a) the Promissory Note and all other notes given
in substitution therefor or in modification, supplement, increase, renewal or
extension thereof, in whole or in part (such note or notes, whether one or more,
as from time to time renewed, extended, supplemented, increased or modified and
all other notes given in substitution therefor, or in modification, renewal or
extension thereof, in whole or in part, being hereinafter called the "Note");
(b) all indebtedness and other obligations owed by Borrower to Lender, or any
affiliate of Lender, now or hereafter incurred or arising pursuant to or
permitted by the provisions of the Note, this Security Instrument, the
Environmental Indemnity Agreement (the "Environmental Agreement") of even date
herewith between Borrower and Lender, or any other document now or hereafter
evidencing, governing, guaranteeing, securing or otherwise executed in
connection with the loan evidenced by the Note, including but not limited to any
loan or credit agreement, tri-party financing agreement, purchase and sale
agreement with respect to the Property or other agreement between Borrower and
Lender, or among Borrower, Lender and any other party or parties, pertaining to
the repayment or use of the proceeds of the loan evidenced by the Note (the
Note, this Security Instrument, the Environmental Agreement and such other
documents, as they or any of them may have been or may be from time to time
renewed, extended, supplemented, increased or modified, being herein sometimes
collectively called the "Loan Documents"); and (c) all other loans and future
advances made by Lender to Borrower and all other debts, obligations and
liabilities of Borrower of every kind and character now or hereafter existing in
favor of Lender, however and whenever incurred, whether direct or indirect,
primary or secondary, joint or several, fixed or contingent, secured or
unsecured, and whether originally payable to Lender or to a third party and
subsequently acquired by Lender; provided, however, and notwithstanding the
foregoing provisions of this clause (c), this Security Instrument shall not
secure any such other loan, advance, debt, obligation or liability with respect
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to which Lender is by applicable law prohibited from obtaining a lien or
security title on real estate nor shall this clause (c) operate or be effective
to constitute or require any assumption or payment by any person, in any way, of
any debt of any other person to the extent that the same would violate or exceed
the limit provided in any applicable usury or other law. The indebtedness
referred to in this Section 1.4 is hereinafter sometimes referred to as the
"secured indebtedness" or the "indebtedness secured hereby."
ARTICLE 2 - Representations, Warranties and Covenants
Section 2.1. Borrower represents, warrants, and covenants as
follows:
(a) Payment and Performance. Borrower will make due and punctual
payment of the secured indebtedness. Borrower will timely and properly perform
and comply with all of the covenants, agreements, and conditions imposed upon it
by this Security Instrument and the other Loan Documents and will not permit a
default to occur hereunder or thereunder. Time shall be of the essence in this
Security Instrument.
(b) Title and Permitted Encumbrances. Borrower has, in Borrower's
own right, and Borrower covenants to maintain, lawful, good and marketable fee
simple title to the Property, is lawfully seized and possessed of the Property
and every part thereof, and has the right to convey the same, free and clear of
all liens, charges, claims, interests, and encumbrances except for (i) the
matters, if any, set forth under the heading "Permitted Exceptions" in Exhibit B
hereto, which are Permitted Exceptions only to the extent the same are valid and
subsisting and affect the Property, (ii) the liens and security interests
evidenced by this Security Instrument, (iii) other liens and security interests
(if any) in favor of Lender (the matters described in the foregoing clauses (i),
(ii) and (iii) being herein called the "Permitted Encumbrances"). Borrower, and
Borrower's successors and assigns, will warrant and forever defend title to the
Property, subject as aforesaid, to Lender and its successors and assigns,
against the claims and demands of all persons claiming or to claim the same or
any part thereof. Borrower will punctually pay, perform, observe and keep all
covenants, obligations and conditions in or pursuant to any Permitted
Encumbrance and will not modify or permit modification of any Permitted
Encumbrance without the prior written consent of Lender. Inclusion of any matter
as a Permitted Encumbrance does not constitute approval or waiver by Lender of
any existing or future violation or other breach thereof by Borrower, by the
Property or otherwise. If any right or interest of Lender in the Property or any
part thereof shall be endangered or questioned or
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shall be attacked directly or indirectly, Lender (whether or not named as the
party to legal proceedings with respect thereto) is hereby authorized and
empowered to take such steps as in its discretion may be proper for the defense
of any such legal proceedings or the protection of such right or interest of
Lender, including but not limited to the employment of independent counsel, the
prosecution or defense of litigation, and the compromise or discharge of adverse
claims. All expenditures so made of every kind and character shall be a demand
obligation (which obligation Borrower hereby promises to pay) owing by Borrower
to Lender, and Lender shall be subrogated to all rights of the person receiving
such payment.
(c) Taxes and Other Impositions. Borrower will pay, or cause to be
paid, all taxes, assessments and other charges or levies imposed upon or against
or with respect to the Property or the ownership, use, occupancy or enjoyment of
any portion thereof, or any utility service thereto, as the same become due and
payable, including but not limited to all ad valorem taxes assessed against the
Property or any part thereof, and shall deliver promptly to Lender such evidence
of the payment thereof as Lender may require.
(d) Insurance.
I. Required Insurance. Borrower shall obtain and maintain at
Borrower's sole expense: (1) Lender title insurance issued to Lender covering
the Premises as required by Lender; (2) all-risk insurance with respect to all
insurable Property, against loss or damage by fire, lightning, windstorm,
explosion, hail, tornado and such hazards as are presently included in so-called
"all-risk" coverage and against such other insurable hazards as Lender may
require, in an amount not less than 100% of the full replacement cost, including
the cost of debris removal, without deduction for depreciation and sufficient to
prevent Borrower and Lender from becoming a coinsurer, such insurance to be in
builder's risk (non-reporting) form during and with respect to any construction
on the Premises; (3) if and to the extent any portion of the Improvements is in
a special flood hazard area, a flood insurance policy in an amount equal to the
lesser of the principal face amount of the Note or the maximum amount available;
(4) comprehensive general public liability insurance, on an "occurrence" basis,
for the benefit of Borrower and Lender as named insureds; (5) statutory workers'
compensation insurance with respect to any work on or about the Premises; and
(6) such other insurance on the Property as may from time to time be required by
Lender (including but not limited to rental loss or business interruption
insurance, boiler and machinery insurance, earthquake insurance, and war risk
insurance) and against other insurable hazards or casualties which at the time
are commonly
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insured against in the case of premises similarly situated, due regard being
given to the height, type, construction, location, use and occupancy of
buildings and improvements. All insurance policies shall be issued and
maintained by insurers, in amounts, with deductibles, and in form satisfactory
to Lender, and shall require not less than thirty (30) days' prior written
notice to Lender of any cancellation or change of coverage. All insurance
policies maintained, or caused to be maintained, by Borrower with respect to the
Property, except for public liability insurance, shall provide that each such
policy shall be primary without right of contribution from any other insurance
that may be carried by Borrower or Lender and that all of the provisions
thereof, except the limits of liability, shall operate in the same manner as if
there were a separate policy covering each insured. If any insurer which has
issued a policy of title, hazard, liability or other insurance required pursuant
to this Security Instrument or any other Loan Document becomes insolvent or the
subject of any bankruptcy, receivership or similar proceeding or if in Lender's
reasonable opinion the financial responsibility of such insurer is or becomes
inadequate, Borrower shall, in each instance promptly upon the request of Lender
and at Borrower's expense, obtain and deliver to Lender a like policy (or, if
and to the extent permitted by Lender, a certificate of insurance) issued by
another insurer, which insurer and policy meet the requirements of this Security
Instrument or such other Loan Document, as the case may be. Without limiting the
discretion of Lender with respect to required endorsements to insurance
policies, all such policies for loss of or damage to the Property shall contain
a standard Lender clause (without contribution) naming Lender as Lender with
loss proceeds payable to Lender notwithstanding (i) any act, failure to act or
negligence of or violation of any warranty, declaration or condition contained
in any such policy by any named insured; (ii) the occupation or use of the
Property for purposes more hazardous than permitted by the terms of any such
policy; (iii) any foreclosure or other action by Lender under the Loan
Documents; or (iv) any change in title to or ownership of the Property or any
portion thereof, such proceeds to be held for application as provided in the
Loan Documents. The originals of each initial insurance policy (or to the extent
permitted by Lender, a copy of the original policy and a satisfactory
certificate of insurance) shall be delivered to Lender at the time of execution
of this Security Instrument, with premiums fully paid, and each renewal or
substitute policy (or certificate) shall be delivered to Lender, with premiums
fully paid, at least ten (10) days before the termination of the policy it
renews or replaces. Borrower shall pay all premiums on policies required
hereunder as they become due and payable and promptly deliver to Lender evidence
satisfactory to Lender of the timely payment thereof. If any loss occurs at any
time when
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Borrower has failed to perform Borrower's covenants and agreements in this
paragraph, Lender shall nevertheless be entitled to the benefit of all insurance
covering the loss and held by or for Borrower, to the same extent as if it had
been made payable to Lender. Upon any foreclosure hereof or transfer of title to
the Property in extinguishment of the whole or any part of the secured
indebtedness, all of Borrower's right, title and interest in and to the
insurance policies referred to in this Section (including unearned premiums) and
all proceeds payable thereunder shall thereupon vest in the purchaser at
foreclosure or other such transferee, to the extent permissible under such
policies. Lender shall have the right (but not the obligation) to make proof of
loss for, settle and adjust any claim under, and receive the proceeds of, all
insurance for loss of or damage to the Property, and the expenses incurred by
Lender in the adjustment and collection of insurance proceeds shall be a part of
the secured indebtedness and shall be due and payable to Lender on demand.
Lender shall not be, under any circumstances, liable or responsible for failure
to collect or exercise diligence in the collection of any of such proceeds or
for the obtaining, maintaining or adequacy of any insurance or for failure to
see to the proper application of any amount paid over to Borrower. Subject to
the terms of Subsection II, below, any proceeds received by Lender shall, after
deduction therefrom of all reasonable expenses actually incurred by Lender,
including attorneys' fees, at Lender's option be (1) released to Borrower, or
(2) applied (upon compliance with such terms and conditions as may be required
by Lender) to repair or restoration, either partly or entirely, of the Property
so damaged, or (3) applied to the payment of the secured indebtedness in such
order and manner as Lender, in its sole but reasonable discretion, may elect,
whether or not due. In any event, the unpaid portion of the secured indebtedness
shall remain in full force and effect and the payment thereof shall not be
excused. Borrower shall at all times comply with the requirements of the
insurance policies required hereunder and of the issuers of such policies and of
any board of fire underwriters or similar body as applicable to or affecting the
Property.
II. Restoration Advances.
(i) Lender agrees that in the event that all or a portion of the
Improvements shall be destroyed or damaged by fire, explosion, windstorm, hail
or any other casualty against which insurance is required under this Security
Instrument, Lender will elect to apply the insurance proceeds which remain after
payment of the expenses of collection thereof as provided in Subsection I, above
(called the "Proceeds" below in this Subsection), or so much thereof as is
required, to restoration of the portion of the Premises damaged, as nearly as
practicable to
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its value, character and condition immediately prior to such casualty (the
"Restoration"), provided that all of the following conditions precedent are
satisfied in full not later than ninety (90) days after the date on which the
casualty loss occurs:
A) no default shall have occurred and shall remain uncured following
the expiration of any grace or cure period;
B) all tenants having present or future possessory rights under
Leases (hereinafter defined), including without limitation the tenant
under the that certain Standard Industrial/Commercial Single-Tenant
Lease-Net (the "Cort Furniture Lease") dated October 25, 1988, by and
between Xxxxxxx Xxxxxxxx Valley Holdings, Inc., a California corporation,
as Lessor, and Cort Furniture Rental Corporation, a New York corporation,
as Lessee, the Lessor's interest thereunder having been assigned to
Borrower, have agreed in a manner satisfactory to Lender that their Leases
will continue in full force and effect and, if necessary, the time for
taking or regaining possession of the demised premises under such Leases
will be extended by the time necessary to complete the Restoration;
C) all parties having operating, management or franchise interests
in, and arrangements concerning, the Property have agreed that they will
continue their interests and arrangements for the contract terms then in
effect following the Restoration;
D) all parties having commitments to provide financing with respect
to the Property, to purchase Borrower's interest in full or in part in the
Property or to purchase or pay the loan evidenced by the Note
(collectively, "Commitment Providers") have agreed in a manner
satisfactory to Lender that their commitments will continue in full force
and effect and, if necessary, the expiration of such commitments will be
extended by the time necessary to complete the Restoration;
E) Borrower has presented evidence satisfactory to Lender, and
Lender has reasonably determined, that the Restoration can be accomplished
within a reasonable period of time and in any event prior to the Maturity
Date (as defined in the Note);
F) Borrower has delivered or caused to be delivered to Lender, and
Lender has approved, complete final plans and specifications (the
"Restoration Plans") for the work to be performed in connection with the
Restoration (hereinafter
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called the "Restoration Work") prepared and sealed by an architect (the
"Architect") acceptable to Lender, with evidence satisfactory to Lender of
the approval of the Restoration Plans by all Commitment Providers and by
all governmental authorities and all tenants under Leases whose approval
is required;
G) Borrower has delivered or caused to be delivered to Lender a
signed estimate approved in writing by the Architect, stating the entire
cost of completing the Restoration Work;
H) Borrower has entered into, and has furnished to Lender a copy of,
a fixed price construction contract satisfactory to Lender, with a
contractor reasonably acceptable to Lender, bonded to the extent required
by Lender, for the Restoration Work;
I) if Lender has determined that (i) the projected cost of the
Restoration Work substantially in accordance with the Restoration Plans
exceeds (ii) the available Proceeds held by Lender, then Borrower has
deposited with Lender funds sufficient to cover the excess cost;
J) Borrower has furnished all insurance coverage required by Lender
pursuant to Subsection 2.1(d)(I), above; and
K) Lender has determined that it will not incur any liability to any
person as a result of such use of the Proceeds.
If all of the foregoing conditions have not been satisfied within
the time limit specified above, then Lender may, at its option, apply such
Proceeds to the indebtedness secured hereby, whether or not due, in such order
and manner as Lender elects.
(ii) To the extent that Lender elects to apply the Proceeds to the
restoration or reconstruction of the Improvements, then disbursement of the
Proceeds for Restoration or Restoration Work shall be subject to and shall be
made in accordance with the customary practices of Lender governing the
disbursement of construction loans. If Lender determines from time to time that
(i) the estimated cost of the Restoration substantially in accordance with the
Restoration Plans exceeds (ii) the available Proceeds held by Lender plus all
other available funds deposited by Borrower with Lender for the purpose of the
Restoration, then Borrower shall deposit additional funds with Lender to cover
the excess cost before Lender shall be
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required to disburse any such Proceeds or other available funds for Restoration
costs. Any such funds provided by Borrower to cover excess costs shall be used
for the costs of Restoration prior to disbursement of any of the Proceeds for
such costs.
(iii) Any such Proceeds and additional funds provided by Borrower
which are held by Lender under this Subsection II shall be held by Lender in an
account of Lender's selection until disbursed for Restoration or otherwise
applied as herein provided. Lender's receipt and custody of such Proceeds or
additional funds shall not constitute a repayment of any of the indebtedness
secured hereby, unless and until such Proceeds or additional funds are actually
applied against the indebtedness secured hereby in accordance with this Security
Instrument. No disbursement of such Proceeds for Restoration costs shall
constitute an advance of the loan evidenced by the Note or increase the
principal amount of such loan. If surplus Proceeds remain after completion of
the Restoration and payment of all costs therefor, then such surplus Proceeds
shall be applied against the indebtedness secured hereby in such manner and
order as Lender elects. If surplus funds then remain from additional funds
provided by Borrower to cover excess costs of Restoration, then such surplus
funds shall be returned to Borrower, provided that no uncured default shall
exist hereunder.
(iv) In any event, upon the occurrence of a default at any time, and
the expiration of any applicable grace or cure period without the curing
thereof, Lender may (but has no obligation to) apply all or any portion of such
Proceeds or additional funds provided by Borrower in Lender's possession to the
payment of the indebtedness secured hereby, whether or not due, in such order
and manner as Lender elects, and/or to the cure of any default without waiving
the same.
(e) Reserve for Insurance, Taxes and Assessments. Upon request of
Lender, to secure certain of Borrower's obligations in paragraphs (c) and (d)
above, but not in lieu of such obligations, Borrower will deposit with Lender a
sum equal to ad valorem taxes, assessments and charges (which charges for the
purpose of this paragraph shall include without limitation any recurring charge
which could result in a lien against the Property) against the Property for the
current year and the premiums for such policies of insurance for the current
year, all as estimated by Lender and prorated to the end of the calendar month
following the month during which Lender's request is made, and thereafter will
deposit with Lender, on each date when an installment of principal and/or
interest is due on the Note, sufficient funds (as estimated from time to time by
Lender) to permit Lender to pay at least fifteen (15) days prior to the
delinquency date thereof, the next maturing ad valorem taxes,
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assessments and charges and premiums for such policies of insurance. Lender
shall have the right to rely upon tax information furnished by applicable taxing
authorities in the payment of such taxes or assessments and shall have no
obligation to make any protest of any such taxes or assessments. Any excess over
the amounts required for such purposes shall be held by Lender for future use,
applied to any secured indebtedness or refunded to Borrower, at Lender's option,
and any deficiency in such funds so deposited shall be made up by Borrower upon
demand of Lender. All such funds so deposited shall bear interest at the rate
applicable to the account selected by Lender for such funds, may be mingled with
the general funds of Lender and shall be applied by Lender toward the payment of
such taxes, assessments, charges and premiums when statements therefor are
presented to Lender by Borrower (which statements shall be presented by Borrower
to Lender a reasonable time before the applicable amount is delinquent);
provided, however, that, if a default shall have occurred hereunder, such funds
may at Lender's option be applied to the payment of the secured indebtedness in
the order determined by Lender in its sole discretion, and that Lender may (but
shall have no obligation) at any time, in its discretion, apply all or any part
of such funds toward the payment of any such taxes, assessments, charges or
premiums which are past due, together with any penalties or late charges with
respect thereto. The conveyance or transfer of Borrower's interest in the
Property for any reason (including without limitation the foreclosure of a
subordinate lien or security interest or a transfer by operation of law) shall
constitute an assignment or transfer of Borrower's interest in and rights to
such funds held by Lender under this paragraph but subject to the rights of
Lender hereunder.
(f) Condemnation. Borrower shall notify Lender immediately of any
threatened or pending proceeding for condemnation affecting the Property or
arising out of damage to the Property, and Borrower shall, at Borrower's
expense, diligently prosecute any such proceedings. Lender shall have the right
(but not the obligation) to participate in any such proceeding and to be
represented by counsel of its own choice. Lender shall be entitled to receive
all sums which may be awarded or become payable to Borrower for the condemnation
of the Property, or any part thereof, for public or quasi-public use, or by
virtue of private sale in lieu thereof, and any sums which may be awarded or
become payable to Borrower for injury or damage to the Property. Borrower shall,
promptly upon request of Lender, execute such additional assignments and other
documents as may be necessary from time to time to permit such participation and
to enable Lender to collect and receipt for any such sums. All such sums are
hereby assigned to Lender, and shall, after deduction therefrom of all
reasonable expenses actually incurred by Lender,
XXXXX/ORANGE COUNTY ASSOCIATES
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PAGE 12
including attorneys' fees, at Lender's option be (1) released to Borrower, or
(2) applied (upon compliance with such terms and conditions as may be required
by Lender) to repair or restoration of the Property so affected, or (3) applied
to the payment of the secured indebtedness in such order and manner as Lender,
in its sole but reasonable discretion, may elect, whether or not due. In any
event the unpaid portion of the secured indebtedness shall remain in full force
and effect and the payment thereof shall not be excused. Lender shall not be,
under any circumstances, liable or responsible for failure to collect or to
exercise diligence in the collection of any such sum or for failure to see to
the proper application of any amount paid over to Borrower. Lender is hereby
authorized, in the name of Borrower, to execute and deliver valid acquittances
for, and to appeal from, any such award, judgment or decree. All costs and
expenses (including but not limited to attorneys' fees) incurred by Lender in
connection with any condemnation shall be a demand obligation owing by Borrower
(which Borrower hereby promises to pay) to Lender pursuant to this Security
Instrument.
(g) Compliance with Legal Requirements. The Property and the use,
operation and maintenance thereof and all activities thereon do and shall at all
times comply with all applicable Legal Requirements (defined below). The
Property is not, and shall not be, dependent on any other property or premises
or any interest therein other than the Property to fulfill any requirement of
any Legal Requirement. Borrower shall not, by act or omission, permit any
building or other improvement not subject to the lien and interest of this
Security Instrument to rely on the Property or any interest therein to fulfill
any requirement of any Legal Requirement. No part of the Property constitutes a
nonconforming use under any zoning law or similar law or ordinance. Borrower has
obtained and shall preserve in force all requisite zoning, utility, building,
health, environmental and operating permits from the governmental authorities
having jurisdiction over the Property. If Borrower receives a notice or claim
from any person that the Property, or any use, activity, operation or
maintenance thereof or thereon, is not in compliance with any Legal Requirement,
Borrower will promptly furnish a copy of such notice or claim to Lender.
Borrower has received no notice and has no knowledge of any such noncompliance.
As used in this Security Instrument: (i) the term "Legal Requirement" means any
Law (defined below), agreement, covenant, restriction, easement or condition
(including, without limitation of the foregoing, any condition or requirement
imposed by any insurance or surety company), as any of the same now exists or
may be changed or amended or come into effect in the future; and (ii) the term
"Law" means any federal, state or local law, statute, ordinance, code, rule,
regulation, license, permit,
XXXXX/ORANGE COUNTY ASSOCIATES
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PAGE 13
authorization, decision, order, injunction or decree, domestic or foreign.
(h) Maintenance, Repair and Restoration. Borrower will keep the
Property in first class order, repair, operating condition and appearance,
causing all necessary repairs, renewals, replacements, additions and
improvements to be promptly made, and will not allow any of the Property to be
misused, abused or wasted or to deteriorate. Notwithstanding the foregoing,
Borrower will not, without the prior written consent of Lender, which consent
shall not be unreasonably withheld (i) remove from the Property any fixtures or
personal property conveyed or encumbered by this Security Instrument except such
as is replaced by Borrower by an article of equal suitability and value, owned
by Borrower, free and clear of any lien or security interest (except that
created by this Security Instrument), or (ii) make any structural alteration to
the Property or any other alteration thereto which impairs the value thereof. If
any act or occurrence of any kind or nature (including any condemnation or any
casualty for which insurance was not obtained or obtainable) shall result in
damage to or loss or destruction of the Property, Borrower shall give prompt
notice thereof to Lender and Borrower shall promptly, at Borrower's sole cost
and expense and regardless of whether insurance or condemnation proceeds (if
any) shall be available or sufficient for the purpose, commence and continue
diligently to completion to restore, repair, replace and rebuild the Property as
nearly as possible to its value, condition and character immediately prior to
the damage, loss or destruction.
(i) No Other Liens. Borrower will not, without the prior written
consent of Lender, create, place or permit to be created or placed, or through
any act or failure to act, acquiesce in the placing of, or allow to remain, any
deed to secure debt, Security Instrument, voluntary or involuntary lien, whether
statutory, constitutional or contractual, security title, interest, encumbrance
or charge, or conditional sale or other title retention document, against or
covering the Property, or any part thereof, other than the Permitted
Encumbrances, regardless of whether the same are expressly or otherwise
subordinate to the lien or security interest created in this Security
Instrument, and should any of the foregoing become attached hereafter in any
manner to any part of the Property without the prior written consent of Lender,
Borrower will cause the same to be promptly discharged and released. Borrower
will own all parts of the Property and will not acquire any fixtures, equipment
or other property forming a part of the Property pursuant to a lease, license,
security agreement or similar agreement, whereby any party has or may obtain the
right to repossess or remove same, without the prior written consent of
XXXXX/ORANGE COUNTY ASSOCIATES
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Lender, which consent shall not be unreasonably withheld. If Lender consents to
the voluntary grant by Borrower of any deed to secure debt, lien, security
interest, or other encumbrance (hereinafter called "Subordinate Lien") conveying
or encumbering any of the Property or if the foregoing prohibition is determined
by a court of competent jurisdiction to be unenforceable as to a Subordinate
Lien, any such Subordinate Lien shall contain express covenants to the effect
that: (1) the Subordinate Lien is unconditionally subordinate to this Security
Instrument and all Leases (hereinafter defined); (2) if any action (whether
judicial or pursuant to a power of sale) shall be instituted to foreclose or
otherwise enforce the Subordinate Lien, no tenant of any of the Leases
(hereinafter defined) shall be named as a party defendant, and no action shall
be taken that would terminate any occupancy or tenancy without the prior written
consent of Lender; (3) Rents (hereinafter defined), if collected by or for the
holder of the Subordinate Lien, shall be applied first to the payment of the
secured indebtedness then due and expenses incurred in the ownership, operation
and maintenance of the Property in such order as Lender may determine, prior to
being applied to any indebtedness secured by the Subordinate Lien; (4) written
notice of default under the Subordinate Lien and written notice of the
commencement of any action (whether judicial or pursuant to a power of sale) to
foreclose or otherwise enforce the Subordinate Lien or to seek the appointment
of a receiver for all or any part of the Property shall be given to Lender with
or immediately after the occurrence of any such default or commencement; and (5)
neither the holder of the Subordinate Lien, nor any purchaser at foreclosure
thereunder, nor anyone claiming by, through or under any of them shall succeed
to any of Borrower's rights hereunder without the prior written consent of
Lender.
(j) Operation of Property. Borrower will operate the Property in a
good and workmanlike manner and in accordance with all Legal Requirements and
will pay all fees or charges of any kind in connection therewith. Borrower will
keep the Property occupied so as not to impair the insurance carried thereon.
Borrower will not use or occupy or conduct any activity on, or allow the use or
occupancy of or the conduct of any activity on, the Property in any manner which
violates any Legal Requirement or which constitutes a public or private nuisance
or which makes void, voidable or cancelable, or increases the premium of, any
insurance then in force with respect thereto. Borrower will not initiate or
permit any zoning reclassification of the Property or seek any variance under
existing zoning ordinances applicable to the Property or use or permit the use
of the Property in such a manner which would result in such use becoming a
nonconforming use under applicable zoning ordinances or other Legal Requirement.
Borrower will not impose any easement, restrictive
XXXXX/ORANGE COUNTY ASSOCIATES
DEED OF TRUST
PAGE 15
covenant or encumbrance upon the Property, execute or file any subdivision plat
or condominium declaration affecting the Property or consent to the annexation
of the Property to any municipality, without the prior written consent of
Lender, which consent shall not be unreasonably withheld. Borrower will not do
or suffer to be done any act whereby the value of any part of the Property may
be lessened. Borrower will preserve, protect, renew, extend and retain all
material rights and privileges granted for or applicable to the Property.
Without the prior written consent of Lender pursuant to paragraph (u) of this
Section 2.1, there shall be no drilling or exploration for or extraction,
removal or production of any mineral, hydrocarbon, gas, natural element,
compound or substance (including sand and gravel) from the surface or subsurface
of the Land regardless of the depth thereof or the method of mining or
extraction thereof. Borrower will cause all debts and liabilities of any
character (including without limitation all debts and liabilities for labor,
material and equipment and all debts and charges for utilities servicing the
Property) incurred in the construction, maintenance, operation and development
of the Property to be promptly paid.
(k) Financial Matters. Borrower is solvent after giving effect to
all borrowings contemplated by the Loan Documents and no proceeding under any
Debtor Relief Law (hereinafter defined) is pending (or, to Borrower's knowledge,
threatened) by or against Borrower, or any affiliate of Borrower, as a debtor.
All reports, statements, plans, budgets, applications, agreements and other data
and information heretofore furnished or hereafter to be furnished by or on
behalf of Borrower to Lender in connection with the loan or loans evidenced by
the Loan Documents (including, without limitation, all financial statements and
financial information) are and will be true, correct and complete in all
material respects as of their respective dates and do not and will not omit to
state any fact or circumstance necessary to make the statements contained
therein not misleading. No material adverse change has occurred since the dates
of such reports, statements and other data in the financial condition of
Borrower or, to Borrower's knowledge, of any tenant under any lease described
therein. For the purposes of this paragraph, "Borrower" shall also include any
person liable directly or indirectly for the secured indebtedness or any part
thereof and any joint venturer or general partner of Borrower.
(l) Status of Borrower; Suits and Claims; Loan Documents. Borrower
is and will continue to be (i) duly organized, validly existing and in good
standing under the laws of its state of organization, (ii) authorized to do
business in, and in good standing in, each state in which the Property is
XXXXX/ORANGE COUNTY ASSOCIATES
DEED OF TRUST
PAGE 16
located, and (iii) possessed of all requisite power and authority to carry on
its business and to own and operate the Property. Each Loan Document executed by
Borrower has been duly authorized, executed and delivered by Borrower, and the
obligations thereunder and the performance thereof by Borrower in accordance
with their terms are and will continue to be within Borrower's power and
authority (without the necessity of joinder or consent of any other person), are
not and will not be in contravention of any Legal Requirement or any other
document or agreement to which Borrower or the Property is subject, and do not
and will not result in the creation of any encumbrance against any assets or
properties of Borrower, or any other person liable, directly or indirectly, for
any of the secured indebtedness, except as expressly contemplated by the Loan
Documents. There is no suit, action, claim, investigation, inquiry, proceeding
or demand pending (or, to Borrower's knowledge, threatened) against Borrower or
against any person liable directly or indirectly for the secured indebtedness or
which affects the Property (including, without limitation, any which challenges
or otherwise pertains to Borrower's title to the Property) or the validity,
enforceability or priority of any of the Loan Documents. There is no judicial or
administrative action, suit or proceeding pending (or, to Borrower's knowledge,
threatened) against Borrower or against any other person liable directly or
indirectly for the secured indebtedness, except as has been disclosed in writing
to Lender in connection with the loan evidenced by the Note. The Loan Documents
constitute legal, valid and binding obligations of Borrower (and of each
guarantor, if any) enforceable in accordance with their terms, except as the
enforceability thereof may be limited by Debtor Relief Laws (hereinafter
defined) and except as the availability of certain remedies may be limited by
general principles of equity. Borrower is not a "foreign person" within the
meaning of the Internal Revenue Code of 1986, as amended, Sections 1445 and 7701
(i.e. Borrower is not a non-resident alien, foreign corporation, foreign
partnership, foreign trust or foreign estate as those terms are defined therein
and in any regulations promulgated thereunder). The loan evidenced by the Note
is solely for business purposes, and is not for personal, family, household or
agricultural purposes. Borrower will not cause or permit any change to be made
in its name, identity, or corporate or partnership structure, unless Borrower
shall have notified Lender of such change prior to the effective date of such
change, and shall have first taken all action required by Lender for the purpose
of further perfecting or protecting the lien and security interest of Lender in
the Property. Borrower's principal place of business and chief executive office,
and the place where Borrower keeps its books and records concerning the
Property, has for the preceding four months been and will continue to be (unless
Borrower notifies Lender of any change in writing prior to the date of such
change)
XXXXX/ORANGE COUNTY ASSOCIATES
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PAGE 17
the address of Borrower set forth at the end of this Security Instrument.
(m) Certain Environmental Matters.
(i) Definitions. As used in this Security Instrument: (1)
"Environmental Claim" means any investigative, enforcement, cleanup, removal,
containment, remedial or other governmental or regulatory action at any time
threatened, instituted or completed pursuant to any applicable Environmental
Requirement against Borrower or against or with respect to the Property or any
use or activity on the Property, and any claim at any time threatened or made by
any person against Borrower or against or with respect to the Property or any
use or activity on the Property, relating to damage, contribution, cost
recovery, compensation, loss or injury resulting from any Hazardous Substance;
(2) "Environmental Requirement" means any Legal Requirement which pertains to
ground or air or water or noise pollution or contamination, underground or
aboveground tanks, health or the environment, including without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended ("CERCLA"), the Resource Conservation and Recovery Act of 1976, as
amended ("RCRA"), and all environmental laws, ordinances, regulations and rules
of the State of California and each agency, instrumentality and subdivision
thereof having jurisdiction over the Premises; and (3) "Hazardous Substance"
means any substance, whether solid, liquid or gaseous: (a) which is listed,
defined or regulated as a "hazardous substance", "hazardous waste" or "solid
waste", or otherwise classified as hazardous or toxic, in or pursuant to any
Environmental Requirement; or (b) which is or contains asbestos, radon, any
polychlorinated biphenyl, urea formaldehyde foam insulation, or explosive or
radioactive material; or (c) which causes or poses a threat to cause a
contamination or nuisance on the Property or on any adjacent property or a
hazard to the environment or to the health or safety of persons on the Property.
As used in this paragraph (m), the word "on" when used with respect to the
Property or adjacent property means "on, in, under, above or about".
(ii) Representations and Warranties. Borrower represents and
warrants to Lender, without regard to whether Lender has or hereafter obtains
any knowledge or report of the environmental condition of the Property, as
follows: (1) during the period of Borrower's ownership of the Property, the
Property has not been used for industrial or manufacturing purposes, for
landfill, dumping or other waste disposal activity or operation, for generation,
storage, use, sale, treatment, processing, recycling or disposal of any
Hazardous Substance, or for any other use that would give rise to the release of
any Hazardous Substance on the Property; (2) to the best of Borrower's
XXXXX/ORANGE COUNTY ASSOCIATES
DEED OF TRUST
PAGE 18
knowledge after inquiry in accordance with good commercial or customary
practices, no use of the Property described in clause (1) preceding occurred at
any time prior to the period of Borrower's ownership of the Property nor did any
such use on any adjacent property occur during or at any time prior to the
period of Borrower's ownership of the Property, and there is no Hazardous
Substance, storage tank (or similar vessel), sump or well on the Property; (3)
Borrower has received no notice and has no knowledge of any Environmental Claim
or any completed, pending, proposed or threatened investigation or inquiry
concerning the presence or release of any Hazardous Substance on the Property or
on any adjacent property or concerning whether any condition, use or activity on
the Property or on any adjacent property is in violation of any Environmental
Requirement; (4) the present conditions, uses and activities on the Property do
not violate any Environmental Requirement and the use of the Property which
Borrower (and each tenant and subtenant, if any) makes and intends to make of
the Property complies and will comply with all applicable Environmental
Requirements; (5) the Property is not currently on, and to the best of
Borrower's knowledge after inquiry in accordance with good commercial or
customary practices, has never been on, any federal or state "superfund" or
"superlien" list; and (6) neither Borrower, nor to Borrower's knowledge any
tenant or subtenant, has obtained or is required to obtain any permit or other
authorization to construct, occupy, operate, use or conduct any activity on any
of the Property by reason of any Environmental Requirement.
(iii) Violations. Borrower will not cause, commit, permit or allow
to continue any violation of any Environmental Requirement by Borrower or by or
with respect to the Property or any use or activity on the Property, or the
attachment of any environmental lien to the Property. Borrower will not place,
install, dispose of or release, or cause, permit or allow the placing,
installation, disposal or release of, any Hazardous Substance or storage tank
(or similar vessel) on the Property and will keep the Property free of any
Hazardous Substance. Notwithstanding the foregoing provisions of this Subsection
(iii), Borrower shall not be in default under this Subsection (iii) should
Borrower store minimal quantities of substances on the Premises which
technically could be considered Hazardous Substance, provided that: such
substances are of a type and are held only in a quantity normally used in
connection with the construction, occupancy or operation of comparable buildings
(such as cleaning fluids, and supplies normally used in the day to day operation
of business offices), such substances are being held, stored and used in
complete and strict compliance with all applicable Environmental Requirements,
and the indemnity in Section 7 of the Environmental Agreement shall always apply
to such substances, and it shall be and continue to be the
XXXXX/ORANGE COUNTY ASSOCIATES
DEED OF TRUST
PAGE 19
responsibility of Borrower to take all remedial actions required under and in
accordance with Subsection (vi), below, in the event of any unlawful release of
any such substance.
(iv) Notice to Lender. Borrower will promptly advise Lender in
writing of any Environmental Claim or of the discovery of any Hazardous
Substance on the Property, as soon as Borrower first obtains knowledge thereof,
including a full description of the nature and extent of the Environmental Claim
and/or Hazardous Substance and all relevant circumstances.
(v) Site Assessments and Information. If Lender shall ever have
reason to believe that any Hazardous Substance affects the Property, or if any
Environmental Claim is made or threatened, or if a default shall have occurred,
Borrower will at its expense provide to Lender from time to time, in each case
within 30 days of Lender's request, a report (including all drafts thereof if
requested by Lender) of an environmental assessment of the Property made after
the date of Lender's request and of such scope (including but not limited to the
taking of soil borings, air and groundwater samples and other above and below
ground testing) as Lender may request and by a consulting firm acceptable to
Lender. Borrower will cooperate with each consulting firm making any such
assessment and will supply to the consulting firm, from time to time and
promptly on request, all information available to Borrower to facilitate the
completion of the assessment and report.
(vi) Remedial Actions. Without limitation of Lender's rights to
declare a default and to exercise all remedies available by reason thereof, if
any Hazardous Substance is discovered on the Property at any time and regardless
of the cause, Borrower shall: (1) promptly at Borrower's sole risk and expense
remove, treat and dispose of the Hazardous Substance in compliance with all
applicable Environmental Requirements and solely under Borrower's name (or if
removal is prohibited by any Environmental Requirement, take whatever action is
required by applicable Environmental Requirements), in addition to taking such
other action as is necessary to have the full use and benefit of the Property as
contemplated by the Loan Documents, and provide Lender with satisfactory
evidence thereof; and (2) if requested by Lender, provide to Lender within 30
days of Lender's request a bond, letter of credit or other financial assurance
evidencing to Lender's satisfaction that all necessary funds are readily
available to pay the costs and expenses of the actions required by clause (1)
preceding and to discharge any assessments or liens established against the
Property as a result of the presence of the Hazardous Substance on the Property.
XXXXX/ORANGE COUNTY ASSOCIATES
DEED OF TRUST
PAGE 20
(n) Further Assurances. Borrower will, promptly on request of
Lender, (i) correct any defect, error or omission which may be discovered in the
contents, execution or acknowledgment of this Security Instrument or any other
Loan Document; (ii) execute, acknowledge, deliver, procure and record and/or
file such further documents (including, without limitation, further Security
Instruments, security agreements, financing statements, continuation statements,
and assignments of rents or leases) and do such further acts as may be
necessary, desirable or proper to carry out more effectively the purposes of
this Security Instrument and the other Loan Documents, to more fully identify
and subject to the liens and interests hereof any property intended to be
covered hereby (including specifically, but without limitation, any renewals,
additions, substitutions, replacements, or appurtenances to the Property) or as
deemed advisable by Lender to protect the lien or the interest hereunder against
the rights or interests of third persons; and (iii) provide such certificates,
documents, reports, information, affidavits and other instruments and do such
further acts as may be necessary, desirable or proper in the reasonable
determination of Lender to enable Lender to comply with the requirements or
requests of any agency having jurisdiction over Lender or any examiners of such
agencies with respect to the indebtedness secured hereby, Borrower or the
Property. Borrower shall pay all costs connected with any of the foregoing,
which shall be a demand obligation owing by Borrower (which Borrower hereby
promises to pay) to Lender pursuant to this Security Instrument.
(o) Fees and Expenses. Without limitation of any other provision of
this Security Instrument or of any other Loan Document and to the extent not
prohibited by applicable law, Borrower will pay, and will reimburse to Lender on
demand to the extent paid by Lender: (i) all appraisal fees, filing and
recording fees, taxes, brokerage fees and commissions, abstract fees, title
search or examination fees, title policy and endorsement premiums and fees,
uniform commercial code search fees, escrow fees, reasonable attorneys' fees,
architect fees, construction consultant fees, environmental inspection fees,
survey fees, and all other out-of-pocket costs and expenses of every character
incurred by Borrower or Lender in connection with the preparation of the Loan
Documents, the evaluation, closing and funding of the loan evidenced by the Loan
Documents, and any and all amendments and supplements to this Security
Instrument, the Note or any other Loan Documents or any approval, consent,
waiver, release or other matter requested or required hereunder or thereunder,
or otherwise attributable or chargeable to Borrower as owner of the Property;
and (ii) all costs and expenses, including reasonable attorneys' fees and
expenses, incurred or expended in connection with the exercise of any right
XXXXX/ORANGE COUNTY ASSOCIATES
DEED OF TRUST
PAGE 21
or remedy, or the enforcement of any obligation of Borrower, hereunder or under
any other Loan Document.
(p) Indemnification.
(i) Borrower will indemnify and hold harmless Lender from and
against, and reimburse Lender on demand for, any and all Indemnified Matters
(defined below). For purposes of this paragraph (p), the term "Lender" shall
include the directors, officers, partners, employees and agents of Lender, and
any persons owned or controlled by, owning or controlling, or under common
control or affiliated with Lender. Without limitation, the foregoing indemnities
shall apply to each indemnified person with respect to matters which in whole or
in part are caused by or arise out of the negligence of such (and/or any other)
indemnified person. However, such indemnities shall not apply to a particular
indemnified person to the extent that the subject of the indemnification is
caused by or arises out of the gross negligence or willful misconduct of that
indemnified person. Any amount to be paid under this paragraph (p) by Borrower
to Lender shall be a demand obligation owing by Borrower (which Borrower hereby
promises to pay) to Lender pursuant to this Security Instrument. Nothing in this
paragraph, elsewhere in this Security Instrument or in any other Loan Document
shall limit or impair any rights or remedies of Lender (including without
limitation any rights of contribution or indemnification) against Borrower or
any other person under any other provision of this Security Instrument, any
other Loan Document, any other agreement or any applicable Legal Requirement.
(ii) As used herein, the term "Indemnified Matters" means any and
all claims, demands, liabilities (including strict liability), losses, damages
(including consequential damages), causes of action, judgments, penalties, costs
and expenses (including without limitation, reasonable fees and expenses of
attorneys and other professional consultants and experts, and of the
investigation and defense of any claim, whether or not such claim is ultimately
defeated, and the settlement of any claim or judgment including all value paid
or given in settlement) of every kind, known or unknown, foreseeable or
unforeseeable, which may be imposed upon, asserted against or incurred or paid
by Lender at any time and from time to time, whenever imposed, asserted or
incurred, because of, resulting from, in connection with, or arising out of any
transaction, act, omission, event or circumstance in any way connected with the
Property or with this Security Instrument or any other Loan Document, including
but not limited to any bodily injury or death or property damage occurring in or
upon or in the vicinity of the Property through any cause whatsoever at any time
on or before the Release Date, any act performed or omitted to be performed
hereunder or under
XXXXX/ORANGE COUNTY ASSOCIATES
DEED OF TRUST
PAGE 22
any other Loan Document, any breach by Borrower of any representation, warranty,
covenant, agreement or condition contained in this Security Instrument or in any
other Loan Document, any default as defined herein or any claim under or with
respect to any Lease (hereinafter defined) or arising under the Environmental
Agreement. The term "Release Date" as used herein means the earlier of the
following two dates: (i) the date on which the indebtedness and obligations
secured hereby have been paid and performed in full and this Security Instrument
has been cancelled and satisfied of record, or (ii) the date on which this
Security Instrument is fully and finally foreclosed or a conveyance by deed in
lieu of such foreclosure is fully and finally effective, and possession of the
Property has been given to the purchaser or grantee free of occupancy and claims
to occupancy by Borrower and Borrower's heirs, devisees, representatives,
successors and assigns; provided, that if such payment, performance, release,
foreclosure or conveyance is challenged, in bankruptcy proceedings or otherwise,
the Release Date shall be deemed not to have occurred until such challenge is
rejected, dismissed or withdrawn with prejudice. The indemnities in this
paragraph (p) shall not terminate upon the Release Date or upon the
cancellation, satisfaction, foreclosure or other termination of this Security
Instrument but will survive the Release Date, foreclosure of this Security
Instrument or conveyance in lieu of foreclosure, the repayment of the secured
indebtedness, the discharge, cancellation and satisfaction of this Security
Instrument and the other Loan Documents, any bankruptcy or other debtor relief
proceeding, and any other event whatsoever.
(q) Records and Financial Reports. Borrower will keep accurate books
and records in accordance with sound accounting principles in which full, true
and correct entries shall be promptly made with respect to the Property and the
operation thereof, and will permit all such books and records to be inspected
and copied, and the Property to be inspected and photographed, by Lender and its
representatives during normal business hours and at any other reasonable times.
Without limitation of other or additional requirements in any of the other Loan
Documents, Borrower will furnish to Lender (i) current operating statements
itemizing all income and expenses of the Property for each quarter (and for the
fiscal year through the end of such quarter) as soon as reasonably practicable
but in any event within fifteen (15) days after the end of such quarter and for
the fiscal year of Borrower within sixty (60) days after the end thereof
including also a projection of such operations for the next fiscal year; and
(ii) a balance sheet (including disclosure of all contingent liabilities) and an
income statement of Borrower, for each fiscal year of Borrower as soon as
reasonably practicable following the end of such fiscal year, but
XXXXX/ORANGE COUNTY ASSOCIATES
DEED OF TRUST
PAGE 23
in any event within ninety (90) days after the end thereof. Each financial
statement submitted pursuant to this paragraph shall be prepared in accordance
with generally accepted accounting principles, consistently applied, and be
certified in writing as true and correct by a representative of Borrower
acceptable to Lender. Borrower will furnish to Lender at Borrower's expense all
evidence which Lender may from time to time reasonably request as to compliance
with all provisions of the Loan Documents. Any inspection or audit of the
Property or the books and records of Borrower, or the procuring of documents and
financial and other information, by or on behalf of Lender shall be for Lender's
protection only, and shall not constitute any assumption of responsibility to
Borrower or anyone else with regard to the condition, construction, maintenance
or operation of the Property nor Lender's approval of any certification given to
Lender nor relieve Borrower of any of Borrower's obligations. Lender may from
time to time assign or grant participations in the secured indebtedness and
Borrower consents to the delivery by Lender to any acquirer or prospective
acquirer of any interest or participation in or with respect to all or part of
the secured indebtedness such information as Lender now or hereafter has
relating to the Property, Borrower, any party obligated for payment of any part
of the secured indebtedness, any tenant or guarantor under any lease affecting
any part of the Property and any agent or guarantor under any management
agreement affecting any part of the Property.
(r) Taxes on Note or Security Instrument. Borrower will promptly pay
all income, franchise and other taxes owing by Borrower and any stamp taxes or
other taxes (unless such payment by Borrower is prohibited by law) which may be
required to be paid with respect to the Note, this Security Instrument or any
other instrument evidencing or securing any of the secured indebtedness,
excepting any amounts to be paid under the present California Security
Instrument tax laws, which amounts shall be paid by Lender. In the event of the
enactment after this date of any law of any governmental entity applicable to
Lender, the Note, the Property or this Security Instrument deducting from the
value of property for the purpose of taxation any lien or interest thereon, or
imposing upon Lender the payment of the whole or any part of the taxes or
assessments or charges or liens herein required to be paid by Borrower, or
changing in any way the laws relating to the taxation of Security Instruments or
security agreements or debts secured by Security Instruments or security
agreements or the interest of the Lender or secured party in the property
covered thereby, or the manner of collection of such taxes, so as to affect this
Security Instrument or the indebtedness secured hereby or Lender, then, and in
any such event, Borrower, upon demand by Lender, shall pay such taxes,
assessments, charges or liens, or reimburse Lender
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therefor; provided, however, that if in the opinion of counsel for Lender (i) it
might be unlawful to require Borrower to make such payment or (ii) the making of
such payment might result in the imposition of interest beyond the maximum
amount permitted by law, then and in such event, Lender may elect, by notice in
writing given to Borrower, to declare all of the indebtedness secured hereby to
be and become due and payable sixty (60) days from the giving of such notice.
(s) Statement Concerning Note or Security Instrument. Borrower shall
at any time and from time to time furnish within seven (7) days of request by
Lender a written statement in such form as may be required by Lender stating
that (i) the Note, this Security Instrument and the other Loan Documents are
valid and binding obligations of Borrower, enforceable against Borrower in
accordance with their terms; (ii) the unpaid principal balance of the Note;
(iii) the date to which interest on the Note is paid; (iv) the Note, this
Security Instrument and the other Loan Documents have not been released,
subordinated or modified; and (v) there are no offsets or defenses against the
enforcement of the Note, this Security Instrument or any other Loan Document. If
any of the foregoing statements are untrue, Borrower shall, alternatively,
specify the reasons therefor.
(t) Annual Appraisal. Lender may at its option obtain at Borrower's
expense, once in each year (or as otherwise reasonably requested by Lender) an
appraisal of the Property or any part thereof prepared in accordance with
written instructions from Lender by a third-party appraiser engaged directly by
Lender. Each such appraiser and appraisal shall be satisfactory to Lender. The
costs of each such appraisal shall be a part of the secured indebtedness and
shall be payable by Borrower to Lender on demand (which obligation Borrower
hereby promises to pay).
(u) Mineral Interests. Borrower agrees that the making of any oil,
gas or mineral lease or the sale or conveyance of any mineral interest or right
to explore for minerals under, through or upon the Property would impair the
value of the Property as security for payment of the indebtedness secured hereby
and that Borrower shall have no right, power or authority to lease the Property,
or any part thereof, for oil, gas or other mineral purposes, or to grant, assign
or convey any mineral interest of any nature, or the right to explore for oil,
gas and other minerals, without first obtaining from Lender express written
permission, which permission shall not be valid until recorded. Borrower further
agrees that if Borrower shall make any such lease or attempt to grant any such
mineral rights without such prior written permission, then Lender shall have the
option, without notice, to declare the same to be a default
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hereunder and to declare the indebtedness secured hereby immediately due and
payable. Whether or not Lender shall consent to such lease or grant of mineral
rights, Lender shall receive the entire consideration to be paid for such lease
or grant of mineral rights, with the same to be applied upon the indebtedness
secured hereby; provided, however, that the acceptance of such consideration
shall in no way impair the lien of this Security Instrument on the Property,
including all mineral rights.
(v) Year 2000 Compliance. Borrower has (i) initiated a review and
assessment of all areas within its business and operations (including those
affected by suppliers and vendors) that could be adversely affected by the "Year
2000 Problem" (that is, the risk that computer applications used by Borrower (or
its suppliers and vendors) may be unable to recognize and perform properly
date-sensitive functions involving certain dates prior to and any date after
December 31, 1999), (ii) developed a plan and timeline for addressing the Year
2000 Problem on a timely basis, and (iii) to date, implemented that plan in
accordance with that timetable. Borrower reasonably believes that all computer
applications (including those of its suppliers and vendors) that are material to
its business and operations will on a timely basis be able to perform properly
date-sensitive functions for all dates before and after January 1, 2000 (that
is, will be "Year 2000 Compliant"), except to the extent that a failure to do so
could not reasonably be expected to cause a material adverse change in the
financial condition, results of operations, business or properties of Borrower
(a "Material Adverse Change"). Borrower will promptly notify Lender in the event
that Borrower discovers or determines that any computer application (including
those of its suppliers and vendors) that is material to its business and
operations will not be Year 2000 Compliant on a timely basis, except to the
extent that such failure could not reasonably be expected to cause a Material
Adverse Change.
Section 2.2. Performance by Lender on Borrower's Behalf. Borrower
agrees that, if Borrower fails to perform any act or to take any action which
under any Loan Document Borrower is required to perform or take, or to pay any
money which under any Loan Document Borrower is required to pay, and whether or
not the failure then constitutes a default hereunder or thereunder, and whether
or not there has occurred any default or defaults hereunder or the secured
indebtedness has been accelerated, Lender, in Borrower's name or its own name,
may, but shall not be obligated to, perform or cause to be performed such act or
take such action or pay such money, and any expenses so incurred by Lender and
any money so paid by Lender shall be a demand obligation owing by Borrower to
Lender (which obligation Borrower hereby promises to pay), shall be a part of
the indebtedness
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secured hereby, and Lender, upon making such payment, shall be subrogated to all
of the rights of the person, entity or body politic receiving such payment.
Lender and its designees shall have the right to enter upon the Property at any
time and from time to time for any such purposes. No such payment or performance
by Lender shall waive or cure any default or waive any right, remedy or recourse
of Lender. Any such payment may be made by Lender in reliance on any statement,
invoice or claim without inquiry into the validity or accuracy thereof. Each
amount due and owing by Borrower to Lender pursuant to this Security Instrument
shall bear interest, from the date such amount becomes due until paid, at the
rate per annum provided in the Note for interest on past due principal owed on
the Note but never in excess of the maximum nonusurious amount permitted by
applicable law, which interest shall be payable to Lender on demand; and all
such amounts, together with such interest thereon, shall automatically and
without notice be a part of the indebtedness secured hereby. The amount and
nature of any expense by Lender hereunder and the time when paid shall be fully
established by the certificate of Lender or any of Lender's officers or agents.
Section 2.3. Absence of Obligations of Lender with Respect to
Property. Notwithstanding anything in this Security Instrument to the contrary,
including, without limitation, the definition of "Property" and/or the
provisions of Article 3 hereof, (i) to the extent permitted by applicable law,
the Property is composed of Borrower's rights, title and interests therein but
not Borrower's obligations, duties or liabilities pertaining thereto, (ii)
Lender neither assumes nor shall have any obligations, duties or liabilities in
connection with any portion of the items described in the definition of
"Property" herein, either prior to or after obtaining title to such Property,
whether by foreclosure sale, the granting of a deed in lieu of foreclosure or
otherwise, and (iii) Lender may, at any time prior to or after the acquisition
of title to any portion of the Property as above described, advise any party in
writing as to the extent of Lender's interest therein and/or expressly disaffirm
in writing any rights, interests, obligations, duties and/or liabilities with
respect to such Property or matters related thereto. Without limiting the
generality of the foregoing, it is understood and agreed that Lender shall have
no obligations, duties or liabilities prior to or after acquisition of title to
any portion of the Property, as lessee under any lease or purchaser or seller
under any contract or option unless Lender elects otherwise by written
notification.
ARTICLE 3 - Collateral Assignment of Leases and Rents
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Section 3.1. Assignment. As additional security for the indebtedness
secured hereby, Borrower hereby assigns to Lender all Rents (hereinafter
defined) and all of Borrower's rights in and under all Leases (hereinafter
defined). Upon the occurrence of a default hereunder, Lender shall have the
right, power and privilege (but shall be under no duty) to demand possession of
the Rents, which demand shall to the fullest extent permitted by applicable law
be sufficient action by Lender to entitle Lender to immediate and direct payment
of the Rents (including delivery to Lender of Rents collected for the period in
which the demand occurs and for any subsequent period), for application as
provided in this Security Instrument, all without the necessity of any further
action by Lender, including, without limitation, any action to obtain possession
of the Land, Improvements or any other portion of the Property or any action for
the appointment of a receiver. Borrower hereby authorizes and directs the
tenants under the Leases to pay Rents to Lender upon written demand by Lender,
without further consent of Borrower, without any obligation to determine whether
a default has in fact occurred and regardless of whether Lender has taken
possession of any portion of the Property, and the tenants may rely upon any
written statement delivered by Lender to the tenants. Any such payment to Lender
shall constitute payment to Borrower under the Leases, and Borrower hereby
appoints Lender as Borrower's lawful attorney-in-fact for giving, and Lender is
hereby empowered to give, acquittances to any tenants for such payments to
Lender after a default. The assignment contained in this Section shall become
null and void upon the release of this Security Instrument. As used herein: (i)
"Lease" means each existing or future lease, sublease (to the extent of
Borrower's rights thereunder), usufruct or other agreement under the terms of
which any person has or acquires any right to occupy or use the Property, or any
part thereof, or interest therein, and each existing or future guaranty of
payment or performance thereunder, and all extensions, renewals, modifications
and replacements of each such lease, sublease, usufruct, agreement or guaranty;
and (ii) "Rents" means all of the rents, revenue, income, profits and proceeds
derived and to be derived from the Property or arising from the use or enjoyment
of any portion thereof or from any Lease, including but not limited to
liquidated damages following default under any such Lease, all proceeds payable
under any policy of insurance covering loss of rents resulting from
untenantability caused by damage to any part of the Property, all of Borrower's
rights to recover monetary amounts from any tenant in bankruptcy including,
without limitation, rights of recovery for use and occupancy and damage claims
arising out of Lease defaults, including rejections, under any applicable Debtor
Relief Law (as hereinafter defined), together with any sums of money that may
now or at any time hereafter be or become due and payable to Borrower by virtue
of any and all royalties,
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overriding royalties, bonuses, delay rentals and any other amount of any kind or
character arising under any and all present and all future oil, gas, mineral and
mining leases covering the Property or any part thereof, and all proceeds and
other amounts paid or owing to Borrower under or pursuant to any and all
contracts and bonds relating to the construction or renovation of the Property.
Section 3.2. Covenants, Representations and Warranties Concerning
Leases and Rents. Borrower covenants, represents and warrants that: (i) Borrower
has good title to, and is the owner of the entire landlord's interest in, the
Leases and Rents hereby assigned and authority to assign them; (ii) all Leases
are valid and enforceable, and in full force and effect, and are unmodified
except as stated therein; (iii) neither Borrower nor any tenant in the Property
is in default under its Lease (and no event has occurred which with the passage
of time or notice or both would result in a default under its Lease) or is the
subject of any bankruptcy, insolvency or similar proceeding; (iv) unless
otherwise stated in a Permitted Encumbrance, no Rents or Leases have been or
will be assigned, mortgaged, pledged or otherwise encumbered and no other person
has or will acquire any right, title or interest in such Rents or Leases; (v) no
Rents have been waived, released, discounted, set off or compromised; (vi)
except as stated in the Leases, Borrower has not received any funds or deposits
from any tenant for which credit has not already been made on account of accrued
Rents; (vii) Borrower shall perform all of its obligations under the Leases and
enforce the tenants' obligations under the Leases to the extent enforcement is
prudent under the circumstances; (viii) Borrower will not, without the prior
written consent of Lender, which consent shall not be unreasonably withheld,
enter into any Lease after the date hereof, or waive, release, discount, set
off, compromise, reduce or defer any Rent, receive or collect Rents more than
one (1) month in advance, grant any rent-free period to any tenant, reduce any
Lease term or waive, release or otherwise modify any other material obligation
under any Lease, renew or extend any Lease except in accordance with a right of
the tenant thereto in such Lease, approve or consent to an assignment of a Lease
or a subletting of any part of the premises covered by a Lease, or settle or
compromise any claim against a tenant under a Lease in bankruptcy or otherwise;
(ix) Borrower will not, except in good faith where the tenant is in material
default thereunder, terminate or consent to the cancellation or surrender of any
Lease having an unexpired term of one year or more unless promptly after the
cancellation or surrender a new Lease of such premises is made with a new tenant
having a credit standing, in Lender's judgment, at least equivalent to that of
the tenant whose Lease was cancelled, on substantially the same terms as the
terminated or cancelled Lease; (x) Borrower will not execute any
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Lease except in accordance with the Loan Documents and for actual occupancy by
the tenant thereunder; (xi) Borrower shall give prompt notice to Lender, as soon
as Borrower first obtains notice, of any claim, or the commencement of any
action, by any tenant or subtenant under or with respect to a Lease regarding
any claimed damage, default, diminution of or offset against Rent, cancellation
of the Lease, or constructive eviction, excluding, however, notices of default
under residential Leases, and Borrower shall defend, at Borrower's expense, any
proceeding pertaining to any Lease, including, if Lender so requests, any such
proceeding to which Lender is a party; (xii) Borrower shall as often as
requested by Lender, within ten (10) days of each request, deliver to Lender a
complete rent roll of the Property in such detail as Lender may require and
financial statements of the tenants, subtenants and guarantors under the Leases
to the extent available to Borrower, and deliver to such of the tenants and
others obligated under the Leases specified by Lender written notice of the
assignment in Section 3.1 hereof in form and content satisfactory to Lender;
(xiii) promptly upon request by Lender, Borrower shall deliver to Lender
executed originals of all Leases and copies of all records relating thereto;
(xiv) there shall be no merger of the leasehold estates, created by the Leases,
with the fee estate of the Land without the prior written consent of Lender; and
(xv) Lender may at any time and from time to time by specific written instrument
intended for the purpose, unilaterally subordinate the lien of this Security
Instrument to any Lease, without joinder or consent of, or notice to, Borrower,
any tenant or any other person, and notice is hereby given to each tenant under
a Lease of such right to subordinate. No such subordination shall constitute a
subordination to any lien or other encumbrance, whenever arising, or improve the
right of any junior lienholder; and nothing herein shall be construed as
subordinating this Security Instrument to any Lease.
Section 3.3. No Liability of Lender. Lender's acceptance of this
assignment shall not be deemed to constitute Lender a "Lender in possession,"
nor obligate Lender to appear in or defend any proceeding relating to any Lease
or to the Property, or to take any action hereunder, expend any money, incur any
expenses, or perform any obligation or liability under any Lease, or assume any
obligation for any deposit delivered to Borrower by any tenant and not as such
delivered to and accepted by Lender. Lender shall not be liable for any injury
or damage to person or property in or about the Property, or for Lender's
failure to collect or to exercise diligence in collecting Rents, but shall be
accountable only for Rents that it shall actually receive. Neither the
assignment of Leases and Rents nor enforcement of Lender's rights regarding
Leases and Rents (including collection of Rents) nor possession of the Property
by
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Lender nor Lender's consent to or approval of any Lease (nor all of the same),
shall render Lender liable on any obligation under or with respect to any Lease
or constitute affirmation of, or any subordination to, any Lease, occupancy, use
or option. If Lender seeks or obtains any judicial relief regarding Rents or
Leases, the same shall in no way prevent the concurrent or subsequent employment
of any other appropriate rights or remedies nor shall same constitute an
election of judicial relief for any foreclosure or any other purpose. Lender
neither has nor assumes any obligations as lessor or landlord with respect to
any Lease. The rights of Lender under this Article 3 shall be cumulative of all
other rights of Lender under the Loan Documents or otherwise.
ARTICLE 4 - Default
Section 4.1. Events of Default. The occurrence of any one of the
following shall be a default under this Security Instrument ("Default" or
"default"):
(a) Failure to Pay Indebtedness. Any of the secured indebtedness is
not paid when due, regardless of how such amount may have become due, and such
failure is not cured within the applicable grace or cure period provided for in
Section 4.2 of this Security Instrument.
(b) Nonperformance of Covenants. Any covenant, agreement or
condition herein or in any other Loan Document (other than covenants otherwise
addressed in another paragraph of this Section, such as covenants to pay the
secured indebtedness) is not fully and timely performed, observed or kept, and
such failure is not cured within the applicable grace or cure period provided
for in Section 4.2 of this Security Instrument.
(c) Representations. Any statement, representation or warranty in
any of the Loan Documents, or in any financial statement or any other writing
heretofore or hereafter delivered to Lender in connection with the secured
indebtedness is false, misleading or erroneous in any material respect on the
date hereof or on the date as of which such statement, representation or
warranty is made.
(d) Bankruptcy or Insolvency. The owner of the Property or any
person liable, directly or indirectly, for any of the secured indebtedness (or
any general partner or joint venturer of such owner, if the owner is a general
partnership or joint venture):
(1) (i) Executes an assignment for the benefit of creditors, or
takes any action in furtherance thereof; or (ii) admits in writing its inability
to pay, or fails to pay, its
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debts generally as they become due; or (iii) as a debtor, files a petition,
case, proceeding or other action pursuant to, or voluntarily seeks the benefit
or benefits of, Title 11 of the United States Code as now or hereafter in effect
or any other law, domestic or foreign, as now or hereafter in effect relating to
bankruptcy, insolvency, liquidation, receivership, reorganization, arrangement,
composition, extension or adjustment of debts, or similar laws affecting the
rights of creditors (Title 11 of the United States Code and such other laws
being herein called "Debtor Relief Laws"), or takes any action in furtherance
thereof; or (iv) seeks the appointment of a receiver, trustee, custodian or
liquidator of the Property or any part thereof or of any significant portion of
its other property; or
(2) Suffers the filing of a petition, case, proceeding or other
action against it as a debtor under any Debtor Relief Law or seeking appointment
of a receiver, trustee, custodian or liquidator of the Property or any part
thereof or of any significant portion of its other property, and (i) admits,
acquiesces in or fails to contest diligently the material allegations thereof,
or (ii) the petition, case, proceeding or other action results in entry of any
order for relief or order granting relief sought against it, or (iii) in a
proceeding under the Federal Bankruptcy Code, the case is converted from one
chapter to another, or (iv) fails to have the petition, case, proceeding or
other action permanently dismissed or discharged on or before the earlier of
trial thereon or sixty (60) days next following the date of its filing; or
(3) Conceals, removes, or permits to be concealed or removed, any
part of its property, with intent to hinder, delay or defraud its creditors or
any of them, or makes or suffers a transfer of any of its property which may be
fraudulent under any bankruptcy, fraudulent conveyance or similar law; or makes
any transfer of its property to or for the benefit of a creditor at a time when
other creditors similarly situated have not been paid; or suffers or permits,
while insolvent, any creditor to obtain a lien (other than as described in
subparagraph (4) below) upon any of its property through legal proceedings which
are not vacated and such lien discharged prior to enforcement thereof and in any
event within sixty (60) days from the date thereof; or
(4) Fails to have discharged within a period of ten (10) days any
attachment, sequestration, or similar writ levied upon any of its property; or
(5) Fails to pay immediately any final money judgment against it.
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(e) Transfer of the Property. There occurs any sale, lease,
conveyance, assignment, pledge, encumbrance, or transfer of all or any part of
the Property or any interest therein, voluntarily or involuntarily, whether by
operation of law or otherwise, except: (i) sales or transfers of items of the
Accessories which have become obsolete or worn beyond practical use and which
have been replaced by adequate substitutes, owned by Borrower, having a value
equal to or greater than the replaced items when new; and (ii) the grant, in the
ordinary course of business, of a leasehold interest in a part of the
Improvements to a tenant for occupancy, not containing a right or option to
purchase and not in contravention of any provision of this Security Instrument
or of any other Loan Document. Lender may, in its sole discretion, waive a
default under this paragraph, but it shall have no obligation to do so, and any
waiver may be conditioned upon such one or more of the following (if any) which
Lender may require: the grantee's integrity, reputation, character,
creditworthiness and management ability being satisfactory to Lender in its sole
judgment and such grantee's executing, prior to such sale or transfer, a written
assumption agreement containing such terms as Lender may require, a principal
paydown on the Note, an increase in the rate of interest payable under the Note,
a transfer fee, a modification of the term of the Note, and any other
modification of the Loan Documents which Lender may require.
(f) Transfer of Ownership of Borrower. There occurs any sale,
pledge, encumbrance, assignment or transfer, voluntarily or involuntarily,
whether by operation of law or otherwise, of any interest in Borrower, without
the prior written consent of Lender.
(g) Grant of Easement, Etc. Without the prior written consent of
Lender, which will not be unreasonably withheld, Borrower grants any easement or
dedication, files any plat, condominium declaration, or restriction, or
otherwise encumbers the Property, or seeks or permits any zoning
reclassification or variance, unless such action is expressly permitted by the
Loan Documents or does not affect the Property.
(h) Abandonment. The owner of the Property abandons any of the
Property.
(i) Default Under Other Lien. A default or event of default occurs
and is continuing under any lien, security interest or assignment covering the
Property or any part thereof (whether or not Lender has consented, and without
hereby implying Lender's consent, to any such lien, security interest or
assignment not created hereunder), or the holder of any such lien, security
interest or assignment declares a default or
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institutes foreclosure or other proceedings for the enforcement of its remedies
thereunder.
(j) Destruction. The Property is so demolished, destroyed or damaged
that, in the reasonable opinion of Lender, it cannot be restored or rebuilt with
available funds to a profitable condition within a reasonable period of time and
in any event prior to the final maturity date of the Note.
(k) Condemnation. (i) Any governmental authority shall require, or
commence any proceeding for, the demolition of any building or structure
comprising a part of the Premises, or (ii) there is commenced any proceeding to
condemn or otherwise take pursuant to the power of eminent domain, or a contract
for sale or a conveyance in lieu of such a taking is executed which provides for
the transfer of, a material portion of the Premises, including but not limited
to the taking (or transfer in lieu thereof) of any portion which would result in
the blockage or substantial impairment of access or utility service to the
Improvements or which would cause the Premises to fail to comply with any Legal
Requirement.
(l) Liquidation, Etc. There occurs a liquidation, termination,
dissolution, merger, consolidation or failure to maintain good standing in the
State of Georgia (or in the case of an individual, the death or legal
incapacity) of the owner of the Property or any person obligated to pay any part
of the secured indebtedness.
(m) Material, Adverse Change. In Lender's reasonable opinion, the
prospect of payment of all or any part of the secured indebtedness has been
impaired because of a material, adverse change in the financial condition,
results of operations, business or properties of the owner of the Property or
any person liable, directly or indirectly, for any of the secured indebtedness,
or of any general partner or joint venturer thereof (if such owner or other
person is a partnership or joint venture).
(n) Enforceability; Priority. Any Loan Document shall for any reason
without Lender's specific written consent cease to be in full force and effect,
or shall be declared null and void or unenforceable in whole or in part, or the
validity or enforceability thereof, in whole or in part, shall be challenged or
denied by any party thereto other than Lender; or the liens, interests, Security
Instruments or security interests of Lender in any of the Property become
unenforceable in whole or in part, or cease to be of the priority herein
required, or the validity or enforceability thereof, in whole or in part, shall
be
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challenged or denied by Borrower or any person obligated to pay any part of the
secured indebtedness.
(o) Other Loan Documents; Cort Furniture Lease. A default or event
of default occurs under any Loan Document, other than this Security Instrument,
or a default or event of default occurs under the Cort Furniture Lease, and the
same is not remedied within the applicable period of grace (if any) provided in
such document.
Section 4.2. Notice and Cure. Lender agrees, by its acceptance of
this Security Instrument, that notwithstanding anything to the contrary
contained herein or in any of the other Loan Documents, upon the occurrence of
any default of the type described in Subparagraphs (a) or (b) of Section 4.1 of
this Security Instrument, Lender will not accelerate the maturity of the Note or
the secured indebtedness and will not exercise any of its other rights and
remedies hereunder or under the other Loan Documents until and unless Lender has
first given notice of such default to Borrower, in the manner prescribed in
Section 6.12 of this Security Instrument, and Borrower has failed to cure such
default within the following periods of time:
(a) If such default is a default of the type described in
Subparagraph (a) of Section 4.1 of this Security Instrument, Borrower shall have
a period of ten (10) days from and after the effective date of such notice
within which to cure such default; or
(b) If such default is a default of the type described in
Subparagraph (b) of Section 4.1 of this Security Instrument, Borrower shall have
a period of thirty (30) days from and after the effective date of such notice
within which to cure such default.
After the occurrence of three (3) such defaults, and the giving of
notice thereof by Lender, Lender shall not be obligated to give to Borrower any
further notice of default or opportunity to cure the same. The agreements set
forth in this Section 4.2 do not and shall not be deemed to prevent or prohibit
Lender from withholding any advances of the secured indebtedness, following the
occurrence of a default, until and unless such default shall have been cured.
If Lender shall fail to give such notice and right to cure to
Borrower as provided herein, the sole and exclusive remedy of Borrower for such
failure shall be to seek appropriate equitable relief to enforce the agreement
to give such notice and right to cure and to have any acceleration of the
maturity of the Note and the secured indebtedness postponed or revoked and
foreclosure or other proceedings in connection therewith delayed or terminated
pending or upon the curing of such default in the
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manner and during the period of time permitted by such agreement, and Borrower
shall have no right to damages or any other type of relief not herein
specifically set out against Lender, all of which damages or other relief are
hereby waived by Borrower. Nothing herein or in any of the other Loan Documents
shall operate or be construed to add on or make cumulative any cure or grace
periods specified in any of the Loan Documents.
ARTICLE 5 - Remedies
Section 5.1. Certain Remedies. If a default shall occur, Lender may
(but shall have no obligation to) exercise any one or more of the following
remedies, without additional notice (unless notice is required by applicable
statute):
(a) Acceleration. Lender may at any time and from time to time
declare any or all of the secured indebtedness immediately due and payable and
such secured indebtedness shall thereupon be immediately due and payable,
without presentment, demand, protest, notice of protest, notice of acceleration
or of intention to accelerate or any other notice or declaration of any kind,
all of which are hereby expressly waived by Borrower. Without limitation of the
foregoing, upon the occurrence of a default described in clauses (i), (iii) or
(iv) of subparagraph (1) of paragraph (d) of Section 4.1, hereof, all of the
secured indebtedness shall thereupon be immediately due and payable, without
presentment, demand, protest, notice of protest, declaration or notice of
acceleration or intention to accelerate, or any other notice, declaration or act
of any kind, all of which are hereby expressly waived by Borrower.
(b) Enforcement of Assignment of Rents. Prior or subsequent to
taking possession of any portion of the Property or taking any action with
respect to such possession, Lender may: (1) collect and/or xxx for the Rents in
Lender's own name, give receipts and releases therefor, and after deducting all
expenses of collection, including attorneys' fees and expenses, apply the net
proceeds thereof to the secured indebtedness in such manner and order as Lender
may elect and/or to the operation and management of the Property, including the
payment of management, brokerage and attorney's fees and expenses; and (2)
require Borrower to transfer all security deposits and records thereof to Lender
together with original counterparts of the Leases.
(c) Foreclosure.
(i) Method of Foreclosure. Lender, at Lender's option, may either:
(1) accelerate the secured indebtedness, including all accrued interest,
pursuant to paragraph (a) of this Section 5.1 and foreclose the lien of this
Security Instrument by
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judicial proceeding, or (2) declare the secured indebtedness immediately due and
payable, without deduction, and foreclose this Security Instrument by the power
of sale hereby granted.
(ii) Power of Sale. Should Lender elect to foreclose by exercise of
the power of sale contained herein, Lender shall notify Trustee and shall, if
required, deposit with Trustee the Note, the original or a certified copy of
this Security Instrument, and such other documents, receipts and evidences of
expenditures made and secured hereby as Trustee may require. Upon receipt of
such notice from Lender, Trustee shall cause to be recorded and delivered to
Borrower such notice as may then be required by law and by this Security
Instrument. Trustee shall, without demand on Borrower, after lapse of such time
as may then be required by law and after recordation of such notice of default
and after notice of sale has been given as required by law, sell the Property at
the time and place of sale fixed by it in said notice of sale, either as a whole
or in separate lots or parcels or items as Trustee shall deem expedient, and in
such order as it may determine, at public auction to the highest bidder for cash
in lawful money of the United States payable at the time of sale. Trustee shall
deliver to the purchaser or purchasers at such sale its good and sufficient deed
or deeds conveying the property so sold, but without any covenant or warranty,
express or implied. The recitals in such deed of any matters or facts shall be
conclusive proof of the truthfulness thereof. Any person, including, without
limitation, Borrower, Trustee or Lender, may purchase at such sale, and Borrower
hereby covenants to warrant and defend the title of such purchaser or
purchasers.
(iii) Foreclosure Sale; Proceeds. After deducting all costs, fees
and expenses of Trustee and of this Security Instrument, including, without
limitation, costs of evidence of title and actual and customary attorneys' fees
of Trustee or Lender in connection with a sale as provided in subparagraph (i)
above, Trustee shall apply the proceeds of such sale (a) first, to the payment
of all sums expended by Lender under the terms of any of the Loan Documents and
not yet repaid, together with interest on such sums at the Default Rate as set
forth in the Note, (b) second, to the payment of all sums expended under the
terms hereof not then repaid, with accrued interest at the rate of interest
equal to the rate then in effect under the Note, or if the Note has been repaid,
the rate that would have been in effect under the Note, (c) third, to the
payment of all other sums then secured hereby, and (d) fourth, the remainder, if
any, to the person or persons legally entitled thereto.
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(iv) Additional Remedies. Trustee and Lender shall have all powers,
rights and remedies under applicable law whether or not specifically or
generally granted or described in this Security Instrument. 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
trustees or beneficiaries under deeds of trust in the State of California.
Trustee and Lender, and each of them, shall be entitled to enforce the payment
and performance of any indebtedness or obligations secured hereby and to
exercise all rights and powers under this Security Instrument or under any other
Loan Document or other agreement or any laws now or hereafter in force,
notwithstanding the fact that some or all of the indebtedness and obligations
secured hereby may now or hereafter be otherwise secured, whether by Security
Instrument, deed of trust, pledge, lien, assignment or otherwise. Neither the
acceptance of this Security Instrument nor its enforcement, whether by court
action or pursuant to the power of sale or other powers contained herein, shall
prejudice or in any manner affect Trustee's or Lender's right to realize upon or
enforce any other rights or security now or hereafter held by Trustee or Lender.
Trustee and Lender, and each of them, shall be entitled to enforce this Security
Instrument and any other rights or security now or hereafter held by Lender or
Trustee in such order and manner as they or either of them may in their absolute
discretion determine. No remedy herein conferred upon or reserved to Trustee or
Lender is intended to be exclusive of any other remedy contained herein or by
law provided or permitted, but each shall 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 Loan Documents to Trustee or Lender,
or to which either of them may be otherwise entitled, may be exercised,
concurrently or independently, from time to time and as often as may be deemed
expedient by Trustee or Lender, and either of them may pursue inconsistent
remedies. By exercising or by failing to exercise any right, option or election
hereunder, Lender shall not be deemed to have waived any provision hereof or to
have released Borrower from any of the obligations secured hereby unless such
waiver or release is in writing and signed by Lender. The waiver by Lender of
Borrower's failure to perform or observe any term, covenant or condition
referred to or contained herein to be performed or observed by Borrower shall
not be deemed to be a waiver of such term, covenant or condition or of any
subsequent failure of Borrower to perform or observe the same or any other such
term, covenant or condition referred to or contained herein, and no custom or
practice which may develop between Borrower and Lender during the term hereof
shall be deemed a waiver of or in any way affect the right of Lender to insist
upon the performance by Borrower of the
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obligations secured hereby in strict accordance with the terms hereof or of any
other Loan Document.
(d) Uniform Commercial Code. Without limitation of Lender's rights
of enforcement with respect to the Collateral or any part thereof in accordance
with the procedures for foreclosure of real estate, Lender may exercise its
rights of enforcement with respect to the Collateral or any part thereof under
the Uniform Commercial Code as adopted in the State of California (or under the
Uniform Commercial Code in force in any other state to the extent the same is
applicable law) and in conjunction with, in addition to or in substitution for
those rights and remedies: (1) Lender may enter upon Borrower's premises to take
possession of, assemble and collect the Collateral or, to the extent and for
those items of the Collateral permitted under applicable law, to render it
unusable; (2) Lender may require Borrower to assemble the Collateral and make it
available at a place Lender designates which is mutually convenient to allow
Lender to take possession or dispose of the Collateral; (3) written notice
mailed to Borrower as provided herein at least five (5) days prior to the date
of public sale of the Collateral or prior to the date after which private sale
of the Collateral will be made shall constitute reasonable notice; (4) any sale
made pursuant to the provisions of this paragraph shall be deemed to have been a
public sale conducted in a commercially reasonable manner if held
contemporaneously with and upon the same notice as required for the sale of the
Property under power of sale as provided in paragraph (c) above in this Section
5.1; (5) in the event of a foreclosure sale, whether made by Lender under the
terms hereof, or under judgment of a court, the Collateral and the other
Property may, at the option of Lender, be sold as a whole; (6) it shall not be
necessary that Lender take possession of the Collateral or any part thereof
prior to the time that any sale pursuant to the provisions of this Section is
conducted and it shall not be necessary that the Collateral or any part thereof
be present at the location of such sale; (7) with respect to application of
proceeds of disposition of the Collateral under Section 5.2 hereof, the costs
and expenses incident to disposition shall include the reasonable expenses of
retaking, holding, preparing for sale or lease, selling, leasing and the like
and the reasonable attorneys' fees and legal expenses incurred by Lender; (8)
any and all statements of fact or other recitals made in any xxxx of sale or
assignment or other instrument evidencing any foreclosure sale hereunder as to
nonpayment of the secured indebtedness or as to the occurrence of any default,
or as to Lender having declared all of such indebtedness to be due and payable,
or as to notice of time, place and terms of sale and of the properties to be
sold having been duly given, or as to any other act or thing having been duly
done by Lender, shall be taken as prima facie evidence of the
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truth of the facts so stated and recited; and (9) Lender may appoint or delegate
any one or more persons as agent to perform any act or acts necessary or
incident to any sale held by Lender, including the sending of notices and the
conduct of the sale, but in the name and on behalf of Lender.
(e) Right of Rescission. Lender may from time to time rescind any
notice of default or notice of sale before any Trustee's sale in accordance with
the laws of the State of California. The exercise by Lender of such right of
rescission shall not constitute a waiver of any breach or default then existing
or subsequently occurring, or impair the right of Lender to execute and deliver
to Trustee, as above provided, other declarations or notices of default to
satisfy the obligations of this Security Instrument or secured hereby, nor
otherwise affect any provision, covenant or condition of any Loan Document or
any of the rights, obligations or remedies of Trustee or Lender hereunder or
thereunder.
(f) Full Reconveyance. Upon written request of Lender stating that
all sums secured hereby have been paid, upon surrender to Trustee of the Note
and the original or a certified copy of this Security Instrument for
cancellation and retention, and upon payment of its fees, Trustee shall fully
reconvey, without warranty, the entire remaining Property then held hereunder.
The recitals in such reconveyance of any matters of facts shall be conclusive
proof of the truthfulness thereof. The grantee in such reconveyance may be
described as "the person or persons legally entitled thereto."
(g) Fixture Filing. This Security Instrument constitutes a fixture
filing under the fixture filing provisions of the UCC, Sections 9-313 and
9-402(6) as enacted and under the equivalent statutes in the State of
California, as amended or recodified from time to time.
(h) Border Zone Property. Borrower represents and warrants that the
Property has not been designated as Border Zone Property under the provisions of
California Health and Safety Code, Sections 25220 et seq. or any regulation
adopted in accordance therewith, and there has been no occurrence or condition
on any real property adjoining or in the vicinity of the Property that is
reasonably likely to cause the Property or any part thereof to be designated as
Border Zone Property.
(i) Entry on Property. Lender is authorized, prior or subsequent to
the institution of any foreclosure proceedings, to the fullest extent permitted
by applicable law, to enter upon the Property, or any part thereof, and to take
possession of the Property and all books and records relating thereto, and to
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exercise without interference from Borrower any and all rights which Borrower
has with respect to the management, possession, operation, protection or
preservation of the Property. Lender shall not be deemed to have taken
possession of the Property or any part thereof except upon the exercise of its
right to do so, and then only to the extent evidenced by its demand and overt
act specifically for such purpose. All costs, expenses and liabilities of every
character incurred by Lender in managing, operating, maintaining, protecting or
preserving the Property shall constitute a demand obligation of Borrower (which
obligation Borrower hereby promises to pay) to Lender pursuant to this Security
Instrument. If necessary to obtain the possession provided for above, Lender may
invoke any and all legal remedies to dispossess Borrower. In connection with any
action taken by Lender pursuant to this Section, Lender shall not be liable for
any loss sustained by Borrower resulting from any failure to let the Property or
any part thereof, or from any act or omission of Lender in managing the Property
unless such loss is caused by the willful misconduct and bad faith of Lender,
nor shall Lender be obligated to perform or discharge any obligation, duty or
liability of Borrower arising under any lease or other agreement relating to the
Property or arising under any Permitted Encumbrance or otherwise arising.
Borrower hereby assents to, ratifies and confirms any and all actions of Lender
with respect to the Property taken under this Section.
(J) Termination of Commitment to Lend. Lender may terminate any
commitment or obligation to lend or disburse funds under any Loan Document.
Section 5.2. Intentionally Deleted.
Section 5.3. Lender as Purchaser. Lender shall have the right to
become the purchaser at any sale held by Lender or substitute or successor or by
any receiver or public officer or at any public sale, and Lender shall have the
right to credit upon the amount of Lender's successful bid, to the extent
necessary to satisfy such bid, all or any part of the secured indebtedness in
such manner and order as Lender may elect.
Section 5.4. Remedies Cumulative. All rights and remedies provided
for herein and in any other Loan Document are cumulative of each other and of
any and all other rights and remedies existing at law or in equity, and Lender
shall, in addition to the rights and remedies provided herein or in any other
Loan Document, be entitled to avail itself of all such other rights and remedies
as may now or hereafter exist at law or in equity for the collection of the
secured indebtedness and the enforcement of the covenants herein and the
foreclosure of the liens and interests evidenced hereby, and the resort to any
right
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or remedy provided for hereunder or under any such other Loan Document or
provided for by law or in equity shall not prevent the concurrent or subsequent
employment of any other appropriate right or rights or remedy or remedies.
Section 5.5. Lender's Discretion as to Security. Lender may resort
to any security given by this Security Instrument or to any other security now
existing or hereafter given to secure the payment of the secured indebtedness,
in whole or in part, and in such portions and in such order as may seem best to
Lender in its sole and uncontrolled discretion, and any such action shall not in
any way be considered as a waiver of any of the rights, benefits, liens or
interests evidenced by this Security Instrument.
Section 5.6. Borrower's Waiver of Certain Rights. To the full extent
Borrower may do so, Borrower agrees that Borrower will not at any time insist
upon, plead, claim or take the benefit or advantage of any law now or hereafter
in force providing for any stay, extension or redemption, homestead, moratorium,
reinstatement, marshalling or forbearance, and Borrower, for Borrower,
Borrower's successors and assigns, and for any and all persons ever claiming any
interest in the Property, to the extent permitted by applicable law, hereby
waives and releases all rights of redemption, stay of execution, reinstatement,
notice of intention to mature or declare due the whole of the secured
indebtedness, notice of election to mature or declare due the whole of the
secured indebtedness and all rights to a marshaling of assets of Borrower,
including the Property, or to a sale in inverse order of alienation in the event
of foreclosure of the liens and/or security interests hereby created. Borrower
shall not have or assert any right under any statute or rule of law pertaining
to the marshaling of assets, sale in inverse order of alienation, the exemption
of homestead, the administration of estates of decedents, or other matters
whatever to defeat, reduce or affect the right of Lender under the terms of this
Security Instrument to a sale of the Property for the collection of the secured
indebtedness without any prior or different resort for collection, or the right
of Lender under the terms of this Security Instrument to the payment of the
secured indebtedness out of the proceeds of sale of the Property in preference
to every other claimant whatever. Borrower waives any right or remedy which
Borrower may have or be able to assert, pursuant to any provision of applicable
law, pertaining to the rights and remedies of sureties. If any law referred to
in this Section and now in force, of which Borrower or Borrower's successors or
assigns or any other persons claiming any interest in the Property might take
advantage despite this Section, shall hereafter be repealed or cease to be in
force, such law shall not thereafter be deemed to preclude the
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application of this Section. Appraisement of the Property is hereby expressly
waived, or not, at the option of Lender, such option to be exercised at the time
judgment is rendered in any foreclosure hereof, or at any time prior thereto.
Section 5.7. Delivery of Possession After Foreclosure. In the event
there is a foreclosure sale hereunder and at the time of such sale, Borrower or
Borrower's successors or assigns are occupying or using the Property, or any
part thereof, each and all shall immediately become the tenant of the purchaser
at such sale, which tenancy shall be a tenancy from day to day, terminable at
the will of either landlord or tenant, at a reasonable rental per day based upon
the value of the property occupied, such rental to be due daily to the
purchaser; and to the extent permitted by applicable law, the purchaser at such
sale shall, notwithstanding any language herein apparently to the contrary, have
the sole option to demand immediate possession following the sale or to permit
the occupants to remain as tenants at will. In the event the tenant fails to
surrender possession of said property upon demand, the purchaser shall be
entitled to institute and maintain a summary action for possession of the
property (such as an action for forcible detainer) in any court having
jurisdiction.
Section 5.8. Withdrawal, Discontinuance or Abandonment of
Proceedings. In the case Lender shall have proceeded to enforce any right, power
or remedy under this Security Instrument by foreclosure, entry or otherwise or
in the event that Lender shall have commenced advertising the intended exercise
of the right of foreclosure provided hereunder, and such proceeding or
advertisement shall be withdrawn, discontinued or abandoned for any reason, or
shall be determined adversely to Lender, then, in every such case (i) Borrower
and Lender shall be restored to their former positions and rights, (ii) all
rights, powers and remedies of Lender shall continue as if no such proceeding
had been taken, (iii) each and every default declared and remaining uncured
prior to such withdrawal, discontinuance or abandonment shall and shall be
deemed to be a continuing default, and (iv) neither this Security Instrument,
the Note, the secured indebtedness nor any other instrument concerned therewith
shall be or shall be deemed to have been reinstated or otherwise affected by
such withdrawal, discontinuance or abandonment, and Borrower hereby expressly
waives the benefit of any statute or rule of law which would produce a result
contrary to or in conflict with the foregoing.
ARTICLE 6 - Miscellaneous
Section 6.1. Scope of Security Instrument. This Security Instrument
is a Security Instrument, collateral
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assignment, security agreement and financing statement, and also covers proceeds
and fixtures.
Section 6.2. Notice to Account Debtors. In addition to the rights
granted elsewhere in this Security Instrument, Lender may at any time notify the
account debtors or obligors of any accounts, chattel paper, negotiable
instruments or other evidences of indebtedness included in the Collateral to pay
Lender directly.
Section 6.3. Waiver by Lender. Lender may at any time and from time
to time by a specific writing intended for the purpose: (a) waive compliance by
Borrower with any covenant herein made by Borrower to the extent and in the
manner specified in such writing; (b) consent to Borrower's doing any act which
hereunder Borrower is prohibited from doing, or to Borrower's failing to do any
act which hereunder Borrower is required to do, to the extent and in the manner
specified in such writing; (c) release any part of the Property or any interest
therein from the lien and security interest of this Security Instrument; or (d)
release any party liable, either directly or indirectly, for the secured
indebtedness or for any covenant herein or in any other Loan Document, without
impairing or releasing the liability of any other party. No such act shall in
any way affect the rights or powers of Lender hereunder except to the extent
specifically agreed to by Lender in such writing.
Section 6.4. No Impairment of Security. The lien, interest and other
security rights of Lender hereunder or under any other Loan Document shall not
be impaired by any indulgence, moratorium or release granted by Lender
including, but not limited to, any renewal, extension or modification which
Lender may grant with respect to any secured indebtedness, or any surrender,
compromise, release, renewal, extension, exchange or substitution which Lender
may grant in respect of the Property, or any part thereof or any interest
therein, or any release or indulgence granted to any endorser, guarantor or
surety of any secured indebtedness. The taking of additional security by Lender
shall not release or impair the lien, interest or other security rights of
Lender hereunder or affect the liability of Borrower or of any endorser,
guarantor or surety, or improve the right of any junior lienholder in the
Property (without implying hereby Lender's consent to any junior lien).
Section 6.5. Acts Not Constituting Waiver by Lender. Lender may
waive any default without waiving any other prior or subsequent default. Lender
may remedy any default without waiving the default remedied. Neither failure by
Lender to exercise, nor delay by Lender in exercising, nor discontinuance of the
exercise of any right, power or remedy (including but not
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limited to the right to accelerate the maturity of the secured indebtedness or
any part thereof) upon or after any default shall be construed as a waiver of
such default or as a waiver of the right to exercise any such right, power or
remedy at a later date. No single or partial exercise by Lender of any right,
power or remedy hereunder shall exhaust the same or shall preclude any other or
further exercise thereof, and every such right, power or remedy hereunder may be
exercised at any time and from time to time. No modification or waiver of any
provision hereof nor consent to any departure by Borrower therefrom shall in any
event be effective unless the same shall be in writing and signed by Lender and
then such waiver or consent shall be effective only in the specific instance,
for the purpose for which given and to the extent therein specified. No notice
to nor demand on Borrower in any case shall of itself entitle Borrower to any
other or further notice or demand in similar or other circumstances. Remittances
in payment of any part of the secured indebtedness other than in the required
amount in immediately available U.S. funds shall not, regardless of any receipt
or credit issued therefor, constitute payment until the required amount is
actually received by Lender in immediately available U.S. funds and shall be
made and accepted subject to the condition that any check or draft may be
handled for collection in accordance with the practice of the collecting bank or
banks. Acceptance by Lender of any payment in an amount less than the amount
then due on any secured indebtedness shall be deemed an acceptance on account
only and shall not in any way excuse the existence of a default hereunder.
Section 6.6. Borrower's Successors. If the ownership of the Property
or any part thereof becomes vested in a person other than Borrower, Lender may,
without notice to Borrower, deal with such successor or successors in interest
with reference to this Security Instrument and to the indebtedness secured
hereby in the same manner as with Borrower, without in any way vitiating or
discharging Borrower's liability hereunder or for the payment of the
indebtedness or performance of the obligations secured hereby. No transfer of
the Property, no forbearance on the part of Lender, and no extension of the time
for the payment of the indebtedness secured hereby given by Lender shall operate
to release, discharge, modify, change or affect, in whole or in part, the
liability of Borrower hereunder for the payment of the indebtedness or
performance of the obligations secured hereby or the liability of any other
person hereunder for the payment of the indebtedness secured hereby. Borrower
agrees that it shall be bound by any modification of this Security Instrument or
any of the other Loan Documents made by Lender and any subsequent owner of the
Property, with or without notice to such Borrower, and no such modifications
shall impair the obligations of such Borrower under this Security Instrument or
any other Loan Document. Nothing in this Section or elsewhere in this Security
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Instrument shall be construed to imply Lender's consent to any transfer of the
Property.
Section 6.7. Place of Payment; Forum. All secured indebtedness which
may be owing hereunder at any time by Borrower shall be payable at the place
designated in the Note (or if no such designation is made, at the address of
Lender indicated at the end of this Security Instrument). Borrower hereby
irrevocably submits generally and unconditionally for itself and in respect of
its property to the non-exclusive jurisdiction of any Georgia state court or any
United States federal court sitting in the county in which the secured
indebtedness is payable, and to the non-exclusive jurisdiction of any state or
United States federal court sitting in the state in which any of the Property is
located, over any suit, action or proceeding arising out of or relating to this
Security Instrument or the secured indebtedness. Borrower hereby agrees and
consents that, in addition to any methods of service of process provided for
under applicable law, all service of process in any such suit, action or
proceeding in any Georgia state court or any United States federal court sitting
in the county in which the secured indebtedness is payable may be made by
certified or registered mail, return receipt requested, directed to Borrower at
its address stated in this Security Instrument, or at a subsequent address of
Borrower of which Lender received actual notice from Borrower in accordance with
this Security Instrument, and service so made shall be complete five (5) days
after the same shall have been so mailed.
Section 6.8. Subrogation to Existing Liens; Vendor's Lien. To the
extent that proceeds of the Note are used to pay indebtedness secured by any
outstanding lien, interest, charge or prior encumbrance against the Property,
such proceeds have been advanced by Lender at Borrower's request, and Lender
shall be subrogated to any and all rights, interests and liens owned by any
owner or holder of such outstanding liens, security interests, charges or
encumbrances, however remote, irrespective of whether said liens, interests,
charges or encumbrances are released, and all of the same are recognized as
valid and subsisting and are renewed and continued and merged herein to secure
the secured indebtedness, but the terms and provisions of this Security
Instrument shall govern and control the manner and terms of enforcement of the
liens, security interests, charges and encumbrances to which Lender is
subrogated hereunder. It is expressly understood that, in consideration of the
payment of such indebtedness by Lender, Borrower hereby waives and releases all
demands and causes of action for offsets and payments in connection with the
said indebtedness. If all or any portion of the proceeds of the loan evidenced
by the Note or of any other secured indebtedness has been advanced for the
purpose of paying
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the purchase price for all or a part of the Property, no vendor's lien is
waived; and Lender shall have, and is hereby granted, a vendor's lien on the
Property as cumulative additional security for the secured indebtedness. Lender
may foreclose under this Security Instrument or under the vendor's lien without
waiving the other or may foreclose under both.
Section 6.9. Application of Payments to Certain Indebtedness. If any
part of the secured indebtedness cannot be lawfully secured by this Security
Instrument or if any part of the Property cannot be lawfully subject to the lien
and interest hereof to the full extent of such indebtedness, then all payments
made shall be applied on said indebtedness first in discharge of that portion
thereof which is not secured by this Security Instrument.
Section 6.10. Compliance with Usury Laws. It is the intent of
Borrower and Lender and all other parties to the Loan Documents to conform to
and contract in strict compliance with applicable usury law from time to time in
effect. All agreements between Lender and Borrower (or any other party liable
with respect to any indebtedness under the Loan Documents) are hereby limited by
the provisions of this Section which shall override and control all such
agreements, whether now existing or hereafter arising. In no way, nor in any
event or contingency (including but not limited to prepayment, default, demand
for payment, or acceleration of the maturity of any obligation), shall the
interest taken, reserved, contracted for, charged, chargeable, or received under
this Security Instrument, the Note or any other Loan Document or otherwise,
exceed the maximum nonusurious amount permitted by applicable law (the "Maximum
Amount"). If, from any possible construction of any document, interest would
otherwise be payable in excess of the Maximum Amount, any such construction
shall be subject to the provisions of this Section and such document shall ipso
facto be automatically reformed and the interest payable shall be automatically
reduced to the Maximum Amount, without the necessity of execution of any
amendment or new document. If Lender shall ever receive anything of value which
is characterized as interest under applicable law and which would apart from
this provision be in excess of the Maximum Amount, an amount equal to the amount
which would have been excessive interest shall, without penalty, be applied to
the reduction of the principal amount owing on the secured indebtedness in the
inverse order of its maturity and not to the payment of interest, or refunded to
Borrower or the other payor thereof if and to the extent such amount which would
have been excessive exceeds such unpaid principal. The right to accelerate
maturity of the Note or any other secured indebtedness does not include the
right to accelerate any interest which has not otherwise accrued on the
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date of such acceleration, and Lender does not intend to charge or receive any
unearned interest in the event of acceleration. All interest paid or agreed to
be paid to Lender shall, to the extent permitted by applicable law, be
amortized, prorated, allocated and spread throughout the full stated term
(including any renewal or extension) of such indebtedness so that the amount of
interest on account of such indebtedness does not exceed the Maximum Amount. As
used in this Section, the term "applicable law" shall mean applicable laws of
the State of Georgia, or the federal laws of the United States applicable to
this transaction, whichever laws allow the greater interest, as such laws now
exist or may be changed or amended or come into effect in the future.
Section 6.11. Cancellation of Security Instrument. If all of the
secured indebtedness be paid as the same becomes due and payable and all of the
covenants, warranties, undertakings and agreements made in this Security
Instrument are kept and performed, and all obligations, if any, of Lender for
further advances have been terminated, then, and in that event only, this
Security Instrument shall be cancelled by Lender in due form at Borrower's cost.
Without limitation, all provisions herein for indemnity of Lender shall survive
discharge of the secured indebtedness and any foreclosure, release or
termination of this Security Instrument.
Section 6.12. Notices. All notices, requests, consents, demands and
other communications required or which any party desires to give hereunder or
under any other Loan Document shall be in writing and, unless otherwise
specifically provided in such other Loan Document, shall be deemed sufficiently
given or furnished if delivered by personal delivery, by courier, or by
registered or certified United States mail, postage prepaid, addressed to the
party to whom directed at the addresses specified at the end of this Security
Instrument (unless changed by similar notice in writing given by the particular
party whose address is to be changed) or by telex, or facsimile. Any such notice
or communication shall be deemed to have been given and to be effective either
at the time of personal delivery or, in the case of courier or mail, as of the
date of first attempted delivery at the address and in the manner provided
herein, or, in the case of telex, when transmitted (answerback confirmed), or,
in the case of facsimile, upon receipt. Notwithstanding the foregoing, no notice
of change of address shall be effective except upon receipt. This Section shall
not be construed in any way to affect or impair any waiver of notice or demand
provided in any Loan Document or to require giving of notice or demand to or
upon any person in any situation or for any reason.
Section 6.13. Invalidity of Certain Provisions. A determination that
any provision of this Security Instrument is
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unenforceable or invalid shall not affect the enforceability or validity of any
other provision and the determination that the application of any provision of
this Security Instrument to any person or circumstance is illegal or
unenforceable shall not affect the enforceability or validity of such provision
as it may apply to other persons or circumstances.
Section 6.14. Gender; Titles; Construction. Within this Security
Instrument, words of any gender shall be held and construed to include any other
gender, and words in the singular number shall be held and construed to include
the plural, unless the context otherwise requires. Titles appearing at the
beginning of any subdivisions hereof are for convenience only, do not constitute
any part of such subdivisions, and shall be disregarded in construing the
language contained in such subdivisions. The use of the words "herein,"
"hereof," "hereunder" and other similar compounds of the word "here" shall refer
to this entire Security Instrument and not to any particular Article, Section,
paragraph or provision. The term "person" and words importing persons as used in
this Security Instrument shall include firms, associations, partnerships
(including limited partnerships), joint ventures, trusts, corporations and other
legal entities, including public or governmental bodies, agencies or
instrumentalities, as well as natural persons.
Section 6.15. Reporting Compliance. Borrower agrees to comply with
any and all reporting requirements applicable to the transaction evidenced by
the Note and secured by this Security Instrument which are set forth in any law,
statute, ordinance, rule, regulation, order or determination of any governmental
authority, including but not limited to The International Investment Survey Act
of 1976, The Agricultural Foreign Investment Disclosure Act of 1978, The Foreign
Investment in Real Property Tax Act of 1980 and the Tax Reform Act of 1984 and
further agrees upon request of Lender to furnish Lender with evidence of such
compliance.
Section 6.16. Lender's Consent. Except where otherwise expressly
provided herein, in any instance hereunder where the approval, consent or the
exercise of judgment of Lender is required or requested, (i) the granting or
denial of such approval or consent and the exercise of such judgment shall be
within the sole discretion of Lender, and Lender shall not, for any reason or to
any extent, be required to grant such approval or consent or exercise such
judgment in any particular manner, regardless of the reasonableness of either
the request or Lender's judgment, and (ii) no approval or consent of Lender
shall be deemed to have been given except by a specific writing
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intended for the purpose and executed by an authorized representative of Lender.
Section 6.17. Borrower. Unless the context clearly indicates
otherwise, as used in this Security Instrument, "Borrower" means the Borrower
named in Section 1.1 hereof. Each signatory who signs on behalf of Borrower
represents and warrants to Lender that this instrument is executed, acknowledged
and delivered by Borrower's duly authorized representatives.
Section 6.18. Execution; Recording. This Security Instrument has
been executed in several counterparts, all of which are identical, and all of
which counterparts together shall constitute one and the same instrument. The
date or dates reflected in the acknowledgments hereto indicate the date or dates
of actual execution of this Security Instrument, but such execution is as of the
date shown on the first page hereof, and for purposes of identification and
reference the date of this Security Instrument shall be deemed to be the date
reflected on the first page hereof. Borrower will cause this Security Instrument
and all amendments and supplements thereto and substitutions therefor and all
financing statements and continuation statements relating thereto to be
recorded, filed, re-recorded and refiled in such manner and in such places as
Lender shall reasonably request and will pay all such recording, filing,
re-recording and refiling taxes, fees and other charges.
Section 6.19. Successors and Assigns. The terms, provisions,
covenants and conditions hereof shall be binding upon Borrower, and the
successors and assigns of Borrower, and shall inure to the benefit of Lender and
the successors and assigns of Lender and shall constitute covenants running with
the Land. All references in this Security Instrument to Borrower shall be deemed
to include all such successors and assigns of Borrower, and all references in
this Security Instrument to Lender shall be deemed to include all such
successors and assigns of Lender.
Section 6.20. Modification or Termination. The Loan Documents may
only be modified or terminated by a written instrument or instruments intended
for that purpose and executed by the party against which enforcement of the
modification or termination is asserted. Any alleged modification or termination
which is not so documented shall not be effective as to any party.
Section 6.21. No Partnership, Etc.. The relationship between Lender
and Borrower is solely that of lender and borrower. Lender has no fiduciary or
other special relationship with Borrower. Nothing contained in the Loan
Documents is intended to create any partnership, joint venture, association or
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special relationship between Borrower and Lender or in any way make Lender a
co-principal with Borrower with reference to the Property. All agreed
contractual duties between Borrower and Lender are set forth herein and in the
other Loan Documents and any additional implied covenants or duties are hereby
disclaimed. Any inferences to the contrary of any of the foregoing are hereby
expressly negated.
Section 6.22. Disclosure of Information. Lender may, from time to
time, sell or offer to sell the Loan, or interests therein, to one or more
assignees or participants and is hereby authorized to disseminate any
information it now has or hereafter obtains pertaining to the Loan, including,
without limitation, any security for the Loan and credit or other information on
the Project, Borrower, any of its principals and any guarantor, to any assignee
or participant or prospective assignee or prospective participant, to Security
Instrument's affiliates, including without limitation NationsBanc Capital
Markets, Inc., to any regulatory body having jurisdiction over Lender and to any
other parties as necessary or appropriate in Lender's reasonable judgment.
Borrower shall execute, acknowledge and deliver any and all instruments
reasonably requested by Lender in connection therewith and to the extent, if
any, specified in any such assignment or participation, such companies,
assignees or participants shall have the rights and benefits with respect to the
Loan Documents as such persons would have if such persons were Lender hereunder.
Section 6.23. Applicable Law. The enforceability of this Security
Instrument shall be governed by California law only for purposes of determining
the following: (i) the applicable conflict of law rules in this Security
Instrument and the other Loan Documents, (ii) whether this Security Instrument
transfers or creates an interest in real property for security purposes or
otherwise, (iii) the nature of an interest in real property that is transferred
or created by this Security Instrument, (iv) the method for foreclosure of a
lien on real property and the exercise of any other remedy with respect to the
real property or the Rents or profits therefrom, (v) the nature of an interest
in real property that results from foreclosure, and (vi) the manner and effect
of recording or failing to record evidence of a transaction that transfers or
creates an interest in real property. Except as expressly set out above, the
enforceability of this Security Instrument and the other Loan Documents shall be
governed by Georgia law.
Section 6.24. Effective as a Financing Statement. This Security
Instrument shall be effective as a financing statement filed as a fixture filing
with respect to all fixtures included within the Property and is to be filed for
record in the
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real estate records of each county where any part of the Property (including
said fixtures) is situated. This Security Instrument shall also be effective as
a financing statement covering minerals or the like (including oil and gas) and
accounts and is to be filed for record in the real estate records of each county
where any part of the Property is situated. This Security Instrument shall also
be effective as a financing statement covering any other Property and may be
filed in any other appropriate filing or recording office. The mailing address
of Borrower is the address of Borrower set forth at the end of this Security
Instrument and the address of Lender from which information concerning the
security interests hereunder may be obtained is the address of Lender set forth
at the end of this Security Instrument. A carbon, photographic or other
reproduction of this Security Instrument or of any financing statement relating
to this Security Instrument shall be sufficient as a financing statement for any
of the purposes referred to in this Section.
Section 6.25. Entire Agreement. The Loan Documents constitute the
entire understanding and agreement between Borrower and Lender with respect to
the transactions arising in connection with the indebtedness secured hereby and
supersede all prior written or oral understandings and agreements between
Borrower and Lender with respect to the matters addressed in the Loan Documents.
Borrower hereby acknowledges that, except as incorporated in writing in the Loan
Documents, there are not, and were not, and no persons are or were authorized by
Lender to make, any representations, understandings, stipulations, agreements or
promises, oral or written, with respect to the matters addressed in the Loan
Documents.
THE WRITTEN LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES
IN WITNESS WHEREOF, this Security Instrument has been executed and
sealed by Borrower as of the date first written on page 1 hereof.
Borrower:
Xxxxx/Orange County Associates,
a Georgia joint venture
By: Xxxxx Operating Partnership, L.P.,
a Delaware limited partnership,
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Joint Venture Partner
By: Xxxxx Real Estate Investment
Trust, Inc.,
a Maryland corporation,
General Partner
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxx
---------------------------------
Title: Executive Vice President
--------------------------------
[CORPORATE SEAL]
By: Xxxxx Development Corporation,
a Georgia corporation,
Joint Venture Partner
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxx
---------------------------------
Title: Executive Vice President
--------------------------------
[CORPORATE SEAL]
The address and federal tax identification
number of Borrower are:
0000 Xxxxxxx Xxxxxx Xxxx
Xxxxxxxx, Xxxxxxx 00000
Federal Tax No. 00-0000000
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The address of Lender is (including county):
NationsBank, N.A.
NationsBank Plaza - 6th Floor
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxx Xxxxxx,
Xxxxxxx 00000
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ACKNOWLEDGMENT
STATE OF GEORGIA :
: ss
COUNTY OF XXXXXX :
Before me, a notary public in and for said County and State, on this
28th day of July, 1998, personally appeared Xxxxx X. Xxxxxx, to me known to be
the identical person who subscribed the name of Xxxxx/Orange County Associates,
a Georgia joint venture ("Borrower"), to the foregoing instrument in his/her
capacity as Executive Vice President of Xxxxx Real Estate Investment Trust,
Inc., a Maryland corporation, which is the General Partner of Xxxxx Operating
Partnership, L.P., a Delaware limited partnership, one of the Joint Venture
Partners of Borrower, and in his/her capacity as Executive Vice President of
Xxxxx Development Corporation, a Georgia corporation, the other Joint Venture
Partner of Borrower, and acknowledged to me that he/she executed the same as
his/her free and voluntary act and deed and as the free act and voluntary deed
of such Joint Venture Partners and of Borrower for the uses and purposes therein
set forth.
/s/ X. X. X'Xxxxxxxxx
--------------------------------------
NOTARY PUBLIC
My Commission Expires:
[SEAL]
--------------------------------------
[NOTARIAL SEAL]
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