EXHIBIT 10.2
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Loan No. V_17415
WHC809, LLC, as grantor
(Borrower)
to
TRANSNATION TITLE INSURANCE COMPANY, as trustee
(Trustee)
for the benefit of
XXXXXX GUARANTY TRUST COMPANY OF NEW YORK, as beneficiary
(Lender)
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DEED OF TRUST AND
SECURITY AGREEMENT
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Dated: As of June 14, 2001
PREPARED BY AND UPON
RECORDATION RETURN TO:
Dechert
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxx X. Xxxxxx, Esq.
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TABLE OF CONTENTS
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PAGE
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ARTICLE 1 - GRANTS OF SECURITY..............................................................1
Section 1.1. PROPERTY CONVEYED................................................1
Section 1.2. ASSIGNMENT OF RENTS..............................................4
Section 1.3. DEFINITION OF PERSONAL PROPERTY..................................4
Section 1.4. PLEDGE OF MONIES HELD............................................4
ARTICLE 2 - DEBT AND OBLIGATIONS SECURED....................................................4
Section 2.1. DEBT.............................................................4
Section 2.2. OTHER OBLIGATIONS................................................5
Section 2.3. DEBT AND OTHER OBLIGATIONS.......................................5
Section 2.4. PAYMENTS.........................................................5
ARTICLE 3 - BORROWER COVENANTS..............................................................6
Section 3.1. INCORPORATION BY REFERENCE.......................................6
Section 3.2. INSURANCE........................................................6
Section 3.3. PAYMENT OF TAXES, ETC...........................................12
Section 3.4. CONDEMNATION....................................................13
Section 3.5. USE AND MAINTENANCE OF PROPERTY.................................13
Section 3.6. WASTE...........................................................14
Section 3.7. COMPLIANCE WITH LAWS; ALTERATIONS...............................14
Section 3.8. BOOKS AND RECORDS...............................................14
Section 3.9. PAYMENT FOR LABOR AND MATERIALS.................................16
Section 3.10. PERFORMANCE OF OTHER AGREEMENTS.................................16
ARTICLE 4 - SPECIAL COVENANTS..............................................................16
Section 4.1. PROPERTY USE....................................................16
Section 4.2. ERISA...........................................................16
Section 4.3. SINGLE PURPOSE ENTITY...........................................17
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES.................................................20
Section 5.1. BORROWER'S REPRESENTATIONS......................................20
Section 5.2. WARRANTY OF TITLE...............................................20
Section 5.3. STATUS OF PROPERTY..............................................21
Section 5.4. NO FOREIGN PERSON...............................................22
Section 5.5. SEPARATE TAX LOT................................................22
ARTICLE 6 - OBLIGATIONS AND RELIANCES......................................................22
Section 6.1. RELATIONSHIP OF BORROWER AND LENDER.............................22
Section 6.2. NO RELIANCE ON LENDER...........................................22
Section 6.3. NO LENDER OBLIGATIONS...........................................22
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Section 6.4. RELIANCE........................................................22
ARTICLE 7 - FURTHER ASSURANCES.............................................................23
Section 7.1. RECORDING FEES..................................................23
Section 7.2. FURTHER ACTS....................................................23
Section 7.3. CHANGES IN TAX, DEBT CREDIT AND DOCUMENTARY STAMP LAWS..........23
Section 7.4. CONFIRMATION STATEMENT..........................................24
Section 7.5. SPLITTING OF SECURITY INSTRUMENT................................24
Section 7.6. REPLACEMENT DOCUMENTS...........................................25
ARTICLE 8 - DUE ON SALE/ENCUMBRANCE........................................................25
Section 8.1. LENDER RELIANCE.................................................25
Section 8.2. NO SALE/ENCUMBRANCE.............................................25
Section 8.3. EXCLUDED AND PERMITTED TRANSFERS................................26
Section 8.4. NO IMPLIED FUTURE CONSENT.......................................28
Section 8.5. COSTS OF CONSENT................................................28
Section 8.6. CONTINUING SEPARATENESS REQUIREMENTS............................28
ARTICLE 9 - DEFAULT........................................................................28
Section 9.1. EVENTS OFDEFAULT................................................28
Section 9.2. DEFAULT INTEREST................................................30
ARTICLE 10 - RIGHTS AND REMEDIES...........................................................31
Section 10.1. REMEDIES........................................................31
Section 10.2. RIGHT OF ENTRY..................................................36
ARTICLE 11 - INDEMNIFICATION; SUBROGATION..................................................36
Section 11.1. GENERAL INDEMNIFICATION.........................................36
Section 11.2. ENVIRONMENTAL INDEMNIFICATION...................................38
Section 11.3. DUTY TO DEFEND AND ATTORNEYS AND OTHER FEES AND EXPENSES........40
Section 11.4. SURVIVAL OF INDEMNITIES.........................................40
ARTICLE 12 - SECURITY AGREEMENT............................................................40
Section 12.1. SECURITY AGREEMENT..............................................40
ARTICLE 13 - WAIVERS.......................................................................41
Section 13.1. MARSHALLING AND OTHER MATTERS...................................41
Section 13.2. WAIVER OF NOTICE................................................42
Section 13.3. SOLE DISCRETION OF LENDER.......................................42
Section 13.4. SURVIVAL........................................................42
Section 13.5. WAIVER OF TRIAL BY JURY.........................................42
Section 13.6. WAIVER OF AUTOMATIC OR SUPPLEMENTAL STAY........................43
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ARTICLE 14 - NOTICES.......................................................................43
Section 14.1. NOTICES.........................................................43
ARTICLE 15 - APPLICABLE LAW................................................................44
Section 15.1. GOVERNING LAW; JURISDICTION.....................................44
Section 15.2. USURY LAWS......................................................44
Section 15.3. PROVISIONS SUBJECT TO APPLICABLE LAW............................45
ARTICLE 16 - SECONDARY MARKET..............................................................45
Section 16.1. TRANSFER OF LOAN................................................45
ARTICLE 17 - COSTS.........................................................................45
Section 17.1. PERFORMANCE AT BORROWER'S EXPENSE...............................45
Section 17.2. ATTORNEY'S FEES FOR ENFORCEMENT.................................45
ARTICLE 18 - DEFINITIONS...................................................................46
Section 18.1. GENERAL DEFINITIONS.............................................46
ARTICLE 19 - MISCELLANEOUS PROVISIONS......................................................46
Section 19.1. NO ORAL CHANGE..................................................46
Section 19.2. LIABILITY.......................................................46
Section 19.3. INAPPLICABLE PROVISIONS.........................................46
Section 19.4. HEADINGS, ETC...................................................46
Section 19.5. DUPLICATE ORIGINALS; COUNTERPARTS...............................46
Section 19.6. NUMBER AND GENDER...............................................47
Section 19.7. SUBROGATION.....................................................47
Section 19.8. ENTIRE AGREEMENT................................................47
ARTICLE 20 - TRUSTEE.......................................................................47
ARTICLE 21 - SPECIAL STATE OF WASHINGTON PROVISIONS........................................48
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Index of Defined Terms
ADA........................................................................................14
APPLICABLE LAWS............................................................................14
ATTORNEYS..................................................................................37
ATTORNEYS' FEES............................................................................46
BANKRUPTCY CODE.............................................................................2
BORROWER................................................................................1, 46
BUSINESS DAY...............................................................................44
COLLATERAL.................................................................................41
COUNSEL FEES...............................................................................46
DEBT........................................................................................4
DEFAULT RATE...............................................................................30
ENVIRONMENTAL INDEMNITY.....................................................................6
ENVIRONMENTAL LAW......................................................................38, 39
ENVIRONMENTAL LIEN.........................................................................39
ERISA......................................................................................16
ESCROW AGREEMENT............................................................................3
EVENT......................................................................................45
EVENT OF DEFAULT...........................................................................28
EXCULPATED PORTION.........................................................................36
FEES AND EXPENSES..........................................................................37
GUARANTOR..................................................................................18
HAZARDOUS SUBSTANCES.......................................................................39
IMPROVEMENTS................................................................................1
INDEMNIFIED PARTIES........................................................................39
INSURANCE PREMIUMS..........................................................................8
INSURED CASUALTY...........................................................................10
INTANGIBLES.................................................................................3
INVESTOR...................................................................................45
LAND........................................................................................1
LEASE.......................................................................................2
LEASES......................................................................................2
LEGAL FEES.................................................................................46
LENDER..................................................................................1, 46
LOAN.......................................................................................27
LOAN DOCUMENTS..............................................................................6
LOSSES.....................................................................................39
NOTE....................................................................................1, 46
OBLIGATIONS.................................................................................5
OTHER CHARGES..............................................................................12
Index - 1
OTHER LOAN DOCUMENTS........................................................................6
OTHER OBLIGATIONS...........................................................................5
PERMITTED EXCEPTIONS.......................................................................20
PERSON.....................................................................................46
PERSONAL PROPERTY...........................................................................4
POLICIES....................................................................................8
POLICY......................................................................................8
PROPERTY................................................................................1, 46
QUALIFIED INSURER...........................................................................8
RATING AGENCY..............................................................................45
RELEASE....................................................................................40
REMEDIATION................................................................................40
RENTS.......................................................................................2
SECURITIES.................................................................................45
SECURITY INSTRUMENT.........................................................................1
TAXES......................................................................................12
TRUSTEE.....................................................................................1
UNIFORM COMMERCIAL CODE.....................................................................2
Index - 2
THIS DEED OF TRUST AND SECURITY AGREEMENT (this "SECURITY INSTRUMENT")
is made as of the ____ day of June, 2001, by WHC809, LLC, a Delaware limited
liability company, having its principal place of business at /o West Coast Grand
Hotel, 0000 Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx 00000 ("BORROWER"), to TRANSNATION
TITLE INSURANCE COMPANY, an Arizona corporation ("TRUSTEE"), having its
principal place of business at 0000 XX 00xx Xxxxx, #000, Xxxxxxxx, Xxxxxxxxxx
00000-0000, for the benefit of XXXXXX GUARANTY TRUST COMPANY OF NEW YORK, a New
York banking corporation, having its principal place of business at 00 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000, as beneficiary ("LENDER").
RECITALS:
Borrower by its Fixed Rate Note of even date herewith given to Lender
is indebted to Lender in the principal sum of $36,050,000 in lawful money of the
United States of America (such Fixed Rate Note, together with all extensions,
renewals, modifications, substitutions and amendments thereof, shall
collectively be referred to as the "NOTE"), with interest from the date thereof
at the rates set forth in the Note, principal and interest to be payable in
accordance with the terms and conditions provided in the Note, and with a final
maturity date of July 1, 2011.
Borrower desires to secure the payment of the Debt (as defined in
Article 2) and the performance of all of its obligations under the Note and the
Other Obligations (as defined in Article 2).
ARTICLE 1 - GRANTS OF SECURITY
Section 1.1 PROPERTY CONVEYED. Borrower does hereby irrevocably,
unconditionally and absolutely, grant, bargain, sell, pledge, enfeoff, assign,
warrant, transfer and convey to Trustee IN TRUST, WITH POWER OF SALE, for the
purposes herein set forth, the following property, rights, interests and estates
now owned, or hereafter acquired, by Borrower (collectively, the "PROPERTY"):
(a) Land. The real property described in Exhibit A attached
hereto and made a part hereof (collectively, the "LAND"), together with
additional lands, estates and development rights hereafter acquired by
Borrower for use in connection with the development, ownership or
occupancy of such real property, and all additional lands and estates
therein which may, from time to time, by supplemental deed of trust or
otherwise be expressly made subject to the lien of this Security
Instrument;
(b) Improvements. The buildings, structures, fixtures, additions,
accessions, enlargements, extensions, modifications, repairs,
replacements and improvements now or hereafter erected or located on
the Land (the "IMPROVEMENTS");
(c) Easements. All easements, rights-of-way or use, rights,
strips and gores of land, streets, ways, alleys, passages, sewer
rights, water, water courses, water rights and powers, air rights and
development rights, and all estates, rights, titles, interests,
privileges, liberties, servitudes, tenements, hereditaments and
appurtenances of any nature whatsoever, in any way now or hereafter
belonging, relating or pertaining to the Land and the Improvements and
the reversion and reversions, remainder and remainders, and all land
lying in the bed of any street, road or avenue, opened or proposed, in
front of or adjoining the Land, to the center line thereof and all the
estates, rights, titles, interests, dower and rights of dower, curtesy
and rights of curtesy, property, possession, claim and demand
whatsoever, both at law and in equity, of Borrower of, in and to the
Land and the Improvements and every part and parcel thereof, with the
appurtenances thereto;
(d) Fixtures and Personal Property. All machinery, equipment,
goods, inventory, consumer goods, furnishings, fixtures (including but
not limited to all heating, air conditioning, plumbing, inventory,
lighting, communications and elevator fixtures) and other personal
property of every kind and nature, whether tangible or intangible,
whatsoever owned by Borrower, or in which Borrower has or shall have an
interest, now or hereafter located upon the Land and the Improvements,
or appurtenant thereto, and usable in connection with the present or
future use, maintenance, enjoyment, operation and occupancy of the Land
and the Improvements, including without limitation, beds, bureaus,
chiffonniers, chests, chairs, desks, lamps, mirrors, bookcases, tables,
rugs, carpeting, drapes, draperies, curtains, shades, venetian blinds,
screens, paintings, hangings, pictures, divans, couches, luggage carts,
luggage racks, stools, sofas, chinaware, linens, pillows, blankets,
glassware, foodcarts, cookware, dry cleaning facilities, dining room
wagons, keys or other entry systems, bars, bar fixtures, mini-bars,
liquor and other drink dispensers, icemakers, kitchen equipment,
radios, television sets, cable t.v. equipment, intercom and paging
equipment, electric and electronic equipment, dictating equipment,
private telephone systems, reservation systems and related computer
software, medical equipment, potted plants, heating, lighting and
plumbing fixtures, fire prevention and extinguishing apparatus,
fittings, plants, apparatus, stoves, ranges, refrigerators, cutlery and
dishes, laundry machines, tools, machinery, engineers, dynamos, motors,
boilers, incinerators, washers and dryers, other customary hotel
equipment, and all building equipment, materials and supplies of any
nature whatsoever owned by Borrower, or in which Borrower has or shall
have an interest, now or hereafter located upon the Land and the
Improvements, or appurtenant thereto, or usable in connection with the
present or future operation, enjoyment and occupancy of the Land and
the Improvements and the right, title and interest of Borrower in and
to any of the Personal Property (as hereinafter defined) which may be
subject to any security interests, as defined in the Uniform Commercial
Code, as adopted and enacted by the state or states where any of the
Property is located (the "UNIFORM COMMERCIAL CODE") superior in lien to
the lien of this Security Instrument and all proceeds and products of
the above;
(e) Leases and Rents. All leases, subleases and other agreements
affecting the use, enjoyment or occupancy of the Land and the
Improvements heretofore or hereafter entered into (including, without
limitation, any and all security interests, contractual liens and
security deposits) whether before or after the filing by or against
Borrower of any petition for relief under 11 U.S.C.ss.101 et seq. as
the same may be amended from time to
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time (the "BANKRUPTCY CODE") (individually, a "LEASE", collectively,
the "LEASES") and all income, rents (including, without limitation,
room rents, revenues, accounts and receivables derived from the use or
occupancy of all or any portion of the Improvements), issues, profits
and revenues (including all oil and gas or other mineral royalties and
bonuses) from the Land and the Improvements whether paid or accruing
before or after the filing by or against Borrower of any petition for
relief under the Bankruptcy Code, including, without limitation, all
revenues and credit card receipts collected from guest rooms,
restaurants, bars, meeting rooms, banquet rooms and recreational
facilities, all receivables, customer obligations, installment payment
obligations and other obligations now existing or hereafter arising or
created out of the sale, lease, sublease, license, concession or other
grant of the right of the use and occupancy of property or rendering of
services by Borrower or any operator or manager of the hotel or the
commercial space located in the Improvements or acquired from others
(including, without limitation, from the rental of any office space,
retail space, guest rooms or other space, halls, stores, and offices,
and deposits securing reservations of such space), license, lease,
sublease and concession fees and rentals, health club membership fees,
food and beverage wholesale and retail sales (including mini-bar
revenues), service charges, vending machine sales and proceeds, if any,
from business interruption or other loss of income insurance
(collectively, the "RENTS") and all proceeds from the sale or other
disposition of the Leases and the right to receive and apply the Rents
to the payment of the Debt;
(f) Condemnation Awards. All awards or payments, including
interest thereon, which may heretofore and hereafter be made with
respect to the Property, whether from the exercise of the right of
eminent domain (including but not limited to any transfer made in lieu
of or in anticipation of the exercise of the right), or for a change of
grade, or for any other injury to or decrease in the value of the
Property;
(g) Insurance Proceeds. All proceeds of and any unearned premiums
on any insurance policies covering the Property, including, without
limitation, the right to receive and apply the proceeds of any
insurance, judgments, or settlements made in lieu thereof, for damage
to the Property;
(h) Tax Certiorari. All refunds, rebates or credits in connection
with a reduction in real estate taxes and assessments charged against
the Property as a result of tax certiorari or any applications or
proceedings for reduction;
(i) Conversion. All proceeds of the conversion, voluntary or
involuntary, of any of the foregoing including, without limitation,
proceeds of insurance and condemnation awards, into cash or liquidation
claims;
(j) Rights. The right, in the name and on behalf of Borrower, to
appear in and defend any action or proceeding brought with respect to
the Property and to commence any action or proceeding to protect the
interest of Trustee and/or Lender in the Property;
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(k) Agreements. All agreements, contracts (including purchase,
sale, option, right of first refusal and other contracts pertaining to
the Property), franchise agreements, certificates, instruments,
franchises, permits, licenses, approvals, consents, plans,
specifications and other documents, now or hereafter entered into, and
all rights therein and thereto, respecting or pertaining to the use,
occupation, construction, management or operation of the Property
(including any Improvements or respecting any business or activity
conducted on the Land and any part thereof) and all right, title and
interest of Borrower therein and thereunder, including, without
limitation, the right, upon the happening of any default hereunder, to
receive and collect any sums payable to Borrower thereunder;
(l) Trademarks. All tradenames, trademarks, servicemarks, logos,
copyrights, goodwill, books and records and all other general
intangibles relating to or used in connection with the operation of the
Property, subject to any rights therein which may be held by third
parties;
(m) Accounts. All accounts, accounts receivable, escrows
(including, without limitation, all escrows, deposits, reserves and
impounds established pursuant to that certain Escrow Agreement for
Reserves and Impounds of even date herewith between Borrower and
Lender; hereinafter the "ESCROW AGREEMENT"), documents, instruments,
chattel paper, claims, reserves (including deposits) representations,
warranties and general intangibles, as one or more of the foregoing
terms may be defined in the Uniform Commercial Code, and all contract
rights, franchises, books, records, plans, specifications, permits,
licenses (to extent assignable), approvals, actions, choses, claims,
suits, proofs of claims in bankruptcy and causes of action which now or
hereafter relate to, are derived from or are used in connection with
the Property, including, without limitation, all revenues and credit
card receipts collected from guest rooms, restaurants, bars, meeting
rooms, banquet rooms, and recreational facilities, all receivables,
customer obligations, installment payment obligations and other
obligations now existing or hereafter arising or created out of the
sale, lease, sublease, license, concession or other grant of the right
of the use and occupancy of property or rendering of services by Debtor
or any operator or manager of the hotel or the commercial space located
in the Improvements or acquired from others (including, without
limitation, from the rental of any office space, retail space, guest
rooms or other space, halls, stores, and offices, and deposits securing
reservations of such space), license, lease, sublease and concession
fees and rentals, health club membership fees, food and beverage
wholesale and retail sales, service charges, vending machine sales and
proceeds, if any, from business interruption or other loss of income
insurance, or arising from the sale of any Property or the rendition of
services in the ordinary course of business or otherwise (whether or
not earned by performance), together with any Property returned by or
reclaimed from customers wherever such Property is located, or the use,
operation, maintenance, occupancy or enjoyment thereof or the conduct
of any business activities thereon (collectively called the
"INTANGIBLES");
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(n) Liquor License. All licenses, permits, approvals and consents
which are required for the sale and service of alcoholic beverages on
the Property heretofore or hereafter obtained by Borrower from
applicable state and local authorities, provided, however, the
aforesaid licenses, permits, approvals and consents shall not be
considered to be a part of the Property if applicable law prohibits the
pledge, mortgage, transfer, assignment, sale or conveyance of the same;
and
(o) Other Rights. Any and all other rights of Borrower in and to
the Property and any accessions, renewals, replacements and
substitutions of all or any portion of the Property and all proceeds
derived from the sale, transfer, assignment or financing of the
Property or any portion thereof.
Section 1.2 ASSIGNMENT OF RENTS. Borrower hereby absolutely and
unconditionally assigns to Lender Borrower's right, title and interest in and to
all current and future Leases and Rents; it being intended by Borrower that this
assignment constitutes a present, absolute and unconditional assignment and not
an assignment for additional security only. Nevertheless, subject to the terms
of this Section 1.2 and the terms and conditions of that certain Assignment of
Rents and Leases, of even date herewith between Borrower and Lender, Lender
grants to Borrower a revocable license to collect and receive the Rents, which
license shall be automatically revoked upon the occurrence and during the
continuation of an Event of Default. Borrower shall hold the Rents, or a portion
thereof sufficient to discharge all current sums due on the Debt, for use in the
payment of such sums.
Section 1.3 DEFINITION OF PERSONAL PROPERTY. For purposes of this
Security Instrument, the Property identified in Subsections 1.1(d) through
1.1(o), inclusive, shall be collectively referred to herein as the "PERSONAL
PROPERTY."
Section 1.4 PLEDGE OF MONIES HELD. Borrower hereby pledges to Lender
any and all monies now or hereafter held by Lender, including, without
limitation, any sums deposited in the Funds (as defined in the Escrow
Agreement), all insurance proceeds described in Section 3.2 and condemnation
awards or payments described in Section 3.4, as additional security for the
Obligations until expended or applied as provided in this Security Instrument.
CONDITIONS TO GRANT
TO HAVE AND TO HOLD the above granted and described Property unto and
to the use and benefit of Trustee, and the successors and assigns of Trustee,
forever;
PROVIDED, HOWEVER, these presents are upon the express condition that,
if Borrower shall well and truly pay to Lender the Debt at the time and in the
manner provided in the Note and this Security Instrument, shall well and truly
perform the Other Obligations as set forth in this Security Instrument and shall
well and truly abide by and comply with each and every covenant and condition
set forth herein and in the Note, these presents and the estate hereby granted
shall cease, terminate and be void; provided however, that Borrower's obligation
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to indemnify and hold harmless Lender pursuant to the provisions hereof with
respect to matters relating to any period of time during which this Security
Instrument was in effect shall survive any such payment or release.
ARTICLE 2. - DEBT AND OBLIGATIONS SECURED
Section 2.1 DEBT. This Security Instrument and the grants, assignments
and transfers made in Article 1 are given for the purpose of securing the
following, in such order of priority as Lender may determine in its sole
discretion (the "DEBT"):
(a) the payment of the indebtedness evidenced by the Note in
lawful money of the United States of America;
(b) the payment of interest, default interest, late charges and
other sums, as provided in the Note, this Security Instrument or the
Other Loan Documents (as hereinafter defined);
(c) the payment of all other moneys agreed or provided to be paid
by Borrower in the Note, this Security Instrument or the Other Loan
Documents;
(d) the payment of all sums advanced pursuant to this Security
Instrument to protect and preserve the Property and the lien and the
security interest created hereby; and
(e) the payment of all sums advanced and costs and expenses
incurred by Lender in connection with the Debt or any part thereof, any
renewal, extension, or change of or substitution for the Debt or any
part thereof, or the acquisition or perfection of the security
therefor, whether made or incurred at the request of Borrower or
Lender.
Section 2.2 OTHER OBLIGATIONS. This Security Instrument and the grants,
assignments and transfers made in Article 1 are also given for the purpose of
securing the following (the "OTHER OBLIGATIONS"):
(a) the performance of all other obligations of Borrower
contained herein;
(b) the performance of each obligation of Borrower contained in
any other agreement given by Borrower to Lender which is for the
purpose of further securing the obligations secured hereby, and any
amendments, modifications and changes thereto; and
(c) the performance of each obligation of Borrower contained in
any renewal, extension, amendment, modification, consolidation, change
of, or substitution or replacement for, all or any part of the Note,
this Security Instrument or the Other Loan Documents.
6
Section 2.3 DEBT AND OTHER OBLIGATIONS. Borrower's obligations for the
payment of the Debt and the performance of the Other Obligations shall be
referred to collectively herein as the "OBLIGATIONS."
Section 2.4 PAYMENTS. Unless payments are made in the required amount
in immediately available funds at the place where the Note is payable,
remittances in payment of all or any part of the Debt shall not, regardless of
any receipt or credit issued therefor, constitute payment until the required
amount is actually received by Lender in funds immediately available at the
place where the Note is payable (or any other place as Lender, in Lender's sole
discretion, may have established by delivery of written notice thereof to
Borrower) 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 shall be deemed an acceptance on account only, and the
failure to pay the entire amount then due shall be and continue to be an Event
of Default (as hereinafter defined) until such time that Lender has accepted
payment of the entire amount then due.
ARTICLE 3 - BORROWER COVENANTS
Borrower covenants and agrees that:
Section 3.1 INCORPORATION BY REFERENCE. All the covenants, conditions
and agreements contained in (a) the Note, and (b) all and any of the documents
other than the Note or this Security Instrument now or hereafter executed by
Borrower and/or others and by or in favor of Lender in connection with the
creation of the Obligations, the payment of any other sums owed by Borrower to
Lender or the performance of any Obligations (collectively the "OTHER LOAN
DOCUMENTS"), are hereby made a part of this Security Instrument to the same
extent and with the same force as if fully set forth herein. The term "LOAN
DOCUMENTS" as used herein shall individually and collectively refer to the Note,
this Security Instrument and the Other Loan Documents; provided, however, that
notwithstanding any provision of this Security Instrument to the contrary, the
Obligations of the Borrower under that certain Environmental Indemnity Agreement
of even date herewith executed by Borrower in favor of Lender (the
"ENVIRONMENTAL INDEMNITY") shall not be deemed or construed to be secured by
this Security Instrument or otherwise restricted or affected by the foreclosure
of the lien hereof or any other exercise by Lender of its remedies hereunder or
under any other Loan Document, such Environmental Indemnity being intended by
the signatories thereto to be its (or their) unsecured obligation.
Section 3.2 INSURANCE.
(a) Borrower shall obtain and maintain (or cause to be obtained
and maintained), and shall pay all premiums in accordance with
Subsection 3.2(b) below for, insurance for Borrower and the Property
providing at least the following coverages:
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(i) comprehensive all risk insurance (including, without
limitation, riot and civil commotion, vandalism, malicious
mischief, water, fire, burglary and theft) on the Improvements
and the Personal Property and in each case (A) in an amount equal
to 100% of the "Full Replacement Cost", which for purposes of
this Security Instrument shall mean actual replacement value
(exclusive of costs of excavations, foundations, underground
utilities and footings) with a waiver of depreciation; (B)
containing an agreed amount endorsement with respect to the
Improvements and Personal Property waiving all co-insurance
provisions; (C) providing that the deductible shall not exceed
the lesser of $12,500.00 or one percent (1%) of the face value of
the policy; and (D) containing Demolition Costs, Increased Cost
of Construction and "Ordinance or Law Coverage" or "Enforcement"
endorsements in amounts satisfactory to Lender if any of the
Improvements or the use of the Property shall at any time
constitute legal non-conforming structures or uses or the ability
to rebuild the Improvements is restricted or prohibited. The Full
Replacement Cost may be redetermined from time to time by an
appraiser or contractor designated and paid by Lender or by an
engineer or appraiser in the regular employ of the insurer. No
omission on the part of Lender to request any such appraisals
shall relieve Borrower of any of its obligations under this
Subsection;
(ii) comprehensive general liability insurance against claims
for personal injury, bodily injury, death or property damage
occurring upon, in or about the Property, such insurance (A) to
be on the so-called "occurrence" form with a combined single
limit of not less than $1,000,000.00 and not less than
$3,000,000.00 if the Property has one or more elevators, as well
as liquor liability insurance in a minimum amount of
$2,000,000.00 if any part of the Property is covered by a liquor
license and an aggregate coverage limit acceptable to Lender; (B)
to continue at not less than the aforesaid limit until required
to be changed by Lender in writing by reason of changed economic
conditions making such protection inadequate; (C) to cover at
least the following hazards: (1) premises and operations; (2)
products and completed operations on an "if any" basis; (3)
independent contractors; (4) blanket contractual liability for
all written and oral contracts; (5) contractual liability
covering the indemnities contained in Article 11 ----------
hereof to the extent the same is available; and (D) to be without
deductible;
(iii) business income insurance (A) with loss payable to
Lender; (B) covering losses of income and Rents derived from the
Property and any non-insured property on or adjacent to the
Property resulting from any risk or casualty whatsoever; (C)
containing an extended period of indemnity endorsement which
provides that after the physical loss to the Improvements and
Personal Property has been repaired, the continued loss of income
will be insured until such income either returns to the same
level it was at prior to the loss, or the expiration of eighteen
(18) months from the date of the loss, whichever first occurs,
and notwithstanding that the policy may expire prior to the end
of such period; and
8
(D) in an amount equal to 100% of the all unavoidable expenses
from the Property (including debt service on the Loan) from the
operation of the Property for a period of eighteen (18) months.
The amount of such business income insurance shall be determined
by Lender prior to the date hereof and at least once each year
thereafter based on Borrower's reasonable estimate of the gross
income from the Property for the succeeding eighteen (18) month
period. All insurance proceeds payable to Lender pursuant to this
Subsection 3.2(a) shall be held by Lender and shall be applied to
the obligations secured hereunder from time to time due and
payable hereunder and under the Note and, provided that no Event
of Default then exists and Lender determines in its sole
discretion that sufficient funds will remain available for the
payment amounts payable hereunder and under the Note, for the
payment of operating expenses approved by Lender; provided,
however, that nothing herein contained shall be deemed to relieve
Borrower of its obligations to pay the obligations secured
hereunder on the respective dates of payment provided for in the
Note except to the extent such amounts are actually paid out of
the proceeds of such business income insurance;
(iv) at all times during which structural construction,
repairs or alterations are being made with respect to the
Improvements: (A) owner's contingent or protective liability
insurance covering claims not covered by or under the terms or
provisions of the above mentioned commercial general liability
insurance policy; and (B) the insurance provided for in
Subsection 3.2(a)(i) written in a so-called builder's risk
completed value form (1) on a non-reporting basis, (2) against
all risks insured against pursuant to Subsection 3.2(a)(i), (3)
including permission to occupy the Property, and (4) with an
agreed amount endorsement waiving co-insurance provisions;
(v) workers' compensation, subject to the statutory limits of
the state in which the Property is located, and employer's
liability insurance with a limit of at least $1,000,000.00 per
accident and per disease per employee, and $1,000,000.00 for
disease aggregate in respect of any work or operations on or
about the Property, or in connection with the Property or its
operation (if applicable);
(vi) comprehensive boiler and machinery insurance (without
exclusion for explosion), if applicable, in amounts as shall be
reasonably required by Lender and covering all boilers or other
pressure vessels, machinery and equipment located at or about the
Property (including, without limitation, electrical equipment,
sprinkler systems, heating and air conditioning equipment,
refrigeration equipment and piping);
(vii) flood hazard insurance if any portion of the
Improvements is currently or at any time in the future located in
a federally designated "special flood hazard area," flood hazard
insurance in an amount equal to the lesser of (a)
9
the outstanding principal balance of the Note, (b) the Full
Replacement Cost, or (c) the maximum amount of such insurance
available under the National Flood Insurance Act of 1968, the
Flood Disaster Protection Act of 1973 or the National Flood
Insurance Reform Act of 1994, as each may be amended; and
(viii) such other insurance and in such amounts as Lender
from time to time may reasonably request against such other
insurable hazards which at the time are commonly insured against
for property similar to the Property located in or around the
region in which the Property is located, including, without
limitation, earthquake insurance (in the event the Property is
located in an area with a high degree of seismic activity),
sinkhole insurance, mine subsidence insurance and environmental
insurance.
(b) All insurance provided for in Subsection 3.2(a) hereof shall
be obtained under valid and enforceable policies (the "POLICIES" or in
the singular, the "POLICY"), in such forms and, from time to time after
the date hereof, in such amounts as may from time to time be
satisfactory to Lender, issued by financially sound and responsible
insurance companies authorized to do business in the state in which the
Property is located as admitted or unadmitted carriers which, in either
case, have been approved by Lender and which have a claims paying
ability rating of AA or better issued by Standard & Poor's Ratings
Group or with a claims paying ability rating otherwise acceptable to
Lender (each such insurer shall be referred to below as a "QUALIFIED
INSURER"). Such Policies shall not be subject to invalidation due to
the use or occupancy of the Property for purposes more hazardous than
the use of the Property at the time such Policies were issued. Not less
than thirty (30) days prior to the expiration dates of the Policies
theretofore furnished to Lender pursuant to Subsection 3.2(a),
certified copies of the Policies marked "premium paid" or accompanied
by evidence satisfactory to Lender of payment of the premiums due
thereunder (the "INSURANCE PREMIUMS"), shall be delivered by Borrower
to Lender; provided, however, that in the case of renewal Policies,
Borrower may furnish Lender with binders therefor to be followed by the
original Policies when issued.
(c) Borrower shall not obtain (i) separate insurance concurrent
in form or contributing in the event of loss with that required in
Subsection 3.2(a) to be furnished by, or which may be reasonably
required to be furnished by, Borrower, or (ii) any umbrella or blanket
liability or casualty Policy unless, in each case, Lender's interest is
included therein as provided in this Security Instrument and such
Policy is issued by a Qualified Insurer. If Borrower obtains separate
insurance or an umbrella or a blanket Policy, Borrower shall notify
Lender of the same and shall cause certified copies of each Policy to
be delivered as required in Subsection 3.2(a). Any blanket insurance
Policy shall specifically allocate to the Property the amount of
coverage from time to time required hereunder and shall otherwise
provide the same protection as would a separate Policy insuring only
the Property in compliance with the provisions of Subsection 3.2(a).
Subject to the foregoing requirements, Borrower may obtain umbrella or
blanket
10
insurance policies which are maintained by the manager under the
Management Agreement and cover other facilities which are owned, leased
or managed by said manager.
(d) All Policies of insurance provided for or contemplated by
Subsection 3.2(a) shall name Lender, its successors and assigns,
including any servicers, trustees or other designees of Lender, and
Borrower as the insured or additional insured, as their respective
interests may appear, and in the case of property damage, boiler and
machinery, and flood insurance, shall contain a so-called New York
standard non-contributing Lender clause in favor of Lender providing
that the loss thereunder shall be payable to Lender.
(e) All Policies of insurance provided for in Subsection 3.2(a)
shall contain clauses or endorsements to the effect that:
(i) no act or negligence of Borrower, or anyone acting for
Borrower, or of any tenant under any Lease or other occupant, or
failure to comply with the provisions of any Policy which might
otherwise result in a forfeiture of the insurance or any part
thereof, shall in any way affect the validity or enforceability
of the insurance insofar as Lender is concerned;
(ii) the Policy shall not be materially changed (other than
to increase the coverage provided on the Property thereby) or
canceled without at least thirty (30) days' prior written notice
to Lender and any other party named therein as an insured;
(iii) each Policy shall provide that the issuers thereof
shall give written notice to Lender if the Policy has not been
renewed thirty (30) days prior to its expiration; and
(iv) Lender shall not be liable for any Insurance Premiums
thereon or subject to any assessments thereunder.
(f) Borrower shall furnish to Lender within ten (10) calendar
days after Lender's request therefor, a statement certified by Borrower
or a duly authorized officer of Borrower of the amounts of insurance
maintained in compliance herewith, of the risks covered by such
insurance and of the insurance company or companies which carry such
insurance and, if requested by Lender, verification of the adequacy of
such insurance by an independent insurance broker or appraiser
acceptable to Lender.
(g) If Borrower fails to timely provide Lender written evidence
that all insurance required hereunder is in full force and effect,
Lender shall have the right but not the obligation, without notice to
Borrower, to take such action as Lender deems necessary to protect its
interest in the Property, including, without limitation, the obtaining
of such insurance coverage as Lender in its sole discretion deems
appropriate,
11
and all expenses incurred by Lender in connection with
such action or in obtaining such insurance and keeping it in effect
shall be paid by Borrower to Lender upon demand and until paid shall be
secured by this Security Instrument and shall bear interest at the
Default Rate (as hereinafter defined).
(h) If the Property shall be damaged or destroyed, in whole or in
part, by fire or other casualty, Borrower shall give prompt notice
thereof to Lender.
(i) In case of loss covered by Policies, Lender may either
(1) settle and adjust any claim without the consent of Borrower,
or (2) allow Borrower to agree with the insurance company or
companies on the amount to be paid upon the loss; provided, that
Borrower may adjust losses aggregating not in excess of
$250,000.00 if such adjustment is carried out in a competent and
timely manner, and provided that in any case Lender shall and is
hereby authorized to collect and receive any such insurance
proceeds; and the expenses incurred by Lender in the adjustment
and collection of insurance proceeds shall become part of the
Debt and be secured hereby and shall be reimbursed by Borrower to
Lender upon demand (unless deducted by and reimbursed to Lender
from such proceeds).
(ii) In the event of any insured damage to or destruction of
the Property or any part thereof (herein called an "INSURED
CASUALTY"), if (A) less than 50% of the total floor area of the
Improvements has been damaged, destroyed or rendered unusable as
a result of such Insured Casualty and in the reasonable judgment
of Lender, the Property can be restored within twelve (12) months
after insurance proceeds are made available and at least six (6)
months prior to the Maturity Date (as defined in the Note) to an
economic unit not less valuable (including an assessment by
Lender of the impact of the termination of any Leases due to such
Insured Casualty) and not less useful than the same was prior to
the Insured Casualty, and after such restoration will adequately
secure the outstanding balance of the Debt, and (B) no Event of
Default (hereinafter defined) shall have occurred and be then
continuing, then the proceeds of insurance shall be applied to
pay for or reimburse Borrower for the cost of restoring,
repairing, replacing or rebuilding the Property or part thereof
which constitute the Insured Casualty, as provided below; and
Borrower hereby covenants and agrees forthwith to commence and
diligently to prosecute such restoring, repairing, replacing or
rebuilding; provided, however, in any event Borrower shall pay
all costs (and if required by Lender, Borrower shall deposit the
total thereof with Lender in advance) of such restoring,
repairing, replacing or rebuilding in excess of the net proceeds
of insurance made available pursuant to the terms hereof.
(iii) Except as provided above, the proceeds of insurance
collected upon any Insured Casualty shall, at the option of
Lender in its sole discretion, be applied to the payment of the
Debt or applied to pay for the cost of restoring, repairing,
replacing or rebuilding the Property or part thereof subject to
the
12
Insured Casualty, in the manner set forth below. Any such
application to the Debt shall not be considered a voluntary
prepayment requiring payment of the prepayment consideration
provided in the Note, and shall not reduce or postpone any
payments otherwise required pursuant to the Note, other than the
final payment on the Note.
(iv) If proceeds of insurance, if any, are made available to
Borrower for the restoring, repairing, replacing or rebuilding of
the Property, Borrower hereby covenants to restore, repair,
replace or rebuild the same to be of at least equal value and of
substantially the same character as prior to such damage or
destruction, all to be effected in accordance with applicable law
and plans and specifications approved in advance by Lender.
(v) If such insurance proceeds are to pay for the costs of
restoring, repairing, replacing and rebuilding of the Property,
Lender shall disburse such amounts from time to time upon Lender
being furnished with (1) evidence satisfactory to it (which
evidence may include inspection[s] of the work performed) that
portion of the restoration, repair, replacement and rebuilding
covered by the disbursement has been completed in accordance with
plans and specifications approved by Lender, (2) evidence
satisfactory to it of the estimated cost of completion of the
restoration, repair, replacement and rebuilding, (3) funds, or,
at Lender's option, assurances satisfactory to Lender that such
funds are available, sufficient in addition to the proceeds of
insurance to complete the proposed restoration, repair,
replacement and rebuilding, and (4) such architect's
certificates, waivers of lien, contractor's sworn statements,
title insurance endorsements, bonds, plats of survey and such
other evidences of cost, payment and performance as Lender may
reasonably require and approve in connection with such
disbursement; and Lender may, in any event, require that all
plans and specifications for such restoration, repair,
replacement and rebuilding be submitted to and approved by Lender
prior to commencement of work. With respect to disbursements to
be made by Lender: (A) no payment made prior to the final
completion of the restoration, repair, replacement and rebuilding
shall exceed ninety percent (90%) of the value of the work
performed from time to time; (B) funds other than proceeds of
insurance shall be disbursed prior to disbursement of such
proceeds; and (C) at all times, the undisbursed balance of such
proceeds remaining in the hands of Lender, together with funds
deposited for that purpose or irrevocably committed to the
satisfaction of Lender by or on behalf of Borrower for that
purpose, shall be at least sufficient in the reasonable judgment
of Lender to pay for the cost of completion of the restoration,
repair, replacement or rebuilding, free and clear of all liens or
claims for lien and the costs described in Subsection 3.2(h)(vi)
below. Any surplus which may remain out of insurance proceeds
held by Lender after payment of such costs of restoration,
repair, replacement or rebuilding shall be paid to any party
entitled thereto. In no event shall Lender assume any duty or
obligation for the adequacy,
13
form or content of any such plans and specifications, nor for the
performance, quality or workmanship of any restoration, repair,
replacement and rebuilding.
(vi) Notwithstanding anything to the contrary contained
herein, the proceeds of insurance reimbursed to Borrower in
accordance with the terms and provisions of this Security
Instrument shall be reduced by the reasonable costs (if any)
incurred by Lender in the adjustment and collection thereof and
in the reasonable costs incurred by Lender of paying out such
proceeds (including, without limitation, reasonable attorneys'
fees and costs paid to third parties for inspecting the
restoration, repair, replacement and rebuilding and reviewing the
plans and specifications therefor).
(i) Notwithstanding anything to the contrary contained herein,
Borrower shall not be deemed to be in breach of its obligations under
Subsection 3.2(a) if Lender fails to pay the premiums for the insurance
required thereunder in accordance with the terms of the Escrow
Agreement and funds sufficient to pay the same have been deposited by
Borrower.
Section 3.3 PAYMENT OF TAXES, ETC.
(a) Borrower shall pay all taxes, assessments, water rates, sewer
rents, governmental impositions, and other charges, including without
limitation, vault charges and license fees for the use of vaults,
chutes and similar areas adjoining the Land, now or hereafter levied or
assessed or imposed against the Property or any part thereof (the
"TAXES"), all ground rents, maintenance charges and similar charges,
now or hereafter levied or assessed or imposed against the Property or
any part thereof (the "OTHER CHARGES"), and all charges for utility
services provided to the Property as same become due and payable.
Borrower will deliver to Lender, promptly upon Lender's request,
evidence satisfactory to Lender that the Taxes, Other Charges and
utility service charges have been so paid or are not then delinquent.
Borrower shall not allow and shall promptly cause to be paid and
discharged any lien or charge whatsoever which may be or become a lien
or charge against the Property, except for liens covering Taxes and
Other Charges which are not yet due. Except to the extent sums
sufficient to pay all Taxes and Other Charges have been deposited with
Lender in accordance with the terms of this Security Instrument,
Borrower shall furnish to Lender paid receipts for the payment of the
Taxes and Other Charges prior to the date the same shall become
delinquent. Notwithstanding anything to the contrary contained herein,
Borrower shall not be deemed to be in breach of its obligations under
this Subsection 3.3(a) if Lender fails to pay the Taxes and Other
Charges in accordance with the terms of the Escrow Agreement and funds
sufficient to pay the same have been deposited by Borrower.
(b) After prior written notice to Lender, Borrower, at its own
expense, may contest by appropriate legal proceeding, promptly
initiated and conducted in good faith and with due diligence, the
amount or validity or application in whole or in part of any of
14
the Taxes, provided that (i) no Event of Default has occurred and is
continuing under the Note, this Security Instrument or any of the Other
Loan Documents, (ii) Borrower is permitted to do so under the
provisions of any other mortgage, deed of trust or deed to secure debt
affecting the Property, (iii) such proceeding shall suspend the
collection of the Taxes from Borrower and from the Property or Borrower
shall have paid all of the Taxes under protest, (iv) such proceeding
shall be permitted under and be conducted in accordance with the
provisions of any other instrument to which Borrower is subject and
shall not constitute a default thereunder, (v) neither the Property nor
any part thereof or interest therein will be in danger of being sold,
forfeited, terminated, canceled or lost, (vi) Borrower shall have set
aside and deposited with Lender adequate reserves for the payment of
the Taxes, together with all interest and penalties thereon, unless
Borrower has paid all of the Taxes under protest, and (vii) Borrower
shall have furnished the security as may be required in the proceeding,
or as may be requested by Lender to insure the payment of any contested
Taxes, together with all interest and penalties thereon.
Section 3.4 CONDEMNATION. Borrower shall promptly give Lender notice of
the actual or threatened commencement of any condemnation or eminent domain
proceeding and shall deliver to Lender copies of any and all papers served in
connection with such proceedings. Lender is hereby irrevocably appointed as
Borrower's attorney-in-fact, coupled with an interest, with exclusive power to
collect, receive and retain any award or payment for said condemnation or
eminent domain and to make any compromise or settlement in connection with such
proceeding, subject to the provisions of this Security Instrument.
Notwithstanding the foregoing, Borrower may settle and compromise such award
provided that (i) the same is effected in a competent and timely manner, (ii)
the amount of the award does not exceed $250,000, (iii) the award is paid to
Lender and applied in accordance with this Security Instrument and (iv) no Event
of Default then exists. Notwithstanding any taking by any public or quasi-public
authority through eminent domain or otherwise (including but not limited to any
transfer made in lieu of or in anticipation of the exercise of such taking),
Borrower shall continue to pay the Debt at the time and in the manner provided
for its payment in the Note and in this Security Instrument and the Debt shall
not be reduced until any award or payment therefor shall have been actually
received and applied by Lender, after the deduction of expenses of collection,
to the reduction or discharge of the Debt. Lender shall not be limited to the
interest paid on the award by the condemning authority but shall be entitled to
receive out of the award interest at the rate or rates provided herein or in the
Note. Borrower shall cause the award or payment made in any condemnation or
eminent domain proceeding, which is payable to Borrower, to be paid directly to
Lender. Lender may apply any award or payment to the reduction or discharge of
the Debt whether or not then due and payable (such application to be free from
any prepayment consideration provided in the Note, except that if an Event of
Default, or an event which with notice and/or the passage of time, or both,
would constitute an Event of Default, has occurred and is continuing, then such
application shall be subject to the full prepayment consideration computed in
accordance with the Note). If the Property is sold, through foreclosure or
otherwise, prior to the receipt by Lender of the award or payment, Lender shall
have the right, whether or not a deficiency judgment on the Note shall have been
sought, recovered or denied, to receive the award or payment, or a portion
thereof sufficient to pay the Debt.
15
Section 3.5 USE AND MAINTENANCE OF PROPERTY. Borrower shall cause the
Property to be maintained and operated in a good and safe condition and repair
and in keeping with the condition and repair of properties of a similar use,
value, age, nature and construction, subject, in the case of a casualty, to the
availability of insurance proceeds. Borrower shall not use, maintain or operate
the Property in any manner 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. The Improvements and the Personal
Property shall not be removed, demolished or materially altered (except for
normal replacement of the Personal Property with items of the same utility and
of equal or greater value) without the prior written consent of Lender. Borrower
shall promptly repair, replace or rebuild any part of the Property which may be
destroyed by any casualty, or become damaged, worn or dilapidated or which may
be affected by any proceeding of the character referred to in Section 3.4 hereof
and shall complete and pay for any structure at any time in the process of
construction or repair on the Land. Borrower shall not initiate, join in,
acquiesce in, or consent to any change in any private restrictive covenant,
zoning law or other public or private restriction, limiting or defining the uses
which may be made of the Property or any part thereof. If under applicable
zoning provisions the use of all or any portion of the Property is or shall
become a nonconforming use, Borrower will not cause or permit the nonconforming
use to be discontinued or abandoned without the express written consent of
Lender. Borrower shall not take any steps whatsoever to convert the Property, or
any portion thereof, to a condominium or cooperative form of management.
Section 3.6 WASTE. Borrower shall not commit or suffer any waste of the
Property or, without first obtaining such additional insurance as may be
necessary to cover a proposed change in use of the Property, make any change in
the use of the Property which will in any way materially increase the risk of
fire or other hazard arising out of the operation of the Property, or take any
action that might invalidate or give cause for cancellation of any Policy, or do
or permit to be done thereon anything that may in any way impair the value of
the Property or the security of this Security Instrument. Borrower will not,
without the prior written consent of Lender, permit any drilling or exploration
for or extraction, removal, or production of any minerals from the surface or
the subsurface of the Land, regardless of the depth thereof or the method of
mining or extraction thereof.
Section 3.7 COMPLIANCE WITH LAWS; ALTERATIONS.
(a) Borrower shall promptly comply with all existing and future
federal, state and local laws, orders, ordinances, governmental rules
and regulations or court orders affecting or which may be interpreted
to affect the Property, or the use thereof, including, but not limited
to, the Americans with Disabilities Act (the "ADA") (collectively
"APPLICABLE LAWS").
(b) Notwithstanding any provisions set forth herein or in any
document regarding Lender's approval of alterations of the Property,
Borrower shall not alter the Property in any manner which would
increase Borrower's responsibilities for compliance
16
with Applicable Laws without the prior written approval of Lender.
Lender's approval of the plans, specifications, or working drawings for
alterations of the Property shall create no responsibility or liability
on behalf of Lender for their completeness, design, sufficiency or
their compliance with Applicable Laws. The foregoing shall apply to
tenant improvements constructed by Borrower or by any of its tenants.
Lender may condition any such approval upon receipt of a certificate of
compliance with Applicable Laws from an independent architect,
engineer, or other person acceptable to Lender.
(c) Borrower shall give prompt notice to Lender of the receipt by
Borrower of any notice related to a violation of any Applicable Laws
and of the commencement of any proceedings or investigations which
relate to compliance with Applicable Laws.
(d) Borrower shall take appropriate measures to prevent and will
not engage in or knowingly permit any illegal activities at the
Property.
Section 3.8 BOOKS AND RECORDS.
(a) Borrower shall keep accurate books and records of account in
accordance with sound accounting principles in which full, true and
correct entries shall be promptly made with respect to Borrower, the
Property and the operation thereof, and will permit all such books and
records (including without limitation all contracts, statements,
invoices, bills and claims for labor, materials and services supplied
for the construction, repair or operation to Borrower of the
Improvements) to be inspected or audited and copies made by Lender and
its representatives during normal business hours and at any other
reasonable times. Borrower represents that its chief executive office
is as set forth in the introductory paragraph of this Security
Instrument and that all books and records pertaining to the Property
are maintained at the Property or such other location as may be
expressly disclosed to Lender in writing. Borrower will furnish, or
cause to be furnished, to Lender on or before forty-five (45) calendar
days after the end of each calendar quarter the following items, each
certified by Borrower as being true and correct, in such format and in
such detail as Lender or its servicer may request:
(i) a written statement (rent roll) dated as of the last day
of each such calendar quarter identifying each of the Leases by
the term, space occupied, rental required to be paid, security
deposit paid, any rental concessions, and identifying any
defaults or payment delinquencies thereunder;
(ii) a report of occupancy for the subject quarter, including
an average daily rate, and any and all franchise inspection
reports received by Borrower during the subject quarter; and
(iii) monthly and year to date operating statements prepared
for each calendar month during each such reporting period
detailing the total revenues
17
received, total expenses incurred, total costs of capital
improvements, total debt service and total cash flow.
(b) Within ninety (90) calendar days following the end of each
calendar year, Borrower shall furnish a statement of the financial
affairs and condition of the Borrower and the Property including a
statement of profit and loss for the Property in such format and in
such detail as Lender or its servicer may request, and setting forth
the financial condition and the income and expenses for the Property
for the immediately preceding calendar year prepared and audited by an
independent certified public accountant. Borrower shall deliver to
Lender copies of all income tax returns, requests for extension and
other similar items contemporaneously with its delivery of same to the
Internal Revenue Service.
(c) Borrower will permit representatives appointed by Lender,
including independent accountants, agents, attorneys, appraisers and
any other persons, to visit and inspect during its normal business
hours and at any other reasonable times any of the Property and to make
photographs thereof, and to write down and record any information such
representatives obtain, and shall permit Lender or its representatives
to investigate and verify the accuracy of the information furnished to
Lender under or in connection with this Security Instrument or any of
the Other Loan Documents and to discuss all such matters with its
officers, employees and representatives. Borrower will furnish to
Lender at Borrower's expense all evidence which Lender may from time to
time reasonably request as to the accuracy and validity of or
compliance with all representations and warranties made by Borrower in
the Loan Documents and satisfaction of all conditions contained
therein. 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 at Borrower's
expense and shall be for Lender's protection only, and shall not
constitute any assumption of responsibility or liability by Lender 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; provided, however, Borrower shall not have any obligation
to reimburse Lender for more than one (1) such audit or inspection per
calendar year except in the event of a continuing Event of Default.
(d) Prior to the transfer of the Loan by Lender pursuant to
Section 16.1 hereof, Borrower shall deliver to Lender the reports
required by Section 3.8(a) on a monthly basis. Such reports shall be
delivered within twenty (20) calendar days after the end of each
calendar month.
Section 3.9 PAYMENT FOR LABOR AND MATERIALS. Borrower will promptly pay
when due all bills and costs for labor, materials, and specifically fabricated
materials incurred in connection with the Property and never permit to exist
beyond the due date thereof in respect of the Property or any part thereof any
lien or security interest, even though inferior to the liens and the security
interests hereof, and in any event never permit to be created or exist in
18
respect of the Property or any part thereof any other or additional lien or
security interest other than the liens or security interests hereof, except for
the Permitted Exceptions (as hereinafter defined).
Section 3.10 PERFORMANCE OF OTHER AGREEMENTS. Borrower shall observe
and perform each and every term to be observed or performed by Borrower pursuant
to the terms of any agreement or recorded instrument affecting or pertaining to
the Property, or given by Borrower to Lender for the purpose of further securing
an obligation secured hereby and any amendments, modifications or changes
thereto.
Section 3.11 CERTAIN HOTEL COVENANTS. Borrower further covenants and
agrees with Lender as follows:
(a) Borrower shall cause the hotel located on the Property to be
operated pursuant to the Franchise Agreement (as hereinafter defined)
and the Management Agreement (as hereinafter defined).
(b) Borrower covenants and agrees that it shall:
(i) promptly perform and/or observe all of the covenants and
agreements required to be performed and observed by it under the
Franchise Agreement and the Management Agreement and do all
things necessary to preserve and to keep unimpaired its material
rights thereunder;
(ii) promptly notify Lender of any default under the
Franchise Agreement or the Management Agreement of which it is
aware;
(iii) promptly deliver to Lender upon request a copy of any
financial statement, business plan, capital expenditures plan,
notice, report and estimate received by Borrower under the
Franchise Agreement or the Management Agreement; and
(iv) promptly enforce the performance and observance of all
of the covenants and agreements required to be performed and/or
observed by the franchisor under the Franchise Agreement and the
manager under the Management Agreement.
(c) Borrower consents and agrees that it shall not, without
Lender's prior written consent:
(i) surrender, terminate or cancel the Franchise Agreement or
the Management Agreement;
(ii) reduce or consent to the reduction of the term of the
Franchise Agreement or the Management Agreement;
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(iii) increase or consent to the increase of the amount of
any charges under the Franchise Agreement or the Management
Agreement; or
(iv) otherwise modify, change, supplement, alter or amend, or
waive or release any of its rights and remedies under, the
Franchise Agreement or the Management Agreement in any material
respect.
(d) Borrower shall not, without Lender's prior consent, enter
into transactions with any affiliate, including without limitation, any
arrangement providing for the managing of the hotel on the Property,
the rendering or receipt of services or the purchase or sale of
inventory, except any such transaction in the ordinary course of
business of Borrower if the monetary or business consideration arising
therefrom would be substantially as advantageous to Borrower as the
monetary or business consideration that would obtain in a comparable
transaction with a person not an affiliate of Borrower. Lender
acknowledges and agrees that Lender has approved of the Management
Agreement and Franchise Agreement.
(e) Borrower shall maintain the Management Agreement for the
operation of the Property in full force and effect and timely perform
all of Borrower's obligations thereunder and enforce performance of all
obligations of the manager thereunder, and not permit the termination
or amendment of such Management Agreement unless the prior written
consent of Lender is first obtained. Borrower will enter into and cause
the manager to enter into an assignment and subordination of such
Management Agreement in form satisfactory to Lender, assigning and
subordinating the manager's interest in the Property and all fees and
other rights of the manager pursuant to such Management Agreement to
the rights of Lender. Upon an Event of Default, Borrower at Lender's
request made at any time while such Event of Default continues, shall
terminate the Management Agreement and replace the manager with a
manager selected by Lender.
ARTICLE 4 - SPECIAL COVENANTS
Borrower covenants and agrees that:
Section 4.1 PROPERTY USE. The Property shall be used only as a hotel
and for ancillary purposes (and for the rental of commercial office space to the
extent currently used for such purpose) and for no other use without the prior
written consent of Lender, which consent may be withheld in Lender's sole and
absolute discretion.
Section 4.2 ERISA.
(a) It shall not engage in any transaction which would cause any
obligation, or action taken or to be taken, hereunder (or the exercise
by Lender of any of its rights under the Note, this Security Instrument
and the Other Loan Documents) to be a non-exempt (under a statutory or
administrative class exemption) prohibited transaction under the
Employee Retirement Income Security Act of 1974, as amended ("ERISA").
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(b) It shall deliver to Lender such certifications or other
evidence from time to time throughout the term of the Security
Instrument, as requested by Lender in its sole discretion, that (i)
Borrower is not an "employee benefit plan" as defined in Section 3(3)
of ERISA, which is subject to Title I of ERISA, or a "governmental
plan" within the meaning of Section 3(32) of ERISA; (ii) Borrower is
not subject to state statutes regulating investments and fiduciary
obligations with respect to governmental plans; and (iii) one or more
of the following circumstances is true:
(i) Equity interests in Borrower are publicly offered
securities, within the meaning of 29 C.F.R. ss.2510.3-101(b)(2);
(ii) Less than twenty-five percent (25%) of each outstanding
class of equity interests in Borrower are held by "benefit plan
investors" within the meaning of 29 C.F.R.ss.2510.3-101(f)(2); or
(iii) Borrower qualifies as an "operating company" or a "real
estate operating company" within the meaning of 29 C.F.R.
ss.2510.3-101(c) or (e) or an investment company registered under
The Investment Company Act of 1940.
Section 4.3 SINGLE PURPOSE ENTITY. (1) So long as any obligation under
the Note remains unsatisfied, Borrower covenants and agrees that it has not and
shall not:
(a) engage in any business or activity other than the
acquisition, ownership, operation and maintenance of the Property, and
activities incidental thereto;
(b) acquire or own any material asset other than (i) the
Property, and (ii) such incidental Personal Property as may be
necessary for the operation of the Property;
(c) merge into or consolidate with any person or entity or
dissolve, terminate or liquidate in whole or in part, transfer or
otherwise dispose of all or substantially all of its assets or change
its legal structure, without in each case Lender's consent;
(d) fail to preserve its existence as an entity duly organized,
validly existing and in good standing (if applicable) under the laws of
the jurisdiction of its organization or formation, or without the prior
written consent of Lender, amend, modify, terminate or fail to comply
with the provisions of Borrower's Partnership Agreement, Articles or
Certificate of Incorporation, Articles of Organization, Operating
Agreement or similar organizational documents, as the case may be;
(e) own any subsidiary or make any investment in or acquire the
obligations or securities of any other person or entity without the
consent of Lender;
(f) commingle its assets with the assets of any of its
partner(s), members, shareholders, affiliates, or of any other person
or entity or transfer any assets to any such
21
person or entity other than distributions on account of equity
interests in the Borrower permitted hereunder and properly accounted
for;
(g) incur any debt, secured or unsecured, direct or contingent
(including guaranteeing any obligation), other than the Debt, except
(i) unsecured trade and operational debt incurred with trade creditors
in the ordinary course of its business of owning and operating the
Property in such amounts as are normal and reasonable under the
circumstances and (ii) debt incurred in connection with the financing
of furniture fixtures and equipment at the Property, provided that such
debt referenced in clauses (i) and (ii) is not evidenced by a note and
is paid when due and provided in any event the outstanding principal
balance of all such debt (including any exiting debt owed to MetLife
Capital Corporation) shall not exceed at any one time four percent (4%)
of the initial principal amount of the Debt; provided, however, that
for purposes of this Section 4.3(g), indebtedness shall not include
judgments against Borrower (other than judgments for contractual
indebtedness);
(h) allow any person or entity to pay its debts and liabilities
(except a Guarantor or Indemnitor) or fail to pay its debts and
liabilities solely from its own assets;
(i) fail to maintain its records, books of account and bank
accounts separate and apart from those of the shareholders, partners,
members, principals and affiliates of Borrower, the affiliates of a
shareholder, partner or member of Borrower, and any other person or
entity or fail to prepare and maintain its own financial statements in
accordance with generally accepted accounting principles and
susceptible to audit, or if such financial statements are consolidated
fail to cause such financial statements to contain footnotes disclosing
that the Property is actually owned by the Borrower;
(j) enter into any contract or agreement with any shareholder,
partner, member, principal or affiliate of Borrower, any guarantor of
all or a portion of the Debt (a "GUARANTOR") or any shareholder,
partner, member, principal or affiliate thereof, except upon terms and
conditions that are intrinsically fair and substantially similar to
those that would be available on an arms-length basis with third
parties other than any shareholder, partner, member, principal or
affiliate of Borrower or Guarantor, or any shareholder, partner,
member, principal or affiliate thereof;
(k) seek dissolution or winding up in whole, or in part;
(l) fail to correct any known misunderstandings regarding the
separate identity of Borrower;
(m) hold itself out to be responsible or pledge its assets or
credit worthiness for the debts of another person or entity or allow
any person or entity to hold itself out to be responsible or pledge its
assets or credit worthiness for the debts of the Borrower (except for a
Guarantor or Indemnitor);
22
(n) make any loans or advances to any third party, including any
shareholder, partner, member, principal or affiliate of Borrower, or
any shareholder, partner, member, principal or affiliate thereof;
(o) fail to file its own tax returns or to use separate
contracts, purchase orders, stationary, invoices and checks; provided
that Borrower may file a consolidated tax return with its affiliates if
required or permitted under applicable law;
(p) fail either to hold itself out to the public as a legal
entity separate and distinct from any other entity or person or to
conduct its business solely in its own name in order not (i) to mislead
others as to the entity with which such other party is transacting
business, or (ii) to suggest that Borrower is responsible for the debts
of any third party (including any shareholder, partner, member,
principal or affiliate of Borrower, or any shareholder, partner,
member, principal or affiliate thereof);
(q) fail to allocate fairly and reasonably among Borrower and any
third party (including, without limitation, any Guarantor) any overhead
for common employees, shared office space or other overhead and
administrative expenses;
(r) allow any person or entity to pay the salaries of Borrower's
employees or fail to maintain a sufficient number of employees for its
contemplated business operations;
(s) fail to maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in
light of its contemplated business operations;
(t) file a voluntary petition or otherwise initiate proceedings
to have the Borrower or any general partner or managing member
adjudicated bankrupt or insolvent, or consent to the institution of
bankruptcy or insolvency proceedings against the Borrower or any
general partner or managing member, or file a petition seeking or
consenting to reorganization or relief of the Borrower or any general
partner or managing member as debtor under any applicable federal or
state law relating to bankruptcy, insolvency, or other relief for
debtors with respect to the Borrower or any general partner or managing
member; or seek or consent to the appointment of any trustee, receiver,
conservator, assignee, sequestrator, custodian, liquidator (or other
similar official) of the Borrower or any general partner or managing
member or of all or any substantial part of the properties and assets
of the Borrower or any general partner or managing member, or make any
general assignment for the benefit of creditors of the Borrower or any
general partner or managing member, or admit in writing the inability
of the Borrower or any general partner or managing member to pay its
debts generally as they become due or declare or effect a moratorium on
the Borrower or any general partner or managing member debt or take any
action in furtherance of any such action;
23
(u) except in connection with the Franchise Agreement or
Management Agreement, share any common logo with or hold itself out as
or be considered as a department or division of (i) any shareholder,
partner, principal, member or affiliate of Borrower, (ii) any affiliate
of a shareholder, partner, principal, member or affiliate of Borrower,
or (iii) any other person or entity or allow any person or entity to
identify the Borrower as a department or division of that person or
entity;
(v) conceal assets from any creditor, or enter into any
transaction with the intent to hinder, delay or defraud creditors of
the Borrower or the creditors of any other person or entity; or
(w) fail to conduct its business so that the assumptions made
with respect to the Borrower and SPE Principal in that certain
"substantive non-consolidation" opinion letter (the "INSOLVENCY
Opinion") delivered by Xxxxxxx Xxxxxxxx X.X. in connection with the
origination of the Loan shall be true and correct in all material
respects.
(2) If Borrower is a limited partnership or a limited liability
company (other than a Single Member LLC (as defined below), its sole
general partner or managing member (the "SPE PRINCIPAL") of Borrower,
as applicable, is and shall be at all times a corporation whose sole
asset is its interest in Borrower and such SPE Principal of Borrower
will at all times comply, and will cause Borrower to comply, with each
of the covenants, terms and provisions contained in Section 4.3(1) as
if such representation, warranty or covenant was made directly by such
SPE Principal. The SPE Principal (or Borrower if Borrower is a
corporation or a Single Member LLC) shall not fail at any time to have
at least one (1) independent director who is not at the time of initial
appointment, has not been at any time during the preceding five (5)
years and shall not be at any time while serving: (a) a stockholder,
director (other than as an independent director), officer, employee,
partner or member of the Borrower, the SPE Principal or any affiliate
of either of them; (b) a customer, supplier or other person who
purchases any goods or services from or derives any revenues from its
activities with the Borrower, the SPE Principal or any affiliate of
either of them; (c) a person or other entity controlling or under
common control with any such stockholder, member, partner, customer,
supplier or other person; (d) an attorney or counsel to the Borrower,
the SPE Principal or any of their affiliates or (e) a member of the
immediate family of any such stockholder, director, officer, employee,
member, partner, customer, supplier or other person. Notwithstanding
the foregoing, the ownership of DE MINIMUS amounts of stock in WHC
shall not, in and of itself, disqualify an individual from serving as
an Independent Director. As used herein, the term "affiliate" means any
person controlling, under common control with, or controlled by the
person in question, and the term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction
of management, policies or activities of a person or entity, whether
through ownership of voting securities, by contract or otherwise. As
used herein, the term "Single Member LLC" means a limited liability
company that (i) is either a single member limited liability company or
a multiple member limited liability company that does not have an SPE
24
Principal, (ii) is organized under the laws of the State of Delaware,
(iii) provides in its organizational documents that it will at all
times have either (x) a member which owns no economic interest in such
Single Member LLC or (y) a "springing member" which will automatically
become a member of such Single Member LLC immediately prior to the
dissolution of the last remaining member and (iv) is otherwise
acceptable to Lender.
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES
Section 5.1 BORROWER'S REPRESENTATIONS. Borrower represents and
warrants to Lender that each of the representations and warranties set forth in
that certain Closing Certificate of even date herewith executed by Borrower in
favor of Lender are true and correct as of the date hereof and are hereby
incorporated and restated in this Security Instrument by this reference.
Section 5.2 WARRANTY OF TITLE. Borrower represents and warrants that it
has good and marketable title to the Property and has the right to grant,
bargain, sell, pledge, assign, warrant, transfer and convey the same and that
Borrower possesses an unencumbered fee simple absolute estate in the Land and
the Improvements and that it owns the Property free and clear of all liens,
encumbrances and charges whatsoever except for those exceptions shown in the
title insurance policy insuring the lien of this Security Instrument and the
lien of MetLife Capital Corporation in certain personal property financed by it
(the "PERMITTED EXCEPTIONS"). Borrower represents and warrants that none of the
Permitted Exceptions will materially and adversely affect the ability of the
Borrower to pay in full the Loan, the use of the Property for the use currently
being made thereof, the operation of the Property or the value of the Property.
Borrower shall, at its sole cost and expense, forever warrant, defend and
preserve the title and the validity and priority of the lien of this Security
Instrument and shall, at its sole cost and expense, forever warrant and defend
the same to Trustee and Lender against the claims of all persons whomsoever.
Section 5.3 STATUS OF PROPERTY.
(a) No portion of the Improvements is located in an area
identified by the Secretary of Housing and Urban Development or any
successor thereto as an area having special flood hazards pursuant to
the National Flood Insurance Act of 1968 or the Flood Disaster
Protection Act of 1973, as amended, or any successor law, or, if
located within any such area, Borrower has obtained and will maintain
the insurance prescribed in Section 3.2 hereof.
(b) Borrower has obtained all necessary certificates, permits,
certificates of incorporation, licenses and other approvals,
governmental and otherwise, necessary for the use, occupancy and
operation of the Property and the conduct of the business as a hotel
(including, without limitation, any applicable liquor license,
certificates of completion and certificates of occupancy) and all
required zoning, building code, land use, environmental and other
similar permits or approvals, all of which are in full force
25
and effect as of the date hereof and not subject to revocation,
suspension, forfeiture or modification (collectively, the "LICENSES").
(c) The Property and the present and contemplated use and
occupancy thereof are to the best knowledge of Borrower in full
compliance with all Applicable Laws, including, without limitation,
zoning ordinances, building codes, land use and environmental laws,
laws relating to the disabled (including, but not limited to, the ADA)
and other similar laws.
(d) The Property is served by all utilities required for the
current or contemplated use thereof. All utility service is provided by
public utilities and the Property has accepted or is equipped to accept
such utility service.
(e) All public roads and streets necessary for service of and
access to the Property for the current or contemplated use thereof have
been completed, are serviceable and are physically and legally open for
use by the public.
(f) The Property is served by public water and sewer systems.
(g) The Property is free from damage caused by fire or other
casualty. There is no pending or, to the best knowledge of Borrower,
threatened condemnation proceedings affecting the Property or any
portion thereof.
(h) All costs and expenses of any and all labor, materials,
supplies and equipment used in the construction of the Improvements
have been paid in full and no notice of any mechanics' or materialmen's
liens or of any claims of right to any such liens have been received.
(i) Borrower has paid in full for, and is the owner of, all
furnishings, fixtures and equipment (other than tenants' property) used
in connection with the operation of the Property, free and clear of any
and all security interests, liens or encumbrances, except the lien and
security interest created pursuant to the Loan Documents and the lien
of MetLife Capital Corporation in certain personal property financed by
it.
(j) All liquid and solid waste disposal, septic and sewer systems
located on the Property are to the best knowledge of Borrower in a good
and safe condition and repair and in compliance with all Applicable
Laws.
(k) All Improvements lie within the boundary of the Land, except
for such encroachments shown in the title insurance policy insuring the
lien of this Security Instrument or on the survey which is incorporated
into said title insurance policy.
Section 5.4 NO FOREIGN PERSON. Borrower is not a "foreign person"
within the meaning of Section 1445(f)(3) of the Internal Revenue Code of 1986,
as amended, and the related Treasury Department regulations, including temporary
regulations.
26
Section 5.5 SEPARATE TAX LOT. The Property is assessed for real estate
tax purposes as one or more wholly independent tax lot or lots, separate from
any adjoining land or improvements not constituting a part of such lot or lots,
and no other land or improvements is assessed and taxed together with the
Property or any portion thereof.
Section 5.6 FRANCHISE AGREEMENT. The WestCoast Hotels Franchise
Agreement dated as of May ___, 2001 (the "FRANCHISE AGREEMENT"), between
Borrower and WestCoast Hotels, Inc., pursuant to which Borrower has the right to
operate the hotel located on the Property under a name and/or hotel system
controlled by such franchisor, is in full force and effect and there is no
default, breach or violation existing thereunder by any party thereto and no
event has occurred (other than payments due but not yet delinquent) that, with
the passage of time or the giving of notice, or both, would constitute a
default, breach or violation by any party thereunder.
Section 5.7 MANAGEMENT AGREEMENT. The Management Agreement dated as of
May ____, 2001 (the "MANAGEMENT AGREEMENT"), between Borrower and WestCoast
Hospitality Limited Partnership ("WHLP"), pursuant to which such hotel manager
operates the Property as a hotel, is in full force and effect and there is no
default, breach or violation existing thereunder by any party thereto and no
event has occurred (other than payments due but not yet delinquent) that, with
the passage of time or the giving of notice, or both, would constitute a
default, breach or violation by any party thereunder.
Section 5.8 VALIDITY OF AGREEMENTS. Neither the execution and delivery
of the Loan Documents, the Borrower's performance thereunder, the recordation of
this Security Instrument, nor the exercise of any remedies under this Security
Instrument, will adversely affect Borrower's rights under the Franchise
Agreement, the Management Agreement, or any of the Licenses.
ARTICLE 6 - OBLIGATIONS AND RELIANCES
Section 6.1 RELATIONSHIP OF BORROWER AND LENDER. The relationship
between Borrower and Lender is solely that of debtor and creditor, and Lender
has no fiduciary or other special relationship with Borrower, and no term or
condition of any of the Note, this Security Instrument and the other Loan
Documents shall be construed so as to deem the relationship between Borrower and
Lender to be other than that of debtor and creditor.
Section 6.2 NO RELIANCE ON LENDER. The partners, members, principals
and (if Borrower is a trust) beneficial owners of Borrower are experienced in
the ownership and operation of properties similar to the Property, and Borrower
and Lender are relying solely upon such expertise and business plan in
connection with the ownership and operation of the Property. Borrower is not
relying on Lender's expertise, business acumen or advice in connection with the
Property.
Section 6.3 NO LENDER OBLIGATIONS.
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(a) Notwithstanding the provisions of Subsections 1.1(e) and
1.1(l) or Section 1.2, Lender is not undertaking (i) any obligations
under the Leases; or (ii) any obligations with respect to such
agreements, contracts, certificates, instruments, franchises, permits,
trademarks, licenses and other documents.
(b) By accepting or approving anything required to be observed,
performed or fulfilled or to be given to Lender pursuant to this
Security Instrument, the Note or the Other Loan Documents, including
without limitation, any officer's certificate, balance sheet, statement
of profit and loss or other financial statement, survey, appraisal, or
insurance policy, Lender shall not be deemed to have warranted,
consented to, or affirmed the sufficiency, legality or effectiveness of
same, and such acceptance or approval thereof shall not constitute any
warranty or affirmation with respect thereto by Lender.
Section 6.4 RELIANCE. Borrower recognizes and acknowledges that in
accepting the Note, this Security Instrument and the Other Loan Documents,
Lender is expressly and primarily relying on the truth and accuracy of the
warranties and representations set forth in Article 5 and that certain Closing
Certificate of even date herewith executed by Borrower, without any obligation
to investigate the Property and notwithstanding any investigation of the
Property by Lender; that such reliance existed on the part of Lender prior to
the date hereof; that such warranties and representations are a material
inducement to Lender in accepting the Note, this Security Instrument and the
Other Loan Documents; and that Lender would not be willing to make the Loan (as
hereinafter defined) and accept this Security Instrument in the absence of the
warranties and representations as set forth in Article 5 and such Closing
Certificate.
ARTICLE 7 - FURTHER ASSURANCES
Section 7.1 RECORDING FEES. Borrower will pay all taxes, filing,
registration or recording fees, and all expenses incident to the preparation,
execution, acknowledgment and/or recording of the Note, this Security
Instrument, the Other Loan Documents, any note or deed of trust supplemental
hereto, any security instrument with respect to the Property and any instrument
of further assurance, and any modification or amendment of the foregoing
documents, and all federal, state, county and municipal taxes, duties, imposts,
assessments and charges arising out of or in connection with the execution and
delivery of this Security Instrument, any deed of trust supplemental hereto, any
security instrument with respect to the Property or any instrument of further
assurance, and any modification or amendment of the foregoing documents, except
where prohibited by law so to do.
Section 7.2 FURTHER ACTS. Borrower will, at the cost of Borrower, and
without expense to Lender, do, execute, acknowledge and deliver all and every
such further acts, deeds, conveyances, deeds of trust, assignments, notices of
assignments, transfers and assurances as Lender shall, from time to time,
require, for the better assuring, conveying, assigning, transferring, and
confirming unto Lender the property and rights hereby granted, bargained, sold,
conveyed, confirmed, pledged, assigned, warranted and transferred or intended
now or hereafter
28
so to be, or which Borrower may be or may hereafter become bound to convey or
assign to Lender, or for carrying out the intention or facilitating the
performance of the terms of this Security Instrument or for filing, registering
or recording this Security Instrument, or for complying with all Applicable
Laws. Borrower, on demand, will execute and deliver to Lender one or more
financing statements, chattel mortgages or other instruments, to evidence more
effectively the security interest of Lender in the Property. Borrower grants to
Lender an irrevocable power of attorney coupled with an interest for the purpose
of exercising and perfecting any and all rights and remedies available to Lender
at law and in equity, including without limitation such rights and remedies
available to Lender pursuant to this Section 7.2; provided that Lender shall not
exercise such power of attorney unless Borrower fails to comply with the
provisions of this Section 7.2 for ten (10) days after notice from Lender.
Section 7.3 CHANGES IN TAX, DEBT CREDIT AND DOCUMENTARY STAMP LAWS.
(a) If any law is enacted or adopted or amended after the date of
this Security Instrument which imposes a tax, either directly or
indirectly, on the Debt or Lender's interest in the Property, requires
revenue or other stamps to be affixed to the Note, this Security
Instrument, or the Other Loan Documents, or imposes any other tax or
charge on the same, Borrower will pay the same, with interest and
penalties thereon, if any; provided, however, the foregoing shall not
apply to any income or similar taxes which are imposed on Lender. If
Lender is advised by counsel chosen by it that the payment of tax by
Borrower would be unlawful or taxable to Lender or unenforceable or
provide the basis for a defense of usury, then Lender shall have the
option, by written notice of not less than ninety (90) calendar days,
to declare the Debt immediately due and payable.
(b) Borrower will not claim or demand or be entitled to any
credit or credits on account of the Debt for any part of the Taxes or
Other Charges assessed against the Property, or any part thereof, and
no deduction shall otherwise be made or claimed from the assessed value
of the Property, or any part thereof, for real estate tax purposes by
reason of this Security Instrument or the Debt. If such claim, credit
or deduction shall be required by law, Lender shall have the option, by
written notice of not less than ninety (90) calendar days, to declare
the Debt immediately due and payable.
Section 7.4 CONFIRMATION STATEMENT.
(a) After request by Lender, Borrower, within ten (10) days,
shall furnish Lender or any proposed assignee with a statement, duly
acknowledged and certified, confirming to Lender (or its designee) (i)
the amount of the original principal amount of the Note, (ii) the
unpaid principal amount of the Note, (iii) the rate of interest of the
Note, (iv) the terms of payment and maturity date of the Note, (v) the
date installments of interest and/or principal were last paid, and (vi)
that, except as provided in such statement, there are no defaults or
events which with the passage of time or the giving of notice or both,
would constitute an event of default under the Note or this Security
29
Instrument; provided, however, Lender shall not be entitled hereunder
to receive more than one (1) such statement in each calendar year.
(b) Subject to the provisions of the Leases, Borrower shall
deliver to Lender, promptly upon request (but not more frequently than
once annually so long as Borrower is not in default hereunder), duly
executed estoppel certificates from any one or more lessees as required
by Lender attesting to such facts regarding the Lease as Lender may
require, including but not limited to attestations that each Lease
covered thereby is in full force and effect with no defaults thereunder
on the part of any party, that none of the Rents have been paid more
than one month in advance, and that the lessee claims no defense or
offset against the full and timely performance of its obligations under
the Lease.
(c) Upon any transfer or proposed transfer contemplated by
Section 16.1 hereof, at Lender's request, Borrower, any Guarantors and
any Indemnitors shall provide an estoppel certificate to the Investor
(defined in Section 16.1) or any prospective Investor in such form,
substance and detail as Lender, such Investor or prospective Investor
may require.
Section 7.5 SPLITTING OF SECURITY INSTRUMENT. This Security Instrument
and the Note shall, at any time until the same shall be fully paid and
satisfied, at the sole election of Lender, be split or divided into two or more
notes and two or more security instruments, each of which shall cover all or a
portion of the Property to be more particularly described therein. To that end,
Borrower, upon written request of Lender, shall execute, acknowledge and
deliver, or cause to be executed, acknowledged and delivered by the then owner
of the Property, to Lender and/or its designee or designees substitute notes and
security instruments in such principal amounts, aggregating not more than the
then unpaid principal amount of Debt, and containing terms, provisions and
clauses similar to those contained herein and in the Note, and such other
documents and instruments as may be required by Lender.
Section 7.6 REPLACEMENT DOCUMENTS. Upon receipt of an affidavit of an
officer of Lender as to the loss, theft, destruction or mutilation of the Note
or any Other Loan Document which is not of public record, and, in the case of
any such mutilation, upon surrender and cancellation of such Note or Other Loan
Document, Borrower, at its expense, will issue, in lieu thereof, a replacement
Note or Other Loan Document, dated the date of such lost, stolen, destroyed or
mutilated Note or Other Loan Document in the same principal amount thereof and
otherwise of like tenor.
ARTICLE 8 - DUE ON SALE/ENCUMBRANCE
Section 8.1 LENDER RELIANCE. Borrower acknowledges that Lender has
examined and relied on the creditworthiness of Borrower and experience of
Borrower and its partners, members, principals and (if Borrower is a trust)
beneficial owners in owning and operating properties such as the Property in
agreeing to make the Loan, and will continue to rely
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on Borrower's ownership of the Property as a means of maintaining the value of
the Property as security for repayment of the Debt and the performance of the
Other Obligations. Borrower acknowledges that Lender has a valid interest in
maintaining the value of the Property so as to ensure that, should Borrower
default in the repayment of the Debt or the performance of the Other
Obligations, Lender can recover the Debt by a sale of the Property.
Section 8.2 NO SALE/ENCUMBRANCE.
(a) Borrower agrees that Borrower shall not, without the prior
written consent of Lender, Transfer the Property or any part thereof or
permit the Property or any part thereof to be Transferred. Lender shall
not be required to demonstrate any actual impairment of its security or
any increased risk of default hereunder in order to declare the Debt
immediately due and payable upon Borrower's Transfer of the Property
without Lender's consent.
(b) As used in Section 8.2(a), "Transfer" shall mean any
voluntary or involuntary sale, conveyance, mortgage, grant, bargain,
encumbrance, pledge, assignment or transfer of all or any part of the
Property or any interest therein including, but not limited to: (i) an
installment sales agreement wherein Borrower agrees to sell the
Property or any part thereof for a price to be paid in installments;
(ii) an agreement by Borrower leasing all or a substantial part of the
Property for other than actual occupancy by a space tenant thereunder;
(iii) a sale, assignment or other transfer of, or the grant of a
security interest in, Borrower's right, title and interest in and to
any Leases or any Rents; (iv) if Borrower, Guarantor, or any managing
member or general partner of Borrower or Guarantor is a corporation,
any Transfer of such corporation's stock (or the stock of any
corporation directly or indirectly controlling such Borrower,
Guarantor, managing member or general partner by operation of law or
otherwise) or the creation or issuance of new stock in one or a series
of transactions by which an aggregate of forty-nine percent (49%) or
more of such corporation's stock shall directly or indirectly be vested
in or pledged to a party or parties who are not now stockholders
(provided, however, in no event shall this subpart [iv] apply to any
Guarantor whose stock or shares are traded on a nationally recognized
stock exchange); (v) if Borrower, Guarantor, or any managing member or
general partner of Borrower or Guarantor is a limited liability company
or partnership, the Transfer by which an aggregate of forty-nine
percent (49%) or more of the ownership interest in such limited
liability company or forty-nine percent (49%) or more of the
partnership interests in such partnership shall directly or indirectly
be vested in or pledged to parties not having an ownership interest as
of the date of this Security Instrument; and (vi) if Borrower, any
Guarantor or any managing member or general partner of Borrower or any
Guarantor is a partnership, limited liability company or joint venture,
the change, removal or resignation of a general partner, managing
member or joint venturer or the Transfer directly or indirectly of all
or any portion of the partnership or ownership interest of any general
partner, managing member or joint venturer.
Section 8.3 EXCLUDED AND PERMITTED TRANSFERS.
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(a) A Transfer within the meaning of this Article 8 shall not
include Transfers of Shares of WestCoast Hospitality Corporation
("WHC") for so long as WHC is a publicly-traded company. In the event
WHC is no longer a publicly-traded company, the provisions of Sections
8.2(a) and (b) shall thereafter apply to WHC. Additionally, Lender's
consent shall not be required in connection with a merger of WHLP into
WHC or the transfer to WHC of any interests held by WHLP.
(b) Intentionally Omitted.
(c) Notwithstanding the provisions of Section 8.2 above, Lender
will give its consent to three separate sales or transfers of the
Property or ownership interests in the Borrower, a general partner or
managing member of the Borrower, or any Guarantor, if (but only if) no
Event of Default under the Loan Documents has occurred and is
continuing, and if each of the following conditions precedent have been
fully satisfied (in each case as determined in Lender's sole and
absolute discretion or, in connection with the first such transfer of
the ownership interests in the sole Member of Borrower, Lender's
reasonable discretion): (i) the grantee's or transferee's integrity,
reputation, financial condition, character and management ability are
satisfactory to Lender, and all information relating thereto requested
by Lender is delivered to Lender at least 30 days prior to the proposed
transfer, (ii) the grantee's or transferee's (and its sole general
partner's or managing member's) single purpose and bankruptcy remote
character are satisfactory to Lender, and all information relating
thereto requested by Lender is delivered to Lender at least 30 days
prior to the proposed transfer, (iii) Lender has obtained such
estoppels from any guarantors of the Note or replacement guarantors and
such other legal opinions regarding substantive consolidation issues,
enforceability of the assumption documents, no adverse impact on the
Securities or any REMIC holding the Note and similar matters as Lender
may require, (iv) all of Lender's costs and expenses associated with
the sale or transfer (including reasonable attorneys' fees) are paid by
Borrower or the grantee or transferee, (v) the payment of a transfer
fee not to exceed 1% of the then unpaid principal balance of the loan
evidenced by the Note and secured hereby (the "LOAN"), except that the
first such transfer of the ownership interests in the sole member of
Borrower shall be subject to the payment of a transfer fee not to
exceed 0.5% of the then unpaid principal balance of the Loan, (vi) the
execution and delivery to Lender of a written assumption agreement
and/or substitute guaranty (in its sole and absolute discretion) and
such modifications to the Loan Documents executed by such parties and
containing such terms and conditions as Lender may require prior to
such sale or transfer (provided that in the event the Loan is included
in a REMIC and is a performing Loan, no modification to the terms and
conditions shall be made or permitted that would cause (A) any adverse
tax consequences to the REMIC or any holders of any Mortgage-Backed
Pass-Through Securities, (B) the Security Instrument to fail to be a
Qualifying Security Instrument under applicable federal law relating to
REMIC's, or (C) result in a taxation of the income from the Loan to the
REMIC or cause a loss of REMIC status), and (vii) if applicable, the
delivery to Lender of an endorsement (at Borrower's
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sole cost and expense) to Lender's policy of title insurance then
insuring the lien created by this Security Instrument in form and
substance acceptable to Lender.
(d) Without limiting the foregoing, if Lender shall consent to a
transfer of the Property, the written assumption agreement described in
Subsection 8.3(c)(vi) above shall provide for the release of Borrower
and, if approved by Lender, each Guarantor and Indemnitor of personal
liability under the Note and Other Loan Documents, but only as to acts
or events occurring, or obligations arising, after the closing of such
transfer.
Section 8.4. NO IMPLIED FUTURE CONSENT. Lender's consent to one sale,
conveyance, alienation, mortgage, encumbrance, pledge or transfer of the
Property shall not be deemed to be a waiver of Lender's right to require such
consent to any future occurrence of same. Any sale, conveyance, alienation,
mortgage, encumbrance, pledge or transfer of the Property made in contravention
of this Article 8 shall be null and void and of no force and effect.
Section 8.5 COSTS OF CONSENT. Borrower agrees to bear and shall pay or
reimburse Lender on demand for all reasonable expenses (including, without
limitation, all recording costs, reasonable attorneys' fees and disbursements
and title search costs) incurred by Lender in connection with the review,
approval and documentation of any such sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer.
Section 8.6 CONTINUING SEPARATENESS REQUIREMENTS. In no event shall any
of the terms and provisions of this Article 8 amend or modify the terms and
provisions contained in Section 4.3 herein.
Section 8.7 NON-CONSOLIDATION OPINION. If as a result of any direct or
indirect transfers of interests in Borrower (including any excluded and
permitted transfers) more than forty-nine percent (49%) in the aggregate of
direct or indirect interests in Borrower is owned by any person or entity that
owned less than a forty-nine percent (49%) direct or indirect interest in
Borrower as of the date hereof, Lender shall, as a condition to such transfer,
receive a non-consolidation opinion acceptable to it and the Rating Agencies.
ARTICLE 9 - DEFAULT
Section 9.1 EVENTS OF DEFAULT. The occurrence of any one or more of the
following events shall constitute an "EVENT OF DEFAULT":
(a) if any portion of the Debt is not paid prior to the fifth
(5th) calendar day after the same is due or if the entire Debt is not
paid on or before the maturity date, along with applicable prepayment
premiums, if any;
(b) if Borrower, or its general partner or managing member, if
applicable, violates or does not comply with the provisions of Section
4.3 in all material respects or if (i) there is a transfer of title to
the Property or any portion thereof in violation of Article 8, (ii)
there is a transfer of title to any direct or indirect interest in
Borrower in violation
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of Article 8, (iii) Borrower voluntarily breaches or permits any other
breach of Article 8, or (iv) there is any other breach of Article 8 and
such breach continues for thirty (30) calendar days after Borrower has
notice of same;
(c) if any representation or warranty of Borrower or of its
members, general partners, principals, affiliates, agents or employees,
or of any Guarantor made herein or in the Environmental Indemnity or in
any other Loan Document, in any guaranty, or in any certificate,
report, financial statement or other instrument or document furnished
to Lender shall have been false or misleading in any material respect
when made;
(d) if Borrower or any Guarantor shall make an assignment for the
benefit of creditors or if Borrower or any Guarantor shall admit in
writing its inability to pay, or Borrower's or any Guarantor's failure
to pay its debts as they become due;
(e) if (i) Borrower or any subsidiary or general partner or
managing member of Borrower, or any Guarantor shall commence any case,
proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, conservatorship or relief of debtors, seeking to have
an order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian, conservator or
other similar official for it or for all or any substantial part of its
assets, or Borrower or any subsidiary or general partner or managing
member of Borrower, or any Guarantor shall make a general assignment
for the benefit of its creditors; or (ii) there shall be commenced
against Borrower or any subsidiary or general partner or managing
member of Borrower, or any Guarantor any case, proceeding or other
action of a nature referred to in clause (i) above which (A) results in
the entry of an order for relief or any such adjudication or
appointment or (B) remains undismissed, undischarged or unbonded for a
period of sixty (60) calendar days; or (iii) there shall be commenced
against Borrower or any subsidiary or general partner or managing
member of Borrower or any Guarantor any case, proceeding or other
action seeking issuance of a warrant of attachment, execution,
distraint or similar process against all or any substantial part of its
assets which results in the entry of any order for any such relief
which shall not have been vacated, discharged, or stayed or bonded
pending appeal within sixty (60) calendar days from the entry thereof;
or (iv) Borrower or any subsidiary or general partner or managing
member of Borrower, or any Guarantor shall take any action in
furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii) or (iii)
above; or (v) Borrower or any subsidiary or general partner or managing
member of Borrower, or any Guarantor shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay its debts as
they become due;
(f) subject to Borrower's right to contest certain liens as
provided in this Security Instrument, if the Property becomes subject
to any mechanic's, materialman's or
34
other lien other than a lien for local real estate taxes and
assessments not then due and payable and the lien shall remain
undischarged of record (by payment, bonding or otherwise) for a period
of thirty (30) calendar days;
(g) if any federal tax lien is filed against Borrower, any
general partner or managing member of Borrower, any Guarantor or the
Property and same is not discharged of record within thirty (30)
calendar days after same is filed, or if any final judgment or decree
shall be entered against Borrower which is not fully insured or paid
within thirty (30) calendar days;
(h) except as permitted in this Security Instrument, the actual
or threatened demolition or removal of any of the Improvements without
the prior consent of Lender;
(i) damage to the Property in any manner which is not covered by
insurance, which lack of coverage arises solely as a result of
Borrower's failure to maintain the insurance required under this
Security Instrument;
(j) if without Lender's prior consent, the hotel manager for the
Property under the Management Agreement (or any successor management
agreement) resigns or is removed, or there is any material change in
the Management Agreement (or any successor management agreement);
(k) this Security Instrument shall cease to constitute a
first-priority lien on the Property (other than in accordance with its
terms);
(l) seizure or forfeiture of any material portion of the
Property, or Borrower's interest therein, resulting from criminal
wrongdoing or other unlawful action of Borrower, its affiliates, or any
tenant in the Property under any federal, state or local law;
(m) if Borrower consummates a transaction which would cause this
Security Instrument or Lender's exercise of its rights under this
Security Instrument, the Note or the Other Loan Documents to constitute
a nonexempt prohibited transaction under ERISA or result in a violation
of a state statute regulating governmental plans, subjecting Lender to
liability for a violation of ERISA or a state statute governing
employee benefit plans;
(n) if any default occurs under any guaranty or indemnity
including the Environmental Indemnity executed in connection herewith
and such default continues after the expiration of applicable grace
periods, or such guaranty or indemnity shall cease to be in full force
and effect, or any guarantor or indemnitor shall deny or disaffirm its
obligation thereunder;
(o) if Borrower or any Guarantor, as the case may be, shall
continue to be in default under any other term, covenant or condition
of this Security Instrument or any Other Loan Documents for thirty (30)
calendar days after notice from Lender; provided
35
that if such default cannot reasonably be cured within such thirty (30)
calendar day period and Borrower (or such Guarantor as the case may be)
shall have commenced to cure such default within such thirty (30)
calendar day period and thereafter diligently and expeditiously
proceeds to cure the same, such thirty (30) calendar day period shall
be extended for so long as it shall require Borrower (or such Guarantor
as the case may be) in the exercise of due diligence to cure such
default, it being agreed that no such extension shall be for a period
in excess of sixty (60) calendar days after the notice from Lender
referred to above;
(p) if a default has occurred and continues beyond any applicable
cure period under the Management Agreement (or any successor management
agreement) if such default permits the hotel manager to terminate or
cancel the Management Agreement (or any successor management
agreements);
(q) if without Lender's prior consent, there is any material
change in the Franchise Agreement (or any successor franchise
agreement);
(r) if a default has occurred and continues beyond any applicable
cure period under the Franchise Agreement (or any successor franchise
agreement) if such default permits the franchisor to terminate or
cancel the Franchise Agreement (or any successor franchise agreement);
and
(s) if Borrower ceases to do business as a hotel or motel on the
Property or terminates such business for any reason whatsoever (other
than temporary cessation in connection with any renovations to the
Property).
Section 9.2 DEFAULT INTEREST. Borrower will pay, from the date of an
Event of Default through the earlier of the date upon which the Event of Default
is cured or the date upon which the Debt is paid in full, interest on the unpaid
principal balance of the Note at a per annum rate equal to the lesser of (a) the
greater of (i) five percent (5%) plus the Prime Rate (as defined in the Note),
and (ii) five percent (5%) plus the Applicable Interest Rate (as defined in the
Note), and (b) the maximum interest rate which Borrower may by law pay or Lender
may charge and collect (the "DEFAULT RATE").
ARTICLE 10 - RIGHTS AND REMEDIES
Section 10.1 REMEDIES. Upon the occurrence of any Event of Default and
prior to Lender's acceptance of any cure thereof, Borrower agrees that Lender
may take such action, by or through Trustee, by Lender itself or otherwise,
without notice or demand, as it deems advisable to protect and enforce its
rights against Borrower and in and to the Property, including, but not limited
to, the following actions, each of which may be pursued concurrently or
otherwise, at such time and in such order as Lender may determine, in its sole
discretion, without impairing or otherwise affecting the other rights and
remedies of Lender:
36
(a) Right to Perform Borrower's Covenants. If Borrower has failed
to keep or perform any covenant whatsoever contained in this Security
Instrument or the Other Loan Documents, Lender may, but shall not be
obligated to any person to do so, perform or attempt to perform said
covenant and any payment made or expense incurred in the performance or
attempted performance of any such covenant, together with any sum
expended by Lender that is chargeable to Borrower or subject to
reimbursement by Borrower under the Loan Documents, shall be and become
a part of the "Debt", and Borrower promises, upon demand, to pay to
Lender, at the place where the Note is payable, all sums so incurred,
paid or expended by Lender, with interest from the date when paid,
incurred or expended by Lender at the Default Rate.
(b) Right of Entry. Lender may, prior or subsequent to the
institution of any foreclosure proceedings, enter upon the Property, or
any part thereof, and take exclusive possession of the Property and of
all books, records, and accounts relating thereto and to 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, including without limitation the right
to rent the same for the account of Borrower and to deduct from such
Rents all costs, expenses, and liabilities of every character incurred
by Lender in collecting such Rents and in managing, operating,
maintaining, protecting, or preserving the Property and to apply the
remainder of such Rents on the Debt in such manner as Lender may elect.
All such costs, expenses, and liabilities incurred by Lender in
collecting such Rents and in managing, operating, maintaining,
protecting, or preserving the Property, if not paid out of Rents as
hereinabove provided, shall constitute a demand obligation owing by
Borrower and shall bear interest from the date of expenditure until
paid at the Default Rate, all of which shall constitute a portion of
the Debt. If necessary to obtain the possession provided for above,
Lender may invoke any and all legal remedies to dispossess Borrower,
including specifically one or more actions for forcible entry and
detainer, trespass to try title, and restitution. In connection with
any action taken by Lender pursuant to this Subsection 10.1(b), 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 other
act or omission of Lender in managing the Property unless such loss is
caused by the willful misconduct of Lender, nor shall Lender be
obligated to perform or discharge any obligation, duty, or liability
under any Lease or under or by reason hereof or the exercise of rights
or remedies hereunder. Borrower shall and does hereby agree to
indemnify Lender for, and to hold Lender harmless from, any and all
liability, loss, or damage, which may or might be incurred by Lender
under any such Lease or under or by reason hereof or the exercise of
rights or remedies hereunder, and from any and all claims and demands
whatsoever which may be asserted against Lender by reason of any
alleged obligations or undertakings on its part to perform or discharge
any of the terms, covenants, or agreements contained in any such Lease.
Should Lender incur any such liability, the amount thereof, including
without limitation costs, expenses, and reasonable attorneys' fees,
together with interest thereon from the date of expenditure until paid
at the Default Rate, shall be secured hereby, and Borrower shall
reimburse Lender therefor
37
immediately upon demand. Nothing in this Subsection 10.1(b) shall
impose any duty, obligation, or responsibility upon Lender for the
control, care, management, leasing, or repair of the Property, nor for
the carrying out of any of the terms and conditions of any such Lease;
nor shall it operate to make Lender responsible or liable for any waste
committed on the Property by the tenants or by any other parties, or
for any hazardous substances or environmental conditions on or under
the Property, or for any dangerous or defective condition of the
Property or for any negligence in the management, leasing, upkeep,
repair, or control of the Property resulting in loss or injury or death
to any tenant, licensee, employee, or stranger. Borrower hereby assents
to, ratifies, and confirms any and all actions of Lender with respect
to the Property taken under this subsection.
(c) Right to Accelerate. Lender may, without notice (except as
provided in Section 9.1(o) above), demand, presentment, notice of
nonpayment or nonperformance, protest, notice of protest, notice of
intent to accelerate, notice of acceleration, or any other notice or
any other action, all of which are hereby waived by Borrower and all
other parties obligated in any manner whatsoever on the Debt, declare
the entire unpaid balance of the Debt immediately due and payable, and
upon such declaration, the entire unpaid balance of the Debt shall be
immediately due and payable.
(d) Foreclosure-Power of Sale. Lender may institute a proceeding
or proceedings, judicial, or nonjudicial, by advertisement or
otherwise, for the complete or partial foreclosure of this Security
Instrument or the complete or partial sale of the Property under power
of sale or under any applicable provision of law. Lender may, through
the Trustee, sell the Property, and all estate, right, title, interest,
claim and demand of Borrower therein, and all rights of redemption
thereof, at one or more sales, as an entirety or in parcels, with such
elements of real and/or personal property, and at such time and place
and upon such terms as it may deem expedient, or as may be required by
applicable law, and in the event of a sale, by foreclosure or
otherwise, of less than all of the Property, this Security Instrument
shall continue as a lien and security interest on the remaining portion
of the Property.
(e) Rights Pertaining to Sales. Subject to the requirements of
applicable law and except as otherwise provided herein, the following
provisions shall apply to any sale or sales of all or any portion of
the Property under or by virtue of Subsection 10.1(d) above, whether
made under the power of sale herein granted or by virtue of judicial
proceedings or of a judgment or decree of foreclosure and sale:
(i) Trustee or Lender may conduct any number of sales from
time to time. The power of sale set forth above shall not be
exhausted by any one or more such sales as to any part of the
Property which shall not have been sold, nor by any sale which is
not completed or is defective in Lender's opinion, until the Debt
shall have been paid in full.
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(ii) Any sale may be postponed or adjourned by public
announcement at the time and place appointed for such sale or for
such postponed or adjourned sale without further notice.
(iii) After each sale, Lender, Trustee or an officer of any
court empowered to do so shall execute and deliver to the
purchaser or purchasers at such sale a good and sufficient
instrument or instruments granting, conveying, assigning and
transferring all right, title and interest of Borrower in and to
the property and rights sold and shall receive the proceeds of
said sale or sales and apply the same as specified in the Note.
Each of Trustee and Lender is hereby appointed the true and
lawful attorney-in-fact of Borrower, which appointment is
irrevocable and shall be deemed to be coupled with an interest,
in Borrower's name and stead, to make all necessary conveyances,
assignments, transfers and deliveries of the property and rights
so sold, Borrower hereby ratifying and confirming all that said
attorney or such substitute or substitutes shall lawfully do by
virtue thereof. Nevertheless, Borrower, if requested by Trustee
or Lender, shall ratify and confirm any such sale or sales by
executing and delivering to Trustee, Lender or such purchaser or
purchasers all such instruments as may be advisable, in Trustee's
or Lender's judgment, for the purposes as may be designated in
such request.
(iv) Any and all statements of fact or other recitals made in
any of the instruments referred to in Subsection 10.1(e)(iii)
given by Trustee or Lender shall be taken as conclusive and
binding against all persons as to evidence of the truth of the
facts so stated and recited.
(v) Any such sale or sales shall operate to divest all of the
estate, right, title, interest, claim and demand whatsoever,
whether at law or in equity, of Borrower in and to the properties
and rights so sold, and shall be a perpetual bar both at law and
in equity against Borrower and any and all persons claiming or
who may claim the same, or any part thereof or any interest
therein, by, through or under Borrower to the fullest extent
permitted by applicable law.
(vi) Upon any such sale or sales, Lender may bid for and
acquire the Property and, in lieu of paying cash therefor, may
make settlement for the purchase price by crediting against the
Debt the amount of the bid made therefor, after deducting
therefrom the expenses of the sale, the cost of any enforcement
proceeding hereunder, and any other sums which Trustee or Lender
is authorized to deduct under the terms hereof, to the extent
necessary to satisfy such bid.
(vii) Upon any such sale, it shall not be necessary for
Trustee, Lender or any public officer acting under execution or
order of court to have present or constructively in its
possession any of the Property.
39
(f) Lender's Judicial Remedies. Lender, or Trustee upon written
request of Lender, may proceed by suit or suits, at law or in equity,
to enforce the payment of the Debt to foreclose the liens and security
interests of this Security Instrument as against all or any part of the
Property, and to have all or any part of the Property sold under the
judgment or decree of a court of competent jurisdiction. This remedy
shall be cumulative of any other nonjudicial remedies available to
Lender under this Security Instrument, the Note or the Other Loan
Documents. Proceeding with a request or receiving a judgment for legal
relief shall not be or be deemed to be an election of remedies or bar
any available nonjudicial remedy of Lender.
(g) Lender's Right to Appointment of Receiver. Lender, as a
matter of right and (i) without regard to the sufficiency of the
security for repayment of the Debt and without notice to Borrower, (ii)
without any showing of insolvency, fraud, or mismanagement on the part
of Borrower, (iii) without the necessity of filing any judicial or
other proceeding other than the proceeding for appointment of a
receiver, and (iv) without regard to the then value of the Property,
shall be entitled to the appointment of a receiver or receivers for the
protection, possession, control, management and operation of the
Property, including (without limitation), the power to collect the
Rents, enforce this Security Instrument and, in case of a sale and
deficiency, during the full statutory period of redemption (if any),
whether there be a redemption or not, as well as during any further
times when Borrower, except for the intervention of such receiver,
would be entitled to collection of such Rents. Borrower hereby
irrevocably consents to the appointment of a receiver or receivers. Any
receiver appointed pursuant to the provisions of this subsection shall
have the usual powers and duties of receivers in such matters.
(h) Commercial Code Remedies. Lender may exercise any and all
rights and remedies granted to a secured party upon default under the
Uniform Commercial Code, including, without limiting the generality of
the foregoing: (i) the right to take possession of the Personal
Property or any part thereof, and to take such other measures as Lender
may deem necessary for the care, protection and preservation of the
Personal Property, and (ii) request Borrower at its expense to assemble
the Personal Property and make it available to Lender at a convenient
place acceptable to Lender. Any notice of sale, disposition or other
intended action by Lender with respect to the Personal Property sent to
Borrower in accordance with the provisions hereof at least five (5)
days prior to such action, shall constitute commercially reasonable
notice to Borrower.
(i) Apply Escrow Funds. Lender may apply any Funds (as defined in
the Escrow Agreement) and any other sums held in escrow or otherwise by
Lender in accordance with the terms of this Security Instrument or any
Other Loan Document to the payment of the following items in any order
in its uncontrolled discretion:
(i) Taxes and Other Charges;
(ii) Insurance Premiums;
40
(iii) Interest on the unpaid principal balance of the Note;
(iv) Amortization of the unpaid principal balance of the
Note; and
(v) All other sums payable pursuant to the Note, this
Security Instrument and the Other Loan Documents, including
without limitation advances made by Lender pursuant to the terms
of this Security Instrument.
(j) Other Rights. Lender (i) may, upon notice to Borrower,
surrender the Policies maintained pursuant to this Security Instrument
or any part thereof, and upon receipt shall apply the unearned premiums
as a credit on the Debt, and, in connection therewith, Borrower hereby
appoints Lender as agent and attorney-in-fact (which is coupled with an
interest and is therefore irrevocable) for Borrower to collect such
premiums; and (ii) may apply the Tax and Insurance Escrow Fund (as
defined in the Escrow Agreement) and/or the Replacement Escrow Fund (as
defined in the Escrow Agreement) and any other funds held by Lender
toward payment of the Debt; and (iii) shall have and may exercise any
and all other rights and remedies which Lender may have at law or in
equity, or by virtue of any of the Loan Documents, or otherwise.
(k) Discontinuance of Remedies. In case Lender shall have
proceeded to invoke any right, remedy, or recourse permitted under the
Loan Documents and shall thereafter elect to discontinue or abandon
same for any reason, Lender shall have the unqualified right so to do
and, in such event, Borrower and Lender shall be restored to their
former positions with respect to the Debt, the Loan Documents, the
Property or otherwise, and the rights, remedies, recourses and powers
of Lender shall continue as if same had never been invoked.
(l) Remedies Cumulative. All rights, remedies, and recourses of
Lender granted in the Note, this Security Instrument and the Other Loan
Documents, any other pledge of collateral, or otherwise available at
law or equity: (i) shall be cumulative and concurrent; (ii) may be
pursued separately, successively, or concurrently against Borrower, the
Property, or any one or more of them, at the sole discretion of Lender;
(iii) may be exercised as often as occasion therefor shall arise, it
being agreed by Borrower that the exercise or failure to exercise any
of same shall in no event be construed as a waiver or release thereof
or of any other right, remedy, or recourse; (iv) shall be nonexclusive;
(v) shall not be conditioned upon Lender exercising or pursuing any
remedy in relation to the Property prior to Lender bringing suit to
recover the Debt; and (vi) in the event Lender elects to bring suit on
the Debt and obtains a judgment against Borrower prior to exercising
any remedies in relation to the Property, all liens and security
interests, including the lien of this Security Instrument, shall remain
in full force and effect and may be exercised thereafter at Lender's
option.
(m) Bankruptcy Acknowledgment. In the event the Property or any
portion thereof or any interest therein becomes property of any
bankruptcy estate or subject to
41
any state or federal insolvency proceeding, then Lender shall
immediately become entitled, in addition to all other relief to which
Lender may be entitled under this Security Instrument, to obtain (i) an
order from the Bankruptcy Court or other appropriate court granting
immediate relief from the automatic stay pursuant toss. 362 of the
Bankruptcy Code so to permit Lender to pursue its rights and remedies
against Borrower as provided under this Security Instrument and all
other rights and remedies of Lender at law and in equity under
applicable state law, and (ii) an order from the Bankruptcy Court
prohibiting Borrower's use of all "cash collateral" as defined underss.
363 of the Bankruptcy Code. In connection with such Bankruptcy Court
orders, Borrower shall not contend or allege in any pleading or
petition filed in any court proceeding that Lender does not have
sufficient grounds for relief from the automatic stay. Any bankruptcy
petition or other action taken by the Borrower to stay, condition, or
inhibit Lender from exercising its remedies are hereby admitted by
Borrower to be in bad faith and Borrower further admits that Lender
would have just cause for relief from the automatic stay in order to
take such actions authorized under state law.
(n) Application of Proceeds. The proceeds from any sale, lease,
or other disposition made pursuant to this Security Instrument, or the
proceeds from the surrender of any insurance policies pursuant hereto,
or any Rents collected by Lender from the Property, or the Tax and
Insurance Escrow Fund or the Replacement Escrow Fund (as defined in the
Escrow Agreement) or proceeds from insurance which Lender elects to
apply to the Debt pursuant to Article 3 hereof, shall be applied by
Trustee, or by Lender, as the case may be, to the Debt in the following
order and priority: (1) to the payment of all expenses of advertising,
selling, and conveying the Property or part thereof, and/or prosecuting
or otherwise collecting Rents, proceeds, premiums or other sums
including reasonable attorneys' fees and a reasonable fee or commission
to Trustee, not to exceed five percent of the proceeds thereof or sums
so received; (2) to that portion, if any, of the Debt with respect to
which no person or entity has personal or entity liability for payment
(the "EXCULPATED PORTION"), and with respect to the Exculpated Portion
as follows: first, to accrued but unpaid interest, second, to matured
principal, and third, to unmatured principal in inverse order of
maturity; (3) to the remainder of the Debt as follows: first, to the
remaining accrued but unpaid interest, second, to the matured portion
of principal of the Debt, and third, to prepayment of the unmatured
portion, if any, of principal of the Debt applied to installments of
principal in inverse order of maturity; (4) the balance, if any or to
the extent applicable, remaining after the full and final payment of
the Debt to the holder or beneficiary of any inferior liens covering
the Property, if any, in order of the priority of such inferior liens
(Trustee and Lender shall hereby be entitled to rely exclusively on a
commitment for title insurance issued to determine such priority); and
(5) the cash balance, if any, to the Borrower. The application of
proceeds of sale or other proceeds as otherwise provided herein shall
be deemed to be a payment of the Debt like any other payment. The
balance of the Debt remaining unpaid, if any, shall remain fully due
and owing in accordance with the terms of the Note and the other Loan
Documents.
42
Section 10.2 RIGHT OF ENTRY. Lender and its agents shall have the right
to enter and inspect the Property at all reasonable times.
ARTICLE 11 - INDEMNIFICATION; SUBROGATION
Section 11.1 GENERAL INDEMNIFICATION.
(a) Borrower shall indemnify, defend and hold Lender and Trustee
harmless against: (i) any and all claims for brokerage, leasing,
finder's or similar fees which may be made relating to the Property or
the Debt, and (ii) any and all liability, obligations, losses, damages,
penalties, claims, actions, suits, costs and expenses (including
Lender's reasonable attorneys' fees, together with reasonable appellate
counsel fees, if any) of whatever kind or nature which may be asserted
against, imposed on or incurred by Lender or Trustee in connection with
the Debt, this Security Instrument, the Property, or any part thereof,
or the exercise by Lender or Trustee of any rights or remedies granted
to it under this Security Instrument; provided, however, that nothing
herein shall be construed to obligate Borrower to indemnify, defend and
hold harmless Lender from and against any and all liabilities,
obligations, losses, damages, penalties, claims, actions, suits, costs
and expenses enacted against, imposed on or incurred by Lender by
reason of Lender's willful misconduct or gross negligence.
(b) If Lender is made a party defendant to any litigation or any
claim is threatened or brought against Lender concerning the secured
indebtedness, this Security Instrument, the Property, or any part
thereof, or any interest therein, or the construction, maintenance,
operation or occupancy or use thereof, then Lender shall notify
Borrower of such litigation or claim and Borrower shall indemnify,
defend and hold Lender harmless from and against all liability by
reason of said litigation or claims, including reasonable attorneys'
fees (together with reasonable appellate counsel fees, if any). The
right to such attorneys' fees (together with reasonable appellate
counsel fees, if any) and expenses incurred by Lender in any such
litigation or claim of the type described in this Subsection 11.1(b),
whether or not any such litigation or claim is prosecuted to judgment,
shall be deemed to have accrued on the commencement of such claim or
action and shall be enforceable whether or not such claim or action is
prosecuted to judgment. If Lender commences an action against Borrower
to enforce any of the terms hereof or to prosecute any breach by
Borrower of any of the terms hereof or to recover any sum secured
hereby, Borrower shall pay to Lender its reasonable attorneys' fees
(together with reasonable appellate counsel fees, if any) and expenses.
If Borrower breaches any term of this Security Instrument, Lender may
engage the services of an attorney or attorneys to protect its rights
hereunder, and in the event of such engagement following any breach by
Borrower, Borrower shall pay Lender reasonable attorneys' fees
(together with reasonable appellate counsel fees, if any) and expenses
incurred by Lender, whether or not an action is actually commenced
against Borrower by reason of such breach. All references to
"ATTORNEYS" in this Subsection 11.1(b) and elsewhere in this Security
Instrument shall include without limitation any attorney or law firm
engaged by Lender
43
and Lender's in-house counsel, and all references to "FEES AND
EXPENSES" in this Subsection 11.1(b) and elsewhere in this Security
Instrument shall include without limitation any fees of such attorney
or law firm and any allocation charges and allocation costs of Lender's
in-house counsel.
(c) A waiver of subrogation shall be obtained by Borrower from
its insurance carrier and, consequently, Borrower waives any and all
right to claim or recover against Lender, its officers, employees,
agents and representatives, for loss of or damage to Borrower, the
Property, Borrower's property or the property of others under
Borrower's control from any cause insured against or required to be
insured against by the provisions of this Security Instrument.
Section 11.2 ENVIRONMENTAL INDEMNIFICATION. Borrower shall, at its sole
cost and expense, protect, defend, indemnify, release and hold harmless the
Indemnified Parties from and against any and all Losses (as hereinafter defined)
imposed upon or incurred by or asserted against any Indemnified Parties (other
than those arising solely from a state of facts that first came into existence
after either (i) conveyance of all of Borrower's interest in the Property in
accordance with the provisions of Article 8 hereof or (ii) Lender acquired title
to the Property through foreclosure or a deed in lieu thereof), and directly or
indirectly arising out of or in any way relating to any one or more of the
following: (a) any presence of any Hazardous Substances (as hereinafter defined)
in, on, above, or under the Property; (b) any past, present or future Release
(as hereinafter defined) of Hazardous Substances in, on, above, under or from
the Property; (c) any activity by Borrower, any person or entity affiliated with
Borrower, and any tenant or other user of the Property in connection with any
actual, proposed or threatened use, treatment, storage, holding, existence,
disposition or other Release, generation, production, manufacturing, processing,
refining, control, management, abatement, removal, handling, transfer or
transportation to or from the Property of any Hazardous Substances at any time
located in, under, on or above the Property; (d) any activity by Borrower, any
person or entity affiliated with Borrower, and any tenant or other user of the
Property in connection with any actual or proposed Remediation (as hereinafter
defined) of any Hazardous Substances at any time located in, under, on or above
the Property, whether or not such Remediation is voluntary or pursuant to court
or administrative order, including but not limited to any removal, remedial or
corrective action; (e) any past, present or threatened non-compliance or
violations of any Environmental Law (as hereinafter defined) (or permits issued
pursuant to any Environmental Law) in connection with the Property or operations
thereon, including but not limited to any failure by Borrower, any person or
entity affiliated with Borrower, and any tenant or other user of the Property to
comply with any order of any governmental authority in connection with any
Environmental Laws; (f) the imposition, recording or filing or the future
imposition, recording or filing of any Environmental Lien (as hereinafter
defined) encumbering the Property; (g) any administrative processes or
proceedings or judicial proceedings in any way connected with any matter
addressed in this Section 11.2; and (h) any misrepresentation or inaccuracy in
any representation or warranty or material breach or failure to perform any
covenants or other obligations under the Environmental Indemnity of even date
executed by Borrower and Indemnitor.
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The term "ENVIRONMENTAL LAW" means any present and future federal,
state and local laws, statutes, ordinances, rules, regulations and the like, as
well as common law, relating to protection of human health or the environment,
relating to Hazardous Substances, relating to liability for or costs of
Remediation or prevention of Releases of Hazardous Substances or relating to
liability for or costs of other actual or threatened danger to human health or
the environment. The term "ENVIRONMENTAL LAW" includes, but is not limited to,
the following statutes, as amended, any successor thereto, and any regulations
promulgated pursuant thereto, and any state or local statutes, ordinances,
rules, regulations and the like addressing similar issues: the Comprehensive
Environmental Response, Compensation and Liability Act; the Emergency Planning
and Community Right-to-Know Act; the Hazardous Substances Transportation Act;
the Resource Conservation and Recovery Act (including but not limited to
Subtitle I relating to underground storage tanks); the Solid Waste Disposal Act;
the Clean Water Act; the Clean Air Act; the Toxic Substances Control Act; the
Safe Drinking Water Act; the Occupational Safety and Health Act; the Federal
Water Pollution Control Act; the Federal Insecticide, Fungicide and Rodenticide
Act; the Endangered Species Act; the National Environmental Policy Act; and the
River and Harbors Appropriation Act. The term "ENVIRONMENTAL LAW" also includes,
but is not limited to, any present and future federal, state and local laws,
statutes, ordinances, rules, regulations and the like, as well as common law:
conditioning transfer of property upon a negative declaration or other approval
of a governmental authority of the environmental condition of the Property;
requiring notification or disclosure of Releases of Hazardous Substances or
other environmental condition of the Property to any governmental authority or
other person or entity, whether or not in connection with transfer of title to
or interest in property; imposing conditions or requirements in connection with
permits or other authorization for lawful activity; relating to nuisance,
trespass or other causes of action related to the Property; and relating to
wrongful death, personal injury, or property or other damage in connection with
any physical condition or use of the Property.
The term "ENVIRONMENTAL LIEN" means any lien or other encumbrance
imposed pursuant to Environmental Law, whether due to any act or omission of
Borrower or any other person or entity.
The term "HAZARDOUS SUBSTANCES" means any and all substances (whether
solid, liquid or gas) defined, listed, or otherwise classified as pollutants,
hazardous wastes, hazardous substances, hazardous materials, extremely hazardous
wastes, or words of similar meaning or regulatory effect under any present or
future Environmental Laws or that may have a negative impact on human health or
the environment, including but not limited to petroleum and petroleum products,
asbestos and asbestos-containing materials, polychlorinated biphenyls, lead,
lead-based paints, radon, radioactive materials, flammables and explosives.
The term "INDEMNIFIED PARTIES" means Lender, any person or entity who
is or will have been involved in originating the Loan evidenced by the Note, any
person or entity who is or will have been involved in servicing the Loan, any
person or entity in whose name the encumbrance created by this Security
Instrument is or will have been recorded, persons and entities who may hold or
acquire or will have held a full or partial interest in the Loan (including but
not limited to
45
those who may acquire any interest in Securities, as well as custodians,
trustees and other fiduciaries who hold or have held a full or partial interest
in the Loan for the benefit of third parties), as well as the respective
directors, officers, shareholders, partners, employees, agents, servants,
representatives, contractors, subcontractors, affiliates, subsidiaries,
participants, any other person or entity who holds or acquires or will have held
a participation or other full or partial interest in the Loan or the Property,
whether during the term of the Loan or as part of or following foreclosure
pursuant to the Loan) and including but not limited to any successors by merger,
consolidation or acquisition of all or a substantial part of Lender's assets and
business.
The term "LOSSES" means any claims, suits, liabilities (including but
not limited to strict liabilities), administrative or judicial actions or
proceedings, obligations, debts, damages, losses, costs, expenses, diminutions
in value, fines, penalties, charges, fees, expenses, costs of Remediation
(whether or not performed voluntarily), judgments, award, amounts paid in
settlement, foreseeable and unforeseeable consequential damages, litigation
costs, attorneys' fees, engineer's fees, environmental consultants' fees and
investigation costs (including but not limited to costs for sampling, testing
and analysis of soil, water, air, building materials, and other materials and
substances whether solid, liquid or gas), of whatever kind or nature, and
whether or not incurred in connection with any judicial or administrative
proceedings.
The term "RELEASE" with respect to any Hazardous Substance means any
release, deposit, discharge, emission, leaking, leaching, spilling, seeping,
migrating, injecting, pumping, pouring, emptying, escaping, dumping, disposing
or other movement of Hazardous Substances.
The term "REMEDIATION" means any response, remedial, removal, or
corrective action; any activity to cleanup, detoxify, decontaminate, contain or
otherwise remediate any Hazardous Substance; any actions to prevent, cure or
mitigate any Release of any Hazardous Substance; any action to comply with any
Environmental Laws or with any permits issued pursuant thereto; any inspection,
investigation, study, monitoring, assessment, audit, sampling and testing,
laboratory or other analysis, or evaluation relating to any Hazardous Substances
or to anything referred to in this Article 11.
Section 11.3 DUTY TO DEFEND AND ATTORNEYS AND OTHER FEES AND EXPENSES.
Upon written request by any Indemnified Party, Borrower shall defend such
Indemnified Party (if requested by any Indemnified Party, in the name of the
Indemnified Party) by attorneys and other professionals approved by the
Indemnified Parties. Borrower shall not be liable for the expenses of more than
one separate counsel unless an Indemnified Party shall have reasonably concluded
that there are legal defenses available to it that are different from or
additional to those available to another Indemnified Party. Notwithstanding the
foregoing, any Indemnified Parties may, in their sole and absolute discretion,
engage their own attorneys and other professionals to defend or assist them,
and, at the option of Indemnified Parties, their attorneys shall control the
resolution of claim or proceeding; provided, however, that neither an
Indemnified Party nor its counsel shall have any right to settle or compromise
any claims covered by the indemnification set forth herein without the prior
written consent of Borrower, such consent not to be unreasonably withheld,
conditioned or delayed. Upon demand, Borrower
46
shall pay or, in the sole and absolute discretion of the Indemnified Parties,
reimburse, the Indemnified Parties for the payment of reasonable fees and
disbursements of attorneys, engineers, environmental consultants, laboratories
and other professionals in connection therewith.
Section 11.4 SURVIVAL OF INDEMNITIES. Notwithstanding any provision of
this Security Instrument or any other Loan Document to the contrary, the
provisions of Section 11.1 and Section 11.2, and Borrower's obligations
thereunder, shall survive (a) the repayment of the Note, (b) the foreclosure of
this Security Instrument, and (c) the release (or reconveyance, as applicable)
of the lien of this Security Instrument.
ARTICLE 12 - SECURITY AGREEMENT
Section 12.1 SECURITY AGREEMENT. This Security Instrument is both a
real property mortgage and a "security agreement" within the meaning of the
Uniform Commercial Code. The Property includes both real and personal property
and all other rights and interests, whether tangible or intangible in nature, of
Borrower in the Property. Borrower by executing and delivering this Security
Instrument has granted and hereby grants to Lender, as security for the
Obligations, a security interest in the Property to the full extent that the
Property may be subject to the Uniform Commercial Code (said portion of the
Property so subject to the Uniform Commercial Code being called in this
paragraph the "COLLATERAL"). Borrower hereby agrees with Lender to execute and
deliver to Lender, in form and substance satisfactory to Lender, such financing
statements, continuation statements, other uniform commercial code forms and
shall pay all expenses and fees in connection with the filing and recording
thereof, and such further assurances as Lender may from time to time, reasonably
consider necessary to create, perfect, and preserve Lender's security interest
herein granted. This Security Instrument shall also constitute a "fixture
filing" for the purposes of the Uniform Commercial Code. All or part of the
Property are or are to become fixtures. Information concerning the security
interest herein granted may be obtained from the parties at the addresses of the
parties set forth in the first paragraph of this Security Instrument. If an
Event of Default shall occur, Lender, in addition to any other rights and
remedies which they may have, shall have and may exercise immediately and
without demand, any and all rights and remedies granted to a secured party upon
default under the Uniform Commercial Code, including, without limiting the
generality of the foregoing, the right to take possession of the Collateral or
any part thereof, and to take such other measures as Lender may deem necessary
for the care, protection and preservation of the Collateral. Upon request or
demand of Lender, Borrower shall at its expense assemble the Collateral and make
it available to Lender at a convenient place acceptable to Lender. Borrower
shall pay to Lender on demand any and all expenses, including legal expenses and
attorneys' fees, incurred or paid by Lender in protecting the interest in the
Collateral and in enforcing the rights hereunder with respect to the Collateral.
Any notice of sale, disposition or other intended action by Lender with respect
to the Collateral sent to Borrower in accordance with the provisions hereof at
least five (5) days prior to such action, shall constitute commercially
reasonable notice to Borrower. The proceeds of any disposition of the
Collateral, or any part thereof, may be applied by Lender to the payment of the
Obligations in such priority and proportions as Lender in its discretion shall
47
deem proper. In the event of any change in name, identity or structure of any
Borrower, such Borrower shall notify Lender thereof, and promptly after request
shall execute, file and record such Uniform Commercial Code forms as are
necessary to maintain the priority of Lender's lien upon and security interest
in the Collateral, and shall pay all expenses and fees in connection with the
filing and recording thereof. If Lender shall require the filing or recording of
additional Uniform Commercial Code forms or continuation statements, Borrower
shall, promptly after request, execute, file and record such Uniform Commercial
Code forms or continuation statements as Lender shall deem necessary, and shall
pay all expenses and fees in connection with the filing and recording thereof it
being understood and agreed, however, that no such additional documents shall
increase Borrower's obligations under the Note, this Security Instrument and the
Other Loan Documents. Borrower hereby irrevocably appoints Lender as its
attorney-in-fact, coupled with an interest, to file with the appropriate public
office on its behalf any financing or other statements signed only by Lender, as
Borrower's attorney-in-fact, in connection with the Collateral covered by this
Security Instrument. Notwithstanding the foregoing, Borrower shall appear and
defend in any action or proceeding which affects or purports to affect the
Property and any interest or right therein, whether such proceeding effects
title or any other rights in the Property (and in conjunction therewith,
Borrower shall fully cooperate with Lender in the event Lender is a party to
such action or proceeding).
ARTICLE 13 - WAIVERS
Section 13.1 MARSHALLING AND OTHER MATTERS. Borrower hereby waives, to
the extent permitted by law, the benefit of all appraisement, valuation, stay,
extension, reinstatement and redemption laws now or hereafter in force and all
rights of marshalling in the event of any sale hereunder of the Property or any
part thereof or any interest therein. Further, Borrower hereby expressly waives
any and all rights of redemption from sale under any order or decree of
foreclosure of this Security Instrument on behalf of Borrower, and on behalf of
each and every person acquiring any interest in or title to the Property
subsequent to the date of this Security Instrument and on behalf of all persons
to the extent permitted by applicable law.
Section 13.2 WAIVER OF NOTICE. Borrower shall not be entitled to any
notices of any nature whatsoever from Lender except with respect to matters for
which this Security Instrument specifically and expressly provides for the
giving of notice by Lender to Borrower and except with respect to matters for
which Lender is required by applicable law to give notice, and Borrower hereby
expressly waives the right to receive any notice from Lender with respect to any
matter for which this Security Instrument does not specifically and expressly
provide for the giving of notice by Lender to Borrower.
Section 13.3 SOLE DISCRETION OF LENDER. Wherever pursuant to this
Security Instrument Lender exercises any right given to it to approve or
disapprove, or any arrangement or term is to be satisfactory to Lender, the
decision of Lender to approve or disapprove or to decide that arrangements or
terms are satisfactory or not satisfactory shall be in the sole discretion of
Lender and shall be final and conclusive, except as may be otherwise expressly
and specifically provided herein.
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Section 13.4 SURVIVAL. The indemnifications made pursuant to Article
11, shall continue indefinitely in full force and effect and shall survive and
shall in no way be impaired by: any satisfaction or other termination of this
Security Instrument, any assignment or other transfer of all or any portion of
this Security Instrument or Lender's interest in the Property (but, in such
case, shall benefit both Indemnified Parties and any assignee or transferee),
any exercise of Lender's rights and remedies pursuant hereto including but not
limited to foreclosure or acceptance of a deed in lieu of foreclosure, any
exercise of any rights and remedies pursuant to the Note or any of the Other
Loan Documents, any transfer of all or any portion of the Property (whether by
Borrower or by Lender following foreclosure or acceptance of a deed in lieu of
foreclosure or at any other time), any amendment to this Security Instrument,
the Note or the Other Loan Documents, and any act or omission that might
otherwise be construed as a release or discharge of Borrower from the
obligations pursuant hereto.
Section 13.5 WAIVER OF TRIAL BY JURY.
BORROWER HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE
TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE
EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS
SECURITY INSTRUMENT, THE NOTE OR THE OTHER LOAN DOCUMENTS, OR ANY CLAIM,
COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH INCLUDING, BUT NOT
LIMITED TO THOSE RELATING TO (A) ALLEGATIONS THAT A PARTNERSHIP EXISTS BETWEEN
LENDER AND BORROWER; (B) USURY OR PENALTIES OR DAMAGES THEREFOR; (C) ALLEGATIONS
OF UNCONSCIONABLE ACTS, DECEPTIVE TRADE PRACTICE, LACK OF GOOD FAITH OR FAIR
DEALING, LACK OF COMMERCIAL REASONABLENESS, OR SPECIAL RELATIONSHIPS (SUCH AS
FIDUCIARY, TRUST OR CONFIDENTIAL RELATIONSHIP); (D) ALLEGATIONS OF DOMINION,
CONTROL, ALTER EGO, INSTRUMENTALITY, FRAUD, REAL ESTATE FRAUD,
MISREPRESENTATION, DURESS, COERCION, UNDUE INFLUENCE, INTERFERENCE OR
NEGLIGENCE; (E) ALLEGATIONS OF TORTIOUS INTERFERENCE WITH PRESENT OR PROSPECTIVE
BUSINESS RELATIONSHIPS OR OF ANTITRUST; OR (F) SLANDER, LIBEL OR DAMAGE TO
REPUTATION. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND
VOLUNTARILY BY BORROWER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE
AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE.
LENDER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING
AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY BORROWER.
Section 13.6 WAIVER OF AUTOMATIC OR SUPPLEMENTAL STAY. In the event of
the filing of any voluntary or involuntary petition under the Bankruptcy Code by
or against Borrower (other than an involuntary petition filed by or joined in by
Lender), the Borrower shall not assert, or request any other party to assert,
that the automatic stay under ss. 362 of the
49
Bankruptcy Code shall operate or be interpreted to stay, interdict, condition,
reduce or inhibit the ability of Lender to enforce any rights it has by virtue
of this Security Instrument, or any other rights that Lender has, whether now or
hereafter acquired, against any guarantor of the Debt. Further, Borrower shall
not seek a supplemental stay or any other relief, whether injunctive or
otherwise, pursuant to ss. 105 of the Bankruptcy Code or any other provision
therein to stay, interdict, condition, reduce or inhibit the ability of Lender
to enforce any rights it has by virtue of this Security Instrument against any
guarantor of the Debt. The waivers contained in this paragraph are a material
inducement to Lender's willingness to enter into this Security Instrument and
Borrower acknowledges and agrees that no grounds exist for equitable relief
which would bar, delay or impede the exercise by Lender of Lender's rights and
remedies against Borrower or any guarantor of the Debt.
ARTICLE 14 - NOTICES
Section 14.1 NOTICES. All notices or other written communications
hereunder shall be deemed to have been properly given (i) upon delivery, if
delivered in person or by facsimile transmission with receipt acknowledged, (ii)
one (1) Business Day after having been deposited for overnight delivery with any
reputable overnight courier service, or (iii) three (3) Business Days after
having been deposited in any post office or mail depository regularly maintained
by the U.S. Postal Service and sent by registered or certified mail, postage
prepaid, addressed as follows:
If to Borrower: West Coast Grand Hotel
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Executive Offices
Facsimile No.: (000) 000-0000
With a copy to: WestCoast Hospitality Limited Partnership
c/o WestCoast Hospitality Corporation
000 X. Xxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Chief Financial Officer
Facsimile No.: (000) 000-0000
With a copy to: Xxxxxxx Xxxxxxxx X.X.
0000 Xxxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxx Xxxxxx, Esq.
Facsimile No.: (206) 389 - 1708
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If to Lender: Xxxxxx Guaranty Trust Company of New York
c/o X.X. Xxxxxx Mortgage Capital, Inc.
000 Xxxxxxxxx Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: L. Xxxxxx Register, Jr.
Facsimile No.: (000) 000-0000
With a copy to: Dechert
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxx X. Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
or addressed as such party may from time to time designate by written notice to
the other parties. For purposes of this subsection, the term "BUSINESS DAY"
shall mean a day on which commercial banks are not authorized or required by law
to close in New York, New York.
Any party by notice to the other parties may designate additional or
different addresses for subsequent notices or communications.
ARTICLE 15 - APPLICABLE LAW
Section 15.1 GOVERNING LAW; JURISDICTION. This Security Instrument
shall be governed by and construed in accordance with applicable federal law and
the laws of the state where the Property is located, without reference or giving
effect to any choice of law doctrine. Borrower hereby irrevocably submits to the
jurisdiction of any court of competent jurisdiction located in the state in
which the Property is located in connection with any proceeding arising out of
or relating to this Security Instrument.
Section 15.2 USURY LAWS. This Security Instrument and the Note are
subject to the express condition that at no time shall Borrower be obligated or
required to pay interest on the Debt at a rate which could subject the holder of
the Note to either civil or criminal liability as a result of being in excess of
the maximum interest rate which Borrower is permitted by applicable law to
contract or agree to pay. If by the terms of this Security Instrument or the
Note, Borrower is at any time required or obligated to pay interest on the Debt
at a rate in excess of such maximum rate, the rate of interest under the
Security Instrument and the Note shall be deemed to be immediately reduced to
such maximum rate and the interest payable shall be computed at such maximum
rate and all prior interest payments in excess of such maximum rate shall be
applied and shall be deemed to have been payments in reduction of the principal
balance of the Note. All sums paid or agreed to be paid to Lender for the use,
forbearance, or detention of the Debt shall, to the extent permitted by
applicable law, be amortized, prorated, allocated, and spread throughout the
full stated term of the Note until payment in full so that the rate or amount
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of interest on account of the Debt does not exceed the maximum lawful rate of
interest from time to time in effect and applicable to the Debt for so long as
the Debt is outstanding.
Section 15.3 PROVISIONS SUBJECT TO APPLICABLE LAW. All rights, powers
and remedies provided in this Security Instrument may be exercised only to the
extent that the exercise thereof does not violate any applicable provisions of
law and are intended to be limited to the extent necessary so that they will not
render this Security Instrument invalid, unenforceable or not entitled to be
recorded, registered or filed under the provisions of any applicable law. If any
term of this Security Instrument or any application thereof shall be invalid or
unenforceable, the remainder of this Security Instrument and any other
application of the term shall not be affected thereby.
ARTICLE 16 - SECONDARY MARKET
Section 16.1 TRANSFER OF LOAN. Lender may, at any time, sell, transfer
or assign the Note, this Security Instrument and the Other Loan Documents, and
any or all servicing rights with respect thereto, or grant participations
therein or issue mortgage pass-through certificates or other securities
evidencing a beneficial interest in a rated or unrated public offering or
private placement (the "SECURITIES"). Lender may forward to each purchaser,
transferee, assignee, servicer, participant, investor in such Securities or any
Rating Agency rating such Securities (collectively, the "INVESTOR") and each
prospective Investor, all documents and information which Lender now has or may
hereafter acquire relating to the Debt and to Borrower, any Guarantor, any
Indemnitor and the Property, whether furnished by Borrower, any Guarantor, any
Indemnitor or otherwise, as Lender determines necessary or desirable. The term
"RATING AGENCY" shall mean each statistical rating agency that has assigned a
rating to the Securities.
ARTICLE 17 - COSTS
Section 17.1 PERFORMANCE AT BORROWER'S EXPENSE. Borrower acknowledges
and confirms that Lender shall impose certain administrative processing and/or
commitment fees in connection with (a) the extension, renewal, modification,
amendment and termination (excluding the scheduled maturity of the Note) of its
loans, (b) the release or substitution of collateral therefor, or (c) obtaining
certain consents, waivers and approvals with respect to the Property (the
occurrence of any of the above shall be called an "EVENT"). Borrower hereby
acknowledges and agrees to pay, immediately, upon demand, all such fees (as the
same may be increased or decreased from time to time), and any additional fees
of a similar type or nature which may be imposed by Lender from time to time,
upon the occurrence of any Event.
Section 17.2 ATTORNEY'S FEES FOR ENFORCEMENT. (a) Borrower shall pay
all legal fees incurred by Lender in connection with (i) the preparation of the
Note, this Security Instrument and the Other Loan Documents and (ii) the items
set forth in Section 17.1 above, and (b) Borrower shall pay to Lender on demand
any and all expenses, including legal expenses and attorneys' fees, incurred or
paid by Lender in protecting its interest in the Property or Personal
52
Property and/or collecting any amount payable or in enforcing its rights
hereunder with respect to the Property or Personal Property, whether or not any
legal proceeding is commenced hereunder or thereunder and whether or not any
default or Event of Default shall have occurred and is continuing, together with
interest thereon at the Default Rate from the date of payment or incurring by
Lender until paid by Borrower.
ARTICLE 18 - DEFINITIONS
Section 18.1 GENERAL DEFINITIONS. Unless the context clearly indicates
a contrary intent or unless otherwise specifically provided herein, words used
in this Security Instrument may be used interchangeably in singular or plural
form and the word "BORROWER" shall mean "each Borrower and any subsequent owner
or owners of the Property or any part thereof or any interest therein," the word
"LENDER" shall mean "Lender and any subsequent holder of the Note," the word
"NOTE" shall mean "the Note and any other evidence of indebtedness secured by
this Security Instrument," the word "PERSON" shall include an individual,
corporation, partnership, trust, unincorporated association, government,
governmental authority, and any other entity, the word "PROPERTY" shall include
any portion of the Property and any interest therein, and the phrases
"ATTORNEYS' FEES," "LEGAL fees" and "COUNSEL FEES" shall include any and all
attorneys', paralegal and law clerk fees and disbursements, including, but not
limited to, fees and disbursements at the pre-trial, trial and appellate levels
incurred or paid by Lender in protecting its interest in the Property, the
Leases and the Rents and enforcing its rights hereunder.
ARTICLE 19 - MISCELLANEOUS PROVISIONS
Section 19.1 NO ORAL CHANGE. This Security Instrument, the Note, and
the Other Loan Documents and any provisions hereof or thereof, may not be
modified, amended, waived, extended, changed, discharged or terminated orally or
by any act or failure to act on the part of Borrower or Lender, but only by an
agreement in writing signed by the party against whom enforcement of any
modification, amendment, waiver, extension, change, discharge or termination is
sought.
Section 19.2 LIABILITY. If Borrower consists of more than one person,
the obligations and liabilities of each such person hereunder shall be joint and
several. This Security Instrument shall be binding upon and inure to the benefit
of Borrower and Lender and their respective successors and assigns forever.
Section 19.3 INAPPLICABLE PROVISIONS. If any term, covenant or
condition of the Note or this Security Instrument is held to be invalid, illegal
or unenforceable in any respect, the Note and this Security Instrument shall be
construed without such provision.
Section 19.4 HEADINGS, ETC. The headings and captions of various
Sections of this Security Instrument are for convenience of reference only and
are not to be construed as defining or limiting, in any way, the scope or intent
of the provisions hereof.
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Section 19.5 DUPLICATE ORIGINALS; COUNTERPARTS. This Security
Instrument may be executed in any number of duplicate originals and each
duplicate original shall be deemed to be an original. This Security Instrument
may be executed in several counterparts, each of which counterparts shall be
deemed an original instrument and all of which together shall constitute a
single Security Instrument. The failure of any party hereto to execute this
Security Instrument, or any counterpart hereof, shall not relieve the other
signatories from their obligations hereunder.
Section 19.6 NUMBER AND GENDER. Whenever the context may require, any
pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns and pronouns shall include the
plural and vice versa.
Section 19.7 SUBROGATION. If any or all of the proceeds of the Note
have been used to extinguish, extend or renew any indebtedness heretofore
existing against the Property, then, to the extent of the funds so used, Lender
shall be subrogated to all of the rights, claims, liens, titles, and interests
existing against the Property heretofore held by, or in favor of, the holder of
such indebtedness and such former rights, claims, liens, titles, and interests,
if any, are not waived but rather are continued in full force and effect in
favor of Lender and are merged with the lien and security interest created
herein as cumulative security for the repayment of the Debt, the performance and
discharge of Borrower's obligations hereunder, under the Note and the Other Loan
Documents and the performance and discharge of the Other Obligations.
Section 19.8 ENTIRE AGREEMENT. The Note, this Security Instrument and
the Other Loan Documents constitute the entire understanding and agreement
between Borrower and Lender with respect to the transactions arising in
connection with the Debt and supersede all prior written or oral understandings
and agreements between Borrower and Lender with respect thereto. Borrower hereby
acknowledges that, except as incorporated in writing in the Note, this Security
Instrument and the Other 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 transaction which is the subject of the Note, this Security
Instrument and the Other Loan Documents.
Section 19.9 RECONVEYANCE. Upon payment of all sums secured by this
Instrument and satisfaction of all obligations under the Loan Documents, Lender
shall request Trustee to reconvey the Property and shall surrender this
Instrument and all notes evidencing indebtedness secured by this Instrument to
Trustee. Trustee shall reconvey the Property without warranty to the person or
persons legally entitled thereto. Such person or persons shall pay Trustee's
reasonable costs incurred in so reconveying the Property.
Section 19.10 ACCEPTANCE OF CURE. No provision of the Note, this
Security Instrument and the Other Loan Documents which provide that a remedy,
right or power of Lender exists only during the existence or of continuance of
an Event of Default shall be construed as a imposing any obligation of Lender to
accept any cure, or impair any such remedy,
54
right or power unless and until Lender, in its sole and absolute discretion,
elects in writing to accept a cure.
ARTICLE 20 - TRUSTEE
Trustee may resign by the giving of notice of such resignation in
writing or verbally to Lender. If Trustee shall die, resign, or become
disqualified from acting in the execution of this trust, or if, for any reason,
Lender shall prefer to appoint a substitute trustee or multiple substitute
trustees, or successive substitute trustees or successive multiple substitute
trustees, to act instead of the aforenamed Trustee, Lender shall have full power
to appoint a substitute trustee (or, if preferred, multiple substitute trustees)
in succession who shall succeed (and if multiple substitute trustees are
appointed, each of such multiple substitute trustees shall succeed) to all the
estates, rights, powers, and duties of the aforenamed Trustee. Such appointment
may be executed by any authorized agent of Lender, and if such Lender be a
corporation and such appointment be executed in its behalf by any officer of
such corporation, such appointment shall be conclusively presumed to be executed
with authority and shall be valid and sufficient without proof of any action by
the board of directors or any superior officer of the corporation. Borrower
hereby ratifies and confirms any and all acts which the aforenamed Trustee, or
his successor or successors in this trust, shall do lawfully by virtue hereof.
If multiple substitute Trustees are appointed, each of such multiple substitute
Trustees shall be empowered and authorized to act alone without the necessity of
the joinder of the other multiple substitute trustees, whenever any action or
undertaking of such substitute trustees is requested or required under or
pursuant to this Security Instrument or applicable law. Any substitute Trustee
appointed pursuant to any of the provisions hereof shall, without any further
act, deed, or conveyance, become vested with all the estates, properties,
rights, powers, and trusts of its or his predecessor in the rights hereunder
with like effect as if originally named as Trustee herein; but nevertheless,
upon the written request of Lender or of the substitute Trustee, the Trustee
ceasing to act shall execute and deliver any instrument transferring to such
substitute Trustee, upon the trusts herein expressed, all the estates,
properties, rights, powers, and trusts of the Trustee so ceasing to act, and
shall duly assign, transfer and deliver any of the property and moneys held by
such Trustee to the substitute Trustee so appointed in the Trustee's place. No
fees or expenses shall be payable to Trustee, except in connection with a
foreclosure of the Property or any part thereof or in connection with the
release of the Property following payment in full of the Debt.
ARTICLE 21 - SPECIAL STATE OF WASHINGTON PROVISIONS
Section 21.1 Use of Property. The Property is not used principally for
agricultural or farming purposes.
Section 21.2 If Lender invokes the power of sale, Lender shall give
written notice to Trustee of the occurrence of a Event of Default and of
Lender's election to cause the Property to be sold. Trustee and Lender shall
give such notices as the applicable laws may require to Borrower and to such
other persons as the applicable laws prescribe, and after the lapse of such time
as may be required by applicable law, Trustee shall sell the Property according
to the
55
applicable laws. Trustee may sell the Property at the time and place and under
the terms designated in the notice of sale in one or more parcels and in such
order as Trustee may determine. Trustee may postpone sale of all or any parcel
of the Property for a period or periods not exceeding the periods permitted by
applicable law by taking the actions prescribed by applicable law. Lender or
Lender's designee may purchase the Property at any sale.
Section 21.3 ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND
CREDIT, OR TO FORBEAR FROM ENFORCING PAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER
WASHINGTON LAW.
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IN WITNESS WHEREOF, THIS SECURITY INSTRUMENT has been executed by
Borrower the day and year first above written.
BORROWER:
WHC809, LLC, a Delaware limited liability
company
By: ____________________________
Name:
Title:
State of Washington )
) ss
County of __________________ )
I hereby certify that I know or have satisfactory evidence that
___________________, in his capacity as ___________ of WHC809, LLC, a Delaware
limited liability company, is the person who appeared before me and said person
acknowledged that (he/she) signed this instrument and acknowledged it to be
(his/her) free and voluntary act, on behalf of the limited liability company,
for the uses and purposes mentioned in the instrument.
(Seal)
Dated: ____________________
-----------------------------------------
Notary Public
Serial number:
My appointment expires ________________
EXHIBIT A
(Description of Land)
All of that certain lot, piece or parcel of land, with the buildings
and improvements thereon, situate, lying and being described as follows:
A - 1
