EXHIBIT 10.8
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
XXXXX XXXXXXX XXXX XXXXXX
& XXXXXXX LLP
0000 Xxxxxx xx xxx Xxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxx, Esq.
================================================================================
(Space Above For Recorder's Use)
XXXXXXX REIT OPERATING PARTNERSHIP II, L.P., as trustor
(Borrower)
to
HOUSTON TITLE COMPANY, as trustee
(Trustee) for the benefit of
GMAC COMMERCIAL MORTGAGE CORPORATION,
as beneficiary
(Lender)
----------
DEED OF TRUST AND
SECURITY AGREEMENT
----------
Dated: December 20, 2002
TABLE OF CONTENTS
PAGE
----
ARTICLE 1 GRANTS OF SECURITY.............................................. 1
Section 1.1 Property Mortgaged..................................... 1
Section 1.2 Assignment of Leases and Rents......................... 4
Section 1.3 Security Agreement..................................... 4
Section 1.4 Pledge of Monies Held.................................. 4
ARTICLE 2 ARTICLE 2 DEBT AND OBLIGATIONS SECURED.......................... 5
Section 2.1 Debt................................................... 5
Section 2.2 Other Obligations...................................... 5
Section 2.3 Debt and Other Obligations............................. 5
Section 2.4 Payments............................................... 6
ARTICLE 3 BORROWER COVENANTS.............................................. 6
Section 3.1 Payment of Debt........................................ 6
Section 3.2 Incorporation by Reference............................. 6
Section 3.3 Insurance.............................................. 6
Section 3.4 Payment of Taxes, Etc.................................. 11
Section 3.5 Escrow Fund............................................ 12
Section 3.6 Condemnation........................................... 13
Section 3.7 Xxxxxx and Rents....................................... 13
Section 3.8 Maintenance of Property................................ 14
Section 3.9 Waste.................................................. 14
Section 3.10 Compliance With Laws................................... 14
Section 3.11 Books and Records...................................... 15
Section 3.12 Payment For Labor and Materials........................ 17
Section 3.13 Performance of Other Agreements........................ 17
Section 3.14 Change of Name, Identity or Structure.................. 17
Section 3.15 Existence.............................................. 17
Section 3.16 Non-Consolidation Opinion.............................. 17
ARTICLE 4 SPECIAL COVENANTS............................................... 17
Section 4.1 Property Use........................................... 17
Section 4.2 ERISA.................................................. 18
Section 4.3 Single Purpose Entity.................................. 18
Section 4.4 Restoration After Casualty/Condemnation................ 21
ARTICLE 5 REPRESENTATIONS AND WARRANTIES.................................. 26
Section 5.1 Warranty of Title...................................... 26
Section 5.2 Authority.............................................. 26
Section 5.3 Legal Status and Authority............................. 27
Section 5.4 Validity of Documents.................................. 27
Section 5.5 Litigation............................................. 27
Section 5.6 Status of Property..................................... 27
(i)
Section 5.7 No Foreign Person...................................... 29
Section 5.8 Separate Tax Lot....................................... 29
Section 5.9 ERISA Compliance....................................... 29
Section 5.10 Leases................................................. 29
Section 5.11 Financial Condition.................................... 30
Section 5.12 Business Purposes...................................... 30
Section 5.13 Taxes.................................................. 30
Section 5.14 Mailing Address........................................ 30
Section 5.15 No Change in Facts or Circumstances.................... 30
Section 5.16 Disclosure............................................. 30
Section 5.17 Third Party Representations............................ 30
Section 5.18 Illegal Activity....................................... 30
Section 5.19 Non-Consolidation Opinion Assumptions.................. 31
Section 5.20 Federal Reserve Regulations............................ 31
Section 5.21 Investment Company Act................................. 31
ARTICLE 6 DEBTOR/CREDITOR RELATIONSHIP.................................... 31
Section 6.1 Relationship of Borrower and Lender.................... 31
Section 6.2 Servicing of the Loan.................................. 31
ARTICLE 7 FURTHER ASSURANCE............................................... 31
Section 7.1 Recording of Security Instrument, Etc.................. 31
Section 7.2 Further Acts, Etc...................................... 32
Section 7.3 Changes in Tax, Debt Credit and Documentary Stamp Laws. 32
Section 7.4 Estoppel Certificates.................................. 33
Section 7.5 Flood Insurance........................................ 34
Section 7.6 Splitting of Security Instrument....................... 34
Section 7.7 Replacement Documents.................................. 34
Section 7.8 Financing Statements................................... 34
ARTICLE 8 DUE ON SALE/ENCUNIBRANCE........................................ 34
Section 8.1 No Sale/Encumbrance.................................... 34
Section 8.2 Sale/Encumbrance Defined............................... 35
Section 8.3 Lender's Rights........................................ 36
ARTICLE 9 PREPAYMENT...................................................... 36
Section 9.1 Prepayment Only in Accordance with Note................ 36
ARTICLE 10 DEFAULT........................................................ 36
Section 10.1 Events of Default...................................... 36
ARTICLE 11 RIGHTS AND REMEDIES............................................ 38
Section 11.1 Remedies............................................... 38
Section 11.2 Application of Proceeds................................ 41
Section 11.3 Right to Cure Defaults................................. 41
Section 11.4 Actions and Proceedings................................ 42
Section 11.5 Recovery of Sums Required To Be Paid................... 42
(ii)
Section 11.6 Examination of Books and Records....................... 42
Section 11.7 Other Rights, Etc...................................... 42
Section 11.8 Right to Release Any Portion of the Property........... 43
Section 11.9 Violation of Laws...................................... 43
Section 11.10 of Entry............................................... 43
ARTICLE 12 ENVIRONMENTAL HAZARDS.......................................... 43
Section 12.1 Environmental Representations and Warranties........... 43
Section 12.2 Environmental Covenants................................ 45
Section 12.3 Lender's Rights........................................ 46
ARTICLE 13 INDEMNIFICATION................................................ 46
Section 13.1 General Indemnification................................ 46
Section 13.2 Mortgage and/or Intangible Tax......................... 47
Section 13.3 ERISA Indemnification.................................. 47
Section 13.4 Environmental Indemnification.......................... 48
Section 13.5 Duty to Defend; Attorneys' Fees and Other Fees and
Expenses .............................................. 49
ARTICLE 14 WAIVERS........................................................ 49
Section 14.1 Waiver of Counterclaim................................. 49
Section 14.2 Marshaling and Other Matters........................... 49
Section 14.3 Waiver of Notice....................................... 49
Section 14.4 Waiver of Statute of Limitations....................... 49
Section 14.5 Sole Discretion of Lender.............................. 49
Section 14.6 Survival............................................... 50
Section 14.7 Waiver of Trial By Jury................................ 50
ARTICLE 15 EXCULPATION.................................................... 50
Section 15.1 Exculpation............................................ 50
Section 15.2 Reservation of Certain Rights.......................... 51
Section 15.3 Exceptions to Exculpation.............................. 51
Section 15.4 Recourse............................................... 52
Section 15.5 Bankruptcy Claims...................................... 52
ARTICLE 16 NOTICES........................................................ 52
Section 16.1 Notices................................................ 52
ARTICLE 17 APPLICABLE LAW................................................. 53
Section 17.1 Choice of Law.......................................... 53
Section 17.2 Usury Laws............................................. 53
Section 17.3 Provisions Subject to Applicable Law................... 53
Section 17.4 Inapplicable Provision................................. 54
ARTICLE 18 SECONDARY MARKET............................................... 54
Section 18.1 Dissemination of Information........................... 54
Section 18.2 Cooperation............................................ 54
ARTICLE 19 COST .......................................................... 55
(iii)
Section 19.1 Performance at Borrower's Expense...................... 55
Section 19.2 Attorney's Fees for Enforcement........................ 55
ARTICLE 20 DEFINITIONS.................................................... 55
Section 20.1 General Definitions.................................... 55
Section 20.2 Headings. Etc.......................................... 56
ARTICLE 21 MISCELLANEOUS PROVISIONS....................................... 56
Section 21.1 No Oral Change......................................... 56
Section 21.2 Liability.............................................. 56
Section 21.3 Duplicate Originals; Counterparts...................... 56
Section 21.4 Number and Gender...................................... 56
Section 21.5 Subrogation............................................ 56
Section 21.6 Entire Agreement....................................... 56
ARTICLE 22 TRUSTEE PROVISIONS............................................. 57
Section 22.1 The Trustee............................................ 57
ARTICLE 23 LOCAL LAW PROVISIONS........................................... 58
Section 23.1 Remedies............................................... 58
Section 23.2 Release of Security Instrument......................... 62
Section 23.3 Fixture Filing......................................... 62
(iv)
EXHIBITS -
EXHIBIT A - DESCRIPTION OF LAND
DEFINITIONS
The terms set forth below are defined in the following Sections of this
Security Instrument:
a. ADA: Subsection 3.10(a);
b. Applicable Law: Subsection 3.10(a);
c. Attorneys' Fees/Counsel Fees: Section 20.1;
d. Bankruptcy Code: Subsection 1.1(f);
e. Borrower: Preamble;
f. Business Day: Section 16.1;
g. Casualty Consultant: Subsection 4.4(b)(iii);
h. Casualty Retainage: Subsection 4.4(b)(iv);
i. Collateral: Section 1.3;
j. Debt: Section 2.1;
k. Default Rate: Section 11.3;
l. Environmental Indemnity: Subsection 10.1(c);
m. Environmental Law: Section 12.1;
n. Environmental Liens: Section 12.2;
o. Environmental Report: Section 12.1;
p. ERISA: Subsection 4.2(a);
q. Escrow Fund: Section 3.5;
r. Event Section 19.1
s. Event of Default: Section 10.1;
5
t. Exculpated Parties: Section 15.1;
u. Force Majeure: Subsection 4.4(b);
v. Guarantor: Section 5.5;
X. Xxxxxxxxx Substances: Section 12.1;
x. Improvements: Subsection 1.1(c);
y. Indemnified Parties: Section 13.1;
z. Indemnitor: Subsection 10.1(c);
aa. Independent Member: Subsection 4.3(c);
bb. Insurance Premiums: Subsection 3.3(b);
cc. Investor: Section 18.1;
dd. Land: Subsection 1.1(a);
ee. Lease Guaranty: Subsection 3.7(a);
ff. Leases: Subsection 1.1(f);
gar. Lender: Preamble;
hh. Loan Application: Section 5.15;
ii. Losses: Section 13.1;
jj. Net Proceeds: Subsection 4.4(b);
kk. Net Proceeds Deficiency: Subsection 4.4(b)(vi);
ll. Note: Recitals;
mm. Obligations: Section 2.3;
nn. Other Charges: Subsection 3.4(a);
oo. Other Obligations- Section 2.2
pp. Other Security Documents: Section 3.2;
6
qq. Participations: 18.1;
rr. Permitted Exceptions: Section 5.1;
ss. Person: Section 20.1;
tt. Personal Property: Subsection 1.1(e);
uu. Policies/Policy: Subsection 3.3(b);
vv. Property: Section 1.1;
ww. Qualified Insurer: Subsection 3.3(b);
xx. Rating Agency: Subsection 3.3(b);
yy. Release: Section 12.1;
zz. Remediation: Section 12.1;
aaa. Rents: Subsection 1.1(f);
bbb. Restoration: Subsection 3.3(d);
ccc. Securities: Section 18.1;
ddd. Securitization: Section 18.1;
eee. Security Instrument: Preamble;
fff. Servicer: Section 6.2;
ggg. SPE Member: Subsection 4.3(b);
hhh. Taxes: Subsection 3.4(a);
iii. Trustee: Preamble; and
jjj. Uniform Commercial Code: Subsection 1.1(e).
7
THIS DEED OF TRUST AND SECURITY AGREEMENT (the "Security Instrument") is
made as of this 20th day of December, 2002, by XXXXXXX REIT OPERATING
PARTNERSHIP II, L.P., a Texas limited partnership, having its principal place of
business at c/x Xxxxxxx Management, Inc., 0000 Xxxx Xxx Xxxxxxx Xxxxxxx Xxxxx,
Xxxxx 000, Xxxxxxx, Xxxxx 00000, as trustor ("Borrower") to HOUSTON TITLE
COMPANY, having an address at 000 Xxxx Xxx Xxxxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx
00000, as trustee ("Trustee"), for the benefit of GMAC COMMERCIAL MORTGAGE
CORPORATION, a California corporation, having an address at 000 Xxxxxx Xxxx,
Xxxxxxx, Xxxxxxxxxxxx 00000-0000, as beneficiary ("Lender").
RECITALS:
Borrower by its promissory note of even date herewith given to Lender is
indebted to Lender in the principal sum of $34,440,000.00 in lawful money of the
United States of America (the note together with all extensions, renewals,
modifications, consolidations, substitutions, replacements, restatements and
increases thereof shall collectively be referred as to 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.
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 Mortgaged. Borrower does hereby irrevocably (i)
mortgage, grant, bargain, sell, pledge, assign, warrant, transfer and convey to
Trustee and to its successors and assigns in trust with power of sale in
accordance with the terms and conditions hereof, for the use and benefit of
Lender, and (ii) grant a security interest to Trustee and to its successors and
assigns in trust with power of sale, in accordance with the terms and conditions
hereof, for the use and benefit of Xxxxxx, in, the following property, rights,
interests and estates now owned, or hereafter acquired by Borrower (individually
and collectively, the "Property");
(a) Land. The real property described in Exhibit "A"
attached hereto and made a part hereof (the "Land"), which consists of
several properties as further described in Exhibit "A" attached hereto
and made a part hereof (each, together with the Improvements (as
hereinafter defined) thereon, an "Individual Property");
(b) Additional Land. All additional lands, estates and
development rights hereafter acquired by Borrower for use in connection
with the Land and the development of the Land that may, from time to
time, by supplemental mortgage or otherwise be expressly made subject to
the lien of this Security Instrument;
(c) Improvements. The buildings, structures, fixtures,
additions, enlargements, extensions, modifications, repairs,
replacements and improvements now or hereafter erected or located on the
Land (the "Improvements");
(d) 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 arid, in equity, of Borrower of, in and to the
Land and the Improvements and every part and parcel thereof, with the
appurtenances thereto;
(e) Personal Property and Fixtures. All of Borrower's
assets, including without limitation, all of Borrower's "accounts,"
"cash proceeds," "chattel paper," "collateral," "commercial tort
claims," "deposit accounts," "documents," "electronic chattel paper,"
"equipment," "fixtures," "general intangibles," "healthcare insurance
receivables," "goods," "instruments," "inventory," "investment
property," "letter-of-credit rights," "noncash proceeds," "payment
intangibles," "proceeds," "software," "supporting obligations," and
"tangible chattel paper," each as defined in uniform commercial code
adopted in the state or states where any of the foregoing is located
(the "Uniform Commercial Code"), 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 and occupancy of the
Land and the Improvements (all of the foregoing, collectively, the
"Personal Property"), and the right, title and interest of Borrower in
and to any of the Personal Property which may be subject to any security
interests, as defined in the Uniform Commercial Code, superior in lien
to the lien of the security agreement and all proceeds and products of
the above and, without limiting the generality of any of the foregoing,
all machinery, equipment, fixtures (including, but not limited to, all
heating, air conditioning, plumbing, lighting, communications and
elevator fixtures) and other property of every kind and nature
whatsoever owned by Borrower, or in which Borrower has or shall have an
interest, now or hereafter located upon the Land and the buildings,
structures, fixtures, additions, enlargements, extensions,
modifications, repairs, replacements and the Improvements or appurtenant
thereto, and usable in connection with the present or future operation
and occupancy of the Land and the Improvements;
(f) Leases and Rents. All leases and other agreements
affecting the use, enjoyment or occupancy of all or any part of the Land
or the Improvements heretofore or hereafter entered into whether before
or after the filing by of against Borrower of any petition for relief
under 11 U.S.C. Section 101 et sea. (the "Bankruptcy Code"), as the same
may be amended from time to time (the "Leases") and all right, title and
interest of Xxxxxxxx, its successor and assigns therein and thereunder,
including without limitation,
-2-
all guarantees, letters of credit and any other credit support given by
any guarantor in connection therewith, cash or securities deposited
under the Leases to secure the performance by the lessees of their
obligations thereunder and all rents, additional rents, revenues, issues
and profits (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 (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, in each case together with
the immediate and continuing right to collect and receive the same;
(g) 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;
(h) 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;
(i) 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;
(j) Rights. The right, in the name and on behalf of
Xxxxxxxx, to commence any action or proceeding to protect the interest
of Lender or Trustee in the Property and while an Event of Default
(defined in Section 10.1) remains uncured, to appear in and defend any
action or proceeding brought with respect to the Property;
(k) Agreements. All agreements, contracts, certificates,
instruments, franchises, permits, licenses, 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 Land and any part thereof
and 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, while an Event of Default remains uncured, to receive and collect
any sums payable to Borrower thereunder;
(l) Intangibles. All accounts, escrows, chattel paper,
claims, deposits, trade names, trademarks, servicemarks, logos,
copyrights, goodwill, books and records and all other general
intangibles specific to or used in connection with the operation of the
Property, if any;
(m) 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; and
-3-
(n) Accounts. All reserves, escrows and deposit accounts
maintained by Borrower with respect to the Property including, without
limitation, any lockbox account and cash management account, and all
securities, investments, property and financial assets held therein from
time to time and all proceeds, products, distributions or dividends or
substitutions thereon and thereof; and
(o) Other Rights. Any and all other rights of Borrower in
and to the items set forth in Subsections (a) through (n) above.
Section 1.2 Assignment of Leases and Rents. Borrower hereby
absolutely and unconditionally assigns to Xxxxxx Xxxxxxxx'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 assignment and not
an assignment for additional security only. Nevertheless, subject to the terms
of this Section 1.2 and Section 3.7, Lender grants to Borrower a revocable
license to collect and receive the Rents. 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 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. By executing and delivering this Security Instrument,
Borrower hereby grants to Lender, as security for the Obligations (defined in
Section 2.3), 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, the "Collateral").
Section 1.4 Pledge of Monies Held. Borrower hereby pledges to
Lender, and grants to Lender a security interest in, any and all monies now or
hereafter held by Lender, including, without limitation, any sums deposited in
the Escrow Fund (defined in Section 3.5) and the Net Proceeds (defined in
Section 4.4), 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 the Trustee
and its successors and assigns, in trust with power of sale in accordance with
the terms and conditions hereof, for the use and benefit of Xxxxxx, and the
successors and assigns of Lender, 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.
-4-
ARTICLE 2
DEBT AND OBLIGATIONS SECURED
Section 2.1 Debt. This Security Instrument and the grants,
assignments and transfers made in Article l 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 Security Documents (defined in Section 3.2);
(c) [Intentionally Omitted];
(d) other monies agreed or provided to be paid by Borrower
in the Note, this Security Instrument, or the Other Security Documents;
(e) 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
(f) the payment of all sums advanced and costs and expenses
incurred by Lender or Trustee in connection with the Debt or any part
thereof, any renewal, extension, modification, consolidation, change,
substitution, replacement, restatement or increase of 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 the Note in addition to the payment of the Debt and of Borrower and
of any Guarantor (defined in Section 5.5) contained in the Other
Security Documents; and
(c) the performance of each obligation of Borrower and any
Guarantor contained in any renewal, extension, modification,
consolidation, change, substitution, replacement for, restatement or
increase of all or any part of the Note, this Security Instrument or the
Other Security Documents.
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 below as the "Obligations."
-5-
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.
ARTICLE 3
BORROWER COVENANTS
Borrower covenants and agrees with Trustee and Xxxxxx that:
Section 3.1 Payment of Debt. Borrower will pay the Debt at the
time.-and in the manner provided in the Note and in this Security Instrument,
which debt has a stated maturity date of January 1, 2006, or if extended,
January 1, 2008.
Section 3.2 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 Xxxxxxxx and/or others and by or in favor of Lender, which wholly or
partially secure or guaranty payment of the Note or the other Obligations (the
"Other Security 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.
Section 3.3 Insurance
(a) Borrower shall obtain and maintain, or cause to be
maintained, insurance for Borrower and the Property providing at least
the following coverages:
(i) Property Insurance. Insurance with respect to
the Improvements and building equipment insuring against any
peril included within the classification "All Risks of Physical
Loss" in amounts at all times sufficient to prevent Lender from
becoming a co-insurer within the terms of the applicable
policies and under applicable law, but in any event such
insurance shall be maintained in an amount equal to the full
insurable value of the Improvements and building equipment, the
term "full insurable value" to mean the actual replacement cost
of the Improvements and building equipment (without taking into
account any depreciation, and exclusive of excavations, footings
and foundations, landscaping and paving) determined annually by
an insurer, a recognized independent insurance broker or an
independent appraiser selected and paid by Borrower and in no
event less than the coverage required pursuant to the terms of
any Lease. Absent such annual adjustment, each policy shall
contain inflation guard coverage insuring that the policy limit
will be increased over time
-6-
to reflect the effect of inflation. Borrower shall also maintain
insurance against loss or damage to such furniture, furnishings,
fixtures, equipment and other items (whether personalty or
fixtures) included in the Property and owned by Borrower from
time to time, to the extent applicable, in the amount of the
cost of replacing the same, in each case, with inflation guard
coverage to reflect the, effect of inflation, or annual
valuation. Each policy or policies shall contain a replacement
cost endorsement and either an agreed amount endorsement (to
avoid the operation of any co-insurance provisions) or a waiver
of any co-insurance provisions, all subject to Lender's
approval. The maximum deductible shall be $10,000.00;
(ii) Liability Insurance. Comprehensive general
liability insurance, including personal injury, bodily injury,
death and property damage liability, insurance against any and
all claims;'-including all legal liability to the extent
insurable and imposed upon Lender and all court costs and
attorneys' fees and expenses, arising out of or connected with
the possession, use, leasing, operation, maintenance or
condition of the Property in such amounts as are generally
available at commercially reasonable premiums and are generally
required by institutional lenders for properties comparable to
the Property but in no event for a combined single limit of less
than $11,000,000 per occurrence and $12,000,000 in the
aggregate. During any construction of the Property, Xxxxxxxx's
general contractor for such construction shall also provide the
insurance required in this Subsection b. Lender hereby retains
the right to periodically review the amount of said liability
insurance being maintained by Borrower and to require an
increase in the amount of said liability insurance should Lender
deem an increase to be reasonably prudent under then existing
circumstances;
(iii) Workers' Compensation Insurance. Statutory
workers' compensation insurance with respect to any work on or
about the Property covering all persons subject to the workers'
compensation laws of the state in which the Property is located;
(iv) Business Interruption. Business interruption
and/or loss of "rental income" insurance in an amount sufficient
to avoid any co-insurance penalty and to provide-proceeds which
will cover a period of not less than eighteen (18) months from
the date of casualty or loss, with an extended period of
indemnity acceptable to Lender in all respects, but in no event
for a period in excess of six (6) months. The term "rental
income" shall mean the sum of (A) the total then ascertainable
Rents payable under the Leases and (B) the total ascertainable
amount of all other amounts to be received by Borrower from
third parties which are the legal obligation of the tenants,
reduced to the extent such amounts would not be received because
of operating expenses not incurred during a period of
non-occupancy of that portion of the Property then not being
occupied. The amount of coverage shall be adjusted annually to
reflect the Rents payable during the succeeding eighteen (18)
month period;
-7-
(v) Boiler and Machinery Insurance. Broad form
boiler and machinery insurance (without exclusion for explosion)
covering all boilers or other pressure vessels, machinery, and
equipment located in, on or about the Property and insurance
against loss of occupancy or use arising from any breakdown in
such amount per accident equal to the replacement value of the
improvements housing the machinery or $2,000,000 or such other
amount reasonably determined by Lender. If one or more large
HVAC units is in operation at the Property, "System Breakdowns"
coverage shall be required, as determined by Lender. Minimum
liability coverage per accident must equal the - value of such
unit(s);
(vi) Flood Insurance. If required by Subsection
5.6(a) hereof, flood insurance in an amount at least equal to
the lesser of (A) the minimum amount required, under the terms
of coverage; to compensate for any damage or loss on a
replacement basis (or the unpaid balance of the indebtedness
secured hereby if replacement cost coverage is not available for
the type of building insured); or (B) the maximum insurance
available under the appropriate National Flood Insurance
Administration program. The deductible may not exceed $25,000;
(vii) Insurance During Construction. During the period
of any construction, renovation or alteration of the
Improvements which exceeds the lesser of 10% of the principal
amount of the Note or $500,000, at Lender's request, a completed
value, "All Risk" Builder's Risk form, or "Course of
Construction" insurance policy in non-reporting form for any
Improvements under construction, renovation or alteration in an
amount approved by Lender may be required. During the period of
any construction of any addition to the existing Improvements, a
completed value, "All Risk" Builder's Risk form or "Course of
Construction" insurance policy in non-reporting form, in an
amount approved by Lender, shall be required; and
(viii) Other Insurance. Such other insurance with
respect to the Property or on any replacements or substitutions
thereof or additions thereto as may from time to time be
required by Lender against other insurable hazards or casualties
which at the time are commonly insured against in the case of
property similarly situated, including, without limitation,
sinkhole, mine subsidence, earthquake and environmental
insurance, due regard being given to the height and type of
buildings, their construction, location, use and occupancy.
(b) All insurance provided for in Subsection 3.3(a) hereof
shall be obtained under valid and enforceable policies (the "Policies"
or in the singular, the "Policy"), and shall be issued by one or more
domestic primary insurer(s) having an investment grade rating of "AA" or
better assigned by S&P or a comparable claims paying ability assigned by
another credit rating agency approved by Lender (a "Rating Agency") or
be otherwise acceptable to Lender in all respects (each such insurer
shall be referred to below as a "Qualified Insurer"). Notwithstanding
the foregoing, Lender has approved at Closing Transcontinental Insurance
Company ("Transcontinental") as a Qualified Insurer provided for so long
as it maintain its current investment grade rating of A-. In the event
S&P lowers the investment grade rating of Transcontinental below A-,
Borrower shall
-8-
promptly replace Transcontinental with a Qualified Insurer acceptable to
Lender. All insurers providing insurance required by this Security
Instrument shall be authorized to issue insurance in the state in which
the Property is located. The Policy referred to in Subsection 3.3(a)(ii)
above shall name Lender as an additional named insured and the Policy
referred to in Subsection 3.3(a)(i), (iv), (v) and (vi) above shall
provide that all proceeds be payable to Lender as set forth in Section
4.4 hereof. The Policies referred to in Subsections 33(a)(i), (v) and
(vi) shall, also contain: (i) a standard "non-contributory mortgagee"
endorsement or its equivalent relating, inter alia, to recovery by
Lender notwithstanding the negligent or willful acts or omissions of
Lender; and (ii) to the extent available at commercially reasonable
rates, a waiver of subrogation endorsement as to Lender. All Policies
described in Subsection 3.3(a) above shall contain (A) a provision that
such Policies shall not be cancelled or terminated, nor shall they
expire, without at least thirty (30) days' prior written notice to
Lender in each instance; and (B) include effective waivers by the
insurer of all claims for Insurance Premiums (defined below) against any
mortgagee, loss payees, additional insureds and named insureds (other
than Borrower). In the event that the Property or the Improvements
constitutes a legal nonconforming use under applicable building, zoning
or land use laws or ordinances, the policy shall include an ordinance or
law coverage endorsement which will contain Coverage A: "Loss Due to
Operation of Law"'(with a minimum liability limit equal to Replacement
Cost With Agreed Value Endorsement), Coverage B: "Demolition Cost" and
Coverage C: "Increased Cost of Construction" coverages. Certificates of
insurance with respect to all renewal and replacement Policies shall be
delivered to Lender not less than fifteen (15) days prior to the
expiration date of any of the Policies required to be maintained
hereunder which certificates shall bear notations evidencing payment of
applicable premiums (the "Insurance Premiums"). Originals or
certificates of such replacement Policies shall be delivered to Lender
promptly after Xxxxxxxx's receipt thereof but in any case within fifteen
(15) days after the effective date thereof. If Borrower fails to
maintain and deliver to Lender the original Policies or certificates of
insurance required by this Security Instrument, upon ten (10) days'
prior notice to Borrower, Lender may procure such insurance at
Borrower's sole cost and expense. No Policy shall have any exclusion for
terrorism or terrorist acts; provided, however, on any property
insurance renewal date, Borrower shall be required to purchase terrorism
insurance coverage` (whether by virtue of being covered in the
Borrower's "all-risk" policy or by purchase of a "standalone" terrorism
insurance policy) only to the extent the cost of Borrower's proposed
property insurance package upon renewal, including terrorism, does not
exceed the amount that is 120 percent of the cost of the same proposed
property insurance package without coverage for terrorism (whether by
virtue of being excluded in the Borrower's "all-risk" policy or by the
lack of a "standalone" terrorism policy) (the "Cap Amount"). To the
extent terrorism insurance coverage can be purchased at an insured value
level less than the full replacement cost of the property, then Borrower
shall purchase as much. terrorism coverage as possible without exceeding
the Cap Amount. The Cap Amount shall have no relevance whatsoever to the
Borrower's requirement to purchase all other insurance coverages
required by the Lender other than terrorism coverage.
(c) Borrower shall comply with all insurance requirements
and shall not bring or keep or permit to be brought or kept any article
upon any of the Property or cause or
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permit any condition to exist thereon which would be prohibited by an
insurance requirement, or would invalidate the insurance coverage
required hereunder to be maintained by Borrower on or with respect to
any part of the Property pursuant to this Section 3.3.
(d) If the Property shall be damaged or destroyed, in whole
or in part, by fire or other casualty, Borrower shall give prompt notice
of such damage to Lender and provided that Borrower shall have received
the Net Proceeds, Borrower shall promptly commence and diligently
prosecute the completion of the repair and restoration of the Property
as nearly as possible to the condition the Property was in immediately
prior to such fire or other casualty, with such alterations as may be
approved by Lender (the "Restoration") and otherwise in accordance with
Section 4.4 of this Security Instrument.
(e) The insurance coverage required under Section 3.3(a) may
be effected under a blanket policy or policies covering the Property and
other properties and assets not constituting a part of the security
hereunder; provided that any such blanket policy shall specify, except
in the case of public liability insurance, the portion of the total
coverage of such policy that is allocated to the Property, and any
sublimate in such blanket policy applicable to the Property, and shall
in any case comply in all other respects with the requirements of this
Section 3.3.
(f) The insurance coverage required under Subsection
3.3(a)(ii) may be satisfied by a layering of Commercial General
Liability, Umbrella and Excess Liability Policies, but in no event will
the Commercial General Liability policy be written for an amount less
than $1,000,000 per occurrence and $2,000,000 aggregate for bodily
injury and property damage liability. Borrower shall maintain umbrella
insurance coverage in the amount of not less than $10,000,000.00.
(g) Borrower must deliver prior to closing (i) the original,
or a copy certified by the insurance agent, of the policy(ies) of
insurance; or (ii) the insurance binder (Accord Form 25S provided by the
insurance carrier); or (iii) a certificate of insurance (Accord Form 27
provided by the insurance agent), or (iv) an original letter from the
insurance carrier on the primary layer, signed by an officer of such
carrier, attaching the form of insurance policy pursuant to which
coverage is being provided, and, if applicable, an original letter from
each insurance carrier on the excess layers, signed by an officer of
such carrier(s) agreeing that it is bound to the form of insurance
policy delivered by the primary carrier (i.e., agreeing to "follow form"
to the primary carrier). The letter must set forth the date by which the
policy will be delivered to the Lender, which must not be more than
sixty (60) days following closing. All mortgagee/loss payee/additional
insured endorsements must be attached to the letter.
(h) The delivery to Lender of the insurance policies or the
certificates of insurance as provided above shall constitute an
assignment of all proceeds payable under such insurance as relating to
the Property by Borrower to Lender as further security for the
indebtedness secured hereby. In the event of foreclosure of this
Security Instrument, or other transfer of title to the Property in
extinguishment in whole or in part of the secured indebtedness, all
right, title and interest of Xxxxxxxx in and to all proceeds
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payable under such policies then in force concerning the Property shall
thereupon vest in the purchaser at such foreclosure, or in Lender or
other transferee in the event of such other transfer of title. Approval
of any insurance by Lender shall not be a representation of the solvency
of any insurer or the sufficiency of any amount of insurance.
(i) Lender shall not be responsible for nor incur any
liability for the insolvency of the insurer or other failure of the
insurer to perform, even though Xxxxxx has caused the insurance to be
placed with the insurer after failure of Borrower to furnish such
insurance. Borrower shall not obtain insurance for the Property in
addition to that required by Lender without the prior written consent of
Lender, which consent will not be unreasonably withheld provided that
(i) Lender is named insured on such insurance, (ii) Xxxxxx receives
complete copies of all policies evidencing such insurance, and (iii)
such insurance complies with all of the applicable requirements set
forth herein.
Section 3.4 Payment of Taxes, Etc.
(a) Borrower shall pay by their due date 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 Xxxxxx'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 suffer 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 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.
(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 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 Security
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,
cancelled or lost, (vi) Borrower shall have set aside adequate reserves
for the payment of the Taxes, together with all interest and penalties
thereon, unless Xxxxxxxx has paid all of the Taxes
-11-
under protest, and (vii) Borrower shall have furnished the security as
may be required in the proceeding, or as may be reasonably requested by
Xxxxxx to insure the payment of any contested Taxes, together with all
interest and penalties thereon, taking into consideration the amount in
the Escrow Fund available for payment of Taxes.
Section 3.5 Escrow Fund. At the option of Lender, Lender may
require Borrower to establish an Escrow Fund (defined below) sufficient to
discharge its obligations for the payment of Insurance Premiums and Taxes
pursuant to Sections 3.3 and 3.4 hereof. Initial deposits of Taxes and Insurance
Premiums shall be made by Borrower to Lender in amounts determined by Lender in
its discretion on the date hereof to be held by Lender in escrow. Additionally,
Borrower shall pay to Lender on each Payment Date (as defined in the Note) (a)
one-twelfth of an amount which would be sufficient to pay the Taxes payable, or
estimated by Lender to be payable, upon the due dates established by the
appropriate taxing authority during the next ensuing twelve (12) months and (b)
one-twelfth of an amount which would be sufficient to pay the Insurance Premiums
due for the renewal of the coverage afforded by the Policies upon the expiration
thereof (the initial deposits together with the amounts in'(a) and (b) above
shall be called the "Escrow Fund").. The foregoing and anything herein to the
contrary notwithstanding, contemporaneously with the execution hereof, Xxxxxxxx
shall deliver into escrow with Xxxxxx a sum equal to twenty-five percent (25%)
of the annual Insurance Premiums, as determined by Xxxxxx in Xxxxxx's sole and
absolute discretion. On an annual basis, Lender may reasonably adjust the amount
of the deposit required by the immediately preceding sentence and, within thirty
(30) days after written notice from Lender, Borrower shall deposit with Lender
any additional amount required in connection with such adjustment. Lender will
waive the requirement that Borrower make monthly installments for the payment of
Insurance Premiums, provided that (a) no Event of Default has occurred and (b)
not later than fifteen (15) days prior to the expiration date of any Policy,
Borrower provides to Lender evidence of insurance, including evidence of
payment, for the next succeeding twelve (12) month period. Xxxxxxxx agrees to
notify Xxxxxx immediately of any changes to the amounts, schedules and
instructions for payment of any Taxes and Insurance Premiums of which it has
obtained knowledge and authorizes Lender or its agent to obtain the bills for
Taxes and Other Charges directly from the appropriate .tax authority. The Escrow
Fund and the payments of interest or principal or both, payable pursuant to the
Note shall be added together and shall be paid as an aggregate sum by Borrower
to Lender. Provided there are sufficient amounts in the Escrow Fund and no Event
of Default exists, Lender shall be obligated to pay the Taxes and Insurance
Premiums as they become due on their respective due dates on behalf of Borrower
by applying the Escrow Fund to the payments of such Taxes and Insurance Premiums
required to be made by Borrower pursuant to Sections 3.3 and 3.4 hereof. If the
amount of the Escrow Fund shall exceed the amounts due for Taxes and Insurance
Premiums pursuant to Sections 3.3 and 3.4 hereof, Lender shall, in its
discretion, return any excess to Borrower or credit such excess against future
payments to be made to the Escrow Fund. In allocating such excess, Xxxxxx may
deal with the person shown on the records of Xxxxxx to be the owner of the
Property. If the Escrow Fund is not sufficient to pay the items set forth in (a)
and (b) above, Borrower shall promptly pay to Lender, upon demand, an amount
which Lender shall reasonably estimate as sufficient to make up the deficiency.
The Escrow Fund shall not constitute a trust fund and may be commingled with
other monies held by Xxxxxx.
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Section 3.6 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. Xxxxxx may participate in any such proceedings
to the extent permitted by law. Upon an Event of Default, Borrower shall deliver
to Lender all instruments requested by it to permit such ,participation.
Borrower shall, at its expense, diligently prosecute any such proceedings, and
shall consult with Lender, its attorneys and experts, and cooperate with them in
the carrying on or defense of any such proceedings. Borrower shall not make any
agreement in lieu of condemnation of the Property or any portion thereof without
the prior written consent of Lender in each instance, which consent shall not be
unreasonably withheld or delayed in the case of a taking of an insubstantial
portion of the Property. 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 Xxxxxx, 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. If the Property or any portion thereof is taken by the
power of eminent domain, Borrower shall promptly commence and diligently
prosecute the Restoration of the Property and otherwise comply with the
provisions of and in accordance with Section 4.4 of this Security Instrument. 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.
Section 3.7 Leases and Rents. Except as otherwise consented to by
Lender, all Leases shall be written on a standard form of lease which shall have
been approved by Lender. Upon request, Borrower shall furnish Lender with
executed copies of all Leases. No material changes may be made to the
Lender-approved standard lease without the prior written consent of Lender,
which consent shall not be unreasonably withheld or delayed. All proposed leases
shall be subject to the prior approval of Lender except that all proposed leases
which (i) are on the same form of lease which has been approved by Lender, (ii)
are the result of an arms-length transaction, (iii) which provide for rental
rates comparable to existing market rates, (iv) where space to be leased does
not exceed more than ten thousand (10,000) square feet, including all expansion
rights and/or the term thereof does not exceed five (5) years, including all
extension and renewal options, (v) where the proposed tenant is an independent
third party not affiliated with-the Borrower, and (vi) do not contain any terms
which would materially affect Lender's rights under this Security Instrument,
the Note or the Other Security Documents, shall not be subject to the prior
approval of Lender. Borrower (i) shall observe and perform all the obligations
imposed upon the lessor under the Leases if the failure to perform or observe
the same would materially and adversely affect the value of the Property taken
as a whole and shall not do or permit to be done anything to impair the value of
the Leases as security for the Debt; (ii) shall promptly send copies to Lender
of all notices of default which Borrower shall send or receive thereunder; (iii)
shall enforce in a commercially reasonable manner all of the terms, covenants
and conditions contained in the Leases upon the. part of the lessee thereunder
to be observed or performed; (iv) shall not collect any of the Rents more than
one (1) month in
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advance (provided that a security deposit shall not be deemed rent collected in
advance); (v) shall not execute any other assignment of the lessor's interest in
the Leases or the Rents; (vi) shall not (A) materially alter, modify or change
the terms of the Leases without the prior written consent of Lender, which
consent shall not be unreasonably withheld or delayed if the alteration,
modification or change does not materially and adversely affect the value of the
Property taken as a whole and provided further that such Lease, as altered,
modified or changed, is otherwise in compliance with the requirements of this
Security Instrument, or (B) cancel or terminate any Lease (except for defaults
thereunder) of more than ten thousand (10,000) square feet, including all
expansion rights, or if the term thereof exceeds five (5) years, including all .
extension and renewal options, or accept a surrender thereof or convey or
transfer or suffer or permit a conveyance or transfer of the Land or of any
interest therein so as to effect a merger of the estates and rights of, or a
termination or diminution of the obligations of, lessees thereunder; (vii) shall
not alter, modify or change the terms. of any guaranty, letter of credit or
other credit support with respect to the Leases (the "Lease Guaranty") or cancel
or terminate such Lease Guaranty without the prior written consent of Lender;
and (viii) shall not consent to any assignment of or subletting under the Leases
not in accordance with their terms, without the prior written consent of Lender.
Notwithstanding the foregoing, subdivisions (ii), (vi), (vii) and (viii) shall
not apply to residential Leases for space in a multifamily residential property.
Section 3.8 Maintenance of Property. Borrower shall cause the
Property to be maintained in a good and safe condition and repair. The
Improvements and the Personal Property shall not be removed, demolished or
materially altered (except for normal replacement of the Personal Property)
without the 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 3.6 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 or Improvement to be
discontinued or abandoned without the express written consent of Lender.
Section 3.9 Waste. Borrower shall not commit or suffer any waste of
the Property or 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 3.10 Compliance With Laws
(a) Borrower shall promptly comply with all existing and
future federal, state and local laws, orders, ordinances, governmental
rules and regulations or court orders
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affecting the Property, or the use thereof including, but not limited
to, the Americans with Disabilities Act ("ADA") (collectively,
"Applicable Law").
(b) Borrower shall from time to time, upon Xxxxxx's request,
provide Lender with evidence reasonably satisfactory to Lender that the
Property complies with all Applicable Laws or is exempt from compliance
with Applicable Laws.
(c) Notwithstanding any provisions set forth herein or in
any document regarding Xxxxxx's approval of alterations of the Property,
Borrower shall not alter the Property in any manner which would
materially increase Borrower's responsibilities for compliance with
Applicable Laws without the prior written approval of Lender. Xxxxxx'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 Xxxxxx.
(d) 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.
(e) 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
Applicable Laws affecting the Property, provided that (i) no Event of
Default has occurred and is continuing under the Note, this Security
Instrument or any of the Other Security 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 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; (iv) neither the Property nor
any part thereof or interest therein nor any of the tenants, or
occupants thereof shall be affected in any material adverse way as a
result of such proceeding; and (v) Borrower shall have furnished to
Lender all other items reasonably requested by Lender.
Section 3.11 Books and Records
(a) and any Guarantors and Indemnitors shall keep adequate
books and records of account in accordance with methods acceptable to
Lender in its sole discretion, consistently applied and furnish to
Lender:
(i) quarterly certified rent rolls signed and dated
by Xxxxxxxx, detailing the names of all tenants of the
Improvements, the portion of Improvements occupied by each
tenant, the base rent and any other charges payable under each
Lease and the term of each Lease, including the expiration date,
and any other information as is reasonably required by Xxxxxx,
within thirty (3Q) days after the end of each fiscal quarter.
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(ii) a quarterly operating statement of the Property
detailing the total revenues received, total expenses incurred,
total cost of all capital improvements, total debt service and
total cash flow, together with a balance sheet for such quarter,
to be prepared and certified by Borrower in the form required by
Lender, and if available, any quarterly operating statement
and/or balance sheet prepared by an independent certified public
accountant .within thirty (30) days after the close of each
fiscal quarter.
(iii) an annual balance sheet and profit and loss
statement of Borrower, any Guarantors and any Indemnitors, in
the form required by Lender, prepared and certified by the
respective Borrower, Guarantor and/or Indemnitor, as applicable,
within ninety (90) days after the close of each fiscal year;
(iv) an annual certified rent roll presented. on a quarterly
basis consistent with the quarterly certified rent rolls
described above within ninety (90) days after the close of each
fiscal year;
(iv) an annual operating budget presented on a
monthly basis consistent with the annual operating statement
described above for the Property and all proposed capital
replacements and improvements at least thirty (30) days prior to
the start of each calendar year; and
(v) such other financial statements, including
monthly operating statements and rent rolls, as Lender may
reasonably request. Without limiting the generality of the
immediately preceding sentence, until the loan evidenced by the
Note is securitized, upon Xxxxxx's request, Borrower shall
deliver to Lender monthly rent rolls and operating statements
for each Property, and, thereafter, following the occurrence and
during the continuance of an Event of Default or in connection
with a sale of the loan evidenced by the Note, Lender shall have
the right to require Borrower to deliver to Lender such
additional financial and other information as Lender may request
with respect to each Property and Borrower including, without
limitation, monthly rent rolls and operating statements.
(b) Upon reasonable request from Lender, Borrower and its
affiliates shall furnish to Lender:
(i) a property management report for the Property,
showing the number of inquiries made and/or rental applications
received from tenants or prospective tenants and deposits
received from tenants and any other information requested by
Xxxxxx, in reasonable detail and certified by Borrower under
penalty of perjury to be true and complete, but no more
frequently than quarterly; and
(ii) an accounting of all security deposits held in
connection with any Lease of any part of the Property, including
the name and identification number of the accounts in which such
security deposits are held, the name and address of the
financial institutions in which such security deposits are held
and the name of the person to contact at such financial
institution, along with any authority or release
-16-
necessary for Lender to obtain information regarding such
accounts directly from such financial institutions.
(c) Borrower and its affiliates and any Guarantor and
Indemnitor shall furnish Lender with such other additional financial or
management information as may, from time to time, be reasonably required
by Lender in form and substance satisfactory to Lender.
Section 3.12 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 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 (defined in Section 5.1).
Section 3.13 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.
Section 3.14 Change of Name, Identity or Structure. Borrower will not
change Xxxxxxxx's name, identity (including its trade name or names) or, if not
an individual, Borrower's corporate, partnership or other structure without
notifying the Lender of such change in writing at least thirty (30) days prior
to the effective date of such change and, in the case of a change in Borrower's
structure, without first obtaining the prior written consent of the Lender.
Section 3.15 Existence. Borrower will continuously maintain (a) its
existence and shall not dissolve or permit its dissolution, (b) its rights to do
business in the state where the Property is located and (c) its franchises and
trade names.
Section 3.16 Non-Consolidation Opinion. Borrower has complied and
will comply with each of the assumptions made with respect to it in that certain
substantive non-consolidation opinion letter, dated the date hereof, and the
certifications contained in any Borrower's certificate referred to therein,
delivered by Xxxxxxxx's counsel in connection with the Loan and any subsequent
non-consolidation opinion delivered in accordance with the terms and conditions
of this Security Instrument or the Cooperation Letter, including, but not
limited to, any exhibits attached thereto (the "Non-Consolidation Opinion").
Each entity other than Borrower with respect to which an assumption is made in
the Non-Consolidation Opinion has complied and will comply with each of the
assumptions made with respect to it in the Non-Consolidation Opinion.
ARTICLE 4
SPECIAL COVENANTS
Borrower covenants and agrees with Trustee and Xxxxxx that:
Section 4.1 Property Use. The Property shall be used only for light
industrial, office warehouse, retail and commercial office uses and for no other
use without the prior written consent of Lender, which consent may be withheld
in Lender's discretion.
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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 Security 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").
(b) Borrower further covenants and agrees to deliver to
Lender such certifications or other evidence from time to time
throughout the term of this Security Instrument, as requested by Lender
in its sole discretion, that (i) Borrower is not an "employee benefit
plan" as defined in Section 3(32) 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. Section
2510.3-101(b)(2);
(ii) Less than 25 percent of each outstanding class
of equity interests in Borrower are field by "benefit plan
investors" within the meaning of 29 C.F.R. Section
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. Section 2510.3-101(c) or (e) or an investment company
registered under The Investment Company Act of 1940.
Section 4.3 Single Purpose Entity
(a) Borrower:
(i) has not and shall not engage in any business or
activity other than the ownership, operation and maintenance of
the Property, and activities incidental thereto;
(ii) has not and shall not acquire or own any
material assets other than (A) the Property, and (B) such
incidental Personal Property as may be necessary for the
operation of the Property;
(iii) shall not 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;
(iv) shall not fail to preserve its existence as an
entity duly organized, validly existing and in gooey standing
(if applicable) under the. laws of the jurisdiction of its
organization or formation, or without the prior written consent
-18-
of Lender, amend, modify, terminate or fail to comply with the
provisions of Borrower's Partnership Agreement, Articles or
Certificate of Incorporation, Operating Agreement or similar
organizational documents, as the case may be, as same may be
further amended or supplemented, if such amendment,
modification, termination or failure to comply would adversely
affect the ability of Borrower to perform its obligations
hereunder, under the Note or under the Other Security
'Documents;
(v) shall not own any subsidiary or make any
investment in, any person or entity without the consent of
Lender;
(vi) has maintained and will maintain its accounts,
books and records separate from any other person or entity;
(vii) has maintained and will maintain its books,
records, resolutions and agreements as official records;
(viii) has not commingled and will not commingle
its-funds or assets with those of any other entity;
(ix) has held and will hold its assets in its own
name;
(x) has conducted and will conduct its business in
its name;
(xi) has maintained and will maintain its financial
statements, accounting records and other entity documents
separate from any other person or entity;
(xii) has paid and will pay its own liabilities out,
of its own funds and assets;
(xiii) has observed and will observe all partnership,
corporate or limited liability company formalities as
applicable;
(xiv) has maintained and will maintain an arms-length
relationship with its. affiliates;
(xv) has and will have no indebtedness other than the
Debt, the indebtedness evidenced by that certain Promissory Note
of even date herewith in the principal amount of Three Hundred
Eighty-Five Thousand Dollars ($385,000.00) executed and
delivered by Borrower to Lender (the "Second Note") and,
together with the other documents, instruments and agreements
executed in connection therewith, the "Second Loan Documents"),
and unsecured trade payables in the ordinary course of business
relating to the ownership and operation of the Property which
(1) do not exceed, at any time, a maximum amount of one percent
(1%) of the original principal amount of the Note and (2) are
paid within thirty (30) days of the date incurred;
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(xvi) has not and will not assume or guarantee or
become obligated for the debts of any other entity or hold out
its credit as being available to satisfy the obligations of any
other entity except for the Indebtedness;
(xvii) has not acquired and will not acquire
obligations or securities of its partners, members or
shareholders;
(xviii) allocated and will allocate fairly and
reasonably shared expenses, including, without limitation,
shared office space and uses separate stationery, invoices and
checks;
(xix) except pursuant hereto and pursuant to the
Second Loan Documents, has not and will not pledge its assets
for the benefit of any other person or entity;
(xx) has held and identified itself and will hold
itself out and identify itself as a separate and distinct entity
under its own name and not as a division or part of any other
person or entity, and will not fail to correct any
misunderstanding as to its separateness or distinction from any
of its affiliates;
(xxi) has not made and will not make loans to any
person or entity;.
(xxii) has not and will not identify its partners,
members or shareholders, or any affiliates of any of them as a
division or part of it;
(xxiii) not entered and will not enter into or be a
party to, any transaction with its partners, members,
shareholders or its affiliates except in the ordinary course of
its business and on terms which are intrinsically fair and are
not less favorable to it than would be obtained in a comparable
arms-length transaction with an unrelated third party;
(xxiv) paid and will pay the salaries of its own
employees from its own funds; and
(xxv) has maintained and will maintain adequate
capital in light of its contemplated business operations.
(b) Xxxxxxxx's general partner shall be 'a limited liability
company, formed in the State of Delaware,(the "SPE Member"), whose sole
asset is its interest in Borrower and the SPE Member will at all times
comply, and will cause Borrower to comply, with each of the covenants,
terms and provisions contained in Section 4.3(a) as if such
representation, warranty or covenant was made directly by such SPE
Member.
(c) Xxxxxxxx shall at all times cause there to be at least
one duly appointed director of the SPE Member (an "Independent
Director") reasonably satisfactory to Lender who shall not have been at
the time of such individual's initial appointment, and may not have been
at any time during the preceding five years, and shall not be at any
time while serving as a director of the SPE Member (i) a shareholder of,
or an officer,
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director, partner, manager or employee of, Xxxxxxxx, the SPE Member or
any of their respective shareholders, partners, members, subsidiaries or
affiliates, (ii) a customer of, or supplier to, Borrower, the SPE Member
or any of their respective shareholders, partners, members, subsidiaries
or affiliates, (iii) a person or other entity controlling or under
common control with any such shareholder, officer, director, partner,
member, employee, supplier or customer, or (iv) a member of the
immediate family of any such shareholder; officer, director, partner,
member, employee, supplier or customer. As used herein, the term
"control" means: the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policy of a person
or entity, whether through ownership of voting securities, by contract
or otherwise.
(d) Without the consent of the Independent Director,
Xxxxxxxx shall not:
(i) engage in any business activity other than as
set forth in Section 4.3(a)(i) hereof, and Borrower shall engage
solely in such business activity set forth in Section 43(a)(i)
hereof; (ii) dissolve or liquidate, in whole or in part; (iii)
consolidate or merge with or into any other entity or convey or
transfer or lease Borrower's property and assets substantially
as an entirety to any entity, in each subject also to the
provisions of this Security Instrument; (iv) institute
proceedings to be adjudicated bankrupt or insolvent, or consent
to the institution or bankruptcy or insolvency proceedings
against Borrower, or file a petition seeking or consenting to
reorganization or relief under any applicable federal or state
law relating to bankruptcy, or consent to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of Borrower or a. substantial part of property
of Xxxxxxxx, or make any assignment for the benefit of
creditors, or admit in writing Xxxxxxxx's inability to pay
Xxxxxxxx's debts generally as they become due, or take corporate
action in furtherance of any such action; or (v) amend any
provision of the organizational documents of Borrower relating
to matters set forth in this Section 4.3.
Section 4.4 Restoration After Casualty/Condemnation. In the event of
a casualty or a taking by eminent domain, the following provisions shall apply
in connection with the Restoration of the Property:
(a) If (i) the aggregate Net Proceeds (defined below) with
respect to the Property do not exceed $500,000.00 or, with respect to
any Individual Property, do not exceed $250,000 (each such amount a
"Casualty Amount"); (ii) the costs of completing the Restoration as
reasonably estimated by Borrower shall be less than or equal to the
Casualty Amount; (iii) no Event of Default shall have occurred and be
continuing under the Note, this Security Instrument or any of the Other
Security Documents; (iv) the Property and the use thereof after the
Restoration will be in compliance with, and permitted under, all
applicable zoning laws, ordinances, rules and regulations (including,
without limitation, all applicable Environmental Laws (defined in
Section 12.1); and (v) such fire or other casualty or taking, as
applicable, does not materially impair access to the Property or the
Improvements, then the Net Proceeds will be disbursed directly to
Borrower and Borrower shall commence and diligently prosecute to
completion, subject to Force Majeure (defined herein), the Restoration
of the Property to as nearly as possible
-21-
the condition it; was in immediately prior to such fire or other
casualty or to such taking. Except upon the occurrence and continuance
of an Event of Default, Borrower shall settle any insurance claims with
respect to the Net Proceeds which in the aggregate are less than or
equal to the Casualty Amount. Lender shall have the right to participate
in and reasonably approve any settlement for insurance claims with
respect to the Net Proceeds which in the aggregate are equal to or
greater than the Casualty Amount. If an Event of Default shall have
occurred and be continuing, Borrower hereby irrevocably empowers Lender,
in the name of Borrower as its true and lawful attorney-in-fact, to file
and prosecute" such claim and to collect and to make receipt for any
such payment. If the Net Proceeds are received by Borrower, such Net
Proceeds shall, until the completion of the related work, be held in
trust for Lender and shall be segregated from other funds of Borrower to
be used to pay for the cost of the Restoration in accordance with the
terms hereof.
(b) If the Net Proceeds are greater than the Casualty
Amount, such Net Proceeds shall, subject to the provisions of the Leases
that are superior to the lien of this Security Instrument or with
respect to which subordination, non-disturbance agreements binding upon
Lender have been entered into concerning the deposits of Net Proceeds,
be forthwith paid to Lender to be held by Lender in a segregated account
to be made available to Borrower for the Restoration in accordance with
the provisions of this Subsection 4.4(b). Borrower shall commence and
diligently prosecute to completion, subject to Force Majeure (defined
below), the Restoration (in the case of a taking, to the extent the
Property is capable of being restored). The term "Net Proceeds" for
purposes of this Section 4.4 shall mean: (1) the net amount of all
insurance proceeds received by Lender under the Policies carried
pursuant to Subsections 3.3(a)(i), (iv), (v), (vi) and (vii) of this
Security Instrument as a result of such damage or destruction, after
deduction of its reasonable costs and expenses (including, but not
limited to reasonable counsel fees), if any, in collecting the same, or
(ii).the net amount of all awards and payments received by Lender with
respect to a taking referenced in Section 3.6 of this Security
Instrument, after deduction of its reasonable costs and expenses
(including, but not limited to reasonable counsel fees), if any, in
collecting the same, whichever the case may be. The term "Force Majeure"
for the purpose of this Section 4.4 shall have the following meaning:
Borrower shall be excused for the period of any delay in the performance
of any obligations hereunder when prevented from so doing by cause or
causes beyond Borrower's control such as, without limitation, all labor
.disputes, civil commotion, war, war-like operations, invasion,
rebellion, hostilities, military or usurped power, sabotage,
governmental regulations or controls, fire or other casualty, inability
to obtain any materials or services, and acts of God.
(i) The Net Proceeds shall be made available to
Borrower for payment of, or reimbursement of Xxxxxxxx's expenses
in connection with, the Restoration, subject to the following
conditions:
(A) No Event of Default shall have occurred
and be continuing under the Note, this Security
Instrument or any of the Other Security Documents;
-22-
(B) Lender shall. within a reasonable period
of time prior to request for initial disbursement be
furnished with an estimate of the cost of the
Restoration accompanied by an independent architect's
certification as to such costs and appropriate plans and
specifications for the Restoration;
(C) The Net Proceeds, together with any cash
or cash equivalent deposited by Borrower with Lender,
are, sufficient to cover the cost of the Restoration as
such costs are certified by the independent architect;
(D) (1) in the event that the Net Proceeds
are insurance proceeds, with respect to each Individual
Property, less than fifty percent (50%) of the total
floor area of the Improvements has been damaged or
destroyed, or rendered unusable as a result of such fire
or other casualty; or (2) in the event that the Net
Proceeds are condemnation awards, less than fifty
percent (50%) of the Land constituting the Property is
taken, such Land that is taken is located along the
perimeter or periphery of the Property and no portion of
the Improvements is located in such Lands;
(E) Lender shall be satisfied that any
operating deficits, including all scheduled payments of
principal and interest under the Note which will be
incurred with respect to the Property as a result of the
occurrence of any such fire or other casualty or taking,
whichever the case may be, will be covered out of (1)
the Net Proceeds, or (2) other funds of Borrower;
(F) Lender shall be satisfied that, upon the
completion of the Restoration and related lease-up, if
applicable, the net cash flow of the Property will be
restored to a level sufficient to cover all carrying
costs and operating expenses of the Property, including,
without limitation, debt service on the Note and on the
Second Note at a coverage ratio (on a "normalized"
basis, i.e., after deducting replacement reserve
requirements and reserves for tenant improvements and
leasing commissions from net operating income, whether
or not such sums are escrowed with Lender) of at least
2:00:1.0, which coverage ratio shall be equal to or
greater than the coverage ratio existing as of the date
of this Security Instrument or, if lower, the coverage
ratio which existed as of the date immediately preceding
such casualty or taking as the case may be;
(G) The Restoration can reasonably be
completed on or before the earliest to occur of (1) six
(6) months prior to the Maturity Date (as defined in the
Note), (2) the earliest date required for such
completion under the terms of any Lease and (3) such
time as may be required under applicable zoning law,
ordinance, rule or regulation in order to repair and
restore the Property to as nearly as possible the
condition it was in immediately prior to such fire or
other casualty or to such taking, as
-23-
applicable, and (4) the expiration of business
interruption insurance maintained. pursuant to Section
3.3(a)(iv); ,
(H) The Property and the use thereof after
the Restoration will be in compliance with, and
permitted under, all applicable zoning laws, ordinances,
rules and regulations (including, without limitation,
all applicable Environmental Laws (defined in Section
12.1); and
(I) Such fire or other casualty or taking,
as applicable, does not t materially impair access to
the Property or the Improvements.
(ii) The Net Proceeds shall be held by Lender in an
escrow account bearing interest at the bank monitor rate (the
"Net Proceeds Account") and, until disbursed in, accordance with
the provisions of this Subsection 4.4(b), shall constitute
additional security for the Obligations. The Net Proceeds other
than the Net Proceeds paid under the Policy described in
Subsection 33(a)(iv) shall be disbursed by Lender to, or as
directed by, Borrower from time to time during the course of the
Restoration, upon receipt of evidence satisfactory to Lender
that (A) all materials installed and work and labor performed
(except to the extent that they are to be paid for out of the
requested disbursement) in connection with the Restoration have
been paid for in full, and (B) there exist no notices of
pendency, stop orders, mechanic's or materialman's liens or
notices of intention to file same, or any other liens or
encumbrances of any nature whatsoever on the Property arising
out of the Restoration which have not either been fully bonded
and discharged of record or in the alternative fully insured to
the satisfaction of Lender by the title company insuring the
lien. of this Security Instrument. Borrower hereby acknowledges
and confirms that Lender shall have no responsibility or
liability for the amount of interest earned on the Net Proceeds
Account. All interest earned from investment of the funds
deposited in the Net Proceeds Account shall be credited to the
Net Proceeds. Borrower shall include and report such interest in
its income for Federal, state and local income and franchise tax
purposes.
(iii) Lender shall have the use of the plans and
specifications and all permits, licenses and approvals required
or obtained in connection with the Restoration. The identity of
the contractors, subcontractors and materialmen engaged in the
Restoration, as well as the contracts under which they have been
engaged, shall be subject to prior review and acceptance by
Xxxxxx and an independent consulting engineer selected by Xxxxxx
(the "Casualty Consultant"), such acceptance not to be
unreasonably withheld or delayed. All costs and expenses
incurred by Lender in connection with making the Net Proceeds
available for the Restoration including, without limitation,
reasonable counsel fees and disbursements and the Casualty
Consultant's fees, shall be paid by Xxxxxxxx.
(iv) In no event shall Lender be obligated to make
disbursements of the Net Proceeds in excess of an amount equal
to the costs actually incurred from
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time to time for work in place as part of the Restoration, as
certified by the Casualty Consultant. minus the Casualty
Retainage; provided, however, if Borrower has contracted
directly with any materialmen, then there shall be no Casualty
Retainage with respect to the payments by Borrower directly to
such materialman. The term "Casualty Retainagee" as used in this
Subsection 4.4(b) shall mean an amount equal to 10% of the costs
actually incurred for work in place as part of the Restoration,
as certified by the Casualty Consultant, until such time as the
Casualty Consultant certifies to Lender that 50% of the required
Restoration has been completed. There shall be no Casualty
Retainage with respect ,to costs actually incurred by Borrower
for work in place in completing the last 50% of the required
Restoration. The Casualty Retainage shall in no event, and
notwithstanding anything to the contrary set forth above in this
Subsection 4.4(b), be less than the amount actually held back by
Borrower from contractors, subcontractors and-materialmen
engaged in the Restoration. The Casualty Retainage shall not be
released until the Casualty Consultant certifies to Lender that
the Restoration has been completed in accordance with the
provisions of this Subsection 4.4(b) and that all approvals
necessary for the re-occupancy and use of the Property have been
obtained from all appropriate governmental and
quasi-governmental authorities, and Lender receives evidence
satisfactory to Lender that the costs of the Restoration have
been paid in full or will be paid in full out of the Casualty
Retainage, provided, however, that Xxxxxx will release the
portion of the Casualty Retainage being held with respect to any
contractor, subcontractor or materialman engaged in the
Restoration as of the date upon which the Casualty Consultant
certifies to Lender that the contractor, subcontractor or
materialman has satisfactorily completed all work and has
supplied all materials in accordance with the provisions of the
contractor's, subcontractor's or materialman's contract, and the
contractor, subcontractor or materialman delivers the lien
waivers and evidence of payment in full of all sums due to the
contractor, subcontractor or materialman as may be reasonably
requested by Xxxxxx or by the title company insuring the lien of
this Security Instrument. If required by Lender, the release of
any such portion of the Casualty Retainage shall be approved by
the surety company; if any, which has issued a payment or
performance bond with respect to the contractor, subcontractor
or materialman.
(v) Lender shall not be obligated to make
disbursements of the Net Proceeds more frequently than once
every calendar month.
(vi) If at any time the Net Proceeds or the
undisbursed balance thereof shall not, in the opinion of Xxxxxx,
be sufficient to pay in full the balance of the costs which are
estimated by the Casualty Consultant to be incurred in
connection with the completion of the Restoration, Borrower
shall deposit the deficiency (the "Net Proceeds Deficiency")
with Lender before any further disbursement of the Net Proceeds
shall be made. The Net Proceeds Deficiency deposited with Lender
. shall be held by Xxxxxx and shall be disbursed for costs
actually incurred in connection with the Restoration on the same
conditions applicable to the
-25-
disbursement of the Net Proceeds, and until so disbursed
pursuant to this Subsection 4.4(b) shall constitute additional
security for the Obligations.
(vii) The excess, if any, of the Net Proceeds and the
remaining balance, if any, of the Net Proceeds Deficiency
deposited with Lender after the Casualty Consultant certifies to
Lender that the Restoration has been completed in accordance
with the provisions of this Subsection 4.4(b), and the receipt
by Lender of evidence satisfactory to Lender that all costs
incurred in connection with the Restoration have been paid in
full, shall be remitted by Lender to Borrower, provided no Event
of Default shall have occurred and shall be continuing under the
Note, this Security Instrument or any of the Other Security
Documents.
(c) All Net Proceeds not required (i) to be made available
for the Restoration or (ii) to be returned to Borrower as excess Net
Proceeds pursuant to Subsection 4.4(b)(vii) shall be retained and
applied by Lender toward the payment of the Debt whether or not then due
and payable in such order, priority and proportions-as Lender in its
discretion shall deem proper or, at the discretion of Lender, the same
shall be paid, either in whole or in part, to Borrower. If Lender shall
receive and retain Net Proceeds, the lien of this Security Instrument
shall be reduced only by the amount received and retained by Xxxxxx and
actually applied by Lender in reduction of the Debt.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Trustee and Lender that:
Section 5.1 Warranty of Title. Borrower has good and indefeasible
title to the. Property and has the right to mortgage, 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 the lien of that certain Second
Deed of Trust and Security Agreement of even date herewith executed by Borrower
in favor of Lender in connection with the Second Note (the "Second Security
Instrument") and those exceptions shown in the title insurance policy insuring
the lien of this Security Instrument (the "Permitted Exceptions'.'). The
Permitted Exceptions do not materially interfere with the security intended to
be provided by this Security Instrument or the use and operations of the
Property. Borrower shall forever warrant, defend and preserve the title and the
validity and priority of the lien of this Security Instrument and shall forever
warrant and defend the same to Trustee and to Lender against the claims of all
persons whomsoever. Upon the recordation of this Security Instrument and the
filing of a UCC Financing Statement in the office of the Secretary of State for
the state where the Borrower is located, the Lender will have a first priority
perfected security interest in all personal property owned by Xxxxxxxx.
Section 5.2 Authority. Xxxxxxxx (and the undersigned representative
of Borrower, if any) has full power, authority and legal right to execute this
Security Instrument, and to mortgage, grant, bargain, sell, pledge, assign,
warrant, transfer and convey the Property pursuant
-26-
to the terms hereof and to keep and observe all of the terms of this Security
Instrument on Xxxxxxxx's part to be performed.
Section 5.3 Legal Status and Authority. Borrower (a) is duly
organized, validly existing and in good standing under the laws of its state of
organization or incorporation, and Xxxxxxxx's exact legal name appears in the
first paragraph of this Security Instrument; (b) is duly qualified to transact
business and is in good standing in the State where the Property is located; and
(c) has all necessary approvals, governmental and otherwise, and full power and
authority to own the Property and carry on its business as now conducted and
proposed to be conducted. Borrower now has and shall continue to have the full
right, power and authority to operate and lease the Property, to encumber the
Property as provided herein and to perform all of the other obligations to be
performed by Borrower under the Note, this Security Instrument and the Other
Security Documents.
Section 5.4 Validity of Documents
(a) The execution, delivery and performance of the Note,
this Security- _, Instrument and the Other Security Documents and the
borrowing evidenced by the Note (i) are within the power and authority
of Xxxxxxxx; (ii) have been authorized by all. requisite organizational
action; (iii) have received all necessary approvals and consents,
corporate, governmental or otherwise; (iv) will not violate, conflict
with, result in a breach of or constitute (with notice or lapse of time,
or both) a default under any provision of law (including, without
limitation, any usury laws), any order or judgment of any court or
governmental authority, the articles of incorporation, by-laws,
partnership or operating agreement, or other governing instrument of
Borrower, or any indenture, agreement or other instrument to which
Borrower is a party of by which it or any of its assets or the Property
is or may be bound or affected; (v) will not result in the creation or
imposition of any lien, charge or encumbrance whatsoever upon any of its
assets, except the lien and security interest created hereby; and (vi)
will not require any authorization or license from, or any filing with,
any governmental or other body (except for the recordation of this
instrument in appropriate land records in the State where the Property
is located and except for Uniform Commercial Code filings relating to
the security interest created hereby), and (b) the Note, this Security
Instrument and the Other Security Documents constitute the legal, valid
and binding obligations of Borrower.
Section 5.5 Litigation. There is no action, suit or proceeding,
judicial, administrative or otherwise (including any condemnation or similar
proceeding), pending or, to the best of Borrower's knowledge, threatened or
contemplated against Borrower, any person guaranteeing the-payment of the Debt
or any portion thereof or performance by Borrower of any terms of this Security
Instrument (a "Guarantor"), if any, an Indemnitor (defined in Subsection
10.1(c)), if any, or against or affecting the Property that (a) has not been
disclosed to Lender, and has a material, adverse effect on the Property or
Borrower's, any Guarantor's or any Indemnitor's ability to perform its
obligations under the Note, this Security Instrument or the Other Security
Documents, or (b) is not adequately covered by insurance, each as determined by
Lender in its sole and absolute discretion.
Section 5.6 Status of Property
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(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, or the National Flood Insurance Reform Act of
1994, as each may be amended, or any successor law, or, if any portion
of the Improvements is now or at any time in the future located within
any such area, Borrower has obtained and will maintain the insurance
prescribed in Section 3.3 hereof.
(b) Borrower has obtained all necessary certificates,
licenses and other approvals, governmental and otherwise, necessary for
the operation of the Property and the conduct of its business and all
required zoning, building code, land use, environmental and other
similar permits or approvals, all of which are in full force and effect
as of the date hereof and not subject to revocation, suspension,
forfeiture or modification.
(c) The Property and the present and contemplated use and
occupancy thereof are 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 all-weather 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.
(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.
(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 hereby.
(j) All liquid and solid waste disposal, septic and sewer
systems located on the Property are in a good and safe condition and
repair and in compliance with all Applicable Laws.
(k) All security deposits relating to the Leases reflected
on the certified rent roll delivered to Lender have been collected by
Borrower except as noted on the certified rent roll.
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(l) Xxxxxxxx has received no notice of an actual or
threatened condemnation or eminent domain proceeding by any public or
quasi-public authority.
(m) All the Improvements lie within the boundaries of the
Property.
Section 5.7 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.
Section 5.8 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 5.9 ERISA Compliance
(a) As of the date hereof and throughout the term of this
Security Instrument,_ (i) Borrower is not and will not be an "employee
benefit plan" as defined in Section 3(32) of ERISA, which is subject to
Title I of ERISA, and (ii) the assets of Borrower do not and will not
constitute "plan assets" of one or more such plans for purposes of Title
I of ERISA; and
(b) As of the date hereof and throughout the term of this
Security Instrument, (i) Borrower is not and will not be a "governmental
plan" within the meaning of Section 3(32) of ERISA, and (ii)
transactions by or with Borrower are not and will not be subject to
state statutes applicable to Borrower regulating investments of and
fiduciary obligations with respect to governmental plans.
Section 5.10 Leases. Except as disclosed in the certified rent roll
for the Property delivered to and approved by Xxxxxx, (a) Borrower is the sole
owner of the entire lessor's interest in the Leases; (b) the Leases are valid
and enforceable; (c) the terms of all alterations, modifications and amendments
to the Leases are reflected in the certified rent roll delivered to and approved
by Lender; (d) none of the Rents reserved in the Leases have been assigned or
otherwise pledged or hypothecated (except to, Lender); (e) none of the Rents
have been collected for more than one (1) month in advance (provided that a
security deposit shall not be deemed rent collected in advance); (f) the
premises demised under the Leases have been completed and the tenants under the
Leases have accepted the same and have taken possession of the same on a
rent-paying basis.; (g) there exist no offsets or defenses to the payment of any
portion of the Rents; (h) Borrower has received no notice from any tenant
challenging the validity or enforceability of any Lease; (i) all payments due
under the Leases are current and are consistent with the certified rent roll for
the Property delivered to and approved by Lender; (j) no tenant under any Lease
is in default thereunder, or is a debtor in any bankruptcy, reorganization,
insolvency or similar proceeding, or has demonstrated a history of payment
problems which suggest financial difficulty; (k) there are no agreements with
the tenants under the Leases other than expressly set forth in each Lease; (1)
the Leases are valid and enforceable against Borrower and the tenants set forth
therein; (m) no Lease contains an option to purchase, right of first refusal to
purchase, or any other similar provision; (n) no person or entity has any
possessory
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interest in, or right to occupy, the Property except under and pursuant to a
Lease; (o) each Lease (other than a residential Lease) is subordinate to this
Security Instrument, either pursuant to its agreement that would be considered
unacceptable to prudent institutional lenders; and (q) no brokerage commissions
or finders fees are due and payable regarding any Lease.
Section 5.11 Financial Condition
(a) Borrower is solvent, and no bankruptcy, reorganization,
insolvency or similar proceeding under any state or federal law with
respect to Borrower has been initiated, (b) it has received reasonably
equivalent value for the granting of this Security Instrument, and (c)
the granting of this Security Instrument does not constitute a
fraudulent conveyance.
Section 5.12 Business Purposes. The loan evidenced by the Note is
solely for the business purpose of Xxxxxxxx, and is not for personal, family,
household, or agricultural purposes.
Section 5.13 Taxes. Borrower, any Guarantor and any Indemnitor have
filed all federal, state, county, municipal, and city income and other tax
returns required to have been filed by them and have paid all taxes and related
liabilities which have become due pursuant to -, such returns or pursuant to any
assessments received by them. Neither Borrowed, any Guarantor nor any Indemnitor
knows of any basis for any additional assessment in respect of any such taxes
and related liabilities for prior years.
Section 5.14 Mailing Address. Xxxxxxxx's mailing address, as set
forth in the opening paragraph hereof or as changed in accordance with Article
16, is true and correct.
Section 5.15 No Change in Facts or Circumstances. All information in
the application for the loan submitted to Lender (the "Loan Application") and in
all financing statements, rent rolls, reports, certificates and other documents
submitted in connection with the Loan Application or in satisfaction of the
terms thereof, are accurate, complete and correct in all respects. There has
been no adverse change in any condition, fact, circumstance or event that would
make any such information inaccurate, incomplete or otherwise misleading.
Section 5.16 Disclosure. Xxxxxxxx has disclosed to Lender all
material facts and has not failed to. disclose any material fact that could
cause any representation or warranty made herein to be materially misleading.
Section 5.17 Third Party Representations. Each of the representations
and the warranties made by each Guarantor and Indemnitor herein or in any Other
Security Document(s) is true and correct in all material respects.
Section 5.18 Illegal Activity. No portion of the Property has been or
will be purchased, improved, fixtured, equipped or furnished with proceeds of
any criminal or other illegal activity and to the best of Borrower's knowledge,
there are no illegal activities or activities relating to controlled substance
at the Property.
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Section 5.19 Non-Consolidation Opinion Assumptions. All of the
assumptions made in the Non-Consolidation Opinion; including, but not limited
to, any exhibits attached thereto, are true and correct.
Section 5.20 Federal Reserve Regulations. No part of the proceeds of
the Loan will be used for the purpose of purchasing or acquiring any "margin
stock" within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System or for any other purpose which would be inconsistent with
such Regulation U or any other Regulations of such Board of Governors, or for
any purposes prohibited by Legal Requirements or by the terms and conditions of
this Security Instrument, the Note or the Other Security Documents.
Section 5.21 Investment Company Act. Borrower is not (a) an
"investment company" or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended; (b) a
"holding company" or a "subsidiary company" of a "holding company" or an
"affiliate" of either a "holding company" or a "subsidiary company" within the
meaning of the Public Utility Holding Company Act of 1935, as amended; or (c)
subject to any other federal or state law or regulation which purports to
restrict or regulate its ability to borrow money.
ARTICLE 6
DEBTOR/CREDITOR RELATIONSHIP
Section 6.1 Relationship of Borrower and Lender. The relationship
between Xxxxxxxx and Xxxxxx is solely that of debtor and creditor, and Xxxxxx
has no fiduciary or other special relationship with Xxxxxxxx, and no term or
condition of any of the Note, this Security Instrument and the Other Security
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 Servicing of the Loan. At the option of Lender, the loan
secured hereby may be serviced by a servicer/trustee (the "Servicer") selected
by Xxxxxx and Lender may delegate all or any portion of its responsibilities
under the Note, this Security Instrument, and the Other Security Documents to
the Servicer.
ARTICLE 7
FURTHER ASSURANCE
Section 7.1 Recording of Security Instrument, Etc. Borrower
forthwith upon the execution and delivery of this Security Instrument and
thereafter, from time to-time, will cause this Security Instrument and any of
the Other Security Documents creating a lien or security interest or evidencing
the lien hereof upon the Property and each instrument of further assurance to be
filed, registered or recorded in such, manner and in such places as may be
required by any present or future law in order to publish notice of and fully to
protect and perfect the lien or security interest hereof upon, and the interest
of Trustee and of Lender in, the Property. 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 Security Documents, any note or mortgage supplemental
hereto, any security instrument with respect to the Property and any instrument
of further assurance, and any
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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 mortgage 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, Etc. Xxxxxxxx will, at the cost of
Xxxxxxxx, and without expense to Xxxxxx, do, execute, acknowledge and deliver
all and every such further acts, deeds, conveyances, mortgages, assignments,
notices of assignments, transfers and assurances as Lender shall, from time to
time, reasonably require, for the better assuring, conveying, assigning,
transferring, and confirming unto Trustee (where appropriate) and to Lender, the
property and rights hereby mortgaged, granted, bargained, sold, conveyed,
confirmed, pledged, assigned, warranted and transferred or intended now or
hereafter so to be, or which Borrower may be or may hereafter become bound to
convey or assign to Trustee or 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. Xxxxxxxx, on demand, will execute and deliver and
hereby authorizes Xxxxxx and Trustee to execute in the name of Borrower or
without the signature of Borrower to the extent Lender or Trustee may lawfully
do so, one or more financing statements, chattel mortgages or other instruments,
to evidence or perfect more effectively the security interest of Trustee or
Lender in the Property. Borrower grants to Lender and Trustee an irrevocable
power of attorney coupled with an interest for the purpose of exercising and
perfecting any and all rights and remedies available to Trustee or Lender
pursuant to this Section 7.2.
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 deducts the Debt from the value
of the Property for the purpose of taxation or which imposes a tax,
either directly or indirectly, on the Debt or Xxxxxx's interest in the
Property, Borrower will pay the tax, with interest and penalties
thereon, if any. If Xxxxxx is advised by counsel chosen by it that the
payment of tax by Xxxxxxxx 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)
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) days, to declare the Debt
immediately due and payable.
(c) If at any time the United States of America, any State
thereof or any subdivision of any such State shall require revenue or
other stamps to be affixed to the Note, this Security Instrument, or any
of the Other Security Documents or impose any
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other tax or charge on the same, Borrower will pay for the same, with
interest and penalties thereon, if any.
Section 7.4 Estoppel Certificates
(a) After request by Xxxxxx, Borrower, within ten (10) days,
shall furnish Lender or any proposed assignee with a statement, duly
acknowledged and certified, setting forth (i) the amount of the original
principal amount of the Note, (ii) the unpaid principal amount of the
Note based upon data provided by Lender pursuant to Section 7.4(d),
(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, (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 the Security Instrument, (vii) that the Note
and this Security Instrument are valid, legal and binding obligations
and have not been modified or if modified, giving particulars of such
modification, (viii) whether any offsets or defenses exist against the
obligations secured hereby and, if any are alleged to exist, a detailed
description thereof, (ix) that all Leases are in full force and effect
and (provided the Property is not a residential multifamily property)
have not been modified (or if modified, setting forth all
modifications), (x) the date to which the Rents thereunder have been
paid pursuant to the Leases, (xi) whether or not, to the best knowledge
of Borrower, any of the lessees under the Leases are in default under
the Leases, and, if any of the lessees are in default, setting forth the
specific nature of all such defaults, (xii) the amount of security
deposits held by Borrower under each Lease and that such amounts are
consistent with the amounts... required under each Lease, and (xiii) as
to any other matters reasonably requested by Xxxxxx and reasonably
related to the Leases, the obligations secured hereby, the Property or
this Security Instrument.
(b) Borrower shall use commercially reasonable good faith
efforts to deliver to Lender, promptly upon request, 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, except as security, 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 8.1 hereof, at Xxxxxx's request, Borrower, any Guarantors and
any Indemnitors shall provide an estoppel certificate to the Investor
(defined in Section 18.1) or any prospective Investor confirming the
accuracy of information provided by such person to Lender under or in
respect of this Security Instrument.
(d) After written request by Borrower not more than twice
annually, Lender shall furnish Borrower a statement setting forth (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,
and (iv) the balance of the sums in the Escrow Fund, if any.
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Section 7.5 Flood Insurance. After Xxxxxx's request, Borrower shall
deliver evidence satisfactory to Lender that no portion of the Improvements is
situated in a federally designated "special flood hazard area" or, if it is,
that Borrower has obtained insurance meeting the requirements of Section
3.3(a)(vi).
Section 7.6 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. Lender
shall bear all expenses relating to such split or division unless Lender elects
to split or divide the Security Instrument and the Note as a result of an Event
of Default, in which case all such expenses shall be borne by Borrower. To that
end, Borrower, upon written request of Xxxxxx, shall execute, acknowledge and
deliver 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 secured by this Security Instrument, and containing terms,
provisions and clauses no less favorable to Borrower than those contained herein
and in the Note, and such other documents and .instruments as may be required by
Lender to effect the splitting of the Note and-this Security Instrument.
Section 7.7 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 Security Document which is not of public record, and, in the
case of any such mutilation, upon surrender and cancellation of such Note or
Other Security Document, Borrower will issue, in lieu thereof, a replacement
Note or Other Security Document, dated the date of such lost, stolen, destroyed
or mutilated Note or Other Security Document in the same principal amount
thereof and otherwise of like tenor.
Section 7.8 Financing Statements. By the execution of this Security
Instrument, Borrower authorizes the filing of an initial financing statement and
any amendments and extensions thereto as required by Xxxxxx to establish,
maintain or extend the validity, perfection and priority of the security
interest granted herein. At the request of the Lender, Borrower shall execute a
certificate in form satisfactory to the Lender listing the trade names under
which Borrower intends to operate the Property, and representing and warranting
that Borrower does business under no other trade name with respect to the
Property.
ARTICLE 8
DUE ON SALE/ENCUNIBRANCE
Section 8.1 No Sale/Encumbrance. Xxxxxxxx agrees that, except for
the lien of the Second Security Instrument and the other Second Loan Documents,
Borrower shall not, without the prior written consent of Lender, sell, convey,
mortgage, grant, bargain, encumber, pledge, assign, or otherwise transfer the
Property or any part thereof or permit the Property or any part thereof to be
sold, conveyed, mortgaged, granted, bargained, encumbered, pledged, assigned, or
otherwise transferred. Notwithstanding the foregoing, the Property may be
transferred with the prior written consent of Lender which consent shall not be
unreasonably withheld in the case of a proposed transferee whose entity status,
creditworthiness and management ability meet standards consistently applied by
Lender for approval of borrowers for similar properties under mortgage
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loans secured by similar properties (the financial condition of a proposed
transferee shall be acceptable if such transferee's financial condition is equal
to or Greater than the financial condition of the Borrower as of the date hereof
or as of the proposed date of transfer, whichever is more favorable, as
determined by Xxxxxx in Lender's sole and absolute discretion), provided that
(i) only one such transfer shall be permitted during the term of the Note, (ii)
prior to the effective date of the transfer, the transferee shall execute and
deliver to tender a written assumption agreement in form and substance
acceptable to Lender in its sole discretion, (iii) a transfer fee equal to one
percent (1%) of, the Debt-shall be paid by Xxxxxxxx to Lender upon notice being
given to Borrower of approval of the proposed transfer, (iv) no transfer shall
be permitted hereunder if an Event of Default, or an event which with the giving
of notice or lapse of time or both could become an Event of Default, has
occurred and is continuing, and (v) such transferee shall be a single purpose
bankruptcy remote entity and Borrower shall cause to be delivered to Lender a
non-consolidation opinion or an update of the same, in form and substance
reasonably acceptable to Lender, upon Xxxxxx's request to do so, and (vi) such
transfer will not result in a downgrade, qualification or withdrawal of the then
current rating of the Securities (as hereinafter defined) by any Rating Agency.
Xxxxxxxx agrees that Xxxxxxxx shall not incur any debt, secured or unsecured,
direct or contingent (including guaranteeing any obligation), other than the
Debt, the indebtedness evidenced by the Second Loan Documents and trade payables
incurred in the ordinary course of business in connection with the operation of
the Property, provided same are paid when due.
Section 8.2 Sale/Encumbrance Defined. A sale, conveyance, mortgage,
grant, bargain, encumbrance, pledge, assignment, or transfer within the meaning
of this Article 8 shall be deemed to include, but not be limited to'(a) an
installment sales agreement wherein Borrower agrees to sell the Property or any
part thereof for a price to be paid in installments; (b) an agreement by
Borrower leasing all or a substantial part of the Property for other than actual
occupancy by a space tenant thereunder or a sale, assignment or other transfer
of, or the grant of a security interest in, Xxxxxxxx's right, title and interest
in and to any Leases or any Rents; (c) if Borrower, any Guarantor, any
Indemnitor, or any general partner or managing member (or if no managing member,
any member) of Borrower, Guarantor or Indemnitor is a corporation, the voluntary
or involuntary sale, conveyance, transfer or pledge of such corporation's stock
(or the stock of any corporation directly or indirectly controlling such
corporation by operation of law or otherwise) or the creation or issuance of new
stock by which an aggregate of more than 49% of such corporation's stock shall
be vested in a party or parties who are not now owners of more than 49% of such
corporation's stock; (d) if Borrower, any Guarantor or Indemnitor or any general
partner or managing member (or if no managing member, any member) of Xxxxxxxx,
any Guarantor or Indemnitor is a limited or general partnership or joint
venture, the change, removal or resignation of a general partner or the transfer
or pledge of the partnership interest of any general partner or any profits or
proceeds relating to such partnership interest or the transfer or pledge of any
partnership interest of any limited partner or any profits or proceeds relating
to any such partnership interest, which, whether singly or in the aggregate,
result in more than 49% of the beneficial interests in Borrower, or the profits
or proceeds relating thereto, having been transferred or pledged; and (e) if
Borrower, any Guarantor, any Indemnitor or any general partner or member of
Borrower, any Guarantor or any Indemnitor is a limited liability company, the
change, removal or resignation of a managing member or the transfer of the
membership interest of a managing member or any profits or proceeds relating to
such membership interest or the transfer or pledge of any membership interest of
any other member or any profits or proceeds
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relating to any such membership interest, which, whether singly or in the
aggregate, result in more than 49% of the beneficial interest in Borrower, or
the profits or proceeds relating thereto, having been transferred or pledged.
Notwithstanding the foregoing, the following transfers shall not be deemed to be
a sale, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment or
transfer within the meaning of this Article 8: (a) transfer by devise or descent
or by operation of law upon the death of a member, general partner or
stockholder of Borrower, any Guarantor or Indemnitor or any member or general
partner thereof, (b) a sale, transfer or hypothecation of a membership,
partnership or shareholder interest in Borrower, whichever the case may be, by a
current member, general partner or shareholder, as applicable, to an immediate
family member (i.e., parents, spouses, siblings, children or grandchildren) of
such member, general partner or shareholder, or to a trust for the benefit of an
immediate family member of such member, general partner or shareholder, provided
that, as to each of clauses (a) and (b) of this sentence, with respect to any
such sale, transfer or hypothecation, Borrower shall deliver a non-consolidation
opinion or an update of the same, in form and substance reasonably satisfactory
to Lender, upon Xxxxxx's request to do so, and (c) the lien of the Second
Security Instrument.
Section 8.3 Lender's Rights. Lender reserves the right to condition
the. consent required hereunder upon a modification of the terms hereof and on
assumption of the Note, this Security Instrument and the Other Security
Documents as so modified by the proposed transferee, payment of a transfer fee
and all of Lender's and Trustee's expenses incurred in connection with such
transfer, or such other conditions as Lender shall determine in its sole
discretion to be in the interest of Lender. Notwithstanding anything to the
contrary set forth in this Section 8.3, Lender shall not be entitled to modify
the material payment terms of the Note, including, but not limited to, the
interest rate, payment dates and amounts and date of maturity of same nor
require additional security or collateral in connection with same. 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 Xxxxxxxx's sale, conveyance, mortgage, grant, bargain,
encumbrance, pledge, assignment, or transfer of the Property without Xxxxxx's
consent. This provision shall apply to every sale, conveyance, mortgage, grant,
bargain, encumbrance, pledge, assignment, or transfer of the Property regardless
of whether voluntary or not, or whether or not Lender has consented to any
previous sale, conveyance, mortgage, grant, bargain, encumbrance, pledge,
assignment, or transfer of the Property.
ARTICLE 9
PREPAYMENT
Section 9.1 Prepayment Only in Accordance with Note. The Debt may be
prepaid only in strict accordance with the express terms and conditions of the
Note including, without limitation.
ARTICLE 10
DEFAULT
Section 10.1 Events of Default. The occurrence of any one or more of
the following events shall constitute an "Event of Default":
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(a) if any Event of Default (as defined in the Note, for
purposes of this Section 10.1(a) only) occurs under the Note;
(b) if Borrower violates or does not comply with any of the
provisions of Sections 3.7, 4.3 or 8.1 or if any general partner or the
SPE Member of Borrower violates or does not comply with any of the
provisions of Section 4.3;
(c) if any representation or warranty of Borrower,
Indemnitor (as defined in that certain Environmental Indemnity Agreement
dated as of the date hereof (the "Environmental Indemnity") or any
Guarantor, or any member, general partner, principal or beneficial owner
of any of the foregoing, made herein or in the Environmental Indemnity
or 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 any default occurs under any guaranty or indemnity
executed in connection herewith and such default continues after the
expiration of applicable grace periods, if any; .
(e) except for the specific defaults set forth in this
Section 10.1, any other default hereunder or any of the Other Security
Documents (including, without limitation, the Cooperation Letter, as
defined in Section 18.2) by Borrower, which default is not cured (1) in
the case of any default which can be cured by the payment of a sum of
money, within five (5) days after receipt of written notice from Lender
to Borrower, or (ii) in the case of any other default, within thirty
(30) days after receipt of written notice from Lender to Borrower;
provided that if such default cannot reasonably be cured within such
thirty (30) day period and Borrower shall have commenced to cure such
default within such thirty (30) day period and thereafter diligently and
expeditiously proceeds to cure the same, such thirty (30) day period
shall be extended for so long as it shall require Borrower 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 one hundred twenty
(120) days, unless, only in the case of cures that require construction
or remedial work, such cure cannot with diligence be completed within
such one hundred twenty (120) day; period, in which case such period
shall be extended for an additional one hundred twenty (120) days;
(f) if Borrower or any Guarantor or Indemnitor shall make an
assignment for the benefit of creditors or if Borrower shall generally
not be paying its debts as they become due; or
(g) if the Policies are not kept in full force and effect,
or Borrower has not delivered evidence of the renewal of the Policies
ten (10) days prior to their expiration as provided in Section
3.3(b);,or
(h) if any of the assumptions contained in the
Non-Consolidation Opinion were not true and correct as of the date of
such Non-Consolidation Opinion or thereafter became untrue or incorrect
in any, respect; or
(i) if a default occurs under the Cooperation Letter; or
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(j) if (i) Borrower or any Guarantor or Indemnitor 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 the Borrower or any Guarantor or
Indemnitor shall make a general assignment for the benefit of its
creditors'; or (ii) there shall be commenced against Borrower or any
Guarantor or Indemnitor 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 ninety (90) days;
or (iii) there shall be commenced against the Borrower or any Guarantor
or Indemnitor 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 ninety (90) days
from the entry thereof; or (iv) the Borrower or any Guarantor or
Indemnitor 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) the Borrower or any
Guarantor or Indemnitor shall generally not, or shall be unable to, or
shall admit in writing its inability to, pay its debts as they become
due.
ARTICLE 11
RIGHTS AND REMEDIES
Section 11.1 Remedies
(a) Upon the occurrence of any Event of Default, Xxxxxxxx
agrees that Xxxxxx, and when requested to do so by Xxxxxx, Trustee, may
take such action, without notice or demand, notice of intention to
accelerate or notice of acceleration, presentment for payment, notice of
non-payment, protest, notice of protest, notice of disfavor and all
other notices, all of which are waived, as it deems advisable to protect
and enforce the rights of Lender and Trustee 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
or Trustee:
(i) declare the entire unpaid Debt to be immediately
due and payable;
(ii) institute proceedings, judicial or otherwise,
for the complete foreclosure of this Security Instrument under
any applicable provision of law in which case the Property or
any interest therein may be sold for cash or upon credit in one
or more parcels or in several interests or portions and in any
order or manner;
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(iii) with or without entry, to the extent permitted
and pursuant to the procedures provided by applicable law,
institute proceedings for the partial foreclosure of this
Security Instrument for the portion of the Debt then due and
payable, subject to the continuing lien and security interest of
this Security Instrument for the balance of the Debt not then
due, unimpaired and without loss of priority;
(iv) sell for cash or upon credit the Property or any
part thereof and all estate, claim, demand, right, title and
interest of Borrower therein and rights of redemption thereof,
pursuant to power of sale or otherwise, at one or more sales, as
an entity or in parcels, at such time and place, upon such terms
and after such notice thereof as may be required or permitted by
law;
(v) subject to the provisions of Article 15,
institute an action, suit or proceeding in equity for the
specific performance of any covenant, condition or agreement
contained herein, in the Note or in the Other Security
Documents;
(vi) subject to the provisions of Article 15, recover
judgment on the Note either before, during or after any
proceedings for the enforcement of this Security Instrument or
the Other Security Documents;
(vii) apply for the appointment of a receiver,
trustee, liquidator or conservator of the Property, without
notice and without regard for the adequacy of the security for
the Debt and without regard for the solvency of Borrower, any
Guarantor, Indemnitor or of any person, firm or other entity
liable for the payment of the Debt;
(viii) subject to any applicable law, the license
granted to Borrower under Section 1.2 shall automatically be
revoked and Xxxxxx may enter into or upon the Property, either
personally or by its agents, nominees or attorneys and
dispossess Borrower and its agents and servants therefrom,
without liability for trespass, damages or otherwise and exclude
Borrower and its agents or servants wholly therefrom, and take
possession of all books, records and accounts relating thereto
and Borrower agrees to surrender possession of the Property and
of such books, records and. accounts to Lender upon demand, and
thereupon Lender may(A) use, operate, manage, control, insure,
maintain, repair, restore and otherwise deal with all and every
part of the Property and conduct the business thereat; (B)
complete any construction on the Property in such manner and
form as Lender deems advisable; (C) make alterations, additions,
renewals, replacements and improvements to or on the Property;
(D) exercise all rights and powers of Borrower with respect to
the. Property, whether in the name of Borrower or otherwise,
including, without limitation, the right to make, cancel,
enforce or modify Leases, obtain and evict tenants, and demand,
sue for, collect and receive all Rents of the Property and every
part thereof; (E) require Borrower to pay monthly in advance to
Lender, or any receiver appointed to collect the Rents, the fair
and reasonable rental value for the use and occupation of such
part of the Property as may be occupied by Borrower: (F) require
Borrower to vacate
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and surrender possession of the Property to Lender or to such
receiver and, in default thereof, Borrower may be evicted by
summary proceedings or otherwise; and (G) apply the receipts
from the Property to the payment of the Debt, in such order,
priority and proportions as Lender shall deem appropriate in its
sole discretion after deducting therefrom all expenses
(including reasonable attorneys' fees) incurred in connection
with the aforesaid operations and all amounts necessary to pay
the Taxes, Other Charges, insurance and other expenses in
connection with the Property, as well as just and reasonable
compensation for the services of Lender, its counsel, agents and
employees;
(ix) 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: (A) the right to take possession of the Collateral or
any part thereof, and, to take such other measures as Trustee or
Lender may deem necessary for the care, protection and
preservation of the Collateral, and (B) request Borrower at its
expense to assemble the Collateral and make it available to
Trustee or Lender at a convenient place acceptable to Lender.
Any notice of sale, disposition or other intended action by
Trustee or Lender with respect to the Collateral sent to
Borrower in accordance with the provisions hereof at least ten
(10) days prior to such action, shall constitute commercially
reasonable notice to Borrower;
(x) apply any sums then deposited in the Escrow Fund
and any other sums held in escrow or otherwise by Lender in
accordance with the terms of this Security Instrument or any
Other Security Document to the payment of the following items in
any order in its sole and absolute discretion:
(A) Taxes and Other Charges;
(B) Insurance Premiums;
(C) Interest on the unpaid principal balance
of the Note;
(D) Amortization of the unpaid principal
balance of the Note; and all other sums payable pursuant
to the Note, this Security Instrument and the Other
Security Documents, including, without limitation,
advances made by Lender pursuant to the terms of this
Security Instrument;
(xi) surrender the Policies maintained pursuant to
Article 3 hereof, collect the unearned Insurance Premiums and
apply such sums as a credit on the Debt in such priority and
proportion as Lender in its discretion shall deem proper, 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 Insurance
Premiums;
(xii) apply the undisbursed balance of any Net
Proceeds or any Net Proceeds Deficiency deposit, together with
interest thereon, to the payment of the
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Debt in such order, priority and proportions as Lender shall
deem to be appropriate in its discretion;
(xiii) prohibit Borrower and anyone claiming on behalf
of or through Borrower from making use of or withdrawing any
sums from any lockbox or similar account, if any;
(xiv) pursue such other remedies as Lender or Trustee
may have under applicable law.
(b) In the event of a sale, by foreclosure, power of sale,
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 unimpaired and without loss of priority.
Notwithstanding the provisions of this Section 11.1 to the contrary; if
any Event of Default as described in Subsection 10.1 (h)(i) or (ii)
shall occur, the entire unpaid Debt shall be automatically due and
payable, without any further notice, demand or other action by Xxxxxx.
(c) Lender may adjourn from time to time any sale by it to
be made under or by virtue of this Security Instrument by announcement
at the time and place appointed for such sale or for such adjourned sale
or sales; and, except as otherwise provided by any applicable provision
of law, Lender, without further notice or publication, may make such
sale at the time and place to which the same shall be so adjourned.
(d) Upon any sale made under or by virtue of this Section
11.1, whether made under a power of sale or under or by virtue of
judicial proceedings or of a judgment or decree of foreclosure and sale,
Lender may bid for and acquire the Property or any part thereof and in
lieu of paying cash therefor may make settlement for the purchase price
by crediting upon the Debt the net sales price after deducting therefrom
the expenses of the sale and costs of the action and any other sums
which Lender is authorized to deduct under this Security Instrument.
Section 11.2 Application of Proceeds. The purchase money, proceeds
and avails of any disposition .of the Property, or any part thereof, or any
other sums collected by Lender pursuant to the Note, this Security Instrument or
the Other Security Documents, may be applied by Lender to the payment of the
Debt in such priority and proportions as Lender in its discretion shall deem
proper.
Section 11.3 Right to Cure Defaults. Upon the occurrence of any Event
of Default, Lender may, but without any obligation to do so and without notice
to or demand on Borrower and without releasing Borrower from any obligation
hereunder, cure the same in such manner and to such extent as Lender may deem
necessary to protect the security hereof. Lender is authorized to enter upon the
Property for such purposes, or appear in, defend, or bring any action or
proceeding to protect its interest in the Property or to foreclose this Security
Instrument or collect the Debt, and the cost and expense thereof (including
reasonable attorneys' fees to the extent permitted by law), with interest as
provided in this Section 11.3, shall constitute a portion of the Debt and shall
be due and payable to Lender upon demand. All such costs and expenses
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incurred by Xxxxxx in remedying such Event of Default or in appearing in,
defending, or bringing any such action or proceeding shall bear interest at the
Default Rate (as defined in the Note), for the period after notice from Lender
that such cost or expense was incurred to the date of payment to Lender. All
such costs and expenses incurred by Lender together with interest thereon
calculated at the Default Rate shall be deemed to constitute a portion of the
Debt and be secured by this Security Instrument and the Other Security Documents
and shall be immediately due and payable upon demand by Lender therefor.
Section 11.4 Actions and Proceedings. After the occurrence and during
the continuance of an Event of Default, Xxxxxx has the right to appear in and
defend any action or proceeding brought with respect to the Property and to
bring any action or proceeding, in the name and on behalf of Xxxxxxxx, which
Xxxxxx, in its discretion, decides should be brought to protect its interest in
the Property.
Section 11.5 Recovery of Sums Required To Be Paid. Lender shall have
the right from time to time to take action to recover any sum or sums which
constitute a part of the Debt as the same become due, without regard to whether
or not the balance of the Debt shall be due, and without prejudice to the right
of Lender thereafter to bring an action of foreclosure, or any other action, for
a default or defaults by Borrower existing at the time such earlier action was
commenced.
Section 11.6 Examination of Books and Records. Lender, its agents,
accountants and attorneys shall have the right upon prior written notice to
examine the records, books, management and other papers of Borrower and its
affiliates or of any Guarantor or Indemnitor which reflect upon their financial
condition, at the Property or at any office regularly maintained by Borrower,
its affiliates or any Guarantor or Indemnitor where the books and records are
located. Lender and its agents shall have the right upon notice to make copies
and extracts from the foregoing records and other papers. In addition, Lender,
its agents, accountants and attorneys shall have the right to examine and audit
the books and records of Borrower and its affiliates or of any Guarantor or
Indemnitor pertaining to the income, expenses and operation of the Property
during reasonable business hours at any office of Borrower, its affiliates or
any Guarantor or Indemnitor where the books and records are located.
Section 11.7 Other Rights, Etc.
(a) The failure of Lender to insist upon strict performance
of any term hereof shall not be deemed to be a waiver of any term of
this Security Instrument. Borrower shall not be relieved of Borrower's
obligations hereunder by reason of (i) the failure of Lender or Trustee
to comply with any request of Borrower, any Guarantor or any Indemnitor
to take any action to foreclose this Security Instrument or otherwise
enforce any of the provisions hereof or of the Note or the Other
Security Documents, (ii) the release, regardless of consideration, of
the whole or any part of the Property, or of any person liable for the
Debt or any portion thereof, or (iii) any agreement or stipulation by
Lender extending the time of payment or otherwise modifying or
supplementing the terms of the Note, this Security Instrument or the
Other Security Documents.
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(b) It is agreed that the risk of loss or damage to the
Property is on Borrower, and Lender shall have no liability whatsoever
for decline in value of the Property, for failure to maintain the
Policies, or for failure to determine whether insurance in force is
adequate as to the amount of risks insured. Possession by Xxxxxx
shall-not be deemed an election of judicial relief, if any such
possession is requested or obtained, with respect to any Property or
collateral not in Xxxxxx's possession.
(c) Lender may resort for the payment of the Debt to any
other security held by Lender or Trustee in such order and manner as
Lender, in its discretion, may elect. Lender may take action to recover
the Debt, or any portion thereof, or to enforce any covenant hereof
without prejudice to the right of Trustee or Lender thereafter to
foreclose this Security Instrument. The rights of Trustee and Lender
under this Security Instrument shall be separate, distinct and
cumulative and none shall be given effect to the exclusion of the
others. No act of Trustee or Lender shall be construed as an election to
proceed under any one provision herein to the exclusion of any other
provision. Neither Trustee nor Lender shall be limited exclusively to
the rights and remedies herein stated but shall be entitled to every
right and remedy now or hereafter afforded at law or in equity.
Section 11.8 Right to Release Any Portion of the Property. Trustee,
at the direction of Lender, may release any portion of the Property for such
consideration as Lender may require without, as to the remainder of the
Property, in any way impairing or affecting the lien or priority of this
Security Instrument, or improving the position of any subordinate lienholder
with respect thereto, except to the extent that the obligations hereunder shall
have been reduced by the actual monetary consideration, if any, received by
Lender for such release, and may accept by assignment, pledge or otherwise any
other property in place thereof as Lender may require without being accountable
for so doing to any other lienholder. This Security Instrument shall continue as
a lien and security interest in the remaining portion of the Property.
Section 11.9 Violation of Laws. If the Property is not in compliance
with Applicable Laws, Lender may impose additional requirements upon Borrower in
connection herewith including, without limitation, monetary reserves or
financial equivalents.
Section 11.10 of Entry. Lender and its agents shall have the right
upon prior written notice to enter and inspect the Property at all reasonable
times upon not less than five (5) Business Days' notice (except in the case of
emergencies when no notice shall be required) to Borrower.
ARTICLE 12
ENVIRONMENTAL HAZARDS
Section 12.1 Environmental Representations and Warranties. Borrower
represents and warrants, based upon an environmental Phase I site assessment of
the Property and information that Borrower knows, that: (a) there are no
Hazardous Substances (defined below) or underground storage tanks in, on, or
under the Property, except those that are both ,(I) in compliance with
Environmental Laws (defined below) and with permits issued pursuant thereto, if
any, and (ii) fully disclosed to Lender in writing pursuant to the written
reports resulting from the environmental assessments of the Property delivered
to Lender (the "Environmental
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Report"); (b) there are no past or present Releases (defined below) of Hazardous
Substances in violation of any Environmental Law or which would require
Remediation (defined below) by a Governmental Authority in, on, under or from
the Property except as described in the Environmental Report; (c) there is no
past of present non-compliance with Environmental Laws, or with permits issued
pursuant thereto, in connection with the Property except as. described in the
Environmental Report; (d) Borrower does not know of, and has not received,. any
written or oral notice or other communication from any person or entity
(including, but not limited to a governmental entity) relating to Hazardous
Substances or Remediation thereof, of possible liability of any person of entity
pursuant to any Environmental Law, other environmental conditions in connection
with the Property, or any actual administrative or judicial proceedings in
connection with any of the foregoing; and (e) Borrower has truthfully and fully
provided to Lender, in writing, any and all information relating to
environmental conditions in, on, under or from the Property that is known to
Borrower and that is contained in Borrower's files and records, including, but
not limited to any reports relating to Hazardous Substances in, on, under or
from the Property and/or to the environmental condition of the Property.
"Environmental Law" means any present, and for the purposes of Sections 12.2.
12.3 and 13.4 only, 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. "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.
"Environmental Law" also includes, but is not limited to, any present, and for
the purposes of Sections 12.2, 12.3 and 13.4 only, 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. "Hazardous Substances" include but are not
limited to any and all substances (whether solid, liquid or gas) (i) 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 for the purposes of Sections
12.2. 12.3 and 13.4 only, future, Environmental Laws or (ii) 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, radon, radioactive materials, flammables and
explosives and toxic mold. "Release" of any Hazardous Substance includes, but is
not limited to any release, deposit,
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discharge, emission, leaking, spilling, seeping, migrating, injecting, pumping,
pouring, emptying, escaping, dumping, disposing or other movement of Hazardous
Substances. "Remediation" includes, but is not limited to 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 12.
Section 12.2 Environmental Covenants. Borrower covenants and agrees
that so long as the Borrower owns, manages, is in possession of, or otherwise
controls the operation of the Property: (a) all uses and operations on or of the
Property, whether by Borrower or any other person or entity, shall be in
compliance with all Environmental Laws and permits issued pursuant thereto; (b)
there shall be no Releases of Hazardous Substances in, on, under or from the
Property; (c) there shall be no Hazardous Substances in, on, or under the
Property, except those that are in compliance with all Environmental Laws and
with permits issued pursuant thereto, if and to the extent required; (d)
Borrower shall keep the Property free and clear of all liens and other
encumbrances imposed pursuant to any Environmental Law, whether due to any act
or omission of Borrower or any other person or entity (the "Environmental
Liens"); (e) Borrower shall, at its sole cost and expense, fully and
expeditiously cooperate in all activities pursuant to Section 12.3 below,
including, but not limited to providing all relevant information and making
knowledgeable persons available for interviews; (f) Borrower shall, at its sole
cost and expense, perform any environmental site assessment or other
investigation of environmental conditions in connection with the Property,
pursuant to any reasonable written request of Lender after Lender has reason to
believe this Section 12.2 has been violated (including, but not limited . to
sampling, testing and analysis of soil, water, air, building materials and other
materials and substances whether solid, liquid or gas), and share with Lender
the reports and other results thereof, and Lender and other Indemnified Parties
(defined in Section 13.1) shall be entitled to rely on such reports and other
results thereof; (g) Borrower shall, at its sole cost and expense, comply with
all reasonable written requests of Lender to (i) reasonably effectuate
Remediation of any condition (including, but not limited to a Release of a
Hazardous Substance) in, on, under or from the. Property, (ii) comply with any
Environmental Law, (iii) comply with any directive from any governmental
authority, and (iv) take any other reasonable action necessary or appropriate
for protection of human health of the environment; (h) Borrower shall not do or
allow any tenant or other user of the Property to do any act that materially
increases the dangers to human health or the environment, poses an unreasonable
risk of harm to any person or entity (whether on or off the Property), impairs
or may impair the value of the Property, is contrary to any requirement of any
insurer, constitutes a public or private nuisance, constitutes waste, or
violates any covenant, condition, agreement or easement applicable to the
Property; and (i) Borrower shall immediately notify Lender in writing promptly
after it has become aware of (A) any presence or Releases or threatened Releases
of Hazardous Substances in, on, under, from or migrating towards the Property
which is required to be reported to a governmental authority under any
Environmental Law, (B) any actual Environmental Lien affecting the Property, (C)
any required Remediation of environmental conditions relating to the Property,
and (D) any written or oral notice or other communication of which Borrower
becomes aware from any source whatsoever (including but not limited to a
governmental entity) relating in any way to
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Hazardous Substances or Remediation thereof, possible liability of any person or
entity pursuant to any Environmental Law, other environmental conditions in
connection with the Property, or any actual or threatened administrative or
judicial proceedings in connection with anything referred to in this Article 12.
Section 12.3 Lender's Rights. Lender, its environmental consultant,
and any other person or entity designated by Xxxxxx, including, but not limited
to any receiver and any representative of a governmental entity, shall have the
right, but not the obligation, at intervals of not less than one year, or more
frequently if the Lender reasonably believes that a Hazardous Substance or other
environmental condition violates or threatens to violate any Environmental Law,
after notice to Borrower, to enter upon the. Property at all reasonable times to
assess any and all aspects of the environmental condition of the Property and
its use, including, but not limited to conducting any environmental assessment
or audit of the Property or portions thereof to confirm Borrower's compliance
with the provisions of this Article 12, and Borrower shall cooperate in all
reasonable ways with Lender in connection with any such audit. Such audit shall
be performed in a manner so as to minimize interference with the conduct of
business at the Property. If such audit discloses that a violation of or a
liability under any Environmental Law exists or if such audit was required or
prescribed by law, regulation or governmental or quasi-governmental authority,
Borrower shall pay all costs and expenses incurred in connection with such
audit; otherwise, the costs and expenses of such audit shall, notwithstanding
anything to the contrary set forth in this Section, be paid by Lender.
ARTICLE 13
INDEMNIFICATION
Section 13.1 General 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 claims, suits, liabilities
(including, without limitation, strict liabilities), actions, proceedings,
obligations, debts, damages, losses, costs, expenses, diminutions in value,
fines, penalties, charges, fees, expenses, judgments, awards, amounts paid in
settlement, or punitive damages, of whatever kind or nature (including, but not
limited to attorneys' fees and other costs of defense) (the "Losses") imposed
upon or incurred by or asserted against any Indemnified Parties and directly or
indirectly arising out of or in any way relating to any one or more of the
following (but excluding Losses arising out of Xxxxxx's gross negligence or
willful misconduct): (a) ownership of this Security Instrument, the Property or
any interest therein or receipt of any Rents; (b) any amendment to, or
restructuring of, the Debt, and the Note, this Security Instrument, or any Other
Security Documents; (c) any and all lawful action that may be taken by Lender or
Trustee in connection with the enforcement of the provisions of this Security
Instrument or the Note or any of the Other Security Documents, whether or not
suit is filed in connection with same, or in connection with Borrower, any
Guarantor or Indemnitor and/or any member, partner, joint venturer or
shareholder thereof becoming a party to a voluntary or involuntary federal or
state bankruptcy, insolvency or similar proceeding; (d) any accident, injury to
or death of persons or loss of or damage to property occurring in, on or about
the Property or any part thereof or on the adjoining sidewalks, curbs, adjacent
property or adjacent parking areas, streets or ways; (e) any use, nonuse or
condition in, on or about the Property or an), part thereof or on the adjoining
sidewalks, curbs, adjacent property or adjacent parking areas. streets or ways;
(f) any failure on the part of Borrower to perform or be in compliance with
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any of the terms of this Security Instrument or the Other Security Documents;
(g) performance of any labor or services or the furnishing of any materials or
other property in respect of the Property or any part thereof; (h) the failure
of any person to file timely with the Internal Revenue Service an accurate Form
1099-S, Statement for Recipients of Proceeds from Real Estate Transactions,
which may be required in connection with the Security Instrument, or to supply a
copy thereof in a timely fashion to the recipient of the proceeds of the
transaction in connection with which this Security Instrument is made; (i) any
failure of the Property to be in compliance with any Applicable Laws; (j) the
enforcement by any Indemnified Party of the provisions of this Article 13; (k)
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 Lease; (1)
the payment of any commission, charge or brokerage fee to anyone which may be
payable in connection with the funding of the loan evidenced by the Note and
secured by this Security Instrument; or (m) any misrepresentation made by
Borrower in this Security Instrument, the Other Security Documents, or any
documents or information provided pursuant to Section 18.1 hereof. XXXXXXXX
EXPRESSLY AGREES TO INDEMNIFY INDEMNIFIED PARTIES FROM LOSSES ARISING FROM THE
NEGLIGENCE OF ANY OF THE INDEMNIFIED PARTIES. Any amounts payable to Lender by
reason of the application of this Section 13.1. shall become immediately due and
payable and shall bear interest at the Default Rate from the date loss or damage
is sustained by Lender until paid. For purposes of this Article 13, the term
"Indemnified Parties" means Lender and any person or entity who is or will have
been involved in the origination of this loan, any person or entity who is or
will have been involved in the servicing of this loan, any person or entity,
including Trustee and its successors and assigns, 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
this loan (including, but not limited to Investors or prospective Investors in
the Securities, as well as custodians, trustees and other fiduciaries who hold
or have held a full or partial interest in this loan for the benefit of third
parties) as well as the respective directors, officers, shareholders, members,
partners, employees, agents, ,servants, representatives, contractors,
subcontractors, affiliates, subsidiaries, participants, successors and assigns
of any and all of the. foregoing (including, but not limited to any other person
or entity who holds or acquires or will have held a participation or other full
or partial interest in this loan or the Property, whether during the term of
this loan or as a part of or following a foreclosure of this loan and including,
but not limited to any successors by merger, consolidation or acquisition of all
or a substantial portion of Lender's assets and business).
Section 13.2 Mortgage and/or Intangible Tax. 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 imposed upon or incurred
by or asserted against any Indemnified Parties and directly or indirectly
arising out of or in any way relating to any tax on the making and/or recording
of this Security Instrument, the Note or any of the Other Security Documents or
in connection with a transfer of all or a portion of the Property pursuant to a
foreclosure, deed in lieu of foreclosure or otherwise.
Section 13.3 ERISA Indemnification. Borrower shall, at its sole cost
and expense, protect, defend, indemnify, release and hold harmless the
Indemnified Parties from and against an), and all Losses (including, without
limitation; attorneys' fees and costs incurred in the
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investigation, defense, and settlement of Losses incurred in correcting any
prohibited transaction or in the sale of a prohibited loan, and in obtaining any
individual prohibited transaction exemption under ERISA that may be required, in
Xxxxxx's sole discretion) that Lender may incur, directly or indirectly, as a
result of a default under Sections 4.2 or 5.9.
Section 13.4 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 and costs of Remediation
(whether or not performed voluntarily), engineers' fees, environmental
consultants' fees, and costs of investigation (including, but not limited to
sampling, testing and analysis of soil, water, air, building materials and other
materials and substances whether solid, liquid or gas) imposed upon or incurred
by or asserted against any Indemnified Parties, and arising out of or in any way
relating to any one or more of the following, unless caused by the gross
negligence or willful misconduct of any Indemnified Party: (a) any presence of
any Hazardous Substances in, on, above or under the Property; (b) any past,
present or threatened Release of Hazardous Substances in, on, above, under or
from the Property; (c) any activity by Borrower, any person or entity affiliated
with Borrower or tenant or other users 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 or tenant or other users of the
Property in connection with any actual or proposed Remediation 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 violations of any Environmental Laws (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 or tenant or other users of the
Property to comply with any order of any governmental authority in connection
with Environmental Laws; (f) the imposition, recording or filing of any
Environmental Lien encumbering the Property; (g) any administrative processes or
proceedings or judicial proceedings in any way connected with any matter
addressed in Article 12 and this Section 13.4; (h) any past, present or
threatened injury to, destruction of or loss of natural resources in any way
connected with the Property; including, but not limited to costs to investigate
and assess such injury, destruction or loss; (i) any acts of Borrower or other
users of the Property in arranging for disposal or treatment, or arranging with
a transporter for transport for disposal or treatment, of Hazardous Substances
owned or possessed by such Borrower or other users, at any facility or
incineration vessel owned or operated by another person or entity and containing
such or similar Hazardous Substance; (j) any acts of Borrower or other users of
the Property, in accepting any Hazardous Substances for transport to disposal or
treatment facilities, incineration vessels or sites selected by Borrower or such
other users, from which there is a Release, or a threatened Release of any
Hazardous Substance which causes the incurrence of costs for Remediation; (k)
any personal injury, wrongful death, or property damage caused by Hazardous
Substances arising under any statutory or common law or tort law theory,
including, but not limited to damages assessed for the maintenance of a private
or public nuisance or for the conducting of an abnormally dangerous activity on
or near the Property; and (1) any intentional
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misrepresentation in any representation or warranty or material breach or
failure to perform any covenants or other obligations pursuant to Article 12.
Section 13.5 Duty to Defend; Attorneys' Fees 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. 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.
Upon demand, Xxxxxxxx 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.
ARTICLE 14
WAIVERS
Section 14.1 Waiver of Counterclaim. Borrower hereby waives the right
to assert a counterclaim, other than a mandatory or compulsory counterclaim, in
any action* or proceeding brought against it by Trustee or Lender arising out of
or in any way connected with this Security Instrument, the Note, any of the
Other Security Documents, 'or the Obligations.
Section 14.2 Marshaling and Other Matters. Borrower hereby waives, to
the extent permitted by law, the benefit of all appraisement, valuation, stay,
extension, reinstatement arid redemption laws now or hereafter in force and all
rights of marshaling 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 14.3 Waiver of Notice. To the extent permitted by Applicable
Law, Borrower shall not be entitled to any notices of any nature whatsoever from
Trustee or Lender except with respect to matters for which this Security
Instrument specifically and expressly provides for the giving of notice by
Trustee or Lender to Borrower and except with respect to matters for which
Trustee or Lender is required by Applicable Law to give notice, and Borrower
hereby expressly waives the right to receive any notice from Trustee or Lender
with respect to any matter for which this Security Instrument does not
specifically and expressly provide for the giving of notice by Trustee or Lender
to Borrower.
Section 14.4 Waiver of Statute of Limitations. Borrower hereby
expressly waives and releases to the fullest extent permitted by law, the
pleading of any statute of limitations as a defense to payment of the Debt or
performance of its Other Obligations.
Section 14.5 Sole Discretion of Lender. Wherever pursuant to this
Security Instrument (a) Lender exercises any right given to it to approve or
disapprove, (b) any arrangement or term is to be satisfactory to Lender, or (c)
and, other decision or determination is to be made by
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Xxxxxx, the decision of Xxxxxx to approve or disapprove all decisions that
arrangements or terms are satisfactory or not satisfactory, and all other
decisions and determinations made by Xxxxxx, shall be in the sole and absolute
discretion of Lender and shall be final and conclusive, except as may be
otherwise expressly and specifically provided herein.
Section 14.6 Survival. Except as hereinafter specifically set forth
below, the representations and warranties, covenants, and other obligations
arising tinder Article 12 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 or Trustee'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 Security Documents, any transfer of all
or any portion of the Property (whether by Borrower, by Lender, or by Trustee at
the request of 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 Security Documents, and any act or omission that might
otherwise be construed as a release or discharge of Borrower from the
obligations pursuant hereto. All obligations and liabilities of Borrower under
Article 12 shall cease and terminate on the first (1st) anniversary of the date
of payment to Lender in cash of the entire Debt, provided that contemporaneously
with or subsequent to such payment, Borrower, at its sole cost and expense,
delivers to Lender an environmental audit of the Property in form and substance,
and prepared by a qualified environmental consultant, reasonably satisfactory in
all respects to Lender and indicating the Property is in full compliance with
all applicable Environmental Laws.
Section 14.7 Waiver of Trial By Jury. BORROWER HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING
DIRECTLY OR INDIRECTLY TO THE LOAN EVIDENCED BY THE NOTE, THE APPLICATION FOR
THE LOAN EVIDENCED BY THE NOTE, THE NOTE, THIS SECURITY INSTRUMENT OR THE OTHER
SECURITY DOCUMENTS OR ANY ACTS OR OMISSIONS OF LENDER, ITS OFFICERS, EMPLOYEES,
DIRECTORS OR AGENTS IN CONNECTION THEREWITH.
ARTICLE 15
EXCULPATION
Section 15.1 Exculpation. Notwithstanding anything to the contrary
contained in this Security Instrument or in any Other Security Documents (but
subject to the provisions of Sections 15.2, 15.3, 15.4 and 15.5), Lender shall
not enforce the liability and obligation of Borrower to perform and observe the
obligations contained in the Note or this Security Instrument or Other Security
Documents by any action or proceeding to collect damages or wherein a money
judgment or any deficiency judgment or order or any judgment establishing any
personal obligation or liability shall be sought against Borrower or any
principal director, officer, employee, beneficiary, shareholder, partner,
member, trustee, agent or affiliate of Borrower or any person owning, directly
or indirectly, any legal or beneficial interest in Borrow.-T, o- any, successors
or assigns o any or the foregoing (collectively, the "Exculpated
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Parties"). Lender or Trustee, at the request of Lender, may bring a foreclosure
action, action for specific performance or other appropriate action or
proceeding to enable Lender to enforce and realize upon this Security
Instrument, the Other Security Documents, and the interest in the Property, the
Rents and any other collateral given to Lender created by this Security
Instrument and the Other Security Documents; provided, however, subject, to the
provisions of Sections 15.2, 15.3, 15.4 and 15.5, that any judgment in any
action or proceeding shall be enforceable against Borrower only to the extent of
Xxxxxxxx's interest in the Property, in the Rents and in any other collateral
given to Lender in connection with the Note. Xxxxxx, by accepting the Note and
this Security Instrument, agrees that it shall not, except as otherwise provided
below, sue for or demand any deficiency judgment against Borrower or any of the
Exculpated Parties in any action or proceeding, under or by reason of or under
or in connection with the Note, the Other Security Documents or this Security
Instrument.
Section 15.2 Reservation of Certain Rights. The provisions of Section
15.1 shall not (a) constitute a waiver, release or impairment of the
Obligations; (b) impair the right of Lender or Trustee to name Borrower as a
party defendant in any action or suit for judicial foreclosure and sale under
this Security Instrument; (c) affect the validity or enforceability of any
indemnity, guaranty, master lease or similar instrument made in connection with
the Note, this Security Instrument, or the Other Security Documents; (d) impair
the right of Lender to obtain the appointment of a receiver; or (e) impair the
enforcement of the Assignment of Leases and Rents executed in connection
herewith.
Section 15.3 Exceptions to Exculpation. Notwithstanding the
provisions of Article 15.1 to the contrary, Borrower and Indemnitor shall be
personally liable to Lender on a joint and several basis for the Losses Lender
incurs due to: (a) fraud or intentional misrepresentation by Borrower or any
other person or entity in connection with the execution and the delivery of the
Note, this Security Instrument or the Other Security Documents; (b) Borrower's
misapplication or misappropriation of Rents received by Borrower after the
occurrence and during the continuance of an Event of Default; (c) Borrower's
misapplication or misappropriation of tenant security deposits or Rents
collected in advance; (d) the misapplication or misappropriation of insurance
proceeds or condemnation awards after the occurrence and during the continuance
of an Event of Default; (e) any fees or commissions paid by Borrower after the
occurrence and during the continuance of an Event of Default to any principal,
affiliate or general partner of Borrower, Indemnitor or Guarantor in violation
of the terms of the Note, this Security Instrument or the Other Security
Documents; (f) gross negligence, or criminal acts perpetrated by it resulting in
forfeiture, seizure or loss of any portion of the security; (g) any failure by
Borrower or Indemnitor to comply with the terms and provisions of Section 13.4
hereof or of the Environmental Indemnity; (h) any failure by Borrower or any
general partner or the SPE Member of Borrower to comply with the terms and
provisions of Section 4.3 hereof; (i) all fees and expenses of Lender or Trustee
pursuant to Section 19.2(b) hereof; (j) any sale, conveyance, mortgage, grant,
bargain, encumbrance, pledge, assignment or transfer of the Property or any part
thereof, within the meaning of Article 8 hereof, without the prior written
consent of Xxxxxx; (k) Borrower's failure to maintain insurance without
exclusions for terrorism or terrorist acts, except as set forth herein; or (1)
Borrower's failure to deliver to Lender any deficiency amount with respect to
contested taxes in accordance with that certain letter agreement of even date
herewith between Borrower and Lender relating to contested taxes.
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Section 15.4 Recourse. Notwithstanding the foregoing, the agreement
of Lender not to pursue recourse liability as set forth in Section 15.1 above
SHALL BECOME NULL AND VOID and shall be of no further force and effect in the
event (i) the Property or any part thereof shall become an asset in (A) a
voluntary bankruptcy or insolvency proceeding, or (B) an involuntary bankruptcy
or insolvency proceeding commenced by any Person (other than Lender) and
Borrower or Guarantor fails to use its best efforts to obtain a dismissal of
such proceeding), or (ii) Borrower or any Guarantor or Indemnitor fails to
comply with the terms and provisions of Section 3.11 hereof within thirty (30)
days after written notice from Lender to Borrower (which notice shall be a
second notice given after the expiration of any notice given pursuant to Section
10.1(e)).
Section 15.5 Bankruptcy Claims. Nothing herein shall be deemed to be
a waiver of any right which Lender may have under Sections 506(x), 506(b), 1111
(b) or any other provisions of the U.S. Bankruptcy Code to file a claim for the
full amount of the Debt secured by this Security. Instrument or to require that
all collateral shall continue to secure all of the Debt owing to Lender in
accordance with the Note, this Security Instrument and the Other Security
Documents.
ARTICLE 16
NOTICES
Section 16.1 Notices. All notices or other written communications
hereunder shall be deemed to have been properly given (a) upon delivery, if
delivered in person or by facsimile transmission with receipt acknowledged by
the recipient thereof, (b) one (1) Business Day (defined below) after having
been deposited for overnight delivery with any reputable overnight courier
service, or (c) 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, return receipt requested,
addressed as follows:
If to Borrower: Xxxxxxx REIT Operating Partnership II, L.P.
c/x Xxxxxxx Management, Inc.
0000 Xxxx Xxx Xxxxxxx Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Facsimile No.: (000) 000-0000
If to Trustee: Houston Title Company
000 Xxxx Xxx Xxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Facsimile No. (000) 000-0000
If to Lender: GMAC Commercial Mortgage Corporation
000 Xxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: Executive Vice President,
Commercial Loan Servicing
Facsimile No. (000) 000-0000
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With a copy to: Commercial Capital Initiatives, Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Manager - Loan Administration
Facsimile No. (000) 000-0000
And: Xxxxx Xxxxxxx Xxxx Xxxxxx &', Xxxxxxx LLP
0000 Xxxxxx of the-Xxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxx, Esq.
Facsimile No. (000) 000-0000
or addressed as such party may from time to time designate by written notice to
the other parties.
Either party by notice to the other may designate additional or
different addresses for subsequent notices or communications.
For purposes of this Subsection, "Business Day" shall mean a day on
which commercial banks are not authorized or required by law to close in the
State of New York.
ARTICLE 17
APPLICABLE LAW
Section 17.1 Choice of Law. THIS SECURITY INSTRUMENT SHALL BE
GOVERNED, CONSTRUED, APPLIED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE
STATE WHERE THE PROPERTY IS LOCATED AND THE APPLICABLE, LAWS OF THE UNITED
STATES OF AMERICA.
Section 17.2 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 terns of the Note until payment in full so that the rate or amount
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 17.3 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
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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.
Section 17.4 Inapplicable Provision. 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 18
SECONDARY MARKET
Section 18.1 Dissemination of Information. If Lender determines at
any time to sell, transfer or assign the Note, this Security Instrument and the
Other Security Documents, and any or all servicing rights with respect thereto,
or to grant participations therein (the "participations") or issue mortgage
pass-through certificates or other securities (such sale and/or issuance, the
"Securitization") 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, or their
respective successors in such Participations and/or Securities (collectively,
the "Investor") or any rating agency rating such Securities ("Rating Agency")
and each prospective Investor, all documents and information which tender now
has or may hereafter acquire relating to the Debt and to Borrower, any
Guarantor, any Indemnitors and the Property (including, without limitation, all
financial statements), which shall have been furnished by Borrower, any
Guarantor or any Indemnitors, as Lender determines necessary or, desirable.
Borrower, any Guarantor and any Indemnitor agree to cooperate with Lender in
connection with any transfer made or any Securities created pursuant to this
Section, including, without limitation, the delivery of an estoppel certificate
required in accordance with Subsection 7.4(c) hereof and such other documents as
may be reasonably requested by Xxxxxx and, upon Lender's reasonable request,
meeting with any Rating Agency for due diligence purposes. Borrower shall also
furnish and Borrower, any Guarantor and any Indemnitor consent to Lender
furnishing to such Investors or such prospective Investors or any Rating Agency
any and all information concerning the Property, the Leases, the financial
condition of Borrower, any Guarantor and any Indemnitor as may be requested by
Lender, any Investor or any prospective Investor or Rating Agency in connection
with any sale, transfer or Participation. Borrower shall deliver on the date
hereof, at Borrower's sole cost and expense, a nonconsolidation opinion, and
within ten (W) days after demand of Lender, an update of same (which update
Borrower will not be required to provide more than once), each in form and
substance and delivered by counsel acceptable to Lender and the Rating Agency
rating or proposed to rate the Securities, as may be required by Lender and/or
such Rating Agency. Xxxxxxxx's failure to deliver the opinions required hereby
shall constitute an Event of Default hereunder. Notwithstanding anything to the
contrary set forth herein, Borrower shall not be required to reimburse Lender
for more than $20,000.00 of Xxxxxx's costs in connection with any such
securitization.
Section 18.2 Cooperation. Borrower, any Guarantor and any Indemnitor
agree to cooperate with Lender in connection with any transfer made or any
Securities created pursuant to this Article 18, including, without limitation,
complying with all of the terms and conditions of that certain letter agreement,
dated the date hereof, between Lender and Borrower (the "Cooperation Letter").
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ARTICLE 19
COST
Section 19.1 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 of its loans, (b) the release or substitution of
collateral therefor, (c) obtaining pertain consents, waivers and approvals with
respect to the Property, or (d) the review of any Lease or proposed Lease or the
preparation or review of any subordination, non-disturbance agreement (the
occurrence of any of the above shall be called an "Event"). Borrower further
acknowledges and confirms that it shall be responsible for the payment of all
costs of reappraisal of the Property or any part thereof, whether required by
law, regulation, Lender or any governmental or quasi-governmental authority.
Borrower hereby acknowledges and agrees to pay, immediately, with or without
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 or otherwise.
Wherever it is provided for herein that Borrower pay any costs and expenses,
such costs and expenses shall include, but not be limited to, all legal fees and
disbursements of Lender (whether of retained firms, the reimbursement for the
expenses of in-house staff or otherwise) and all costs and expenses of Trustee,
if any.
Section 19.2 Attorney's Fees for Enforcement
(a) Borrower shall pay all legal fees incurred by Lender in
connection with (1) the preparation of the Note, this Security
Instrument and the Other Security Documents; and (ii) the items set
forth in Section 19.1 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 or Trustee in protecting its interest
in the Property or the Collateral or in collecting any amount payable
hereunder or in enforcing its rights hereunder with respect to the
Property or the Collateral, 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 paid or incurred by
Lender or Trustee until such expenses are paid by Borrower.
ARTICLE 20
DEFINITIONS
Section 20.1 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, limited liability company, 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, the word "Trustee" shall mean "Trustee and its successors
and assigns", and the phrases "attorneys' fees" and "counsel fees" shall include
any and all attorneys', paralegal and
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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 under this Security Instrument.
Section 20.2 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.
ARTICLE 21
MISCELLANEOUS PROVISIONS
Section 21.1 No Oral Change. This Security Instrument, and any
provisions hereof, 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, Lender or Trustee, 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 21.2 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 Xxxxxxxx and Xxxxxx and their respective successors and assigns forever.
Section 21.3 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 21.4 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 21.5 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
Security Documents and the performance and discharge of the Other Obligations.
Section 21.6 Entire Agreement. The Note, this Security Instrument and
the Other Security Documents constitute the entire understanding and agreement
between Borrower, Lender and Trustee 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
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the Note, this Security Instrument and the Other Security 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 Security Documents.
ARTICLE 22
TRUSTEE PROVISIONS
Section 22.1 The Trustee
(a) It shall be no part of the duty of Trustee to see to any
recording, filing or registration of this Security Instrument or any
other instrument in addition or supplemental hereto, or to give any
notice thereof, or to see to the payment of or be under any duty in
respect of any tax or assessment or other governmental charge which may
be levied or assessed on the Property, or any part thereof, or against
Borrower, or to see to the performance or observance by Borrower of any
of the covenants and agreements contained herein. Trustee shall not be
responsible for the execution, acknowledgment or validity of this
Security Instrument or of any instrument in addition or supplemental
hereto or for the sufficiency of the security purported to be created
hereby, and makes no representation in respect thereof or in respect of
the rights of Lender. Trustee shall have the right to advice of counsel
upon any matters arising hereunder and shall be fully protected in
relying as to legal matters on the advice of counsel. Trustee shall not
incur any personal liability hereunder except for his own gross
negligence or willful misconduct and Trustee shall have the right to
rely on any instrument, document or signature authorizing or supporting
any action taken or proposed to be taken by Trustee hereunder and
believed by Trustee in good faith to be genuine.
(b) Trustee may resign by an instrument in writing addressed
to Xxxxxx, or Trustee may be removed at any time with or without cause
by an instrument in writing executed by Xxxxxx. In case of the death,
resignation, removal or disqualification of Trustee, or if for any
reason Lender shall deem it desirable to appoint a substitute or
successor trustee to act instead of the herein named trustee or any
substitute or successor trustee, then Lender shall have the right and is
hereby authorized and empowered to appoint a successor trustee, or a
substitute trustee, without other formality than appointment and
designation in writing executed by Xxxxxx, which substituted trustee may
be Lender or an affiliate of Lender, and the authority hereby conferred
shall extend to the appointment of other successor and substitute
trustees successively until the Debt secured hereby has been paid in
full, or until the Property is fully and finally sold hereunder. Such
appointment and designation by Xxxxxx shall be full evidence of the
right and authority to make the same and of all facts therein recited.
If Lender is a corporation or association and such appointment is
executed in its behalf by an officer of such corporation or association,
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 or
association. Upon the making of any such appointment and designation,
all of the estate and title of Trustee in
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the Property shall vest in the named successor or substitute Trustee,
and he shall thereupon succeed to and shall hold, possess and execute
all of the rights, powers, privileges, immunities and duties herein
conferred upon Trustee; but, nevertheless, upon the written request of
Lender or of the successor or substitute Trustee, the trustee ceasing to
act shall execute and deliver an instrument transferring to such
successor or substitute Trustee all of the estate and title in the
Property of the trustee so ceasing to act, together with all the rights,
powers, privileges, immunities and duties herein conferred upon the
Trustee, and shall duly assign, transfer and deliver any of the
properties and moneys held by said trustee hereunder to said successor
or substitute Trustee. All references herein to "Trustee" shall be
deemed to refer to Trustee (including any successor or substitute
appointed and designated as herein provided) from time to time acting
hereunder.
(c) Trustee shall not be liable for any error of judgment or
act done by Trustee in good faith, or be otherwise responsible or
accountable under any circumstances whatsoever (including Trustee's
negligence), except for Trustee's gross negligence or willful
misconduct. Trustee shall have the right to rely on any instrument,
document or signature authorizing or supporting any action taken or
proposed to be taken by him hereunder, believed by him in good faith to
be genuine. All moneys received by Trustee shall, until used or applied
as herein provided, be held in trust for the purposes for which they
were received, but need not be segregated in any manner from any other
moneys (except to the extent required by law), and Trustee shall be
under no liability for interest on any moneys received by him hereunder.
Borrower hereby ratifies and confirms any and all acts which the
herein-named Trustee or his successor or successors', substitute or
substitutes, in this trust, shall do lawfully by virtue hereof. Xxxxxxxx
will reimburse Trustee for, and save him harmless against, any and all
liability and expenses which may be incurred by him in the performance
of his duties. The foregoing indemnity shall not terminate upon
discharge of the secured Debt or foreclosure, or release or other
termination, of this Security Instrument.
ARTICLE 23
LOCAL LAW PROVISIONS
Section 23.1 Remedies.
(a) If Borrower has failed to keep or perform any covenant
whatsoever contained in this Security Instrument or Other Security
Documents, Lender may, but shall not be obligated to, perform or attempt
to perform said covenant, and any payment made or expense incurred in
the performance or attempted performance of any such covenant shall be a
part of the obligations secured hereby, and Borrower promises, upon
demand, to pay to Lender, at the place where the Note is payable, or at
such other place as Lender may direct by written notice, all sums so
advanced or paid by Xxxxxx, with interest at the highest lawful rate
from the date when paid or incurred by Xxxxxx. No such payment by Lender
shall constitute a waiver of any Event of Default. In addition to the
liens and security interests hereof, Lender shall be subrogated to all
rights, titles, liens and security interests securing the payment of any
debt, claim, tax, or assessment for the payment of which Lender may make
an advance, or which Lender may pay.
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(b) Except as otherwise expressly stated herein or in the
Note, Lender may; without notice, demand, presentment, notice of
intention to accelerate or acceleration, protest or notice of protest,
all of which are hereby waived by Xxxxxxxx, declare the entire unpaid
balance of the Note immediately due and payable, and upon such
declaration, the entire unpaid balance of the Note shall be immediately
due and payable.
(c) Lender may request Trustee to proceed with foreclosure,
and in such event Trustee is authorized and empowered, and it shall be
Trustee's special duty, upon such request of Lender, to sell the
Property, or any part thereof; to the highest bidder or bidders for cash
or credit, as directed by Xxxxxx:
(i) in the county in the State of Texas wherein the
Land then subject to the lien hereof is situated; provided, that
if the Land is situated in more than one county, then such sale
of the Property, or part thereof, may be made in any county in
the State of Texas wherein any part of the Land then subject to
the lien hereof is situated. Any such sale shall be a public
sale at auction held between the hours of ten o'clock (10:00)
a.m. and four o'clock (4:00) p.m. on the first (1st) Tuesday in
any month. Written or printed notice of such sale shall be
posted at the courthouse door in the county, or if more than
one, then in each of the counties, wherein the Land to be sold
is situated. Such notice shall designate the county where the
Property, or part thereof, will be sold, and include a statement
of the earliest time at which the sale will begin and such
notice shall be posted at least twenty-one (21) days prior to
the date of sale. Such notice shall also be filed, at least
twenty-one (21) days prior to the date of sale, with the county
clerk in the county, or if more than one, then in each of the
counties wherein the Land is located. Lender shall, at least
twenty-one (21) days preceding the date of sale, serve written
notice of the proposed sale by certified mail on Borrower and on
each debtor obligated to pay the Note according to the records
of Xxxxxx and the sale must begin at the time stated in the
notice of sale or not later than three (3) hours after that
time; or
(ii) at the location, at such time and in such manner
as may be permitted by applicable law, including without
limitation Chapter 51 of the Texas Property Code, as amended
from time to time.
After such sale, Trustee shall make to the purchaser or
purchasers thereunder good and sufficient assignments, deeds, bills of sale, and
other instruments, in the name of Borrower, conveying the Property, or part
thereof, so sold to the purchaser or purchasers with general warranty of title
by Xxxxxxxx. The sale of a part of the Property shall not exhaust the power of
sale, but sales may be made from time to time until the obligations secured
hereby are paid and performed in full. It shall not be necessary to have present
or to exhibit at any such sale any of the collateral.
(d) In addition to the rights and powers of sale granted
under the preceding Subsection 231(c), if default is made in the payment
of any installment of the Note, Lender may, at its option, at once or at
any time thereafter while any matured installment remains unpaid,
without declaring the entire Note to be due and payable, orally or in
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writing direct the Trustee to enforce this trust and to sell the
Property subject to such unmatured indebtedness and the assignments,
liens and security interests securing its payment, in the same manner,
on the same terms, at the same place and time and after having given
notice in the same manner, all as provided in the preceding provisions
of Subsection 23.1(c). After such sale, the Trustee shall make due
conveyance to the purchaser or purchasers. Sales made without maturing
the Note may be made hereunder whenever there is a default in the
payment of any installment of the Note without affecting in. any way the
power of sale granted under this Subsection 23.1(d), the unmatured
balance of the Note (except as to any proceeds of any sale which Lender
may apply as a prepayment of the Note) or the assignments, liens and
security interests securing payment of the Note.
(e) It is intended by each of the foregoing provisions of
Subsection 23.1(c) and Subsection 23.1 (d) that Trustee may, after any
request or direction by Xxxxxx, sell not only the Personal Property and
other interests constituting a part of the Property, or any part
thereof, along with the Property, or any part thereof, all as a unit and
as a part of a single sale, or may sell any part of the Property
separately from the remainder of the Property. The sale or sales by
Trustee of less than the whole of the Property shall not exhaust the
power of sale herein granted, and Trustee is specifically empowered to
make successive sale or sales under such power until the whole of the
Property shall be sold; and if the proceeds of such sale or sales of
less than the whole of such Property shall be less than the aggregate of
the obligations secured hereby and the expense of executing this trust,
this Deed of Trust and the assignments, liens, and security interests
hereof shall remain in full force and effect as to the unsold portion of
the Property just as though no sale or sale of the Property had
occurred, but Lender shall have the right, at its sole election, to
request Trustee to sell less than the whole of the Property.
(f) Borrower and Lender agree that, in any assignments,
deed, bills of sale, notices of sale, or postings, given by Trustee or
Lender, any and all statements of fact or other recitals therein made as
to the identity of Xxxxxx, or as to the occurrence or existence of any
Event of Default, or as to the acceleration of the maturity of the Note,
or as to the request to sell, posting of notice of sale, notice of sale,
time, place, terms and manner of sale and receipt, distribution and
application of the money realized therefrom, or as to the due and proper
appointment of a substitute trustee and without being limited by the
foregoing, as to any other act or thing having been duly done by Lender
or by Trustee, shall be taken by all courts of law and equity as prima
facie evidence that the said statements or recitals state facts and are
without further questions to be so accepted, and Xxxxxxxx does hereby
ratify and confirm any and all acts that Trustee may lawfully do in the
premises by virtue hereof.
(g) Lender may require Borrower to assemble the Personal
Property, or any part thereof, and make it available to Lender at a
place to be designated by Lender which is reasonably convenient to
Lender.
(h) After notification, if any, hereafter provided in this
Subsection, Lender may, or the Trustee may, upon request of Lender,
sell, lease, or otherwise dispose of (herein a "Sale"), at the office of
Lender, or on the Land, or elsewhere as chosen by
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Lender, all or any part of the Personal Property, in its then condition,
or following any commercially reasonable preparation or processing, and
each Sale may be as a unit or in parcels, by public or private
proceedings, and by way of one or more contracts, and, at any Sale, it
shall not be necessary to exhibit the Personal Property, or part
thereof, being sold. In addition, in order to dispose of the Personal
Property and otherwise enforce the Rights granted to it hereunder,
Xxxxxx may use, and advertise the Personal Property for sale under, any
and all trade names or service names attached to, fixed upon or made
part of, any of the Personal Property. The Sale of any part of the
Personal Property shall not exhaust Lender's power of Sale, but Sales
may be made, from time to time, until the obligations secured hereby are
paid and performed in full. Reasonable notification of the time and
place of any public Sale pursuant to this Subsection, or reasonable
notification of the time after which any private Sale is to be made
pursuant to this Subsection, shall be sent to Borrower and to any other
person entitled to notice under the Uniform Commercial Code; provided,
that if the Personal Property being sold, or any part thereof, is
perishable, or threatens to decline speedily in value, or is of a type
customarily sold on a recognized market, Lender may sell, lease, or
otherwise dispose of such Personal Property without notification,
advertisement or other notice of any kind. It is agreed that notice sent
or given not less than ten (10) calendar days prior to the taking of the
action to which the notice relates, is reasonable notification and
notice for the purposes of this Subsection.
(i) Lender may retain the Personal Property in satisfaction
of all or any portion of the obligations secured hereby whenever the
circumstances are such that Xxxxxx is entitled to do so under the
Uniform Commercial Code.
(j) Lender may, or Trustee may upon written request of
Xxxxxx, proceed by suit or suits, at law or in equity, to enforce the
payment and performance of the Note in accordance with the terms hereof
or of the other Loan Documents, to foreclose or otherwise enforce the
assignments, liens, and security interests created or evidenced by the
Other Security Documents, or 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.
(k) To the extent permitted by law and without a breach of
the peace, Lender may enter upon the Land, take possession of the
Property and remove the Personal Property or any part thereof, with or
without judicial process, and, in connection therewith, without any
responsibility or liability, including, without limitation, liability
for consequential damages of any kind, on the part of Lender, and Lender
may take possession of any property located on or in the Land which is
not a part of the Property and hold or store such property at Borrower's
expense. .
(l) may surrender the insurance policies maintained pursuant
to the terms hereof, or any part thereof, and receive and apply the
unearned premiums as a credit on the obligations secured hereby, and, in
connection therewith, Borrower hereby appoints Lender (or any officer of
Lender), as the true and lawful agent and attorney-in-fact for Borrower
(with full powers of substitution), which power of attorney shall be
deemed to be a power coupled with an interest and therefore irrevocable,
to collect such premiums.
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(m) may buy the Property, or any part thereof, at any public
sale or judicial sale and, if the Personal Property being sold is of a
type customarily sold in a recognized market or a type which is the
subject of widely distributed standard price quotations, Lender may also
buy the Property, or any part thereof, at any private sale.
(n) 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
other security instrument, or under the Uniform Commercial Code, or
otherwise.
(o) anything contained herein to the contrary, pursuant to
Section 9.601 of the Uniform Commercial Code, Lender may proceed under
the Uniform Commercial Code as to all personal property covered hereby
or, at Xxxxxx's election, Lender, may proceed as to both the real and
personal property covered hereby in accordance with Xxxxxx's rights and
remedies in respect of real property, in which case the provisions of
the Uniform Commercial Code (and Subsection 23.1(a). hereof) shall not
apply.
Section 23.2 Release of Security Instrument. If the indebtedness and
obligations secured hereby are paid and performed in full in accordance with the
terms of this Security Instrument, the Note and the Other Security Documents,
and if Borrower shall well and truly perform all of Borrower's covenants
contained herein, then this conveyance shall become null and void and be
released at Borrower's request and expense, otherwise, it shall remain in full
force and effect, provided that no release hereof shall impair Borrower's
warranties and indemnities contained herein.
Section 23.3 Fixture Filing. This Security Instrument constitutes a
fixture filing under the fixture filing provisions of the UCC, Sections
9-102(a)(40) and 9-502 as enacted and under the equivalent statutes in the State
of Texas, as amended or recodified from time to time.
THIS WRITTEN AGREEMENT, TOGETHER WITH THE NOTE, REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
[SIGNATURES ON NEXT PAGE]
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IN WITNESS WHEREOF, THIS SECURITY INSTRUMENT has been executed by
Xxxxxxxx as of the date first above written.
BORROWER:
XXXXXXX REIT OPERATING PARTNERSHIP
II, L.P., a Texas limited- partnership
By: Xxxxxxx REIT Operating Partnership II GP,
LLC, a Delaware limited liability company
By:
-----------------------------------
Xxxxx X. Xxxxxxx
Manager
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The State of Texas
County of Xxxxxx
Before me Xxxxx Xxxx Xxxxx on this day personally appeared Xxxxx X.
Xxxxxxx, known to me (or proved to me on the oath of _________________________
or through TDL (description of identity card or other document)) to be the
person whose name is subscribed to the foregoing instrument and acknowledged to
me that he executed the same for the purposes and consideration therein
expressed.
(Seal)
Given under my hand and seal of office this 17th day of December, 2002.
---------------------------------------------
Notary Public in and for State of Texas
Notary's Name (printed): Xxxxx Xxxx Xxxxx
My Commission expires: 8/7/2004
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