EXHIBIT 10.7
Loan No. V_08839
4212 TECHCOURT, LLC, as grantor
(Borrower)
to
XXXXXXX X. XXXXX, XX. as trustee
(Trustee)
for the benefit of
XXXXXX GUARANTY TRUST COMPANY OF NEW YORK, as beneficiary
(Lender)
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DEED OF TRUST AND
SECURITY AGREEMENT
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Dated: May 23, 2000
PREPARED BY AND UPON
RECORDATION RETURN TO:
Xxxxxx Xxxxxxx Xxxxxxxxx & Xxxx, PLLC
0000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxxxxx X. Xxx, Esq.
AFTER RECORDING RETURN TO:
Tri-State Commercial Closings, Inc.
0000 00xx Xx., XX., Xxxxx 000
Xxxxxxxxxx, X.X. 00000
TABLE OF CONTENTS
PAGE
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ARTICLE 1 - GRANTS OF SECURITY ......................................................... 1
Section 1.1 PROPERTY CONVEYED ............................................. 1
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Section 1.2 ASSIGNMENT OF RENTS ........................................... 3
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Section 1.3 DEFINITION OF PERSONAL PROPERTY ............................... 4
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Section 1.4 PLEDGE OF MONIES HELD ......................................... 4
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ARTICLE 2 - DEBT AND OBLIGATIONS SECURED ............................................... 5
Section 2.1 DEBT .......................................................... 5
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Section 2.2 OTHER OBLIGATIONS ............................................. 5
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Section 2.3 DEBT AND OTHER OBLIGATIONS .................................... 6
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Section 2.4 PAYMENTS ...................................................... 6
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ARTICLE 3 - BORROWER COVENANTS ......................................................... 6
Section 3.1 INCORPORATION BY REFERENCE .................................... 6
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Section 3.2 INSURANCE ..................................................... 7
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Section 3.3 PAYMENT OF TAXES, ETC ......................................... 13
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Section 3.4 CONDEMNATION .................................................. 14
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Section 3.5 USE AND MAINTENANCE OF PROPERTY ............................... 14
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Section 3.6 WASTE ......................................................... 15
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Section 3.7 COMPLIANCE WITH LAWS; ALTERATIONS ............................. 15
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Section 3.8 BOOKS AND RECORDS ............................................. 16
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Section 3.9 PAYMENT FOR LABOR AND MATERIALS ............................... 17
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Section 3.10 PERFORMANCE OF OTHER AGREEMENTS ............................... 17
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ARTICLE 4 - SPECIAL COVENANTS .......................................................... 18
Section 4.1 PROPERTY USE .................................................. 18
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Section 4.2 ERISA ......................................................... 18
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Section 4.3 SINGLE PURPOSE ENTITY ......................................... 18
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ARTICLE 5 - REPRESENTATIONS AND WARRANTIES ............................................. 21
Section 5.1 BORROWER'S REPRESENTATIONS .................................... 21
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Section 5.2 WARRANTY OF TITLE ............................................. 21
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Section 5.3 STATUS OF PROPERTY ............................................ 21
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Section 5.4 NO FOREIGN PERSON ............................................. 23
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Section 5.5 SEPARATE TAX LOT .............................................. 23
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ARTICLE 6 - OBLIGATIONS AND RELIANCES .................................................. 23
Section 6.1 RELATIONSHIP OF BORROWER AND LENDER ........................... 23
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Section 6.2 NO RELIANCE ON LENDER ......................................... 23
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Section 6.3 NO LENDER OBLIGATIONS ......................................... 23
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Section 6.4 RELIANCE ...................................................... 24
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ARTICLE 7 - FURTHER ASSURANCES ......................................................... 24
Section 7.1 RECORDING FEES ................................................ 24
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Section 7.2 FURTHER ACTS .................................................. 24
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Section 7.3 CHANGES IN TAX, DEBT CREDIT AND DOCUMENTARY STAMP LAWS ........ 25
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Section 7.4 CONFIRMATION STATEMENT ........................................ 25
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Section 7.5 SPLITTING OF SECURITY INSTRUMENT .............................. 26
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Section 7.6 REPLACEMENT DOCUMENTS ......................................... 26
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ARTICLE 8 - DUE ON SALE/ENCUMBRANCE .................................................... 26
Section 8.1 LENDER RELIANCE ............................................... 26
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Section 8.2 NO SALE/ENCUMBRANCE ........................................... 26
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Section 8.3 EXCLUDED AND PERMITTED TRANSFERS .............................. 27
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Section 8.4 NO IMPLIED FUTURE CONSENT ..................................... 29
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Section 8.5 COSTS OF CONSENT .............................................. 29
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Section 8.6 CONTINUING SEPARATENESS REQUIREMENTS .......................... 30
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ARTICLE 9 - DEFAULT .................................................................... 30
Section 9.1 EVENTS OF DEFAULT ............................................. 30
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Section 9.2 DEFAULT INTEREST .............................................. 32
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ARTICLE 10 - RIGHTS AND REMEDIES ....................................................... 32
Section 10.1 REMEDIES .................................................... 32
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ARTICLE 11 - INDEMNIFICATION; SUBROGATION .............................................. 39
Section 11.1 GENERAL INDEMNIFICATION ..................................... 39
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Section 11.2 ENVIRONMENTAL INDEMNIFICATION ............................... 40
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Section 11.3 DUTY TO DEFEND AND ATTORNEYS AND OTHER FEES AND EXPENSES .... 43
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Section 11.4 SURVIVAL OF INDEMNITIES ..................................... 43
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ARTICLE 12 - SECURITY AGREEMENT ........................................................ 43
Section 12.1 SECURITY AGREEMENT .......................................... 43
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ARTICLE 13 - WAIVERS ................................................................... 44
Section 13.1 MARSHALLING AND OTHER MATTERS ............................... 44
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Section 13.2 WAIVER OF NOTICE ............................................ 44
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Section 13.3 SOLE DISCRETION OF LENDER ................................... 45
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Section 13.4 SURVIVAL .................................................... 45
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Section 13.5 WAIVER OF TRIAL BY JURY ..................................... 45
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Section 13.6 WAIVER OF AUTOMATIC OR SUPPLEMENTAL STAY .................... 46
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ARTICLE 14 - NOTICES ................................................................... 46
Section 14.1 NOTICES ..................................................... 46
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ARTICLE 15 - APPLICABLE LAW ............................................................ 47
Section 15.1 GOVERNING LAW; JURISDICTION ................................. 47
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Section 15.2 USURY LAWS .................................................. 47
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Section 15.3 PROVISIONS SUBJECT TO APPLICABLE LAW ........................ 48
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ARTICLE 16 - SECONDARY MARKET .......................................................... 48
Section 16.1 TRANSFER OF LOAN ............................................ 48
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ARTICLE 17 - COSTS ..................................................................... 48
Section 17.1 PERFORMANCE AT BORROWER'S EXPENSE ............................ 48
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Section 17.2 ATTORNEY'S FEES FOR ENFORCEMENT ............................. 49
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ARTICLE 18 - DEFINITIONS ............................................................... 49
Section 18.1 GENERAL DEFINITIONS ......................................... 49
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ARTICLE 19 - MISCELLANEOUS PROVISIONS ................................................. 49
Section 19.1 NO ORAL CHANGE .............................................. 49
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Section 19.2 LIABILITY ................................................... 50
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Section 19.3 INAPPLICABLE PROVISIONS .................................... 50
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Section 19.4 HEADINGS, ETC ............................................... 50
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Section 19.5 DUPLICATE ORIGINALS; COUNTERPARTS ........................... 50
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Section 19.6 NUMBER AND GENDER ........................................... 50
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Section 19.7 SUBROGATION ................................................. 50
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Section 19.8 ENTIRE AGREEMENT ............................................ 50
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ARTICLE 20 - TRUSTEE ................................................................... 51
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Index of Defined Terms
"ADA" ..................................................................... 15
"APPLICABLE LAWS" ......................................................... 15
"ATTORNEYS' FEES .......................................................... 49
"ATTORNEYS" ............................................................... 39
"BANKRUPTCY CODE" ......................................................... 2
"BORROWER" ................................................................
"BUSINESS DAY" ............................................................ 47
"COLLATERAL" .............................................................. 43
"COUNSEL FEES" ............................................................ 49
"DEBT" .................................................................... 5
"DEFAULT RATE" ............................................................ 32
"ENVIRONMENTAL INDEMNITY" ................................................. 6
"ENVIRONMENTAL LAW" ....................................................... 40, 41
"ENVIRONMENTAL LIEN" ...................................................... 41
"ERISA" ................................................................... 18
"ESCROW AGREEMENT" ........................................................ 3
"EVENT OF DEFAULT" ........................................................ 29
"EVENT" ................................................................... 48
"EXCULPATED PORTION" ...................................................... 38
"FEES AND EXPENSES" ....................................................... 39
"GUARANTOR" ............................................................... 19
"HAZARDOUS SUBSTANCES" .................................................... 41
"IMPROVEMENTS" ............................................................ 1
"INDEMNIFIED PARTIES" ..................................................... 41
"INSURANCE PREMIUMS" ...................................................... 9
"INSURED CASUALTY" ........................................................ 11
"INTANGIBLES" ............................................................. 4
"INVESTOR" ................................................................ 48
"LAND" .................................................................... 1
"LEASE" ................................................................... 2
"LEASES" .................................................................. 2
"LEGAL FEES" .............................................................. 49
"LENDER" .................................................................. 1, 49
"LOAN DOCUMENTS" .......................................................... 6
"LOAN" .................................................................... 28
"LOSSES" .................................................................. 41
"NOTE" .................................................................... 1, 49
"OBLIGATIONS .............................................................. 6
"ORIGINAL PRINCIPALS" ..................................................... 27
"OTHER CHARGES" ........................................................... 13
"OTHER LOAN DOCUMENTS" .................................................... 6
Index - 1
"OTHER OBLIGATIONS" ....................................................... 5
"PERMITTED EXCEPTIONS" .................................................... 21
"PERSON" .................................................................. 49
"PERSONAL PROPERTY ........................................................ 4
"POLICIES" ................................................................ 9
"POLICY" .................................................................. 9
"PROPERTY" ................................................................ 1, 49
"QUALIFIED INSURER" ....................................................... 9
"RATING AGENCY" ........................................................... 48
"RELEASE" ................................................................. 42
"REMEDIATION" ............................................................. 42
"RENTS" ................................................................... 2
"SECURITIES" .............................................................. 48
"SECURITY INSTRUMENT" ..................................................... 1
"TAXES" ................................................................... 13
"UNIFORM COMMERCIAL CODE" ................................................. 2
Index - 2
DEED OF TRUST AND SECURITY AGREEMENT
THIS DEED OF TRUST AND SECURITY AGREEMENT (this "SECURITY INSTRUMENT")
is made as of the 23rd day of May, 2000, by 4212 TECHCOURT, LLC, a Virginia
limited liability company, having its principal place of business at c/o First
Potomac Realty Investment LP, 0000 Xxxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxx,
Xxxxxxxx 00000 ("BORROWER"), to XXXXXXX X. XXXXX, XX., a resident of Fairfax
County, Virginia ("TRUSTEE"), having an address c/o Tri-State Commercial
Closings, Inc., 0000 00xx Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000, , for the
benefit of XXXXXX GUARANTY TRUST COMPANY OF NEW YORK, a New York banking
corporation, having its principal place of business at 00 Xxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000-0000, as beneficiary ("LENDER").
RECITALS:
Borrower by its Fixed Rate Note of even date herewith given to Lender is
indebted to Lender in the original principal sum of $1,825,000 in lawful money
of the United States of America (such Fixed Rate Note, together with all
extensions, renewals, modifications, substitutions and amendments thereof, shall
collectively be referred to as the "NOTE"), with interest from the date thereof
at the rates set forth in the Note, principal and interest to be payable in
accordance with the terms and conditions provided in the Note, and with a final
maturity date of June 1, 2010.
Borrower desires to secure the payment of the Debt (as defined in
Article 2) and the performance of all of its obligations under the Note and the
Other Obligations (as defined in Article 2).
ARTICLE 1 - GRANTS OF SECURITY
Section 1.1 PROPERTY CONVEYED. Borrower does hereby irrevocably,
unconditionally and absolutely, grant, bargain, sell, pledge, enfeoff, assign,
warrant, transfer and convey to Trustee (with power of sale) in trust for the
purposes herein set forth, the following property, rights, interests and estates
now owned, or hereafter acquired, by Borrower (collectively, the "PROPERTY"):
(a) Land. The real property described in Exhibit A attached
hereto and made a part hereof (collectively, the "LAND"), together with
additional lands, estates and development rights hereafter acquired by
Borrower for use in connection with the development, ownership or
occupancy of such real property, and all additional lands and estates
therein which may, from time to time, by supplemental deed of trust or
otherwise be expressly made subject to the lien of this Security
Instrument;
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(b) Improvements. The buildings, structures, fixtures,
additions, accessions, enlargements, extensions, modifications, repairs,
replacements and improvements now or hereafter erected or located on the
Land (the "IMPROVEMENTS");
(c) Easements. All easements, rights-of-way on use, rights,
strips and gores of land, streets, ways, alleys, passages, sewer rights,
water, water courses, water rights and powers, air rights and
development rights, and all estates, rights, titles, interests,
privileges, liberties, servitudes, tenements, hereditaments and
appurtenances of any nature whatsoever, in any way now or hereafter
belonging, relating or pertaining to the Land and the Improvements and
the reversion and reversions, remainder and remainders, and all land
lying in the bed of any street, road or avenue, opened or proposed, in
front of or adjoining the Land, to the center line thereof and all the
estates, rights, titles, interests, dower and rights of dower, curtesy
and rights of curtesy, property, possession, claim and demand
whatsoever, both at law and in equity, of Borrower of, in and to the
Land and the Improvements and every part and parcel thereof, with the
appurtenances thereto;
(d) Fixtures and Personal Property. All machinery,
equipment, goods, inventory, consumer goods, 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
Improvements, or appurtenant thereto, and usable in connection with the
present or future use, maintenance, enjoyment, operation and occupancy
of the Land and the Improvements 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, and the right, title and interest of Borrower
in and to any of the Personal Property (as hereinafter defined) which
may be subject to any security interests, as defined in the Uniform
Commercial Code, as adopted and enacted by the state or states where any
of the Property is located (the "UNIFORM COMMERCIAL CODE"), superior in
lien to the lien of this Security Instrument and all proceeds and
products of the above;
(e) Leases and Rents. All leases and other agreements
affecting the use, enjoyment or occupancy of the Land and the
Improvements heretofore or hereafter entered into, whether before or
after the filing by or against Borrower of any petition for relief under
11 U.S.C. Section 101 et seq., as the same may be amended from time to
time (the "BANKRUPTCY CODE") (individually, a "LEASE"; collectively, the
"LEASES") and all right, title and interest of Borrower, its successors
and assigns therein and thereunder, including, without limitation, cash
or securities deposited thereunder to secure the performance by the
lessees of their obligations thereunder and all rents (including all
tenant security and other deposits), additional rents, revenues, issues
and profits (including all oil and gas or other mineral royalties and
bonuses) from the Land and the
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Improvements whether paid or accruing before or after the filing by or
against Borrower of any petition for relief under the Bankruptcy Code
(collectively the "RENTS") and all proceeds from the sale or other
disposition of the Leases and the right to receive and apply the Rents
to the payment of the Debt;
(f) Condemnation Awards. All awards or payments, including
interest thereon, which may heretofore and hereafter be made with
respect to the Property, whether from the exercise of the right of
eminent domain (including but not limited to any transfer made in lieu
of or in anticipation of the exercise of the right), or for a change of
grade, or for any other injury to or decrease in the value of the
Property;
(g) Insurance Proceeds. All proceeds of and any unearned
premiums on any insurance policies covering the Property, including,
without limitation, the right to receive and apply the proceeds of any
insurance, judgments, or settlements made in lieu thereof, for damage to
the Property;
(h) Tax Certiorari. All refunds, rebates or credits in
connection with a reduction in real estate taxes and assessments charged
against the Property as a result of tax certiorari or any applications
or proceedings for reduction;
(i) Conversion. All proceeds of the conversion, voluntary or
involuntary, of any of the foregoing including, without limitation,
proceeds of insurance and condemnation awards, into cash or liquidation
claims;
(j) Rights. The right, in the name and on behalf of
Borrower, to appear in and defend any action or proceeding brought with
respect to the Property and to commence any action or proceeding to
protect the interest of Trustee and/or Lender in the Property;
(k) Agreements. All agreements, contracts (including
purchase, sale, option, right of first refusal and other contracts
pertaining to the Property), certificates, instruments, franchises,
permits, licenses, approvals, consents, plans, specifications and other
documents, now or hereafter entered into, and all rights therein and
thereto, respecting or pertaining to the use, occupation, construction,
management or operation of the Property (including any Improvements or
respecting any business or activity conducted on the Land and any part
thereof) and all right, title and interest of Borrower therein and
thereunder, including, without limitation, the right, upon the happening
of any default hereunder, to receive and collect any sums payable to
Borrower thereunder;
(l) Trademarks. All tradenames, trademarks, servicemarks,
logos, copyrights, goodwill, books and records and all other general
intangibles relating to or used in connection with the operation of the
Property;
(m) Accounts. All accounts, accounts receivable, escrows
(including, without limitation, all escrows, deposits, reserves and
impounds established pursuant to that
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certain Escrow Agreement for Reserves and Impounds of even date herewith
between Borrower and Lender; hereinafter, the "ESCROW AGREEMENT"),
documents, instruments, chattel paper, claims, reserves (including
deposits) representations, warranties and general intangibles, as one or
more of the foregoing terms may be defined in the Uniform Commercial
Code, and all contract rights, franchises, books, records, plans,
specifications, permits, licenses (to the extent assignable), approvals,
actions, choses, claims, suits, proofs of claim in bankruptcy and causes
of action which now or hereafter relate to, are derived from or are used
in connection with the Property, or the use, operation, maintenance,
occupancy or enjoyment thereof or the conduct of any business or
activities thereon (hereinafter collectively called the "INTANGIBLES");
and
(n) Other Rights. Any and all other rights of Borrower in
and to the Property and any accessions, renewals, replacements and
substitutions of all or any portion of the Property and all proceeds
derived from the sale, transfer, assignment or financing of the
Property or any portion thereof.
Section 1.2 ASSIGNMENT OF RENTS. Borrower hereby absolutely and
unconditionally assigns to Lender Borrower's right, title and interest in and to
all current and future Leases and Rents; it being intended by Borrower that this
assignment constitutes a present, absolute and unconditional assignment and not
an assignment for additional security only. Unless provided to the contrary in
the Cash Management Agreement between Borrower and Lender of even date herewith
(the "Cash Management Agreement"), all payments due under the Leases shall be
paid directly by the tenants thereunder to an account controlled by the Lender
when such amounts are due and payable. All such payments received in such
account shall be applied as set forth in the Cash Management Agreement. The
payment of amounts due under the Leases directly to an account controlled by
Lender as required by the Cash Management Agreement, this Section 1.2 and by the
Assignment of Leases and Rents shall not limit, reduce or otherwise affect
Borrower's obligations to make payments of amounts due hereunder and under the
other Loan Documents, unless pursuant to the terms of the Cash Management
Agreement Lender has received and applied amounts sufficient to make such
payments.
Section 1.3 DEFINITION OF PERSONAL PROPERTY. For purposes of this
Security Instrument, the Property identified in Subsections 1.1(d) through
1.1(n), inclusive, shall be collectively referred to herein as the "PERSONAL
PROPERTY."
Section 1.4 PLEDGE OF MONIES HELD. Borrower hereby pledges to Lender any
and all monies now or hereafter held by Lender, including, without limitation,
any sums deposited in the Funds (as defined in the Escrow Agreement), all
insurance proceeds described in Section 3.2 and condemnation awards or payments
described in Section 3.4, as additional security for the Obligations until
expended or applied as provided in this Security Instrument.
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CONDITIONS TO GRANT
TO HAVE AND TO HOLD the above granted and described Property unto and to
the use and benefit of Trustee, and the successors and assigns of Trustee,
forever;
PROVIDED, HOWEVER, these presents are upon the express condition that,
if Borrower shall well and truly pay to Lender the Debt at the time and in the
manner provided in the Note and this Security Instrument, shall well and truly
perform the Other Obligations as set forth in this Security Instrument and shall
well and truly abide by and comply with each and every covenant and condition
set forth herein and in the Note, these presents and the estate hereby granted
shall cease, terminate and be void; provided however, that Borrower's obligation
to indemnify and hold harmless Lender pursuant to the provisions hereof with
respect to matters relating to any period of time during which this Security
Instrument was in effect shall survive any such payment or release.
ARTICLE 2- DEBT AND OBLIGATIONS SECURED
Section 2.1 DEBT. This Security Instrument and the grants, assignments
and transfers made in Article 1 are given for the purpose of securing the
following, in such order of priority as Lender may determine in its sole
discretion (the "DEBT"):
(a) the payment of the indebtedness evidenced by the Note in
lawful money of the United States of America;
(b) the payment of interest, default interest, late charges
and other sums, as provided in the Note, this Security Instrument or the
Other Loan Documents (as hereinafter defined);
(c) the payment of all other moneys agreed or provided to be
paid by Borrower in the Note, this Security Instrument or the Other Loan
Documents;
(d) the payment of all sums advanced pursuant to this
Security Instrument to protect and preserve the Property and the lien
and the security interest created hereby; and
(e) the payment of all sums advanced and costs and expenses
incurred by Lender in connection with the Debt or any part thereof, any
renewal, extension, or change of or substitution for the Debt or any
part thereof, or the acquisition or perfection of the security therefor,
whether made or incurred at the request of Borrower or Lender.
Section 2.2 OTHER OBLIGATIONS. This Security Instrument and the grants,
assignments and transfers made in Article 1 are also given for the purpose of
securing the following (the "OTHER OBLIGATIONS"):
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(a) the performance of all other obligations of Borrower
contained herein;
(b) the performance of each obligation of Borrower contained
in any other agreement given by Borrower to Lender which is for the
purpose of further securing the obligations secured hereby, and any
amendments, modifications and changes thereto; and
(c) the performance of each obligation of Borrower contained
in any renewal, extension, amendment, modification, consolidation,
change of, or substitution or replacement for, all or any part of the
Note, this Security Instrument or the Other Loan Documents.
Section 2.3 DEBT AND OTHER OBLIGATIONS. Borrower's obligations for the
payment of the Debt and the performance of the Other Obligations shall be
referred to collectively herein as the "OBLIGATIONS."
Section 2.4 PAYMENTS. Unless payments are made in the required amount in
immediately available funds at the place where the Note is payable, remittances
in payment of all or any part of the Debt shall not, regardless of any receipt
or credit issued therefor, constitute payment until the required amount is
actually received by Lender in funds immediately available at the place where
the Note is payable (or any other place as Lender, in Lender's sole discretion,
may have established by delivery of written notice thereof to Borrower) and
shall be made and accepted subject to the condition that any check or draft may
be handled for collection in accordance with the practice of the collecting bank
or banks. Acceptance by Lender of any payment in an amount less than the amount
then due shall be deemed an acceptance on account only, and the failure to pay
the entire amount then due shall be and continue to be an Event of Default (as
hereinafter defined).
ARTICLE 3- BORROWER COVENANTS
Borrower covenants and agrees that:
Section 3.1 INCORPORATION BY REFERENCE. All the covenants, conditions
and agreements contained in (a) the Note, and (b) all and any of the documents
other than the Note or this Security Instrument now or hereafter executed by
Borrower and/or others and by or in favor of Lender in connection with the
creation of the Obligations, the payment of any other sums owed by Borrower to
Lender or the performance of any Obligations (collectively the "OTHER LOAN
DOCUMENTS"), are hereby made a part of this Security Instrument to the same
extent and with the same force as if fully set forth herein. The term "LOAN
DOCUMENTS" as used herein shall individually and collectively refer to the Note,
this Security Instrument and the Other Loan Documents; provided, however, that
notwithstanding any provision of this Security Instrument to the contrary, the
Obligations of the Borrower under that certain Environmental Indemnity Agreement
of even date herewith executed by Borrower in favor of Lender (the
"ENVIRONMENTAL INDEMNITY") shall not be deemed or construed to be secured by
this Security Instrument or otherwise restricted or affected by the foreclosure
of the lien hereof or any other exercise by
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Lender of its remedies hereunder or under any other Loan Document, such
Environmental Indemnity being intended by the signatories thereto to be its (or
their) unsecured obligation.
Section 3.2 INSURANCE.
(a) Borrower shall obtain and maintain, and shall pay all
premiums in accordance with Subsection 3.2(b) below for, insurance for
Borrower and the Property providing at least the following coverages:
(i) comprehensive all risk insurance
(including, without limitation, riot and civil commotion,
vandalism, malicious mischief, water, fire, burglary and theft)
on the Improvements and the Personal Property and in each case
(A) in an amount equal to 100% of the "Full Replacement Cost",
which for purposes of this Security Instrument shall mean actual
replacement value (exclusive of costs of excavations,
foundations, underground utilities and footings) with a waiver
of depreciation; (B) containing an agreed amount endorsement
with respect to the Improvements and Personal Property waiving
all co-insurance provisions; (C) providing that the deductible
shall not exceed the lesser of $10,000.00 or one percent (1%) of
the face value of the policy; and (D) containing Demolition
Costs, Increased Cost of Construction and "Ordinance or Law
Coverage" or "Enforcement" endorsements in amounts satisfactory
to Lender if any of the Improvements or the use of the Property
shall at any time constitute legal non-conforming structures or
uses or the ability to rebuild the Improvements is restricted or
prohibited. The Full Replacement Cost may be redetermined from
time to time by an appraiser or contractor designated and paid
by Lender or by an engineer or appraiser in the regular employ
of the insurer. No omission on the part of Lender to request any
such appraisals shall relieve Borrower of any of its obligations
under this Subsection;
(ii) comprehensive general liability
insurance against claims for personal injury, bodily injury,
death or property damage occurring upon, in or about the
Property, such insurance (A) to be on the so-called "occurrence"
form with a combined single limit of not less than $1,000,000.00
and not less than $3,000,000.00 if the Property has one or more
elevators, as well as liquor liability insurance in a minimum
amount of $2,000,000.00 if any part of the Property is covered
by a liquor license; (B) to continue at not less than the
aforesaid limit until required to be changed by Lender in
writing by reason of changed economic conditions making such
protection inadequate; (C) to cover at least the following
hazards: (1) premises and operations; (2) products and completed
operations on an "if any" basis; (3) independent contractors;
(4) blanket contractual liability for all written and oral
contracts; (5) contractual liability covering the indemnities
contained in Article 11 hereof to the extent the same is
available; and (D)) to be without deductible;
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(iii) business income insurance (A) with loss
payable to Lender; (B) covering losses of income and Rents
derived from the Property and any non-insured property on or
adjacent to the Property resulting from any risk or casualty
whatsoever; (C) containing an extended period of indemnity
endorsement which provides that after the physical loss to the
Improvements and Personal Property has been repaired, the
continued loss of income will be insured until such income
either returns to the same level it was at prior to the loss, or
the expiration of eighteen (18) months from the date of the
loss, whichever first occurs, and notwithstanding that the
policy may expire prior to the end of such period; and (D) in an
amount equal to 100% of the projected gross income from the
Property for a period of eighteen (18) months. The amount of
such business income insurance shall be determined by Lender
prior to the date hereof and at least once each year thereafter
based on Borrower's reasonable estimate of the gross income from
the Property for the succeeding eighteen (18) month period. All
insurance proceeds payable to Lender pursuant to this Subsection
3.2(a) shall be held by Lender and shall be applied to the
obligations secured hereunder from time to time due and payable
hereunder and under the Note; provided, however, that nothing
herein contained shall be deemed to relieve Borrower of its
obligations to pay the obligations secured hereunder on the
respective dates of payment provided for in the Note except to
the extent such amounts are actually paid out of the proceeds of
such business income insurance;
(iv) at all times during which structural
construction, repairs or alterations are being made with respect
to the Improvements: (A) owner's contingent or protective
liability insurance covering claims not covered by or under the
terms or provisions of the above mentioned commercial general
liability insurance policy; and (B) the insurance provided for
in Subsection 3.2(a)(i) written in a so-called builder's risk
completed value form (1) on a non-reporting basis, (2) against
all risks insured against pursuant to Subsection 3.2(a)(i), (3)
including permission to occupy the Property, and (4) with an
agreed amount endorsement waiving co-insurance provisions;
(v) workers' compensation, subject to the
statutory limits of the state in which the Property is located,
and employer's liability insurance with a limit of at least
$1,000,000.00 per accident and per disease per employee, and
$1,000,000.00 for disease aggregate in respect of any work or
operations on or about the Property, or in connection with the
Property or its operation (if applicable);
(vi) comprehensive boiler and machinery
insurance (without exclusion for explosion), if applicable, in
amounts as shall be reasonably required by Lender and covering
all boilers or other pressure vessels, machinery and equipment
located at or about the Property (including, without limitation,
8
electrical equipment, sprinkler systems, heating and air
conditioning equipment, refrigeration equipment and piping);
(vii) flood hazard insurance if any portion of
the Improvements is currently or at any time in the future
located in a federally designated "special flood hazard area,"
flood hazard insurance in an amount equal to the lesser of (a)
the outstanding principal balance of the Note, (b) the Full
Replacement Cost, or (c) the maximum amount of such insurance
available under the National Flood Insurance Act of 1968, the
Flood Disaster Protection Act of 1973 or the National Flood
Insurance Reform Act of 1994, as each may be amended; and
(viii) such other insurance and in such amounts
as Lender from time to time may reasonably request against such
other insurable hazards which at the time are commonly insured
against for property similar to the Property located in or
around the region in which the Property is located, including,
without limitation, earthquake insurance (in the event the
Property is located in an area with a high degree of seismic
activity), sinkhole insurance, mine subsidence insurance and
environmental insurance.
(b) All insurance provided for in Subsection 3.2(a) hereof
shall be obtained under valid and enforceable policies (the "POLICIES"
or in the singular, the "POLICY"), in such forms and, from time to time
after the date hereof, in such amounts as may from time to time be
satisfactory to Lender, issued by financially sound and responsible
insurance companies authorized to do business in the state in which the
Property is located as admitted or unadmitted carriers which, in either
case, have been approved by Lender and which have a claims paying
ability rating of A or better issued by Standard & Poor's Ratings Group
or with a claims paying ability rating otherwise acceptable to Lender
(each such insurer shall be referred to below as a "QUALIFIED INSURER").
Such Policies shall not be subject to invalidation due to the use or
occupancy of the Property for purposes more hazardous than the use of
the Property at the time such Policies were issued. Not less than thirty
(30) days prior to the expiration dates of the Policies theretofore
furnished to Lender pursuant to Subsection 3.2(a), certified copies of
the Policies marked "premium paid" or accompanied by evidence
satisfactory to Lender of payment of the premiums due thereunder (the
"INSURANCE PREMIUMS"), shall be delivered by Borrower to Lender;
provided, however, that in the case of renewal Policies, Borrower may
furnish Lender with binders therefor to be followed by the original
Policies when issued.
(c) Borrower shall not obtain (i) separate insurance
concurrent in form or contributing in the event of loss with that
required in Subsection 3.2(a) to be furnished by, or which may be
reasonably required to be furnished by, Borrower, or (ii) any umbrella
or blanket liability or casualty Policy unless, in each case, Lender's
interest is included therein as provided in this Security Instrument and
such Policy is issued by a Qualified Insurer. If Borrower obtains
separate insurance or an umbrella or a blanket
9
Policy, Borrower shall notify Lender of the same and shall cause
certified copies of each Policy to be delivered as required in
Subsection 3.2(a). Any blanket insurance Policy shall specifically
allocate to the Property the amount of coverage from time to time
required hereunder and shall otherwise provide the same protection as
would a separate Policy insuring only the Property in compliance with
the provisions of Subsection 3.2(a).
(d) All Policies of insurance provided for or contemplated
by Subsection 3 .2(a) shall name Lender, its successors and assigns,
including any servicers, trustees or other designees of Lender, and
Borrower as the insured or additional insured, as their respective
interests may appear, and in the case of property damage, boiler and
machinery, and flood insurance, shall contain a so-called New York
standard non-contributing Lender clause in favor of Lender providing
that the loss thereunder shall be payable to Lender.
(e) All Policies of insurance provided for in Subsection
3.2(a) shall contain clauses or endorsements to the effect that:
(i) no act or negligence of Borrower, or
anyone acting for Borrower, or of any tenant under any Lease or
other occupant, or failure to comply with the provisions of any
Policy which might otherwise result in a forfeiture of the
insurance or any part thereof, shall in any way affect the
validity or enforceability of the insurance insofar as Lender is
concerned;
(ii) the Policy shall not be materially
changed (other than to increase the coverage provided on the
Property thereby) or canceled without at least thirty (30) days'
prior written notice to Lender and any other party named therein
as an insured;
(iii) each Policy shall provide that the
issuers thereof shall give written notice to Lender if the
Policy has not been renewed thirty (30) days prior to its
expiration; and
(iv) Lender shall not be liable for any
Insurance Premiums thereon or subject to any assessments
thereunder.
(f) Borrower shall furnish to Lender within ten (10)
calendar days after Lender's request therefor, a statement certified by
Borrower or a duly authorized officer of Borrower of the amounts of
insurance maintained in compliance herewith, of the risks covered by
such insurance and of the insurance company or companies which carry
such insurance and, if requested by Lender, verification of the adequacy
of such insurance by an independent insurance broker or appraiser
acceptable to Lender.
(g) If at any time Lender is not in receipt of written
evidence that all insurance required hereunder is in full force and
effect, Lender shall have the right but not the
10
obligation, without notice to Borrower, to take such action as Lender
deems necessary to protect its interest in the Property, including,
without limitation, the obtaining of such insurance coverage as Lender
in its sole discretion deems appropriate, and all expenses incurred by
Lender in connection with such action or in obtaining such insurance and
keeping it in effect shall be paid by Borrower to Lender upon demand and
until paid shall be secured by this Security Instrument and shall bear
interest at the Default Rate (as hereinafter defined).
(h) If the Property shall be damaged or destroyed, in whole
or in part, by fire or other casualty, Borrower shall give prompt notice
thereof to Lender.
(i) In case of loss covered by Policies,
Lender may either (1) settle and adjust any claim without the
consent of Borrower, or (2) allow Borrower to agree with the
insurance company or companies on the amount to be paid upon the
loss; provided, that Borrower may adjust losses aggregating not
in excess of $100,000.00 if such adjustment is carried out in a
competent and timely manner, and provided that in any case
Lender shall and is hereby authorized to collect and receive any
such insurance proceeds; and the expenses incurred by Lender in
the adjustment and collection of insurance proceeds shall become
part of the Debt and be secured hereby and shall be reimbursed
by Borrower to Lender upon demand (unless deducted by and
reimbursed to Lender from such proceeds).
(ii) In the event of any insured damage to or
destruction of the Property or any part thereof (herein called
an "INSURED CASUALTY"), if (A) in the reasonable judgment of
Lender, the Property can be restored within nine (9) months
after insurance proceeds are made available and at least nine
(9) months prior to the Maturity Date (as defined in the Note)
to an economic unit not less valuable (including an assessment
by Lender of the impact of the termination of any Leases due to
such Insured Casualty) and not less useful than the same was
prior to the Insured Casualty, and after such restoration will
adequately secure the outstanding balance of the Debt, and (B)
no Event of Default (hereinafter defined) shall have occurred
and be then continuing, then the proceeds of insurance shall be
applied to reimburse Borrower for the cost of restoring,
repairing, replacing or rebuilding the Property or part thereof
subject to Insured Casualty, as provided below; and Borrower
hereby covenants and agrees forthwith to commence and diligently
to prosecute such restoring, repairing, replacing or rebuilding;
provided, however, in any event Borrower shall pay all costs
(and if required by Lender, Borrower shall deposit the total
thereof with Lender in advance) of such restoring, repairing,
replacing or rebuilding in excess of the net proceeds of
insurance made available pursuant to the terms hereof.
11
(iii) Except as provided above, the proceeds
of insurance collected upon any Insured Casualty shall, at the
option of Lender in its sole discretion, be applied to the
payment of the Debt or applied to reimburse Borrower for the
cost of restoring, repairing, replacing or rebuilding the
Property or part thereof subject to the Insured Casualty, in the
manner set forth below. Any such application to the Debt shall
not be considered a voluntary prepayment requiring payment of
the prepayment consideration provided in the Note, and shall not
reduce or postpone any payments otherwise required pursuant to
the Note, other than the final payment on the Note.
(iv) If proceeds of insurance, if any, are
made available to Borrower for the restoring, repairing,
replacing or rebuilding of the Property, Borrower hereby
covenants to restore, repair, replace or rebuild the same to be
of at least equal value and of substantially the same character
as prior to such damage or destruction, all to be effected in
accordance with applicable law and plans and specifications
approved in advance by Lender.
(v) If Borrower is entitled to reimbursement
out of insurance proceeds held by Lender, such proceeds shall be
disbursed from time to time upon Lender being furnished with (1)
evidence satisfactory to it (which evidence may include
inspection[s] of the work performed) that the restoration,
repair, replacement and rebuilding covered by the disbursement
has been completed in accordance with plans and specifications
approved by Lender, (2) evidence satisfactory to it of the
estimated cost of completion of the restoration, repair,
replacement and rebuilding, (3) funds, or, at Lender's option,
assurances satisfactory to Lender that such funds are available,
sufficient in addition to the proceeds of insurance to complete
the proposed restoration, repair, replacement and rebuilding,
and (4) such architect's certificates, waivers of lien,
contractor's sworn statements, title insurance endorsements,
bonds, plats of survey and such other evidences of cost, payment
and performance as Lender may reasonably require and approve;
and Lender may, in any event, require that all plans and
specifications for such restoration, repair, replacement and
rebuilding be submitted to and approved by Lender prior to
commencement of work. With respect to disbursements to be made
by Lender: (A) no payment made prior to the final completion of
the restoration, repair, replacement and rebuilding shall exceed
ninety percent (90%) of the value of the work performed from
time to time; (B) funds other than proceeds of insurance shall
be disbursed prior to disbursement of such proceeds; and (C) at
all times, the undisbursed balance of such proceeds remaining in
the hands of Lender, together with funds deposited for that
purpose or irrevocably committed to the satisfaction of Lender
by or on behalf of Borrower for that purpose, shall be at least
sufficient in the reasonable judgment of Lender to pay for the
cost of completion of the restoration, repair, replacement or
rebuilding, free and clear of all liens or claims for lien and
the
12
costs described in Subsection 3.2(h)(vi) below. Any surplus
which may remain out of insurance proceeds held by Lender after
payment of such costs of restoration, repair, replacement or
rebuilding shall be paid to any party entitled thereto. In no
event shall Lender assume any duty or obligation for the
adequacy, form or content of any such plans and specifications,
nor for the performance, quality or workmanship of any
restoration, repair, replacement and rebuilding.
(vi) Notwithstanding anything to the contrary
contained herein, the proceeds of insurance reimbursed to
Borrower in accordance with the terms and provisions of this
Security Instrument shall be reduced by the reasonable costs (if
any) incurred by Lender in the adjustment and collection thereof
and in the reasonable costs incurred by Lender of paying out
such proceeds (including, without limitation, reasonable
attorneys' fees and costs paid to third parties for inspecting
the restoration, repair, replacement and rebuilding and
reviewing the plans and specifications therefor).
Section 3.3 PAYMENT OF TAXES, ETC.
(a) Borrower shall pay all taxes, assessments, water rates,
sewer rents, governmental impositions, and other charges, including
without limitation, vault charges and license fees for the use of
vaults, chutes and similar areas adjoining the Land, now or hereafter
levied or assessed or imposed against the Property or any part thereof
(the "TAXES"), all ground rents, maintenance charges and similar
charges, now or hereafter levied or assessed or imposed against the
Property or any part thereof (the "OTHER CHARGES"), and all charges for
utility services provided to the Property as same become due and
payable. Borrower will deliver to Lender, promptly upon Lender's
request, evidence satisfactory to Lender that the Taxes, Other Charges
and utility service charges have been so paid or are not then
delinquent. Borrower shall not allow and shall promptly cause to be paid
and discharged any lien or charge whatsoever which may be or become a
lien or charge against the Property. Except 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 Loan
Documents, (ii) Borrower is permitted to do so under the provisions of
any other mortgage, deed of trust or deed to secure debt affecting the
Property, (iii) such proceeding shall suspend the collection of the
Taxes from Borrower and from the Property or Borrower shall have paid
all of the Taxes under protest, (iv) such proceeding shall be permitted
under and be conducted in
13
accordance with the provisions of any other instrument to which Borrower
is subject and shall not constitute a default thereunder, (v) neither
the Property nor any part thereof or interest therein will be in danger
of being sold, forfeited, terminated, canceled or lost, (vi) Borrower
shall have set aside and deposited with Lender adequate reserves for the
payment of the Taxes, together with all interest and penalties thereon,
unless Borrower has paid all of the Taxes under protest, and (vii)
Borrower shall have furnished the security as may be required in the
proceeding, or as may be requested by Lender to insure the payment of
any contested Taxes, together with all interest and penalties thereon.
Section 3.4 CONDEMNATION. Borrower shall promptly give Lender notice of
the actual or threatened commencement of any condemnation or eminent domain
proceeding and shall deliver to Lender copies of any and all papers served in
connection with such proceedings. Lender is hereby irrevocably appointed as
Borrower's attorney-in-fact, coupled with an interest, with exclusive power to
collect, receive and retain any award or payment for said condemnation or
eminent domain and to make any compromise or settlement in connection with such
proceeding, subject to the provisions of this Security Instrument.
Notwithstanding any taking by any public or quasi-public authority through
eminent domain or otherwise (including but not limited to any transfer made in
lieu of or in anticipation of the exercise of such taking), Borrower shall
continue to pay the Debt at the time and in the manner provided for its payment
in the Note and in this Security Instrument and the Debt shall not be reduced
until any award or payment therefor shall have been actually received and
applied by Lender, after the deduction of expenses of collection, to the
reduction or discharge of the Debt. Lender shall not be limited to the interest
paid on the award by the condemning authority but shall be entitled to receive
out of the award interest at the rate or rates provided herein or in the Note.
Borrower shall cause the award or payment made in any condemnation or eminent
domain proceeding, which is payable to Borrower, to be paid directly to Lender.
Lender may apply any award or payment to the reduction or discharge of the Debt
whether or not then due and payable (such application to be free from any
prepayment consideration provided in the Note, except that if an Event of
Default, or an event which with notice and/or the passage of time, or both,
would constitute an Event of Default, has occurred, then such application shall
be subject to the full prepayment consideration computed in accordance with the
Note). If the Property is sold, through foreclosure or otherwise, prior to the
receipt by Lender of the award or payment, Lender shall have the right, whether
or not a deficiency judgment on the Note shall have been sought, recovered or
denied, to receive the award or payment, or a portion thereof sufficient to pay
the Debt.
Section 3.5 USE AND MAINTENANCE OF PROPERTY. Borrower shall cause the
Property to be maintained and operated in a good and safe condition and repair
and in keeping with the condition and repair of properties of a similar use,
value, age, nature and construction. Borrower shall not use, maintain or operate
the Property in any manner which constitutes a public or private nuisance or
which makes void, voidable, or cancelable, or increases the premium of, any
insurance then in force with respect thereto. The Improvements and the Personal
Property shall not be removed, demolished or materially altered (except for
normal replacement of the Personal Property with items of the same utility and
of equal or greater value)
14
without the prior written consent of Lender. Borrower shall promptly repair,
replace or rebuild any part of the Property which may be destroyed by any
casualty, or become damaged, worn or dilapidated or which may be affected by any
proceeding of the character referred to in Section 3.4 hereof and shall complete
and pay for any structure at any time in the process of construction or repair
on the Land. Borrower shall not initiate, join in or consent to any change in
any private restrictive covenant, zoning law or other public or private
restriction, limiting or defining the uses which may be made of the Property or
any part thereof. If under applicable zoning provisions the use of all or any
portion of the Property is or shall become a nonconforming use, Borrower will
not cause or permit the nonconforming use to be discontinued or abandoned
without the express written consent of Lender. Borrower shall not take any steps
whatsoever to convert the Property, or any portion thereof, to a condominium or
cooperative form of management.
Section 3.6 WASTE. Borrower shall not commit or suffer any waste of the
Property or, without first obtaining such additional insurance as may be
necessary to cover a proposed change in use of the Property, make any change in
the use of the Property which will in any way materially increase the risk of
fire or other hazard arising out of the operation of the Property, or take any
action that might invalidate or give cause for cancellation of any Policy, or do
or permit to be done thereon anything that may in any way impair the value of
the Property or the security of this Security Instrument. Borrower will not,
without the prior written consent of Lender, permit any drilling or exploration
for or extraction, removal, or production of any minerals from the surface or
the subsurface of the Land, regardless of the depth thereof or the method of
mining or extraction thereof.
Section 3.7 COMPLIANCE WITH LAWS; ALTERATIONS.
(a) Borrower shall promptly comply with all existing and
future federal, state and local laws, orders, ordinances, governmental
rules and regulations or court orders affecting or which may be
interpreted to affect the Property, or the use thereof, including, but
not limited to, the Americans with Disabilities Act (the "ADA")
(collectively "APPLICABLE LAWS").
(b) Notwithstanding any provisions set forth herein or in
any document regarding Lender's approval of alterations of the Property,
Borrower shall not alter the Property in any manner which would increase
Borrower's responsibilities for compliance with Applicable Laws without
the prior written approval of Lender. Lender's approval of the plans,
specifications, or working drawings for alterations of the Property
shall create no responsibility or liability on behalf of Lender for
their completeness, design, sufficiency or their compliance with
Applicable Laws. The foregoing shall apply to tenant improvements
constructed by Borrower or by any of its tenants. Lender may condition
any such approval upon receipt of a certificate of compliance with
Applicable Laws from an independent architect, engineer, or other person
acceptable to Lender.
15
(c) Borrower shall give prompt notice to Lender of the
receipt by Borrower of any notice related to a violation of any
Applicable Laws and of the commencement of any proceedings or
investigations which relate to compliance with Applicable Laws.
(d) Borrower shall take appropriate measures to prevent and
will not engage in or knowingly permit any illegal activities at the
Property.
Section 3.8 BOOKS AND RECORDS.
(a) Borrower shall keep accurate books and records of
account in accordance with sound accounting principles in which full,
true and correct entries shall be promptly made with respect to
Borrower, the Property and the operation thereof, and will permit all
such books and records (including without limitation all contracts,
statements, invoices, bills and claims for labor, materials and services
supplied for the construction, repair or operation to Borrower of the
Improvements) to be inspected or audited and copies made by Lender and
its representatives during normal business hours and at any other
reasonable times. Borrower represents that its chief executive office is
as set forth in the introductory paragraph of this Security Instrument
and that all books and records pertaining to the Property are maintained
at the Property or such other location as may be expressly disclosed to
Lender in writing. Borrower will furnish, or cause to be furnished, to
Lender on or before forty-five (45) calendar days after the end of each
calendar quarter the following items, each certified by Borrower as
being true and correct, in such format and in such detail as Lender or
its servicer may request:
(i) a written statement (rent roll) dated as
of the last day of each such calendar quarter identifying each
of the Leases by the term, space occupied, rental required to be
paid (including percentage rents and tenant sales), security
deposit paid, any rental concessions, all rent escalations, any
rents paid more than one (1) month in advance, any special
provisions or inducements granted to tenants, any taxes,
maintenance and other common charges paid by tenants, all
vacancies and identifying any defaults or payment delinquencies
thereunder; and
(ii) quarterly and year-to-date operating
statements prepared for each calendar quarter during each such
reporting period detailing the total revenues received, total
expenses incurred, total cost of all capital improvements, total
debt service and total cash flow.
(b) Within ninety (90) calendar days following the end of
each calendar year, Borrower shall furnish a statement of the financial
affairs and condition of the Borrower
16
and the Property including a statement of profit and loss for the
Property in such format and in such detail as Lender or its servicer may
request, and setting forth the financial condition and the income and
expenses for the Property for the immediately preceding calendar year
prepared by an independent certified public accountant. Borrower shall
deliver to Lender copies of all income tax returns, requests for
extension and other similar items contemporaneously with its delivery of
same to the Internal Revenue Service.
(c) Borrower will permit representatives appointed by
Lender, including independent accountants, agents, attorneys, appraisers
and any other persons, upon reasonable advance notice except in the
event of emergencies, subject to the rights of tenants, to visit and
inspect during its normal business hours and at any other reasonable
times any of the Property and to make photographs thereof, and to write
down and record any information such representatives obtain, and shall
permit Lender or its representatives to investigate and verify the
accuracy of the information furnished to Lender under or in connection
with this Security Instrument or any of the Other Loan Documents and to
discuss all such matters with its officers, employees and
representatives. Borrower will furnish to Lender at Borrower's expense
all evidence which Lender may from time to time reasonably request as to
the accuracy and validity of or compliance with all representations and
warranties made by Borrower in the Loan Documents and satisfaction of
all conditions contained therein. Any inspection or audit of the
Property or the books and records of Borrower, or the procuring of
documents and financial and other information, by or on behalf of
Lender, shall be at Borrower's expense and shall be for Lender's
protection only, and shall not constitute any assumption of
responsibility or liability by Lender to Borrower or anyone else with
regard to the condition, construction, maintenance or operation of the
Property, nor Lender's approval of any certification given to Lender nor
relieve Borrower of any of Borrower's obligations.
Section 3.9 PAYMENT FOR LABOR AND MATERIALS. Borrower will promptly pay
when due all bills and costs for labor, materials, and specifically fabricated
materials incurred in connection with the Property and never permit to exist
beyond the due date thereof in respect of the Property or any part thereof any
lien or security interest, even though inferior to the liens and the security
interests hereof, and in any event never permit to be created or exist in
respect of the Property or any part thereof any other or additional lien or
security interest other than the liens or security interests hereof, except for
the Permitted Exceptions (as hereinafter defined).
Section 3.10 PERFORMANCE OF OTHER AGREEMENTS. Borrower shall observe and
perform each and every term to be observed or performed by Borrower pursuant to
the terms of any agreement or recorded instrument affecting or pertaining to the
Property, or given by Borrower to Lender for the purpose of further securing an
obligation secured hereby and any amendments, modifications or changes thereto.
17
ARTICLE 4 - SPECIAL COVENANTS
Borrower covenants and agrees that:
Section 4.1 PROPERTY USE. The Property shall be used only for
office/warehouse purposes, and for no other use without the prior written
consent of Lender, which consent may be withheld in Lender's sole and absolute
discretion.
Section 4.2 ERISA.
(a) It shall not engage in any transaction which would cause
any obligation, or action taken or to be taken, hereunder (or the
exercise by Lender of any of its rights under the Note, this Security
Instrument and the Other Loan Documents) to be a non-exempt (under a
statutory or administrative class exemption) prohibited transaction
under the Employee Retirement Income Security Act of 1974, as amended
("ERISA").
(b) It shall deliver to Lender such certifications or other
evidence from time to time throughout the term of the Security
Instrument, as requested by Lender in its sole discretion, that (i)
Borrower is not an "employee benefit plan" as defined in Section 3(3) of
ERISA, which is subject to Title I of ERISA, or a "governmental plan"
within the meaning of Section 3(32) of ERISA; (ii) Borrower is not
subject to state statutes regulating investments and fiduciary
obligations with respect to governmental plans; and (iii) one or more of
the following circumstances is true:
(i) Equity interests in Borrower are
publicly offered securities, within the meaning of 29 C.F.R.
Section 2510.3-lOl(b)(2);
(ii) Less than twenty-five percent (25%) of
each outstanding class of equity interests in Borrower are held
by "benefit plan investors" within the meaning of 29 C.F.R.
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. Borrower covenants and agrees that it
has not and shall not:
(a) engage in any business or activity other than the
acquisition, ownership, operation and maintenance of the Property, and
activities incidental thereto;
18
(b) acquire or own any material asset other than (i) the
Property, and (ii) such incidental Personal Property as may be necessary
for the operation of the Property;
(c) merge into or consolidate with any person or entity or
dissolve, terminate or liquidate in whole or in part, transfer or
otherwise dispose of all or substantially all of its assets or change
its legal structure, without in each case Lender's consent;
(d) fail to preserve its existence as an entity duly
organized, validly existing and in good standing (if applicable) under
the laws of the jurisdiction of its organization or formation, or
without the prior written consent of Lender, amend, modify, terminate or
fail to comply with the provisions of Borrower's Partnership Agreement,
Articles or Certificate of Incorporation, Articles of Organization,
Operating Agreement or similar organizational documents, as the case may
be;
(e) own any subsidiary or make any investment in or acquire
the obligations or securities of any other person or entity without the
consent of Lender;
(f) commingle its assets with the assets of any of its
partner(s), members, shareholders, affiliates, or of any other person or
entity or transfer any assets to any such person or entity other than
distributions on account of equity interests in the Borrower permitted
hereunder and properly accounted for;
(g) incur any debt, secured or unsecured, direct or
contingent (including guaranteeing any obligation), other than the Debt,
except unsecured trade and operational debt incurred with trade
creditors in the ordinary course of its business of owning and operating
the Property in such amounts as are normal and reasonable under the
circumstances, provided that such debt is not evidenced by a note and is
paid when due and provided in any event the outstanding principal
balance of such debt shall not exceed at any one time one percent (1%)
of the outstanding Debt;
(h) allow any person or entity to pay its debts and
liabilities (except a Guarantor or Indemnitor) or fail to pay its debts
and liabilities solely from its own assets;
(i) fail to maintain its records, books of account and bank
accounts separate and apart from those of the shareholders, partners,
members, principals and affiliates of Borrower, the affiliates of a
shareholder, partner or member of Borrower, and any other person or
entity;
(j) enter into any contract or agreement with any
shareholder, partner, member, principal or affiliate of Borrower, any
guarantor of all or a portion of the Debt (a "GUARANTOR") or any
shareholder, partner, member, principal or affiliate thereof, except
upon terms and conditions that are intrinsically fair and substantially
similar to those that would be available on an arms-length basis with
third parties other than any shareholder,
19
partner, member, principal or affiliate of Borrower or Guarantor, or any
shareholder, partner, member, principal or affiliate thereof;
(k) seek dissolution or winding up in whole, or in part;
(l) fail to correct any known misunderstandings regarding
the separate identity of Borrower;
(m) hold itself out to be responsible or pledge its assets
or credit worthiness for the debts of another person or entity or allow
any person or entity to hold itself out to be responsible or pledge its
assets or credit worthiness for the debts of the Borrower (except for a
Guarantor or Indemnitor);
(n) make any loans or advances to any third party, including
any shareholder, partner, member, principal or affiliate of Borrower, or
any shareholder, partner, member, principal or affiliate thereof;
(o) fail to file its own tax returns as legally required or
to use separate invoices and checks;
(p) fail either to hold itself out to the public as a legal
entity separate and distinct from any other entity or person or to
conduct its business solely in its own name in order not (i) to mislead
others as to the entity with which such other party is transacting
business, or (ii) to suggest that Borrower is responsible for the debts
of any third party (including any shareholder, partner, member,
principal or affiliate of Borrower, or any shareholder, partner, member,
principal or affiliate thereof);
(q) fail to allocate fairly and reasonably among Borrower
and any third party (including, without limitation, any Guarantor) any
overhead for common employees, shared office space or other overhead and
administrative expenses;
(r) allow any person or entity to pay the salaries of its
own employees or fail to maintain a sufficient number of employees for
its contemplated business operations;
(s) fail to maintain adequate capital for the normal
obligations reasonably foreseeable in a business of its size and
character and in light of its contemplated business operations;
(t) file a voluntary petition or otherwise initiate
proceedings to have the Borrower or any general partner or managing
member adjudicated bankrupt or insolvent, or consent to the institution
of bankruptcy or insolvency proceedings against the Borrower or any
general partner or managing member, or file a petition seeking or
consenting to reorganization or relief of the Borrower or any general
partner or managing member as debtor under any applicable federal or
state law relating to bankruptcy,
20
insolvency, or other relief for debtors with respect to the Borrower or
any general partner or managing member; or seek or consent to the
appointment of any trustee, receiver, conservator, assignee,
sequestrator, custodian, liquidator (or other similar official) of the
Borrower or any general partner or managing member or of all or any
substantial part of the properties and assets of the Borrower or any
general partner or managing member, or make any general assignment for
the benefit of creditors of the Borrower or any general partner or
managing member, or admit in writing the inability of the Borrower or
any general partner or managing member to pay its debts generally as
they become due or declare or effect a moratorium on the Borrower or any
general partner or managing member debt or take any action in
furtherance of any such action;
(u) share any common logo with or hold itself out as or be
considered as a department or division of (i) any shareholder, partner,
principal, member or affiliate of Borrower, (ii) any affiliate of a
shareholder, partner, principal, member or affiliate of Borrower, or
(iii) any other person or entity or allow any person or entity to
identify the Borrower as a department or division of that person or
entity; or
(v) conceal assets from any creditor, or enter into any
transaction with the intent to hinder, delay or defraud creditors of the
Borrower or the creditors of any other person or entity;
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES
Section 5.1 BORROWER'S REPRESENTATIONS. Borrower represents and warrants
to Lender that each of the representations and warranties set forth in that
certain Closing Certificate of even date herewith executed by Borrower in favor
of Lender are true and correct as of the date hereof and are hereby incorporated
and restated in this Security Instrument by this reference.
Section 5.2 WARRANTY OF TITLE. Borrower represents and warrants that it
has good and marketable title to the Property and has the right to grant,
bargain, sell, pledge, assign, warrant, transfer and convey the same and that
Borrower possesses an unencumbered fee simple absolute estate in the Land and
the Improvements and that it owns the Property free and clear of all liens,
encumbrances and charges whatsoever except for those exceptions shown in the
title insurance policy insuring the lien of this Security Instrument (the
"PERMITTED EXCEPTIONS"). Borrower shall, at its sole cost and expense, forever
warrant, defend and preserve the title and the validity and priority of the lien
of this Security Instrument and shall, at its sole cost and expense, forever
warrant and defend the same to Trustee and Lender against the claims of all
persons whomsoever.
Section 5.3 STATUS OF PROPERTY.
(a) No portion of the Improvements is located in an area
identified by the Secretary of Housing and Urban Development or any
successor thereto as an area having
21
special flood hazards pursuant to the National Flood Insurance Act of
1968 or the Flood Disaster Protection Act of 1973, as amended, or any
successor law, or, if located within any such area, Borrower has
obtained and will maintain the insurance prescribed in Section 3.2
hereof.
(b) Borrower has obtained all necessary certificates,
permits, licenses and other approvals, governmental and otherwise,
necessary for the use, occupancy and operation of the Property and the
conduct of its business (including, without limitation, certificates of
completion and certificates of occupancy) and all required zoning,
building code, land use, environmental and other similar permits or
approvals, all of which are in full force 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 to the best knowledge of Borrower in full
compliance with all Applicable Laws, including, without limitation,
zoning ordinances, building codes, land use and environmental laws, laws
relating to the disabled (including, but not limited to, the ADA) and
other similar laws.
(d) The Property is served by all utilities required for the
current or contemplated use thereof. All utility service is provided by
public utilities and the Property has accepted or is equipped to accept
such utility service.
(e) All public roads and streets necessary for service of
and access to the Property for the current or contemplated use thereof
have been completed, are serviceable and are physically and legally open
for use by the public.
(f) The Property is served by public water and sewer
systems.
(g) The Property is free from damage caused by fire or other
casualty. There is no pending or, to the best knowledge of Borrower,
threatened condemnation proceedings affecting the Property or any
portion thereof.
(h) All costs and expenses of any and all labor, materials,
supplies and equipment used in the construction of the Improvements have
been paid in full and no notice of any mechanics' or materialmen's liens
or of any claims of right to any such liens have been received.
(i) Borrower has paid in full for, and is the owner of, all
furnishings, fixtures and equipment (other than tenants' property) used
in connection with the operation of the Property, free and clear of any
and all security interests, liens or encumbrances, except the lien and
security interest created hereby.
22
(j) All liquid and solid waste disposal, septic and sewer
systems located the Property are to the best knowledge of Borrower in a
good and safe condition and repair and in compliance with all Applicable
Laws.
(k) All Improvements lie within the boundary of the Land.
Section 5.4 NO FOREIGN PERSON. Borrower is not a "foreign person" within
the meaning of Section 1445(f)(3) of the Internal Revenue Code of 1986, as
amended, and the related Treasury Department regulations, including temporary
regulations.
Section 5.5 SEPARATE TAX LOT. The Property is assessed for real estate
tax purposes as one or more wholly independent tax lot or lots, separate from
any adjoining land or improvements not constituting a part of such lot or lots,
and no other land or improvements is assessed and taxed together with the
Property or any portion thereof.
ARTICLE 6 - OBLIGATIONS AND RELIANCES
Section 6.1 RELATIONSHIP OF BORROWER AND LENDER. The relationship
between Borrower and Lender is solely that of debtor and creditor, and Lender
has no fiduciary or other special relationship with Borrower, and no term or
condition of any of the Note, this Security Instrument and the other Loan
Documents shall be construed so as to deem the relationship between Borrower and
Lender to be other than that of debtor and creditor.
Section 6.2 NO RELIANCE ON LENDER. The partners, members, principals and
(if Borrower is a trust) beneficial owners of Borrower are experienced in the
ownership and operation of properties similar to the Property, and Borrower and
Lender are relying solely upon such expertise and business plan in connection
with the ownership and operation of the Property. Borrower is not relying on
Lender's expertise, business acumen or advice in connection with the Property.
Section 6.3 NO LENDER OBLIGATIONS.
(a) Notwithstanding the provisions of Subsections 1.1(e) and
1.1(1) or Section 1.2, Lender is not undertaking (i) any obligations
under the Leases; or (ii) any obligations with respect to such
agreements, contracts, certificates, instruments, franchises, permits,
trademarks, licenses and other documents.
(b) By accepting or approving anything required to be
observed, performed or fulfilled or to be given to Lender pursuant to
this Security Instrument, the Note or the Other Loan Documents,
including without limitation, any officer's certificate, balance sheet,
statement of profit and loss or other financial statement, survey,
appraisal, or insurance policy, Lender shall not be deemed to have
warranted, consented to, or affirmed the sufficiency, legality or
effectiveness of same, and such acceptance or
23
approval thereof shall not constitute any warranty or affirmation with
respect thereto by Lender.
Section 6.4 RELIANCE. Borrower recognizes and acknowledges that in
accepting the Note, this Security Instrument and the Other Loan Documents,
Lender is expressly and primarily relying on the truth and accuracy of the
warranties and representations set forth in Article 5 and that certain Closing
Certificate of even date herewith executed by Borrower, without any obligation
to investigate the Property and notwithstanding any investigation of the
Property by Lender; that such reliance existed on the part of Lender prior to
the date hereof; that such warranties and representations are a material
inducement to Lender in accepting the Note, this Security Instrument and the
Other Loan Documents; and that Lender would not be willing to make the Loan (as
hereinafter defined) and accept this Security Instrument in the absence of the
warranties and representations as set forth in Article 5 and such Closing
Certificate.
ARTICLE 7 - FURTHER ASSURANCES
Section 7.1 RECORDING FEES. Borrower will pay all taxes, filing,
registration or recording fees, and all expenses incident to the preparation,
execution, acknowledgment and/or recording of the Note, this Security
Instrument, the Other Loan Documents, any note or deed of trust supplemental
hereto, any security instrument with respect to the Property and any instrument
of further assurance, and any modification or amendment of the foregoing
documents, and all federal, state, county and municipal taxes, duties, imposts,
assessments and charges arising out of or in connection with the execution and
delivery of this Security Instrument, any deed of trust supplemental hereto, any
security instrument with respect to the Property or any instrument of further
assurance, and any modification or amendment of the foregoing documents, except
where prohibited by law so to do.
Section 7.2 FURTHER ACTS. Borrower will, at the cost of Borrower, and
without expense to Lender, do, execute, acknowledge and deliver all and every
such further acts, deeds, conveyances, deeds of trust, assignments, notices of
assignments, transfers and assurances as Lender shall, from time to time,
require, for the better assuring, conveying, assigning, transferring, and
confirming unto Lender the property and rights hereby granted, bargained, sold,
conveyed, confirmed, pledged, assigned, warranted and transferred or intended
now or hereafter so to be, or which Borrower may be or may hereafter become
bound to convey or assign to Lender, or for carrying out the intention or
facilitating the performance of the terms of this Security Instrument or for
filing, registering or recording this Security Instrument, or for complying
with all Applicable Laws. Borrower, on demand, will execute and deliver and
hereby authorizes Lender to execute in the name of Borrower or without the
signature of Borrower to the extent Lender may lawfully do so, one or more
financing statements, chattel mortgages or other instruments, to evidence more
effectively the security interest of Lender in the Property. Borrower grants to
Lender an irrevocable power of attorney coupled with an interest for the purpose
of exercising and perfecting any and all rights and remedies available to Lender
at law and in equity, including without limitation such rights and remedies
available to Lender pursuant to this Section 7.2.
24
Section 7.3 CHANGES IN TAX, DEBT CREDIT AND DOCUMENTARY STAMP LAWS.
(a) If any law is enacted or adopted or amended after the
date of this Security Instrument which imposes a tax, either directly or
indirectly, on the Debt or Lender's interest in the Property, requires
revenue or other stamps to be affixed to the Note, this Security
Instrument, or the Other Loan Documents, or imposes any other tax or
charge on the same, Borrower will pay the same, with interest and
penalties thereon, if any. If Lender is advised by counsel chosen by it
that the payment of tax by Borrower would be unlawful or taxable to
Lender or unenforceable or provide the basis for a defense of usury,
then Lender shall have the option, by written notice of not less than
ninety (90) calendar days, to declare the Debt immediately due and
payable.
(b) Borrower will not claim or demand or be entitled to any
credit or credits on account of the Debt for any part of the Taxes or
Other Charges assessed against the Property, or any part thereof, and no
deduction shall otherwise be made or claimed from the assessed value of
the Property, or any part thereof, for real estate tax purposes by
reason of this Security Instrument or the Debt. If such claim, credit or
deduction shall be required by law, Lender shall have the option, by
written notice of not less than ninety (90) calendar days, to declare
the Debt immediately due and payable.
Section 7.4 CONFIRMATION STATEMENT.
(a) After request by Lender, Borrower, within ten (10) days,
shall furnish Lender or any proposed assignee with a statement, duly
acknowledged and certified, confirming to Lender (or its designee) (i)
the amount of the original principal amount of the Note, (ii) the unpaid
principal amount of the Note, (iii) the rate of interest of the Note,
(iv) the terms of payment and maturity date of the Note, (v) the date
installments of interest and/or principal were last paid, and (vi) that,
except as provided in such statement, there are no defaults or events
which with the passage of time or the giving of notice or both, would
constitute an event of default under the Note or this Security
Instrument; provided, however, Lender shall not be entitled hereunder to
receive more than one (1) such statement in each calendar year.
(b) Subject to the provisions of the Leases, Borrower shall
deliver to Lender, promptly upon request (but not more frequently than
once annually so long as Borrower is not in default hereunder), duly
executed estoppel certificates from any one or more lessees as required
by Lender attesting to such facts regarding the Lease as Lender may
require, including but not limited to attestations that each Lease
covered thereby is in full force and effect with no defaults thereunder
on the part of any party, that none of the Rents have been paid more
than one month in advance, and that the lessee claims no defense or
offset against the full and timely performance of its obligations under
the Lease.
25
(c) Upon any transfer or proposed transfer contemplated by
Section 16.1 hereof, at Lender's request, Borrower, any Guarantors and
any Indemnitors shall provide an estoppel certificate to the Investor
(defined in Section 16.1) or any prospective Investor in such form,
substance and detail as Lender, such Investor or prospective Investor
may require.
Section 7.5 SPLITTING OF SECURITY INSTRUMENT. This Security Instrument
and the Note shall, at any time until the same shall be fully paid and
satisfied, at the sole election of Lender, be split or divided into two or more
notes and two or more security instruments, each of which shall cover all or a
portion of the Property to be more particularly described therein. To that end,
Borrower, upon written request of Lender, shall execute, acknowledge and
deliver, or cause to be executed, acknowledged and delivered by the then owner
of the Property, to Lender and/or its designee or designees substitute notes and
security instruments in such principal amounts, aggregating not more than the
then unpaid principal amount of Debt, and containing terms, provisions and
clauses similar to those contained herein and in the Note, and such other
documents and instruments as may be required by Lender.
Section 7.6 REPLACEMENT DOCUMENTS. Upon receipt of an affidavit of an
officer of Lender as to the loss, theft, destruction or mutilation of the Note
or any Other Loan Document which is not of public record, and, in the case of
any such mutilation, upon surrender and cancellation of such Note or Other Loan
Document, Borrower, at its expense, will issue, in lieu thereof, a replacement
Note or Other Loan Document, dated the date of such lost, stolen, destroyed or
mutilated Note or Other Loan Document in the same principal amount thereof and
otherwise of like tenor.
ARTICLE 8 - DUE ON SALE/ENCUMBRANCE
Section 8.1 LENDER RELIANCE. Borrower acknowledges that Lender has
examined and relied on the creditworthiness of Borrower and experience of
Borrower and its partners, members, principals and (if Borrower is a trust)
beneficial owners in owning and operating properties such as the Property in
agreeing to make the Loan, and will continue to rely on Borrower's ownership of
the Property as a means of maintaining the value of the Property as security for
repayment of the Debt and the performance of the Other Obligations. Borrower
acknowledges that Lender has a valid interest in maintaining the value of the
Property so as to ensure that, should Borrower default in the repayment of the
Debt or the performance of the Other Obligations, Lender can recover the Debt by
a sale of the Property.
Section 8.2 NO SALE/ENCUMBRANCE.
(a) Borrower agrees that Borrower shall not, without the
prior written consent of Lender, Transfer the Property or any part
thereof or permit the Property or any part thereof to be Transferred.
Lender shall not be required to demonstrate any actual impairment of its
security or any increased risk of default hereunder in order to declare
26
the Debt immediately due and payable upon Borrower's Transfer of the Property
without Lender's consent.
(b) As used in Section 8.2(a), "Transfer" shall mean any voluntary
or involuntary sale, conveyance, mortgage, grant, bargain, encumbrance, pledge,
assignment or transfer of all or any part of the Property or any interest
therein including, but not limited to: (i) an installment sales agreement
wherein Borrower agrees to sell the Property or any part thereof for a price to
be paid in installments; (ii) an agreement by Borrower leasing all or a
substantial part of the Property for other than actual occupancy by a space
tenant thereunder; (iii) a sale, assignment or other transfer of, or the grant
of a security interest in, Borrower's right, title and interest in and to any
Leases or any Rents; (iv) if Borrower, Guarantor, or any managing member or
general partner of Borrower or Guarantor is a corporation, any Transfer of such
corporation's stock (or the stock of any corporation directly or indirectly
controlling such Borrower, Guarantor, managing member or general partner by
operation of law or otherwise) or the creation or issuance of new stock in one
or a series of transactions by which an aggregate of forty-nine percent (49%) or
more of such corporation's stock shall directly or indirectly be vested in or
pledged to a party or parties who are not now stockholders (provided, however,
in no event shall this subpart [iv] apply to any Guarantor whose stock or shares
are traded on a nationally recognized stock exchange); (v) if Borrower,
Guarantor, or any managing member or general partner of Borrower or Guarantor is
a limited liability company or partnership, the Transfer by which an aggregate
of forty-nine percent (49%) or more of the ownership interest in such limited
liability company or the general partnership interests in such partnership shall
directly or indirectly be vested in or pledged to parties not having an
ownership interest as of the date of this Security Instrument; (vi) if Borrower,
any Guarantor or any managing member or general partner of Borrower or any
Guarantor is a partnership, limited liability company or joint venture, the
change, removal or resignation of a general partner, managing member or joint
venturer or the Transfer directly or indirectly of all or any portion of the
partnership or ownership interest of any general partner, managing member or
joint venturer; and (vii) except as expressly permitted by Section 8.3, any
Transfer by an Original Principal, directly or indirectly, of its ownership
interest in the Borrower.
Section 8.3 EXCLUDED AND PERMITTED TRANSFERS.
(a) A Transfer within the meaning of this Article 8 shall not
include (i) transfers of ownership interests in the Borrower, any general
partner or managing member or any Guarantor made by devise or descent or by
operation of law upon the death of a joint tenant, partner, member or
shareholder, subject, however, to all the following requirements: (A) written
notice of any transfer under this Section 8.3, whether by will, trust or other
written instrument, operation of law or otherwise, is provided to Lender or its
servicer, together with copies of such documents relating to the transfer as
Lender or its servicer may reasonably request, (B) control over the
27
management and operation of the Property is retained by Xxxxxxx X.
Xxxxxxxxx, Xxxxx X. Xxxxxxxxx or Xxxxxxxx Xxxxx (each an "ORIGINAL
PRINCIPAL", whether one or more) at all times prior to the death or
legal incapacity of all the Original Principals and is thereafter
assumed by persons who are acceptable in all respects to Lender in its
sole and absolute discretion, (C) no such transfer by any of the
Original Principal will release the respective estate from any liability
as a Guarantor, and (D) no such transfer, death or other event has any
adverse effect either on the bankruptcy-remote status of Borrower under
the requirements of any national rating agency for the Securities
(hereinafter defined) or on the status of Borrower as a continuing legal
entity liable for the payment of the Debt and the performance of all
other obligations secured hereby, (ii) transfers otherwise by operation
of law in the event of a bankruptcy, or (iii) a Lease of a portion of
the Property to a space tenant.
(b) Notwithstanding any provision of this Security
Instrument to the contrary, the prohibitions in Subsection 8.2(a) shall
not apply to an inter vivos or testamentary transfer of all or any
portion of ownership interests in the Borrower, any general partner or
managing member or any Guarantor to one or more family members of
Original Principal or a trust in which all of the beneficial interest is
held by one or more family members of Original Principal or a
partnership or limited liability company in which a majority of the
capital and profits interests are held by one or more family members of
Original Principal, provided, that any inter vivos transfer of all or
any portion of the ownership interests in the Borrower, such general
partner or managing member or such Guarantor is made in connection with
Original Principal bona fide, good faith estate planning and that the
person(s) with voting control of Borrower or the management of the
Property are (i) the same person(s) who had such voting control and
management rights immediately prior to the transfer in question, or (ii)
reasonably acceptable to Lender and provided further that no such
transfer shall have any adverse effect on the bankruptcy remote status
of Borrower under the requirements of any national rating agency for the
Securities. Lender acknowledges that Original Principal and/or an
Original Principal's spouse are acceptable to exercise voting control of
Borrower and the management of the Property. As used herein, "family
members" shall include the spouse, children and grandchildren and any
lineal descendants.
(c) Notwithstanding the provisions of Section 8.2 above,
Lender will give its consent to three separate sales or transfers of the
Property or ownership interests in the Borrower, a general partner or
managing member of the Borrower, or any Guarantor, if (but only if) no
Event of Default under the Loan Documents has occurred and is
continuing, and if each of the following conditions precedent have been
fully satisfied (as determined in Lender's sole and absolute
discretion): (i) the grantee's or transferee's integrity, reputation,
financial condition, character and management ability are satisfactory
to Lender in its sole discretion, and all information relating thereto
requested by Lender is delivered to Lender at least 30 days prior to the
proposed transfer, (ii) the grantee's or transferee's (and its sole
general partner's or managing member's) single
28
purpose and bankruptcy remote character are satisfactory to Lender in
its sole discretion, and all information relating thereto requested by
Lender is delivered to Lender at least 30 days prior to the proposed
transfer, (iii) Lender has obtained such estoppels from any guarantors
of the Note or replacement guarantors and such other legal opinions
regarding substantive consolidation issues, enforceability of the
assumption documents, no adverse impact on the Securities or any REMIC
holding the Note and similar matters as Lender may require, (iv) all of
Lender's costs and expenses associated with the sale or transfer
(including reasonable attorneys' fees) are paid by Borrower or the
grantee or transferee, (v) the payment of a transfer fee not to exceed
1% of the then unpaid principal balance of the loan evidenced by the
Note and secured hereby (the "LOAN"), (vi) the execution and delivery to
Lender of a written assumption agreement and/or substitute guaranty (in
its sole and absolute discretion) and such modifications to the Loan
Documents executed by such parties and containing such terms and
conditions as Lender may require in its sole and absolute discretion
prior to such sale or transfer (provided that in the event the Loan is
included in a REMIC and is a performing Loan, no modification to the
terms and conditions shall be made or permitted that would cause (A) any
adverse tax consequences to the REMIC or any holders of any
Mortgage-Backed Pass-Through Securities, (B) the Security Instrument to
fail to be a Qualifying Security Instrument under applicable federal
law relating to REMIC's, or (C) result in a taxation of the income from
the Loan to the REMIC or cause a loss of REMIC status), and (vii) if
applicable, the delivery to Lender of an endorsement (at Borrower's sole
cost and expense) to Lender's policy of title insurance then insuring
the lien created by this Security Instrument in form and substance
acceptable to Lender in its sole judgment.
(d) Without limiting the foregoing, if Lender shall consent
to a transfer of the Property, the written assumption agreement
described in Subsection 8.3(c)(vi) above shall provide for the release
of Borrower and, if approved by Lender, each Guarantor and Indemnitor
of personal liability under the Note and Other Loan Documents, but only
as to acts or events occurring, or obligations arising, after the
closing of such transfer.
Section 8.4 NO IMPLIED FUTURE CONSENT. Lender's consent to one sale,
conveyance, alienation, mortgage, encumbrance, pledge or transfer of the
Property shall not be deemed to be a waiver of Lender's right to require such
consent to any future occurrence of same. Any sale, conveyance, alienation,
mortgage, encumbrance, pledge or transfer of the Property made in contravention
of this Article 8 shall be null and void and of no force and effect.
Section 8.5 COSTS OF CONSENT. Borrower agrees to bear and shall pay or
reimburse Lender on demand for all reasonable expenses (including, without
limitation, all recording costs, reasonable attorneys' fees and disbursements
and title search costs) incurred by Lender in connection with the review,
approval and documentation of any such sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer.
29
Section 8.6 CONTINUING SEPARATENESS REQUIREMENTS. In no event shall any
of the terms and provisions of this Article 8 amend or modify the terms and
provisions contained in Section 4.3 herein.
ARTICLE 9 - DEFAULT
Section 9.1 EVENTS OF DEFAULT. The occurrence of any one or more of the
following events shall constitute an "EVENT OF DEFAULT":
(a) if any portion of the Debt is not paid prior to the
seventh (7th) calendar day after the same is due or if the entire Debt
is not paid on or before the maturity date, along with applicable
prepayment premiums, if any;
(b) if Borrower, or its general partner or managing member,
if applicable, violates or does not comply with any of the provisions of
Section 4.3 or Article 8;
(c) if any representation or warranty of Borrower or of its
members, general partners, principals, affiliates, agents or employees,
or of any Guarantor made herein or in the Environmental Indemnity or in
any other Loan Document, in any guaranty, or in any certificate, report,
financial statement or other instrument or document furnished to Lender
shall have been false or misleading in any material respect when made;
(d) if Borrower or any Guarantor shall make an assignment
for the benefit of creditors or if Borrower or any Guarantor shall admit
in writing its inability to pay, or Borrower's or any Guarantor's
failure to pay its debts as they become due;
(e) if (i) Borrower or any subsidiary or general partner or
managing member of Borrower, or any Guarantor shall commence any case,
proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, conservatorship or relief of debtors, seeking to have an
order for relief entered with respect to it, or seeking to adjudicate it
a bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, winding-up, liquidation, dissolution, composition or other
relief with respect to it or its debts, or (B) seeking appointment of a
receiver, trustee, custodian, conservator or other similar official for
it or for all or any substantial part of its assets, or Borrower or any
subsidiary or general partner or managing member of Borrower, or any
Guarantor shall make a general assignment for the benefit of its
creditors; or (ii) there shall be commenced against Borrower or any
subsidiary or general partner or managing member of Borrower, or any
Guarantor any case, proceeding or other action of a nature referred to
in clause (i) above which (A) results in the entry of an order for
relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of ninety (90)
calendar days; or (iii) there shall be commenced against Borrower or any
subsidiary or general partner or managing member of Borrower or any
Guarantor any case, proceeding or other action seeking issuance of a
warrant of attachment, execution,
30
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) calendar days from the entry thereof; or (iv)
Borrower or any subsidiary or general partner or managing member of
Borrower, or any Guarantor shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the
acts set forth in clause (i), (ii) or (iii) above; or (v) Borrower or
any subsidiary or general partner or managing member of Borrower, or any
Guarantor shall generally not, or shall be unable to, or shall admit in
writing its inability to, pay its debts as they become due;
(1) subject to Borrower's right to contest certain liens as
provided in this Security Instrument, if the Property becomes subject to
any mechanic's, materialman's or other lien other than a lien for local
real estate taxes and assessments not then due and payable and the lien
shall remain undischarged of record (by payment, bonding or otherwise)
for a period of thirty (30) calendar days;
(g) if any federal tax lien is filed against Borrower, any
general partner or managing member of Borrower, any Guarantor or the
Property and same is not discharged of record within thirty (30)
calendar days after same is filed;
(h) except as permitted in this Security Instrument, the
alteration, improvement, demolition or removal of any of the
Improvements without the prior consent of Lender;
(i) damage to the Property in any manner which is not
covered by insurance, which lack of coverage arises solely as a result
of Borrower's failure to maintain the insurance required under this
Security Instrument;
(j) without Lender's prior consent, (i) any managing agent
for the Property resigns or is removed, (ii) the ownership, management
or control of such managing agent is transferred to a person or entity
other than the general partner or managing member of the Borrower, or
(iii) there is any material change in the property management agreement
of the Property;
(k) this Security Instrument shall cease to constitute a
first-priority lien on the Property (other than in accordance with its
terms);
(1) seizure or forfeiture of the Property, or any portion
thereof, or Borrower's interest therein, resulting from criminal
wrongdoing or other unlawful action of Borrower, its affiliates, or any
tenant in the Property under any federal, state or local law;
(m) if Borrower consummates a transaction which would cause
this Security Instrument or Lender's exercise of its rights under this
Security Instrument, the Note or the Other Loan Documents to constitute
a nonexempt prohibited transaction under
31
ERISA or result in a violation of a state statute regulating
governmental plans, subjecting Lender to liability for a violation of
ERISA or a state statute;
(n) if any default occurs under any guaranty or indemnity
including the Environmental Indemnity executed in connection herewith
and such default continues after the expiration of applicable grace
periods, or such guaranty or indemnity shall cease to be in full force
and effect, or any guarantor or indemnitor shall deny or disaffirm its
obligation thereunder; and
(o) if Borrower or any Guarantor, as the case may be, shall
continue to be in default under any other term, covenant or condition of
this Security Instrument or any Other Loan Documents for thirty (30)
calendar days after notice from Lender; provided that if such default
cannot reasonably be cured within such thirty (30) calendar day period
and Borrower (or such Guarantor as the case may be) shall have commenced
to cure such default within such thirty (30) calendar day period and
thereafter diligently and expeditiously proceeds to cure the same, such
thirty (30) calendar day period shall be extended for so long as it
shall require Borrower (or such Guarantor as the case may be) in the
exercise of due diligence to cure such default, it being agreed that no
such extension shall be for a period in excess of sixty (60) calendar
days after the notice from Lender referred to above.
Section 9.2 DEFAULT INTEREST. Borrower will pay, from the date of an
Event of Default through the earlier of the date upon which the Event of Default
is cured or the date upon which the Debt is paid in full, interest on the unpaid
principal balance of the Note at a per annum rate equal to the lesser of (a) the
greater of (i) five percent (5%) plus the Prime Rate (as defined in the Note),
and (ii) five percent (5%) plus the Applicable Interest Rate (as defined in the
Note), and (b) the maximum interest rate which Borrower may by law pay or Lender
may charge and collect (the "DEFAULT RATE").
ARTICLE 10 - RIGHTS AND REMEDIES
Section 10.1 REMEDIES. Upon the occurrence of any Event of Default,
Borrower agrees that Lender may take such action, by or through Trustee, by
Lender itself or otherwise, without notice or demand, as it deems advisable to
protect and enforce its rights against Borrower and in and to the Property,
including, but not limited to, the following actions, each of which may be
pursued concurrently or otherwise, at such time and in such order as Lender may
determine, in its sole discretion, without impairing or otherwise affecting the
other rights and remedies of Lender:
(a) Right to Perform Borrower's Covenants. If Borrower has
failed to keep or perform any covenant whatsoever contained in this
Security Instrument or the Other Loan Documents, Lender may, but shall
not be obligated to any person to do so, perform or attempt to perform
said covenant and any payment made or expense incurred in the
performance or attempted performance of any such covenant; together with
any sum
32
expended by Lender that is chargeable to Borrower or subject to
reimbursement by Borrower under the Loan Documents, shall be and become
a part of the "Debt", and Borrower promises, upon demand, to pay to
Lender, at the place where the Note is payable, all sums so incurred,
paid or expended by Lender, with interest from the date when paid,
incurred or expended by Lender at the Default Rate.
(b) Right of Entry. Lender may, prior or subsequent to the
institution of any foreclosure proceedings, enter upon the Property, or
any part thereof, and take exclusive possession of the Property and of
all books, records, and accounts relating thereto and to exercise
without interference from Borrower any and all rights which Borrower has
with respect to the management, possession, operation, protection, or
preservation of the Property, including without limitation the right to
rent the same for the account of Borrower and to deduct from such Rents
all costs, expenses, and liabilities of every character incurred by
Lender in collecting such Rents and in managing, operating, maintaining,
protecting, or preserving the Property and to apply the remainder of
such Rents on the Debt in such manner as Lender may elect. All such
costs, expenses, and liabilities incurred by Lender in collecting such
Rents and in managing, operating, maintaining, protecting, or preserving
the Property, if not paid out of Rents as hereinabove provided, shall
constitute a demand obligation owing by Borrower and shall bear interest
from the date of expenditure until paid at the Default Rate, all of
which shall constitute a portion of the Debt. If necessary to obtain the
possession provided for above, Lender may invoke any and all legal
remedies to dispossess Borrower, including specifically one or more
actions for forcible entry and detainer, trespass to try title, and
restitution. In connection with any action taken by Lender pursuant to
this Subsection 10.1(b), Lender shall not be liable for any loss
sustained by Borrower resulting from any failure to let the Property, or
any part thereof, or from any other act or omission of Lender in
managing the Property unless such loss is caused by the willful
misconduct of Lender, nor shall Lender be obligated to perform or
discharge any obligation, duty, or liability under any Lease or under or
by reason hereof or the exercise of rights or remedies hereunder.
Borrower shall and does hereby agree to indemnify Lender for, and to
hold Lender harmless from, any and all liability, loss, or damage, which
may or might be incurred by Lender under any such Lease or under or by
reason hereof or the exercise of rights or remedies hereunder, and from
any and all claims and demands whatsoever which may be asserted against
Lender by reason of any alleged obligations or undertakings on its part
to perform or discharge any of the terms, covenants, or agreements
contained in any such Lease. Should Lender incur any such liability, the
amount thereof, including without limitation costs, expenses, and
reasonable attorneys' fees, together with interest thereon from the date
of expenditure until paid at the Default Rate, shall be secured hereby,
and Borrower shall reimburse Lender therefor immediately upon demand.
Nothing in this Subsection 10.1(b) shall impose any duty, obligation, or
responsibility upon Lender for the control, care, management, leasing,
or repair of the Property, nor for the carrying out of any of the terms
and conditions of any such Lease; nor shall it operate to make Lender
responsible or liable for any waste
33
committed on the Property by the tenants, or by any other parties, or
for any hazardous substances or environmental conditions on or under the
Property, or for any dangerous or defective condition of the Property or
for any negligence in the management, leasing, upkeep, repair, or
control of the Property resulting in loss or injury or death to any
tenant, licensee, employee, or stranger. Borrower hereby assents to,
ratifies, and confirms any and all actions of Lender with respect to the
Property taken under this subsection.
(c) Right to Accelerate. Lender may, without notice (except
as provided in Section 9.1(p) above) demand, presentment, notice of
nonpayment or nonperformance, protest, notice of protest, notice of
intent to accelerate, notice of acceleration, or any other notice or any
other action, all of which are hereby waived by Borrower and all other
parties obligated in any manner whatsoever on the Debt, declare the
entire unpaid balance of the Debt immediately due and payable, and upon
such declaration, the entire unpaid balance of the Debt shall be
immediately due and payable.
(d) Foreclosure-Power of Sale. Lender may institute a
proceeding or proceedings, judicial, or nonjudicial, by advertisement or
otherwise, for the complete or partial foreclosure of this Security
Instrument or the complete or partial sale of the Property under power
of sale or under any applicable provision of law. Lender may, through
the Trustee, sell the Property, and all estate, right, title, interest,
claim and demand of Borrower therein, and all rights of redemption
thereof, at one or more sales, as an entirety or in parcels, with such
elements of real and/or personal property, and at such time and place
and upon such terms as it may deem expedient, or as may be required by
applicable law, and in the event of a sale, by foreclosure or otherwise,
of less than all of the Property, this Security Instrument shall
continue as a lien and security interest on the remaining portion of the
Property.
(e) Rights Pertaining to Sales. Subject to the requirements
of applicable law and except as otherwise provided herein, the following
provisions shall apply to any sale or sales of all or any portion of the
Property under or by virtue of Subsection 10.1(d) above, whether made
under the power of sale herein granted or by virtue of judicial
proceedings or of a judgment or decree of foreclosure and sale:
(i) Trustee or Lender may conduct any number
of sales from time to time. The power of sale set forth above
shall not be exhausted by any one or more such sales as to any
part of the Property which shall not have been sold, nor by any
sale which is not completed or is defective in Lender's opinion,
until the Debt shall have been paid in full.
(ii) Any sale may be postponed or adjourned
by public announcement at the time and place appointed for such
sale or for such postponed or adjourned sale without further
notice.
34
(iii) After each sale, Lender, Trustee or an
officer of any court empowered to do so shall execute and
deliver to the purchaser or purchasers at such sale a good and
sufficient instrument or instruments granting, conveying,
assigning and transferring all right, title and interest of
Borrower in and to the property and rights sold and shall
receive the proceeds of said sale or sales and apply the same as
specified in the Note. Each of Trustee and Lender is hereby
appointed the true and lawful attorney-in-fact of Borrower,
which appointment is irrevocable and shall be deemed to be
coupled with an interest, in Borrower's name and stead, to make
all necessary conveyances, assignments, transfers and deliveries
of the property and rights so sold, Borrower hereby ratifying
and confirming all that said attorney or such substitute or
substitutes shall lawfully do by virtue thereof. Nevertheless,
Borrower, if requested by Trustee or Lender, shall ratify and
confirm any such sale or sales by executing and delivering to
Trustee, Lender or such purchaser or purchasers all such
instruments as may be advisable, in Trustee's or Lender's
judgment, for the purposes as may be designated in such request.
(iv) Any and all statements of fact or other
recitals made in any of the instruments referred to in
Subsection 10. 1(e)(iii) given by Trustee or Lender shall be
taken as conclusive and binding against all persons as to
evidence of the truth of the facts so stated and recited.
(v) Any such sale or sales shall operate to
divest all of the estate, right, title, interest, claim and
demand whatsoever, whether at law or in equity, of Borrower in
and to the properties and rights so sold, and shall be a
perpetual bar both at law and in equity against Borrower and any
and all persons claiming or who may claim the same, or any part
thereof or any interest therein, by, through or under Borrower
to the fullest extent permitted by applicable law.
(vi) Upon any such sale or sales, Lender may
bid for and acquire the Property and, in lieu of paying cash
therefor, may make settlement for the purchase price by
crediting against the Debt the amount of the bid made therefor,
after deducting therefrom the expenses of the sale, the cost of
any enforcement proceeding hereunder, and any other sums which
Trustee or Lender is authorized to deduct under the terms
hereof, to the extent necessary to satisfy such bid.
(vii) Upon any such sale, it shall not be
necessary for Trustee, Lender or any public officer acting under
execution or order of court to have present or constructively in
its possession any of the Property.
(f) Lender's Judicial Remedies. Lender, or Trustee upon
written request of Lender, may proceed by suit or suits, at law or in
equity, to enforce the payment of the Debt to foreclose the liens and
security interests of this Security Instrument as against all
35
or any part of the Property, and to have all or any part of the Property
sold under the judgment or decree of a court of competent jurisdiction.
This remedy shall be cumulative of any other nonjudicial remedies
available to Lender under this Security Instrument, the Note or the
Other Loan Documents. Proceeding with a request or receiving a judgment
for legal relief shall not be or be deemed to be an election of remedies
or bar any available nonjudicial remedy of Lender.
(g) Lender's Right to Appointment of Receiver. Lender, as a
matter of right and (i) without regard to the sufficiency of the
security for repayment of the Debt and without notice to Borrower, (ii)
without any showing of insolvency, fraud, or mismanagement on the part
of Borrower, (iii) without the necessity of filing any judicial or other
proceeding other than the proceeding for appointment of a receiver, and
(iv) without regard to the then value of the Property, shall be entitled
to the appointment of a receiver or receivers for the protection,
possession, control, management and operation of the Property, including
(without limitation), the power to collect the Rents, enforce this
Security Instrument and, in case of a sale and deficiency, during the
full statutory period of redemption (if any), whether there be a
redemption or not, as well as during any further times when Borrower,
except for the intervention of such receiver, would be entitled to
collection of such Rents. Borrower hereby irrevocably consents to the
appointment of a receiver or receivers. Any receiver appointed pursuant
to the provisions of this subsection shall have the usual powers and
duties of receivers in such matters.
(h) Commercial code Remedies. Lender may exercise any and
all rights and remedies granted to a secured party upon default under
the Uniform Commercial Code, including, without limiting the generality
of the foregoing: (i) the right to take possession of the Personal
Property or any part thereof, and to take such other measures as Lender
may deem necessary for the care, protection and preservation of the
Personal Property, and (ii) request Borrower at its expense to assemble
the Personal Property and make it available to Lender at a convenient
place acceptable to Lender. Any notice of sale, disposition or other
intended action by Lender with respect to the Personal Property sent to
Borrower in accordance with the provisions hereof at least five (5) days
prior to such action, shall constitute commercially reasonable notice to
Borrower.
(i) Apply Escrow Funds. Lender may apply any Funds (as
defined in the Escrow Agreement) and any other sums held in escrow or
otherwise by Lender in accordance with the terms of this Security
Instrument or any Other Loan Document to the payment of the following
items in any order in its uncontrolled discretion:
(i) Taxes and Other Charges;
(ii) Insurance Premiums;
(iii) Interest on the unpaid principal balance of the
Note;
36
(iv) Amortization of the unpaid principal balance of
the Note; and
(v) All other sums payable pursuant to the Note,
this Security Instrument and the Other Loan Documents, including
without limitation advances made by Lender pursuant to the terms
of this Security Instrument.
(j) Other Rights. Lender (i) may surrender the Policies
maintained pursuant to this Security Instrument or any part thereof, and
upon receipt shall apply the unearned premiums as a credit on the Debt,
and, in connection therewith, Borrower hereby appoints Lender as agent
and attorney-in-fact (which is coupled with an interest and is therefore
irrevocable) for Borrower to collect such premiums; and (ii) may apply
the Tax and Insurance Escrow Fund (as defined in the Escrow Agreement)
and/or the Replacement Escrow Fund (as defined in the Escrow Agreement)
and any other funds held by Lender toward payment of the Debt; and (iii)
shall have and may exercise any and all other rights and remedies which
Lender may have at law or in equity, or by virtue of any of the Loan
Documents, or otherwise.
(k) Discontinuance of Remedies. In case Lender shall have
proceeded to invoke any right, remedy, or recourse permitted under the
Loan Documents and shall thereafter elect to discontinue or abandon same
for any reason, Lender shall have the unqualified right so to do and, in
such event, Borrower and Lender shall be restored to their former
positions with respect to the Debt, the Loan Documents, the Property or
otherwise, and the rights, remedies, recourses and powers of Lender
shall continue as if same had never been invoked.
(l) Remedies Cumulative. All rights, remedies, and recourses
of Lender granted in the Note, this Security Instrument and the Other
Loan Documents, any other pledge of collateral, or otherwise available
at law or equity: (i) shall be cumulative and concurrent; (ii) may be
pursued separately, successively, or concurrently against Borrower, the
Property, or any one or more of them, at the sole discretion of Lender;
(iii) may be exercised as often as occasion therefor shall arise, it
being agreed by Borrower that the exercise or failure to exercise any of
same shall in no event be construed as a waiver or release thereof or of
any other right, remedy, or recourse; (iv) shall be nonexclusive; (v)
shall not be conditioned upon Lender exercising or pursuing any remedy
in relation to the Property prior to Lender bringing suit to recover the
Debt; and (vi) in the event Lender elects to bring suit on the Debt and
obtains a judgment against Borrower prior to exercising any remedies in
relation to the Property, all liens and security interests, including
the lien of this Security Instrument, shall remain in full force and
effect and may be exercised thereafter at Lender's option.
(m) Bankruptcy Acknowledgment. In the event the Property or
any portion thereof or any interest therein becomes property of any
bankruptcy estate or subject to any state or federal insolvency
proceeding, then Lender shall immediately become
37
entitled, in addition to all other relief to which Lender may be
entitled under this Security Instrument, to obtain (i) an order from the
Bankruptcy Court or other appropriate court granting immediate relief
from the automatic stay pursuant to Section 362 of the Bankruptcy Code
so to permit Lender to pursue its rights and remedies against Borrower
as provided under this Security Instrument and all other rights and
remedies of Lender at law and in equity under applicable state law, and
(ii) an order from the Bankruptcy Court prohibiting Borrower's use of
all "cash collateral" as defined under Section 363 of the Bankruptcy
Code. In connection with such Bankruptcy Court orders, Borrower shall
not contend or allege in any pleading or petition filed in any court
proceeding that Lender does not have sufficient grounds for relief from
the automatic stay. Any bankruptcy petition or other action taken by the
Borrower to stay, condition, or inhibit Lender from exercising its
remedies are hereby admitted by Borrower to be in bad faith and Borrower
further admits that Lender would have just cause for relief from the
automatic stay in order to take such actions authorized under state law.
(n) Application of Proceeds. The proceeds from any sale,
lease, or other disposition made pursuant to this Security Instrument,
or the proceeds from the surrender of any insurance policies pursuant
hereto, or any Rents collected by Lender from the Property, or the Tax
and Insurance Escrow Fund or the Replacement Escrow Fund (as defined in
the Escrow Agreement) or proceeds from insurance which Lender elects to
apply to the Debt pursuant to Article 3 hereof, shall be applied by
Trustee, or by Lender, as the case may be, to the Debt in the following
order and priority: (1) to the payment of all expenses of advertising,
selling, and conveying the Property or part thereof, and/or prosecuting
or otherwise collecting Rents, proceeds, premiums or other sums
including reasonable attorneys' fees and a reasonable fee or commission
to Trustee, not to exceed five percent of the proceeds thereof or sums
so received; (2) to that portion, if any, of the Debt with respect to
which no person or entity has personal or entity liability for payment
(the "EXCULPATED PORTION"), and with respect to the Exculpated Portion
as follows: first, to accrued but unpaid interest, second, to matured
principal, and third, to unmatured principal in inverse order of
maturity; (3) to the remainder of the Debt as follows: first, to the
remaining accrued but unpaid interest, second, to the matured portion of
principal of the Debt, and third, to prepayment of the unmatured
portion, if any, of principal of the Debt applied to installments of
principal in inverse order of maturity; (4) the balance, if any or to
the extent applicable, remaining after the full and final payment of the
Debt to the holder or beneficiary of any inferior liens covering the
Property, if any, in order of the priority of such inferior liens
(Trustee and Lender shall hereby be entitled to rely exclusively on a
commitment for title insurance issued to determine such priority); and
(5) the cash balance, if any, to the Borrower. The application of
proceeds of sale or other proceeds as otherwise provided herein shall be
deemed to be a payment of the Debt like any other payment. The balance
of the Debt remaining unpaid, if any, shall remain fully due and owing
in accordance with the terms of the Note and the other Loan Documents.
Section 10.2 [Intentionally Omitted]
38
ARTICLE II - INDEMNIFICATION; SUBROGATION
Section 11.1 GENERAL INDEMNIFICATION.
(a) Borrower shall indemnify, defend and hold Lender and
Trustee harmless against: (i) any and all claims for brokerage, leasing,
finder's or similar fees which may be made relating to the Property or
the Debt, and (ii) any and all liability, obligations, losses, damages,
penalties, claims, actions, suits, costs and expenses (including
Lender's reasonable attorneys' fees, together with reasonable appellate
counsel fees, if any) of whatever kind or nature which may be asserted
against, imposed on or incurred by Lender or Trustee in connection with
the Debt, this Security Instrument, the Property, or any part thereof,
or the exercise by Lender or Trustee of any rights or remedies granted
to it under this Security Instrument; provided, however, that nothing
herein shall be construed to obligate Borrower to indemnify, defend and
hold harmless Lender from and against any and all liabilities,
obligations, losses, damages, penalties, claims, actions, suits, costs
and expenses enacted against, imposed on or incurred by Lender by reason
of Lender's willful misconduct or gross negligence.
(b) If Lender is made a party defendant to any litigation or
any claim is threatened or brought against Lender concerning the secured
indebtedness, this Security Instrument, the Property, or any part
thereof, or any interest therein, or the construction, maintenance,
operation or occupancy or use thereof, then Lender shall notify Borrower
of such litigation or claim and Borrower shall indemnify, defend and
hold Lender harmless from and against all liability by reason of said
litigation or claims, including reasonable attorneys' fees (together
with reasonable appellate counsel fees, if any). The right to such
attorneys' fees (together with reasonable appellate counsel fees, if
any) and expenses incurred by Lender in any such litigation or claim of
the type described in this Subsection 11.1(b), whether or not any such
litigation or claim is prosecuted to judgment, shall be deemed to have
accrued on the commencement of such claim or action and shall be
enforceable whether or not such claim or action is prosecuted to
judgment. If Lender commences an action against Borrower to enforce any
of the terms hereof or to prosecute any breach by Borrower of any of the
terms hereof or to recover any sum secured hereby, Borrower shall pay to
Lender its reasonable attorneys' fees (together with reasonable
appellate counsel fees, if any) and expenses. If Borrower breaches any
term of this Security Instrument, Lender may engage the services of an
attorney or attorneys to protect its rights hereunder, and in the event
of such engagement following any breach by Borrower, Borrower shall pay
Lender reasonable attorneys' fees (together with reasonable appellate
counsel fees, if any) and expenses incurred by Lender, whether or not an
action is actually commenced against Borrower by reason of such breach.
All references to "ATTORNEYS" in this Subsection 11.1(b) and elsewhere
in this Security Instrument shall include without limitation any
attorney or law firm engaged by Lender and Lender's in-house counsel,
and all references to "FEES AND EXPENSES" in this Subsection 11.1(b) and
elsewhere in this Security Instrument shall include without limitation
any fees of such
39
attorney or law firm and any allocation charges and allocation costs of
Lender's in-house counsel.
(c) A waiver of subrogation shall be obtained by Borrower
from its insurance carrier and, consequently, Borrower waives any and
all right to claim or recover against Lender, its officers, employees,
agents and representatives, for loss of or damage to Borrower, the
Property, Borrower's property or the property of others under Borrower's
control from any cause insured against or required to be insured against
by the provisions of this Security Instrument.
Section 11.2 ENVIRONMENTAL INDEMNIFICATION. Borrower shall, at its sole
cost and expense, protect, defend, indemnify, release and hold harmless the
Indemnified Parties from and against any and all Losses (as hereinafter defined)
imposed upon or incurred by or asserted against any Indemnified Parties (other
than those arising solely from a state of facts that first came into existence
after Lender acquired title to the Property through foreclosure or a deed in
lieu thereof), and directly or indirectly arising out of or in any way relating
to any one or more of the following: (a) any presence of any Hazardous
Substances (as hereinafter defined) in, on, above, or under the Property; (b)
any past, present or future Release (as hereinafter defined) of Hazardous
Substances in, on, above, under or from the Property; (c) any activity by
Borrower, any person or entity affiliated with Borrower, and any tenant or other
user of the Property in connection with any actual, proposed or threatened use,
treatment, storage, holding, existence, disposition or other Release,
generation, production, manufacturing, processing, refining, control,
management, abatement, removal, handling, transfer or transportation to or from
the Property of any Hazardous Substances at any time located in, under, on or
above the Property; (d) any activity by Borrower, any person or entity
affiliated with Borrower, and any tenant or other user of the Property in
connection with any actual or proposed Remediation (as hereinafter defined) of
any Hazardous Substances at any time located in, under, on or above the
Property, whether or not such Remediation is voluntary or pursuant to court or
administrative order, including but not limited to any removal, remedial or
corrective action; (e) any past, present or threatened non-compliance or
violations of any Environmental Law (as hereinafter defined) (or permits issued
pursuant to any Environmental Law) in connection with the Property or operations
thereon, including but not limited to any failure by Borrower, any person or
entity affiliated with Borrower, and any tenant or other user of the Property to
comply with any order of any governmental authority in connection with any
Environmental Laws; (f) the imposition, recording or filing or the future
imposition, recording or filing of any Environmental Lien (as hereinafter
defined) encumbering the Property; (g) any administrative processes or
proceedings or judicial proceedings in any way connected with any matter
addressed in this Section 11.2; (h) any misrepresentation or inaccuracy in any
representation or warranty or material breach or failure to perform any
covenants or other obligations under the Environmental Indemnity of even date
executed by Borrower and Indemnitor; and (i) any diminution in value of the
Property in any way connected with any occurrence or other matter referred to in
this Section 11.2.
40
The term "ENVIRONMENTAL LAW" means any present and future federal, state
and local laws, statutes, ordinances, rules, regulations and the like, as well
as common law, relating to protection of human health or the environment, in
both cases relating to Hazardous Substances or relating to liability for or
costs of Remediation. The term "ENVIRONMENTAL LAW" includes, but is not limited
to, the following statutes, as amended, any successor thereto, and any
regulations promulgated pursuant thereto, and any state or local statutes,
ordinances, rules, regulations and the like addressing similar issues: the
Comprehensive Environmental Response, Compensation and Liability Act; the
Emergency Planning and Community Right-to-Know Act; the Hazardous Substances
Transportation Act; the Resource Conservation and Recovery Act (including but
not limited to Subtitle I relating to underground storage tanks); the Solid
Waste Disposal Act; the Clean Water Act; the Clean Air Act; the Toxic Substances
Control Act; the Safe Drinking Water Act; the Occupational Safety and Health
Act; the Federal Water Pollution Control Act; the Federal Insecticide, Fungicide
and Rodenticide Act; the Endangered Species Act; the National Environmental
Policy Act; and the River and Harbors Appropriation Act. The term "ENVIRONMENTAL
Law" also includes, but is not limited to, any present and future federal, state
and local laws, statutes, ordinances, rules, regulations and the like, as well
as common law: conditioning transfer of property upon a negative declaration or
other approval of a governmental authority of the environmental condition of the
Property; requiring notification or disclosure of Releases of Hazardous
Substances or other environmental condition of the Property to any governmental
authority or other person or entity, whether or not in connection with transfer
of title to or interest in property; imposing conditions or requirements in
connection with permits or other authorization for lawful activity; relating to
nuisance, trespass or other causes of action related to the Property; and
relating to wrongful death, personal injury, or property or other damage in
connection with any physical condition or use of the Property.
The term "ENVIRONMENTAL LIEN" includes but is not limited to any lien or
other encumbrance imposed pursuant to Environmental Law, whether due to any act
or omission of Borrower or any other person or entity.
The term "HAZARDOUS SUBSTANCES" includes but is not limited to any and
all substances (whether solid, liquid or gas) defined, listed, or otherwise
classified as pollutants, hazardous wastes, hazardous substances, hazardous
materials, extremely hazardous wastes, or words of similar meaning or regulatory
effect under any present or future Environmental Laws or that may have a
negative impact on human health or the environment, including but not limited to
petroleum and petroleum products, asbestos and asbestos-containing materials,
polychlorinated biphenyls, lead, lead-based paints, radon, radioactive
materials, flammables and explosives.
The term "INDEMNIFIED PARTIES" includes but is not limited to Lender,
any person or entity who is or will have been involved in originating the Loan
evidenced by the Note, any person or entity who is or will have been involved in
servicing the Loan, any person or entity in whose name the encumbrance created
by this Security Instrument is or will have been recorded, persons and entities
who may hold or acquire or will have held a full or partial interest in the Loan
(including but not limited to those who may acquire any interest in Securities,
as well as
41
custodians, trustees and other fiduciaries who hold or have held a full or
partial interest in the Loan for the benefit of third parties), as well as the
respective directors, officers, shareholders, partners, employees, agents,
servants, representatives, contractors, subcontractors, affiliates,
subsidiaries, participants, successors and assign 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
the Loan or the Property, whether during the term of the Loan or as part of or
following foreclosure pursuant to the Loan) and including but not limited to any
successors by merger, consolidation or acquisition of all or a substantial part
of Lender's assets and business.
The term "LOSSES" includes but is not limited to any claims, suits,
liabilities (including but not limited to strict liabilities), administrative or
judicial actions or proceedings, obligations, debts, damages, losses, costs,
expenses, diminutions in value, fines, penalties, charges, fees, expenses, costs
of Remediation (whether or not performed voluntarily), judgments, award, amounts
paid in settlement, foreseeable and unforeseeable consequential damages,
litigation costs, attorneys' fees, engineer's fees, environmental consultants'
fees and investigation costs (including but not limited to costs for sampling,
testing and analysis of soil, water, air, building materials, and other
materials and substances whether solid, liquid or gas), of whatever kind or
nature, and whether or not incurred in connection with any judicial or
administrative proceedings.
The term "RELEASE" with respect to any Hazardous Substance includes but
is not limited to any release, deposit, discharge, emission, leaking, leaching,
spilling, seeping, migrating, injecting, pumping, pouring, emptying, escaping,
dumping, disposing or other movement of Hazardous Substances.
The term "REMEDIATION" 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 11.
Section 11.5 EXCLUDED OCCURRENCES
Notwithstanding any provision of this Security Instrument to the
contrary, where after the date of this Security Instrument there shall occur an
event (including, without limitation, a Release) for which Borrower would have
an obligation under this Security Instrument to indemnify, defend, protect or
hold harmless the Indemnified Parties, then Borrower shall have no such
obligation to indemnify, defend, protect, release and hold harmless the
Indemnified Parties from and against Losses for acts or omissions the cause(s)
of which is outside or beyond the control of Borrower. For purposes of this
Section 11.3, Borrower shall be deemed and construed to have control over the
acts and omissions of all tenants and subtenants of the
42
Property and each of their respective agents, vendors, guests, invitees,
licensees, servants, employees, officers, directors, representatives,
contractors, subcontractors, affiliates and subsidiaries.
Section 11.4 DUTY TO DEFEND AND ATTORNEYS AND OTHER FEES AND EXPENSES.
Upon written request by any Indemnified Party, Borrower shall defend such
Indemnified Party (if requested by any Indemnified Party, in the name of the
Indemnified Party) by attorneys and other professionals approved by the
Indemnified Parties. 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, Borrower shall pay or, in the sole and absolute discretion of the
Indemnified Parties, reimburse, the Indemnified Parties for the payment of
reasonable fees and disbursements of attorneys, engineers, environmental
consultants, laboratories and other professionals in connection therewith.
Section 11.5 SURVIVAL OF INDEMNITIES. Notwithstanding any provision of
this Security Instrument or any other Loan Document to the contrary, the
provisions of Section 11.1 and Section 11.2, and Borrower's obligations
thereunder, shall survive (a) the repayment of the Note, (b) the foreclosure of
this Security Instrument, and (c) the release (or reconveyance, as applicable)
of the lien of this Security Instrument.
ARTICLE 12 - SECURITY AGREEMENT
Section 12.1 SECURITY AGREEMENT. This Security Instrument is both a real
property mortgage and a "security agreement" within the meaning of the Uniform
Commercial Code. The Property includes both real and personal property and all
other rights and interests, whether tangible or intangible in nature, of
Borrower in the Property. Borrower by executing and delivering this Security
Instrument has granted and hereby grants to Lender, as security for the
Obligations, a security interest in the Property to the full extent that the
Property may be subject to the Uniform Commercial Code (said portion of the
Property so subject to the Uniform Commercial Code being called in this
paragraph the "COLLATERAL"). Borrower hereby agrees with Lender to execute and
deliver to Lender, in form and substance satisfactory to Lender, such financing
statements, continuation statements, other uniform commercial code forms and
shall pay all expenses and fees in connection with the filing and recording
thereof, and such further assurances as Lender may from time to time, reasonably
consider necessary to create, perfect, and preserve Lender's security interest
herein granted. This Security Instrument shall also constitute a "fixture
filing" for the purposes of the Uniform Commercial Code. All or part of the
Property are or are to become fixtures. Information concerning the security
interest herein granted may be obtained from the parties at the addresses of the
parties set forth in the first paragraph of this Security Instrument. If an
Event of Default shall occur, Lender, in addition to any other rights and
remedies which they may have, shall have and may exercise immediately and
without demand, any and all rights and remedies granted to a secured party upon
default under the Uniform Commercial Code, including, without limiting the
generality of the foregoing,
43
the right to take possession of the Collateral or any part thereof, and to take
such other measures as Lender may deem necessary for the care, protection and
preservation of the Collateral. Upon request or demand of Lender, Borrower shall
at its expense assemble the Collateral and make it available to Lender at a
convenient place acceptable to Lender. Borrower shall pay to Lender on demand
any and all expenses, including legal expenses and attorneys' fees, incurred or
paid by Lender in protecting the interest in the Collateral and in enforcing the
rights hereunder with respect to the Collateral. Any notice of sale, disposition
or other intended action by Lender with respect to the Collateral sent to
Borrower in accordance with the provisions hereof at least five (5) days prior
to such action, shall constitute commercially reasonable notice to Borrower. The
proceeds of any disposition of the Collateral, or any part thereof, may be
applied by Lender to the payment of the Obligations in such priority and
proportions as Lender in its discretion shall deem proper. In the event of any
change in name, identity or structure of any Borrower, such Borrower shall
notify Lender thereof, and promptly after request shall execute, file and record
such Uniform Commercial Code forms as are necessary to maintain the priority of
Lender's lien upon and security interest in the Collateral, and shall pay all
expenses and fees in connection with the filing and recording thereof. If Lender
shall require the filing or recording of additional Uniform Commercial Code
forms or continuation statements, Borrower shall, promptly after request,
execute, file and record such Uniform Commercial Code forms or continuation
statements as Lender shall deem necessary, and shall pay all expenses and fees
in connection with the filing and recording thereof it being understood and
agreed, however, that no such additional documents shall increase Borrower's
obligations under the Note, this Security Instrument and the Other Loan
Documents. Borrower hereby irrevocably appoints Lender as its attorney-in-fact,
coupled with an interest, to file with the appropriate public office on its
behalf any financing or other statements signed only by Lender, as Borrower's
attorney-in-fact, in connection with the Collateral covered by this Security
Instrument. Notwithstanding the foregoing, Borrower shall appear and defend in
any action or proceeding which affects or purports to affect the Property and
any interest or right therein, whether such proceeding effects title or any
other rights in the Property (and in conjunction therewith, Borrower shall fully
cooperate with Lender in the event Lender is a party to such action or
proceeding).
ARTICLE 13 - WAIVERS
Section 13.1 MARSHALLING AND OTHER MATTERS. Borrower hereby waives, to
the extent permitted by law, the benefit of all appraisement, valuation, stay,
extension, reinstatement and redemption laws now or hereafter in force and all
rights of marshalling in the event of any sale hereunder of the Property or any
part thereof or any interest therein. Further, Borrower hereby expressly waives
any and all rights of redemption from sale under any order or decree of
foreclosure of this Security Instrument on behalf of Borrower, and on behalf of
each and every person acquiring any interest in or title to the Property
subsequent to the date of this Security Instrument and on behalf of all persons
to the extent permitted by applicable law.
Section 13.2 WAIVER OF NOTICE. Borrower shall not be entitled to any
notices of any nature whatsoever from Lender except with respect to matters for
which this Security
44
Instrument specifically and expressly provides for the giving of notice by
Lender to Borrower and except with respect to matters for which Lender is
required by applicable law to give notice, and Borrower hereby expressly waives
the right to receive any notice from Lender with respect to any matter for which
this Security Instrument does not specifically and expressly provide for the
giving of notice by Lender to Borrower.
Section 13.3 SOLE DISCRETION OF LENDER. Wherever pursuant to this
Security Instrument Lender exercises any right given to it to approve or
disapprove, or any arrangement or term is to be satisfactory to Lender, the
decision of Lender to approve or disapprove or to decide that arrangements or
terms are satisfactory or not satisfactory shall be in the sole discretion of
Lender and shall be final and conclusive, except as may be otherwise expressly
and specifically provided herein.
Section 13.4 SURVIVAL. The indemnifications made pursuant to Article 11,
shall continue indefinitely in full force and effect and shall survive and shall
in no way be impaired by: any satisfaction or other termination of this Security
Instrument, any assignment or other transfer of all or any portion of this
Security Instrument or Lender's interest in the Property (but, in such case,
shall benefit both Indemnified Parties and any assignee or transferee), any
exercise of Lender's rights and remedies pursuant hereto including but not
limited to foreclosure or acceptance of a deed in lieu of foreclosure, any
exercise of any rights and remedies pursuant to the Note or any of the Other
Loan Documents, any transfer of all or any portion of the Property (whether by
Borrower or by Lender following foreclosure or acceptance of a deed in lieu of
foreclosure or at any other time), any amendment to this Security Instrument,
the Note or the Other Loan Documents, and any act or omission that might
otherwise be construed as a release or discharge of Borrower from the
obligations pursuant hereto.
Section 13.5 WAIVER OF TRIAL BY JURY.
BORROWER HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE
OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT
ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS SECURITY
INSTRUMENT, THE NOTE OR THE OTHER LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR
OTHER ACTION ARISING IN CONNECTION THEREWITH INCLUDING, BUT NOT LIMITED TO THOSE
RELATING TO (A) ALLEGATIONS THAT A PARTNERSHIP EXISTS BETWEEN LENDER AND
BORROWER; (B) USURY OR PENALTIES OR DAMAGES THEREFOR; (C) ALLEGATIONS OF
UNCONSCIONABLE ACTS, DECEPTIVE TRADE PRACTICE, LACK OF GOOD FAITH OR FAIR
DEALING, LACK OF COMMERCIAL REASONABLENESS, OR SPECIAL RELATIONSHIPS (SUCH AS
FIDUCIARY, TRUST OR CONFIDENTIAL RELATIONSHIP); (D) ALLEGATIONS OF DOMINION,
CONTROL, ALTER EGO, INSTRUMENTALITY, FRAUD, REAL ESTATE FRAUD,
MISREPRESENTATION, DURESS, COERCION, UNDUE INFLUENCE, INTERFERENCE OR
NEGLIGENCE; (E) ALLEGATIONS OF TORTIOUS INTERFERENCE WITH PRESENT OR
45
PROSPECTIVE BUSINESS RELATIONSHIPS OR OF ANTITRUST; OR (F) SLANDER, LIBEL OR
DAMAGE TO REPUTATION. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY
AND VOLUNTARILY BY BORROWER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH
INSTANCE AND EACH ISSUE AS TO WHICH TILE RIGHT TO A TRIAL BY JURY WOULD
OTHERWISE ACCRUE. LENDER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH
IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY BORROWER
Section 13.6 WAIVER OF AUTOMATIC OR SUPPLEMENTAL STAY. In the event of
the filing of any voluntary or involuntary petition under the Bankruptcy Code by
or against Borrower (other than an involuntary petition filed by or joined in by
Lender), the Borrower shall not assert, or request any other party to assert,
that the automatic stay under SECTION 362 of the Bankruptcy Code shall operate
or be interpreted to stay, interdict, condition, reduce or inhibit the ability
of Lender to enforce any rights it has by virtue of this Security Instrument, or
any other rights that Lender has, whether now or hereafter acquired, against any
guarantor of the Debt. Further, Borrower shall not seek a supplemental stay or
any other relief, whether injunctive or otherwise, pursuant to SECTION 105 of
the Bankruptcy Code or any other provision therein to stay, interdict,
condition, reduce or inhibit the ability of Lender to enforce any rights it has
by virtue of this Security Instrument against any guarantor of the Debt. The
waivers contained in this paragraph are a material inducement to Lender's
willingness to enter into this Security Instrument and Borrower acknowledges and
agrees that no grounds exist for equitable relief which would bar, delay or
impede the exercise by Lender of Lender's rights and remedies against Borrower
or any guarantor of the Debt.
ARTICLE 14 - NOTICES
Section 14.1 NOTICES. All notices or other written communications
hereunder shall be deemed to have been properly given (i) upon delivery, if
delivered in person or by facsimile transmission with receipt acknowledged, (ii)
one (1) Business Day after having been deposited for overnight delivery with any
reputable overnight courier service, or (iii) three (3) Business Days after
having been deposited in any post office or mail depository regularly maintained
by the U.S. Postal Service and sent by registered or certified mail, postage
prepaid, addressed as follows:
If to Borrower: 4212 Techcourt, LLC
c/o First Potomac Realty Investment LP
0000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxx
Facsimile: (000) 000-0000
With a copy to: Xxxxx, Early & Xxxxxx
0 Xxxxxxxx Xxxxx Xxxxxx, Xxxxx 000
00
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
If to Trustee: Xxxxxxx X. Xxxxx, Xx.
do Tri-State Commercial Closings, Inc.
0000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Facsimile: (202)
If to Lender: Xxxxxx Guaranty Trust Company of New York
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxx Alto, Commercial Mortgage Finance
Group Loan Servicing
Facsimile No.: (000) 000-0000
With a copy to: Xxxxxx Xxxxxxx Xxxxxxxxx & Xxxx, PLLC
0000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxxxxx Xxx, Esq.
Facsimile: (000) 000-0000
or addressed as such party may from time to time designate by written notice to
the other parties. For purposes of this subsection, the term "BUSINESS DAY"
shall mean a day on which commercial banks are not authorized or required by law
to close in New York, New York.
Any party by notice to the other parties may designate additional or
different addresses for subsequent notices or communications.
ARTICLE 15- APPLICABLE LAW
Section 15.1 GOVERNING LAW; JURISDICTION. This Security Instrument shall
be governed by and construed in accordance with applicable federal law and the
laws of the Commonwealth of Virginia, without reference or giving effect to any
choice of law doctrine. Borrower hereby irrevocably submits to the jurisdiction
of any court of competent jurisdiction located in the Commonwealth of Virginia
in connection with any proceeding arising out of or relating to this Security
Instrument.
Section 15.2 USURY LAWS. This Security Instrument and the Note are
subject to the express condition that at no time shall Borrower be obligated or
required to pay interest on the Debt at a rate which could subject the holder of
the Note to either civil or criminal liability as a
47
result of being in excess of the maximum interest rate which Borrower is
permitted by applicable law to contract or agree to pay. If by the terms of this
Security Instrument or the Note, Borrower is at any time required or obligated
to pay interest on the Debt at a rate in excess of such maximum rate, the rate
of interest under the Security Instrument and the Note shall be deemed to be
immediately reduced to such maximum rate and the interest payable shall be
computed at such maximum rate and all prior interest payments in excess of such
maximum rate shall be applied and shall be deemed to have been payments in
reduction of the principal balance of the Note. All sums paid or agreed to be
paid to Lender for the use, forbearance, or detention of the Debt shall, to the
extent permitted by applicable law, be amortized, prorated, allocated, and
spread throughout the full stated term of the Note until payment in frill 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 15.3 PROVISIONS SUBJECT TO APPLICABLE LAW. All rights, powers
and remedies provided in this Security Instrument may be exercised only to the
extent that the exercise thereof does not violate any applicable provisions of
law and are intended to be limited to the extent necessary so that they will not
render this Security Instrument invalid, unenforceable or not entitled to be
recorded, registered or filed under the provisions of any applicable law. If any
term of this Security Instrument or any application thereof shall be invalid or
unenforceable, the remainder of this Security Instrument and any other
application of the term shall not be affected thereby.
ARTICLE 16 - SECONDARY MARKET
Section 16.1 TRANSFER OF LOAN. Lender may, at any time, sell, transfer
or assign the Note, this Security Instrument and the Other Loan Documents, and
any or all servicing rights with respect thereto, or grant participations
therein or issue mortgage pass-through certificates or other securities
evidencing a beneficial interest in a rated or unrated public offering or
private placement (the "SECURITIES"). Lender may forward to each purchaser,
transferee, assignee, servicer, participant, investor in such Securities or any
Rating Agency (as hereinafter defined) rating such Securities (collectively, the
"INVESTOR") and each prospective Investor, all documents and information which
Lender now has or may hereafter acquire relating to the Debt and to Borrower,
any Guarantor, any Indemnitor and the Property, whether furnished by Borrower,
any Guarantor, any Indemnitor or otherwise, as Lender determines necessary or
desirable. The term "RATING AGENCY" shall mean each statistical rating agency
that has assigned a rating to the Securities.
ARTICLE 17 - COSTS
Section 17.1 PERFORMANCE AT BORROWER'S EXPENSE. Borrower acknowledges
and confirms that Lender shall impose certain administrative processing and/or
commitment fees in connection with (a) the extension, renewal, modification,
amendment and termination (excluding the scheduled maturity of the Note) of its
loans, (b) the release or substitution of collateral therefor, or (c) obtaining
certain consents, waivers and approvals with
48
respect to the Property (the occurrence of any of the above shall be called an
"Event"). Borrower hereby acknowledges and agrees to pay, immediately, upon
demand, all such fees (as the same may be increased or decreased from time to
time), and any additional fees of a similar type Or nature which may be imposed
by Lender from time to time, upon the occurrence of any Event.
Section 17.2 ATTORNEY'S FEES FOR ENFORCEMENT. (a) Borrower shall pay all
legal fees incurred by Lender in connection with (i) the preparation of the
Note, this Security Instrument and the Other Loan Documents and (ii) the items
set forth in Section 17.1 above, and (b) Borrower shall pay to Lender on demand
any and all expenses, including legal expenses and attorneys' fees, incurred or
paid by Lender in protecting its interest in the Property or Personal Property
and/or collecting any amount payable or in enforcing its rights hereunder with
respect to the Property or Personal Property, whether or not any legal
proceeding is commenced hereunder or thereunder and whether or not any default
or Event of Default shall have occurred and is continuing, together with
interest thereon at the Default Rate from the date of payment or incurring by
Lender until paid by Borrower.
ARTICLE 18 - DEFINITIONS
Section 18.1 GENERAL DEFINITIONS. Unless the context clearly indicates a
contrary intent or unless otherwise specifically provided herein, words used in
this Security Instrument may be used interchangeably in singular or plural form
and the word "BORROWER" shall mean "each Borrower and any subsequent owner or
owners of the Property or any part thereof or any interest therein," the word
"LENDER" shall mean "Lender and any subsequent holder of the Note," the word
"NOTE" shall mean "the Note and any other evidence of indebtedness secured by
this Security Instrument," the word "PERSON" shall include an individual,
corporation, partnership, trust, unincorporated association, government,
governmental authority, and any other entity, the word "PROPERTY" shall include
any portion of the Property and any interest therein, and the phrases
"ATTORNEYS' FEES," "LEGAL FEES" and "COUNSEL FEES" shall include any and all
attorneys', paralegal and law clerk fees and disbursements, including, but not
limited to, fees and disbursements at the pre-trial, trial and appellate levels
incurred or paid by Lender in protecting its interest in the Property, the
Leases and the Rents and enforcing its rights hereunder.
ARTICLE 19 - MISCELLANEOUS PROVISIONS
Section 19.1 NO ORAL CHANGE. This Security Instrument, the Note, and the
Other Loan Documents and any provisions hereof or thereof, may not be modified,
amended, waived, extended, changed, discharged or terminated orally or by any
act or failure to act on the part of Borrower or Lender, but only by an
agreement in writing signed by the party against whom enforcement of any
modification, amendment, waiver, extension, change, discharge or termination is
sought.
49
Section 19.2 LIABILITY. If Borrower consists of more than one person,
the obligations and liabilities of each such person hereunder shall be joint and
several. This Security Instrument shall be binding upon and inure to the benefit
of Borrower and Lender and their respective successors and assigns forever.
Section 19.3 INAPPLICABLE PROVISIONS: If any term, covenant or condition
of the Note or this Security Instrument is held to be invalid, illegal or
unenforceable in any respect, the Note and this Security Instrument shall be
construed without such provision.
Section 19.4 HEADINGS, ETC. The headings and captions of various
Sections of this Security Instrument are for convenience of reference only and
are not to be construed as defining or limiting, in any way, the scope or intent
of the provisions hereof.
Section 19.5 DUPLICATE ORIGINALS; COUNTERPARTS. This Security Instrument
may be executed in any number of duplicate originals and each duplicate original
shall be deemed to be an original. This Security Instrument may be executed in
several counterparts, each of which counterparts shall be deemed an original
instrument and all of which together shall constitute a single Security
Instrument. The failure of any party hereto to execute this Security Instrument,
or any counterpart hereof, shall not relieve the other signatories from their
obligations hereunder.
Section 19.6 NUMBER AND GENDER. Whenever the context may require, any
pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns and pronouns shall include the
plural and vice versa.
Section 19.7 SUBROGATION. If any or all of the proceeds of the Note have
been used to extinguish, extend or renew any indebtedness heretofore existing
against the Property, then, to the extent of the funds so used, Lender shall be
subrogated to all of the rights, claims, liens, titles, and interests existing
against the Property heretofore held by, or in favor of, the holder of such
indebtedness and such former rights, claims, liens, titles, and interests, if
any, are not waived but rather are continued in full force and effect in favor
of Lender and are merged with the lien and security interest created herein as
cumulative security for the repayment of the Debt, the performance and discharge
of Borrower's obligations hereunder, under the Note and the Other Loan Documents
and the performance and discharge of the Other Obligations.
Section 19.8 ENTIRE AGREEMENT. The Note, this Security Instrument and
the Other Loan Documents constitute the entire understanding and agreement
between Borrower and Lender with respect to the transactions arising in
connection with the Debt and supersede all prior written or oral understandings
and agreements between Borrower and Lender with respect thereto. Borrower hereby
acknowledges that, except as incorporated in writing in the Note, this Security
Instrument and the Other Loan Documents, there are not, and were not, and no
persons are or were authorized by Lender to make, any representations,
understandings, stipulations, agreements or promises, oral or written, with
respect to the transaction which is the subject of the Note, this Security
Instrument and the Other Loan Documents.
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ARTICLE 20 - TRUSTEE
Trustee may resign by the giving of notice of such resignation in
writing or verbally to Lender. If Trustee shall die, resign, or become
disqualified from acting in the execution of this trust, or if, for any reason,
Lender shall prefer to appoint a substitute trustee or multiple substitute
trustees, or successive substitute trustees or successive multiple substitute
trustees, to act instead of the aforenamed Trustee, Lender shall have full power
to appoint a substitute trustee (or, if preferred, multiple substitute trustees)
in succession who shall succeed (and if multiple substitute trustees are
appointed, each of such multiple substitute trustees shall succeed) to all the
estates, rights, powers, and duties of the aforenamed Trustee. Such appointment
may be executed by any authorized agent of Lender, and if such Lender be a
corporation and such appointment be executed in its behalf by any officer of
such corporation, such appointment shall be conclusively presumed to be executed
with authority and shall be valid and sufficient without proof of any action by
the board of directors or any superior officer of the corporation. Borrower
hereby ratifies and confirms any and all acts which the aforenamed Trustee, or
his successor or successors in this trust, shall do lawfully by virtue hereof.
If multiple substitute Trustees are appointed, each of such multiple substitute
Trustees shall be empowered and authorized to act alone without the necessity of
the joinder of the other multiple substitute trustees, whenever any action or
undertaking of such substitute trustees is requested or required under or
pursuant to this Security Instrument or applicable law. Any substitute Trustee
appointed pursuant to any of the provisions hereof shall, without any further
act, deed, or conveyance, become vested with all the estates, properties,
rights, powers, and trusts of its or his predecessor in the rights hereunder
with like effect as if originally named as Trustee herein; but nevertheless,
upon the written request of Lender or of the substitute Trustee, the Trustee
ceasing to act shall execute and deliver any instrument transferring to such
substitute Trustee, upon the trusts herein expressed, all the estates,
properties, rights, powers, and trusts of the Trustee so ceasing to act, and
shall duly assign, transfer and deliver any of the property and moneys held by
such Trustee to the substitute Trustee so appointed in the Trustee's place. No
fees or expenses shall be payable to Trustee, except in connection with a
foreclosure of the Property or any part thereof or in connection with the
release of the Property following payment in full of the Debt.
ARTICLE 21- SPECIAL COMMONWEALTH OF VIRGINIA PROVISIONS
Section 21.1 Short Form Incorporation. The following short form
provisions are incorporated into this Deed of Trust and Security Agreement by
reference as permitted by Section 55-60 and Section 55-59.2 of the Code of
Virginia as amended (the "CODE"):
(1) Exemptions waived.
(2) Subject to all upon default.
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(3) Renewal, extension or reinstatement permitted.
(4) Substitution of trustee permitted.
(5) Any trustee may act.
(6) Advertisement required: Once a week for two weeks.
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Section 21.2 Powers and Duties of Trustee. The Trustee shall have all
powers and duties granted and imposed under Code Sections 55-59 through 55-59.4,
inclusive. Any trustee's sale hereunder shall be held, and all proceeds thereof
shall be disbursed, in accordance with the provisions of Code Section 55-59.4.
Section 21.3 Commercial Loan. The Borrower warrants and represents that
the loan made by the Lender to the Borrower in accordance with the Note and the
other Loan Documents is made for the acquisition or conduct of a business or
investment within the meaning ascribed to those terms under 6.1-330.75 of the
Code.
Section 21.4 Limitation on Recourse. Borrower's liability under this
Security Instrument shall be limited as set forth in Section 10 of the Note, the
terms of which are incorporated herein by reference.
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IN WITNESS WHEREOF, THIS SECURITY INSTRUMENT has been executed by
Borrower the day and year first above written.
BORROWER:
4212 TECHCOURT, LLC,
a Virginia limited liability company
By: First Potomac Realty Investment Limited
Partnership, a Delaware limited partnership
Its Sole Member
By: First Potomac Realty Investment Trust,
Inc. a Maryland corporation
Its Sole General Partner
By: [SIG]
------------------------------------
Name: Xxxxxxx Xxxxxxxxx
Title: President
[Corporate Seal]
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State of Maryland )
)
County of Xxxxxxxxxx )
Before me, a Notary Public in a for the jurisdiction aforesaid,
personally appeared this date, Xxxxxxx Xxxxxxxxx, personally well known (or
satisfactorily proven) to me to be the person whose name is subscribed to the
foregoing and annexed Instrument, who, being by me first duly sworn,
acknowledged that he is the President of First Potomac Realty Investment Trust,
Inc., a Maryland corporation, which corporation is the sole general partner of
First Potomac Realty Investment Limited Partnership, a Delaware limited
partnership, which partnership is the sole member of 4212 TECHCOURT, LLC, a
Virginia limited liability company, which entity is a party to the foregoing and
annexed Deed of Trust and Security Agreement, and that he, being duly authorized
so to do, executed said Instrument on behalf of said corporation as its free act
and deed and the free act and deed of said partnership and limited liability
company for the uses and purposes therein contained.
WITNESS my hand and official seal this 19th day of May, 2000.
[SIG]
------------------------------
Notary Public
[Notarial Seal]
My commission expires: 12/01/02
-------------------
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EXHIBIT A
(Description of Land)
All of that certain lot, piece or parcel of land, with the buildings and
improvements thereon, situate, lying and being described as follows:
All that certain lot or parcel of land situate and lying in Fairfax
County, Virginia, and more particularly described as follows:
Parcel 0-X, Xxxxxxxxx Xxxxxxxx Xxxxxx, as the same is shown on a plat
attached to the Deed of Subdivision and Easement recorded in Deed Book
7612 at page 1070, among the land records of Fairfax County, Virginia.
Tax Map No.: 033-2-04-0004-B
TOGETHER WITH all rights, title and interest in Ingress and egress
easement created by Deed of Subdivision and Easement recorded in Deed
Book 7612 at page 1070.
ALSO TOGETHER WITH all rights, title and interest in reciprocal easement
recorded in Deed Book 7612 at page 1084, as amended in Deed Book 8710 at
page 1070.
AND BEING part of the property acquired by First Potomac Realty
Investment Limited Partnership, a Delaware limited partnership, by Deed
of Bargain and Sale from Xxxxxxx Real Estate Company, a Virginia
corporation (formerly Xxxxxxx Enterprises, Inc., a Virginia corporation)
dated October 15, 1998 and recorded October 19, 1998 in Deed Book 10612
at page 450.
and commonly known as 0000 Xxxxxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx.
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