EXHIBIT 4.3
PREPARED BY AND UPON RECORDATION RETURN TO:
Xxxxxxx Xxxxxxxxx Xxxxxxx & Xxxxxxx, L.L.P.
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: Xxxx Xxxxxxxx Xxxx, Xx., Esq.
Tax Map Parcel # _______________________
LOAN NO.: 00-0000000 GREENBRIER APARTMENTS
FREDERICKSBURG, VIRGINIA
================================================================================
CRIT-VA II, INC.,
as Grantor
to
TRSTE, INC.,
as Trustee
For the benefit of
FIRST UNION NATIONAL BANK,
as Beneficiary
---------------------------
DEED OF TRUST AND SECURITY AGREEMENT
---------------------------
Date: March 23, 2001
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TABLE OF CONTENTS
Page
ARTICLE I. COVENANTS OF GRANTOR..................................................5
1.1 Warranties of Grantor.............................................5
1.2 Defense of Title..................................................9
1.3 Performance of Obligations........................................9
1.4 Insurance.........................................................9
1.5 Payment of Taxes.................................................12
1.6 Tax and Insurance Impound Account................................13
1.7 Intentionally Deleted............................................14
1.8 Replacement Reserve..............................................14
1.9 Casualty and Condemnation........................................17
1.10 Construction Liens...............................................20
1.11 Rents............................................................20
1.12 Leases...........................................................21
1.13 Alienation and Further Encumbrances..............................23
1.14 Payment of Utilities, Assessments, Charges, Etc..................28
1.15 Access Privileges and Inspections................................28
1.16 Waste; Alteration of Improvements................................28
1.17 Zoning...........................................................29
1.18 Financial Statements and Books and Records.......................29
1.19 Further Documentation............................................31
1.20 Payment of Costs; Reimbursement to Beneficiary...................31
1.21 Security Interest................................................32
1.22 Security Agreement...............................................33
1.23 Easements and Rights-of-Way......................................35
1.24 Compliance with Laws.............................................35
1.25 Additional Taxes.................................................36
1.26 Secured Indebtedness.............................................36
1.27 Grantor's Waivers................................................36
1.28 SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.................37
1.29 Attorney-in-Fact Provisions......................................38
1.30 Management.......................................................38
1.31 Hazardous Waste and Other Substances.............................39
1.32 Indemnification; Subrogation.....................................43
1.33 Covenants with Respect to Indebtedness, Operations, Fundamental
Changes of Grantor.............................................44
1.34 Intentionally Deleted............................................48
1.35 ERISA............................................................48
1.36 Springing Lock-Box Account.......................................49
ARTICLE II. EVENTS OF DEFAULT...................................................50
2.1 Events of Default.............................................50
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Page
ARTICLE III. REMEDIES...........................................................52
3.1 Remedies Available............................................52
3.2 Application of Proceeds.......................................55
3.3 Right and Authority of Receiver or Beneficiary in the Event
of Default; Power of Attorney...............................55
3.4 Occupancy After Foreclosure...................................57
3.5 Notice to Account Debtors.....................................57
3.6 Cumulative Remedies...........................................57
3.7 Payment of Expenses...........................................58
ARTICLE IV. MISCELLANEOUS TERMS AND CONDITIONS..................................58
4.1 Time of Essence...............................................58
4.2 Release of Deed of Trust......................................58
4.3 Certain Rights of Beneficiary.................................58
4.4 Waiver of Certain Defenses....................................58
4.5 Notices.......................................................58
4.6 Successors and Assigns; Joint and Several Liability...........59
4.7 Severability..................................................59
4.8 Gender........................................................59
4.9 Xxxxxx; Discontinuance of Proceedings.........................59
4.10 Section Headings..............................................60
4.11 GOVERNING LAW.................................................60
4.12 Counting of Days..............................................60
4.13 Relationship of the Parties...................................60
4.14 Application of the Proceeds of the Note.......................60
4.15 Unsecured Portion of Indebtedness.............................60
4.16 Cross-Default; Cross-Collateralization; Severance of Loans....60
4.17 Interest After Sale...........................................61
4.18 Inconsistency with Other Loan Documents.......................61
4.19 Construction of this Document.................................61
4.20 No Merger.....................................................62
4.21 Rights With Respect to Junior Encumbrances....................62
4.22 Beneficiary May File Proofs of Claim..........................62
4.23 Fixture Filing................................................62
4.24 After-Acquired Trust Property.................................62
4.25 No Representation.............................................63
4.26 Counterparts..................................................63
4.27 Personal Liability............................................63
4.28 Recording and Filing..........................................63
4.29 Entire Agreement and Modifications............................63
4.30 Maximum Interest..............................................63
4.31 Interest Payable by Beneficiary...............................64
4.32 Secondary Market..............................................64
4.33 Dissemination of Information..................................64
4.34 Contemporaneous Notes, Contemporaneous Mortgages and
Contemporaneous Assignments of Leases and Rents.............65
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Page
4.35 Certain Matters Relating to Trust Property Located in the
Commonwealth of Virginia....................................65
ARTICLE V. CONCERNING THE TRUSTEE...............................................66
5.1 Certain Rights................................................66
5.2 Retention of Money............................................67
5.3 Successor Trustees............................................67
5.4 Perfection of Appointment.....................................68
5.5 Succession Instruments........................................68
5.6 No Representation by Trustee or Beneficiary...................68
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DEED OF TRUST AND SECURITY AGREEMENT
THIS DEED OF TRUST AND SECURITY AGREEMENT (this "Deed of Trust") is
made as of March 23, 2001 by CRIT-VA II, INC., a Virginia corporation, as
Grantor ("Grantor"), whose address is 000 Xxxx Xxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx
00000, to TRSTE, INC., a Virginia corporation, as Trustee ("Trustee") with an
address at 000 Xxxxx Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, for the benefit
of FIRST UNION NATIONAL BANK, a national banking association, as Beneficiary
("Beneficiary"), whose address is One First Union Center, 000 Xxxxx Xxxxxxx
Xxxxxx, Xxxxxxxx XX 0000, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000, Attention: Contract
Finance.
W I T N E S S E T H:
-------------------
THAT FOR AND IN CONSIDERATION OF THE SUM OF TEN AND NO/100 DOLLARS
($10), AND OTHER VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH
ARE HEREBY ACKNOWLEDGED, GRANTOR HEREBY IRREVOCABLY GRANTS, BARGAINS, SELLS,
CONVEYS, TRANSFERS, PLEDGES, SETS OVER AND ASSIGNS, WITH POWER OF SALE, all of
Grantor's estate, right, title and interest (if any) in, to and under any and
all of the following described property, whether now owned or hereafter acquired
by Grantor (exclusive of any of the following owned or leased by tenants leasing
all or part of the Improvements (as hereinafter defined) (Grantor's estate,
right, title and interest in all such property being referred to, collectively,
as the "Trust Property"):
(A) All that certain real property situated in the City of
Fredericksburg, Commonwealth of Virginia, more particularly described on Exhibit
A attached hereto and incorporated herein by this reference (the "Premises"),
together with all of the easements, rights, privileges, franchises, tenements,
hereditaments and appurtenances now or hereafter thereunto belonging or in any
way appertaining thereto, and all of the estate, right, title, interest, claim
and demand whatsoever of Grantor therein or thereto, either at law or in equity,
in possession or in expectancy, now or hereafter acquired;
(B) All structures, buildings and improvements of every kind and
description now or at any time hereafter located or placed on the Premises (the
"Improvements", the Premises and the Improvements being referred to as the "Real
Property");
(C) All furniture, furnishings, fixtures, goods, equipment, inventory
or personal property owned by Grantor and now or hereafter located on, attached
to or used in and about the Improvements, including, but not limited to, all
machines, engines, boilers, dynamos, elevators, stokers, tanks, cabinets,
awnings, screens, shades, blinds, carpets, draperies, lawn mowers, and all
appliances, plumbing, heating, air conditioning, lighting, ventilating,
refrigerating, disposal and incinerating equipment, and all fixtures and
appurtenances thereto, and such other goods and chattels and personal property
owned by Grantor and as are now or hereafter used or furnished in operating the
Improvements, or the activities conducted therein and all building materials and
equipment hereafter situated on or about the Premises or Improvements, and, to
the extent
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assignable, all warranties and guaranties relating thereto, and all additions
thereto and substitutions and replacements therefor;
(D) All easements, rights-of-way, strips and gores of land, vaults,
streets, ways, alleys, passages, sewer rights, and other emblements now or
hereafter located on the Premises or under or above the same or any part or
parcel thereof, and all estates, rights, titles, interests, tenements,
hereditaments and appurtenances, reversions and remainders whatsoever, in any
way belonging, relating or appertaining to the Real Property or any part
thereof, or which hereafter shall in any way belong, relate or be appurtenant
thereto, whether now owned or hereafter acquired by Grantor;
(E) To the extent assignable, all water, ditches, xxxxx, reservoirs and
drains and all water, ditch, well, reservoir and drainage rights which are
appurtenant to, located on, under or above or used in connection with the
Premises or the Improvements, or any part thereof, together (i) with all
utilities, utility lines, utility commitments, utility capacity, capital
recovery charges, impact fees and other fees paid in connection with same, (ii)
reimbursements or other rights pertaining to utility or utility services
provided to the Premises and/or Improvements and (iii) the present or future use
or availability of waste water capacity, or other utility facilities to the
extent same pertain to or benefit the Premises and/or Improvements, including,
without limitation, all reservations of or commitments covering any such use in
the future whether now existing or hereafter created or acquired;
(F) All minerals, crops, timber, trees, shrubs, flowers and landscaping
features now or hereafter located on, under or above the Premises;
(G) All funds now or hereafter on deposit in the Impound Account
and the Replacement Reserve (each as hereinafter defined);
(H) (i) All leases (including, without limitation oil, gas and mineral
leases), licenses, concessions and occupancy agreements of all or any part of
the Premises or the Improvements (each, a "Lease" and, collectively, "Leases"),
whether written or oral, now or hereafter entered into and all rents, royalties,
issues, profits, bonus money, revenue, income, rights and other benefits
(collectively, the "Rents") of the Premises or the Improvements, now or
hereafter arising from the use or enjoyment of all or any portion thereof or
from any present or future Lease or other agreement arising from any of the
Leases (as hereinafter defined) or arising from any of the General Intangibles
(as hereinafter defined) and all cash or securities deposited to secure
performance by the tenants, lessees or licensees (each, a "Tenant" and,
collectively, "Tenants"), as applicable, of their obligations under any such
Leases whether said cash or securities are to be held until the expiration of
the terms of said Leases or applied to one or more of the installments of rent
coming due prior to the expiration of said terms, subject to, however, the
provisions contained in Section 1.11 of this Deed of Trust;
(I) To the extent assignable: (i) all contracts and agreements now or
hereafter entered into by Grantor or binding upon Grantor relating to the
management, maintenance or operation of any part of the Premises or the
Improvements (collectively, the "Contracts") and all revenue, income and other
benefits thereof, including, without limitation, management
2
agreements, service contracts, maintenance contracts, equipment leases, personal
property leases and (ii) any contracts or documents relating to construction on
any part of the Premises or the Improvements (including plans, drawings,
surveys, tests, reports, bonds and governmental approvals);
(J) To the extent assignable, all present and future real estate tax
refunds and monetary deposits given to any public or private utility with
respect to utility services furnished to any part of the Premises or the
Improvements;
(K) To the extent assignable, all present and future funds, accounts,
instruments, accounts receivable, documents, causes of action, claims, general
intangibles (including, without limitation, trademarks, trade names, service
marks and symbols now or hereafter used in connection with any part of the
Premises or the Improvements, all names by which the Premises or the
Improvements may be operated or known, all rights to carry on business under
such names, and all rights, interest and privileges which Grantor has or may
have as developer or declarant under any covenants, restrictions or declarations
now or hereafter relating to the Premises or the Improvements) and all notes or
chattel paper relating to the ownership, operation or maintenance of the Real
Property (exclusive of any of the foregoing owed to tenants or any other third
parties) (collectively, the "General Intangibles");
(L) To the extent assignable, all water taps, sewer taps, certificates
of occupancy, permits, licenses, franchises, certificates, consents, approvals
and other rights and privileges now or hereafter obtained in connection with the
Premises or the Improvements and all present and future warranties and
guaranties relating to the Improvements or to any equipment, fixtures,
furniture, furnishings, personal property or components of any of the foregoing
now or hereafter located or installed on the Premises or the Improvements;
(M) All building materials, supplies and equipment now or hereafter
placed on the Premises or in the Improvements and, to the extent assignable, all
architectural renderings, models, drawings, plans, specifications, studies and
data now or hereafter relating to the Premises or the Improvements;
(N) To the extent assignable, all right, title and interest of Grantor
in any insurance policies or binders now or hereafter relating to the Trust
Property, including any unearned premiums thereon;
(O) All proceeds, products, substitutions and accessions (including
claims and demands therefor) of the conversion, voluntary or involuntary, of any
of the foregoing into cash or liquidated claims, including, without limitation,
proceeds of insurance and condemnation awards; and
(P) All other or greater rights and interests of every nature in the
Premises or the Improvements and in the possession or use thereof and income
therefrom, whether now owned or hereafter acquired by Grantor.
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IN TRUST TO SECURE:
(1) The debt evidenced by that certain Promissory Note (such Promissory
Note, together with any and all renewals, amendments, modifications,
consolidations and extensions thereof, is hereinafter referred to as the "Note")
of even date with this Deed of Trust, made by Grantor payable to the order of
Beneficiary in the principal face amount of Twelve Million Seven Hundred Fifty
Thousand and No/100 Dollars ($12,750,000.00), together with interest as therein
provided, having a maturity date on April 1, 2011;
(2) The full and prompt payment and performance of all of the
provisions, agreements, covenants and obligations herein contained and contained
in agreements, documents or instruments now or hereafter evidencing, securing or
otherwise relating to the Debt (as hereinafter defined) and described on Exhibit
C attached hereto, the Contemporaneous Notes (as hereinafter defined), the
Contemporaneous Mortgages (as hereinafter defined), the Contemporaneous
Assignments (as hereinafter defined), (together with any and all renewals,
amendments, extensions, modifications and restatements thereof, are hereinafter
collectively referred to as the "Loan Documents") and the payment of all other
sums herein or therein covenanted to be paid;
(3) Any and all additional advances made by Beneficiary to protect or
preserve the Trust Property or the lien or security interest created hereby on
the Trust Property, or for taxes, assessments or insurance premiums as
hereinafter provided or for performance of any of Grantor's obligations
hereunder or under the other Loan Documents or for any other purpose provided
herein or in the other Loan Documents; and
(4) Any and all other indebtedness now owing or which may hereafter be
owing by Grantor to Beneficiary under the Loan Documents, including, without
limitation, all prepayment fees, however and whenever incurred or evidenced,
whether express or implied, direct or indirect, absolute or contingent, or due
or to become due, and all renewals, modifications, consolidations, replacements
and extensions thereof.
(All of the sums referred to in Paragraphs (1) through (4) above are herein
referred to as the "Debt").
TO HAVE AND TO HOLD the Trust Property unto Trustee, its successors and
assigns forever, for the benefit of Beneficiary, its successors and assigns, and
Grantor does hereby bind itself, its successors and assigns, to WARRANT AND
FOREVER DEFEND the title to the Real Property (and such other portion of the
Trust Property as may constitute real property under applicable law), subject to
the Permitted Encumbrances (as hereinafter defined), to Beneficiary and Trustee
against every person whomsoever lawfully claiming or to claim the same or any
part thereof;
PROVIDED, HOWEVER, that if the principal and interest and all other
sums due or to become due under the Note or under the other Loan Documents,
including, without limitation, any prepayment fees required pursuant to the
terms of the Note, shall have been paid at the time and in the manner stipulated
therein and the Debt shall have been paid and all other covenants
4
contained in the Loan Documents shall have been performed, then, in such case,
the liens, security interests, estates and rights granted by this Deed of Trust
shall be satisfied and the estate, right, title and interest of Beneficiary in
the Trust Property shall cease, and upon payment to Beneficiary of all costs and
expenses incurred for the preparation of the release hereinafter referenced and
all recording costs if allowed by law, Beneficiary shall promptly satisfy and
release this Deed of Trust of record and the lien hereof by proper instrument.
ARTICLE I.
COVENANTS OF GRANTOR
For the purpose of further securing the Debt and for the protection of
the security of this Deed of Trust, for so long as the Debt or any part thereof
remains unpaid, Grantor covenants and agrees as follows:
1.1 Warranties of Grantor. Grantor, for itself and its successors and
assigns, does hereby represent, warrant and covenant to and with Beneficiary,
its successors and assigns, that:
(a) Grantor has good, marketable and indefeasible fee simple
title to the Real Property, subject only to those matters expressly set forth as
exceptions to or subordinate matters in the title insurance policy insuring the
lien of this Deed of Trust delivered as of the date hereof (the "Title Insurance
Policy"), excepting therefrom all preprinted and/or standard exceptions (such
items being the "Permitted Encumbrances"), and has full power and lawful
authority to grant, bargain, sell, convey, assign, transfer, encumber and
mortgage its interest in the Trust Property in the manner and form hereby done
or intended. Grantor will preserve its interest in and title to the Real
Property and will forever warrant and defend the same to Beneficiary against any
and all claims whatsoever and will forever warrant and defend the validity and
priority of the lien and security interest created herein against the claims of
all persons and parties whomsoever, subject to the Permitted Encumbrances. The
foregoing warranty of title shall survive the foreclosure of this Deed of Trust
and shall inure to the benefit of and be enforceable by Beneficiary in the event
Beneficiary acquires title to or ownership of the Trust Property pursuant to any
foreclosure;
(b) No bankruptcy or insolvency proceedings are pending or
contemplated by Grantor or, to the best knowledge of Grantor, against Grantor or
by or against any endorser or cosigner of the Note or of any portion of the
Debt, or any guarantor or indemnitor under the Indemnity and Guaranty Agreement
and the Environmental Indemnity Agreement executed in connection with the Note
or the loan evidenced thereby and secured hereby (the "Indemnitor");
(c) All written certificates, written affidavits and written
statements made by Grantor to Beneficiary in connection with the loan evidenced
by the Note are true and correct in all material respects and do not omit to
state any fact or circumstance necessary to make the statements contained
therein not materially misleading;
(d) The execution, delivery and performance of this Deed of
Trust, the Note and all of the other Loan Documents have been duly authorized by
all necessary action to be, and are, binding and enforceable against Grantor in
accordance with the respective terms thereof and
5
do not in any material respect contravene, result in a breach of or constitute a
default (nor upon the giving of notice or the passage of time or both will same
constitute a default) under the partnership agreement, articles of
incorporation, operating agreement or other organizational documents of Grantor
or any material contract or agreement to which Grantor is a party or by which
Grantor or any of its property may be bound and do not violate or contravene in
any material respect any law, order, decree, rule or regulation to which Grantor
is subject;
(e) Grantor is not required to obtain any consent, approval or
authorization from or to file any declaration or statement with, any
governmental authority or agency in connection with or as a condition to the
execution, delivery or performance of this Deed of Trust, the Note or the other
Loan Documents which has not been so obtained or filed;
(f) Grantor has obtained or made all necessary (i) consents,
approvals and authorizations and registrations and filings of or with all
governmental authorities or agencies and (ii) consents, approvals, waivers and
notifications of partners, stockholders, members, creditors, lessors and other
non-governmental persons and/or entities, in each case, which are required to be
obtained or made by Grantor in connection with the execution and delivery of,
and the performance by Grantor of its obligations under, the Loan Documents;
(g) Grantor is not an "investment company", or a company
"controlled" by an "investment company", as such terms are defined in the
Investment Company Act of 1940, as amended;
(h) No part of the proceeds of the indebtedness secured hereby
will be used for the purpose of purchasing or acquiring any "margin stock"
within the meaning of Regulation T, U or X of the Board of Governors of the
Federal Reserve System or for any other purpose which would be inconsistent with
such Regulation T, U or X or any other Regulations of such Board of Governors,
or for any purpose prohibited by legal requirements or by the terms and
conditions of the Loan Documents;
(i) Grantor and, if Grantor is a partnership, any general
partner of Grantor, has filed all federal, state and local tax returns required
to be filed as of the date hereof and has paid or made adequate provision for
the payment of all federal, state and local taxes, charges and assessments
payable by Grantor and its general partner, if any as of the date hereof.
Grantor and its general partners, if any, believe that their respective tax
returns properly reflect the income and taxes of Grantor and said general
partners, if any, for the periods covered thereby, subject only to reasonable
adjustments required by the Internal Revenue Service or other applicable tax
authority upon audit;
(j) Grantor is not an "employee benefit plan", as defined in
section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), which is subject to Title I of ERISA and the assets of Grantor do not
constitute "plan assets" of one or more such plans within the meaning of 29
C.F.R. Section 2510.3-101;
(k) The Premises and the Improvements and the current intended
use thereof by Grantor comply in all material respects with all applicable
restrictive covenants, zoning
6
ordinances, subdivision and building codes, flood disaster laws, health and
environmental laws and regulations and all other ordinances, orders or
requirements issued by any state, federal or municipal authorities having or
claiming jurisdiction over the Trust Property. The Premises and Improvements
constitute one or more separate tax parcels for purposes of ad valorem taxation.
To the best of Xxxxxxxx's knowledge, information and belief, the Premises and
Improvements do not require any rights over, or restrictions against, other
property in order to comply with any of the aforesaid governmental ordinances,
orders or requirements;
(l) All utility services necessary and sufficient for the use,
occupancy and operation of the Premises and the Improvements for their current
intended purposes are available to the Real Property, including water, storm
sewer, sanitary sewer, gas, electric, cable and telephone facilities;
(m) All streets, roads, highways and bridges necessary for
access for the current use, occupancy and operation of the Premises and the
Improvements have been completed, to the best of Grantor's knowledge,
information and belief, have been dedicated to and accepted by the appropriate
municipal authority and are open and available to the Premises and the
Improvements without further condition or cost to Grantor;
(n) All curb cuts, driveways and traffic signals (if any)
shown on the survey delivered to Beneficiary prior to the execution and delivery
of this Deed of Trust (the "Survey") are existing and, to the best of Grantor's
knowledge, information and belief, have been fully approved by the appropriate
governmental authority;
(o) There are no judicial, administrative, mediation or
arbitration actions, suits or proceedings pending or threatened against or
affecting Grantor (or, if Grantor is a partnership or a limited liability
company, any of its general partners or members) or the Trust Property which, if
adversely determined, would have a material adverse effect on (a) the Trust
Property, (b) the business, prospects, profits, operations or condition
(financial or otherwise) of Grantor, (c) the enforceability, validity,
perfection or priority of the lien of any Loan Document, or (d) the ability of
Grantor to perform any obligations under any Loan Document (collectively, a
"Material Adverse Effect");
(p) The Trust Property is free from delinquent water
charges, sewer rents, taxes and assessments;
(q) As of the date of this Deed of Trust, the Real Property is
free from unrepaired material damage caused by fire, flood, accident or other
casualty;
(r) As of the date of this Deed of Trust, no part of the
Premises or the Improvements has been taken in condemnation, eminent domain or
like proceeding nor is any such proceeding pending or, to Grantor's knowledge
and belief, threatened;
7
(s) Grantor possesses all material franchises, patents,
copyrights, trademarks, trade names, licenses and permits necessary for the
conduct of its business substantially as now conducted;
(t) Except as may otherwise be disclosed in that certain
Property Condition Report dated March 7, 2001 (Draft), prepared by Dominion
Environmental Group, (i) the Improvements are in good repair and (ii) all major
building systems located within the Improvements, including, without limitation,
the heating and air conditioning systems and the electrical and plumbing
systems, are in good working order and condition;
(u) Grantor has delivered to Beneficiary true, correct
and complete copies of all Contracts and all amendments thereto or modifications
thereof;
(v) Each Contract constitutes the legal, valid and binding
obligation of Grantor and, to the best of Grantor's knowledge and belief, is
enforceable against any other party thereto. No default exists, or with the
passing of time or the giving of notice or both would exist, under any Contract
which would, in the aggregate, have a Material Adverse Effect;
(w) Grantor and the Trust Property are free from any past
due obligations for sales and payroll taxes;
(x) There are no security agreements or financing statements
affecting all or any portion of the Trust Property of Grantor other than (i) as
disclosed in writing by Grantor to Beneficiary prior to the date hereof and (ii)
the Loan Documents;
(y) Grantor has delivered to Beneficiary a true, correct and
complete schedule (the "Rent Roll") of all Leases affecting the Trust Property
as of the date hereof, which accurately and completely sets forth in all
material respects for each such Lease, the following: the name of the Tenant,
the lease expiration date, the base rent payable, the security deposit held
thereunder and any other material provisions of such Lease;
(z) No Tenant under any Lease has, as of the date hereof, paid
rent more than thirty (30) days in advance, and the rents under such Leases have
not been waived, released, or otherwise discharged or compromised;
(aa) The Real Property forms no part of any property owned,
used or claimed by Grantor as its residence or homestead and, to the extent
permitted by applicable law, Grantor hereby disclaims and renounces each and
every claim that the Real Property is exempt from forced sale upon the
occurrence and continuance of an Event of Default as a result of such Real
Property being Grantor's residence or homestead;
(bb) Grantor is not a "foreign person" within the meaning of
ss.1445(f)(3) of the Internal Revenue Code of 1986, as amended, and the related
Treasury Department regulations, including temporary regulations; and
(cc) As of the date hereof, Cornerstone Realty Income Trust,
Inc., a Virginia
8
corporation (the "REIT") is the sole shareholder of Grantor. The REIT's interest
in Grantor is owned by the REIT free and clear of all mortgages, assignments,
pledges and security interests and free and clear of all warrants, options and
rights to purchase.
1.2 Defense of Title. If, while this Deed of Trust is in force, the
title to the Real Property or the interest of Beneficiary in the Trust Property
shall be the subject, directly or indirectly, of any action at law or in equity,
or be attached directly or indirectly, or endangered, clouded or adversely
affected in any manner except for the Permitted Encumbrances, Grantor, at
Grantor's expense, shall take all necessary and proper steps for the defense of
said title or interest, including the employment of counsel reasonably approved
by Beneficiary, the prosecution or defense of litigation, and the compromise or
discharge of claims made against said title or interest. Notwithstanding the
foregoing, if an Event of Default has occurred and is continuing under this
Section, Beneficiary may, without limiting or waiving any other rights or
remedies of Beneficiary hereunder, take such steps with respect thereto as
Beneficiary shall deem necessary or proper and any and all costs and expenses
incurred by Beneficiary in connection therewith, together with interest thereon
at the Default Interest Rate (as defined in the Note) from the date incurred by
Beneficiary until actually paid by Grantor, shall be immediately paid by Grantor
on demand and shall be secured by this Deed of Trust and by all of the other
Loan Documents securing all or any part of the indebtedness evidenced by the
Note.
1.3 Performance of Obligations. Grantor shall pay when due the
principal of and the interest on the Debt in accordance with the terms of the
Note. Grantor shall also pay all charges, fees and other sums required to be
paid by Grantor as provided in the Loan Documents, in accordance with the terms
of the Loan Documents, and shall observe, perform and discharge all obligations,
covenants and agreements to be observed, performed or discharged by Grantor set
forth in the Loan Documents in accordance with their terms. Further, Grantor
shall promptly perform and comply in all material respects with all covenants,
conditions, obligations and prohibitions required of Grantor in connection with
any other document or instrument affecting title to the Real Property or
Grantor's interest in the Trust Property, or any part thereof, regardless of
whether such document or instrument is superior or subordinate to this Deed of
Trust.
1.4 Insurance. Grantor shall, at Xxxxxxx's expense, maintain in force
and effect on the Trust Property at all times while this Deed of Trust continues
in effect the following insurance:
(a) Insurance against loss or damage to the Trust Property by
fire, windstorm, tornado and hail and against loss and damage by such other,
further and additional risks as may be now or hereafter embraced by an
"all-risk" or "special form" type of insurance policy. The amount of such
insurance shall be not less than one hundred percent (100%) of the full
replacement cost (insurable value) of the Improvements (as established by an MAI
appraisal), without reduction for depreciation. The determination of the
replacement cost amount shall be adjusted annually to comply with the
requirements of the insurer issuing such coverage or, at Beneficiary's election,
by reference to such indices, appraisals or information as Beneficiary
determines in its reasonable discretion in order to reflect increased value due
to inflation. Absent such annual adjustment, each policy shall contain inflation
guard coverage insuring that the policy limit will be increased over time to
reflect the effect of inflation. Full replacement cost, as
9
used herein, means, with respect to the Improvements, the cost of replacing the
Improvements without regard to deduction for depreciation, exclusive of the cost
of excavations, foundations and footings below the lowest basement floor.
Grantor shall also maintain insurance against loss or damage to furniture,
furnishings, fixtures, equipment and other items (whether personalty or
fixtures) owned by Grantor and included in the Trust Property and owned by
Grantor from time to time to the extent applicable. Each policy shall contain a
replacement cost endorsement and either an agreed amount endorsement (to avoid
the operation of any co-insurance provisions) or a waiver of any co-insurance
provisions, all subject to Beneficiary's approval. The maximum deductible shall
be $25,000.00.
(b) Commercial General Liability Insurance against claims for
personal injury, bodily injury, death and property damage occurring on, in or
about the Premises or the Improvements in amounts not less than $1,000,000.00
per occurrence and $2,000,000.00 in the aggregate plus umbrella coverage in an
amount not less than $2,000,000. Beneficiary hereby retains the right to
periodically review the amount of said liability insurance being maintained by
Grantor and to require an increase in the amount of said liability insurance
should Beneficiary deem an increase to be reasonably prudent under then existing
circumstances.
(c) Boiler and machinery insurance is required if steam
boilers or other pressure-fired vessels are in operation at the Premises.
Minimum liability coverage per accident must equal the greater of the
replacement cost (insurable value) of the Improvements housing such boiler or
pressure-fired machinery or $2,000,000.00. If one or more large HVAC units is in
operation at the Premises, "Systems Breakdowns" coverage shall be required, as
determined by Beneficiary. Minimum liability coverage per accident must equal
the value of such unit(s).
(d) If the Improvements or any part thereof is situated in an
area designated by the Federal Emergency Management Agency ("FEMA") as a special
flood hazard area (Zone A or Zone V), flood insurance in an amount equal to the
lesser of: (i) the minimum amount required, under the terms of coverage, to
compensate for any damage or loss on a replacement basis (or the unpaid balance
of the Debt if replacement cost coverage is not available for the type of
building insured), or (ii) the maximum insurance available under the appropriate
National Flood Insurance Administration program. The maximum deductible shall be
$3,000.00 per building or a higher minimum amount as required by FEMA or other
applicable law.
(e) During the period of any construction, renovation or
alteration of the existing Improvements which exceeds the lesser of 10% of the
original principal amount of the Note or $500,000, at Beneficiary's request, a
completed value, "All Risk" Builder's Risk form or "Course of Construction"
insurance policy in non-reporting form, in an amount reasonably approved by
Beneficiary, may be required. During the period of any construction of any
addition to the existing Improvements, a completed value, "All Risk" Builder's
Risk form or "Course of Construction" insurance policy in non-reporting form, in
an amount reasonably approved by Beneficiary, shall be required
(f) When required by applicable law, ordinance or other
regulation, Worker's Compensation and Employer's Liability Insurance covering
all persons subject to the worker's compensation laws of the state in which the
Trust Property is located.
10
(g) Business income (loss of rents) insurance in amounts
sufficient to compensate Grantor for all Rents or income during a period of not
less than twelve (12) months. The amount of coverage shall be adjusted annually
to reflect the Rents or income payable during the succeeding twelve (12) month
period.
(h) Such other insurance on the Trust Property or on any
replacements or substitutions thereof or additions thereto as may from time to
time be required by Beneficiary against other insurable hazards or casualties
which at the time are commonly insured against in the case of property similarly
situated including, without limitation, Sinkhole, Mine Subsidence, Earthquake
and Environmental insurance, due regard being given to the height and type of
buildings, their construction, location, use and occupancy.
All such insurance shall (i) be with insurers fully licensed and
authorized to do business in the state within which the Premises is located and
who have and maintain a rating of at least A from Standard & Poors, or
equivalent, (ii) contain the complete address of the Premises (or a complete
legal description), (iii) be prepaid for three (3) months (provided that
Beneficiary may require up to twelve (12) months be prepaid in the event Grantor
is required to make payments to the Impound Account pursuant to Section 1.6(c)
hereof), and (iv) be subject to the approval of Beneficiary as to insurance
companies (provided such approval as to a particular company shall not be
withheld if the foregoing minimum rating requirement is satisfied), amounts,
content, forms of policies, method by which premiums are paid and expiration
dates, and (v) include a standard, non-contributory, mortgagee clause naming
EXACTLY:
First Union National Bank,
its Successors and Assigns ATIMA
Attn.: Structured Products Servicing
0000 Xxxxxxxx Xxxxx, XXX-0
Xxxxxxxxx, XX 00000-0000
(A) as an additional insured under all liability insurance policies, (B) as the
first mortgagee on all property insurance policies and (C) as the loss payee on
all loss of rents or loss of business income insurance policies.
Grantor shall, as of the date hereof, deliver to Beneficiary evidence
that said insurance policies have been prepaid as required above and certified
copies of such insurance policies and original certificates of insurance signed
by an authorized agent of the applicable insurance companies evidencing such
insurance satisfactory to Beneficiary. Grantor shall renew all such insurance
and deliver to Beneficiary certificates and policies evidencing such renewals at
least thirty (30) days before any such insurance shall expire. Grantor further
agrees that each such insurance policy: (i) shall provide for at least thirty
(30) days' prior written notice to Beneficiary prior to any policy reduction or
cancellation for any reason other than non-payment of premium and at least ten
(10) days' prior written notice to Beneficiary prior to any cancellation due to
non-payment of premium; (ii) shall contain an endorsement or agreement by the
insurer that any loss shall be payable to Beneficiary in accordance with the
terms of such policy notwithstanding any act or negligence of Grantor which
might otherwise result in forfeiture of such insurance;
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(iii) shall waive all rights of subrogation against Beneficiary; (iv) in the
event that the Premises or the Improvements constitutes a legal non-conforming
use under applicable building, zoning or land use laws or ordinances, shall
include an ordinance or law coverage endorsement which will contain Coverage A:
"Loss Due to Operation of Law" (with a minimum liability limit equal to
Replacement Cost With Agreed Value Endorsement), Coverage B: "Demolition Cost"
and Coverage C: "Increased Cost of Construction" coverages; and (v) may be in
the form of a blanket policy provided that, in the event that any such coverage
is provided in the form of a blanket policy, Grantor hereby acknowledges and
agrees that failure to pay any portion of the premium therefor which is not
allocable to the Trust Property or by any other action not relating to the Trust
Property which would otherwise permit the issuer thereof to cancel the coverage
thereof, would require the Trust Property to be insured by a separate,
single-property policy. The blanket policy must properly identify and fully
protect the Trust Property as if a separate policy were issued for 100% of
Replacement Cost at the time of loss and otherwise meet all of Beneficiary's
applicable insurance requirements set forth in this Section 1.4. To the extent
permitted by applicable law, in the event of foreclosure of this Deed of Trust,
or other transfer of title to the Trust Property in extinguishment in whole or
in part of the Debt, all right, title and interest of Grantor in and to all
proceeds payable under such policies then in force concerning the Trust Property
shall thereupon vest in the purchaser at such foreclosure, or in Beneficiary or
other transferee in the event of such other transfer of title. Approval of any
insurance by Beneficiary shall not be a representation of the solvency of any
insurer or the sufficiency of any amount of insurance. In the event Grantor
fails to provide, maintain, keep in force or deliver and furnish to Beneficiary
the policies of insurance required by this Deed of Trust or evidence of their
renewal as required herein, Beneficiary may, but shall not be obligated to,
procure such insurance and Grantor shall pay all amounts advanced by Beneficiary
therefor, together with interest thereon at the Default Interest Rate from and
after the date advanced by Beneficiary until actually repaid by Grantor,
promptly upon demand by Beneficiary. Any amounts so advanced by Beneficiary,
together with interest thereon, shall be secured by this Deed of Trust and by
all of the other Loan Documents securing all or any part of the Debt.
Beneficiary shall not be responsible for nor incur any liability for the
insolvency of the insurer or other failure of the insurer to perform, even
though Beneficiary has caused the insurance to be placed with the insurer after
failure of Grantor to furnish such insurance. Grantor shall not obtain insurance
for the Trust Property in addition to that required by Beneficiary without the
prior written consent of Beneficiary, which consent will not be unreasonably
withheld provided that (i) Beneficiary is a named insured on such insurance,
(ii) Beneficiary receives complete copies of all policies evidencing such
insurance, and (iii) such insurance complies with all of the applicable
requirements set forth herein.
1.5 Payment of Taxes. Grantor shall pay or cause to be paid, except to
the extent Beneficiary is to pay the same pursuant to Section 1.6(a) of this
Deed of Trust, all taxes and assessments which are or may become a lien on the
Trust Property or which are assessed against or imposed upon the Trust Property.
If paid by Grantor, Grantor shall furnish Beneficiary with receipts (or if
receipts are not immediately available, with copies of canceled checks
evidencing payment with receipts to follow promptly after they become available)
showing payment of such taxes and assessments at least fifteen (15) days prior
to the applicable delinquency date therefor. Notwithstanding the foregoing,
Grantor may, in good faith, by appropriate proceedings and upon notice to
Beneficiary, contest the validity, applicability or amount of any asserted tax
or
12
assessment so long as (a) such contest is diligently pursued, (b) Beneficiary
determines, in its reasonable subjective opinion, that such contest suspends the
obligation to pay the tax and that nonpayment of such tax or assessment will not
result in the sale, loss, forfeiture or diminution of the Trust Property or any
part thereof or any interest of Beneficiary therein, and (c) prior to the
earlier of the commencement of such contest or the delinquency date of the
asserted tax or assessment, Grantor deposits in the Impound Account (as
hereinafter defined) an amount determined by Beneficiary to be reasonably
adequate to cover the payment of such tax or assessment and a reasonable
additional sum to cover possible interest, costs and penalties; provided,
however, that Grantor shall promptly cause to be paid any amount adjudged by a
court of competent jurisdiction to be due, with all interest, costs and
penalties thereon, promptly after such judgment becomes final; and provided
further that in any event each such contest shall be concluded and the taxes,
assessments, interest, costs and penalties shall be paid prior to the date any
writ or order is issued under which the Trust Property may be sold, lost or
forfeited.
1.6 Tax and Insurance Impound Account. (a) Grantor shall establish and
maintain at all times while this Deed of Trust continues in effect an impound
account (the "Impound Account") with Beneficiary for payment of real estate
taxes and assessments and insurance on the Trust Property and as additional
security for the Debt. Simultaneously with the execution hereof, Grantor shall
deposit in the Impound Account an amount determined by Beneficiary to be
necessary to ensure that there will be on deposit with Beneficiary an amount
which, when added to the monthly payments subsequently required to be deposited
with Beneficiary hereunder on account of real estate taxes, assessments and
insurance premiums, will result in there being on deposit with Beneficiary in
the Impound Account an amount sufficient to pay the next due installment of real
estate taxes and assessments on the Trust Property at least one (1) month prior
to the earlier of (a) the due date thereof or (b) any such date by which Grantor
or Beneficiary is required by law to pay same and the next due annual insurance
premiums with respect to the Trust Property at least one (1) month prior to the
due date thereof. Commencing on the first monthly payment date under the Note
and continuing thereafter on each monthly payment date under the Note, Grantor
shall pay to Beneficiary, concurrently with and in addition to the monthly
payment due under the Note and until the Debt is fully paid and performed,
deposits in an amount equal to one-twelfth (1/12) of the amount of the annual
real estate taxes and assessments that will next become due and payable on the
Trust Property, plus one-twelfth (1/12) of the amount of the annual premiums
that will next become due and payable on insurance policies which Grantor is
required to maintain hereunder, each as estimated and determined by Beneficiary.
So long as no Event of Default has occurred, and no event has occurred or failed
to occur which with the passage of time, the giving of notice, or both would
constitute an Event of Default (a "Default"), all sums in the Impound Account
shall be held by Beneficiary in the Impound Account to pay said taxes,
assessments and insurance premiums before the same become delinquent. Grantor
shall be responsible for ensuring the receipt by Beneficiary, at least thirty
(30) days prior to the respective due date for payment thereof, of all bills,
invoices and statements for all taxes, assessments and insurance premiums to be
paid from the Impound Account, and so long as no Event of Default has occurred,
Beneficiary shall pay the governmental authority or other party entitled thereto
directly to the extent funds are available for such purpose in the Impound
Account. In making any payment from the Impound Account, Beneficiary shall be
entitled to rely on any bill, statement or estimate procured from the
appropriate public office or insurance company or agent without any inquiry into
the accuracy of
13
such bill, statement or estimate and without any inquiry into the accuracy,
validity, enforceability or contestability of any tax, assessment, valuation,
sale, forfeiture, tax lien or title or claim thereof. No interest on funds
contained in the Impound Account, if any, shall be paid by Beneficiary to
Grantor.
(b) Notwithstanding anything herein or in any other Loan
Document to the contrary, at any time prior to the Maturity Date (as defined in
the Note), unless and until an Event of Default shall have occurred and be
continuing, Grantor shall not be required to make deposits to the Impound
Account as required by Section 1.6(a) of this Deed of Trust with respect to
insurance premiums (the "Insurance Obligations") provided that each of the
following conditions is satisfied at all times:
(i) Simultaneously with the execution hereof, Grantor shall
deposit in the Impound Account the equivalent of three (3) months of insurance
premiums; and
(ii) Grantor timely delivers satisfactory evidence of payment
for and renewal of the insurance policy or policies as required
hereunder.
(c) If an Event of Default shall have occurred and be
continuing, including, without limitation, with respect to Grantor's obligations
under Section 1.4 and Section 1.6(a) (as modified by Section 1.6(b)) hereof,
upon Beneficiary's request, Grantor shall promptly commence making full payments
to the Impound Account pursuant to Section 1.6(a) above.
(d) Notwithstanding anything to the contrary herein,
Beneficiary shall not require Grantor to commence making payments to the Impound
Account if a default occurs with regard to the payment and performance of the
Insurance Obligations so long as such default shall not have resulted in the
expiration, termination or lapse of insurance as required under Section 1.4
hereof and so long as Grantor shall have cured such default by the earlier of
(1) seven (7) days after written notice thereof from Beneficiary to Grantor or
(2) prior to the date on which nonpayment of premiums would result in the lapse,
expiration or termination of insurance as required by Section 1.4 hereof.
1.7 Intentionally Deleted.
1.8 Replacement Reserve.
(a) As additional security for the Debt, Grantor shall
establish and maintain at all times while this Deed of Trust continues in effect
a repair and replacement reserve (the "Replacement Reserve") with Beneficiary
for payment of costs and expenses incurred by Grantor in connection with the
performance of work related to the maintenance, replacement and/or repair of the
Trust Property, including without limitation, work to the roofs, chimneys,
gutters, downspouts, paving, curbs, ramps, driveways, balconies, porches,
patios, exterior walls, exterior doors and doorways, windows, elevators and
mechanical and HVAC equipment and such other work as Grantor deems necessary or
appropriate (collectively, the "Repairs"). Commencing on the first monthly
Payment Date under the Note and continuing thereafter on each monthly Payment
Date under the Note, Grantor shall pay to Beneficiary, concurrently with
14
and in addition to the monthly payments due under the Note and until the Debt is
fully paid and performed, a deposit to the Replacement Reserve in an amount
equal to $5,375.00 per month. So long as no Event of Default has occurred and is
continuing, all sums in the Replacement Reserve shall be held by Beneficiary in
the Replacement Reserve to pay the costs and expense of Repairs. So long as no
Default or Event of Default has occurred and is continuing, Beneficiary shall,
to the extent funds are available for such purpose in the Replacement Reserve,
disburse to Grantor the amount paid or incurred by Grantor in performing such
Repairs within ten (10) days following: (a) the receipt by Beneficiary of a
written request from Grantor for disbursement from the Replacement Reserve and a
certification by Grantor that the applicable item of Repair has been completed;
(b) the delivery to Beneficiary of invoices, receipts, cancelled checks or other
evidence reasonably satisfactory to Beneficiary, verifying the cost of
performing the Repairs; (c) for disbursement requests with individual items
costing in excess of $50,000.00, the delivery to Beneficiary of affidavits, lien
waivers, cancelled checks or other evidence reasonably satisfactory to
Beneficiary showing that all materialmen, laborers, subcontractors and any other
parties who might or could claim statutory or common law liens and are
furnishing or have furnished material or labor to the Trust Property have been
paid all amounts due for labor and materials furnished to the Trust Property;
(d) for disbursement requests with individual items costing in excess of
$50,000.00, delivery to Beneficiary of a certification from a third party
acceptable to Beneficiary describing the completed Repairs and verifying the
completion of the Repairs and the value of the completed Repairs; and (e) for
disbursement requests with individual items costing in excess of $50,000.00,
delivery to Beneficiary of a new certificate of occupancy or local equivalent
for the portion of the Improvements covered by such Repairs, if said new
certificate of occupancy is required by law, or a certification by Grantor that
no new certificate of occupancy is required. Beneficiary shall not be required
to make advances from the Replacement Reserve more frequently than once in any
ninety (90) day period. In making any payment from the Replacement Reserve,
Beneficiary shall be entitled to rely on such request from Grantor without any
inquiry into the accuracy, validity or contestability of any such amount.
Beneficiary may, at Xxxxxxx's expense, make or cause to be made during the term
of this Deed of Trust an annual inspection of the Trust Property to determine
the need, as determined by Beneficiary in its reasonable judgment, for further
Repairs of the Trust Property. In the event that such inspection reveals that
further Repairs of the Trust Property are required, Beneficiary shall provide
Grantor with a written description of the required Repairs and Grantor shall
respond within thirty (30) days of such request, and, thereafter, Grantor shall
make such Repairs, as may be mutually agreed upon by Grantor and Beneficiary and
within such time period as may be mutually agreed upon. Funds contained in the
Replacement Reserve shall be placed in an interest-bearing account upon receipt
and interest thereon credited to Grantor as provided in Section 4.31 hereof.
(b) As additional security for the payment and performance by
Grantor of all duties, responsibilities and obligations under the Note and the
other Loan Documents, Grantor hereby unconditionally and irrevocably assigns,
conveys, pledges, mortgages, transfers, delivers, deposits, sets over and
confirms unto Beneficiary, and hereby grants to Beneficiary a security interest
in Grantor's right, title and interest in, (i) the Impound Account, the
Replacement Reserve, the Repair and Remediation Reserve and any other reserve or
escrow account established pursuant to the terms hereof or of any other Loan
Document (collectively, the "Reserves"), (ii) the accounts into which the
Reserves have been deposited, (iii) all insurance on
15
said accounts, (iv) all accounts, contract rights and general intangibles or
other rights and interests pertaining thereto, (v) all sums now or hereafter
therein or represented thereby, (vi) all replacements, substitutions or proceeds
thereof, (vii) all instruments and documents now or hereafter evidencing the
Reserves or such accounts, (viii) all powers, options, rights, privileges and
immunities pertaining to the Reserves (including the right to make withdrawals
therefrom), and (ix) all proceeds of the foregoing. Grantor hereby authorizes
and consents to the account into which the Reserves have been deposited being
held in Beneficiary's name or the name of any entity servicing the Note for
Beneficiary and hereby acknowledges and agrees that Beneficiary, or at
Beneficiary's election, such servicing agent, shall have exclusive control over
said account. Notice of the assignment and security interest granted to
Beneficiary herein may be delivered by Beneficiary at any time to the financial
institution wherein the Reserves have been established, and Beneficiary, or such
servicing entity, shall have possession of all passbooks or other evidences of
such accounts. Grantor hereby assumes all risk of loss with respect to amounts
on deposit in the Reserves, unless finally determined by a court of competent
jurisdiction to have been caused by the gross negligence or willful misconduct
of Beneficiary. Grantor hereby knowingly, voluntarily and intentionally
stipulates, acknowledges and agrees that the advancement of the funds from the
Reserves as set forth herein is at Grantor's direction and is not the exercise
by Beneficiary of any right of set-off or other remedy upon a Default or an
Event of Default. If an Event of Default shall occur hereunder or under any
other of the Loan Documents and shall be continuing, Beneficiary may, without
notice or demand on Grantor, at its option: (A) withdraw any or all of the funds
(including, without limitation, interest) then remaining in the Reserves and
apply the same, after deducting all costs and expenses of safekeeping,
collection and delivery (including, but not limited to, reasonable attorneys'
fees, costs and expenses) to the Debt or any other obligations of Grantor under
the other Loan Documents in such manner as Beneficiary shall deem appropriate in
its sole discretion, and the excess, if any, shall be paid to Grantor, (B)
exercise any and all rights and remedies of a secured party under any applicable
Uniform Commercial Code, or (C) exercise any other remedies available at law or
in equity. No such use or application of the funds contained in the Reserves
shall be deemed to cure any Default or Event of Default.
(c) The Reserves shall not, unless otherwise explicitly
required by applicable law, be or be deemed to be escrow or trust funds, but, at
Beneficiary's option and in Beneficiary's discretion, may either be held in a
separate account or be commingled by Beneficiary with the general funds of
Beneficiary. The Reserves are solely for the protection of Beneficiary and
entail no responsibility on Beneficiary's part beyond the payment of the
respective items for which they are held following receipt of bills, invoices or
statements therefor in accordance with the terms hereof and beyond the allowing
of due credit for the sums actually received. Upon assignment of this Deed of
Trust by Beneficiary and assumption by assignee of Beneficiary's obligations
hereunder, any funds in the Reserves shall be turned over to the assignee and
any responsibility of Beneficiary, as assignor, with respect thereto shall
terminate. If the funds in the applicable Reserve shall exceed the amount of
payments actually applied by Beneficiary for the purposes and items for which
the applicable Reserve is held, such excess may be credited by Beneficiary on
subsequent payments to be made hereunder or, at the option of Beneficiary,
refunded to Grantor. If, however, the applicable Reserve shall not contain
sufficient funds to pay the sums required by the dates on which such sums are
required to be on deposit in such account, Grantor shall, within thirty (30)
days after receipt of written notice thereof, deposit
16
with Beneficiary the full amount of any such deficiency. If Grantor shall fail
to deposit with Beneficiary the full amount of such deficiency as provided
above, Beneficiary shall have the option, but not the obligation, to make such
deposit, and all amounts so deposited by Beneficiary, together with interest
thereon at the Default Interest Rate from the date so deposited by Beneficiary
until actually paid by Grantor, shall be immediately paid by Grantor on demand
and shall be secured by this Deed of Trust and by all of the other Loan
Documents securing all or any part of the Debt. If there is an Event of Default
under this Deed of Trust that shall have occurred and be continuing, Beneficiary
may, but shall not be obligated to, apply at any time the balance then remaining
in any or all of the Reserves against the Debt in whatever order Beneficiary
shall subjectively determine. No such application of any or all of the Reserves
shall be deemed to cure any Event of Default. Upon full payment of the Debt in
accordance with its terms or at such earlier time as Beneficiary may elect, the
balance of any or all of the Reserves then in Beneficiary's possession shall be
paid over to Grantor and no other party shall have any right or claim thereto.
1.9 Casualty and Condemnation. Grantor shall give Beneficiary prompt
written notice of the occurrence of any casualty affecting, or the institution
of any proceedings for eminent domain or for the condemnation of, the Trust
Property or any portion thereof. Subject to the following sentence, all
insurance proceeds on the Trust Property, and all causes of action, claims,
compensation, awards and recoveries for any damage, condemnation or taking of
all or any part of the Trust Property or for any damage or injury to it for any
loss or diminution in value of the Trust Property, shall be paid to Beneficiary.
Beneficiary may participate in any suits or proceedings relating to any such
proceeds, causes of action, claims, compensation, awards or recoveries, and
Beneficiary is hereby authorized, in its own name or in Grantor's name, to
adjust any loss covered by insurance or any condemnation claim or cause of
action, and to settle or compromise any claim or cause of action in connection
therewith, and Grantor shall from time to time deliver to Beneficiary any
instruments required to permit such participation; provided, however, that, so
long as no Event of Default shall have occurred and be continuing, Beneficiary
shall not have the right to participate in the adjustment of any loss or the
receipt of any sums hereunder which is not in excess of the lesser of (i) five
percent (5%) of the then outstanding principal balance of the Note and (ii)
$200,000, and Grantor may receive such funds from any loss not in excess of the
foregoing directly to be used for repair or restoration of the Trust Property in
accordance with the terms hereof. Beneficiary shall apply any sums received by
it under this Section first to the payment of all of its costs and expenses
(including, but not limited to, reasonable legal fees and disbursements)
incurred in obtaining those sums, and then, as follows:
(a) In the event that less than forty percent (40%) of the
Improvements located on the Premises have been taken or destroyed, then if and
so long as:
(1) no Event of Default has occurred and is
continuing hereunder or under any of the other Loan Documents, and
(2) the Trust Property can, in Beneficiary's
reasonable judgment, with diligent restoration or repair, be returned
in all material respects to a condition substantially the same as the
condition thereof that existed prior to the casualty or partial
17
taking causing the loss or damage within the earlier to occur of (i)
nine (9) months after the receipt of insurance proceeds or
condemnation awards by either Grantor or Beneficiary, and (ii) sixty
(60) days prior to the stated maturity date of the Note, and
(3) all necessary governmental approvals can be
obtained to allow the rebuilding and reoccupancy of the Trust Property
as described in Section (a)(2) above, and
(4) there are sufficient sums available (through
insurance proceeds or condemnation awards and contributions by Grantor
or otherwise, the full amount of which shall, at Beneficiary's option,
have been deposited with Beneficiary) for such restoration or repair
(including, without limitation, for any reasonable costs and expenses
of Beneficiary to be incurred in administering said restoration or
repair) and for payment of principal and interest to become due and
payable under the Note during such restoration or repair, and
(5) the economic feasibility of the Improvements
after such restoration or repair will be such that income from their
operation is reasonably anticipated to be sufficient to pay operating
expenses of the Trust Property and debt service on the Debt in full
with the same coverage ratio considered by Beneficiary in its
determination to make the loan secured hereby, and
(6) in the event that the insurance proceeds or
condemnation awards received as a result of such casualty or partial
taking exceed the lesser of (i) five percent (5%) of the then
outstanding principal balance of the Note and (ii) $200,000, Grantor
shall have delivered to Beneficiary, at Grantor's sole cost and
expense, an appraisal report in form and substance reasonably
satisfactory to Beneficiary appraising the value of the Trust Property
as proposed to be restored or repaired to be not less than the
appraised value of the Trust Property considered by Beneficiary in its
determination to make the loan secured hereby, and
(7) Grantor so elects by written notice delivered to
Beneficiary within fifteen (15) days after settlement of the aforesaid
insurance or condemnation claim, then, Beneficiary shall, solely for
the purposes of such restoration or repair, advance so much of the
remainder of such sums as may be required for such restoration or
repair, and any funds deposited by Grantor therefor, to Grantor in the
manner and upon such terms and conditions as would be required by a
prudent interim construction lender, including, but not limited to, the
reasonable prior approval by Beneficiary of plans and specifications,
contractors and form of construction contracts and the furnishing to
Beneficiary of permits, bonds, lien waivers, invoices, receipts and
affidavits from contractors and subcontractors, in form and substance
reasonably satisfactory to Beneficiary in its discretion, with any
remainder being applied by Xxxxxxxxxxx for payment of the Debt in
whatever order Beneficiary directs in its absolute discretion.
(b) In all other cases, namely, in the event that forty
percent (40%) or more of the Improvements located on the Premises have been
taken or destroyed or Grantor does not
18
elect to restore or repair the Trust Property pursuant to clause (a) above or
otherwise fails to meet the requirements of clause (a) above, then, in any of
such events, Beneficiary shall elect, in Beneficiary's absolute discretion and
without regard to the adequacy of Beneficiary's security, to do either of the
following: (1) apply the remainder of such sums received pursuant to this
Section to the payment of the Debt in whatever order Beneficiary directs in its
absolute discretion (and, if required under applicable law so to do, to
accelerate the maturity date of the Note and declare any and all of the Debt to
be immediately due and payable), with any remainder being paid to Grantor, or
(2) notwithstanding that Grantor may have elected not to restore or repair the
Trust Property pursuant to the provisions of Section 1.9(a)(7) above, require
Grantor to restore or repair the Trust Property in the manner and upon such
terms and conditions as would be required by a prudent interim construction
lender, including, but not limited to, the deposit by Grantor with Beneficiary,
within thirty (30) days after demand therefor, of any deficiency reasonably
determined by Beneficiary to be necessary in order to assure the availability of
sufficient funds to pay for such restoration or repair, including Beneficiary's
costs and expenses to be incurred in connection therewith, the reasonable prior
approval by Beneficiary of plans and specifications, contractors and form of
construction contracts and the furnishing to Beneficiary of permits, bonds, lien
waivers, invoices, receipts and affidavits from contractors and subcontractors,
in form and substance reasonably satisfactory to Beneficiary in its discretion,
and apply the remainder of such sums toward such restoration and repair, with
any balance thereafter remaining being applied by Beneficiary for payment of the
Debt in whatever order Beneficiary directs in its absolute discretion.
Notwithstanding Section 1.9(b)(1) hereof, Beneficiary shall not accelerate the
maturity date of the Note pursuant to Section 1.9(b)(1) if the Mortgaged
Property is released from the lien of this Deed of Trust in connection with a
Defeasance (as defined in the Note) in accordance with Section 1.5(d) of the
Note.
Any reduction in the Debt resulting from Beneficiary's application of any sums
received by it hereunder shall take effect only when Beneficiary actually
receives such sums and elects to apply such sums to the Debt and, in any event,
the unpaid portion of the Debt shall remain in full force and effect and Grantor
shall not be excused in the payment thereof. Partial payments received by
Beneficiary, as described in the preceding sentence, shall be applied first to
the final payment due under the Note and thereafter to installments due under
the Note in the inverse order of their due date. If Grantor elects or
Beneficiary directs Grantor to restore or repair the Trust Property after the
occurrence of a casualty or partial taking of the Trust Property as provided
above, Grantor shall promptly and diligently, at Grantor's sole cost and expense
and regardless of whether the insurance proceeds or condemnation award, as
appropriate, shall be sufficient for the purpose, restore, repair, replace and
rebuild the Trust Property as nearly as practicable to its value, condition and
character immediately prior to such casualty or partial taking in accordance
with the foregoing provisions and Grantor shall pay to Beneficiary all costs and
expenses of Beneficiary incurred in administering said rebuilding, restoration
or repair, provided that Beneficiary makes such proceeds or award available for
such purpose. Xxxxxxx agrees to execute and deliver from time to time such
further instruments as may be requested by Beneficiary to confirm the foregoing
assignment to Beneficiary of any award, damage, insurance proceeds, payment or
other compensation. Beneficiary is hereby irrevocably constituted and appointed
the attorney-in-fact of Grantor (which power of attorney shall be irrevocable so
long as any portion of the Debt is outstanding, shall be deemed coupled with an
interest, shall survive the voluntary or involuntary dissolution of Grantor and
shall not be affected by any disability or incapacity
19
suffered by Xxxxxxx subsequent to the date hereof), with full power of
substitution, subject to the terms of this Section, to settle for, collect and
receive any such awards, damages, insurance proceeds, payments or other
compensation from the parties or authorities making the same, to appear in and
prosecute any proceedings therefor and to give receipts and acquittances
therefor.
1.10 Construction Liens. Grantor shall pay when due all claims and
demands of mechanics, materialmen, laborers and others for any work performed or
materials delivered for the Premises or the Improvements; provided, however,
that, Grantor shall have the right to contest in good faith any such claim or
demand, so long as it does so diligently, by appropriate proceedings and without
prejudice to Beneficiary and provided that neither the Trust Property nor any
interest therein would be in any danger of sale, loss or forfeiture as a result
of such proceeding or contest. In the event Grantor shall contest any such claim
or demand, Grantor shall promptly notify Beneficiary of such contest and
thereafter shall, upon Beneficiary's reasonable request, if an Event of Default
shall have occurred and is continuing, promptly provide a bond, cash deposit or
other security sufficient to pay such claim to Beneficiary to protect
Beneficiary's interest and security should the contest be unsuccessful. If
Grantor shall fail to immediately discharge or provide security against any such
claim or demand as aforesaid, Beneficiary may do so and any and all expenses
incurred by Beneficiary, together with interest thereon at the Default Interest
Rate from the date incurred by Beneficiary until actually paid by Grantor, shall
be immediately paid by Grantor on demand and shall be secured by this Deed of
Trust and by all of the other Loan Documents securing all or any part of the
Debt.
1.11 Rents. As additional and collateral security for the payment of
the Debt and cumulative of any and all rights and remedies herein provided for,
Grantor hereby absolutely and presently assigns to Beneficiary Grantor's right,
title and interest (if any) in all existing and future Rents. Grantor hereby
grants to Beneficiary the sole, exclusive and immediate right, without taking
possession of the Trust Property, to demand, collect (by suit or otherwise),
receive and give valid and sufficient receipts for any and all of said Rents,
for which purpose Grantor does hereby irrevocably make, constitute and appoint
Beneficiary its attorney-in-fact with full power to appoint substitutes or a
trustee to accomplish such purpose (which power of attorney shall be irrevocable
so long as any portion of the Debt is outstanding, shall be deemed to be coupled
with an interest, shall survive the voluntary or involuntary dissolution of
Grantor and shall not be affected by any disability or incapacity suffered by
Grantor subsequent to the date hereof). Beneficiary shall be without liability
for any loss which may arise from a failure or inability to collect Rents,
proceeds or other payments. However, until the occurrence and continuance of an
Event of Default under this Deed of Trust or under any other of the Loan
Documents, Grantor shall have a license to collect, receive, use and enjoy the
Rents when due and prepayments thereof for not more than one (1) month prior to
the due date thereof. Upon the occurrence and continuance of an Event of
Default, Grantor's license shall automatically terminate without notice to
Grantor and Beneficiary may thereafter, without taking possession of the Trust
Property, collect the Rents itself or by an agent or receiver. From and after
the termination of such license, Grantor shall be the agent of Beneficiary in
collection of the Rents, and all of the Rents so collected by Grantor shall be
held in trust by Grantor for the sole and exclusive benefit of Beneficiary, and
Grantor shall, within three (3) business days after receipt of any Rents, pay
the same to Beneficiary to be applied by Beneficiary as hereinafter set forth.
Neither the demand for or collection of Rents by Beneficiary shall constitute
any assumption by
20
Beneficiary of any obligations under any agreement relating thereto. Beneficiary
is obligated to account only for such Rents as are actually collected or
received by Beneficiary. Xxxxxxx irrevocably agrees and consents that the
respective payors of the Rents shall, upon demand and notice from Beneficiary of
the occurrence and continuance of an Event of Default, pay said Rents to
Beneficiary without liability to determine the actual existence of any Event of
Default claimed by Beneficiary. Grantor hereby waives any right, claim or demand
which Grantor may now or hereafter have against any such payor by reason of such
payment of Rents to Beneficiary, and any such payment shall discharge such
payor's obligation to make such payment to Grantor. All Rents collected or
received by Beneficiary may be applied against all expenses of collection,
including, without limitation, reasonable attorneys' fees, against costs of
operation and management of the Trust Property and against the Debt, in whatever
order or priority as to any of the items so mentioned as Beneficiary directs in
its sole subjective discretion and without regard to the adequacy of its
security. Neither the exercise by Beneficiary of any rights under this Section
nor the application of any Rents to the Debt shall cure or be deemed a waiver of
any Event of Default. The assignment of Rents hereinabove granted shall continue
in full force and effect during any period of foreclosure or redemption with
respect to the Trust Property. Xxxxxxx has executed an Assignment of Leases and
Rents dated of even date herewith (the "Assignment") in favor of Beneficiary
covering all of the right, title and interest of Grantor, as landlord, lessor or
licensor, in and to any Leases. All rights and remedies granted to Beneficiary
under the Assignment shall be in addition to and cumulative of all rights and
remedies granted to Beneficiary hereunder.
1.12 Leases .
(a) Prior to execution of any Leases of space in the
Improvements after the date hereof, Grantor shall submit to Beneficiary, for
Beneficiary's prior approval, which approval shall not be unreasonably withheld,
a copy of the form Lease Grantor plans to use in leasing space in the
Improvements or at the Trust Property, but only to the extent such form is
materially adversely modified from the form submitted to Beneficiary at or prior
to the date hereof. No further submittals of the form Lease shall be required
unless the form is materially adversely modified from the form most recently
approved by Beneficiary. All such Leases of space in the Improvements or at the
Trust Property shall be on terms consistent with the terms for similar leases in
the market area of the Premises, shall provide for free rent only if the same is
consistent with prevailing market conditions, and shall provide for market rents
then prevailing in the market area of the Premises, and shall be for a term of
not less than three (3) months or greater than one (1) year. Such Leases shall
also provide for security deposits in reasonable amounts consistent with
prevailing market conditions. Grantor shall also submit to Beneficiary for
Beneficiary's approval, which approval shall not be unreasonably withheld, any
proposed material adverse modification of the form Lease of the Improvements.
Grantor shall not execute any Lease for all or a substantial portion of the
Trust Property, except for an actual occupancy by the Tenant, lessee or licensee
thereunder, and shall at all times promptly and faithfully perform, or cause to
be performed, all of the covenants, conditions and agreements contained in all
Leases with respect to the Trust Property, now or hereafter existing, on the
part of the landlord, lessor or licensor thereunder to be kept and performed.
Grantor shall furnish to Beneficiary, within thirty (30) days after a request by
Beneficiary to do so, but in any event by January 1 of each year, a current Rent
Roll, certified by Grantor as being true and correct, containing the names of
all
21
Tenants with respect to the Trust Property, the terms of their respective
Leases, the spaces occupied and the rentals or fees payable thereunder and the
amount of each Tenant's security deposit.
(b) Grantor shall not do or suffer to be done any act, or omit
to take any action, that might result in a default by the landlord, lessor or
licensor under any such Lease or allow the Tenant thereunder to withhold payment
of rent or cancel or terminate same and shall not further assign any such Lease
or any such Rents. Grantor, at no cost or expense to Beneficiary, shall enforce,
short of termination, the performance and observance of each and every condition
and covenant of each of the parties under such Leases and Grantor shall not
anticipate, discount, release, waive, compromise or otherwise discharge any rent
payable under any of the Leases. Grantor shall not, without the prior written
consent of Beneficiary, modify any of the Leases, terminate or accept the
surrender of any Leases, waive or release any other party from the performance
or observance of any obligation or condition under such Leases except in the
normal course of business in a manner which is consistent with sound and
customary leasing and management practices for similar properties in the
community in which the Trust Property is located. Grantor shall not permit the
prepayment of any rents under any of the Leases for more than one (1) month
prior to the due date thereof.
(c) Upon the occurrence and continuance of an Event of Default
under this Deed of Trust, whether before or after the whole principal sum
secured hereby is declared to be immediately due or whether before or after the
institution of legal proceedings to foreclose this Deed of Trust, forthwith,
upon demand of Beneficiary, Grantor shall surrender to Beneficiary, and
Beneficiary shall be entitled to take actual possession of, the Trust Property
or any part thereof personally, or by its agent or attorneys. In such event,
Beneficiary shall have, and Grantor hereby gives and grants to Beneficiary, the
right, power and authority to make and enter into Leases with respect to the
Trust Property or portions thereof for such rents and for such periods of
occupancy and upon conditions and provisions as Beneficiary may deem desirable
in its sole discretion, and Grantor expressly acknowledges and agrees that the
term of any such Lease may extend beyond the date of any foreclosure sale of the
Trust Property, it being the intention of Grantor that in such event Beneficiary
shall be deemed to be and shall be the attorney-in-fact of Grantor for the
purpose of making and entering into Leases of parts or portions of the Trust
Property for the rents and upon the terms, conditions and provisions deemed
desirable to Beneficiary in its sole discretion and with like effect as if such
Leases had been made by Grantor as the owner in fee simple of the Trust Property
free and clear of any conditions or limitations established by this Deed of
Trust. The power and authority hereby given and granted by Grantor to
Beneficiary shall be deemed to be coupled with an interest, shall not be
revocable by Grantor so long as any portion of the Debt is outstanding, shall
survive the voluntary or involuntary dissolution of Grantor and shall not be
affected by any disability or incapacity suffered by Grantor subsequent to the
date hereof. In connection with any action taken by Beneficiary pursuant to this
Section, Beneficiary shall not be liable for any loss sustained by Grantor
resulting from any failure to let the Trust Property, or any part thereof, or
from any other act or omission of Beneficiary in managing the Trust Property,
nor shall Beneficiary be obligated to perform or discharge any obligation, duty
or liability under any Lease covering the Trust Property or any part thereof or
under or by reason of this instrument or the exercise of rights or remedies
hereunder. Grantor shall, and does hereby, indemnify
22
Beneficiary for, and hold Beneficiary harmless from, any and all claims,
actions, demands, liabilities, loss or damage which may or might be incurred by
Beneficiary under any such Lease or under this Deed of Trust or by the exercise
of rights or remedies hereunder and from any and all claims and demands
whatsoever which may be asserted against Beneficiary 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 other than those
finally determined by a court of competent jurisdiction to have resulted solely
from the gross negligence or willful misconduct of Beneficiary. Should
Beneficiary incur any such liability, the amount thereof, including, without
limitation, costs, expenses and reasonable attorneys' fees, together with
interest thereon at the Default Interest Rate from the date incurred by
Beneficiary until actually paid by Grantor, shall be immediately due and payable
to Beneficiary by Grantor on demand and shall be secured hereby and by all of
the other Loan Documents securing all or any part of the Debt. Nothing in this
Section shall impose on Beneficiary any duty, obligation or responsibility for
the control, care, management or repair of the Trust Property, or for the
carrying out of any of the terms and conditions of the Lease, nor shall it
operate to make Beneficiary responsible or liable for any waste committed on the
Trust Property by the Tenants or by any other parties or for any dangerous or
defective condition of the Trust Property, or for any negligence in the
management, upkeep, repair or control of the Trust Property. Grantor hereby
assents to, ratifies and confirms any and all actions of Beneficiary with
respect to the Trust Property taken under this Section.
1.13 Alienation and Further Encumbrances.
(a) Grantor acknowledges that Beneficiary has relied upon the
principals of Grantor and their experience in owning and operating the Trust
Property and properties similar to the Trust Property in connection with the
closing of the loan evidenced by the Note. Accordingly, except as specifically
allowed hereinbelow in this Section and notwithstanding anything to the contrary
contained in Section 4.6 hereof, in the event that the Trust Property or any
part thereof or interest therein shall be sold, conveyed, disposed of,
alienated, hypothecated, leased (except to Tenants of space in the Improvements
in accordance with the provisions of Section 1.12 hereof and except for
condemnation), assigned, pledged, mortgaged, further encumbered or otherwise
transferred or Grantor shall be divested of its title to the Trust Property or
any interest therein, in any manner or way, whether voluntarily or
involuntarily, without the prior written consent of Beneficiary being first
obtained, which consent may be withheld in Beneficiary's sole discretion, then
the same shall constitute an Event of Default and Beneficiary shall have the
right, at its option, to declare any or all of the Debt, irrespective of the
maturity date specified in the Note, immediately due and payable and to
otherwise exercise any of its other rights and remedies contained in Article III
hereof. For the purposes of this Section: (i) in the event either Grantor or any
of its general partners or members is a corporation or trust, the sale,
conveyance, transfer or disposition of more than 50% of the issued and
outstanding capital stock of Grantor or any of its general partners or members
or of the beneficial interest of such trust (or the issuance of new shares of
capital stock in Grantor or any of its general partners or managing members so
that immediately after such issuance (in one or a series of transactions) the
total capital stock then issued and outstanding is more than 150% of the total
immediately prior to such issuance) shall be deemed to be a transfer of an
interest in the Trust Property; and (ii) in the event Grantor or any general
partner or managing member of Grantor is a limited or
23
general partnership, a joint venture or a limited liability company, a change of
more than 50% in the ownership interests in any general partner, any joint
venturer or any managing member, either voluntarily, involuntarily or otherwise,
or the sale, conveyance, transfer, disposition, alienation, hypothecation or
encumbering of all or any portion of the interest of any such general partner,
joint venturer or managing member in Grantor or such general partner or managing
member (whether in the form of a beneficial or partnership interest or in the
form of a power of direction, control or management, or otherwise), shall be
deemed to be a transfer of an interest in the Trust Property. Notwithstanding
the foregoing, however, (i) limited partnership interests in Grantor or in any
general partner or member of Grantor shall be freely transferable without the
consent of Beneficiary, (ii) any involuntary transfer caused by the death of
Grantor or any general partner, shareholder, joint venturer, member or
beneficial owner of a trust shall not be an Event of Default under this Deed of
Trust so long as Grantor is reconstituted, if required, following such death and
so long as those persons primarily responsible for the management of the Trust
Property and Grantor remain unchanged as a result of such death or any
replacement management is approved by Beneficiary, (iii) shares in the REIT may
be offered and sold to investors in an offering of such shares which has been
registered with the Securities and Exchange Commission, or is exempt from such
registration, without regard to the limits referred to above, and (iv) gifts for
estate planning purposes of any individual's interests in Grantor or in any of
Grantor's general partners, managing members or joint venturers to the spouse or
any lineal descendant of such individual, or to a trust for the benefit of any
one or more of such individual, spouse or lineal descendant, shall not be an
Event of Default under this Deed of Trust so long as Grantor is reconstituted,
if required, following such gift and so long as those persons primarily
responsible for the management of the Trust Property and Grantor remain
unchanged following such gift or any replacement management is approved by
Beneficiary.
(b) Notwithstanding the foregoing provisions of this Section,
Beneficiary shall consent to an unlimited number of sales, conveyances or
transfers of the Trust Property in its entirety, together with all Other
Mortgaged Properties (as defined in Section 4.34 hereof) (hereinafter, each a
"Sale") to any person or entity provided that each of the following terms and
conditions are satisfied as to each Sale:
(1) No Event of Default is then continuing hereunder
or under any of the other Loan Documents;
(2) Except in the case of a Sale permitted pursuant
to subparagraph (c) below, Grantor, or its successor pursuant to the
proposed or any prior Sale under the terms and conditions hereof, gives
Beneficiary written notice of the terms of such prospective Sale not
less than sixty (60) days before the date on which such Sale is
scheduled to close and, concurrently therewith, gives Beneficiary all
such information concerning the proposed transferee of the Trust
Property (hereinafter, "Buyer") as Beneficiary would require in
evaluating an initial extension of credit to a borrower under a loan
comparable to the Loan and pays to Beneficiary a non-refundable
application fee in the amount of $5,000. Beneficiary shall have the
right to approve or disapprove the proposed Buyer. In determining
whether to give or withhold its approval of the proposed Buyer,
Beneficiary shall consider the Buyer's experience and track record in
owning and operating facilities similar to the Trust Property, the
Buyer's financial strength, the
24
Buyer's general business standing and the Buyer's relationships and
experience with contractors, vendors, tenants, lenders and other
business entities; provided, however, that, notwithstanding
Beneficiary's agreement to consider the foregoing factors in
determining whether to give or withhold such approval, such approval
shall be given or withheld based on what Beneficiary reasonably
determines to be commercially reasonable in Beneficiary's sole
discretion and, if given, may be given subject to such reasonable
conditions as Beneficiary may deem appropriate;
(3) Except in the case of a Sale permitted pursuant
to subparagraph (c) below, Grantor, or its successor pursuant to a
prior Sale under the terms and conditions hereof, pays Beneficiary,
concurrently with the closing of such Sale, a non-refundable assumption
fee in an amount equal to all out-of-pocket costs and expenses,
including, without limitation, reasonable attorneys' fees, incurred by
Beneficiary in connection with the Sale, plus an amount equal to
one-half of one percent (0.50%) of the then outstanding principal
balance of the Note. Notwithstanding anything contained herein or in
any of the other Loan Documents to the contrary, if the aggregate
original principal balance of the Note, together with the aggregate
original principal balances of the Contemporaneous Notes, at the time
of such sale exceeds $40,000,000.00 (the "Aggregate Loan Balance"), the
assumption fee shall be an amount equal to one quarter of one percent
(0.25%);
(4) The Buyer assumes and agrees to pay the Debt (or
ratifies such obligation) subject to the provisions of Section 4.27
hereof and, prior to or concurrently with the closing of such Sale, the
Buyer executes, without any cost or expense to Beneficiary, such
assumption (or ratification, as applicable) documents and agreements as
Beneficiary shall reasonably require to evidence and effectuate said
assumption and delivers such legal opinions as Beneficiary may
reasonably require;
(5) The current Indemnitor or its successor ratifies
its obligations under its guaranty or indemnity agreement or a party
associated with the Buyer approved by Beneficiary in its sole
discretion assumes the obligations of the current Indemnitor under its
guaranty or indemnity agreement and such party associated with the
Buyer executes, without any cost or expense to Beneficiary, a new
guaranty or indemnity agreement in form and substance reasonably
satisfactory to Beneficiary and delivers such legal opinions as
Beneficiary may reasonably require;
(6) Upon request if reasonably required, Grantor, or
its successor pursuant to the proposed or any prior Sale under the
terms and conditions hereof, and the Buyer execute, without any cost or
expense to Beneficiary, new financing statements or financing statement
amendments and any additional documents reasonably requested by
Beneficiary;
(7) Upon request if reasonably required, Grantor, or
its successor pursuant to the proposed or any prior Sale under the
terms and conditions hereof, delivers to Beneficiary, without any cost
or expense to Beneficiary, such endorsements to Beneficiary's title
insurance policy, hazard insurance policy endorsements or certificates
as Beneficiary may deem reasonably necessary at the time of the Sale,
all in form and
25
substance reasonably satisfactory to Beneficiary, including, without
limitation, an endorsement or endorsements to Beneficiary's title
insurance policy insuring the lien of this Deed of Trust, extending the
effective date of such policy to the date of execution and delivery
(or, if later, of recording) of the assumption agreement referenced
above in subparagraph (4) of this Section, with no additional
exceptions added to such policy except those approved by Beneficiary in
its discretion, and insuring that fee simple title to the Real Property
is vested in the Buyer;
(8) Grantor, or its successor pursuant to the
proposed or any prior Sale under the terms and conditions hereof,
executes and delivers to Beneficiary, without any cost or expense to
Beneficiary, a release of Beneficiary, its officers, directors,
employees and agents, from all claims and liability relating to the
transactions evidenced by the Loan Documents, through and including the
date of the closing of the Sale, which agreement shall be in form and
substance reasonably satisfactory to Beneficiary and shall be binding
upon the Buyer;
(9) Subject to the provisions of Section 4.27 hereof
and the provisions of subparagraph (c) of this Section, such Sale is
not construed so as to relieve Grantor, or its successor pursuant to
the proposed or any prior Sale under the terms and conditions hereof,
of any personal liability under the Note or any of the other Loan
Documents for any acts or events occurring or obligations arising prior
to or simultaneously with the closing of such Sale, whether or not same
is discovered prior or subsequent to the closing of such Sale, and
Grantor, or its successor pursuant to the proposed or any prior Sale
under the terms and conditions hereof, executes, without any cost or
expense to Beneficiary, such documents and agreements as Beneficiary
shall reasonably require to evidence and effectuate the ratification of
said personal liability. Grantor shall be released from and relieved of
any personal liability under the Note or any of the other Loan
Documents for any acts or events occurring or obligations arising after
the closing of such Sale which are not caused by or arising out of any
acts or events occurring or obligations arising prior to or
simultaneously with the closing of such Sale;
(10) Subject to the provisions of subparagraph (c)
below, such Sale is not construed so as to relieve any current
Indemnitor or its successor of its obligations under any guaranty or
indemnity agreement for any acts or events occurring or obligations
arising prior to or simultaneously with the closing of such Sale, and
each such current Indemnitor executes, without any cost or expense to
Beneficiary, such documents and agreements as Beneficiary shall
reasonably require to evidence and effectuate the ratification of each
such guaranty and indemnity agreement. Each such current Indemnitor
shall be released from and relieved of any of its obligations under any
guaranty or indemnity agreement executed in connection with the loan
secured hereby for any acts or events occurring or obligations arising
after the closing of such Sale which are not caused by or arising out
of any acts or events occurring or obligations arising prior to or
simultaneously with the closing of such Sale;
(11) The Buyer shall furnish, if the Buyer is a
corporation, partnership or other entity, all documents evidencing the
Buyer's capacity and good standing, and the
26
qualification of the signers to execute the assumption of the
indebtedness secured hereby, which documents shall include, but not in
any way be limited to, certified copies of all documents relating to
the organization and formation of the Buyer and of the entities, if
any, which are partners of the Buyer. The Buyer and such constituent
partners, members or shareholders of Buyer (as the case may be), as
Beneficiary may require, shall be single-purpose, single-asset
"bankruptcy remote" entities, whose formation documents shall be
approved by counsel to Beneficiary. An individual recommended by the
Buyer and approved by Beneficiary shall serve as an Independent
Director (as defined in Section 1.33(z) of this Deed of Trust) of the
Buyer (if the Buyer is a corporation) or the Buyer's corporate general
partner or an independent member or, in Beneficiary's discretion,
manager of Buyer if the Buyer is a limited liability company. Unanimous
consent of the board of directors (including the Independent Director)
shall be required for, among other things, any merger, consolidation,
dissolution, bankruptcy or insolvency of any such constituent partner,
member or shareholder of the Buyer (as the case may be) or of the
Buyer;
(12) The Buyer, if required by Beneficiary and, in
the case of clauses (i) and (ii) herein only if the outstanding
principal balance of the Loan is in excess of $15,000,000, shall
furnish an opinion of counsel satisfactory to Beneficiary and its
counsel (i) that the Buyer's formation documents provide for the
matters described in subparagraph (11) of this Section 1.13(b), (ii)
that the assets of the Buyer will not be consolidated with the assets
of any other entity (including the Buyer's general partner or members,
if any), as applicable, having an interest in, or affiliation with, the
Buyer, in the event of bankruptcy or insolvency of any such entity or
such general partner or members, (iii) that the assumption of the
indebtedness evidenced hereby has been duly authorized, executed and
delivered, and that the Loan Documents are valid, binding and
enforceable against the Buyer in accordance with their terms, (iv) that
the Buyer and any entity which is a controlling stockholder, general
partner or member of Buyer, have been duly organized, and are in
existence and good standing, and (v) with respect to such other
matters, as Beneficiary may request; and
(13) If required under the operative documents with
respect to a Secondary Market Transaction (as hereinafter defined),
Beneficiary shall have received evidence in writing from the Rating
Agency to the effect that the proposed transfer will not result in a
re-qualification, reduction, downgrade or withdrawal of any rating
initially assigned or to be assigned in a Secondary Market Transaction
or, if no such rating has been issued, in Beneficiary's good faith
judgment, such transfer shall not have an adverse effect on the level
of rating obtainable in connection with the loan secured hereby.
(c) Notwithstanding anything contained herein or in any of the
other Loan Documents to the contrary, Grantor shall have a one-time free right
to transfer or Sale (including, without limitation, by merger or consolidation
or by other disposition of assets) of the Trust Property and all Other Mortgaged
Properties so long as (1) Grantor gives Beneficiary written notice of the terms
of such transfer or sale not less than thirty (30) days before the date on which
such transfer or Sale is scheduled to close, (2) the Buyer has total assets of
at least $750,000,000.00 and financial statements evidencing such value have
been presented to
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Beneficiary and (3) Grantor shall have submitted, in lieu of the $5,000
application fee stated in subparagraph (b)(2) above, a non-refundable
application fee in the amount of $15,000.00. In the event of any such transfer
or Sale pursuant to this subparagraph (c), the provisions of clauses (2) and (3)
of subparagraph (b) of this Section 1.13 shall not apply.
1.14 Payment of Utilities, Assessments, Charges, Etc. Grantor shall pay
when due all utility charges which are incurred by Grantor or which may become a
charge or lien against any portion of the Trust Property for gas, electricity,
water and sewer services furnished to the Premises and/or the Improvements and
all other assessments or charges of a similar nature (excluding taxes and
assessments escrowed in the Impound Account), or assessments payable pursuant to
any restrictive covenants, whether public or private, affecting the Premises
and/or the Improvements or any portion thereof, whether or not such assessments
or charges are or may become liens thereon. Notwithstanding the foregoing,
Grantor may, in good faith, by appropriate proceedings and upon notice to
Beneficiary, contest the validity, applicability or amount of any asserted
utilities, assessments or other charges that may become a charge or lien against
any portion of the Trust Property as long as (a) such contest is diligently
pursued, (b) Beneficiary determines, in its reasonable subjective opinion, that
such contest suspends the obligation to pay such utility charges or assessments
and that non-payment of such charges or assessments will not result in the sale,
loss, forfeiture or diminution of the Trust Property or any part thereof or any
interest of Beneficiary therein, and (c) prior to the earlier of commencement of
such contest or the delinquency date of the asserted charge or assessment,
Grantor deposits the Impound Account an amount determined by Beneficiary to be
reasonably adequate to cover payment of such charge or assessment and a
reasonable additional sum to cover possible interest, costs and penalties;
provided, however, that Grantor shall promptly cause to be paid any amount
adjudged by a court of competent jurisdiction be due, with all interest, costs
and penalties thereon, promptly after such judgment becomes final beyond any
appeal period; and provided, further, that in any event such contest shall be
concluded and the charges or assessments shall be paid prior to the date any
writ or order is issued under which the Trust Property may be sold, lost or
forfeited.
1.15 Access Privileges and Inspections. Beneficiary and the agents,
representatives and employees of Beneficiary shall, subject to the rights of
Tenants, have full and free access to the Premises and the Improvements and any
other location where books and records concerning the Trust Property are kept at
all reasonable times and, except in the event of an emergency, upon not less
than three (3) days prior notice (which notice may be telephonic) for the
purposes of inspecting the Trust Property and of examining, copying and making
extracts from the books and records of Grantor relating to the Trust Property.
Grantor shall lend assistance to all such agents, representatives and employees
of Beneficiary.
1.16 Waste; Alteration of Improvements. Grantor shall not commit,
suffer or permit any waste on the Trust Property nor take any actions that might
invalidate any insurance carried on the Trust Property. Grantor shall maintain
the Trust Property in good condition and repair. No part of the Improvements may
be removed, demolished or materially altered, without the prior written consent
of Beneficiary except as provided herein. Without the prior written consent of
Beneficiary, Grantor shall not commence construction of any improvements on the
Premises
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other than improvements required for the maintenance or repair of the
Trust Property or as otherwise provided herein.
1.17 Zoning. Without the prior written consent of Beneficiary, not to
be unreasonably withheld or delayed, Grantor shall not seek, make, suffer,
consent to or acquiesce in any change in the zoning or conditions of use of the
Premises or the Improvements. Grantor shall have the same right to contest
zoning, conditions on use and other land use matters and/or any proposed changes
in the same in a manner similar to the provisions relating to the contests of
Environmental Laws as provided for in Section 1.31 hereof. Grantor shall comply
with and make all payments required under the provisions of any covenants,
conditions or restrictions affecting the Premises or the Improvements. Grantor
shall comply with all existing and future requirements of all governmental
authorities having jurisdiction over the Real Property. Grantor shall keep all
licenses, permits, franchises and other approvals necessary for the operation of
the Trust Property in full force and effect. Grantor shall operate the Real
Property as an apartment development and incidental and ancillary uses or other
lawful use approved by Beneficiary for so long as the Debt is outstanding. If,
under applicable zoning provisions, the use of all or any part of the Premises
or the Improvements is or becomes a nonconforming use, Grantor shall not cause
or permit such use to be discontinued or abandoned without the prior written
consent of Beneficiary. Further, without Beneficiary's prior written consent,
Grantor shall not file or subject any part of the Premises or the Improvements
to any declaration of condominium or co-operative or convert any part of the
Premises or the Improvements to a condominium, co-operative or other form of
multiple ownership and governance.
1.18 Financial Statements and Books and Records. Grantor shall keep
accurate books and records of account of the Trust Property and its own
financial affairs sufficient to permit the preparation of financial statements
therefrom in accordance with generally accepted accounting principles.
Beneficiary and its duly authorized representatives shall have the right to
examine, copy and audit Grantor's records and books of account at all reasonable
times. Prior to the first Sale hereunder, and for so long as this Deed of Trust
continues in effect, Grantor shall provide to Beneficiary, in addition to any
other financial statements required hereunder or under any of the other Loan
Documents, the following financial statements and information, all of which must
be certified to Beneficiary as being true and correct by the chief financial
officer of the REIT, and, with respect to the financial statements and
information set forth in subsection (e) hereof, audited by an independent
certified public accountant, be prepared in accordance with generally accepted
accounting principles consistently applied and be in form and substance
acceptable to Beneficiary:
(a) monthly balance sheets and statement of operations for the
Trust Property, within thirty (30) days after the end of each of the first (1st)
twelve (12) calendar months following the date hereof; and
(b) quarterly balance sheets and statement of operations for
the Trust Property, within thirty (30) days after the end of each March, June,
September and December commencing with the first (1st) of such months to occur
following the first (1st) anniversary of the date hereof;
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(c) copy of the REIT's 10-Q as filed with the Securities and
Exchange Commission, within forty-five (45) days after the end of each calendar
quarter following the date hereof;
(d) annual balance sheets and statement of operations for the
Trust Property;
(e) the REIT's annual financial statements, within ninety
(90) days after the end of each fiscal year of the REIT;
(f) annual occupancy summary for the Real Property setting
forth the occupancy rates, average daily room rates and room revenues for each
month of the preceding calendar year, as well as annual averages of the same,
and such other information as may customarily be reflected thereon or reasonably
requested by Beneficiary.
Following the first Sale hereunder, and for so long as this Deed of
Trust continues in effect, Grantor shall provide to Beneficiary, in addition to
any other financial statements required hereunder or under any of the other Loan
Documents, the following financial statements and information, all of which must
be certified to Beneficiary as being true and correct by Grantor or the person
or entity to which they pertain, as applicable, and, with respect to the
financial statements and information set forth in subsection (d) hereof, audited
by an independent certified public accountant, be prepared in accordance with
generally accepted accounting principles consistently applied and be in form and
substance acceptable to Beneficiary:
(a) copies of all tax returns filed by Xxxxxxx, within
thirty (30) days after the date of filing;
(b) monthly operating statements for the Trust Property,
within fifteen (15) days after the end of each of the first (1st) twelve (12)
calendar months following the date hereof; and
(c) quarterly operating statements for the Trust Property,
within thirty (30) days after the end of each March, June, September and
December commencing with the first (1st) of such months to occur following the
first (1st) anniversary of the date hereof;
(d) annual balance sheets for the Trust Property and annual
financial statements for Grantor and each Indemnitor, within ninety (90) days
after the end of each calendar year; and
(e) such other information with respect to the Trust Property,
Grantor, the principals or general partners in Grantor, and each Indemnitor,
which may be reasonably requested from time to time by Beneficiary, within a
reasonable time after the applicable request.
If any of the aforementioned materials are not furnished to Beneficiary
within the applicable time periods or Beneficiary is dissatisfied with the
contents of any of the foregoing and has notified Grantor of its
dissatisfaction, in addition to any other rights and remedies of Beneficiary
contained herein, Beneficiary shall have the right, but not the obligation,
after
30
Xxxxxxx's failure to cure such satisfaction within thirty (30) business days
following Xxxxxxx's receipt of such notice, to obtain the same by means of an
audit by an independent certified public accountant selected by Beneficiary, in
which event Grantor agrees to pay, or to reimburse Beneficiary for, any expense
of such audit and further agrees to provide all necessary information to said
accountant and to otherwise cooperate in the making of such audit.
1.19 Further Documentation. Grantor shall, on the request of
Beneficiary and at the expense of Grantor: (a) promptly correct any defect,
error or omission which may be discovered in the contents of this Deed of Trust
or in the contents of any of the other Loan Documents; (b) promptly execute,
acknowledge, deliver and record or file such further instruments (including,
without limitation, further mortgages, deeds of trust, security deeds, security
agreements, financing statements, continuation statements and assignments of
rents or leases) and promptly do such further acts as may be necessary,
desirable or proper to carry out more effectively the purposes of this Deed of
Trust and the other Loan Documents and to subject to the liens and security
interests hereof and thereof any property intended by the terms hereof and
thereof to be covered hereby and thereby, including specifically, but without
limitation, any renewals, additions, substitutions, replacements or
appurtenances to the Trust Property; (c) promptly execute, acknowledge, deliver,
procure and record or file any document or instrument (including specifically,
without limitation, any financing statement) reasonably deemed advisable by
Beneficiary to protect, continue or perfect the liens or the security interests
hereunder against the rights or interests of third persons; and (d) promptly
furnish to Beneficiary, upon Beneficiary's request, a duly acknowledged written
statement and estoppel certificate addressed to such party or parties as
directed by Xxxxxxxxxxx and in form and substance supplied by Beneficiary,
setting forth all amounts due under the Note, stating whether any Event of
Default has occurred hereunder and is continuing, and stating whether any
offsets or defenses exist against the Debt.
1.20 Payment of Costs; Reimbursement to Beneficiary. Grantor shall pay
all reasonable costs and expenses of every character reasonably incurred in
connection with the closing of the loan evidenced by the Note and secured hereby
or otherwise attributable or chargeable to Grantor as the owner of the Trust
Property, including, without limitation, appraisal fees, recording fees,
documentary, stamp, mortgage or intangible taxes, brokerage fees and
commissions, title policy premiums and title search fees, uniform commercial
code/tax lien/litigation search fees, escrow fees and reasonable attorneys'
fees. If Grantor defaults in any such payment, which default is not cured within
any applicable grace or cure period, Beneficiary may, after reasonable prior
written notice to Grantor, pay the same and Grantor shall reimburse Beneficiary
on demand for all such costs and expenses incurred or paid by Beneficiary,
together with such interest thereon at the Default Interest Rate from and after
the date of Beneficiary's making such payment until reimbursement thereof by
Grantor. Any such sums disbursed by Beneficiary, together with such interest
thereon, shall be additional indebtedness of Grantor secured by this Deed of
Trust and by all of the other Loan Documents securing all or any part of the
Debt. Further, Grantor shall promptly notify Beneficiary in writing of any
litigation or threatened litigation affecting the Trust Property, or any other
demand or claim which, if enforced, could impair or threaten to impair
Beneficiary's security hereunder. Without limiting or waiving any other rights
and remedies of Beneficiary hereunder, if Grantor fails to perform any of its
covenants or agreements contained in this Deed of Trust or in any of the other
Loan Documents and such failure is not cured within any applicable grace or cure
period, or if any
31
action or proceeding of any kind (including, but not limited to, any bankruptcy,
insolvency, arrangement, reorganization or other debtor relief proceeding) is
commenced which might adversely affect Beneficiary's interest in the Trust
Property or Beneficiary's right to enforce its security, then Beneficiary may,
at its option, with or without notice to Grantor, make any appearances, disburse
any sums and take any actions as may be necessary or desirable to protect or
enforce the security of this Deed of Trust or to remedy the failure of Grantor
to perform its covenants and agreements (without, however, waiving any default
of Grantor). Xxxxxxx agrees to pay on demand all expenses of Beneficiary or
Trustee incurred with respect to the foregoing (including, but not limited to,
reasonable fees and disbursements of counsel), together with interest thereon at
the Default Interest Rate from and after the date on which Beneficiary or
Trustee incurs such expenses until reimbursement thereof by Grantor. Any such
expenses so incurred by Beneficiary, together with interest thereon as provided
above, shall be additional indebtedness of Grantor secured by this Deed of Trust
and by all of the other Loan Documents securing all or any part of the Debt. The
necessity for any such actions and of the amounts to be paid shall be determined
by Beneficiary in its discretion. Beneficiary is hereby empowered to enter and
to authorize others to enter upon the Trust Property or any part thereof for the
purpose of performing or observing any such defaulted term, covenant or
condition without thereby becoming liable to Grantor or any person in possession
holding under Grantor. Grantor hereby acknowledges and agrees that the remedies
set forth in this Section 1.20 shall be exercisable by Beneficiary, and any and
all payments made or costs or expenses incurred by Beneficiary in connection
therewith shall be secured hereby and shall be, without demand, immediately
repaid by Grantor with interest thereon at the Default Interest Rate,
notwithstanding the fact that such remedies were exercised and such payments
made and costs incurred by Beneficiary after the filing by Grantor of a
voluntary case or the filing against Grantor of an involuntary case pursuant to
or within the meaning of the Bankruptcy Reform Act of 1978, as amended, Title 11
U.S.C., or after any similar action pursuant to any other debtor relief law
(whether statutory, common law, case law or otherwise) of any jurisdiction
whatsoever, now or hereafter in effect, which may be or become applicable to
Grantor, Beneficiary, any Indemnitor, the Debt or any of the Loan Documents.
Grantor hereby indemnifies and holds Beneficiary harmless from and against all
loss, cost and expenses with respect to any Event of Default hereof, any liens
(i.e., judgments, mechanics' and materialmen's liens, or otherwise), charges and
encumbrances filed against the Trust Property, and from any claims and demands
for damages or injury, including claims for property damage, personal injury or
wrongful death, arising out of or in connection with any accident or fire or
other casualty on the Premises or the Improvements or any nuisance made or
suffered thereon, except those that are due to Beneficiary's gross negligence or
willful misconduct as finally determined by a court of competent jurisdiction,
including, without limitation, in any case, reasonable attorneys' fees, costs
and expenses as aforesaid, whether at pretrial, trial or appellate level, and
such indemnity shall survive payment in full of the Debt. This Section shall not
be construed to require Beneficiary to incur any expenses, make any appearances
or take any actions.
1.21 Security Interest. This Deed of Trust is also intended to encumber
and create a security interest in, and Grantor hereby grants to Beneficiary a
security interest in, Xxxxxxx's right, title and interest in all sums on deposit
with Beneficiary pursuant to the provisions of Section 1.6 and Section 1.8
hereof or any other Section hereof or of any other Loan Document and Grantor's
right, title and interest (if any) in all fixtures, chattels, accounts,
equipment,
32
inventory, contract rights, general intangibles and other personal property
included within the Trust Property, all renewals, replacements of any of the
aforementioned items, or articles in substitution therefor or in addition
thereto or the proceeds thereof (said property is hereinafter referred to
collectively as the "Collateral"), whether or not the same shall be attached to
the Premises or the Improvements in any manner. It is hereby agreed that to the
extent permitted by law, all of the foregoing Collateral consisting of
furniture, fixtures and equipment is to be deemed and held to be a part of and
affixed to the Premises and the Improvements. The foregoing security interest
shall also cover Grantor's leasehold interest in any of the foregoing property
which is leased by Grantor. Grantor shall, from time to time upon the request of
Beneficiary, supply Beneficiary with a current inventory of all of the
Collateral in which Beneficiary is granted a security interest hereunder, in
such detail as Beneficiary may reasonably require. Grantor shall promptly
replace all of the Collateral subject to the lien or security interest of this
Deed of Trust when worn or obsolete with Collateral comparable to the worn out
or obsolete Collateral when new and will not, without the prior written consent
of Beneficiary, remove from the Premises or the Improvements any of the
Collateral subject to the lien or security interest of this Deed of Trust except
such as is replaced by an article of similar suitability and value as above
provided, owned by Grantor free and clear of any lien or security interest
except that created by this Deed of Trust and the other Loan Documents. All of
the Collateral shall be kept at the location of the Premises except as otherwise
required by the terms of the Loan Documents. Grantor shall not use any of the
Collateral in violation of any applicable statute, ordinance or insurance
policy.
1.22 Security Agreement. This Deed of Trust constitutes a security
agreement between Grantor and Beneficiary with respect to the Collateral in
which Beneficiary is granted a security interest hereunder, and, cumulative of
all other rights and remedies of Beneficiary hereunder, Beneficiary shall have
all of the rights and remedies of a secured party under any applicable Uniform
Commercial Code. Xxxxxxx hereby agrees to execute and deliver on demand and
hereby irrevocably constitutes and appoints Beneficiary the attorney-in-fact of
Grantor to execute and deliver and, if appropriate, to file with the appropriate
filing officer or office, such security agreements, financing statements,
continuation statements or other instruments as Beneficiary may request or
require in order to impose, perfect or continue the perfection of the lien or
security interest created hereby. To the extent specifically provided herein and
subject to the rights of Tenants under the Leases and the terms and provisions
thereof, Beneficiary shall have the right of possession of all cash, securities,
instruments, negotiable instruments, documents, certificates and any other
evidences of cash or other property or evidences of rights to cash rather than
property, which are now or hereafter a part of the Trust Property, and Grantor
shall promptly deliver the same to Beneficiary, endorsed to Beneficiary, without
further notice from Beneficiary. Xxxxxxx agrees to furnish Beneficiary with
notice of any change in the name, identity, organizational structure, residence,
or principal place of business or mailing address of Grantor within ten (10)
days of the effective date of any such change. Upon the occurrence of any Event
of Default, Beneficiary shall have the rights and remedies as prescribed in this
Deed of Trust, or as prescribed by general law, or as prescribed by any
applicable Uniform Commercial Code, all at Beneficiary's election. Any
disposition of the Collateral following the occurrence and continuance of an
Event of Default may be conducted by an employee or agent of Beneficiary. Any
person, including both Grantor and Beneficiary, shall be eligible to purchase
any part or all of the Collateral at any such disposition. Expenses of retaking,
holding,
33
preparing for sale, selling or the like (including, without limitation,
Beneficiary's reasonable attorneys' fees and legal expenses), together with
interest thereon at the Default Interest Rate from the date incurred by
Beneficiary until actually paid by Grantor, shall be paid by Grantor on demand
and shall be secured by this Deed of Trust and by all of the other Loan
Documents securing all or any part of the Debt. Beneficiary shall have the right
to enter upon the Premises and the Improvements or any real property where any
of the property which is the subject of the security interest granted herein is
located to take possession of, assemble and collect the same or to render it
unusable, or Grantor, upon demand of Beneficiary, shall assemble such property
and make it available to Beneficiary at the Premises, or at a place which is
mutually agreed upon or, if no such place is agreed upon, at a place reasonably
designated by Beneficiary to be reasonably convenient to Beneficiary and
Grantor. If notice is required by law, Beneficiary shall give Grantor at least
ten (10) days' prior written notice of the time and place of any public sale of
such property, or adjournments thereof, or of the time of or after which any
private sale or any other intended disposition thereof is to be made, and if
such notice is sent to Grantor, as the same is provided for the mailing of
notices herein, it is hereby deemed that such notice shall be and is reasonable
notice to Grantor. No such notice is necessary for any such property which is
perishable, threatens to decline speedily in value or is of a type customarily
sold on a recognized market. Any sale made pursuant to the provisions of this
Section shall be deemed to have been a public sale conducted in a commercially
reasonable manner if held contemporaneously with a foreclosure sale as provided
in Section 3.1(e) hereof upon giving the same notice with respect to the sale of
the Trust Property hereunder as is required under said Section 3.1(e).
Furthermore, to the extent permitted by law, in conjunction with, in addition to
or in substitution for the rights and remedies available to Beneficiary pursuant
to any applicable Uniform Commercial Code:
(a) In the event of a foreclosure sale, the Trust Property
may, at the option of Beneficiary, be sold as a whole; and
(b) It shall not be necessary that Beneficiary take possession
of the aforementioned Collateral, or any part thereof, prior to the time that
any sale pursuant to the provisions of this Section is conducted and it shall
not be necessary that said Collateral, or any part thereof, be present at the
location of such sale; and
(c) Beneficiary may appoint or delegate any one or more
persons as agent to perform any act or acts necessary or incident to any sale
held by Beneficiary, including the sending of notices and the conduct of the
sale, but in the name and on behalf of Beneficiary.
The name and address of Grantor (as Debtor under any applicable Uniform
Commercial Code) are:
CRIT-VA II, INC.
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
34
The name and address of Beneficiary (as Secured Party under any applicable
Uniform Commercial Code) are:
FIRST UNION NATIONAL BANK
Commercial Real Estate Finance Group
One First Union Center
000 Xxxxx Xxxxxxx Xxxxxx
Mailcode NC 0166
Loan Number: 00-0000000
Charlotte, North Carolina 28288
Attention: Contract Finance
1.23 Easements and Rights-of-Way. Grantor shall not grant any easement
or right-of-way with respect to all or any portion of the Premises or the
Improvements without the prior written consent of Beneficiary, which shall not
be unreasonably withheld or delayed. The purchaser at any foreclosure sale
hereunder may, at its discretion, disaffirm any easement or right-of-way granted
in violation of any of the provisions of this Deed of Trust and may take
immediate possession of the Trust Property free from, and despite the terms of,
such grant of easement or right-of-way. If Beneficiary consents to the grant of
an easement or right-of-way, Beneficiary agrees to grant such consent without
charge to Grantor other than reasonable expenses, including, without limitation,
reasonable attorneys' fees, incurred by Beneficiary in the review of Grantor's
request and in the preparation of documents effecting the subordination.
1.24 Compliance with Laws. (a) Grantor shall at all times comply with
all statutes, ordinances, regulations and other governmental or
quasi-governmental requirements and private covenants now or hereafter relating
to the ownership, construction, use or operation of the Trust Property,
including, but not limited to, those concerning employment and compensation of
persons engaged in operation and maintenance of the Trust Property and any
environmental or ecological requirements, even if such compliance shall require
structural changes to the Trust Property; provided, however, that, Grantor may,
upon providing Beneficiary with security satisfactory to Beneficiary, proceed
diligently and in good faith to contest the validity or applicability of any
such statute, ordinance, regulation or requirement so long as during such
contest the Trust Property shall not be subject to any lien, charge, fine or
other liability and shall not be in danger of being forfeited, lost or closed.
Grantor shall not use or occupy, or allow the use or occupancy of, the Trust
Property in any manner which violates any Lease of or any other agreement
applicable to the Trust Property or any applicable law, rule, regulation or
order or which constitutes a public or private nuisance or which makes void,
voidable or cancelable, or increases the premium of, any insurance then in force
with respect thereto.
(b) Grantor agrees that the Trust Property shall at all times
comply to the extent applicable with the requirements of the Americans with
Disabilities Act of 1990, the Fair Housing Amendments Act of 1988 and all other
state and local laws and ordinances related to handicapped access and all rules,
regulations, and orders issued pursuant thereto including, without limitation,
the Americans with Disabilities Act Accessibility Guidelines for Buildings and
Facilities (collectively, the "Access Laws"). Xxxxxxx agrees to give prompt
notice to Beneficiary of the receipt by Grantor of any complaints related to
violations of any Access Laws
35
and of the commencement of any proceedings or investigations which relate to
compliance with applicable Access Laws.
1.25 Additional Taxes. In the event of the enactment after the date
hereof of any law of the state in which the Trust Property is located or of any
other governmental entity deducting from the value of the Trust Property for the
purpose of taxing any lien or security interest thereon, or imposing upon
Beneficiary the payment of the whole or any part of the taxes or assessments or
charges or liens herein required to be paid by Grantor, or changing in any way
the laws relating to the taxation of deeds of trust, mortgages or security
agreements or debts secured by deeds of trust, mortgages or security agreements
or the interest of the beneficiary, Beneficiary or secured party in the property
covered thereby, or the manner of collection of such taxes, so as to adversely
affect this Deed of Trust or the Debt or Beneficiary, then, and in any such
event, Grantor, upon demand by Beneficiary, shall pay such taxes, assessments,
charges or liens, or reimburse Beneficiary therefor; provided, however, that if
in the opinion of counsel for Beneficiary (a) it might be unlawful to require
Grantor to make such payment, or (b) the making of such payment might result in
the imposition of interest beyond the maximum amount permitted by law, then and
in either such event, Beneficiary may elect, by notice in writing given to
Grantor, to declare all of the Debt to be and become due and payable in full
thirty (30) days from the giving of such notice, and, in connection with the
payment of such Debt, no prepayment premium or fee shall be due unless, at the
time of such payment, an Event of Default or a Default shall have occurred and
is continuing, which Default or Event of Default is unrelated to the provisions
of this Section 1.25, in which event any applicable prepayment premium or fee in
accordance with the terms of the Note shall be due and payable.
1.26 Secured Indebtedness. It is understood and agreed that this Deed
of Trust shall secure payment of not only the indebtedness evidenced by the Note
but also any and all substitutions, replacements, renewals and extensions of the
Note, any and all indebtedness and obligations arising pursuant to the terms
hereof and any and all indebtedness and obligations arising pursuant to the
terms of any of the other Loan Documents, all of which indebtedness is equally
secured with and has the same priority as any amounts advanced as of the date
hereof. It is agreed that any future advances made by Beneficiary to or for the
benefit of Grantor from time to time under this Deed of Trust or the other Loan
Documents and whether or not such advances are obligatory or are made at the
option of Beneficiary, or otherwise, made for any purpose, within twenty (20)
years from the date hereof, and all interest accruing thereon, shall be equally
secured by this Deed of Trust and shall have the same priority as all amounts,
if any, advanced as of the date hereof and shall be subject to all of the terms
and provisions of this Deed of Trust.
1.27 Grantor's Waivers. To the full extent permitted by law, Xxxxxxx
agrees that Grantor shall not at any time insist upon, plead, claim or take the
benefit or advantage of any law now or hereafter in force providing for any
appraisement, valuation, stay, moratorium or extension, or any law now or
hereafter in force providing for the reinstatement of the Debt prior to any sale
of the Trust Property to be made pursuant to any provisions contained herein or
prior to the entering of any decree, judgment or order of any court of competent
jurisdiction, or any right under any statute to redeem all or any part of the
Trust Property so sold. Xxxxxxx, for Xxxxxxx and Xxxxxxx's successors and
assigns, and for any and all persons ever claiming any interest in the Trust
Property, to the full extent permitted by law, hereby knowingly, intentionally
36
and voluntarily, with and upon the advice of competent counsel: (a) waives,
releases, relinquishes and forever forgoes all rights of valuation,
appraisement, stay of execution, reinstatement and notice of election or
intention to mature or declare due the Debt (except such notices as are
specifically provided for herein); (b) waives, releases, relinquishes and
forever forgoes all right to a marshaling of the assets of Grantor, including
the Trust Property, to a sale in the inverse order of alienation, or to direct
the order in which any of the Trust Property shall be sold in the event of
foreclosure of the liens and security interests hereby created and agrees that
any court having jurisdiction to foreclose such liens and security interests may
order the Trust Property sold as an entirety; and (c) waives, releases,
relinquishes and forever forgoes all rights and periods of redemption provided
under applicable law. To the full extent permitted by law, Grantor shall not
have or assert any right under any statute or rule of law pertaining to the
exemption of homestead or other exemption under any federal, state or local law
now or hereafter in effect, the administration of estates of decedents or other
matters whatever to defeat, reduce or affect the right of Beneficiary under the
terms of this Deed of Trust to a sale of the Trust Property, for the collection
of the Debt without any prior or different resort for collection, or the right
of Beneficiary under the terms of this Deed of Trust to the payment of the Debt
out of the proceeds of sale of the Trust Property in preference to every other
claimant whatever. Furthermore, Grantor hereby knowingly, intentionally and
voluntarily, with and upon the advice of competent counsel, waives, releases,
relinquishes and forever forgoes all present and future statutes of limitations
as a defense to any action to enforce the provisions of this Deed of Trust or to
collect any of the Debt to the fullest extent permitted by law. Grantor
covenants and agrees that upon the commencement of a voluntary or involuntary
bankruptcy proceeding by or against Grantor, Grantor shall not seek a
supplemental stay or otherwise shall not seek pursuant to 11 U.S.C. ss.105 or
any other provision of the Bankruptcy Reform Act of 1978, as amended, or any
other debtor relief law (whether statutory, common law, case law, or otherwise)
of any jurisdiction whatsoever, now or hereafter in effect, which may be or
become applicable, to stay, interdict, condition, reduce or inhibit the ability
of Beneficiary to enforce any rights of Beneficiary against any guarantor or
indemnitor of the secured obligations or any other party liable with respect
thereto by virtue of any indemnity, guaranty or otherwise.
1.28 SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.
(a) GRANTOR, TO THE FULL EXTENT PERMITTED BY LAW, XXXXXX
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT
COUNSEL, (i) SUBMITS TO PERSONAL JURISDICTION IN THE STATE IN WHICH THE PREMISES
IS LOCATED OVER ANY SUIT, ACTION OR PROCEEDING BY ANY PERSON ARISING FROM OR
RELATING TO THE NOTE, THIS DEED OF TRUST OR ANY OTHER OF THE LOAN DOCUMENTS,
(ii) AGREES THAT ANY SUCH ACTION, SUIT OR PROCEEDING MAY BE BROUGHT IN ANY STATE
OR FEDERAL COURT OF COMPETENT JURISDICTION SITTING IN THE COUNTY IN WHICH THE
PREMISES IS LOCATED, (iii) SUBMITS TO THE JURISDICTION OF SUCH COURTS, AND (iv)
TO THE FULLEST EXTENT PERMITTED BY LAW, AGREES THAT IT WILL NOT BRING ANY
ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM (BUT NOTHING HEREIN SHALL AFFECT
THE RIGHT OF BENEFICIARY TO BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER
FORUM).
37
(b) GRANTOR, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT
COUNSEL, WAIVES, RELINQUISHES AND FOREVER FORGOES THE RIGHT TO A TRIAL BY JURY
IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING
TO THE DEBT OR ANY CONDUCT, ACT OR OMISSION OF BENEFICIARY OR GRANTOR, OR ANY OF
THEIR RESPECTIVE DIRECTORS, OFFICERS, PARTNERS, MEMBERS, EMPLOYEES, AGENTS OR
ATTORNEYS, OR ANY OTHER PERSONS AFFILIATED WITH BENEFICIARY OR GRANTOR, IN EACH
OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.
1.29 Attorney-in-Fact Provisions. With respect to any provision of this
Deed of Trust or any other Loan Document whereby Grantor grants to Beneficiary a
power-of-attorney, provided no Event of Default has occurred under this Deed of
Trust, Beneficiary shall first give Grantor written notice at least five (5)
days prior to acting under such power, which notice shall demand that Grantor
first take the proposed action within such period and advising Grantor that if
it fails to do so, Beneficiary will so act under the power; provided, however,
that, in the event that a Default or an Event of Default has occurred, or if
necessary to prevent imminent death, serious injury, damage, loss, forfeiture or
diminution in value to the Trust Property or any surrounding property or to
prevent any adverse affect on Beneficiary's interest in the Trust Property,
Beneficiary may act immediately and without first giving such notice. In such
event, Beneficiary will give Grantor notice of such action as soon thereafter as
reasonably practical.
1.30 Management. The management of the Trust Property shall be by
either: (a) Grantor, the REIT or an entity affiliated with Grantor or the REIT
reasonably approved by Beneficiary for so long as Grantor or said affiliated
entity is managing the Trust Property consistent with the provisions of the Loan
Documents; or (b) a professional property management company reasonably approved
by Beneficiary. If management is by a third-party professional property
management company not affiliated with Grantor or the REIT, such management
shall be pursuant to a written agreement reasonably approved by Beneficiary. In
no event shall any manager be removed or replaced or the terms of any management
agreement materially adversely modified or amended without the prior written
consent of Beneficiary. After an Event of Default or a material default under
any management contract then in effect, which default is not cured within any
applicable grace or cure period, Beneficiary shall have the right to terminate,
or to direct Grantor to terminate, such management contract upon thirty (30)
days' notice and to retain, or to direct Grantor to retain, a new management
agent reasonably approved by Beneficiary. All Rents generated by or derived from
the Trust Property shall first be utilized for current expenses attributable to
the ownership and operation of the Trust Property, including, without
limitation, current expenses relating to Grantor's liabilities and obligations
with respect to this Deed of Trust and the other Loan Documents, and none of the
Rents generated by or derived from the Trust Property shall be diverted by
Grantor and utilized for any other purposes until all such current expenses
attributable to the ownership and operation of the Trust Property have been
fully paid and satisfied.
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1.31 Hazardous Waste and Other Substances.
(a) Grantor hereby represents and warrants to Beneficiary
that, as of the date hereof: (i) to the best of Grantor's knowledge, information
and belief, none of Grantor nor the Trust Property nor any Tenant at the
Premises nor the operations conducted thereon is in direct or indirect violation
of or otherwise exposed to any liability under any local, state or federal law,
rule or regulation or common law duty pertaining to human health as affected by
the environment, natural resources or the environment, including, without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act of 1980 (42 U.S.C.ss.9601 et seq.), the Resource Conservation and Recovery
Act of 1976 (42 U.S.C.ss.6901 et seq.), the Federal Water Pollution Control Act
(33 U.S.C.ss.1251 et seq.), the Clean Air Act (42 U.S.C.ss.7401 et seq.), the
Emergency Planning and Community-Right-to-Know Act (42 U.S.C.ss.11001 et seq.),
the Endangered Species Act (16 U.S.C.ss.1531 et seq.), the Toxic Substances
Control Act (15 U.S.C.ss.2601 et seq.), the Occupational Safety and Health Act
(29 U.S.C.ss.651 et seq.) and the Hazardous Materials Transportation Act (49
U.S.C.ss.1801 et seq.), including any regulations promulgated pursuant to said
laws, all as amended from time to time ("Environmental Laws") or otherwise
exposed to any liability under any Environmental Law relating to or affecting
the Trust Property, whether or not used by or within the control of Grantor;
(ii) to the best of Grantor's knowledge, information and belief, no hazardous,
toxic or harmful substances, wastes, materials, pollutants or contaminants
(including, without limitation, materials containing more than 1% asbestos, lead
based paint, polychlorinated biphenyls, petroleum or petroleum products or
byproducts, flammable explosives, radioactive materials, infectious substances
or raw materials which include hazardous constituents) or any other substances
or materials which are included under or regulated by Environmental Laws
(collectively, "Hazardous Substances") are located on, in or under or have been
handled, generated, stored, processed or disposed of on or released or
discharged from the Trust Property (including underground contamination), except
for those substances used by Grantor or any Tenant in the ordinary course of
their respective businesses and in compliance with all Environmental Laws and
where such would not reasonably be expected to give rise to liability under
Environmental Laws; (iii) to the best of Grantor's knowledge, information and
belief, radon is not present at the Trust Property in excess or in violation of
any applicable thresholds or standards or in amounts that require under
applicable law disclosure to any tenant or occupant of or invitee to the Trust
Property or to any governmental agency or the general public; (iv) to the best
of Grantor's knowledge, information and belief, the Trust Property is not
subject to any private or governmental lien or judicial or administrative notice
or action arising under Environmental Laws; (v) there is no pending, nor, to
Grantor's knowledge, information or belief, threatened litigation arising under
Environmental Laws affecting Grantor or the Trust Property; (vi) to the best of
Grantor's knowledge, information and belief, there are no and have been no
existing or closed underground storage tanks or other underground storage
receptacles for Hazardous Substances or landfills or dumps on the Trust
Property; (vii) Grantor has received no notice of, and to the best of Grantor's
knowledge and belief, there exists no investigation, action, proceeding or claim
by any agency, authority or unit of government or by any third party which could
result in any liability, penalty, sanction or judgment under any Environmental
Laws with respect to any condition, use or operation of the Trust Property, nor
does Grantor know of any basis for such an investigation, action, proceeding or
claim; (viii) Grantor has received no notice
39
of and, to the best of Xxxxxxx's knowledge and belief, there has been no claim
by any party that any use, operation or condition of the Trust Property has
caused any nuisance or any other liability or adverse condition on any other
property, nor does Grantor know of any basis for such an investigation, action,
proceeding or claim.
(b) Grantor has not received nor to the best of Grantor's
knowledge, information and belief has there been issued, any notice,
notification, demand, request for information, citation, summons, or order in
any way relating to any actual, alleged or potential violation or liability
arising under Environmental Laws.
(c) To the best of Grantor's knowledge, information and
belief, the Trust Property is not listed or, to the best of Grantor's knowledge,
information and belief, proposed for listing on the National Priorities List
promulgated pursuant to CERCLA, on CERCLIS (as defined in CERCLA) or on any
similar federal or state list of sites requiring environmental investigation or
clean-up.
(d) Grantor shall comply with all applicable Environmental
Laws. Grantor shall keep or cause the Trust Property to be kept free from
Hazardous Substances (except those substances used by Grantor or any Tenant in
the ordinary course of their respective businesses and except in compliance with
all Environmental Laws and where such would not reasonably be expected to give
rise to liability under Environmental Laws) and in compliance with all
Environmental Laws, Grantor shall not install or use any underground storage
tanks, shall expressly prohibit the use, generation, handling, storage,
production, processing and disposal of Hazardous Substances by all Tenants in
quantities or conditions that would violate or give rise to any obligation to
take remedial or other action under any applicable Environmental Laws. Without
limiting the generality of the foregoing, during the term of this Deed of Trust,
Grantor shall not install in the Improvements or permit to be installed in the
Improvements any asbestos or asbestos-containing materials.
(e) Grantor shall promptly notify Beneficiary if Grantor shall
become aware of (i) the actual or potential existence of any Hazardous
Substances on the Trust Property other than those occurring in the ordinary
course of Grantor's business and which do not violate, or would not otherwise
give rise to liability under Environmental Laws, (ii) any direct or indirect
violation of, or other exposure to liability under, any Environmental Laws,
(iii) any lien, action or notice affecting the Trust Property or Grantor
resulting from any violation or alleged violation of or liability or alleged
liability under any Environmental Laws, (iv) the institution of any
investigation, inquiry or proceeding concerning Grantor or the Trust Property
pursuant to any Environmental Laws or otherwise relating to Hazardous
Substances, or (v) the discovery of any occurrence, condition or state of facts
which would render any representation or warranty contained in this Deed of
Trust incorrect in any material respect if made at the time of such discovery.
Immediately upon receipt of same, Grantor, shall deliver to Beneficiary copies
of any and all requests for information, complaints, citations, summonses,
orders, notices, reports or other communications, documents or instruments in
any way relating to any actual, alleged or potential violation or liability of
any nature whatsoever arising under Environmental Laws and relating to the Trust
Property or to Grantor. Grantor shall remedy or cause to be remedied in a timely
manner (and in any event within the time period permitted by applicable
Environmental Laws) any violation of Environmental Laws or any condition that
could give rise to liability under Environmental Laws. Without limiting the
foregoing, Grantor shall, at its own expense, take all actions as required by
applicable Environmental
40
Laws, for the clean-up of any and all portions of the Trust Property or other
affected property, including, without limitation, all investigative, monitoring,
removal, containment and remedial actions in accordance with all applicable
Environmental Laws (and in all events in a manner reasonably satisfactory to
Beneficiary) and shall further pay or cause to be paid, at no expense to
Beneficiary, all clean-up, administrative and enforcement costs of applicable
governmental agencies which may be asserted against the Trust Property.
Notwithstanding the foregoing, Grantor may, in good faith, by appropriate
proceedings and upon notice to Beneficiary, contest the validity or
applicability of any such Environmental Laws to any portion of the Trust
Property as long as (a) such contest is diligently pursued, (b) Beneficiary
determines, in its reasonable subjective opinion, that such contest suspends the
requirement for Grantor to comply with such Environmental Laws. Prior to the
earlier commencement of such contest or the delinquency date of any asserted
costs related thereto, Grantor shall deposit into the Impound Account an amount
determined by Beneficiary to the reasonably adequate covered payment of such
costs and a reasonable additional sum to cover possible interest, costs and
penalties; provided, however, that Grantor shall promptly cause to be paid any
amount adjudged by a court of competent jurisdiction be due, with all interest,
costs and penalties thereon, promptly after such judgment becomes final; and
provided, further, that in any event such contest shall be concluded and the
charges or assessments shall be paid prior to the date any writ or order is
issued under which the Trust Property may be sold, lost or forfeited. In the
event Grantor fails to do so, Beneficiary may, if required by Environmental Laws
(and after reasonable prior written notice to Grantor), but shall not be
obligated to, cause the Trust Property or other affected property to be freed
from any Hazardous Substances or otherwise brought into conformance with
Environmental Laws and any and all costs and expenses incurred by Beneficiary in
connection therewith, together with interest thereon at the Default Interest
Rate from the date incurred by Beneficiary until actually paid by Grantor, shall
be immediately paid by Grantor on demand and shall be secured by this Deed of
Trust and by all of the other Loan Documents securing all or any part of the
Debt. Grantor hereby grants to Beneficiary and its agents and employees access
to the Trust Property and a license to remove any items deemed by Beneficiary to
be Hazardous Substances and to do all things Beneficiary shall deem necessary to
bring the Trust Property into conformance with Environmental Laws.
(f) Grantor covenants and agrees, at Grantor's sole cost and
expense, to indemnify, defend (at trial and appellate levels, and with
attorneys, consultants and experts reasonably acceptable to Beneficiary), and
hold Beneficiary harmless from and against any and all liens, damages (including
without limitation, punitive or exemplary damages), losses, liabilities
(including, without limitation, strict liability), obligations, settlement
payments, penalties, fines, assessments, citations, directives, claims,
litigation, demands, defenses, judgments, suits, proceedings, costs,
disbursements or expenses of any kind as required by applicable Environmental
Laws or of any nature whatsoever (including, without limitation, reasonable
attorneys', consultants' and experts' fees and disbursements actually incurred
in investigating, defending, settling or prosecuting any claim, litigation or
proceeding) which may at any time be imposed upon, incurred by or asserted or
awarded against Beneficiary or the Trust Property, and arising from or out of:
(i) any violation or alleged violation of, or liability or alleged liability
under, any Environmental Law; (ii) the presence, release or threat of release of
41
or exposure to any Hazardous Substances or radon on, in, under or affecting all
or any portion of the Trust Property or any surrounding areas, regardless of
whether or not caused by or within the control of Grantor; (iii) any transport,
treatment, recycling, storage, disposal or arrangement therefor of Hazardous
Substances whether on the Trust Property, originating from the Trust Property,
or otherwise associated with Grantor or any operations conducted on the Trust
Property at any time; (iv) the failure by Grantor to comply fully with the terms
and conditions of this Section 1.31; (v) the breach of any representation or
warranty contained in this Section 1.31 in any material respect; (vi) the
enforcement of this Section 1.31, including, without limitation, the cost of
assessment, investigation, containment, removal and/or remediation of any and
all Hazardous Substances from all or any portion of the Trust Property or any
surrounding areas as required by applicable Environmental Laws, the cost of any
actions taken in response to the presence, release or threat of release of any
Hazardous Substances on, in, under or affecting any portion of the Trust
Property or any surrounding areas to prevent or minimize such release or threat
of release so that it does not migrate or otherwise cause or threaten danger to
present or future public health, safety, welfare or the environment, and costs
incurred to comply with Environmental Laws in connection with all or any portion
of the Trust Property or any surrounding areas. The indemnity set forth in this
Section 1.31 shall also include any diminution in the value of the security
afforded by the Trust Property or any future reduction in the sales price of the
Trust Property by reason of any matter set forth in this Section 1.31. The
foregoing indemnity shall specifically not include any such costs relating to
Hazardous Substances which are initially placed on, in or under the Trust
Property after foreclosure or other taking of title to the Trust Property by
Beneficiary or its successor or assigns. Beneficiary's rights under this Section
shall survive payment in full of the Debt and shall be in addition to all other
rights of Beneficiary under this Deed of Trust, the Note and the other Loan
Documents.
(g) Upon Beneficiary's request, at any time during the
continuance of an Event of Default or at such other time as Beneficiary has
reasonable grounds to believe, and so notifies Grantor, that Hazardous
Substances are or have been released, stored or disposed of on the Trust
Property, or on property contiguous with the Trust Property, or that the Trust
Property may be in violation of the Environmental Laws, Grantor shall perform or
cause to be performed, at Grantor's sole cost and expense and in scope, form and
substance reasonably satisfactory to Beneficiary, an inspection or audit of the
Trust Property prepared by a hydrogeologist or environmental engineer or other
appropriate consultant approved by Beneficiary indicating the presence or
absence of Hazardous Substances on the Trust Property, the compliance or
non-compliance status of the Trust Property and the operations conducted thereon
with applicable Environmental Laws, or an inspection or audit of the Trust
Property prepared by an engineering or consulting firm reasonably approved by
Beneficiary indicating the presence or absence of friable asbestos or substances
containing asbestos in excess of 1% or lead or substances containing lead or
lead based paint ("Lead Based Paint") on the Trust Property. If Grantor fails to
provide reports of such inspection or audit within thirty (30) days after such
request, Beneficiary may order the same, and Grantor hereby grants to
Beneficiary and its employees and agents access to the Trust Property and an
irrevocable license to undertake such inspection or audit. The cost of such
inspection or audit, together with interest thereon at the Default Interest Rate
from the date incurred by Beneficiary until actually paid by Grantor, shall be
immediately paid by Grantor on demand and shall be secured by this Deed of Trust
and by all of the other Loan Documents securing all or any part of the Debt.
42
(h) Reference is made to that certain Environmental Indemnity
Agreement of even date herewith by and among Grantor, the REIT and Beneficiary
(the "Environmental Indemnity Agreement"). The provisions of this Deed of Trust
and the Environmental Indemnity Agreement shall be read together to maximize the
coverage with respect to the subject matter thereof, as determined by
Beneficiary.
(i) If, prior to the date hereof, it was determined that the
Trust Property contains Lead Based Paint, Grantor had prepared an assessment
report describing the location and condition of the Lead Based Paint (a "Lead
Based Paint Report"). If, at any time hereafter, Lead Based Paint is suspected
of being present on the Trust Property, Grantor agrees, at its sole cost and
expense and within sixty (60) days thereafter, to cause to be prepared a Lead
Based Paint Report prepared by an expert, and in form, scope and substance,
acceptable to Beneficiary.
(j) Grantor agrees that if it has been, or if at any time
hereafter it is, determined that the Trust Property contains Lead Based Paint,
on or before thirty (30) days following (i) the date hereof, if such
determination was made prior to the date hereof or (ii) such determination, if
such determination is hereafter made, as applicable, Grantor shall, at its sole
cost and expenses, develop and implement, and thereafter diligently and
continuously carry out (or cause to be developed and implemented and thereafter
diligently and continually to be carried out), an operations, abatement and
maintenance plan for the Lead Based Paint on the Trust Property, which plan
shall be prepared by an expert, and be in form, scope and substance, acceptable
to Beneficiary (together with any Lead Based Paint Report, the "O&M Plan"). (If
an O&M Plan has been prepared prior to the date hereof, Xxxxxxx agrees to
diligently and continually carry out (or cause to be carried out) the provisions
thereof.) Compliance with the O&M Plan shall require or be deemed to require,
without limitation, the proper preparation and maintenance of all records,
papers and forms required under the Environmental Laws.
1.32 Indemnification; Subrogation.
(a) Grantor shall indemnify, defend and hold Beneficiary
harmless against: (i) any and all claims for brokerage, leasing, finders or
similar fees which may be made relating to the Trust Property or the Debt, and
(ii) any and all liability, obligations, losses, damages, penalties, claims,
actions, suits, costs and expenses (including Beneficiary's reasonable
attorneys' fees) of whatever kind or nature which may be asserted against,
imposed on or incurred by Beneficiary in connection with the Debt, this Deed of
Trust, the Trust Property, or any part thereof, or the exercise by Beneficiary
of any rights or remedies granted to it under this Deed of Trust; provided,
however, that nothing herein shall be construed to obligate Grantor to
indemnify, defend and hold harmless Beneficiary from and against any and all
liabilities, obligations, losses, damages, penalties, claims, actions, suits,
costs and expenses enacted against, imposed on or incurred by Beneficiary by
reason of Beneficiary's willful misconduct or gross negligence or in connection
with Beneficiary effecting a Secondary Market Transaction.
(b) If Beneficiary is made a party defendant to any litigation
or any claim is threatened or brought against Beneficiary concerning the making
or enforcement of the Debt, this Deed of Trust, the Trust Property, or any part
thereof, or any interest therein, or the
43
construction, maintenance, operation or occupancy or use thereof, then Grantor
shall indemnify, defend and hold Beneficiary harmless from and against all
liability by reason of said litigation or claims, including reasonable
attorneys' fees and expenses incurred by Beneficiary in any such litigation or
claim, whether or not any such litigation or claim is prosecuted to judgment. If
Beneficiary commences an action against Grantor to enforce any of the terms
hereof or to prosecute any breach by Grantor of any of the terms hereof or to
recover any sum secured hereby, Grantor shall pay to Beneficiary its reasonable
attorneys' fees and expenses. The right to such attorneys' fees and expenses
shall be deemed to have accrued on the commencement of such action, and shall be
enforceable whether or not such action is prosecuted to judgment. If Grantor
breaches any term of this Deed of Trust, Beneficiary 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 Grantor, Grantor shall pay Beneficiary
reasonable attorneys' fees and expenses incurred by Beneficiary, whether or not
an action is actually commenced against Grantor by reason of such breach. All
references to "attorneys" in this Subsection and elsewhere in this Deed of Trust
shall include, without limitation, any attorney or law firm engaged by
Xxxxxxxxxxx and Beneficiary's in-house counsel, and all references to "fees and
expenses" in this Subsection and elsewhere in this Deed of Trust shall include,
without limitation, any fees of such attorney or law firm, any appellate counsel
fees, if applicable, and any allocation charges and allocation costs of
Beneficiary's in-house counsel.
(c) A waiver of subrogation shall be obtained by Grantor from
its insurance carrier and, consequently, Grantor waives any and all right to
claim or recover against Beneficiary, its officers, employees, agents and
representatives, for loss of or damage to Grantor, the Trust Property, Grantor's
property or the property of others under Grantor's control from any cause
insured against or required to be insured against by the provisions of this Deed
of Trust.
1.33 Covenants with Respect to Indebtedness, Operations, Fundamental
Changes of Grantor. Grantor hereby represents, warrants and covenants as of the
date hereof and until such time as the Debt is paid in full, that Grantor has
been, is, and shall remain a Single-Purpose Entity (as hereinafter defined).
Grantor has complied and will at all times comply, or if Grantor is a limited
partnership or a limited liability company, each general partner or the SPE
Member (as hereinafter defined) of Grantor (each, an "SPE Equity Owner"), has
complied, will at all times comply, and will cause Grantor to comply, with each
of the representations, warranties and covenants contained in this Section 1.33
as if such representation, warranty or covenant was made directly by Grantor or
such SPE Equity Owner, as the case may be. A "Single-Purpose Entity" or "SPE"
means a corporation, limited partnership, or limited liability company that:
(a) if a corporation, must have at least one Independent
Director (as hereinafter defined), or if requested by Beneficiary (which request
Grantor shall comply with within five (5) business days) in connection with a
Secondary Market Transaction, two Independent Directors, and must not take any
action that, under the terms of any certificate or articles of incorporation,
by-laws, or any voting trust agreement with respect to such entity's common
stock, requires the unanimous affirmative vote of 100% of the members of the
board of directors unless all of the directors, including, without limitation,
all Independent Directors, shall have participated in such vote ("SPE
Corporation"); provided, however, the foregoing
44
Independent Director requirement shall not apply unless and until a Sale and
pursuant to the requirements of Section 1.13(b)(11) hereof;
(b) if a limited partnership, must have each general partner
be an SPE Corporation;
(c) if a limited liability company, must have one managing
member (the "SPE Member") and such managing member must be an SPE Corporation.
Only the SPE Member may be designated as a manager under the Grantor's operating
agreement and pursuant to the law where the Grantor is organized. Grantor may be
a single member Delaware limited liability company without an SPE Corporation
managing member so long as Grantor has two "special members" who shall serve as
Independent Directors of Grantor; provided, however, the foregoing Independent
Director requirement shall not apply unless and until a Sale and pursuant to the
requirements of Section 1.13(b)(11) hereof;
(d) was and will be organized solely for the purpose of (i)
owning an interest in the Trust Property and the Other Mortgaged Properties,
(ii) acting as a general partner of a limited partnership that owns an interest
in the Trust Property and the Other Mortgaged Properties, or (iii) acting as the
member of a limited liability company that owns an interest in the Trust
Property and the Other Mortgaged Properties;
(e) will not, nor will any partner, limited or general, member
or shareholder thereof, as applicable, amend, modify or otherwise change its
partnership certificate, partnership agreement, articles of incorporation,
by-laws, operating agreement, articles of organization, or other formation
agreement or document, as applicable, in any material term or manner, or in a
manner which adversely affects Grantor's existence as a single purpose entity,
bankruptcy-remote entity;
(f) will not liquidate or dissolve (or suffer any liquidation
or dissolution), or enter into any transaction of merger or consolidation, or
acquire by purchase or otherwise all or substantially all the business or assets
of, or any stock or other evidence of beneficial ownership of any entity;
(g) has not and will not guarantee, pledge its assets for the
benefit of, or otherwise become liable on or in connection with, any obligation
of any other person or entity;
(h) does not own and will not own any asset other than (i) the
Trust Property, (ii) the Other Mortgaged Properties and (iii) incidental
personal property necessary for the operation of the Trust Property and the
Other Mortgaged Properties;
(i) is not engaged and will not engage, either directly or
indirectly, in any business other than the ownership, management and operation
of the Trust Property and the Other Mortgaged Properties;
(j) will not enter into any contract or agreement with any
general partner, affiliate or member of Grantor, as applicable, or any affiliate
of any general partner or member of
45
Grantor, 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 an affiliate;
(k) has not incurred and will not incur any debt, secured or
unsecured, direct or contingent (including guaranteeing any obligation), other
than (i) the Debt, (ii) affiliate advances or trade payables or accrued expenses
incurred in the ordinary course of business of operating the Trust Property and
the Other Mortgaged Properties customarily satisfied within thirty (30) days in
an aggregate amount, as to the Trust Property or each of Other Mortgaged
Properties, not to exceed one percent (1%) of the outstanding principal balance
of the Note or the respective Contemporaneous Note, as applicable, and no other
debt will be secured (senior, subordinate or pari passu) by the Trust Property;
(l) has not made and will not make any loans or advances to
any third party (including any affiliate);
(m) is and will be solvent and pay its debts from its assets
as the same shall become due;
(n) has done or caused to be done and will do all things
necessary to preserve its existence, and will observe all formalities
applicable to it;
(o) will conduct and operate its business in its own name and
as presently conducted and operated;
(p) will maintain financial statements, books and records and
bank accounts separate from those of its affiliates, including, without
limitation, its general partners or members, as applicable;
(q) will be, and at all times will hold itself out to the
public as, a legal entity separate and distinct from any other entity
(including, without limitation, any affiliate, general partner, or member, as
applicable, or any affiliate of any general partner or member of Grantor, as
applicable);
(r) will file its own tax returns; provided that for so long
as the Grantor is a qualified REIT subsidiary or includible on a consolidated
basis in the tax return of the REIT, Grantor shall only be required to have its
own employer identification number;
(s) will maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in light of
its contemplated business operations;
(t) will establish and maintain an office through which its
business will be conducted separate and apart from those of its affiliates and
shall allocate fairly and reasonably any overhead and expense for shared office
space;
46
(u) will not commingle the funds and other assets of
Grantor with those of any general partner, member, affiliate, principal or
any other person;
(v) has and will maintain its assets in such a manner that it
is not costly or difficult to segregate, ascertain or identify its individual
assets from those of any affiliate or any other person;
(w) does not and will not hold itself out to be responsible
for the debts or obligations of any other person;
(x) will pay any liabilities out of its own funds, including
salaries of its employees, not funds of any affiliate;
(y) will use stationery, invoices, and checks separate from
its affiliates; and
(z) As used in this Section 1.33, "Independent Director" shall
mean a duly appointed member of the board of directors of an SPE Corporation or
single member Delaware limited liability company who has not been at any time
during the five (5) years preceding his or her initial appointment, and shall
not be at any time while serving as Independent Director any of the following:
(a) a stockholder, director (other than in his or her capacity as an Independent
Director), officer, employee, partner, or member of Grantor, any SPE Equity
Owner, any partner, shareholder or member of any SPE Equity Owner, or any
affiliate of any of the foregoing; (b) a stockholder, director, officer,
employee, partner, or member of any customer of, supplier or service provider
(including professionals) to, or other person who derives more than 10% of its
purchases, revenues, compensation, or other financial remuneration from its
activities with Grantor, any SPE Equity Owner, any partner, shareholder or
member of any SPE Equity Owner, any affiliate of any of the foregoing, or any
person or entity who otherwise is financially dependent upon an officer,
director, or employee of Grantor, any SPE Equity Owner, any partner or member of
any SPE Equity Owner, or any family member (by blood or marriage) of any such
officer, director, or employee, or a business entity owned or controlled by any
of the foregoing; (c) a person or other entity controlling or under common
control with any such stockholder, director, officer, employee, partner, member,
customer, supplier or other person; or (d) a member of the immediate family of
any individual described in clause (a), (b) or (c) above. Notwithstanding
anything to the contrary contained herein, the Independent Director of a general
partner or managing member of Grantor shall be permitted to serve as an
Independent Director of other Special Purpose Entities which are now, or may in
the future be, established by any affiliate of Grantor, or any partner or member
of Grantor. As used in this subsection, the term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a person or entity, whether through ownership of
voting securities, by contract or otherwise. As used herein, the term
"affiliate" shall mean:
(i) any person or entity directly or indirectly owning,
controlling or holding with power to vote ten percent (10%) or more of
the outstanding voting securities or interests of such other person or
entity;
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(ii) any person or entity ten percent (10%) or more of whose
outstanding voting securities are directly or indirectly owned,
controlled or held with power to vote by such other person or entity;
(iii) any person or entity directly or indirectly controlling,
controlled by or under common control with such other person or entity;
(iv) any officer, director or partner of such other person or
entity;
(v) if such other person or entity is an officer, director or
partner, any company for which such person or entity acts in any such
capacity; and
(vi) any close relative or spouse of the specified person.
1.34 Intentionally Deleted
1.35 ERISA.
(a) Grantor shall not engage in any transaction which would
cause any obligation, or action taken or to be taken, hereunder (or the exercise
by Beneficiary of any of its rights under the Note, this Deed of Trust or any of
the other Loan Documents) to be a non-exempt (under a statutory or
administrative class exemption) prohibited transaction under ERISA.
(b) Grantor further covenants and agrees to deliver to
Beneficiary such certifications or other evidence from time to time throughout
the term of this Deed of Trust, as requested by Beneficiary in its sole
discretion, that (i) Grantor is not an "employee benefit plan" as defined in
Section 3(32) of ERISA, which is subject to Title I of ERISA, or a "governmental
plan" within the meaning of Section 3(3) of ERISA; (ii) Grantor 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:
(1) Equity interests in Grantor are publicly offered
securities within the meaning of 29 C.F.R. Section 2510.3-101(b)(2);
(2) Less than 25 percent of each outstanding class of equity
interests in Grantor are held by "benefit plan investors" within the
meaning of 29 C.F.R. Section 2510.3-101(f)(2); or
(3) Grantor qualifies as an "operating company" within the
meaning of 29 C.F.R. Section 2510.3-101 or an investment company
registered under the Investment Company Act of 1940.
(c) Grantor shall indemnify Beneficiary and defend and hold
Beneficiary harmless from and against all civil penalties, excise taxes, or
other loss, cost damage and expense (including, without limitation, reasonable
attorneys' fees and disbursements and costs incurred in
48
the investigation, defense and settlement of claims and losses incurred in
correcting any prohibited transaction or in the sale of a prohibited loan, and
in obtaining any individual prohibited transaction exemption under ERISA that
may be required, in Beneficiary's sole discretion) that Beneficiary may incur,
directly or indirectly, as a result of a default under this Section. This
indemnity shall survive any termination, satisfaction or foreclosure of this
Deed of Trust.
1.36 Springing Lock-Box Account. At Beneficiary's election following
the occurrence and continuance of an Event of Default or if the debt service
coverage ratio of the Trust Property and all Other Mortgaged Properties falls
below 1.15:1, as determined by Beneficiary, Beneficiary may require Grantor to
enter into one or more clearing and deposit agreements acceptable to Beneficiary
between Grantor, Beneficiary and one or more certain financial institutions
(which may be Beneficiary or an affiliate or subsidiary of Beneficiary)
acceptable to Beneficiary (together with any modification, amendment,
substitution or replacement thereof, hereinafter collectively referred to as the
"Lock-Box Agreement") in Beneficiary's then current form which shall provide,
among other things, that all Rents and other sums collected from, or arising
with respect to, the Trust Property be deposited in the deposit account (the
"Lock-Box Account") established in connection with such Lock-Box Agreement,
which may be an interest-bearing account, and that such amounts shall be
disbursed in accordance with the Lock-Box Agreement. Grantor shall not have a
right of withdrawal in respect to the Lock-Box Account. Grantor shall pay all
reasonable costs and expenses incurred in creating and maintaining the Lock-Box
Agreement and all of Beneficiary's reasonable out-of-pocket costs and expenses
in connection with the preparation and negotiation of the Lock-Box Agreement.
Immediately following Beneficiary's election to require that Grantor establish
the Lock-Box Account, Grantor shall deliver to Beneficiary for delivery, at
Grantor's expense, by certified mail, return receipt requested, to all Tenants
of the Trust Property an irrevocable written notice in the form attached hereto
as Exhibit D (or such other form as may be attached to the Lock-Box Agreement)
directing such tenants to pay their rent and other amounts due under their
leases to the depository under the Lock-Box Agreement for deposit into the
Lock-Box Account. Additionally, each Lease executed on or after the date of the
Lock-Box Agreement affecting any of the Premises or Improvements must provide,
in a manner approved by Beneficiary, that the Tenant is required to make all
payments due to Grantor under the terms of such lease, license or occupancy
agreement to the depository of the Lock-Box Account by check, cashiers check or
money order made payable to Beneficiary or its successors or assigns. Upon the
occurrence and continuance of any Event of Default, Beneficiary shall apply any
sums then held pursuant to the Lock-Box Agreement (other than security deposits)
to the payment of the Debt in any order in its sole discretion. Until expended
or applied, amounts held in the Lock-Box Account pursuant to the Lock-Box
Agreement (other than security deposits) shall constitute additional security
for the Debt. The Lock-Box Agreement, when and if executed, shall be a "Loan
Document" for all purposes under the Note, this Deed of Trust and the other Loan
Documents. Grantor hereby irrevocably constitutes and appoints Beneficiary the
attorney-in-fact of Grantor, coupled with an interest, to, upon Xxxxxxx's
failure to do so in accordance with the terms hereof, without notice to Grantor,
execute and deliver the Lock-Box Agreement and the notices to tenants described
in this Section 1.36 and to take any other action reasonably necessary or
desirable in Beneficiary's judgment to carry out the intention of this Section
1.36.
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ARTICLE II.
EVENTS OF DEFAULT
2.1 Events of Default. The occurrence of any of the following
events shall be an Event of Default hereunder:
(a) Grantor fails to pay any money to Beneficiary required
hereunder at the time or within any applicable grace period set forth herein or
in any other Loan Document, or if no grace period is set forth herein or
therein, then within seven (7) days after the date of Beneficiary's written
notice to Grantor that such payment is due (except those regarding payments to
be made under the Note, which failure is subject to any grace periods set forth
in the Note).
(b) Grantor fails to provide insurance as required by Section
1.4 hereof or fails to perform any material covenant, agreement, obligation,
term or condition set forth in Section 1.31 or Section 1.33 hereof (provided,
however, so long as Grantor shall be undertaking any obligations required under
Section 1.31 in accordance with Environmental Laws, Grantor shall be entitled to
such time as may reasonably required to fulfill such obligations so long as the
same are completed within any timeframe established under applicable law or
governmental authority).
(c) Grantor fails to perform any other covenant, agreement,
obligation, term or condition set forth herein or in any other Loan Document,
other than those otherwise described in this Section 2.1, and, to the extent
such failure or default is susceptible of being cured, the continuance of such
failure or default for thirty (30) days after written notice thereof from
Beneficiary to Grantor; provided, however, that if such default is susceptible
of cure but such cure cannot be accomplished with reasonable diligence within
said period of time, and if Grantor commences to cure such default promptly
after receipt of written notice thereof from Beneficiary, and thereafter
prosecutes the curing of such default with reasonable diligence, such period of
time shall be extended for such period of time as may be necessary to cure such
default with reasonable diligence, but not to exceed an additional ninety (90)
days.
(d) Any representation or warranty made herein, in or in
connection with any application or commitment relating to the loan evidenced by
the Note, or in any of the other Loan Documents to Beneficiary by Grantor, by
any general partner, manager or member in Grantor, or by any Indemnitor is
determined by Beneficiary to have been false or misleading in any material
respect at the time made and any such false or misleading representation or
warranty has resulted in a Material Adverse Effect.
(e) There shall be a sale, conveyance, disposition,
alienation, hypothecation, leasing, assignment, pledge, mortgage, granting of a
security interest in or other transfer or further encumbrancing of the Trust
Property, Grantor or its general partners or managing members, or any portion
thereof or any interest therein, in violation of Section 1.13 hereof.
(x) Xxxxxxx, general partner or managing member in Grantor or
any Indemnitor becomes insolvent, or makes a transfer in fraud of creditors, or
makes an assignment
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for the benefit of creditors, or files a petition in bankruptcy, or is
voluntarily adjudicated insolvent or bankrupt or admits in writing the inability
to pay its debts as they mature, or petitions or applies to any tribunal for or
consents to or fails to contest the appointment of a receiver, trustee,
custodian or similar officer for Grantor, for any such general partner or
managing member of Grantor or for any Indemnitor or for a substantial part of
the assets of Grantor, of any such general partner or managing member of Grantor
or of any Indemnitor, or commences any case, proceeding or other action under
any bankruptcy, reorganization, arrangement, readjustment or debt, dissolution
or liquidation law or statute of any jurisdiction, whether now or hereafter in
effect.
(g) A petition is filed or any case, proceeding or other
action is commenced against Grantor, against any general partner or managing
member, as the case may be, of Grantor or against any Indemnitor seeking to have
an order for relief entered against it as debtor or seeking reorganization,
arrangement, adjustment, liquidation, dissolution or composition of it or its
debts or other relief under any law relating to bankruptcy, insolvency,
arrangement, reorganization, receivership or other debtor relief under any law
or statute of any jurisdiction, whether now or hereafter in effect, or a court
of competent jurisdiction enters an order for relief against Grantor, against
any general partner or managing member, as the case may be, of Grantor or
against any Indemnitor, as debtor, or an order, judgment or decree is entered
appointing, with or without the consent of Grantor, of any such general partner
or managing member, as the case may be, of Grantor or of any Indemnitor, a
receiver, trustee, custodian or similar officer for Grantor, for any such
general partner or managing member, as the case may be, of Grantor or for any
Indemnitor, or for any substantial part of any of the properties of Grantor, of
any such general partner or managing member, as the case may be, of Grantor or
of any Indemnitor, and if any such event shall occur, such petition, case,
proceeding, action, order, judgment or decree is not dismissed within sixty (60)
days after being commenced.
(h) The Trust Property or any part thereof is taken on
execution or other process of law in any final and non-appealable legal
proceeding, without the right of redemption against Grantor, other than in
connection a condemnation or the exercise of the power of eminent domain or
police power.
(i) Grantor abandons all or a material portion of the Trust
Property for a period in excess of thirty (30) consecutive days other than as a
result of a force majeure.
(j) The holder of any lien or security interest on the Trust
Property (without implying the consent of Beneficiary to the existence or
creation of any such lien or security interest), whether superior or subordinate
to this Deed of Trust or any of the other Loan Documents, declares a default and
such default is not cured within any applicable grace or cure period set forth
in the applicable document or such holder institutes foreclosure or other
proceedings for the enforcement of its remedies thereunder.
(k) The Trust Property, or any part thereof, is subjected to
waste or to removal, demolition or material alteration so that the value of the
Trust Property is materially diminished thereby and Beneficiary determines that
it is not adequately protected from any loss, damage or risk associated
therewith.
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(l) Any dissolution, termination, partial or complete
liquidation, merger or consolidation of Grantor, any general partner or any
managing member, or any Indemnitor.
(m) The occurrence and continuance of an Event of Default
under any of the Contemporaneous Notes, the Contemporaneous Mortgages or the
Contemporaneous Assignments.
ARTICLE III.
REMEDIES
3.1 Remedies Available. If there shall occur and be continuing an Event
of Default under this Deed of Trust, then this Deed of Trust is subject to
foreclosure as provided by law and Beneficiary may, at its option and by or
through a trustee, nominee, assignee or otherwise (including, without
limitation, the Trustee), to the fullest extent permitted by law, exercise any
or all of the following rights, remedies and recourses, either successively or
concurrently:
(a) Acceleration. Accelerate the maturity date of the Note and
declare any or all of the Debt to be immediately due and payable without any
presentment, demand, protest, notice or action of any kind whatever (each of
which is hereby expressly waived by Grantor), whereupon the same shall become
immediately due and payable. Upon any such acceleration, payment of such
accelerated amount shall constitute a prepayment of the principal balance of the
Note and any applicable prepayment fee provided for in the Note shall then be
immediately due and payable.
(b) Entry on the Trust Property. Either in person or by agent,
with or without bringing any action or proceeding, or by a receiver appointed by
a court and without regard to the adequacy of its security, enter upon and take
possession of the Trust Property, or any part thereof, without force or with
such force as is permitted by law and without notice or process or with such
notice or process as is required by law, unless such notice and process is
waivable, in which case Grantor hereby waives such notice and process, and do
any and all acts and perform any and all work which may be desirable or
necessary in Beneficiary's judgment to complete any unfinished construction on
the Premises, to preserve the value, marketability or rentability of the Trust
Property, to increase the income therefrom, to manage and operate the Trust
Property or to protect the security hereof, and all sums expended by Beneficiary
therefor, together with interest thereon at the Default Interest Rate, shall be
immediately due and payable to Beneficiary by Grantor on demand and shall be
secured hereby and by all of the other Loan Documents securing all or any part
of the Debt.
(c) Collect Rents. With or without taking possession of the
Trust Property, sue or otherwise collect the Rents, including those past due and
unpaid.
(d) Appointment of Receiver. Upon, or at any time prior or
after, initiating the exercise of any power of sale, instituting any judicial
foreclosure or instituting any other foreclosure of the liens and security
interests provided for herein or any other legal proceedings hereunder, make
application to a court of competent jurisdiction for appointment of a receiver
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for all or any part of the Trust Property, as a matter of strict right and
without notice to Grantor and without regard to the adequacy of the Trust
Property for the repayment of the Debt or the solvency of Grantor or any person
or persons liable for the payment of the Debt, and Grantor does hereby
irrevocably consent to such appointment, waive any and all notices of and
defenses to such appointment and agree not to oppose any application therefor by
Beneficiary, but nothing herein is to be construed to deprive Beneficiary of any
other right, remedy or privilege Beneficiary may now have under the law to have
a receiver appointed, provided, however, that the appointment of such receiver,
trustee or other appointee by virtue of any court order, statute or regulation
shall not impair or in any manner prejudice the rights of Beneficiary to receive
payment of the Rents pursuant to other terms and provisions hereof. Any such
receiver shall have all of the usual powers and duties of receivers in similar
cases, including, without limitation, the full power to hold, develop, rent,
lease, manage, maintain, operate and otherwise use or permit the use of the
Trust Property upon such terms and conditions as said receiver may deem to be
prudent and reasonable under the circumstances as more fully set forth in
Section 3.3 below. Such receivership shall, at the option of Beneficiary,
continue until full payment of all of the Debt or until title to the Trust
Property subject to foreclosure shall have passed by foreclosure sale under this
Deed of Trust or deed in lieu of foreclosure.
(e) Foreclosure. Immediately commence an action to foreclose
this Deed of Trust or to specifically enforce its provisions with respect to any
of the Debt, pursuant to applicable law, and sell the Trust Property or cause
the Trust Property subject to foreclosure hereunder to be sold in accordance
with the requirements and procedures provided by said statutes in a single
parcel or in several parcels at the option of Beneficiary. In the event
foreclosure proceedings are instituted by Beneficiary, all expenses incident to
such proceedings, including, but not limited to, reasonable attorneys' fees and
costs, shall be paid by Grantor and secured by this Deed of Trust and by all of
the other Loan Documents securing all or any part of the Debt. The Debt and all
other obligations secured by this Deed of Trust, including, without limitation,
interest at the Default Interest Rate any prepayment charge, fee or premium
required to be paid under the Note in order to prepay principal (to the extent
permitted by applicable law), reasonable attorneys' fees and any other amounts
due and unpaid to Beneficiary under the Loan Documents, may be bid by
Beneficiary in the event of a foreclosure sale hereunder. In the event of a
judicial sale pursuant to a foreclosure decree, it is understood and agreed that
Beneficiary or its assigns may become the purchaser of such Trust Property or
any part thereof.
(f) Judicial Remedies. Proceed by suit or suits, at law or in
equity, instituted by or on behalf of Beneficiary, upon written request of
Beneficiary, to enforce the payment of the Debt or the other obligations of
Grantor hereunder or pursuant to the Loan Documents, to foreclose the liens and
security interests of this Deed of Trust as against all or any part of the Trust
Property, and to have all or any part of the Trust Property sold under the
judgment or decree of a court of competent jurisdiction. This remedy shall be
cumulative of any other non-judicial remedies available to Beneficiary with
respect to the Loan Documents. Proceeding with the request or receiving a
judgment for legal relief shall not be or be deemed to be an election of
remedies or bar any available non-judicial remedy of Beneficiary.
(g) Sale of Property. (i) Trustee, at the request of
Beneficiary, shall have the power to sell the Trust Property subject to
foreclosure hereunder or any part thereof at public
53
auction, in such manner, at such time, and place, upon such terms and
conditions, and upon such public notice as may be required or permitted by
applicable law, consisting of advertisement in a newspaper of general
circulation in the jurisdiction and for such period as applicable law may
require and at such other times and by such other methods, if any, as may be
required by law to convey such Trust Property in fee simple by trustee's deed
with special warranty of title to and at the cost of the purchaser, who shall
not be liable to see to the application of the purchase money. The proceeds or
avails of any sale made under or by virtue of this paragraph, together with any
other sums which then may be held by Beneficiary under this Deed of Trust,
whether under the provisions of this paragraph or otherwise, shall be applied as
provided in Section 3.2 hereof. Beneficiary, Trustee and any receiver or
custodian of the Trust Property or any part thereof shall be liable to account
for only those rents, issues, proceeds and profits actually received by it.
(ii) Beneficiary and Trustee, as applicable, may adjourn from
time to time any sale by it to be made under or by virtue of this Deed of Trust
by announcement at the time and place appointed for such sale or for such
adjourned sale or sales and, except as otherwise provided by any applicable law,
Beneficiary or Trustee, without further notice or publication, may make such
sale at the time and place to which the same shall be so adjourned.
(iii) Upon the completion of any sale or sales ordered by
Beneficiary and made by Trustee under or by virtue of this paragraph,
Beneficiary or Trustee, or any officer of any court empowered to do so, shall
execute and deliver to the accepted purchaser or purchasers a good and
sufficient instrument, or good and sufficient instruments, granting, conveying,
assigning and transferring all estate, right, title and interest in and to the
property and rights sold. Trustee is hereby irrevocably appointed the true and
lawful attorney-in-fact for Grantor (coupled with an interest), in its name and
stead, to make all necessary conveyances, assignments, transfers and deliveries
of the property and rights so sold and for that purpose Trustee may execute all
necessary instruments of conveyance, assignment, transfer and delivery, and may
substitute one or more persons with like power, Grantor hereby ratifying and
confirming all that its said attorney-in-fact or such substitute or substitutes
shall lawfully do by virtue hereof. Nevertheless, Grantor, if so requested by
Trustee or Beneficiary, shall ratify and confirm any such sale or sales by
executing and delivering to Beneficiary, or to such purchaser or purchasers all
such instruments as may be advisable, in the sole judgment of Beneficiary, for
such purpose, and as may be designated in such request. Any such sale or sales
made under or by virtue or this paragraph, whether made under the power of sale
herein granted or under or by virtue of judicial proceedings or a judgment or
decree of foreclosure and sale, shall operate to divest all the estate, right,
title, interest, claim and demand whatsoever, whether at law or in equity, of
Grantor in and to the property and rights so sold, and shall, to the fullest
extent permitted under law, be a perpetual bar both at law and in equity against
Grantor and against any and all persons claiming or who may claim the same, or
any party thereof, from, through or under Grantor.
(iv) In the event of any sale made under or by virtue of this
Deed of Trust (whether made under the power of sale herein granted or under or
by virtue of judicial proceedings or a judgment or decree of foreclosure and
sale), the entire Debt relative to the Trust Property, immediately thereupon
shall, anything in the Note, this Deed of Trust or any other of the Loan
Documents to the contrary notwithstanding, become due and payable.
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(v) Upon any sale under or by virtue of this Deed of Trust
(whether made under the power of sale herein granted or under or by virtue of
judicial proceedings or a judgment or decree of foreclosure and sale),
Beneficiary may bid for and acquire the Trust Property or any part thereof and
in lieu of paying cash therefor may make settlement for the purchase price by
crediting the Debt to and against the net sales price after deducting therefrom
the expenses of the sale and the costs of the action.
(vi) No recovery of any judgment by Xxxxxxxxxxx and no levy of
an execution under any judgment upon the Trust Property or any part thereof or
upon any other property of Grantor shall release the lien of this Deed of Trust
upon the Trust Property or any part thereof, or any liens, rights, powers or
remedies of Beneficiary hereunder, but such liens, rights, powers and remedies
of Beneficiary shall continue unimpaired until the entire Debt is paid in full.
(h) Other. Exercise any other right or remedy available
hereunder, under any of the other Loan Documents or at law or in equity.
3.2 Application of Proceeds. To the fullest extent permitted by law,
the proceeds of any sale under this Deed of Trust following the occurrence and
continuance of an Event of Default shall be applied, to the extent funds are so
available, to the following items in such order as Beneficiary in its discretion
may determine:
(a) To payment of the reasonable costs, expenses and fees of
taking possession of the Trust Property, and of holding, operating, maintaining,
using, leasing, repairing, improving, marketing and selling the same and of
otherwise enforcing Beneficiary's rights and remedies hereunder and under the
other Loan Documents, including, but not limited to, receivers' fees, court
costs, attorneys', accountants', appraisers', managers' and other professional
fees, title charges and transfer taxes.
(b) To payment of all sums expended by Beneficiary under the
terms of any of the Loan Documents and not yet repaid, together with interest on
such sums at the Default Interest Rate.
(c) To payment of the Debt and all other obligations secured
by this Deed of Trust, including, without limitation, interest at the Default
Interest Rate and, to the extent permitted by applicable law, any prepayment
fee, charge or premium required to be paid under the Note in order to prepay
principal, subject to applicable law, in any order that Beneficiary chooses in
its sole discretion.
(d) The remainder, if any, of such funds shall be disbursed to
Grantor or to the person or persons legally entitled thereto.
3.3 Right and Authority of Receiver or Beneficiary in the Event of
Default; Power of Attorney. Upon the occurrence and continuance of an Event of
Default, and entry upon the Trust Property pursuant to Section 3.1(b) hereof or
appointment of a receiver pursuant to Section 3.1(d) hereof, and under such
terms and conditions as may be prudent and reasonable under the circumstances in
Beneficiary's or the receiver's sole discretion, all at Grantor's expense,
55
Beneficiary or said receiver, or such other persons or entities as they shall
hire, direct or engage, as the case may be, may do or permit one or more of the
following, successively or concurrently: (a) enter upon and take possession and
control of any and all of the Trust Property; (b) take and maintain possession
of all documents, books, records, papers and accounts relating to the Trust
Property; (c) exclude Grantor and its agents, servants and employees wholly from
the Trust Property; (d) manage and operate the Trust Property; (e) preserve and
maintain the Trust Property; (f) make repairs and alterations to the Trust
Property; (g) complete any construction or repair of the Improvements, with such
changes, additions or modifications of the plans and specifications or intended
disposition and use of the Improvements as Beneficiary may in its sole
discretion deem appropriate or desirable to place the Trust Property in such
condition as will, in Beneficiary's sole discretion, make it or any part thereof
readily marketable or rentable; (h) conduct a marketing or leasing program with
respect to the Trust Property, or employ a marketing or leasing agent or agents
to do so, directed to the leasing or sale of the Trust Property under such terms
and conditions as Beneficiary may in its sole discretion deem appropriate or
desirable; (i) employ such contractors, subcontractors, materialmen, architects,
engineers, consultants, managers, brokers, marketing agents, or other employees,
agents, independent contractors or professionals, as Beneficiary may in its sole
discretion deem appropriate or desirable to implement and effectuate the rights
and powers herein granted; (j) execute and deliver, in the name of Beneficiary
as attorney-in-fact and agent of Grantor or in its own name as Beneficiary, such
documents and instruments as are necessary or appropriate to consummate
transactions authorized hereunder; (k) enter such leases, whether of real or
personal property, or tenancy agreements, under such terms and conditions as
Beneficiary may in its sole discretion deem appropriate or desirable; (1)
collect and receive the Rents from the Trust Property; (m) eject tenants or
repossess personal property, as provided by law, for breaches of the conditions
of their leases or other agreements; (n) sue for unpaid Rents, payments, income
or proceeds in the name of Grantor or Beneficiary; (o) maintain actions in
forcible entry and detainer, ejectment for possession and actions in distress
for rent; (p) compromise or give acquittance for Rents, payments, income or
proceeds that may become due; (q) delegate or assign any and all rights and
powers given to Beneficiary by this Deed of Trust; and (r) do any acts which
Beneficiary in its sole discretion deems appropriate or desirable to protect the
security hereof and use such measures, legal or equitable, as Beneficiary may in
its sole discretion deem appropriate or desirable to implement and effectuate
the provisions of this Deed of Trust. This Deed of Trust shall constitute a
direction to and full authority to any lessee, or other third party who has
heretofore dealt or contracted or may hereafter deal or contract with Grantor or
Beneficiary, at the request of Beneficiary following the occurrence and
continuance of an Event of Default or as otherwise provided in the Loan
Documents, to pay all amounts owing under any lease, contract, concession,
license or other agreement to Beneficiary without proof of the Event of Default
relied upon. Any such lessee or third party is hereby irrevocably authorized to
rely upon and comply with (and shall be fully protected by Grantor in so doing)
any request, notice or demand by Beneficiary for the payment to Beneficiary of
any Rents or other sums which may be or thereafter become due under its lease,
contract, concession, license or other agreement, or for the performance of any
undertakings under any such lease, contract, concession, license or other
agreement, and shall have no right or duty to inquire whether any Event of
Default under this Deed of Trust or under any of the other Loan Documents has
actually occurred or is then existing. Grantor hereby constitutes and appoints
Beneficiary, its assignees, successors, transferees and nominees, as Xxxxxxx's
true and lawful attorney-in-fact and agent, with full
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power of substitution in the Trust Property, in Grantor's name, place and stead,
to do or permit any one or more of the foregoing described rights, remedies,
powers and authorities, successively or concurrently, and said power of attorney
shall be deemed a power coupled with an interest and irrevocable so long as any
portion of the Debt is outstanding. Any money advanced by Beneficiary in
connection with any action taken under this Section 3.3, together with interest
thereon at the Default Interest Rate from the date of making such advancement by
Beneficiary until actually paid by Grantor, shall be a demand obligation owing
by Grantor to Beneficiary and shall be secured by this Deed of Trust and by
every other instrument securing all or any portion of the Debt.
3.4 Occupancy After Foreclosure. In the event there is a foreclosure
sale hereunder resulting from the occurrence and continuance of an Event of
Default, and at the time of such sale, Grantor or Grantor's representatives,
successors or assigns, or any other persons claiming any interest in the Trust
Property by, through or under Grantor (except Tenants of space in the
Improvements subject to Leases), are occupying or using the Trust Property, or
any part thereof, then, to the extent not prohibited by applicable law, each and
all shall, at the option of Beneficiary or the purchaser at such sale, as the
case may be, immediately become the tenant of the purchaser at such sale, which
tenancy shall be a tenancy from day-to-day, terminable at the will of either
landlord or tenant, at a reasonable rental per day based upon the value of the
Trust Property occupied or used, such rental to be due daily to the purchaser.
Further, to the extent permitted by applicable law, in the event the tenant
fails to surrender possession of the Trust Property upon the termination of such
tenancy, the purchaser shall be entitled to institute and maintain an action for
unlawful detainer of the Trust Property in the appropriate court of the county
in which the Premises is located.
3.5 Notice to Account Debtors. Beneficiary may, at any time after the
occurrence and continuance of an Event of Default, notify the account debtors
and obligors of any accounts, chattel paper, negotiable instruments or other
evidences of indebtedness to Grantor included in the Trust Property to pay
Beneficiary directly. Grantor shall at any time or from time to time upon the
request of Beneficiary following the occurrence and continuance of an Event of
Default, provide to Beneficiary a current list of all such account debtors and
obligors and their addresses.
3.6 Cumulative Remedies. All remedies contained in this Deed of Trust
are cumulative and Beneficiary shall also have all other remedies provided at
law and in equity or in any other Loan Documents. Such remedies may be pursued
separately, successively or concurrently at the sole subjective direction of
Beneficiary and may be exercised in any order and as often as occasion therefor
shall arise. No act of Beneficiary shall be construed as an election to proceed
under any particular provisions of this Deed of Trust to the exclusion of any
other provision of this Deed of Trust or as an election of remedies to the
exclusion of any other remedy which may then or thereafter be available to
Beneficiary. No delay or failure by Beneficiary to exercise any right or remedy
under this Deed of Trust shall be construed to be a waiver of that right or
remedy or of any Event of Default. Beneficiary may exercise any one or more of
its rights and remedies at its option without regard to the adequacy of its
security.
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3.7 Payment of Expenses. Grantor shall pay on demand all of
Beneficiary's expenses incurred in any efforts to enforce any terms of this Deed
of Trust, whether or not any lawsuit is filed and whether or not foreclosure is
commenced but not completed, including, but not limited to, reasonable legal
fees and disbursements, foreclosure costs and title charges, together with
interest thereon from and after the date incurred by Beneficiary until actually
paid by Grantor at the Default Interest Rate, and the same shall be secured by
this Deed of Trust and by all of the other Loan Documents securing all or any
part of the Debt.
ARTICLE IV.
MISCELLANEOUS TERMS AND CONDITIONS
4.1 Time of Essence. Time is of the essence with respect to all
provisions of this Deed of Trust.
4.2 Release of Deed of Trust. If all of the Debt be paid, then and in
that event only, all rights under this Deed of Trust, except for those
provisions hereof which by their terms survive, shall terminate and the Trust
Property shall become wholly clear of the liens, security interests, conveyances
and assignments evidenced hereby, which shall be promptly released of record by
Beneficiary in due form at Grantor's cost. No release of this Deed of Trust or
the lien hereof shall be valid unless executed by Beneficiary.
4.3 Certain Rights of Beneficiary. Without affecting Grantor's
liability for the payment of any of the Debt, Beneficiary may from time to time
and without notice to Grantor: (a) release any person liable for the payment of
the Debt; (b) extend or modify the terms of payment of the Debt; (c) accept
additional real or personal property of any kind as security or alter,
substitute or release any property securing the Debt; (d) recover any part of
the Trust Property; (e) consent in writing to the making of any subdivision map
or plat thereof; (f) join in granting any easement therein; or (g) join in any
extension agreement of this Deed of Trust or any agreement subordinating the
lien hereof.
4.4 Waiver of Certain Defenses. No action for the enforcement of the
lien hereof or of any provision hereof shall be subject to any defense which
would not be good and available to the party interposing the same in an action
at law upon the Note or any of the other Loan Documents.
4.5 Notices. All notices, demands, requests or other communications to
be sent by one party to the other hereunder or required by law shall be in
writing and shall be deemed to have been validly given or served by delivery of
the same in person to the intended addressee, or by depositing the same with
Federal Express or another reputable private courier service for next business
day delivery, or by depositing the same in the United States mail, postage
prepaid, registered or certified mail, return receipt requested, in any event
addressed to the intended addressee at its address set forth on the first page
of this Deed of Trust or at such other address as may be designated by such
party as herein provided. All notices, demands and requests shall be effective
upon such personal delivery, or one (1) business day after being deposited with
the private courier service, or two (2) business days after being deposited in
the United States mail as required above. Rejection or other refusal to accept
or the inability to deliver because of
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changed address of which no notice was given as herein required shall be deemed
to be receipt of the notice, demand or request sent. By giving to the other
party hereto at least fifteen (15) days' prior written notice thereof in
accordance with the provisions hereof, the parties hereto shall have the right
from time to time to change their respective addresses and each shall have the
right to specify as its address any other address within the United States of
America.
4.6 Successors and Assigns; Joint and Several Liability. The terms,
provisions, indemnities, covenants and conditions hereof shall be binding upon
Grantor and the successors and assigns of Grantor, including all successors in
interest of Grantor in and to all or any part of the Trust Property, and shall
inure to the benefit of Beneficiary, its directors, officers, shareholders,
employees and agents and their respective successors and assigns and shall
constitute covenants running with the land. All references in this Deed of Trust
to Grantor or Beneficiary shall be deemed to include all such parties'
successors and assigns, and the term "Beneficiary" as used herein shall also
mean and refer to any lawful holder or owner, including pledgees and
participants, of any of the Debt.
4.7 Severability. A determination that any provision of this Deed of
Trust is unenforceable or invalid shall not affect the enforceability or
validity of any other provision, and any determination that the application of
any provision of this Deed of Trust to any person or circumstance is illegal or
unenforceable shall not affect the enforceability or validity of such provision
as it may apply to any other persons or circumstances.
4.8 Gender. Within this Deed of Trust, words of any gender shall be
held and construed to include any other gender, and words in the singular shall
be held and construed to include the plural, and vice versa, unless the context
otherwise requires.
4.9 Waiver; Discontinuance of Proceedings. Beneficiary may waive any
single Event of Default by Grantor hereunder without waiving any other prior or
subsequent Event of Default. Beneficiary may remedy any Event of Default by
Grantor hereunder without waiving the Event of Default remedied. Neither the
failure by Beneficiary to exercise, nor the delay by Beneficiary in exercising,
any right, power or remedy upon any Event of Default by Grantor hereunder shall
be construed as a waiver of such Event of Default or as a waiver of the right to
exercise any such right, power or remedy at a later date. No single or partial
exercise by Beneficiary of any right, power or remedy hereunder shall exhaust
the same or shall preclude any other or further exercise thereof, and every such
right, power or remedy hereunder may be exercised at any time and from time to
time. No modification or waiver of any provision hereof nor consent to any
departure by Grantor therefrom shall in any event be effective unless the same
shall be in writing and signed by Beneficiary, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
given. No notice to nor demand on Grantor in any case shall of itself entitle
Grantor to any other or further notice or demand in similar or other
circumstances. Acceptance by Beneficiary of any payment in an amount less than
the amount then due on any of the Debt shall be deemed an acceptance on account
only and shall not in any way affect the existence of an Event of Default. In
case Beneficiary shall have proceeded to invoke any right, remedy or recourse
permitted hereunder or under the other Loan Documents and shall thereafter elect
to discontinue or abandon the same for any reason, Beneficiary shall have the
unqualified right to do so and, in such an event, Grantor and Beneficiary shall
be restored to their former
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positions with respect to the Debt, the Loan Documents, the Trust Property and
otherwise, and the rights, remedies, recourses and powers of Beneficiary shall
continue as if the same had never been invoked.
4.10 Section Headings. The headings of the sections and paragraphs
of this Deed of Trust are for convenience of reference only, are not to be
considered a part hereof and shall not limit or otherwise affect any of the
terms hereof.
4.11 GOVERNING LAW. THIS DEED OF TRUST WILL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE IN WHICH THE PREMISES IS
LOCATED, PROVIDED THAT TO THE EXTENT THAT ANY OF SUCH LAWS MAY NOW OR HEREAFTER
BE PREEMPTED BY FEDERAL LAW, SUCH FEDERAL LAW SHALL SO GOVERN AND BE
CONTROLLING, AND PROVIDED FURTHER THAT THE LAWS OF THE STATE IN WHICH THE
PREMISES IS LOCATED SHALL GOVERN AS TO THE CREATION, PRIORITY AND ENFORCEMENT OF
LIENS AND SECURITY INTERESTS IN THE TRUST PROPERTY LOCATED IN SUCH STATE.
4.12 Counting of Days. The term "days" when used herein shall mean
calendar days. If any time period ends on a Saturday, Sunday or holiday
officially recognized by the state within which the Premises is located, the
period shall be deemed to end on the next succeeding business day. The term
"business day" when used herein shall mean a weekday, Monday through Friday,
except a legal holiday or a day on which banking institutions in New York, New
York are authorized by law to be closed.
4.13 Relationship of the Parties. The relationship between Grantor and
Beneficiary is that of a borrower and a lender only and neither of those parties
is, nor shall it hold itself out to be, the agent, employee, joint venturer or
partner of the other party.
4.14 Application of the Proceeds of the Note. To the extent that
proceeds of the Note are used to pay indebtedness secured by any outstanding
lien, security interest, charge or prior encumbrance against the Trust Property,
such proceeds have been advanced by Beneficiary at Grantor's request and
Beneficiary shall be subrogated to any and all rights, security interests and
liens owned by any owner or holder of such outstanding liens, security
interests, charges or encumbrances, irrespective of whether said liens, security
interests, charges or encumbrances are released.
4.15 Unsecured Portion of Indebtedness. If any part of the Debt cannot
be lawfully secured by this Deed of Trust or if any part of the Trust Property
cannot be lawfully subject to the lien and security interest hereof to the full
extent of such indebtedness, then all payments made shall be applied on said
indebtedness first in discharge of that portion thereof which is unsecured by
this Deed of Trust.
4.16 Cross-Default; Cross-Collateralization; Severance of Loans.
Grantor acknowledges that Beneficiary has made the loan evidenced by the Note to
Grantor upon the security of its collective interest in the Trust Property and
Other Mortgaged Properties and in reliance upon the aggregate of the Trust
Property and Other Mortgaged Properties taken together
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being of greater value as collateral security than the sum of the Trust Property
and Other Mortgaged Properties taken separately. Grantor agrees that this Deed
of Trust and the other Contemporaneous Mortgages are and will be
cross-collateralized and cross-defaulted with each other so that (i) an Event of
Default under either this Deed of Trust or any of the Contemporaneous Mortgages
shall constitute an Event of Default under both this Deed of Trust and the
Contemporaneous Mortgages which secure the Note and the Contemporaneous Notes;
(ii) an Event of Default under the Note shall constitute an Event of Default
under each of this Deed of Trust, the Contemporaneous Notes, the Contemporaneous
Mortgages and the Contemporaneous Assignments; and (iii) each of this Deed of
Trust, the Contemporaneous Notes and the Contemporaneous Mortgages and the
Contemporaneous Assignments shall constitute security for the Note and the
Contemporaneous Notes as if a single blanket lien were placed on the Trust
Property and Other Mortgaged Properties as security for the Note and the
Contemporaneous Notes. Beneficiary shall have the right from time to time to
sever the Note, Contemporaneous Notes, this Deed of Trust, the Contemporaneous
Mortgages and the respective other security documents into two (2) or more
cross-defaulted and cross-collateralized pools (the "New Loan Pools"). Grantor
shall execute and deliver to Beneficiary, promptly after the request of
Beneficiary, a severance agreement, deed of trust amendments and such other
documents as Beneficiary shall reasonably request in order to effect the
severance described in the preceding sentence, all in form and substance
reasonably satisfactory to Beneficiary; provided that the same shall be at no
cost or expense to Grantor and shall not affect Grantor's rights or obligations
hereunder or under any of the other Loan Documents. Grantor hereby absolutely
and irrevocably appoints Beneficiary as its true and lawful attorney, coupled
with an interest, in its name and stead to make and execute all documents
necessary or desirably to effect the aforesaid severance, Grantor ratifying all
that its said attorney shall do by virtue thereof; however, that Beneficiary
shall not make or execute any such documents under such power until five (5)
days after notice has been given to Grantor by Beneficiary of Beneficiary's
intent to exercise its rights under such power. In connection with any such
severance, the Aggregate Loan Balance for the reduced assumption fee under the
last sentence of Section 1.13(b)(3) hereof shall be ratably reduced based on the
aggregate original principal balances of each of the New Loan Pools.
4.17 Interest After Sale. In the event the Trust Property or any part
thereof shall be sold upon foreclosure as provided hereunder, to the extent
permitted by law, the sum for which the same shall have been sold shall, for
purposes of redemption (pursuant to the laws of the state in which the Premises
is located), bear interest at the Default Interest Rate.
4.18 Inconsistency with Other Loan Documents. In the event of any
inconsistency between the provisions hereof and the provisions in any of the
other Loan Documents, it is intended that the provisions of the Note shall
control over the provisions of this Deed of Trust, and that the provisions of
this Deed of Trust shall control over the provisions of the Assignment of Leases
and Rents, the Guaranty and Indemnity Agreement, the Environmental Indemnity
Agreement, and the other Loan Documents.
4.19 Construction of this Document. This document may be construed as a
mortgage, security deed, deed of trust, chattel mortgage, conveyance,
assignment, security agreement, pledge, financing statement, hypothecation or
contract, or any one or more of the foregoing, in
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order to fully effectuate the liens and security interests created hereby and
the purposes and agreements herein set forth.
4.20 No Merger. It is the desire and intention of the parties hereto
that this Deed of Trust and the lien hereof do not merge in fee simple title to
the Trust Property. It is hereby understood and agreed that should Beneficiary
acquire any additional or other interests in or to the Trust Property or the
ownership thereof, then, unless a contrary intent is manifested by Beneficiary
as evidenced by an appropriate document duly recorded, this Deed of Trust and
the lien hereof shall not merge in such other or additional interests in or to
the Trust Property, toward the end that this Deed of Trust may be foreclosed as
if owned by a stranger to said other or additional interests.
4.21 Rights With Respect to Junior Encumbrances. Any person or entity
purporting to have or to take a junior mortgage or other lien upon the Trust
Property or any interest therein shall be subject to the rights of Beneficiary
to amend, modify, increase, vary, alter or supplement this Deed of Trust, the
Note or any of the other Loan Documents, and to extend the maturity date of the
Debt, and to increase the amount of the Debt, and to waive or forebear the
exercise of any of its rights and remedies hereunder or under any of the other
Loan Documents and to release any collateral or security for the Debt, in each
and every case without obtaining the consent of the holder of such junior lien
and without the lien or security interest of this Deed of Trust losing its
priority over the rights of any such junior lien.
4.22 Beneficiary May File Proofs of Claim. In the case of any
receivership, insolvency, bankruptcy, reorganization, arrangement, adjustment,
composition or other proceedings affecting Grantor or the principals, general
partners or managing members in Grantor, or their respective creditors or
property, Beneficiary, to the extent permitted by law, shall be entitled to file
such proofs of claim and other documents as may be necessary or advisable in
order to have the claims of Beneficiary allowed in such proceedings for the
entire Debt at the date of the institution of such proceedings and for any
additional amount which may become due and payable by Grantor hereunder after
such date.
4.23 Fixture Filing. This Deed of Trust shall be effective from the
date of its recording as a financing statement filed as a fixture filing with
respect to all goods constituting part of the Trust Property which are or are to
become fixtures. This Deed of Trust shall also be effective as a financing
statement covering minerals or the like (including oil and gas) and is to be
filed for record in the real estate records of the county where the Premises is
situated. The mailing address of Grantor and the address of Beneficiary from
which information concerning the security interests may be obtained are set
forth in Section 1.22 above.
4.24 After-Acquired Trust Property. All property acquired by Grantor
after the date of this Deed of Trust which by the terms of this Deed of Trust
shall be subject to the lien and the security interest created hereby, shall
immediately upon the acquisition thereof by Xxxxxxx and without further
mortgage, conveyance or assignment become subject to the lien and security
interest created by this Deed of Trust. Nevertheless, Grantor shall execute,
acknowledge, deliver and record or file, as appropriate, all and every such
further mortgages, security agreements,
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financing statements, assignments and assurances as Beneficiary shall require
for accomplishing the purposes of this Deed of Trust.
4.25 No Representation. By accepting delivery of any item required to
be observed, performed or fulfilled or to be given to Beneficiary pursuant to
the Loan Documents, including, but not limited to, any officer's certificate,
balance sheet, statement of profit and loss or other financial statement,
survey, appraisal or insurance policy, Beneficiary shall not be deemed to have
warranted, consented to, or affirmed the sufficiency, legality, effectiveness or
legal effect of the same, or of any term, provision or condition thereof, and
such acceptance of delivery thereof shall not be or constitute any warranty,
consent or affirmation with respect thereto by Beneficiary.
4.26 Counterparts. This Deed of Trust may be executed in any number of
counterparts, each of which shall be effective only upon delivery and thereafter
shall be deemed an original, and all of which shall be taken to be one and the
same instrument, for the same effect as if all parties hereto had signed the
same signature page. Any signature page of this Deed of Trust may be detached
from any counterpart of this Deed of Trust without impairing the legal effect of
any signatures thereon and may be attached to another counterpart of this Deed
of Trust identical in form hereto but having attached to it one or more
additional signature pages.
4.27 Personal Liability. Notwithstanding anything to the contrary
contained in this Deed of Trust, the liability of Grantor and its officers,
directors, general partners, managers, members and principals for the Debt and
for the performance of the other agreements, covenants and obligations contained
herein and in the Loan Documents shall be limited as set forth in Section 2.6 of
the Note.
4.28 Recording and Filing. Grantor will cause the Loan Documents and
all amendments and supplements thereto and substitutions therefor to be
recorded, filed, re-recorded and re-filed in such manner and in such places as
Beneficiary shall reasonably request, and will pay on demand all such recording,
filing, re-recording and re-filing taxes, fees and other charges. Grantor shall
reimburse Beneficiary, or its servicing agent, for the costs incurred in
obtaining a tax service company to verify the status of payment of taxes and
assessments on the Trust Property.
4.29 Entire Agreement and Modifications. This Deed of Trust and the
other Loan Documents contain the entire agreements between the parties relating
to the subject matter hereof and thereof and all prior agreements relative
hereto and thereto which are not contained herein or therein are terminated.
This Deed of Trust and the other Loan Documents may not be amended, revised,
waived, discharged, released or terminated orally but only by a written
instrument or instruments executed by the party against which enforcement of the
amendment, revision, waiver, discharge, release or termination is asserted. Any
alleged amendment, revision, waiver, discharge, release or termination which is
not so documented shall not be effective as to any party.
4.30 Maximum Interest. The provisions of this Deed of Trust and of all
agreements between Grantor and Beneficiary, whether now existing or hereafter
arising and whether written
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or oral, are hereby expressly limited so that in no contingency or event
whatsoever, whether by reason of demand or acceleration of the maturity of the
Note or otherwise, shall the amount paid, or agreed to be paid ("Interest") to
Beneficiary for the use, forbearance or retention of the money loaned under the
Note exceed the maximum amount permissible under applicable law. If, from any
circumstance whatsoever, performance or fulfillment of any provision hereof or
of any agreement between Grantor and Beneficiary shall, at the time performance
or fulfillment of such provision shall be due, exceed the limit for Interest
prescribed by law or otherwise transcend the limit of validity prescribed by
applicable law, then, ipso facto, the obligation to be performed or fulfilled
shall be reduced to such limit, and if, from any circumstance whatsoever,
Beneficiary shall ever receive anything of value deemed Interest by applicable
law in excess of the maximum lawful amount, an amount equal to any excessive
Interest shall be applied to the reduction of the principal balance owing under
the Note in the inverse order of its maturity (whether or not then due) or, at
the option of Beneficiary, be paid over to Grantor, and not to the payment of
Interest. All Interest (including any amounts or payments deemed to be Interest)
paid or agreed to be paid to Beneficiary shall, to the extent permitted by
applicable law, be amortized, prorated, allocated and spread throughout the full
period until payment in full of the principal balance of the Note so that the
Interest thereon for such full period will not exceed the maximum amount
permitted by applicable law. This Section will control all agreements between
Grantor and Beneficiary.
4.31 Interest Payable by Beneficiary. Beneficiary shall cause funds in
the Replacement Reserve and the Repair and Remediation Reserve to be deposited
into interest bearing accounts of the type customarily maintained by Beneficiary
or its servicing agent for the investment of similar reserves, which accounts
may not yield the highest interest rate then available. Interest payable on such
amounts shall be computed based on the daily outstanding balance in the
Replacement Reserve and the Repair and Remediation Reserve, as applicable. Such
interest shall be calculated on a simple, non-compounded interest basis based
solely on contributions made to the Replacement Reserve and the Repair and
Remediation Reserve by Grantor. All interest earned on amounts contributed to
the Replacement Reserve and the Repair and Remediation Reserve shall be retained
by Beneficiary and accumulated for the benefit of Grantor and added to the
balance in the Replacement Reserve or the Repair and Remediation Reserve, as
applicable, and shall be disbursed for payment of the items for which other
funds in the Replacement Reserve or the Repair and Remediation Reserve, as
applicable, are to be disbursed.
4.32 Secondary Market. Beneficiary may sell, assign, participate,
transfer or deliver the Note and the Loan Documents to one or more investors
(directly or through a trust of other entity which may sell certificates or
other instruments to investor) in the secondary mortgage market (a "Secondary
Market Transaction"). In connection with such sale, assignment, participation,
transfer or delivery, Beneficiary may retain or assign responsibility for
servicing the loan evidenced by the Note or may delegate some or all of such
responsibility and/or obligations to a servicer, including, but not limited to,
any subservicer or master servicer, on behalf of the investors.
4.33 Dissemination of Information. If Beneficiary determines at any
time to sell, transfer or assign the Note, this Deed of Trust and other Loan
Documents, and any or all servicing rights with respect thereto, or to grant
participations therein (the "Participations") or
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issue mortgage pass-through certificates or other securities evidencing a
beneficial interest in a rated or unrated public offering or private placement
(the "Securities"), Beneficiary may forward to each purchaser, transferee,
Beneficiary, servicer, participant, investor, or their respective successors in
such Participations and/or Securities (collectively, the "Investors") or any
Rating Agency rating such Securities, each prospective Investor and each of the
foregoing's respective counsel, all documents and information which Beneficiary
now has or may hereafter acquire relating to the Debt, to Beneficiary, any
guarantor, any indemnitor, and the Trust Property, which shall have been
furnished by Beneficiary and any Indemnitor, as Beneficiary determines necessary
or desirable. If at any time during which the Loan is an asset of a
securitization or is otherwise an asset of any rated transaction, "Rating
Agency" or "Rating Agencies" shall mean the rating agency or rating agencies
that from time to time rate the securities, certificates or other instruments
issued in connection with such securitization or other transaction.
4.34 Contemporaneous Notes, Contemporaneous Mortgages and
Contemporaneous Assignments of Leases and Rents. This Deed of Trust is made
contemporaneously with six (6) other promissory notes, each of even date
herewith (the "Contemporaneous Notes"), six (6) other deeds of trust, each of
even date herewith (the "Contemporaneous Mortgages") and six (6) other
Assignment of Leases and Rents, each of even date herewith (the "Contemporaneous
Assignments"), given by Grantor, CRIT-NC III, LLC or CAC II Limited Partnership
to or for the benefit of Beneficiary covering properties listed together with
the Trust Property, on Exhibit B attached hereto and incorporated herein by this
reference (the "Other Mortgaged Properties").
4.35 Certain Matters Relating to Trust Property Located in the
Commonwealth of Virginia. With respect to the Trust Property which is
located in the Commonwealth of Virginia, notwithstanding anything contained
herein to the contrary:
(a) Acceleration; Remedies. At any time during the existence
of an Event of Default, Beneficiary, at Beneficiary's option, may declare the
Debt to be immediately due and payable without further demand, and may invoke
the power of sale and any other remedies permitted by Virginia law or provided
in this Deed of Trust or in any other Loan Document. Grantor acknowledges that
the power of sale granted in this Deed of Trust may be exercised by Beneficiary
without prior judicial hearing. Grantor has the right to bring an action to
assert that an Event of Default does not exist or to raise any other defense
Grantor may have to acceleration and sale. Beneficiary shall be entitled to
collect all costs and expenses incurred in pursuing such remedies, including
attorneys' fees, costs of documentary evidence, abstracts and title reports.
If Beneficiary invokes the power of sale, Beneficiary or
Trustee shall deliver a copy of a notice of sale to Grantor in the manner
prescribed by Virginia law. Trustee shall give public notice of the sale in the
manner prescribed by Section 55-59.2 of the Code of Virginia (1950) and shall
sell the Trust Property in accordance with Virginia law. Grantor agrees that
publication of a notice of sale once (1) per week for four (4) successive weeks
in a newspaper having general circulation in the city or county in which the
Trust Property is located shall constitute sufficient notice of the sale.
Trustee, without demand on Grantor, shall sell the Trust Property at public
auction to the highest bidder at the time and place and under the terms
designated in the notice of sale in one or more parcels and in such order as
Trustee may determine. Trustee may postpone the sale of all or any part of the
Trust Property by public
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announcement at the time and place of any previously scheduled sale or by
advertising in accordance with Virginia law. Beneficiary or Beneficiary's
designee may purchase the Trust Property at any sale.
Trustee shall deliver to the purchaser at the sale Trustee's
deed conveying the Trust Property so sold with special warranty of title. The
recitals in Trustee's deed shall be prima facie evidence of the truth of the
statements made in those recitals. Trustee shall apply the proceeds of the sale
in the following order: (a) to all costs and expenses of the sale, including
Trustee's fees of one percent (1%) of the gross sale price, attorneys' fees and
costs of title evidence; (b) to the discharge of all taxes, if any, as provided
by Virginia law; (c) to the Debt in such order as Beneficiary, in Beneficiary's
discretion, directs; and (d) the excess, if any, to the person or persons
legally entitled to the excess, including, if any, the holders of liens inferior
to this Deed of Trust in the order of their priority, provided that Trustee has
actual notice of such liens. Trustee shall not be required to take possession of
the Trust Property before the sale or to deliver possession of the Trust
Property to the purchaser at the sale.
(b) Statutory Provisions. The following provisions of
Section 55-60, Code of Virginia (1950), as amended, are made applicable to this
Deed of Trust:
Exemptions waived
Subject to all upon default
Renewal or extension permitted
Substitution of trustee permitted
Any trustee may act
(c) WAIVER OF TRIAL BY JURY. GRANTOR AND BENEFICIARY EACH (A)
COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE
ARISING OUT OF THIS DEED OF TRUST OR THE RELATIONSHIP BETWEEN THE PARTIES AS
BORROWER AND XXXXXX THAT IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT
TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT
EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY
GIVEN BY EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT
LEGAL COUNSEL.
ARTICLE V.
CONCERNING THE TRUSTEE
5.1 Certain Rights. With the approval of Beneficiary, Trustee shall
have the right to take any and all of the following actions: (i) to select,
employ and consult with counsel (who may be, but need not be, counsel for
Beneficiary) upon any matters arising hereunder, including the preparation,
execution and interpretation of the Loan Documents, and shall be fully protected
in relying as to legal matters on the advice of counsel, (ii) to execute any of
the trusts and powers hereof and to perform any duty hereunder either directly
or through his or her agents or attorneys, (iii) to select and employ, in and
about the execution of his or her duties hereunder,
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suitable accountants, engineers and other experts, agents and attorneys-in-fact,
either corporate or individual, not regularly in the employ of Trustee (and
Trustee shall not be answerable for any act, default, negligence, or misconduct
of any such accountant, engineer or other expert, agent or attorney-in-fact, if
selected with reasonable care, or for any error of judgment or act done by
Trustee in good faith, or be otherwise responsible or accountable under any
circumstances whatsoever, except for Trustee's gross negligence or bad faith),
and (iv) any and all other lawful action that Beneficiary may instruct Trustee
to take to protect or enforce Beneficiary's rights hereunder. Trustee shall not
be personally liable in case of entry by Trustee, or anyone entering by virtue
of the powers herein granted to Trustee, upon the Trust Property for debts
contracted for or liability or damages incurred in the management or operation
of the Trust Property. Trustee shall have the right to rely on any instrument,
document, or signature authorizing or supporting any action taken or proposed to
be taken by Trustee hereunder, believed by Trustee in good faith to be genuine.
Trustee shall be entitled to reimbursement for expenses incurred by Xxxxxxx in
the performance of Xxxxxxx's duties hereunder and to reasonable compensation for
such of Trustee's services hereunder as shall be rendered. Grantor will, from
time to time, pay reasonable compensation due to Trustee hereunder and reimburse
Trustee for, and save and hold Trustee harmless against, any and all liability
and reasonable expenses which may be incurred by Trustee in the performance of
Trustee's duties.
5.2 Retention of Money. All moneys received by Trustee shall, until
used or applied as herein provided, be held in trust for the purposes for which
they were received, and shall be segregated from any other moneys of Trustee.
5.3 Successor Trustees. Trustee may resign by the giving of notice of
such resignation in writing to Beneficiary. If Trustee shall die, resign or
become disqualified from acting in the execution of this trust, or if, for any
reason, Beneficiary, in Beneficiary's sole discretion and with or without cause,
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, Beneficiary 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 Beneficiary, and if such Beneficiary be a
corporation and such appointment be executed on 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. Grantor
hereby ratifies and confirms any and all acts which the aforenamed Trustee, or
his or her 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 Deed of Trust or applicable law. Any prior election to act
jointly or severally shall not prevent either or both of such multiple
substitute Trustees from subsequently executing, jointly or severally, any or
all of the provisions hereof.
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5.4 Perfection of Appointment. Should any deed, conveyance, or
instrument of any nature be required from Grantor by any Trustee or substitute
Trustee to more fully and certainly vest in and confirm to Trustee or substitute
Trustee such estates, rights, powers, and duties, then, upon request by Trustee
or substitute trustee, any and all such deeds, conveyances and instruments shall
be made, executed, acknowledged, and delivered and shall be caused to be
recorded and/or filed by Grantor.
5.5 Succession Instruments. 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, his or her predecessor in the rights hereunder with like effect
as if originally named as Trustee herein; but nevertheless, upon the written
request of Beneficiary 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 such Trustee's place.
5.6 No Representation by Trustee or Beneficiary. By accepting or
approving anything required to be observed, performed, or fulfilled or to be
given to Trustee or Beneficiary pursuant to the 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, neither Trustee nor Beneficiary shall be deemed to have warranted,
consented to, or affirmed the sufficiency, legality, effectiveness or legal
effect of the same, or of any term, provision, or condition thereof, and such
acceptance or approval thereof shall not be or constitute any warranty or
affirmation with respect thereto by Trustee or Beneficiary.
[THE BALANCE OF THIS PAGE WAS LEFT BLANK INTENTIONALLY]
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IN WITNESS WHEREOF, Xxxxxxx has executed this Deed of Trust on the day
and year first written above.
GRANTOR:
CRIT-VA II, INC.,
a Virginia corporation
By:/s/ Xxxxxxx X. Xxxxxxx, Xx.
---------------------------
Name: Xxxxxxx X. Xxxxxxx, Xx.
Title: Vice President
COMMONWEALTH OF VIRGINIA
CITY/COUNTY OF Richmond
The foregoing instrument was acknowledged before me this 20th day of March, 2001
by XXXXXXX X. XXXXXXX, XX., the Vice President of CRIT-VA II, INC., a Virginia
corporation, on behalf of said corporation.
[SEAL]
/s/ Xxxxxxx X. Xxxxxx
-------------------------------
Notary Public
My Commission expires: 11/30/02
EXHIBIT A
Legal Description
[Omitted]
EXHIBIT B
Trust Property
1. Greenbrier Apartments at Fredericksburg, Virginia - Xxx Xxxxxxxxxx Xxxxx,
Xxxxxxxxxxxxxx, Xxxxxxxx 00000
Other Mortgaged Properties
1. Park Village at Bedford, Texas - 0000 X. Xxx Xxxxxx, Xxxxxxx, Xxxxx 00000
2. Summertree at Dallas, Texas - 00000 Xxxxx Xxxx, Xxxxxx, Xxxxx 00000
3. The Courts on Pear Ridge at Dallas, Texas - 0000 Xxxx Xxxxx Xxxxx, Xxxxxx,
Xxxxx 00000
4. Canyon Hills at Austin, Texas - 0000 Xxxxx Xxxxxxx Xxxx, Xxxxxx, Xxxxx
00000
5. Harbour Club Apartments at Virginia Beach, Virginia - 000 Xxxxx Xxxx Xxxx,
Xxxxxxxx Xxxxx, Xxxxxxxx 00000
6. Highland Hills Apartments at Carrboro, North Carolina - 180 B.P.W. Club
Road, Carrboro, North Carolina 27510
Contemporaneous Notes
1. $8,500,000.00 Promissory Note from CAC II Limited Partnership, a Virginia
limited partnership, to First Union National Bank, a national banking
association, secured by Park Village at Bedford, Texas (Loan No.:
00-0000000).
2. $7,750,000.00 Promissory Note from CAC II Limited Partnership, a Virginia
limited partnership, to First Union National Bank, a national banking
association, secured by Summertree at Dallas, Texas (Loan No.: 00-0000000).
3. $10,575,000.00 Promissory Note from CAC II Limited Partnership, a Virginia
limited partnership, to First Union National Bank, a national banking
association, secured by The Courts on Pear Ridge at Dallas, Texas (Loan
No.: 00-0000000).
4. $12,675,000.00 Promissory Note from CAC II Limited Partnership, a Virginia
limited partnership, to First Union National Bank, a national banking
association, secured by Canyon Hills at Austin, Texas (Loan No.:
00-0000000).
5. $8,475,000.00 Promissory Note from CRIT-VA II, Inc., a Virginia
corporation, to First Union National Bank, a national banking association,
secured by Harbour Club Apartments at Virginia Beach, Virginia (Loan No.:
00-0000000).
6. $14,775,000.00 Promissory Note from CRIT-NC III, LLC, a Delaware limited
liability company, to First Union National Bank, a national banking
association, secured by Highland Hills Apartments at Carrboro, North
Carolina (Loan No.: 00-0000000).
Contemporaneous Mortgages
1. Deed of Trust and Security Agreement from CAC II Limited Partnership, a
Virginia limited partnership, to First Union National Bank, a national
banking association, secured by Park Village at Bedford, Texas (Loan No.:
00-0000000).
2. Deed of Trust and Security Agreement from CAC II Limited Partnership, a
Virginia limited partnership, to First Union National Bank, a national
banking association, secured by Summertree at Dallas, Texas (Loan No.:
00-0000000).
3. Deed of Trust and Security Agreement from CAC II Limited Partnership, a
Virginia limited partnership, to First Union National Bank, a national
banking association, secured by The Courts on Pear Ridge at Dallas, Texas
(Loan No.: 00-0000000).
4. Deed of Trust and Security Agreement from CAC II Limited Partnership, a
Virginia limited partnership, to First Union National Bank, a national
banking association, secured by Canyon Hills at Austin, Texas (Loan No.:
00-0000000).
5. Deed of Trust and Security Agreement from CRIT-VA II, Inc., a Virginia
corporation, to First Union National Bank, a national banking association,
secured by Harbour Club Apartments at Virginia Beach, Virginia (Loan No.:
00-0000000).
6. Deed of Trust and Security Agreement from CRIT-NC III, LLC, a Delaware
limited liability company, to First Union National Bank, a national banking
association, secured by Highland Hills Apartments at Carrboro, North
Carolina (Loan No.: 00-0000000).
Contemporaneous Assignments
1. Assignment of Leases and Rents from CAC II Limited Partnership, a Virginia
limited partnership, to First Union National Bank, a national banking
association, secured by Park Village at Bedford, Texas (Loan No.:
00-0000000).
2. Assignment of Leases and Rents from CAC II Limited Partnership, a Virginia
limited partnership, to First Union National Bank, a national banking
association, secured by Summertree at Dallas, Texas (Loan No.: 00-0000000).
3. Assignment of Leases and Rents from CAC II Limited Partnership, a Virginia
limited partnership, to First Union National Bank, a national banking
association, secured by The Courts on Pear Ridge at Dallas, Texas (Loan
No.: 00-0000000).
4. Assignment of Leases and Rents from CAC II Limited Partnership, a Virginia
limited partnership, to First Union National Bank, a national banking
association, secured by Canyon Hills at Austin, Texas (Loan No.:
00-0000000).
5. Assignment of Leases and Rents from CRIT-VA II, Inc., a Virginia
corporation, to First Union National Bank, a national banking association,
secured by Harbour Club Apartments at Virginia Beach, Virginia (Loan No.:
00-0000000).
6. Assignment of Leases and Rents from CRIT-NC III, LLC, a Delaware limited
liability company, to First Union National Bank, a national banking
association, secured by Highland Hills Apartments at Carrboro, North
Carolina (Loan No.: 00-0000000).
EXHIBIT C
Loan Documents
1. $12,750,000.00 Promissory Note from CRIT-VA II, INC. to First Union
National Bank
2. Deed of Trust and Security Agreement from CRIT-VA II, INC. to First Union
National Bank
3. Indemnity and Guaranty Agreement from Cornerstone Realty Income Trust, Inc.
to First Union National Bank
4. Environmental Indemnity Agreement from CRIT-VA II, INC. and Cornerstone
Realty Income Trust, Inc. to First Union National Bank
5. Assignment of Leases and Rents from CRIT-VA II, INC. to First Union
National Bank
6. Assignment of Warranties and Other Contract Rights from CRIT-VA II, INC. to
First Union National Bank
7. Consent and Agreement of Manager by Cornerstone Realty Income Trust, Inc.
to First Union National Bank
8. Disbursement Authorization by CRIT-VA II, INC.
9. Receipt and Closing Certificate by CRIT-VA II, INC. and Cornerstone Realty
Income Trust, Inc.
10. Form W-9 by CRIT-VA II, INC.
11. Residential Lease Certificate by CRIT-VA II, INC.
12. Personal Property Certificate by CRIT-VA II, INC.
13. Rent Roll Certificate by CRIT-VA II, INC.
14. Service Contract Certificate by CRIT-VA II, INC.
15. UCC-1 Financing Statement by CRIT-VA II, INC. (City of Fredericksburg,
Virginia)
16. UCC-1 Financing Statement by CRIT-VA II, INC. (City of Richmond, Virginia)
17. UCC-1 Financing Statement by CRIT-VA II, INC. (Virginia State Corporation
Commission and City of Richmond)
EXHIBIT D
FORM OF TENANT NOTICE
[Letterhead of Landlord]
[Name and Address of Tenant]
Re: [Name of Property, Unit No. __________]
Dear Tenant:
You are hereby directed to make all future payments of rent and other
sums due to the landlord under the Lease payable as follows:
Payable To: First Union National Bank
--------------------------------------
c/o [Servicer]
--------------------------------------
--------------------------------------
--------------------------------------
Address:
Please take particular care in making the check payable only to the
above-mentioned name because only checks made payable to the referenced name
will be credited against sums due by you to landlord. Until otherwise advised in
writing by landlord and the above mentioned bank (or its successor or assign),
you should continue to make your payments for rent and other sums as directed by
the terms of this letter.
Thank you in advance for your cooperation with this change in payment
procedures.
By: _________________________
