EXHIBIT 10.13
THIS DEED OF TRUST AND SECURITY AGREEMENT (this "SECURITY INSTRUMENT")
is made as of the 17 day of October, 2002, by GTC II FIRST LLC, a Delaware
limited liability company, having its principal place of business at c/o First
Potomac Realty Investment Trust, Inc., 0000 Xxxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx
00000 ("BORROWER"), to XXXXXXX X. XXXXX, XX., ("TRUSTEE"), having his principal
place of business at c/o Tri-State Commercial Closings, Inc., 0000 00xx Xxxxxx,
X.X., Xxxxx 000, Xxxxxxxxxx, X.X. 00000, for the benefit of JPMORGAN CHASE BANK,
a New York banking corporation, having its principal place of business at 000
Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, as beneficiary ("LENDER").
RECITALS:
Borrower by its Note of even date herewith given to Lender is indebted
to Lender in the principal sum of $10,500,000.00 in lawful money of the United
States of America (such Note, together with all extensions, renewals,
modifications, substitutions and amendments thereof, shall collectively be
referred to as the "NOTE"), with interest from the date thereof at the rates set
forth in the Note, principal and interest to be payable in accordance with the
terms and conditions provided in the Note, and with a final maturity date of
November 10, 2007.
Borrower desires to secure the payment of the Debt (as defined in
Article 2) and the performance of all of its obligations under the Note and the
Other Obligations (as defined in Article 2). The Note is also secured by that
certain Deed of Trust and Security Agreement of even date herewith executed by
Norfolk First LLC, a Delaware limited liability company and a co-maker of the
Note, to Xxxxxxx X. Xxxxx, Xx., as Trustee for the benefit of Lender, covering
the real property described on Exhibit B attached hereto and made a part hereof.
ARTICLE 1 - GRANTS OF SECURITY
Section 1.1 PROPERTY CONVEYED. Borrower does hereby irrevocably,
unconditionally and absolutely grant, bargain, sell, pledge, enfeoff, assign,
warrant, transfer and convey to Trustee (with power of sale) in trust for the
purposes herein set forth, the following property, rights, interests and estates
now owned, or hereafter acquired, by Borrower (collectively, the "PROPERTY");
(a) Land. The real property described in Exhibit A
attached hereto and made a part hereof (collectively, the "LAND"),
together with additional lands, estates and development rights
hereafter acquired by Borrower for use in connection with the
development, ownership or occupancy of such real property, and all
additional lands and estates therein which may, from time to time, by
supplemental deed of trust or otherwise be expressly made subject to
the lien of this Security Instrument;
(b) Improvements. The buildings, structures, fixtures,
additions, accessions, enlargements, extensions, modifications,
repairs, replacements and improvements now or hereafter erected or
located on the Land (the "IMPROVEMENTS");
(c) Easements. All easements, rights-of-way or use,
rights, strips and gores of land, streets, ways, alleys, passages,
sewer rights, water, water courses, water rights and powers, air rights
and development rights, and all estates, rights, titles, interests,
privileges, liberties, servitudes, tenements, hereditaments and
appurtenances of any
JPMORGAN CHASE BANK
nature whatsoever, in any way now or hereafter belonging, relating or
pertaining to the Land and the Improvements and the reversion and
reversions, remainder and remainders, and all land lying in the bed of
any street, road or avenue, opened or proposed, in front of or
adjoining the Land, to the center line thereof and all the estates,
rights, titles, interests, dower and rights of dower, curtesy and
rights of curtesy, property, possession, claim and demand whatsoever,
both at law and in equity, of Borrower of, in and to the Land and the
Improvements and every part and parcel thereof, with the appurtenances
thereto;
(d) Fixtures and Personal Property. All machinery,
equipment, goods, inventory, consumer goods, fixtures (including, but
not limited to, all heating, air conditioning, plumbing, lighting,
communications and elevator fixtures) and other property of every kind
and nature whatsoever owned by Borrower, or in which Borrower has or
shall have an interest, now or hereafter located upon the Land and the
Improvements, or appurtenant thereto, and usable in connection with the
present or future use, maintenance, enjoyment, operation and occupancy
of the Land and the Improvements and all building equipment, materials
and supplies of any nature whatsoever owned by Borrower, or in which
Borrower has or shall have an interest, now or hereafter located upon
the Land and the Improvements, or appurtenant thereto, or usable in
connection with the present or future operation and occupancy of the
Land and the Improvements, and the right, title and interest of
Borrower in and to any of the Personal Property (as hereinafter
defined which may be subject to any security interests, as defined in
the Uniform Commercial Code, as adopted and enacted by the state or
states where any of the Property is located the "UNIFORM COMMERCIAL
CODE"), superior in lien to the lien of this Security Instrument and
all proceeds and products of the above;
(e) Leases and Rents. All leases and other agreements
affecting the use, enjoyment or occupancy of the Land and the
Improvements heretofore or hereafter entered into, whether before or
after the filing by or against Borrower of any petition for relief
under 11 U.S.C. Section 101 et seq., as the same may be amended from
time to time (the "BANKRUPTCY CODE") (individually, a "LEASE";
collectively, the "LEASES") and all right, title and interest of
Borrower, its successors and assigns therein and thereunder, including,
without limitation, cash or securities deposited thereunder to secure
the performance by the lessees of their obligations thereunder and all
rents (including all tenant security and other deposits), additional
rents, revenues, issues and profits (including all oil and gas or other
mineral royalties and bonuses) from the Land and the Improvements
whether paid or accruing before or after the filing by or against
Borrower of any petition for relief under the Bankruptcy Code
(collectively the "RENTS") and all proceeds from the sale or other
disposition of the Leases and the right to receive and apply the Rents
to the payment of the Debt;
(f) Condemnation Awards. All awards or payments,
including interest thereon, which may heretofore and hereafter be made
with respect to the Property, whether from the exercise of the right of
eminent domain (including but not limited to any transfer made in lieu
of or in anticipation of the exercise of the right), or for a change of
grade, or for any other injury to or decrease in the value of the
Property;
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(g) Insurance Proceeds. All proceeds of and any unearned
premiums on any insurance policies covering the Property, including,
without limitation, the right to receive and apply the proceeds of any
insurance, judgments, or settlements made in lieu thereof, for damage
to the Property;
(h) Tax Certiorari. All refunds, rebates or credits in
connection with a reduction in real estate taxes and assessments
charged against the Property as a result of tax certiorari or any
applications or proceedings for reduction;
(i) Conversion. All proceeds of the conversion, voluntary
or involuntary, of any of the foregoing including, without limitation,
proceeds of insurance and, condemnation awards, into cash or
liquidation claims;
(j) Rights. The right, in the name and on behalf of
Borrower, to appear in and defend any action or proceeding brought with
respect to the Property and to commence any action or proceeding to
protect the interest of Trustee and/or Lender in the Property;
(k) Agreements. All agreements, contracts (including
purchase, sale, option, right of first refusal and other contracts
pertaining to the Property), certificates, instruments, franchises,
permits, licenses, approvals, consents, plans, specifications and other
documents, now or hereafter entered into, and all rights therein and
thereto, respecting or pertaining to the use, occupation, construction,
management or operation of the Property (including any Improvements or
respecting any business or activity conducted on the Land and any part
thereof) and all right, title and interest of Borrower therein and
thereunder, including, without limitation, the right, upon the
happening of any default hereunder, to receive and collect any sums
payable to Borrower thereunder;
(1) Trademarks. All tradenames, trademarks, servicemarks,
logos, copyrights, goodwill, books and records and all other general
intangibles relating to or used in connection with the operation of the
Property;
(m) Accounts. All accounts, accounts receivable, escrows
(including, without limitation, all escrows, deposits, reserves and
impounds established pursuant to that certain Escrow Agreement for
Reserves and Impounds of even date herewith between Borrower and
Lender: hereinafter, the "ESCROW AGREEMENT")..documents, instruments,
chattel paper, claims, reserves (including deposits) representations,
warranties and general intangibles, as one or more of the foregoing
terms may be defined in the Uniform Commercial Code, and all contract
rights, franchises, books, records, plans, specifications, permits,
licenses (to the extent assignable), approvals, actions, choses,
claims, suits, proofs of claim in bankruptcy and causes of action which
now or hereafter relate to, are derived from or are used in connection
with the Property, or the use, operation, maintenance, occupancy or
enjoyment thereof or the conduct of any business or activities thereon
(hereinafter collectively called the "INTANGIBLES");
(n) Cap Agreement. All of Borrower's right, title and
interest in and to all payments to be made to Borrower pursuant to that
certain Interest Rate Cap Agreement
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dated an even date herewith (the "Cap Agreement") by and between
Borrower and the Cap Seller (as defined in the Cap Agreement); and
(o) Other Rights. Any and all other rights of Borrower in
and to the Property and any accessions, renewals, replacements and
substitutions of all or any portion of the Property and all proceeds
derived from the sale, transfer, assignment or financing of the
Property or any portion thereof.
Section 1.2 ASSIGNMENT OF RENTS. Borrower hereby absolutely and
unconditionally assigns to Lender Borrower's right, title and interest in and to
all current and future Leases and Rents: it being intended by Borrower that this
assignment constitutes a present, absolute and unconditional assignment and not
an assignment for additional security only. Unless provided to the contrary in
the Cash Management Agreement between Borrower and Lender of even date herewith
(the "Cash Management Agreement"), all payments due under the Leases shall be
paid directly by the tenants thereunder to an account provided for in the Cash
Management Agreement when such amounts are due and payable. All such payments
received in such account shall be applied as set forth in the Cash Management
Agreement. The payment of amounts due under the Leases directly to an account as
required by the Cash Management Agreement, this Section 1.2 and by the
Assignment of Leases and Rents shall not limit, reduce or otherwise affect
Borrower's obligations to make payments of amounts due hereunder and under the
other Loan Documents, unless pursuant to the terms of the Cash Management
Agreement Lender has received and applied amounts sufficient to make such
payments.
Section 1.3 DEFINITION OF PERSONAL PROPERTY. For purposes of this
Security Instrument, the Property identified in Subsections 1.1(d) through
1.1(o), inclusive, shall be collectively referred to herein as the "PERSONAL
PROPERTY."
Section 1.4 PLEDGE OF MONIES HELD. Borrower hereby pledges to
Lender any and all monies now or hereafter held by Lender, including, Without
limitation, any sums deposited in the Funds (as defined in the Escrow
Agreement), all insurance proceeds described in Section 3.2 and condemnation
awards or payments described in Section 3.4, as additional security for the
Obligations until expended or applied as provided in this Security Instrument.
CONDITIONS TO GRANT
TO HAVE AND TO HOLD the above granted and described Property unto and
to the use and benefit of Trustee, and the successors and assigns of Trustee,
forever;
PROVIDED, HOWEVER, these presents are upon the express condition that,
if Borrower shall well and truly pay to Lender the Debt at the time and in the
manner provided in the Note and this Security Instrument, shall well and truly
perform the Other Obligations as set forth in this Security Instrument and shall
well and truly abide by and comply with each and every covenant and condition
set forth herein and in the Note, these presents and the estate hereby granted
shall cease, terminate and be void; provided however, that Borrower's obligation
to indemnify and hold harmless Lender pursuant to the provisions hereof with
respect to matters relating to any period of time during which this Security
Instrument was in effect shall survive any such payment or release.
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ARTICLE 2 - DEBT AND OBLIGATIONS SECURED
Section 2.1 DEBT. This Security Instrument and the grants,
assignments and transfers made in Article 1 are given for the purpose of
securing the following, in such order of priority as Lender may determine in its
sole discretion (the "DEBT"):
(a) the payment of the indebtedness evidenced by the Note
in lawful money of the United States of America;
(b) the payment of interest, default interest, late
charges and other sums, as provided in the Note, this Security
Instrument or the Other Loan Documents (as hereinafter defined);
(c) the payment of all other moneys agreed or provided to
be paid by Borrower in the Note, this Security Instrument or the Other
Loan Documents;
(d) the payment of all sums advanced pursuant to this
Security Instrument to protect and preserve the Property and the lien
and the security interest created hereby; and
(e) the payment of all sums advanced and costs and
expenses incurred by Lender in connection with the Debt or any par.
thereof, any renewal, extension, or change of or substitution for the
Debt or any part thereof, or the acquisition or perfection of the
security therefore, whether made or incurred at the request of
Borrower or Lender.
Section 2.2 OTHER OBLIGATIONS. This Security Instrument and the
grants, assignments and transfers made in Article 1 are also given for the
purpose of securing the following (the "OTHER OBLIGATIONS"):
(a) the performance of all other obligations of Borrower
contained herein;
(b) the performance of each obligation of Borrower
contained in any other agreement given by Borrower to Lender which is
for the purpose of further securing the obligations secured hereby, and
any amendments, modifications and changes thereto; and
(c) the performance of each obligation of Borrower
contained in any renewal, extension, amendment, modification,
consolidation, change of, or substitution or replacement for, all or
any part of the Note, this Security Instrument or the Other Loan
Documents.
Section 2.3 DEBT AND OTHER OBLIGATIONS. Borrower's obligations
for the payment of the Debt and the performance of the Other Obligations shall
be referred to collectively herein as the "OBLIGATIONS."
Section 2.4 PAYMENTS. Unless payments are made in the required
amount in immediately available funds at the place where the Note is payable,
remittances in payment of all or any part of the Debt shall not, regardless of
any receipt or credit issued therefor, constitute payment until the required
amount is actually received by Lender in funds immediately available
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at the place where the Note is payable (or any other place as Lender, in
Lender's sole discretion, may have established by delivery of written notice
thereof to Borrower) and shall be made and accepted subject to the condition
that any check or draft may be handled for collection in accordance with the
practice of the collecting bank or banks. Acceptance by Lender of any payment in
an amount less than the amount then due shall be deemed an acceptance on account
only, and the failure to pay the entire amount then due shall be and continue to
be an Event of Default (as hereinafter defined).
ARTICLE 3 - BORROWER COVENANTS
Borrower covenants and agrees that:
Section 3.1 INCORPORATION BY REFERENCE. All the covenants,
conditions and agreements contained in (a) the Note, and (b) all and any of the
documents other than the Note or this Security Instrument now or hereafter
executed by Borrower and/or others and by or in favor of Lender in connection
with the creation of the Obligations, the payment of any other sums owed by
Borrower to Lender or the performance of any Obligations (collectively the
"OTHER LOAN DOCUMENTS"), are hereby made a part of this Security Instrument to
the same extent and with the same force as if full set forth herein. The term
"LOAN DOCUMENTS" as used herein shall individually and collectively refer to the
Note, this Security Instrument and the Other Loan Documents: provided, however,
that notwithstanding any provision of this Security Instrument to the contrary,
the Obligations of the Borrower under that certain Environmental Indemnity
Agreement of even date herewith executed by Borrower in favor of Lender (the
"ENVIRONMENTAL INDEMNITY") shall not be deemed or construed to be secured by
this Security Instrument or otherwise restricted or affected by the foreclosure
of the lien hereof or any other exercise by Lender of its remedies hereunder or
under any other Loan Document, such Environmental Indemnity being intended by
the signatories thereto to be its (or their) unsecured obligation.
Section 3.2 INSURANCE.
(a) Borrower shall obtain and maintain, and shall pay all
premiums in accordance with Subsection 3.2(b) below for, insurance for
Borrower and the Property providing at least the following coverages:
(i) comprehensive all risk insurance (including,
without limitation, riot and civil commotion, vandalism,
malicious mischief, water, fire, burglary and theft and
without any exclusion for terrorism) on the Improvements and
the Personal Property and in each case (A) in an amount equal
to 100% of the "Full Replacement Cost", which for
purposes of this Security Instrument shall mean actual
replacement value (exclusive of costs of excavations,
foundations, underground utilities and footings) with a waiver
of depreciation; (B) containing an agreed amount endorsement
with respect to the Improvements and Personal Property waiving
all co-insurance provisions; (C) providing that the deductible
shall not exceed the lesser of $10,000.00 or one percent (1%)
of the face value of the policy; and (D) containing Demolition
Costs. Increased Cost of Construction and "Ordinance or Law
Coverage" or "Enforcement" endorsements in amounts
satisfactory to Lender if any of the Improvements or the use
of the Property shall
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at any time constitute legal non-conforming structures or uses
or the ability to rebuild the Improvements is restricted or
prohibited. The Full Replacement Cost may be redetermined from
time to time by an appraiser or contractor designated and paid
by Lender or by an engineer or appraiser in the regular employ
of the insurer. No omission on the part of Lender to request
any such appraisals shall relieve Borrower of any of its
obligations under this Subsection;
(ii) comprehensive general liability insurance
against claims for personal injury, bodily injury, death or
property damage occurring upon, in or about the Property, such
insurance (A) to be on the so-called "occurrence" form with a
combined single limit of not less than $1,000,000.00 and not
less than $3,000,000.00 if the Property has one or more
elevators, as well as liquor liability insurance in a minimum
amount of $2,000,000.00 if any part of the Property is covered
by a liquor license and an aggregate coverage limit acceptable
to Lender; (B) to continue at not less than the aforesaid
limit until required to be changed by Lender in writing by
reason of changed economic conditions making such protection
inadequate; (C) to cover at least the following hazards: (1)
premises and operations; (2) products and completed operations
on an "if any" basis; (3) independent contractors; (4) blanket
contractual liability for all written and oral contracts; (5)
contractual liability covering the indemnities contained in
Article 11 hereof to the extent the same is available; and (D)
to be without deductible;
(iii) business income insurance (A) with loss
payable to Lender; (B) covering losses of income and Rents
derived from the Property and any non-insured property on or
adjacent to the Property resulting from any risk or casualty
whatsoever; (C) containing an extended period of indemnity
endorsement which provides that after the physical loss to the
Improvements and Personal Property has been repaired, the
continued loss of income will be insured until such income
either returns to the same level it was at prior to the loss,
or the expiration of eighteen (18) months from the date of the
loss, whichever first occurs, and notwithstanding that the
policy may expire prior to the end of such period; and (D) in
an amount equal to 100% of the projected gross income from the
Property for a period of eighteen (18) months. The amount of
such business income insurance shall be determined by Lender
prior to the date hereof and at least once each year
thereafter based on Borrower's reasonable estimate of the
gross income from the Property for the succeeding eighteen
(18) month period. All insurance proceeds payable to Lender
pursuant to this Subsection 3.2(a) shall be held by Lender and
shall be applied to the obligations secured hereunder from
time to time due and payable hereunder and under the Note:
provided, however, that nothing herein contained shall be
deemed to relieve Borrower of its obligations to pay the
obligations secured hereunder on the respective dates of
payment provided for in the Note except to the extent such
amounts are actually paid out of the proceeds of such business
income insurance;
(iv) at all times during which structural
construction, repairs or alterations are being made with
respect to the Improvements: (A) owner's contingent or
protective liability insurance covering claims not covered by
or
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under the terms or provisions of the above mentioned
commercial general liability insurance policy; and (B) the
insurance provided for in Subsection 3.2(a)(i) written in a
so-called builder's risk completed value form (1) on a
non-reporting basis, (2) against all risks insured against
pursuant to Subsection 3.2(a)(i), (3) including permission to
occupy the Property, and (4) with an agreed amount endorsement
waiving co-insurance provisions;
(v) workers' compensation, subject to the
statutory limits of the state in which the Property is
located, and employer's liability insurance with a limit of at
least $1,000,000.00 per accident and per disease per employee,
and $1,000,000.00 for disease aggregate in respect of any work
or operations on or about the Property, or in connection with
the Property or its operation (if applicable);
(vi) comprehensive boiler and machinery insurance
(without exclusion for explosion), if applicable, in amounts
as shall be reasonably required by Lender and covering all
boilers or other pressure vessels, machinery and equipment
located at or about the Property (including, without
limitation, electrical equipment, sprinkler systems, heating
and air conditioning equipment, refrigeration equipment and
piping);
(vii) if any portion or the improvements is
currently or at any time in the future located in a federally
designated "special flood hazard area", flood hazard insurance
in an amount equal to the Full Replacement Cost; and
(viii) such other insurance and in such amounts as
Lender from time to time may reasonably request against such
other insurable hazards which at the time are commonly insured
against for property similar to the Property located in or
around the region in winch the Property is located, including,
without limitation, earthquake insurance (in the event the
Property is located in an area with a high degree of seismic
activity), sinkhole insurance, mine subsidence insurance and
environmental insurance.
(b) All insurance provided for in Subsection 3.2(a)
hereof shall be obtained under valid and enforceable policies (the
"POLICIES" or in the singular, the "POLICY"), in such forms and, from
time to time after the date hereof, in such amounts as may from time to
time be satisfactory to Lender, issued by financially sound and
responsible insurance companies authorized to do business in the state
in which the Property is located as admitted or unadmitted carriers
which, in either case, have been approved by Lender and which have a
claims paying ability rating of A or better issued by Standard &
Poor's Ratings Group or with a claims paying ability rating otherwise
acceptable to Lender (each such insurer shall be referred to below as a
"QUALIFIED INSURER"). Such Policies shall not be subject to
invalidation due to the use or occupancy of the Property for purposes
more hazardous than the use of the Property at the time such Policies
were issued. Not less than thirty (30) days prior to the expiration
dates of the Policies theretofore furnished to Lender pursuant to
Subsection 3.2(a), certified copies of the Policies marked "premium
paid" or accompanied by evidence satisfactory to Lender of
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payment of the premiums due thereunder (the "INSURANCE PREMIUMS"),
shall be delivered by Borrower to Lender; provided, however, that in
the case of renewal Policies. Borrower may furnish Lender with binders
therefor to be followed by the original Policies when issued.
(c) Borrower shall not obtain (i) separate insurance
concurrent in form or contributing in the event of loss with that
required in Subsection 3.2(a) to be furnished by, or which may be
reasonably required to be furnished by, Borrower, or (ii) any umbrella
or blanket liability or casualty Policy unless, in each case, Lender's
interest is included therein as provided in this Security Instrument
and such Policy is issued by a Qualified Insurer. If Borrower obtains
separate insurance or an umbrella or a blanket Policy, Borrower shall
notify Lender of the same and shall cause certified copies of each
Policy to be delivered as required in Subsection 3.2(a). Any blanket
insurance Policy shall specifically allocate to the Property the amount
of coverage from time to time required hereunder and shall otherwise
provide the same protection as would a separate Policy insuring only
the Property in compliance with the provisions of Subsection 3.2(a).
(d) All Policies of insurance provided for or
contemplated by Subsection 3.2(a) shall name Lender, its successors and
assigns, including any servicers, trustees or other designees of
Lender, and Borrower as the insured or additional insured, as their
respective interests may appear, and in the case of property damage,
boiler and machinery, and flood insurance, shall contain a so-called
New York standard non-contributing Lender clause in favor of Lender
providing that the loss thereunder shall be payable to Lender.
(e) All Policies of insurance provided for in Subsection
3.2(a) shall contain clauses or endorsements to the effect chat:
(i) no act or negligence of Borrower, or anyone
acting for Borrower, or of any tenant under any Lease or other
occupant, or failure to comply with the provisions of any
Policy which might otherwise result in a forfeiture of the
insurance or any part thereof, shall in any way affect the
validity or enforceability of the insurance insofar as Lender
is concerned;
(ii) the Policy shall not be materially changed
(other than to increase the coverage provided on the Property
thereby) or canceled without at least thirty (30) days' prior
written notice to Lender and any other party named therein as
an insured;
(iii) each Policy shall provide that the issuers
thereof shall give written notice to Lender if the Policy has
not been renewed thirty (30) days prior to its expiration; and
(iv) Lender shall not be liable for any Insurance
Premiums thereon or subject to any assessments thereunder.
(f) Borrower shall furnish to Lender within ten (10)
calendar days after Lender's request therefor, a statement certified by
Borrower or a duly authorized officer
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of Borrower of the amounts of insurance maintained in compliance
herewith, of the risks covered by such insurance and of the insurance
company or companies which carry such insurance and, if requested by
Lender, verification of the adequacy of such insurance by an
independent insurance broker or appraiser acceptable to Lender.
(g) If at any time Lender is not in receipt of written
evidence that all insurance required hereunder is in full force and
effect, Lender shall have the right but not the obligation, without
notice to Borrower, to take such action as Lender deems necessary to
protect its interest in the Property, including, without limitation,
the obtaining of such insurance coverage as Lender in its sole
discretion deems appropriate, and all expenses incurred by Lender in
connection with such action or in obtaining such insurance and keeping
it in effect shall be paid by Borrower to Lender upon demand and until
paid shall be secured by this Security Instrument and shall bear
interest at the Default Rate (as hereinafter defined).
(h) If the Property shall be damaged or destroyed, in
whole or in part, by fire or other casualty. Borrower shall give prompt
notice thereof to Lender.
(i) In case of loss covered by Policies. Lender
may either (1) settle and adjust any claim without the consent
of Borrower, or (2) allow Borrower to agree with the insurance
company or companies on the amount to be paid upon the loss:
provided, that Borrower may adjust losses aggregating not in
excess of $100,000.00 if such adjustment is carried out in a
competent and timely manner, and provided that in any case
Lender shall and is hereby authorized to collect and receive
any such insurance proceeds: and the expenses incurred by
Lender in the adjustment and collection of insurance proceeds
shall become part of the Debt and be secured hereby and shall
be reimbursed by Borrower to Lender upon demand (unless
deducted by and reimbursed to Lender from such proceeds).
(ii) In the event of any insured damage to or
destruction of the Property or any part thereof (herein called
an "INSURED CASUALTY"), if (A) less than 65% of the total
floor area of the Improvements has been damaged, destroyed or
rendered unusable as a result of such Insured Casualty and in
the reasonable judgment of Lender, the Property can be
restored within nine (9) months after insurance proceeds are
made available to an economic unit not less valuable
(including an assessment by Lender of the impact of the
termination of any Leases due to such Insured Casualty) and
not less useful than the same was prior to the Insured
Casualty, and after such restoration will adequately secure
the outstanding balance of the Debt, and (B) no Event of
Default (hereinafter defined) shall have occurred and be then
continuing, then the proceeds of insurance shall be applied to
reimburse Borrower for the cost of restoring, repairing,
replacing or rebuilding the Property or part thereof subject
to Insured Casualty, as provided below: and Borrower hereby
covenants and agrees forthwith to commence and diligently to
prosecute such restoring, repairing, replacing or rebuilding:
provided, however, in any event Borrower shall pay all costs
(and if required by Lender, Borrower shall deposit the total
thereof with Lender in advance) of such restoring,
JPMORGAN CHASE BANK
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repairing, replacing or rebuilding in excess of the net
proceeds of insurance made available pursuant to the terms
hereof.
(iii) Except as provided above, the proceeds of
insurance collected upon any Insured Casualty shall, at the
option of Lender in its sole discretion, be applied to the
payment of the Debt or applied to reimburse Borrower for the
cost of restoring, repairing, replacing or rebuilding the
Property or part thereof subject to the Insured Casualty, in
the manner set forth below. Any such application to the Debt
shall not be considered a voluntary prepayment requiring
payment of the prepayment consideration provided in the Note,
and shall not reduce or postpone any payments otherwise
required pursuant to the Note, other than the final payment on
the Note.
(iv) If proceeds of insurance, if any, are made
available to Borrower for the restoring, repairing, replacing
or rebuilding of the Property. Borrower hereby covenants to
restore, repair, replace or rebuild the same to be of at least
equal value and of substantially the same character as prior
to such damage or destruction, all to be effected in
accordance with applicable law and plans and specifications
approved in advance by Lender.
(v) If Borrower is entitled to reimbursement out
of insurance proceeds held by Lender, such proceeds shall be
disbursed from time to time upon Lender being furnished with
(1) evidence satisfactory to it (which evidence may include
inspection[s] of the work performed) that the restoration,
repair, replacement and rebuilding covered by the disbursement
has been completed in accordance with plans and specifications
approved by Lender, (2) evidence satisfactory to it of the
estimated cost of completion of the restoration, repair,
replacement and rebuilding, (3) funds, or, at Leader's option,
assurances satisfactory to Lender that such funds are
available, sufficient in addition to the proceeds of insurance
to complete the proposed restoration, repair, replacement and
rebuilding, and (4) such architect's certificates, waivers of
lien, contractor's sworn statements, title insurance
endorsements, bonds, plats of survey and such other evidences
of cost, payment and performance as Lender may reasonably
require and approve; and Lender may, in any event, require
that all plans and specifications for such restoration,
repair, replacement and rebuilding be submitted to and
approved by Lender prior to commencement of work. With respect
to disbursements to be made by Lender: (A) no payment made
prior to the final completion of the restoration, repair,
replacement and rebuilding shall exceed ninety percent
(90%) of the value of the work performed from time to
time; (B) funds other than proceeds of insurance shall be
disbursed prior to disbursement of such proceeds; and (C) at
all times, the undisbursed balance of such proceeds remaining
in the hands of Lender, together with funds deposited for that
purpose or irrevocably committed to the satisfaction of Lender
by or on behalf of Borrower for that purpose, shall be at
least sufficient in the reasonable judgment of Lender to pay
for the cost of completion of the restoration, repair,
replacement or rebuilding, free and clear of all liens or
claims for lien and the costs described in Subsection
3.2(h)(vi) below. Any surplus which may remain out of
insurance
JPMORGAN CHASE BANK
13
proceeds held by Lender after payment of such Costs of
restoration, repair, replacement or rebuilding shall be paid
to any party entitled thereto. In no event shall Lender assume
any duty or obligation for the adequacy, form or content of
any such plans and specifications, nor for the performance,
quality or workmanship of any restoration, repair, replacement
and rebuilding.
(vi) Notwithstanding anything to the contrary
contained herein, the proceeds of insurance reimbursed to
Borrower in accordance with the terms and provisions of this
Security Instrument shall be reduced by the reasonable costs
(if any) incurred by Lender in the adjustment and collection
thereof and in the reasonable costs incurred by Lender of
paying out such proceeds (including, without limitation,
reasonable attorneys' fees and costs paid to third parties for
inspecting the restoration, repair, replacement and rebuilding
and reviewing the plans and specifications therefor).
Section 3.3 PAYMENT OF TAXES, ETC.
(a) Subject to Article 3 of the Escrow Agreement,
Borrower shall pay all taxes, assessments, water rates, sewer rents,
governmental impositions, and other charges, including without
limitation, vault charges and license fees for the use of vaults,
chutes and similar areas adjoining the Land, now or hereafter levied or
assessed or imposed against the Property or any part thereof (the
"TAXES"), all ground rents, maintenance charges and similar charges,
now or hereafter levied or assessed or imposed against the Property or
any part thereof (the "OTHER CHARGES"), and all charges for utility
services provided to the Property prior to delinquency. Borrower will
deliver to Lender, promptly upon Lender's request, evidence
satisfactory to Lender that the Taxes. Other Charges and utility
service charges have been so paid or are not then delinquent. Borrower
shall not allow and shall promptly cause to be paid and discharged any
lien or charge whatsoever which may be or become a lien or charge
against the Property. Except to the extent sums sufficient to pay all
Taxes and Other Charges have been deposited with Lender in accordance
with the terms of this Security Instrument. Borrower shall furnish to
Lender paid receipts for the payment of the Taxes and Other Charges
prior to the date the same shall become delinquent.
(b) After prior written notice to Lender, Borrower, at
its own expense, may contest by appropriate legal proceeding, promptly
initiated and conducted in good faith and with due diligence, the
amount or validity or application in whole or in part of any of the
Taxes, provided that (i) no Event of Default has occurred and is
continuing under the Note, this Security Instrument or any of the Other
Loan Documents, (ii) Borrower is permitted to do so under the
provisions of any other mortgage, deed of trust or deed to secure debt
affecting the Property, (iii) such proceeding shall suspend the
collection of the Taxes from Borrower and from the Property or Borrower
shall have paid all of the Taxes under protest, (iv) such proceeding
shall be permitted under and be conducted in accordance with the
provisions of any other instrument to which Borrower is subject and
shall not constitute a default hereunder, (v) neither the Property nor
any part thereof or interest therein will be in danger of being sold,
forfeited, terminated, canceled or lost, (vi) Borrower shall have set
aside and deposited with Lender adequate reserves for the
JPMORGAN CHASE BANK
14
payment of the Taxes, together with all interest and penalties thereon,
unless Borrower has paid all of the Taxes under protest, and (vii)
Borrower shall have furnished the security as may be required in the
proceeding, or as may be requested by Lender to insure the payment of
any contested Taxes, together with all interest and penalties thereon.
Section 3.4 CONDEMNATION. Borrower shall promptly give Lender
notice of the actual or threatened commencement of any condemnation or eminent
domain proceeding and shall deliver to Lender copies of any and all papers
served in connection with such proceedings. Lender is hereby irrevocably
appointed as Borrower's attorney-in-fact, coupled with an interest, with
exclusive power to collect, receive and retain any award or payment for said
condemnation or eminent domain and to make any compromise or settlement in
connection with such proceeding, subject to the provisions of this Security
Instrument. Notwithstanding any taking by any public or quasi-public authority
through eminent domain or otherwise (including but not limited to any transfer
made in lieu of or in anticipation of the exercise of such taking), Borrower
shall continue to pay the Debt at the time and in the manner provided for its
payment in the Note and in this Security Instrument and the Debt shall not be
reduced until any award or payment therefor shall have been actually received
and applied by Lender, after the deduction of expenses of collection, to the
reduction or discharge of the Debt. Lender shall not be limited to the interest
paid on the award by the condemning authority but shall be entitled to receive
out of the award interest at the rate or rates provided herein or in the Note.
Borrower shall cause the award or payment made in any condemnation or eminent
domain proceeding, which is payable to Borrower, to be paid directly to Lender.
Lender may apply any award or payment to the reduction or discharge of the Debt
whether or not then due and payable (such application to be free from any
prepayment consideration provided in the Note, except that if an Event of
Default, or an event which with notice and or the passage of time, or both,
would constitute an Event of Default, has occurred, then such application shall
be subject to the full prepayment consideration computed in accordance with the
Note). If the Property is sold, through foreclosure or otherwise, prior to the
receipt by Lender of the award or payment. Lender shall have the right, whether
or not a deficiency judgment on the Note shall have been sought, recovered or
denied, to receive the award or payment, or a portion thereof sufficient to pay
the Debt.
Section 3.5 USE AND MAINTENANCE OF PROPERTY. Borrower shall cause
the Property to be maintained and operated in a good and safe condition and
repair and in keeping with the condition and repair of properties of a similar
use, value, age, nature and construction. Borrower shall not use, maintain or
operate the Property in any manner which constitutes a public or private
nuisance or which makes void, voidable, or cancelable, or increases the premium
of any insurance then in force with respect thereto. The Improvements and the
Personal Property shall not be removed, demolished or materially altered (except
for normal replacement of the Personal Property with items of the same utility
and of equal or greater value unless obsolete and non-structural alterations in
connection with tenant improvements under leases approved by Lender or for which
Lender's approval is not required under this Security Instrument) without the
prior written consent of Lender. Borrower shall promptly repair, replace or
rebuild any part of the Property which may be destroyed by any casualty, or
become damaged, worn or dilapidated or which may be affected by any proceeding
of the character referred to in Section 3.4 hereof and shall complete and pay
for any structure at any time in the process of construction or repair on the
Land. Borrower shall not initiate, join in, acquiesee in, or consent to any
change in any private restrictive covenant, zoning law or other public or
private
JPMORGAN CHASE BANK
15
restriction, limiting or defining the uses which may be made of the Property or
any part thereof absent Lender's prior written consent. If under applicable
zoning provisions the use of all or any portion of the Property is or shall
become a nonconforming use, Borrower will not cause or permit the nonconforming
use to be discontinued or abandoned without the express written consent of
Lender. Borrower shall not take any steps whatsoever to convert the Property, or
any portion thereof, to a condominium or cooperative form of management.
Section 3.6 WASTE. Borrower shall not commit or suffer any waste
of the Property or without first obtaining such additional insurance as may be
necessary to cover a proposed change in use of the Property, make any change in
the use of the Property which will in any way materially increase the risk of
fire or other hazard arising out of the operation of the Property, or take any
action that might invalidate or give cause for cancellation of any Policy, or do
or permit to be done thereon anything that may in any way impair the value of
the Property or the security of this Security Instrument. Borrower will not
without the prior written consent of Lender, permit any drilling or exploration
for or extraction removal or production of any minerals from the surface or the
subsurface of the Land regardless of the depth thereof or the method of mining
or extraction thereof.
Section 3.7 COMPLIANCE WITH LAWS: ALTERATIONS.
(a) Borrower shall promptly comply with all existing and
future Federal, state and local laws, orders, ordinances, governmental
rules and regulations or court orders affecting or which may be
interpreted to affect the Property, or die use thereof including, but
not limited to the Americans with Disabilities Act (the "ADA")
(collectively "APPLICABLE LAWS").
(b) Notwithstanding any provisions set forth herein or in
any document regarding Lender's approval of alterations of the
Property. Borrower shall not alter the Property in any manner which
would increase Borrower's responsibilities for compliance with
Applicable Laws without the prior written approval of Lender. Lender's
approval of the plans, specifications, or working drawings for
alterations of the Property shall create no responsibility or liability
on behalf of Lender for their completeness, design, sufficiency or
their compliance with Applicable Laws. The foregoing shall apply to
tenant improvements constructed by Borrower or by any of its tenants.
Lender may condition any such approval upon receipt of a certificate of
compliance with Applicable Laws from an independent architect,
engineer, or other person acceptable to Lender.
(c) Borrower shall give prompt notice to Lender of the
receipt by Borrower of any notice related to a violation of any
Applicable Laws and of the commencement of any proceedings or
investigations which relate to compliance with Applicable Laws.
(d) Borrower shall take appropriate measures to prevent
and will not engage in or knowingly permit any illegal activities at
the Property.
Section 3.8 BOOKS AND RECORDS.
(a) Borrower shall keep accurate books and records of
account in accordance with sound accounting principles in which full,
true and correct entries shall be promptly
JPMORGAN CHASE BANK
16
made with respect to Borrower, the Property and the operation thereof,
and will permit all such books and records (including without
limitation all contracts, statements, invoices, bills and claims for
labor, materials and services supplied for the construction, repair or
operation to Borrower of the Improvements) to be inspected or audited
and copies made by Lender and its representatives during normal
business hours and at any other reasonable times upon reasonable
advance written notice except in emergencies. Borrower represents that
its chief executive office is as set forth in the introductory
paragraph of this Security Instrument and that all books and records
pertaining to the Property are maintained at the Property or such other
location as may be expressly disclosed to Lender in writing. Borrower
will furnish, or cause to be furnished, to Lender on or before
fifty-five (55) calendar days after the end of each calendar quarter
the following items, each certified by Borrower as being true and
correct, in such format and in such detail as Lender or its servicer
may request:
(i) a written statement (rent roll) dated as of
the last day of each such calendar quarter identifying each of
the Leases by the term, space occupied, rental required to be
paid (including percentage rents and tenant sales), security
deposit paid, any rental concessions, all rent escalations,
any rents paid more than one (1) month in advance, any special
provisions or inducements granted to tenants, any taxes,
maintenance and other common charges paid by tenants, all
vacancies and identifying any defaults or payment
delinquencies thereunder; and
(ii) quarterly and year-to-date operating
statements prepared for each calendar quarter during each such
reporting period detailing the total revenues received, total
expenses incurred, total cost of all capital improvements,
total debt service and total cash flow.
(b) Within ninety (90) calendar Jays following the end of
each calendar year. Borrower shall furnish a statement of the financial
affairs and condition of the Borrower and the Property including a
statement of profit and loss for the Property in such format and in
such detail as Lender or its service may request, and setting forth the
financial condition and the income any expenses for the Property for
the immediately preceding calendar year prepared by an independent
certified public accountant. Borrower shall deliver to Lender copies of
all income tax returns, requests for extension and other similar items
contemporaneously with its delivery of same to the Internal Revenue
Service.
(c) Borrower will permit representatives appointed by
Lender, including independent accountants, agents, attorneys,
appraisers and any other persons, upon reasonable advance notice except
in emergencies, subject to the rights of tenants, to visit and inspect
during its normal business hours and at any other reasonable times any
of the Property and to make photographs thereof, and to write down and
record any information such representatives obtain, and shall permit
Lender or its representatives to investigate and verify the accuracy of
the information furnished to Lender under or in connection with this
Security Instrument or any of the Other Loan Documents and to discuss
all such matters with its officers, employees and representatives.
Borrower will furnish to Lender at Borrower's expense all evidence
which Lender may from time to time reasonably
JPMORGAN CHASE BANK
17
request as to the accuracy and validity of or compliance with all
representations and warranties made by Borrower in the Loan Documents
and satisfaction of all conditions contained therein. Any inspection or
audit of the Property or the books and records of Borrower, or the
procuring of documents and financial and other information, by or on
behalf of Lender, shall be at Borrower's expense and shall be for
Lender's protection only, and shall not constitute any assumption of
responsibility or liability by Lender to Borrower or anyone else with
regard to the condition, construction, maintenance or operation of the
Property, nor Lender's approval of any certification given to Lender
nor relieve Borrower of any of Borrower's obligations.
(d) Prior to the transfer of the Loan by Lender pursuant
to Section 16.1 hereof, Borrower shall deliver to Lender the reports
required by Section 3.8(a) on a monthly basis. Such reports shall be
delivered within twenty-five (25) calendar days after the end of each
calendar month.
Section 3.9. PAYMENT FOR LABOR AND MATERIALS. Borrower will
promptly pay when due all bills and costs incurred by Borrower for labor,
materials, and specifically fabricated materials incurred in connection with the
Property and never permit to exist beyond the due date thereof in respect of the
Property or any part thereof any lien or security interest, even though inferior
to the liens and the security interests hereof, and in any event never permit to
be created or exist in respect of the Property or any part thereof any other or
additional lien or security interest other than the liens or security interests
hereof, except for the Permitted Exceptions (as hereinafter defined).
Section 3.10 PERFORMANCE OF OTHER AGREEMENTS. Borrower shall
observe and perform each and every term to be observed or performed by Borrower
pursuant to the terms of any agreement or recorded instrument affecting or
pertaining to the Property, or given by Borrower to Lender for the purpose of
further securing an obligation secured hereby and any amendments, modifications
or changes thereto.
ARTICLE 4 - SPECIAL COVENANTS
Borrower covenants and agrees that:
Section 4.1 PROPERTY USE. The Property shall be used only for
industrial, warehouse and office purposes, and for no other use without the
prior written consent of Lender, which consent may be withheld in Lender's sole
and absolute discretion.
Section 4.2 ERISA.
(a) It shall not engage in any transaction which would
cause any obligation, or action taken or to be taken, hereunder (or the
exercise by Lender of any of its rights under the Note, this Security
Instrument and the Other Loan Documents) to be a non-exempt (under a
statutory or administrative class exemption) prohibited transaction
under the Employee Retirement Income Security Act of 1974, as amended
("ERISA").
(b) It shall deliver to Lender such certifications or
other evidence from time to time throughout the term of the Security
Instrument, as requested by Lender in its sole
JPMORGAN CHASE BANK
18
discretion, that (i) Borrower is not an "employee benefit plan" as
defined in Section 3(3) of ERISA, which is subject to Title I of ERISA,
or a "governmental plan" within the meaning of Section 3(32) of ERISA:
(ii) Borrower is not subject to state statutes regulating investments
and fiduciary obligations with respect to governmental plans; and (iii)
one or more of the following circumstances is true:
(i) Equity interests in Borrower are publicly
offered securities, within the meaning of 29 C.F.R. Section
2510.3-101(b)(2);
(ii) Less than twenty-five percent (25%) of each
outstanding class of equity interests in Borrower are held by
"benefit plan investors" within the meaning of 29 C.F.R.
Section 2510.3-101(f)(2): or
(iii) Borrower qualifies as an "operating company"
or a "real estate operating company" within the meaning of 29
C.F.R. Section 2510.3-101(c) or (e) or an investment company
registered under The Investment Company Act of 1940.
Section 4.3 SINGLE PURPOSE ENTITY. Borrower covenants and agrees
that it has not and shall not:
(a) engage in any business or activity other than the
acquisition, ownership, operation and maintenance of the Property and
activities incidental thereto;
(b) acquire or own any material asset other than (i) the
Property, and (ii) such incidental Personal Property as may be
necessary for the operation of the Property;
(c) merge into or consolidate with any person or entity
or dissolve, terminate or liquidate in whole or in part, transfer or
otherwise dispose of all or substantially all of its assets or change
its legal structure without in each case Lender's consent;
(d) fail to preserve its existence as an entity duly
organized, validly existing and in good standing (if applicable under
the laws of the jurisdiction of its organization or formation, or
without the prior written consent of Lender, amend, modify, terminate
or fail to comply with the provisions of Borrower's Partnership
Agreement, Articles or Certificate of Incorporation, Articles of
Organization, Operating Agreement or similar organizational documents,
as the case may be;
(e) own any subsidiary or make any investment in or
acquire the obligations or securities of any other person or entity
without the consent of Lender;
(f) commingle its assets with the assets of any of its
partner(s). members, shareholders, affiliates, or of any other person
or entity or transfer any assets to any such person or entity other
than distributions on account of equity interests in the Borrower
permitted hereunder and properly accounted for;
(g) incur any debt, secured or unsecured, direct or
contingent (including guaranteeing any obligation), other than the
Debt, except unsecured trade and operational debt incurred with trade
creditors in the ordinary course of its business of owning and
JPMORGAN CHASE BANK
19
operating the Property in such amounts as are normal and reasonable
under the circumstances, provided that such debt is not evidenced by a
note and is paid when due and provided in any event the outstanding
principal balance of such debt shall not exceed at any one time one
percent (1%) of the outstanding Debt;
(h) allow any person or entity to pay its debts and
liabilities (except a Guarantor or Indemnitor) or fail to pay its debts
and liabilities solely from its own assets;
(i) fail to maintain its records, books of account and
bank accounts separate and apart from those of the shareholders,
partners, members, principals and affiliates of Borrower, the
affiliates of a shareholder, partner or member of Borrower, and any
other person or entity or fail to prepare and maintain its own
financial statements in accordance with generally accepted accounting
principles and susceptible to audit, or if such financial statements
are consolidated fail to cause such financial statements to contain
footnotes disclosing that the Property is actually owned by the
Borrower;
(j) enter into any contract or agreement with any
shareholder, partner, member, principal or affiliate of Borrower, any
guarantor of all or a portion of the Debt (a "GUARANTOR") or any
shareholder, partner, member, principal or affiliate thereof, except
upon terms and conditions that are intrinsically fair and substantially
similar to those that would be available on an arms-length basis with
third parties other than any shareholder, partner, member, principal or
affiliate of Borrower or Guarantor, or any shareholder, partner,
member, principal or affiliate thereof;
(k) seek dissolution or winding up in whole, or in part;
(l) fail to correct any known misunderstandings regarding
the separate identity of Borrower;
(m) hold itself out to be responsible or pledge its
assets or credit worthiness for the debts of another person or entity
or allow any person or entity to hold itself out to be responsible or
pledge its assets or credit worthiness for the debts of the Borrower
(except for a Guarantor or Indemnitor);
(n) make any loans or advances to any third party,
including any shareholder, partner, member, principal or affiliate of
Borrower, or any shareholder, partner, member, principal or affiliate
thereof;
(o) fail to file its own tax returns (except to the
extent consolidated with another entity pursuant to generally accepted
accounting principles or applicable law) or to use separate contracts,
purchase orders, stationary, invoices and checks;
(p) fail either to hold itself out to the public as a
legal entity separate and distinct from any other entity or person or
to conduct its business solely in its own name in order not (i) to
mislead others as to the entity with which such other party is
transacting business, or (ii) to suggest that Borrower is responsible
for the debts of any third party (including any shareholder, partner,
member, principal or affiliate of Borrower, or any shareholder,
partner, member, principal or affiliate thereof);
JPMORGAN CHASE BANK
20
(q) fail to allocate fairly and reasonably among Borrower
and any third party (including, without limitation, any Guarantor) any
overhead for common employees, shared office space or other overhead
and administrative expenses;
(r) allow any person or entity to pay the salaries of its
own employees or fail to maintain a sufficient number of employees for
its contemplated business operations;
(s) fail to maintain adequate capital for the normal
obligations reasonably foreseeable in a business of its size and
character and in light of its contemplated business operations;
(t) file a voluntary petition or otherwise initiate
proceedings to have the Borrower or any general partner or managing
member adjudicated bankrupt or insolvent, or consent to the institution
of bankruptcy or insolvency proceedings against the Borrower or any
general partner or managing member, or file a petition seeking or
consenting to reorganization or relief of the Borrower or any general
partner or managing member as debtor under any applicable federal or
state law relating to bankruptcy, insolvency, or other relief for
debtors with respect to the Borrower or any general partner or managing
member: or seek or consent to the appointment of any trustee, receiver,
conservator, assignee, sequestrator, custodian, liquidator (or other
similar official) of the Borrower or any general partner or managing
member or of all or any substantial part of the properties and assets
of the Borrower or any general partner or managing member, or make any
general assignment for the benefit of creditors of the Borrower or any
general partner or managing member, or admit in writing the inability
of the Borrower or any general partner or managing member to pay its
debts generally as they become due or declare or effect a moratorium on
the Borrower or any general partner or managing member debt or take any
action in furtherance of any such action;
(u) share any common logo with or hold itself out as or
be considered as a department or division of (i) any shareholder,
partner, principal, member or affiliate of Borrower, (ii) any affiliate
of a shareholder, partner, principal, member or affiliate of Borrower,
or (iii) any other person or entity or allow any person or entity to
identify the Borrower as a department or division of that person or
entity; or
(v) conceal assets from any creditor, or enter into any
transaction with the intent to hinder, delay or defraud creditors of
the Borrower or the creditors of any other person or entity.
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES
Section 5.1 BORROWER'S REPRESENTATIONS. Borrower represents and
warrants to Lender that each of the representations and warranties set forth in
that certain Closing Certificate of even date herewith executed by Borrower in
favor of Lender are true and correct as of the date hereof and are hereby
incorporated and restated in this Security Instrument by this reference.
Section 5.2 WARRANTY OF TITLE. Borrower represents and warrants
that it has good and marketable title to the Property and has the right to
grant, bargain, sell, pledge, assign,
JPMORGAN CHASE BANK
21
warrant, transfer and convey the same and that Borrower possesses an
unencumbered fee simple absolute estate in the Land and the Improvements and
that it owns the Property free and clear of all liens, encumbrances and charges
whatsoever except for those exceptions shown in the title insurance policy
insuring the lien of this Security Instrument (the "PERMITTED EXCEPTIONS").
Borrower shall, at its sole cost and expense, forever warrant, defend and
preserve the title and the validity and priority of the lien of this Security
Instrument and shall, at its sole cost and expense, forever warrant and defend
the same to Trustee and Lender against the claims of all persons whomsoever.
Section 5.3 STATUS OF PROPERTY.
(a) No portion of the Improvements is located in an area
identified by the Secretary of Housing and Urban Development or any
successor thereto as an area having special flood hazards pursuant to
the National Flood Insurance Act of 1968 or the Flood Disaster
Protection Act of 1973, as amended, or any successor law, or, if
located within any such area. Borrower has obtained and will maintain
the insurance prescribed in Section 3.2 hereof.
(b) Borrower has obtained all necessary certificates,
permits, licenses any other approvals, governmental and otherwise,
necessary for the use, occupancy and operation of the Property and the
conduct of its business (including, without limitation, certificates of
completion and certificates of occupancy) and all required zoning,
building code, land use, environmental and other similar permits or
approvals, all of which are in full force and effect as of the date
hereof and not subject to revocation, suspension, forfeiture or
modification.
(c) The Property and the present and contemplated use and
occupancy thereof are to the best knowledge of Borrower in full
compliance with all Applicable Laws, including, without limitation,
zoning ordinances, building codes, land use and environmental laws,
laws relating to the disabled (including, but not limited to the ADA)
and other similar laws.
(d) The Property is served by all utilities required for
the current or contemplated use thereof. All utility service is
provided by public utilities and the Property has accepted or is
equipped to accept such utility service.
(e) All public roads and streets necessary for service of
and access to the Property for the current or contemplated use thereof
have been completed, are serviceable and are physically and legally
open for use by the public.
(f) The Property is served by public water and sewer
systems.
(g) The Property is free from damage caused by fire or
other casualty. There is no pending or to the best knowledge of
Borrower, threatened condemnation proceedings affecting the Property or
any portion thereof.
(h) All costs and expenses of any and all labor,
materials, supplies and equipment used in the construction of the
Improvements have been paid in full and no
JPMORGAN CHASE BANK
22
notice of any mechanics or materialmen's liens or of any claims of
right to any such liens have been received.
(i) Borrower has paid in full for and is the owner of
all furnishings, fixtures and equipment (other than tenants property)
used in connection with the operation of the Property, free and clear
of any and all security interests, liens or encumbrances, except the
lien and security interest created hereby.
(j) All liquid and solid waste disposal, septic and sewer
systems located on the Property are to the best knowledge of Borrower
in a good and safe condition and repair and in compliance with all
Applicable Laws.
(k) All Improvements lie within the boundary of the Land.
Section 5.4 NO FOREIGN PERSON. Borrower is not a "foreign person"
within the meaning of Section 1445(f)(3) of the Internal Revenue Code of 1986,
as amended, and the related Treasury Department regulations, including temporary
regulations.
Section 5.5 SEPARATE TAX LOT. The Property is assessed for real
estate tax purposes as one or more wholly independent tax lot or lots, separate
from any adjoining land or improvements not constituting a part of such lot or
lots, and no other land or improvements is assessed and taxed together with the
Property or any portion thereof.
ARTICLE 6 - OBLIGATIONS AND RELIANCES
Section 6.1 RELATIONSHIP OF BORROWER AND LENDER. The relationship
between Borrower and Lender is solely that of debtor and creditor, and Lender
has no fiduciary or other special relationship with Borrower, and no term or
condition of any of the Note, this Security Instrument and the other Loan
Documents shall be construed so as to deem the relationship between Borrower and
Lender to be other than that of debtor and creditor.
Section 6.2 NO RELIANCE ON LENDER. The partners, members,
principals and (if Borrower is a trust) beneficial owners of Borrower are
experienced in the ownership and operation of properties similar to the
Property, and Borrower and Lender are relying solely upon such expertise and
business plan in connection with the ownership and operation of the Property.
Borrower is not relying on Lender's expertise, business acumen or advice in
connection with the Property.
Section 6.3 NO LENDER OBLIGATIONS.
(a) Notwithstanding the provisions of Subsections 1.1(e)
and l.1(f) or Section 1.2. Lender is not undertaking (i) any
obligations under the Leases; or (ii) any obligations with respect to
such agreements, contracts, certificates, instruments, franchises,
permits, trademarks, licenses and other documents.
(b) By accepting or approving anything required to be
observed, performed or fulfilled or to be given to Lender pursuant to
this Security Instrument, the Note or the Other Loan Documents,
including without limitation, any officer's certificate, balance
JPMORGAN CHASE BANK
23
sheet, statement of profit and loss or other financial statement,
survey, appraisal, or insurance policy, Lender shall not be deemed to
have warranted, consented to, or affirmed the sufficiency, legality or
effectiveness of same, and such acceptance or approval thereof shall
not constitute any warranty or affirmation with respect thereto by
Lender.
Section 6.4 RELIANCE. Borrower recognizes and acknowledges
that in accepting the Note, this Security Instrument and the Other Loan
Documents, Lender is expressly and primarily relying on the truth and accuracy
of the warranties and representations set forth in Article 5 and that certain
Closing Certificate of even date herewith executed by Borrower, without any
obligation to investigate the Property and notwithstanding any investigation of
the Property by Lender; that such reliance existed on the part of Lender prior
to the date hereof; that such warranties and representations are a material
inducement to Lender in accepting the Note, this Security Instrument and the
Other Loan Documents; and that Lender would not be willing to make the Loan (as
hereinafter defined) and accept this Security Instrument in the absence of the
warranties and representations as set forth in Article 5 and such Closing
Certificate.
ARTICLE 7 - FURTHER ASSURANCES
Section 7.1 RECORDING FEES. Borrower will pay all taxes, filing,
registration or recording fees, and all expenses incident to the preparation,
execution, acknowledgment and/or recording of the Note, this Security instrument
the Other Loan Documents, any note or deed of trust supplemental hereto, any
security instrument with respect to the Property and any instrument of further
assurance, and any modification or amendment of die foregoing documents, and all
federal, state, county and municipal taxes, duties, imposts, assessments and
charges arising out of or in connection with the execution and delivery of this
Security Instrument, any deed of trust supplemental hereto, any security
instrument with respect to the Property or any instrument of further assurance,
and any modification or amendment of the foregoing documents, except where
prohibited by law so to do.
Section 7.2 FURTHER ACTS. Borrower will, at the cost of Borrower,
and without expense to Lender, do, execute, acknowledge and deliver all and
every such further acts, deeds, conveyances, deeds of trust, assignments,
notices of assignments, transfers and assurances as Lender shall, from time to
time, require, for the better assuring, conveying, assigning, transferring, and
confirming unto Lender the property and rights hereby granted, bargained, sold,
conveyed, confirmed, pledged, assigned, warranted and transferred or intended
now or hereafter so to be, or which Borrower may be or may hereafter become
bound to convey or assign to Lender, or for carrying out the intention or
facilitating the performance of the terms of this Security Instrument or for
filing, registering or recording this Security Instrument, or for complying with
all Applicable Laws. Borrower, on demand, will execute and deliver and hereby
authorizes Lender to execute in the name of Borrower or without the signature of
Borrower to the extent Lender may lawfully do so, one or more financing
statements, chattel mortgages or other instruments, to evidence more effectively
the security interest of Lender in the Property. Borrower grants to Lender an
irrevocable power of attorney coupled with an interest for the purpose of
exercising and perfecting any and all rights and remedies available to Lender
at law and in equity, including without limitation such rights and remedies
available to Lender pursuant to this Section 7.2.
JPMORGAN CHASE BANK
24
Section 7.3 CHANGES IN TAX. DEBT CREDIT AND DOCUMENTARY STAMP
LAWS.
(a) If any law is enacted or adopted or amended after the
date of this Security Instrument which imposes a tax, either directly
or indirectly, on the Debt or Lender's interest in the Property,
requires revenue or other stamps to be affixed to the Note, this
Security Instrument, or the Other Loan Documents, or imposes any other
tax or charge on the same, Borrower will pay the same, with interest
and penalties thereon, if any. If Lender is advised by counsel chosen
by it that the payment of tax by Borrower would be unlawful or taxable
to Lender or unenforceable or provide the basis for a defense of usury,
then Lender shall have the option, by written notice of not less than
ninety (90) calendar days, to declare the Debt immediately due and
payable.
(b) Borrower will not claim or demand or be entitled to
any credit or credits on account of the Debt for any part of the Taxes
or Other Charges assessed against the Property, or any part thereof,
and no deduction shall otherwise be made or claimed from the assessed
value of the Property, or any part thereof, for real estate tax
purposes by reason of this Security Instrument or the Debt. If such
claim, credit or deduction shall be required by law. Lender shall have
the option, by written notice of not less than ninety (90) calendar
days, to declare the Debt immediately due and payable.
Section 7.4 CONFIRMATION STATEMENT.
(a) After request by Lender Borrower, within ten (10)
days, shall furnish Lender or any proposed assignee with a statement,
duly acknowledged and certified, confirming to Lender (or its
designee) (i) to the amount of the original principal amount of the
Note, (ii) the unpaid principal amount of the Note. (iii) the rate of
interest of die Note, (iv) the terms of payment and maturity date of
the Note, (v) the date installments of interest and, or principal were
last paid, and (vi) that, except as provided in such statement, there
are no defaults or events which with the passage of time or the giving
of notice or both, would constitute an event of default under the Note
or this Security Instrument; provided, however, Lender shall not be
entitled hereunder to receive more than one (1) such statement in each
calendar year.
(b) Subject to the provisions of the Leases. Borrower
shall deliver to Lender, promptly upon request (but not more frequently
than once annually so large as Borrower is not in default hereunder).
duly executed estoppels certificates from any one or more lessees as
required by Lender attesting to such facts regarding the Lease as
Lender may require, including but not limited to attestations that each
Lease covered thereby is in full force and effect with no defaults
thereunder on the part of any party, that none of the Rents have been
paid more than one month in advance, and that the lessee claims no
defense or offset against the full and timely performance of its
obligations under the Lease.
(c) Upon any transfer or proposed transfer contemplated
by Section 16.1 hereof, at Lender's request. Borrower, any Guarantors
and any Indemnitors shall provide an estoppels certificate to the
Investor (defined in Section 16.1) or any prospective
JPMORGAN CHASE BANK
25
Investor in such form, substance and detail as Lender, such Investor or
prospective Investor may reasonably require.
Section 7.5 SPLITTING OF SECURITY INSTRUMENT. This Security
Instrument and the Note shall, at any time until the same shall be fully paid
and satisfied, at the sole election of Lender, be split or divided into two or
more notes and two or more security instruments, each of which shall cover all
or a portion of the Property to be more particularly described therein. To that
end, Borrower, upon written request of Lender, shall execute, acknowledge and
deliver, or cause to be executed, acknowledged and delivered by the then owner
of the Property, to Lender and/or its designee or designees substitute notes and
security instruments in such principal amounts, aggregating not more than the
then unpaid principal amount of Debt, and containing terms, provisions and
clauses similar to those contained herein and in the Note, and such other
documents and instruments as may be required by Lender.
Section 7.6 REPLACEMENT DOCUMENTS. Upon receipt of an affidavit
of an officer of Lender as to the loss, theft, destruction or mutilation of the
Note or any Other Loan Document which is not of public record, and, in the case
of any such mutilation, upon surrender and cancellation of such Note or Other
Loan Document. Borrower, at its expense, will issue, in lieu thereof, a
replacement Note or Other Loan Document, dated the date of such lost, stolen,
destroyed or mutilated Note or Other Loan Document in the same principal amount
thereof and otherwise of like tenor.
ARTICLE 8 - DUE ON SALE ENCUMBRANCE
Section 8.1 LENDER RELIANCE. Borrower acknowledges that Lender
has examined and relied on the creditworthiness or Borrower and experience of
Borrower and its partners, members, principals and (if Borrower is a trust)
beneficial owners in owning and operating properties such as the Property in
agreeing to make the Loan, and will continue to rely on Borrower's ownership of
the Property as a means of maintaining the value of the Property as security for
repayment of the Debt and the performance of the Other Obligations. Borrower
acknowledges that Lender has a valid interest in maintaining the value of the
Property so as to ensure that should Borrower default in the repayment of the
Debt or the performance of the Other Obligations. Lender can recover the Debt by
a sale of the Property.
Section 8.2 NO SALE/ENCUMBRANCE.
(a) Borrower agrees that Borrower shall not, without the
prior written consent of Lender, Transfer the Property or any part
thereof or permit the Property or any part thereof to be Transferred.
Lender shall not be required to demonstrate any actual impairment of
its security or any increased risk of default hereunder in order to
declare the Debt immediately due and payable upon Borrower's Transfer
of the Property without Lender's consent.
(b) As used in Section 8.2(a). "Transfer" shall mean
any voluntary or involuntary sale, conveyance, mortgage, grant,
bargain, encumbrance, pledge, assignment or transfer of all or any part
of the Property or any interest therein including, but not limited to:
(i) an installment sales agreement wherein Borrower auras to sell the
JPMORGAN CHASE BANK
26
Property or any part thereof for a price to be paid in installments;
(ii) an agreement by Borrower leasing all or a substantial part of the
Property for other than actual occupancy by a space tenant thereunder;
(iii) a sale, assignment or other transfer of, or the grant of a
security interest in, Borrower's right, title and interest in and to
any Leases or any Rents; (iv) if Borrower, Guarantor, or any managing
member or general partner of Borrower or Guarantor is a corporation,
any Transfer of such corporation's stock (or the stock of any
corporation directly or indirectly controlling such Borrower,
Guarantor, managing member or general partner by operation of law or
otherwise) or the creation or issuance of new stock in one or a series
of transactions by which an aggregate of forty-nine percent (49%) or
more of such corporation's stock shall directly or indirectly be vested
in or pledged to a party or parties who are not now stockholders
provided, however, in no event shall this subpart (iv) apply to any
Guarantor whose stock or shares are traded on a nationally recognized
stock exchange); (v) if Borrower, Guarantor, or any managing member or
general partner of Borrower or Guarantor is a limited liability company
or partnership, the Transfer by which an aggregate of forty-nine
percent (49%) or more of the ownership interest in such limited
liability company or forty-nine percent (49%) or more of the
partnership interests in such partnership shall directly or indirectly
be vested in or pledged to parties not having an ownership interest as
of the date of this Security Instrument; (vi) if Borrower, any
Guarantor or any managing member or general partner of Borrower or any
Guarantor is a partnership, limited liability company or joint venture,
the change, removal or resignation of a general partner, managing
member or joint venturer or the Transfer directly or indirectly of all
or any portion of the partnership or ownership interest of any general
partner managing member or joint venturer; and (vii) except as
expressly permitted by Section 8.3. any Transfer by an Original
Principal, directly or indirectly, of its ownership interest in the
Borrower.
Section 8.3 EXCLUDED AND PERMITTED TRANSFERS.
(a) A Transfer within the meaning of this Article 8
shall not include (i) transfers of ownership interests in the Borrower,
any general partner or managing member or any Guarantor made by devise
or descent or by operation of law upon the death of a joint tenant,
partner, member or shareholder, subject, however, to all the following
requirements: (A) written notice of any transfer under this Section
8.3, whether by will, trust or other written instrument, operation of
law or otherwise, is provided to Lender or its servicer, together with
copies of such documents relating to the transfer as Lender or its
servicer may reasonably request, (B) control over the management and
operation of the Property is retained by one or more of XXXXXXX
XXXXXXXXX and XXXXXXXX XXXXX (the "ORIGINAL PRINCIPALS", whether one
or more) at all times prior to the death or legal incapacity of all the
Original Principals and is thereafter assumed by persons who are
acceptable in all respects to Lender in its sole and absolute
discretion, (C) no such transfer by any of the Original Principals will
release the respective estate from any liability as a Guarantor, and
(D) no such transfer, death or other event has any adverse effect
either on the bankruptcy-remote status of Borrower under the
requirements of any national rating agency for the Securities
(hereinafter defined) or on the status of Borrower as a continuing
legal entity liable for the payment of the Debt and the performance of
all other obligations secured hereby, (ii) transfers otherwise by
operation of law in the event of a bankruptcy, (iii) a Lease of a
portion of
JPMORGAN CHASE BANK
27
the Property to a space tenant, (iv) pledges of equity interests in any
indirect owner of the Borrower other than the Borrower itself and its
immediate members and managers, or (v) transfers of ownership interests
in Borrower, any general partner or managing member of Borrower to an
affiliate of the Original Principals or to an affiliate of Wafra
Investment Advisory Group, Inc. ("Wafra").
(b) Notwithstanding any provision of this Security Instrument
to the contrary, the prohibitions in Subsection 8.2(a) shall not apply
to an inter vivos or testamentary transfer of all or any portion of
ownership interests in the Borrower, any general partner or managing
member or any Guarantor to one or more family members of Original
Principals or a trust in which all of the beneficial interest is held
by one or more family members of Original Principals or a partnership
or limited liability company in which a majority of the capital and
profits interests are held by one or more family members of Original
Principals, or (ii) any inter vivos or testamentary transfer or
issuance of capital stock in Borrower or the general partner of
Borrower to one or more family members of Original Principals or to a
trust in which all of the beneficial interest is held by one or more
family members of Original Principals or a partnership or limited
liability company in which a majority of the capital and profits
interests are held by one or more family members of Original
Principals: provided, that any inter vivos transfer of all or any
portion of the ownership interests in the Borrower or such Guarantor or
any inter vivos transfer or issuance of capital stock in Borrower or
Borrower's general partner is made in connection with Original
Principals' bona fide, good faith estate planning and that the
person(s) with voting control of Borrower or the management of the
Property are (i) the same person(s) who had such voting control and
management rights immediately prior to the transfer in question, or
(ii) reasonably acceptable to Lender and provided further that no such
transfer shall have any adverse effect on the bankruptcy remote status
of Borrower under the requirements of any national rating agency for
the Securities. Lender acknowledges that Original Principals and or an
Original Principal's spouse are acceptable to exercise voting control
of Borrower and the management of the Property. As used herein, "family
members" shall include the spouse, children and grandchildren and any
lineal descendants.
(c) Notwithstanding the provisions of Section 8.2 above. Lender
will give its consent to three separate sales or transfers of the
Property or ownership interests in the Borrower, a general partner or
managing member of the Borrower, or any Guarantor, if (but only if) no
Event of Default under the Loan Documents has occurred and is
continuing, and if each of the following conditions precedent have been
fully satisfied (as determined in Lender's sole and absolute
discretion): (i) the grantee's or transferee's integrity, reputation,
financial condition, character and management ability are satisfactory
to Lender in its sole discretion, and all information relating thereto
requested by Lender is delivered to Lender at least 30 days prior to
the proposed transfer, (ii) the grantee's or transferee's (and its sole
general partner's or managing member's) single purpose and bankruptcy
remote character are satisfactory to Lender in its sole discretion, and
all information relating thereto requested by Lender is delivered to
Lender at least 30 days prior to the proposed transfer, (iii) Lender
has obtained such estoppels from any guarantors of the Note or
replacement guarantors and such other legal opinions regarding
substantive consolidation issues, enforceability of the assumption
documents, no adverse
JPMORGAN CHASE BANK
28
impact on the Securities or any REMIC holding the Note and similar
matters as Lender may require, (iv) all of Lender's costs and expenses
associated with the sale or transfer (including reasonable attorneys'
fees) are paid by Borrower or the grantee or transferee, (v) except in
the case of a transfer of a direct or indirect interest in the managing
member's interest in the Borrower to an affiliate of Wafra or an
affiliate of the Original Principals, the payment of a transfer fee not
to exceed 1% of the then unpaid principal balance of the loan evidenced
by the Note and secured hereby (the "LOAN"), (vi) the execution and
delivery to Lender of a written assumption agreement and/or substitute
guaranty (in its sole and absolute discretion) and such modifications
to the Loan Documents executed by such parties and containing such
terms and conditions as Lender may require in its sole and absolute
discretion prior to such sale or transfer (provided that in the event
the Loan is included in a REMIC and is a performing Loan, no
modification to the terms and conditions shall be made or permitted
that would cause (A) any adverse tax consequences to the REMIC or any
holders of any Mortgage-Backed Pass-Through Securities, (B) the
Security Instrument to fail to be a Qualifying Security Instrument
under applicable federal law relating to REMIC's, or (C) result in a
taxation of the income from the Loan to the REMIC or cause a loss of
REMIC status), and (vii) if applicable, the delivery to Lender or an
endorsement (at Borrower's sole cost and expense) to Lender's policy of
title insurance then insuring the lien created by this Security
Instrument in form and substance acceptable to Lender in its sole
judgment.
(d) Without limiting the foregoing, if Lender shall
consent to a transfer of the Property, the written assumption agreement
described in Subsection 8.3(c)(vi) above shall provide for the release
of Borrower and. if approved by Lender, each Guarantor and Indemnitor
of personal liability under the Note and Other Loan Documents, but only
as to acts or events occurring, or obligations arising, after the
closing of such transfer.
Section 8.4 NO IMPLIED FUTURE CONSENT. Lender's consent to one
sale, conveyance, alienation, mortgages, encumbrance pledge or transfer of the
Property shall not be deemed to be a waiver of Lender's right to requires such
consent to any future occurrence of same. Any sale, conveyance, alienation,
mortgage, encumbrance, pledge or transfer of the Property made in contravention
of this Article 8 shall be null and void and of no force and effect.
Section 8.5 COSTS OF CONSENT. Borrower agrees to bear and shall
pay or reimburse Lender on demand for all reasonable expenses (including,
without limitation, all recording costs, reasonable attorneys" fees and
disbursements and title search costs) incurred by Lender in connection with the
review, approval and documentation of any such sale, conveyance, alienation,
mortgage, encumbrance, pledge or transfer.
Section 8.6 CONTINUING SEPARATENESS REQUIREMENTS. In no event
shall any of the terms and provisions of this Article 8 amend or modify the
terms and provisions contained in Section 4.3 herein.
ARTICLE 9 - DEFAULT
Section 9.1 EVENTS OF DEFAULT. The occurrence of any one or more
of the following events shall constitute an "EVENT OF DEFAULT":
JPMORGAN CHASE BANK
29
(a) if any portion of the Debt is not paid on or prior to
the calendar day the same is due or if the entire Debt is not paid on
or before the maturity date, along with applicable prepayment premiums,
if any;
(b) if Borrower, or its general partner or managing
member, if applicable, violates or does not comply with any of the
provisions of Section 4.3 or Article 8, or fails to deliver any of the
reports required by Section 3.8; provided, however, that the first
failure to deliver reports required by Section 3.8 during any twelve
month period commencing on the date hereof and each anniversary of the
date hereof shall not constitute an Event of Default unless such
failure remains uncured for ten calendar days after written notice by
Lender to Borrower of such failure;
(c) if any representation or warranty of Borrower or of
its members, general partners, principals, affiliates, agents or
employees, or of any Guarantor made herein or in the Environmental
Indemnity or in any other Loan Document in any guaranty, or in any
certificate, report, financial statement or other instrument or
document furnished to Lender shall have been false or misleading in any
material respect when made;
(d) if Borrower or any Guarantor shall make an assignment
for the benefit of creditors or if Borrower or any Guarantor shall
admit in writing its inability to pay, or Borrower's or any Guarantor's
failure to pay its debts as they become due;
(e) if (i) Borrower or any subsidiary or general partner
or managing member of Borrower, or any Guarantor shall commence any
case, proceeding or other action (A) under any existing or future law
of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization, conservatorship or relief of debtors,
seeking to have an order for relief entered with respect to it or
seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition, or other relief with respect to it or its
debts, or (B) seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any
substantial part of its assets, or Borrower or any subsidiary or
general partner or managing member of Borrower, or any Guarantor shall
make a general assignment for the benefit of its creditors; or (ii)
there shall be commenced against Borrower or any subsidiary or general
partner or managing member of Borrower, or any Guarantor any case,
proceeding or other action of a nature referred to in clause (i) above
which (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed. undischarged or
unbonded for a period of ninety (90) calendar days; or (iii) there
shall be commenced against Borrower or any subsidiary or general
partner or managing member of Borrower or any Guarantor any case,
proceeding or other action seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial
part of its assets which results in the entry of any order for any such
relief which shall not have been vacated, discharged, or stayed or
bonded pending appeal within ninety (90) calendar days from the entry
thereof; or (iv) Borrower or any subsidiary or general partner or
managing member of Borrower, or any Guarantor shall take any action in
furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii) or (iii)
above; or (v) Borrower or any subsidiary or general partner or managing
member of
JPMORGAN CHASE BANK
30
Borrower, or any Guarantor shall generally not, or shall be unable to,
or shall admit in writing its inability to, pay its debts as they
become due;
(f) subject to Borrower's right to contest certain liens
as provided in this Security Instrument, if the Property becomes
subject to any mechanic's, materialman's or other lien other than a
lien for local real estate taxes and assessments not then due and
payable and the lien shall remain undischarged of record (by payment,
bonding or otherwise) for a period of thirty (30) calendar days;
(g) if any federal tax lien is filed against Borrower,
any general partner or managing member of Borrower, any Guarantor or
the Property and same is not discharged of record within thirty (30)
calendar days after same is filed;
(h) except as permitted in this Security Instrument, the
actual or threatened alteration, improvement, demolition or removal of
any of the Improvements without the prior consent of Lender;
(i) damage to the Property in any manner which is not
covered by insurance, which lack of coverage arises solely as a result
of Borrower's failure to maintain the insurance required under this
Security Instrument;
(j) without Lender's prior consent, (i) any managing
agent for the Property resigns or is removed, (ii) the ownership,
management or control of such managing agent is transferred to a person
or entity other than the general partner or managing member of the
Borrower, or (iii) there is any material change in the property
management agreement of the Property;
(k) this Security Instrument shall cease to constitute a
first-priority lien on the Property (other than in accordance with its
terms);
(1) seizure or forfeiture of the Property, or any portion
thereof or Borrower's interest therein, resulting from criminal
wrongdoing or other unlawful action of Borrower, its affiliates, or any
tenant in the Property under any federal, state or local law;
(m) if Borrower consummates a transaction which would
cause this Security Instrument or Lender's exercise of its rights under
this Security Instrument, the Note or the Other Loan Documents to
constitute a nonexempt prohibited transaction under ERISA or result in
a violation of a state statute regulating governmental plans,
subjecting Lender to liability for a violation of ERISA or a state
statute;
(n) if any default occurs under any guaranty or indemnity
including the Environmental Indemnity executed in connection herewith
and such default continues after the expiration of applicable grace
periods, or such guaranty or indemnity shall cease to be in full force
and effect, or any guarantor or inseminator shall deny or disaffirm its
obligation hereunder; and
(o) if Borrower or any Guarantor, as the case may be
shall continue to be in default under any other term, covenant or
condition of this Security Instrument or any
JPMORGAN CHASE BANK
31
Other Loan Documents for thirty (30) calendar days after notice from
Lender; provided that if such default cannot reasonably be cured within
such thirty (30) calendar day period and Borrower (or such Guarantor as
the case may be) shall have commenced to cure such default within such
thirty (30) calendar day period and thereafter diligently and
expeditiously proceeds to cure the same, such thirty (30) calendar day
period shall be extended for so long as it shall require Borrower (or
such Guarantor as the case may be) in the exercise of due diligence to
cure such default, it being agreed that no such extension shall be for
a period in excess of sixty (60) calendar days after the notice from
Lender referred to above.
Section 9.2 DEFAULT INTEREST. Borrower will pay from the date of
an Event of Default through the earlier of the date upon which the Event of
Default is cured or the date upon which the Debt is paid in full, interest on
the unpaid principal balance of the Note at a per annum rate equal to the lesser
of (a) the greater of (i) five percent (5%) plus the Prime Rate (as defined in
the Note), and (ii) five percent (5%) plus the Applicable Interest Rate (as
defined in the Note), and (b) the maximum interest rate which Borrower may by
law pay or Lender may charge and collect (the "DEFAULT RATE").
ARTICLE 10 - RIGHTS AND REMEDIES
Section 10.1 REMEDIES. Upon the occurrence of any Event of
Default. Borrower agrees that Lender may take such action, by or through
Trustee, by Lender itself or otherwise. without notice or demand as it deems
advisable to protect and enforce its rights against Borrower and in and to the
Property including, but not limited to, the following actions, each of which may
be pursued concurrently or otherwise, at such time and in such order as Lender
may determine, in its sole discretion, without inpairing or otherwise affecting
the other rights and remedies of Lender:
(a) Right to Perform Borrower's Covenants. If Borrower
has failed to keep or perform any covenant whatsoever contained in this
Security Installment or the Other Loan Documents. Lender may, but shall
not be obligated to any person to do so, perform or attempt to perform
said covenant and any payment made or expense incurred in the
performance or attempted performance of any such covenant, together
with any sum expended by Lender that is chargeable to Borrower or
subject to reimbursement by Borrower under the Loan Documents, shall
be and become a part of the "Debt", and Borrower promises, upon demand,
to pay to Lender, at the place where the Note is payable, all sums so
incurred, paid or expended by Lender, with interest from the date when
paid, incurred or expended by Lender at the Default Rate.
(b) Right of Entry. Lender may prior or subsequent to
the institution of any foreclosure proceedings, enter upon the
Property, or any part thereof, and take exclusive possession of the
Property and of all books, records, and accounts relating thereto and
to exercise without interference from Borrower any and all rights which
Borrower has with respect to the management, possession, operation,
protection, or preservation of the Property, including without
limitation the right to rent the same for the account of Borrower and
to deduct from such Rents all costs, expenses, and liabilities of every
character incurred by Lender in collecting such Rents and in managing,
operating,
JPMORGAN CHASE BANK
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maintaining, protecting, or preserving the Property and to apply the
remainder of such Rents on the Debt in such manner as Lender may elect.
All such costs, expenses, and liabilities incurred by Lender in
collecting such Rents and in managing, operating, maintaining,
protecting, or preserving the Property, if not paid out of Rents as
hereinabove provided, shall constitute a demand obligation owing by
Borrower and shall bear interest from the date of expenditure until
paid at the Default Rate, all of which shall constitute a portion of
the Debt. If necessary to obtain the possession provided for above.
Lender may invoke any and all legal remedies to dispossess Borrower,
including specifically one or more actions for forcible entry and
detained, trespass to try title, and restitution. In connection with
any action taken by Lender pursuant to this Subsection 10.1(b), Lender
shall not be liable for any loss sustained by Borrower resulting from
any failure to let the Property, or any part thereof, or from any other
act or omission of Lender in managing the Property unless such loss is
caused by the willful misconduct or gross negligence of Lender, nor
shall Lender be obligated to perform or discharge any obligation, duty,
or liability under any Lease or under or by reason hereof or the
exercise of rights or remedies hereunder. Borrower shall and does
hereby agree to indemnify Lender for and to hold Lender harmless from,
any and all liability, loss, or damage, which may or might be incurred
by Lender under any such Lease or under or by reason hereof or the
exercise of rights or remedies hereunder. and from any and all claims
and demands whatsoever which may be asserted against Lender by reason
of any alleged obligations or undertakings or. its part to perform or
discharge any of the terms, covenants, or agreements contained in any
such Lease. Should Lender incur any such liability, the amount
thereof, including without limitation costs, expenses, and reasonable
attorneys' fees, together with interest thereon from the date of
expenditure until paid at the Default Rate, shall be secured hereby,
and Borrower shall reimburse Lender therefore immediately upon demand.
Nothing in this Subsection 10.1(b) shall impose any duty, obligation,
or responsibility upon Lender for the control, care, management,
leasing, or repair of the Property, nor for the carrying out of any of
the terms and conditions of any such Lease: nor shall it operate to
make Lender responsible or liable for any waste committed on the
Property by the tenants or by any other parties, or for any hazardous
substances or environmental conditions on or under the Property, or for
any dangerous or defective condition of the Property or for any
negligence in the management, leasing, upkeep, repair, or control of
the Property resulting in loss or injury or death to any tenant,
licensee, employee, or stranger. Borrower hereby assents to ratifies,
and confirms any and all actions of Lender with respect to the Property
taken under this subsection.
(c) Right to Accelerate. Upon Borrower's breach of any
covenant or agreement of Borrower in this Instrument, including, but
not limited to. the covenants to pay when due any sums, secured by this
Instrument. Lender at Lender's option may declare all of the sums
secured by this Instrument to be immediately due and payable without
further demand, and may invoke the power of sale and any other remedies
permitted by applicable law or provided herein. Borrower acknowledges
that the power of sale herein granted may be exercised by Lender
without prior judicial hearing. Borrower has the right to bring an
action to assert the non-existence of a breach or any other defense of
Borrower to acceleration and sale. Lender shall be entitled to collect
all costs and expenses incurred in pursuing such remedies, including,
but not limited to reasonable attorney's fees and costs of documentary
evidence, abstracts and title reports.
JPMORGAN CHASE BANK
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(d) Foreclosure-Power of Sale. Lender may institute a
proceeding or proceedings, judicial, or nonjudicial by advertisement
or otherwise, for the complete or partial foreclosure of this Security
Instrument or the complete or partial sale of the Property under power
of sale or under any applicable provision of law. Lender may. through
the Trustee, sell the Property, and all estate, right, title, interest,
claim and demand of Borrower therein, and all rights of redemption
thereof, at one or more sales, as an entirety or in parcels, with such
elements of real and/or personal property, and at such time and place
and upon such terms as it may deem expedient, or as may be required by
applicable law. and in the event of a sale, by foreclosure or
otherwise, of less than all of the Property, this Security Instrument
shall continue as a lien and security interest on the remaining portion
of the Property. If Lender invokes the power of sale. Lender or Trustee
shall give to Borrower a copy of a notice of sale in the manner
prescribed by applicable law. Trustee shall give public notice of sale
in the manner prescribed by applicable law and shall sell the Property
in accordance with the laws of Virginia. Trustee, without demand on
Borrower, shall sell the 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 sale of all or any parcel of the
Property by public announcement at the time and place of any previously
scheduled sale or by advertising in accordance with applicable law.
Lender or Lender's designee may purchase the Property at any sale
subject to the provisions of Section 10.l(e)(vi) below.
(e) Rights Pertaining to Sales. Subject to the
requirements of applicable law and except as otherwise provided herein
the following provisions shall apply to any sale or sales of all or any
portion of the Property under or by virtue of Subsection 10.1(d) above,
whether made under the power of sale herein granted or by virtue of
judicial proceedings or of a judgment or decree of foreclosure and
sale:
(i) Trustee or Lender may conduct any number
of sales from time to time. The power of sale set forth above
shall not be exhausted by any one or more such sales as to any
part of die Property which shall not have been sold, nor by
any sale which is not completed or is defective in Lender's
opinion, until the Debt shall have been paid in full.
(ii) Any sale may be postponed or adjourned by
public announcement at the time and place appointed for such
sale or for such postponed or adjourned sale without further
notice.
(iii) Trustee shall deliver to the purchaser
Trustee's deed conveying the Property so sold with special
warranty of title. The recitals in Trustee's deed shall be
prima facie evidence of the truth of statements made therein.
Trustee shall apply the proceeds of the sale in the following
order: (a) to all costs and expenses of the sale, including,
but not limited to. Trustee's fees of 2% of the gross sale
price, attorney's fees and costs of title evidence: (b) to the
discharge of all taxes. levies and assessments on the
Property, if any. as provided by applicable law: (c) to all
sums secured by this Instrument in such order as Lender, in
Lender's sole discretion, directs: and (d) the excess, if any
to the person or persons legally
JPMORGAN CHASE BANK
34
entitled thereto, including, if any, holders of liens inferior
to this Instrument in order of their priority, provided that
Trustee has actual notice of such liens. Trustee shall not be
required to take possession of the Property prior to the sale
thereof or to deliver possession of the Property to the
purchaser at such sale.
(iv) Any and all statements of fact or other
recitals made in any of the instruments referred to in
Subsection 10.1(e)(iii) given by Trustee or Lender shall be
taken as conclusive and binding against all persons as to
evidence of the truth of the facts so stated and recited.
(v) Any such sale or sales shall operate to
divest all of the estate, right, title, interest, claim and
demand whatsoever, whether at law or in equity, of Borrower in
and to the properties and rights so sold, and shall be a
perpetual bar both at law and in equity against Borrower and
any and all persons claiming or who may claim the same, or any
part thereof or any interest therein, by. through or under
Borrower to the fullest extent permitted by applicable law.
(vi) Upon any such sale or sales. Lender may bid
for and acquire the Property and, in lieu of paying cash
therefor, may make settlement for the purchase price by
crediting against the Debt the amount of the bid made
therefore, after deducting therefrom the expenses of the sale,
the cost of any enforcement proceeding hereunder and any
other sums which Trustee or Lender is authorized to deduct
under the terms hereof to the extent necessary to satisfy
such bid.
(vii) Upon any such sale, it shall not be
necessary for Trustee. Lender or any public officer acting
under execution or order of court to have present or
constructively in its possession any of the Property.
(f) Lender's Judicial Remedies. Lender, or Trustee upon
written request of Lender, may proceed by suit or suits, at law or in
equity, to enforce the payment of the Debt to foreclose the liens and
security interests of this Security Instrument as against all or any
part of the Property, and to have all or any part of the Property sold
under the judgment or decree of a court of competent jurisdiction. This
remedy shall be cumulative of any other nonjudicial remedies available
to Lender under this Security Instrument, the Note or the Other Loan
Documents. Proceeding with a request or receiving a judgment for legal
relief shall not be or be deemed to be an election of remedies or bar
any available nonjudicial remedy of Lender.
(g) Lender's Right to Appointment of Receiver. Lender, as
a matter of right and (i) without regard to the sufficiency of the
security for repayment of the Debt and without notice to Borrower, (ii)
without any showing of insolvency, fraud, or mismanagement on the part
of Borrower, (iii) without the necessity of filing any judicial or
other proceeding other than the proceeding for appointment of a
receiver, and (iv) without regard to the then value of the Property,
shall be entitled to the appointment of a receiver or receivers for the
protection, possession, control, management and operation of the
Property, including (without limitation), the power to collect the
Rents, enforce this Security Instrument and, in case of a sale and
deficiency, during the full statutory period
JPMORGAN CHASE BANK
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of redemption (if any), whether there be a redemption or not, as well
as during any further times when Borrower, except for the intervention
of such receiver, would be entitled to collection of such Rents.
Borrower hereby, irrevocably consents to the appointment of a receiver
or receivers. Any receiver appointed pursuant to the provisions of this
subsection shall have the usual powers and duties of receivers in such
matters.
(h) Commercial Code Remedies. Lender may exercise any and
all rights and remedies granted to a secured party upon default under
the Uniform Commercial Code, including, without limiting the generality
of the foregoing: (i) the right to take possession of the Personal
Property or any part thereof, and to take such other measures as Lender
may deem necessary for the care, protection and preservation of the
Personal Property, and (ii) request Borrower at its expense to assemble
the Personal Property and make it available to Lender at a convenient
place acceptable to Lender. Any notice of sale, disposition or other
intended action by Lender with respect to the Personal Property sent to
Borrower in accordance with the provisions hereof at least five (5)
days prior to such action, shall constitute commercially reasonable
notice to Borrower.
(i) Apply Escrow Funds. Lender may apply any Funds (as
defined in the Escrow Agreement) and any other sums held in escrow or
otherwise by Lender in accordance with the terms of this Security
Instrument or any Other Loan Document to the payment of the following
items in any order in its uncontrolled discretion:
(i) Taxes and Other Charges;
(ii) Insurance Premiums;
(iii) Interest on the unpaid principal balance of
the Note;
(iv) Amortization of the unpaid principal balance
of the Note; and
(v) All other sums payable pursuant to the Note,
this Security Instrument and the Other Loan Documents,
including without limitation advances made by Lender pursuant
to the terms of this Security Instrument.
(j) Other Rights. Lender (i) may surrender the Policies
maintained pursuant to this Security Instrument or any part thereof,
and upon receipt shall apply the unearned premiums as a credit on the
Debt and in connection therewith. Borrower hereby appoints Lender as
agent and attorney-in-fact (which is coupled with an interest and is
therefore irrevocable) for Borrower to collect such premiums: and (ii)
may apply the Tax and Insurance Escrow Fund (as defined in the Escrow
Agreement) and/or the Replacement Escrow Fund (as defined in the Escrow
Agreement) and any other funds held by Lender toward payment of the
Debt; and (iii) shall have and may exercise any and all other rights
and remedies which Lender may have at law or in equity, or by virtue of
any of the Loan Documents, or otherwise.
(k) Discontinuance of Remedies. In case Lender shall have
proceeded to invoke any right, remedy, or recourse permitted under the
Loan Documents and shall thereafter elect to discontinue or abandon
same for any reason. Lender shall have the
JPMORGAN CHASE BANK
36
unqualified right so to do and in such event. Borrower and Lender
shall be restored to their former positions with respect to the Debt,
the Loan Documents, the Property or otherwise, and the rights,
remedies, recourses and powers of Lender shall continue as if same had
never been invoked.
(1) Remedies Cumulative. All rights, remedies, and
recourses of Lender granted in the Note, this Security Instrument and
the Other Loan Documents, any other pledge of collateral, or otherwise
available at law or equity: (i) shall be cumulative and concurrent:
(ii) may be pursued separately, successively, or concurrently against
Borrower, the Property, or any one or more of them, at the sole
discretion of Lender; (iii) may be exercised as often as occasion
therefor shall arise, it being agreed by Borrower that the exercise or
failure to exercise any of same shall in no event be construed as a
waiver or release thereof or of any other right, remedy, or recourse:
(iv) shall be nonexclusive; (v) shall not be conditioned upon Lender
exercising or pursuing any remedy in relation to the Property prior to
Lender bringing suit to recover the Debt; and (vi) in the event Lender
elects to bring suit on the Debt and obtains a judgment against
Borrower prior to exercising any remedies in relation to the Property,
all liens and security interests, including the lien of this Security
Instrument, shall remain in full force and effect and may be exercised
thereafter at Lender's option.
(m) Bankruptcy Acknowledgment. In the event the Property
or any portion thereof or any interest therein becomes property of any
bankruptcy estate or subject to any state or federal insolvency
proceeding then Lender shall immediately become entitled, in addition
to all other relief to which Lender may be entitled under this Security
Instrument, to obtain (i) an order from the Bankruptcy Court or other
appropriate court granting immediate relief from the automatic stay
pursuant to Section 362 of the Bankruptcy Code so to permit Lender to
pursue its rights and remedies against Borrower as provided under this
Security Instrument and all other rights and remedies of Lender at law
and in equity under applicable state law and order from the Bankruptcy
Court prohibiting Borrower's use of all "cash collateral" as defined
under Section 363 of the Bankruptcy Code. In connection with such
Bankruptcy Court orders. Borrower shall not contend or allege in any
pleading or petition filed in any court proceeding that Lender does not
have sufficient grounds for relief from the automatic stay. Any
bankruptcy petition or other action taken by the Borrower to stay,
condition, or inhibit Lender from exercising its remedies are hereby
admitted by Borrower to be in bad faith and Borrower further admits
that Lender would have just cause for relief from the automatic stay in
order to take such actions authorized under state law.
(n) Application of Proceeds. The proceeds from any sale,
lease, or other disposition made pursuant to this Security Instrument,
or the proceeds from the surrender of any insurance policies pursuant
hereto, or any Rents collected by Lender from the Property, or the Tax
and Insurance Escrow Fund or the Replacement Escrow Fund (as defined in
the Escrow Agreement) or proceeds from insurance which Lender elects to
apply to the Debt pursuant to Article 3 hereof, shall be applied by
Trustee, or by Lender, as the case may be to the Debt in the following
order and priority: (1) to the payment of all expenses of advertising,
selling, and conveying the Property or part thereof, and/or prosecuting
or otherwise collecting Rents, proceeds, premiums or other sums
including
JPMORGAN CHASE BANK
37
reasonable attorneys' fees and a reasonable fee or commission to
Trustee, not to exceed five percent of the proceeds thereof or sums so
received; (2) to that portion, if any, of the Debt with respect to
which no person or entity has personal or entity liability for payment
(the "EXCULPATED PORTION"), and with respect to the Exculpated Portion
as follows: first, to accrued but unpaid interest, second, to matured
principal, and third, to unmeasured principal in inverse order of
maturity; (3) to the remainder of the Debt as follows: first, to the
remaining accrued but unpaid interest, second, to the matured portion
of principal of the Debt, and third, to prepayment of the unmeasured
portion, if any, of principal of the Debt applied to installments of
principal in inverse order of maturity; (4) the balance, if any or to
the extent applicable, remaining after the full and final payment of
the Debt to the holder or beneficiary of any inferior liens covering
the Property, if any, in order of the priority of such inferior liens
(Trustee and Lender shall hereby be entitled to rely exclusively on a
commitment for title insurance issued to determine such priority); and
(5) the cash balance, if any, to the Borrower. The application of
proceeds of sale or other proceeds as otherwise provided herein shall
be deemed to be a payment of the Debt like any other payment. The
balance of the Debt remaining unpaid, if any, shall remain fully due
and owing in accordance with the terms of the Note and the other Loan
Documents.
Section 10.2 [Intentionally omitted]
ARTICLE 11 - INDEMNIFICATION: SUBROGATION
Section 11.1 GENERAL INDEMNIFICATION.
(a) Borrower shall indemnify, defend and hold Lender and
Trustee harmless against: (i) any and all claims for brokerage,
leasing finder's or similar fees which may be made relating to the
Property or the Debt, and (ii) any and all liability, obligations,
losses, damages, penalties, claims, actions, suits, costs and expenses
(including Lender's reasonable attorneys' fees, together with
reasonable appellate counsel fees, if any) of whatever kind or nature
which may be asserted against, imposed on or incurred by Lender or
Trustee in connection with the Debt, this Security Instrument, the
Property, or any part thereof, or the exercise by Lender or Trustee of
any rights or remedies granted to it under this Security Instrument:
provided, however, that nothing herein shall be construed to obligate
Borrower to indemnify, defend and hold harmless Lender from and against
any and all liabilities, obligations, losses, damages, penalties,
claims, actions, suits, costs and expenses enacted against, imposed on
or incurred by Lender by reason of Lender's willful misconduct or gross
negligence.
(b) If Lender is made a party defendant to any litigation
or any claim is threatened or brought against Lender concerning the
secured indebtedness, this Security Instrument, the Property, or any
part thereof, or any interest therein, or the construction,
maintenance, operation or occupancy or use thereof, then Lender shall
notify Borrower of such litigation or claim and Borrower shall
indemnify, defend and hold Lender harmless from and against all
liability by reason of said litigation or claims, including reasonable
attorneys' fees (together with reasonable appellate counsel fees, if
any). The right to such attorneys' fees (together with reasonable
appellate counsel fees, if any) and expenses incurred by Lender in any
such litigation or claim of the type described in this
JPMORGAN CHASE BANK
38
Subsection 11.1(b), whether or not any such litigation or claim is
prosecuted to judgment, shall be deemed to have accrued on the
commencement of such claim or action and shall be enforceable whether
or not such claim or action is prosecuted to judgment. If Lender
commences an action against Borrower to enforce any of the terms hereof
or to prosecute any breach by Borrower of any of the terms hereof or to
recover any sum secured hereby, Borrower shall pay to Lender its
reasonable attorneys' fees (together with reasonable appellate counsel
fees, if any) and expenses. If Borrower breaches any term of this
Security Instrument, Lender may engage the services of an attorney or
attorneys to protect its rights hereunder, and in the event of such
engagement following any breach by Borrower. Borrower shall pay Lender
reasonable attorneys' fees (together with reasonable appellate counsel
fees, if any) and expenses incurred by Lender, whether or not an action
is actually commenced against Borrower by reason of such breach. All
references to "ATTORNEYS" in this Subsection 11.1(b) and elsewhere in
this Security Instrument shall include without limitation any attorney
or law firm engaged by Lender and Lender's in-house counsel, and all
references to "FEES AND EXPENSES" in this Subsection 11.1(b) and
elsewhere in this Security Instrument shall include without limitation
any fees of such attorney or law firm and any allocation charges and
allocation costs of Lender's in-house counsel.
(c) A waiver of subrogation shall be obtained by Borrower
from its insurance carrier and consequently. Borrower waives any and
all right to claim or recover against Lender, its officers, employees.
agree and representatives, for loss of or damage to Borrower, the
Property. Borrower's property or the property of others under
Borrower's control from any cause insured against or required to be
insured against by the provisions of this Security Instrument.
Section 11.2 ENVIRONMENTAL INDEMNIFICATION. Borrower shall, at
its sole cost and expense, protect, defend, indemnity release and hold
harmless the Indemnified Parties from and against any and all Losses has
hereinafter defined) imposed upon or incurred by or asserted against any
Indemnified Parties (other than those arising solely from a state of facts that
first came into existence after Lender acquired title to the Property through
foreclosure or a deed in lieu thereof), and directly or indirectly arising out
of or in any way relating to any one or more of the following: (a) any presence
of any Hazardous Substances (as hereinafter defined) in, on, above, or under the
Property; (b) any past, present or future Release (as hereinafter defined) of
Hazardous Substances in, on, above, under or from the Property; (c) any activity
by Borrower, any person or entity affiliated with Borrower, and any tenant or
other user of the Property in connection with any actual, proposed or threatened
use, treatment, storage, holding, existence, disposition or other Release,
generation, production, manufacturing, processing, refining, control,
management, abatement, removal, handling, transfer or transportation to or from
the Property of any Hazardous Substances at any time located in, under, on or
above the Property; (d) any activity by Borrower, any person or entity
affiliated with Borrower, and any tenant or other user of the Property in
connection with any actual or proposed Remediation (as hereinafter defined) of
any Hazardous Substances at any time located in. under, on or above the
Property, whether or not such Remediation is voluntary or pursuant to court or
administrative order, including but not limited to any removal, remedial or
corrective action; (e) any past, present or threatened non-compliance or
violations of any Environmental Law (as hereinafter defined) (or permits issued
pursuant to any Environmental Law) in connection with the Property or
JPMORGAN CHASE BANK
39
operations thereon, including but not limited to any failure by Borrower, any
person or entity affiliated with Borrower, and any tenant or other user of the
Property to comply with any order of any governmental authority in connection
with any Environmental Laws; (f) the imposition, recording or filing or the
future imposition, recording or filing of any Environmental Lien (as hereinafter
defined) encumbering the Property; (g) any administrative processes or
proceedings or judicial proceedings in any way connected with any matter
addressed in this Section 11.2; (h) any misrepresentation or inaccuracy in any
representation or warranty or material breach or failure to perform any
covenants or other obligations under the Environmental Indemnity of even date
executed by Borrower and Inseminator; and (i) any diminution in value of the
Property in any way connected with any occurrence or other matter referred to in
this Section 11.2.
The term "ENVIRONMENTAL LAW" means any present and future federal,
state and local laws, statutes, ordinances, rules, regulations and the like, as
well as common law, relating to protection of human health or the environment,
relating to liability for or costs of Remediation or prevention of Releases of
Hazardous Substances. The term "ENVIRONMENTAL LAW" includes, but is not limited
to the following statutes, as amended, any successor thereto, and any
regulations promulgated pursuant thereto, and any state or local statutes,
ordinances, rules, regulations and the like addressing similar issues: the
Comprehensive Environmental Response. Compensation and Liability Act:
the Emergency Planning and Community Right-to-Know Act; the Hazardous Substances
Transportation Act: the Resource Conservation and Recovery Act (including but
not limited to Subtitle I relating to underground storage tanks): the Solid
Waste Disposal Act: the Clean Water Act: the Clean Air Act: the Toxic Substances
Control Act: the Safe Drinking Water Act: the Occupational Safety and Health
Act: the Federal Water Pollution Control Act: the Federal Insecticide. Fungicide
and Rodenticide Act: the Endangered Species Act: the National Environmental
Policy Act: and the River and Harbors Appropriation Act. The term "ENVIRONMENTAL
LAW" also includes, but is nor limited to. any present and future federal, state
and local laws, statutes, ordinances, rules, regulations and the like, as well
as common law: conditioning transfer of property upon a negative declaration or
other approval of a governmental authority of the environmental condition of
the Property: requiring notification or disclosure of Releases of Hazardous
Substances or other environmental condition of the Property to any governmental
authority or other person or entity, whether or not in connection with transfer
of title to or interest in property: imposing conditions or requirements in
connection with permits or other authorization for lawful activity: relating to
nuisance, trespass or other causes of action related to the Property; and
relating to wrongful death, personal injury, or property or other damage in
connection with any physical condition or use of the Property.
The term "ENVIRONMENTAL LIEN" includes but is not limited to any lien
or other encumbrance imposed pursuant to Environmental Law. whether due to any
act or omission of Borrower or any other person or entity.
The term "HAZARDOUS SUBSTANCES" includes but is not limited to any and
all substances (whether solid, liquid or gas) defined, listed, or otherwise
classified as pollutants, hazardous wastes, hazardous substances, hazardous
materials, extremely hazardous wastes, or words of similar meaning or regulatory
effect under any present or future Environmental Laws or that may have a
negative impact on human health or the environment, including but not limited to
petroleum and petroleum products, asbestos and asbestos-containing materials,
polychlorinated biphenyls, lead, lead-based paints, radon, radioactive
materials, flammables and explosives.
JPMORGAN CHASE BANK
40
The term "INDEMNIFIED PARTIES" includes but is not limited to Lender,
any person or entity who is or will have been involved in originating the Loan
evidenced by the Note, any person or entity who is or will have been involved in
servicing the Loan, any person or entity in whose name the encumbrance created
by this Security Instrument is or will have been recorded, persons and entities
who may hold or acquire or will have held a full or partial interest in the Loan
(including but not limited to those who may acquire any interest in Securities,
as well as custodians, trustees and other fiduciaries who hold or have held a
full or partial interest in the Loan for the benefit of third parties), as well
as the respective directors, officers, shareholders, partners, employees,
agents, servants, representatives, contractors, subcontractors, affiliates,
subsidiaries, participants, successors and assign of any and all of the
foregoing (including but not limited to any other person or entity who holds or
acquires or will have held a participation or other full or partial interest in
the Loan or the Property, whether during the term of the Loan or as pan of or
following foreclosure pursuant to the Loan) and including but not limited to any
successors by merger, consolidation or acquisition of all or a substantial part
of Lender's assets and business.
The term "LOSSES" includes but is not limited to any claims, suits,
liabilities (including but not limited to strict liabilities), administrate or
judicial actions or proceedings, obligations, debts, damages, losses, costs,
expenses, diminutions in value, fines, penalties, charges, fees, expenses, costs
of Remediation (whether or not performed voluntarily), judgments, award, amounts
paid in settlement, foreseeable are unforeseeable consequential damages,
litigation costs, attorneys' fees, engineer's fees, environmental consultants'
fees and investigation costs (including but not limited to costs for sale
testing and analysis of soil, water, air. building materials, and other
materials and substances whether solid, liquid or gas), of whatever kind or
nature, and whether or not incurred in connection with any judicial or
administrative proceedings.
The term "RELEASE" with respect to any Hazardous Substance includes but
is not limited to any release, deposit, discharge, emission, leaking, leaching,
spilling, seeping, migrating, injecting, pumping, pouring, emptying, escaping,
dumping, disposing or other movement of Hazardous Substances.
The term "REMEDIATION" includes but; is not limited to any response,
remedial, removal, or corrective action; any activity to cleanup, detoxify,
decontaminate, contain or otherwise premeditate any Hazardous Substance; any
actions to prevent, cure or mitigate any Release of any Hazardous Substance; any
action to comply with any Environmental Laws or with any permits issued pursuant
thereto: any inspection, investigation, study, monitoring, assessment, audit,
sampling and testing, laboratory or other analysis, or evaluation relating to
any Hazardous Substances or to anything referred to in this Article 11.
Section 11.3 DUTY TO DEFEND AND ATTORNEYS AND OTHER FEES AND
EXPENSES. Upon written request by any Indemnified Party. Borrower shall defend
such Indemnified Party (if requested by any Indemnified Part, in the name of
the Indemnified Party) by attorneys and other professionals approved by the
Indemnified Parties. Notwithstanding the foregoing, any Indemnified Parties may,
in their sole and absolute discretion, engage their own attorneys and other
professionals to defend or assist them, and, at the option of Indemnified
Parties, their attorneys shall control the resolution of claim or proceeding.
Upon demand,
JPMORGAN CHASE BANK
41
Borrower shall pay or, in the sole and absolute discretion of the Indemnified
Parties, reimburse, the Indemnified Parties for die payment of reasonable fees
and disbursements of attorneys, engineers, environmental consultants,
laboratories and other professionals in connection therewith.
Section 11.4 SURVIVAL OF INDEMNITIES. Notwithstanding any
provision of this Security Instrument or any other Loan Document to the
contrary, the provisions of Section 11.1 and Section 11.2, and Borrower's
obligations hereunder, shall survive (a) the repayment of the Note, (b) the
foreclosure of this Security Instrument, and (c) the release (or reconveyance,
as applicable) of the lien of this Security Instrument.
ARTICLE 12 - SECURITY AGREEMENT
Section 12.1 SECURITY AGREEMENT. This Security Instrument is both
a real property mortgage and a "security agreement" within the meaning of the
Uniform Commercial Code. The Property includes both real and personal property
and all other rights and interests, whether tangible or intangible in nature, of
Borrower in the Property. Borrower by executing and delivering this Security
Instrument has granted and hereby grants to Lender, as security for the
Obligations, a security interest in the Property to the full extent that the
Property may be subject to the Uniform Commercial Code (said portion of the
Property so subject to the Uniform Commercial Code being called in this
paragraph the "COLLATERAL"). Borrower hereby agrees with Lender to execute and
deliver to Lender, in term :mad substance satisfactory to Lender, such financing
statements, continuation statements, other uniform commercial code forms and
shall pay all expenses and fees in connection with :he filing and recording
thereof, and such further assurances as Lender may from time to time, reasonably
consider necessary to create, perfect, and preserve Lender's security interest
herein granted. This Security Instrument shall also constitute a "fixture
filing" for the purposes of the Uniform Commercial Code. All or pan of the
Property are or are to become fixtures. Information concerning the security
interest herein granted may be obtained from the parties at the aggresses of the
parties set forth in the first paragraph of this Security Instrument. If an
Event of Default shall occur. Lender, in addition to any other rights and
remedies which they may have shall have and may exercise immediately and without
demand, any and all rights and remedies granted to a secured party upon default
under the Uniform Commercial Code, including, without limiting the generality of
the foregoing, the right to take possession of the Collateral or any part
thereof, and to take such other measures as Lender may deem necessary for the
care, protection and preservation of the Collateral. Upon request or demand of
Lender. Borrower shall at its expense assemble the Collateral and make it
available to Lender at a convenient place acceptable to Lender. Borrower shall
pay to Lender on demand any and all expenses, including legal expenses and
attorneys' fees, incurred or paid by Lender in protecting the interest in the
Collateral and in enforcing the rights hereunder with respect to the Collateral.
Any notice of sale, disposition or other intended action by Lender with respect
to the Collateral sent to Borrower in accordance with the provisions hereof at
least five (5) days prior to such action, shall constitute commercially
reasonable notice to Borrower. The proceeds of any disposition of the
Collateral, or any part thereof, may be applied by Lender to the payment of the
Obligations in such priority and proportions as Lender in its discretion shall
deem proper. In the event of any change in name, identity or structure of any
Borrower, such Borrower shall notify Lender thereof, and promptly after request
shall execute, file and record such Uniform Commercial Code forms as are
necessary to maintain the priority of Lender's lien
JPMORGAN CHASE BANK
42
upon and security interest in the Collateral, and shall pay all expenses and
fees in connection with the filing and recording thereof. If Lender shall
require the filing or recording of additional Uniform Commercial Code forms or
continuation statements, Borrower shall, promptly after request, execute, file
and record such Uniform Commercial Code forms or continuation statements as
Lender shall deem necessary, and shall pay all expenses and fees in connection
with the filing and recording thereof it being understood and agreed, however,
that no such additional documents shall increase Borrower's obligations under
the Note, this Security-Instrument and the Other Loan Documents. Borrower hereby
irrevocably appoints Lender as its attorney-in-fact, coupled with an interest,
to file with the appropriate public office on its behalf any financing or other
statements signed only by Lender, as Borrower's attorney-in-fact, in connection
with the Collateral covered by this Security Instrument. Notwithstanding the
foregoing, Borrower shall appear and defend in any action or proceeding which
affects or purports to affect the Property and any interest or right therein,
whether such proceeding effects title or any other rights in the Property (and
in conjunction therewith. Borrower shall fully cooperate with Lender in the
event Lender is a party to such action or proceeding).
ARTICLE 13 - WAIVERS
Section 13.1 MARSHALLING AND OTHER MATTERS. Borrower hereby
waives to the extent permitted by law, the benefit of all appraisement,
valuation, stay, extension, reinstatement and redemption laws now or hereafter
in force and all rights of, marshalling in the event of any sale hereunder of
the Property or any part thereof or any interest therein. Further, Borrower
hereby expressly waives any curd all rights of redemption from sale under any
order or decree of foreclosure of this Security Instrument on behalf of
Borrower, and on behalf of each and every person acquiring any interest in or to
the Property subsequent to the date of this Security Instrument and on behalf of
all persons to the extent permitted by applicable law.
Section 13.2 WAIVER OF NOTICE. Borrower shall not be entitled to
any notices of any nature whatsoever from Lender except except with respect to
matters for which this Security Instrument specifically and expressly provides
for the giving of notice by Lender to Borrower and except with respect to
matters for which Lender is required by applicable law to give notice, and
Borrower hereby expressly waives the right to receive any notice from Lender
with respect to any matter for which this Security Instrument does not
specifically and expressly provide for the giving of notice by Lender to
Borrower.
Section 13.3 SOLE DISCRETION OF LENDER. Wherever pursuant to this
Security Instrument Lender exercises any right given to it to approve or
disapprove, or any arrangement or term is to be satisfactory to Lender, the
decision of Lender to approve or disapprove or to decide that arrangements or
terms are satisfactory or not satisfactory shall be in the sole discretion of
Lender and shall be final and conclusive, except as may be otherwise expressly
and specifically provided herein.
Section 13.4 SURVIVAL. The indemnifications made pursuant to
Article 11, shall continue indefinitely in full force and effect and shall
survive and shall in no way be impaired by: any satisfaction or other
termination of this Security Instrument, any assignment or other transfer of all
or any portion of this Security Instrument or Lender's interest in the Property
(but, in such case, shall benefit both Indemnified Parties and any assignee or
transferee), any exercise
JPMORGAN CHASE BANK
43
of Lender's rights and remedies pursuant hereto including but not limited to
foreclosure or acceptance of a deed in lieu of foreclosure, any exercise of any
rights and remedies pursuant to the Note or any of the Other Loan Documents, any
transfer of all or any portion of the Property (whether by Borrower or by Lender
following foreclosure or acceptance of a deed in lieu of foreclosure or at any
other time), any amendment to this Security Instrument, the Note or the Other
Loan Documents, and any act or omission that might otherwise be construed as a
release or discharge of Borrower from the obligations pursuant hereto.
Section 13.5 WAIVER OF TRIAL BY JURY. BORROWER HEREBY AGREES NOT
TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY
RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR
HEREAFTER EXIST WITH REGARD TO THIS SECURITY INSTRUMENT, THE NOTE OR THE OTHER
LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION
THEREWITH INCLUDING, BUT NOT LIMITED TO THOSE RELATING TO (A) ALLEGATIONS THAT A
PARTNERSHIP EXISTS BETWEEN LENDER AND BORROWER; (B) USURY OR PENALTIES OR
DAMAGES THEREFOR; (C) ALLEGATIONS OF UNCONSCIONABLE ACTS, DECEPTIVE TRADE
PRACTICE, LACK OF GOOD FAITH OR FAIR DEALING. LACK OF COMMERCIAL REASONABLENESS,
OR SPECIAL RELATIONSHIPS (SUCH AS FIDUCIARY, TRUST OR CONFIDENTIAL
RELATIONSHIP); (D) ALLEGATIONS OF DOMINION, CONTROL, ALTER EGO, INSTRUMENTALITY,
FLUID, REAL ESTATE FRAUD, MISREPRESENTATION, DURESS. COERCION. UNDUE INFLUENCE.
INTERFERENCE OR NEGLIGENCE; (E) ALLEGATIONS OF TORTIOUS INTERFERENCE WITH
PRESENT OR PROSPECTIVE BUSINESS RELATIONSHIPS OR OF ANTITRUST; OR (F) SLANDER.
LIBEL OR DAMAGE TO REPUTATION. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN
KNOWINGLY AND VOLUNTARILY BY BORROWER. AND IS INTENDED TO ENCOMPASS INDIVIDUALLY
EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD
OTHERWISE ACCRUE. LENDER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH
IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY BORROWER.
Section 13.6 WAIVER OF AUTOMATIC OR SUPPLEMENTAL STAY. In the
event of the filing of any voluntary or involuntary petition under the
Bankruptcy Code by or against Borrower (other than an involuntary petition filed
by or joined in by Lender), the Borrower shall not assert, or request any other
party to assert, that the automatic stay under Section 362 of the Bankruptcy
Code shall operate or be interpreted to stay interdict, condition, reduce or
inhibit the ability of Lender to enforce any rights it has by virtue of this
Security Instrument, or any other rights that Lender has, whether now or
hereafter acquired, against any guarantor of the Debt. Further, Borrower shall
not seek a supplemental stay or any other relief, whether injunctive or
otherwise, pursuant to Section 105 of the Bankruptcy Code or any other provision
therein to stay, interdict, condition, reduce or inhibit the ability of Lender
to enforce any rights it has by virtue of this Security Instrument against any
guarantor of the Debt. The waivers contained in this paragraph are a material
inducement to Lender's willingness to enter into this Security Instrument and
Borrower acknowledges any agrees that no grounds exist for equitable relief
JPMORGAN CHASE BANK
44
which would bar, delay or impede the exercise by Lender of Lender's rights and
remedies against Borrower or any guarantor of the Debt.
ARTICLE 14 - NOTICES
Section 14.1 NOTICES. All notices or other written communications
hereunder shall be deemed to have been properly given (i) upon delivery, if
delivered in person or by facsimile transmission with receipt acknowledged, (ii)
one (1) Business Day after having been deposited for overnight delivery with any
reputable overnight courier service, or (iii) three (3) Business Days after
having been deposited in any post office or mail depository regularly maintained
by the U.S. Postal Service and sent by registered or certified mail, postage
prepaid, addressed as follows:
If to Borrower: GTC II FIRST LLC
c/o First Potomac Realty Investment Trust, Inc.
0000 Xxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx
Facsimile: (000) 000-0000
and
c/o Wafra Investment Advisory Group. Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxx
Facsimile: (212) 02-8850
If to Trustee: Xxxxxxx X. Xxxxx. Jr.
c/o Tri-State Commercial Closings. Inc.
0000 00xx Xxxxxx. X.X.
Xxxxx 000
Xxxxxxxxxx, XX. 20036
Facsimile: (000) 000-0000
If to Lender: JPMorgan Chase Bank
c/o X.X. Xxxxxx Mortgage Capital. Inc.
000 Xxxxxxxxx Xxxxxx Xxxxxxx. Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: L. Xxxxxx Register. Jr.
Facsimile No.: (000) 000-0000
With a copy to: Xxxxxx Xxxxxx Xxxxx Xxxxxxxx
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: Xxxxxxx X. XxXxxxxx, Esq.
Facsimile: (000)000-0000
JPMORGAN CHASE BANK
45
or addressed as such party may from time to time designate by written notice to
the other parties. For purposes of this subsection, the term "BUSINESS DAY"
shall mean a day on which commercial banks are not authorized or required by law
to close in New York. New York.
Any party by notice to the other parties may designate additional or
different addresses for subsequent notices or communications.
ARTICLE 15 - APPLICABLE LAW
Section 15.1 GOVERNING LAW: JURISDICTION. This Security Instrument
shall be governed by and construed in accordance with applicable federal law and
the laws of the Commonwealth of Virginia, without reference or giving effect to
any choice of law doctrine. Borrower hereby irrevocably submits to the
jurisdiction of any court of competent jurisdiction located in the Commonwealth
of Virginia in connection with any proceeding arising out of or relating to this
Security Instrument.
Section 15.2 USURY LAWS. This Security Instrument and the Note are
subject to the express condition that at no time shall Borrower be obligated or
required to pay interest on the Debt at a rate which could subject the holder of
the Note to either civil or criminal liability as a result of being in excess of
the maximum interest rate which Borrower is permitted by applicable law to
contract or agree to pay. If by the terms of this Security Instrument or the
Note, Borrower is at any time required or obligated to pay interest on the Debt
at a rate in excess of such maximum rate, the rate of interest under the
Security Instrument and the Note shall be deemed to be immediately reduced to
such maximum rate and the interest payable shall be computed at such maximum
rate and all prior interest payments in excess of such maximum rate shall be
applied and shall be deemed to have been payments in reduction of the principal
balance of the Note. All sums paid or agreed to be paid to Lender for the use.
forbearance, or detention of the Debt shall, to the extent permitted by
applicable law be amortized, prorated, allocated, and spread throughout the full
stated term of the Note until payment in full so that the rate or amount of
interest on account of the Debt does not exceed the maximum lawful rate of
interest from time to time in effect and applicable to the Debt for so long as
the Debt is outstanding.
Section 15.3 PROVISIONS SUBJECT TO APPLICABLE LAW. All rights,
powers and remedies provided in this Security Instrument may be exercised only
to the extent that the exercise thereof does not violate any applicable
provisions of law and are intended to be limited to the extent necessary so that
they will not render this Security Instrument invalid, unenforceable or not
entitled to be recorded, registered or filed under the provisions of any
applicable law. If any term of this Security Instrument or any application
thereof shall be invalid or unenforceable, the remainder of this Security
Instrument and any other application of the term shall not be affected thereby.
ARTICLE 16 - SECONDARY MARKET
Section 16.1 TRANSFER OF LOAN. Lender may at any time, sell,
transfer or assign the Note, this Security Instrument and the Other Loan
Documents, and any or all servicing rights with respect thereto, or grant
participations therein or issue mortgage pass-through certificates or other
securities evidencing a beneficial interest in a rated or unrated public
offering or private
JPMORGAN CHASE BANK
46
placement (the "SECURITIES"). Lender may forward to each purchaser, transferee,
assignee, servicer, participant, investor in such Securities or any Rating
Agency (as hereinafter defined) rating such Securities (collectively, the
"INVESTOR") and each prospective Investor, all documents and information which
Lender now has or may hereafter acquire relating to the Debt and to Borrower,
any Guarantor, any Indemnitor and the Property, whether furnished by Borrower,
any Guarantor, any Indemnitor or otherwise, as Lender determines necessary or
desirable. The term "RATING AGENCY" shall mean each statistical rating agency
that has assigned a rating to the Securities.
ARTICLE 17 - COSTS
Section 17.1 PERFORMANCE AT BORROWER'S EXPENSE. Borrower
acknowledges and confirms that Lender shall impose certain administrative
processing and/or commitment fees in connection with (a) the extension, renewal,
modification, amendment and termination (excluding the scheduled maturity of the
Note) of its loans, (b) the release or substitution of collateral therefor, or
(c) obtaining certain consents, waivers and approvals with respect to the
Property (the occurrence of any of the above shall be called an "EVENT").
Borrower hereby acknowledges and agrees to pay, immediately, upon demand, all
such fees (as the same may be increased or decreased from time to time), and any
additional fees of a similar type or nature which may be imposed by Lender from
time to time, upon the occurrence of any Event.
Section 17.2 ATTORNEY'S FEES FOR ENFORCEMENT. (a) Borrower shall
pay all legal fees incurred by Lender in connection with (i) the preparation of
the Note, this Security Instrument and the Other Loan Documents and (ii) the
items set forth in Section 17.1 above, and (b) Borrower shall pay to Lender on
demand any and all expenses, including legal expenses and attorneys' fees,
incurred or paid by Lender in protecting its interest in the Property or
Personal Property and/or collecting any amount payable or in enforcing its
rights hereunder with respect to the Property or Personal Property, whether or
not any legal proceeding is commenced hereunder or thereunder and whether or not
any default or Event of Default shall have occurred and is continuing, together
with interest thereon at die Default Rate from the date of payment or incurring
by Lender until paid by Borrower.
ARTICLE 18 - DEFINITIONS
Section 18.1 GENERAL DEFINITIONS. Unless the context clearly
indicates a contrary intent or unless otherwise specifically provided herein,
words used in this Security Instrument may be used interchangeably in singular
or plural form and the word "BORROWER" shall mean "each Borrower and any
subsequent owner or owners of the Property or any part thereof or any interest
therein," the word "LENDER" shall mean "Lender and any subsequent holder of the
Note," the word "NOTE" shall mean "the Note and any other evidence of
indebtedness secured by this Security Instrument," the word "PERSON" shall
include an individual, corporation, partnership, trust, unincorporated
association, government, governmental authority, and any other entity, the word
"PROPERTY" shall include any portion of the Property and any interest therein,
and the phrases "ATTORNEYS' FEES," "LEGAL FEES" and "COUNSEL FEES" shall include
any and all attorneys', paralegal and law clerk fees and disbursements,
including, but not limited to, fees and disbursements at the pre-trial, trial
and appellate levels incurred or paid by
JPMORGAN CHASE BANK
47
Lender in protecting its interest in the Property, the Leases and the Rents and
enforcing its rights hereunder.
ARTICLE 19 - MISCELLANEOUS PROVISIONS
Section 19.1 NO ORAL CHANGE. This Security Instrument, the Note,
and the Other Loan Documents and any provisions hereof or thereof, may not be
modified, amended, waived, extended, changed, discharged or terminated orally or
by any act or failure to act on the part of Borrower or Lender, but only by an
agreement in writing signed by the party against whom enforcement of any
modification, amendment, waiver, extension, change, discharge or termination is
sought.
Section 19.2 LIABILITY. If Borrower consists of more than one
person, the obligations and liabilities of each such person hereunder shall be
joint and several. This Security Instrument shall be binding upon and inure to
the benefit of Borrower and Lender and their respective successors and assigns
forever.
Section 19.3 INAPPLICABLE PROVISIONS. If any term, covenant or
condition of the Note or this Security Instrument is held to be invalid, illegal
or unenforceable in any respect, the Note and this Security Instrument shall be
construed without such provision.
Section 19.4 HEADINGS, ETC. The headings and captions of various
Sections of this Security Instrument are for convenience of" reference only and
are not to be construed as defining or limiting, in any way, the scope or intent
of the provisions hereof.
Section 19.5 DUPLICATE ORIGINALS; COUNTERPARTS. This Security
Instrument may be executed in any number of duplicate originals and each
duplicate original shall be deemed to be an original. This Security Instrument
may be executed in several counterparts, each of which counterparts shall be
deemed an original instrument and all of which together shall constitute a
single Security Instrument. The failure of any party hereto to execute this
Security Instrument, or any counterpart hereof, shall not relieve the other
signatories from their obligations hereunder.
Section 19.6 NUMBER AND GENDER. Whenever the context may require,
any pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns and pronouns shall include the
plural and vice versa.
Section 19.7 SUBROGATION. If any or all of the proceeds of the
Note have been used to extinguish, extend or renew any indebtedness heretofore
existing against the Property, then, to the extent of the funds so used, Lender
shall be subrogated to all of the rights, claims, liens, titles, and interests
existing against the Property heretofore held by, or in favor of, the holder of
such indebtedness and such former rights, claims, liens, titles, and interests,
if any, are not waived but rather are continued in full force and effect in
favor of Lender and are merged with the lien and security interest created
herein as cumulative security for the repayment of the Debt, the performance and
discharge of Borrower's obligations hereunder, under the Note and the Other Loan
Documents and the performance and discharge of the Other Obligations.
JPMORGAN CHASE BANK
48
Section 19.8 ENTIRE AGREEMENT. The Note, this Security Instrument
and the Other Loan Documents constitute the entire understanding and agreement
between Borrower and Lender with respect to the transactions arising in
connection with the Debt and supersede all prior written or oral understandings
and agreements between Borrower and Lender with respect thereto. Borrower hereby
acknowledges that, except as incorporated in writing in the Note, this Security
Instrument and the Other Loan Documents, there are not, and were not, and no
persons are or were authorized by Lender to make, any representations,
understandings, stipulations, agreements or promises, oral or written, with
respect to the transaction which is the subject of the Note, this Security
Instrument and the Other Loan Documents.
Section 19.9 RELEASE. Upon payment of all sums secured by this
Instrument, Lender shall request Trustee to release this Instrument and shall
surrender all notes evidencing indebtedness secured by this Instrument to
Trustee. Trustee shall release this Instrument. Borrower shall pay Trustee's
reasonable costs incurred in releasing this Instrument.
At any time on or after the Payment Date (as defined in the Note)
occurring in May, 2004. Borrower may obtain the release from this Security
Instrument, the Assignment of Leases and Rents and the UCC Financing Statements
of the Property upon satisfaction of each of the following conditions precedent:
(i) no Event of Default shall have occurred and be continuing, nor
shall have there occurred any event which would, with the giving of notice or
passage of time, or both, constitute an Event of Default;
(ii) payment to Lender in the amount of $6,750,000 to be applied as
a prepayment on the Note pursuant to Section 7 thereof together with all other
amounts required to be paid under said Section 7;
(iii) Borrower shall convey the Property, concurrently with the
release, to an entity other than the Borrower;
(iv) payment to the Lender by Borrower of its reasonable fees and
expenses incurred in evaluating and documenting the release, including, without
limitation, reasonable attorneys' fees and filing fees;
(v) Lender, at its election, may obtain, at Borrower's expense, an
opinion that the release of the Property will not cause (A) any adverse tax
consequences to the REMIC or any holders of any Securities, (B) this Security
Instrument to fail to be a Qualifying Security Instrument under applicable
federal law relating to REMIC's or (C) result in a taxation of the income of the
loans to the REMIC or cause a loss of REMIC status;
(vi) if requested by Lender, each Rating Agency shall have
delivered written confirmation that any rating issued by such Rating Agency in
connection with the securitization of any securities will not, as a result of
the proposed release of the Property, be downgraded from the then current
ratings thereof, qualified or withdrawn;
(vii) Borrower shall comply with any terms and conditions as the
Rating Agencies shall require in connection with such release;
JPMORGAN CHASE BANK
49
(viii) The loan to value ratio, based on the value of the property
(the "Norfolk Property") subject to that certain Deed of Trust and Security
Agreement of even date herewith executed by Norfolk First LLC as security for
the Note, as established by a current MAI appraisal prepared by an appraiser
approved by Lender and conducted after Borrower requests the release of the
Property, and calculated after application of the prepayment required by clause
(ii) above, is no more than eighty percent (80%);
(ix) The Norfolk Property has maintained a Debt Coverage Ratio (as
hereinafter defined) of not less than one hundred thirty percent (130%) for the
twelve (12) month period ending upon the date Borrower requests the release of
the Property, and the Norfolk Property has a projected Debt Coverage Ratio of
not less than one hundred thirty percent (130%) for the twelve (12) months
commencing on the date Borrower requests the release of the Property;
(x) The Norfolk Property has maintained a stressed Debt Coverage
Ratio, calculated based on a constant of 10.09, of not less than one hundred
five percent (105%) for the twelve (12) month period ending upon the date
Borrower requests the release of the Property, and the Norfolk Property has a
projected stressed Debt Coverage Ratio, based on a constant of 10.09, of not
less than one hundred five percent (105%) for the twelve (12) months commencing
on the date Borrower requests the release of the Property;
(xi) Borrower shall deliver or take, as the case may be, any other
items or actions reasonably requested by Lender or Lender's counsel.
For purposes hereof the term "DEBT COVERAGE RATIO" shall mean the ratio of Cash
Available for Debt Service (as defined below) to annual debt service (i.e.,
principal (if any) and interest payments) due under the Note after application
of the prepayment required by clause (ii) above (utilizing solely for purposes
of calculating the Debt Coverage Ratio an assumed interest rate equal to the
Interest Rate in effect on the date of determination of the Debt Coverage Ratio)
and any other notes secured by the Norfolk Property or by direct pledges of
equity in the Borrower (but specifically excluding any notes not made by the
Borrower or secured by the Norfolk Property or membership interests in the
Borrower). Cash Available for Debt Service, which is generally defined below,
shall be determined by Lender in a manner substantially the same as that
utilized by Lender in underwriting loans secured by similar property types at
the time of determination of the Debt Coverage Ratio. In addition, Cash
Available for Debt Service shall be adjusted by applying (i) vacancy and/or
credit loss rates to gross income at the higher of actual, market or the rate
applied by the Rating Agencies, (ii) rental or average daily room rates (as
applicable) at the lower of actual, market or the rate applied by the Rating
Agencies, (iii) deductions for operating expenses based on the higher of actual
historical levels, market or as otherwise applied by the Rating Agencies and
(iv) deducting expenses for capital replacements and repairs, tenant
improvements and leasing commissions, calculated at the greater of actual or
minimum amounts per square foot of the Norfolk Property required by Lender and
or the Rating Agencies for properties of similar types, location and condition.
Cash Available for Debt Service shall mean:
(iv) all gross receipts received or (with respect
to a projected Debt Coverage Ratio) anticipated from the
Norfolk Property, including, without limitation, from tenants
in the Norfolk Property and paying rent under leases in effect
during the applicable twelve-month period, calculated on a
cash basis which reflects only the income actually received
during the previous twelve month period as of the date of such
calculation, and for a projected Debt
JPMORGAN CHASE BANK
50
Coverage Ratio any income anticipated to be received during
the following twelve-month period based on leases in effect as
of the date of calculation, for such time as those leases are
contracted to remain in effect without expiration by their
terms or optional termination by the tenant (unless the tenant
has waived its termination rights in writing or the term of
the lease has been extended in writing), including without
limitation all amounts to be received from tenants as payment
of operating expenses but not including refundable deposits,
late fees or charges, interest income or other non-operating
income, lease termination payments, excess tenant improvement
and leasing commission payments included as additional rent,
principal or interest payments received by Borrower on loans
to tenants and fees and reimbursements for work performed for
tenants by Borrower, less:
(v) all expenses actually incurred by Borrower
(without duplication), for the operation or maintenance of the
Norfolk Property for the applicable twelve-month period,
including ground rents, the cost of property management (which
shall be the greater of die actual management fee payable
under a management contract in effect for the applicable
twelve (12) month period, market or the minimum fee applied by
the Rating Agencies), marketing, franchise fees (which shall
be the greater of the actual fees payable under franchise or
license agreements, market, or the minimum fee applied by
nationally recognized rating agencies), maintenance, cleaning,
security, legal, administrative, landscaping, parking
maintenance, utilities, real estate taxes and assessments and
other taxes related to the operation of the Norfolk Property,
insurance premiums, necessary repairs and future replacements
of equipment and other capital expenditures, tenant
improvements, leasing commissions and other costs and expenses
incurred by Borrower during the applicable period, and for a
projected Debt Coverage Ratio, amounts reasonably estimated by
Lender for each of the foregoing items. Payments under the
Note and non-cash deductions for income tax purposes shall not
be deducted in determining Cash Available for Debt Service.
ARTICLE 20 - TRUSTEE
Trustee may resign by the giving of notice of such resignation in
writing or verbally to Lender. If Trustee shall die, resign, or become
disqualified from acting in the execution of this trust, or if, for any reason.
Lender shall prefer to appoint a substitute trustee or multiple substitute
trustees, or successive substitute trustees or successive multiple substitute
trustees, to act instead of the aforenamed Trustee. Lender shall have full power
to appoint a substitute trustee (or, if preferred, multiple substitute trustees)
in succession who shall succeed (and if multiple substitute trustees are
appointed, each of such multiple substitute trustees shall succeed) to all the
estates, rights, powers, and duties of the aforenamed Trustee. Such appointment
may be executed by any authorized agent of Lender, and if such Lender be a
corporation and such appointment be executed in its behalf by any officer of
such corporation, such appointment shall be conclusively presumed to be executed
with authority and shall be valid and sufficient without proof of any
JPMORGAN CHASE BANK
51
action by the board of directors or any superior officer of the corporation.
Borrower hereby ratifies and confirms any and all acts which the aforenamed
Trustee, or his successor or successors in this trust, shall do lawfully by
virtue hereof. If multiple substitute Trustees are appointed, each of such
multiple substitute Trustees shall be empowered and authorized to act alone
without the necessity of the joinder of the other multiple substitute trustees,
whenever any action or undertaking of such substitute trustees is requested or
required under or pursuant to this Security Instrument or applicable law. Any
substitute Trustee appointed pursuant to any of the provisions hereof shall,
without any further act, deed, or conveyance, become vested with all the
estates, properties, rights, powers, and trusts of its or his predecessor in the
rights hereunder with like effect as if originally named as Trustee herein; but
nevertheless, upon the written request of Lender or of the substitute Trustee,
the Trustee ceasing to act shall execute and deliver any instrument transferring
to such substitute Trustee, upon the trusts herein expressed, all the estates,
properties, rights, powers, and trusts of the Trustee so ceasing to act, and
shall duly assign, transfer and deliver any of the property and moneys held by
such Trustee to the substitute Trustee so appointed in the Trustee's place. No
fees or expenses shall be payable to Trustee, except in connection with a
foreclosure of the Property or any part thereof or in connection with the
release of the Property following payment in full of the Debt.
ARTICLE 21 - SPECIAL COMMONWEALTH OF VIRGINIA PROVISIONS
Section 21.1 Short Form Incorporation. The following short form
provisions are incorporated into this Deed of Trust and Security Agreement by
reference as permitted by Section 55-60 and Section 55-59.2 of the Code of
Virginia as amended (the "CODE"):
(1) Exemptions waived.
(2) Subject to all upon default.
(3) Renewal, extension or reinstatement permitted.
(4) Substitution of trustee permitted.
(5) Any trustee may act.
(6) Advertisement required: Once a week for two weeks.
Section 21.2 Powers and Duties of Trustee. The Trustee shall have
all powers and duties granted and imposed under Code Sections 55-59 through
55-59.4, inclusive. Any trustee's sale hereunder shall be held, and all proceeds
thereof shall be disbursed, in accordance with the provisions of Code Section
55-59.4.
Section 21.3 Commercial Loan. The Borrower warrants and represents
that the loan made by the Lender to the Borrower in accordance with the Note and
the other Loan Documents is made for the acquisition or conduct of a business or
investment within the meaning ascribed to those terms under 6.1-330.75 of the
Code.
Section 21.4 Limitation on Recourse. Borrower's liability under
this Security Instrument shall be limited as set forth in Section 10 of the
Note, the terms of which are incorporated herein by reference.
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JPMORGAN CHASE BANK
52
IN WITNESS WHEREOF, THIS SECURITY INSTRUMENT has been executed by
Borrower the day and year first above written.
BORROWER:
GTC II FIRST LLC, a Delaware limited liability
company
By: /s/ Xxxxxxx X. Xxxxxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: President
STATE OF [ILLEGIBLE]
COUNTY OF [ILLEGIBLE]
Before me, a Notary Public in and for the jurisdiction aforesaid,
personally appeared this date Xxxxxxx X. Xxxxxxxxx, personally well know (or
satisfactorily proven) to me to be the person whose name is subscribed to the
foregoing and annexed Instrument bearing date as of [ILLEGIBLE] 2002, who being
by me first duly sworn acknowledged that he is President of GTC II FIRST LIC, a
Delaware limited liability company, which entity is a party to the foregoing and
annexed Instrument and that he executed said Instrument in his capacity as
President of said entity, as its free act and deed for the uses and purposes
therein contained.
WITNESS my hand and official seal this ______ day of October, 2002.
[ILLEGIBLE]
--------------------------------
NOTARY PUBLIC
Print Name: [ILLEGIBLE]
My Commission Expires: [ILLEGIBLE]
[Affix Notary Seal]
JPMORGAN CHASE BANK
53
EXHIBIT A
(Description of Land)
All of that certain lot, piece or parcel of land, with the buildings
and improvements thereon, situate, lying and being described as follows:
A-1
EXHIBIT B
(Norfolk Parcel)
A-2
