EXHIBIT 10.10
WHEN RECORDED, RETURN TO:
Xxxxx X. Xxxxxxxxxx, Esq.
Xxxxxxxx Xxxxxxxx & Xxxxxx P.C.
5400 Renaissance Tower
0000 Xxx Xxxxxx
Xxxxxx, Xxxxx 00000
DEED OF TRUST
This DEED OF TRUST (herein referred to as the "LIEN INSTRUMENT"),
entered into effective as of February 9, 2004, by BEHRINGER HARVARD XXXXXXX
XXXXXXX XX, a limited partnership organized under the laws of the State of Texas
("BORROWER"), whose mailing address for notice hereunder, address and location
is 0000 Xxxxx Xxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000, Attention:
Xxxxxx Xxxxxxxxx, to Xxxxx X. Xxxxxxxxxx, Esq., Trustee, whose address is x/x
Xxxxxxxx Xxxxxxxx & Xxxxxx X.X., 0000 Renaissance Tower, 0000 Xxx Xxxxxx,
Xxxxxx, Xxxxx 00000-0000, for the benefit of the hereinafter described Lender.
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. As used herein, the following terms shall have the
following meanings:
ASSIGNMENT: That certain Assignment of Rents and Leases of even date
herewith executed by Borrower to Lender.
BORROWER: The individual or entity described as Borrower in the initial
paragraph of this Lien Instrument and any and all subsequent owners of the
Mortgaged Property or any part thereof (without hereby implying Lender's consent
to any Disposition of the Mortgaged Property).
CODE: The Uniform Commercial Code, as amended from time to time, in
effect in the state in which the Mortgaged Property is located.
CONSTITUENT PARTY: Any signatory to this Lien Instrument that signs on
Borrower's behalf that is a corporation, general partner, general partnership,
limited partnership, joint venture, trust, or other type of business
organization.
CONTESTED ITEM: Any imposition, mechanic's or materialman's lien
asserted against all or any portion of the Mortgaged Property if, and so long as
(i) Borrower has notified Lender of same within five (5) days of obtaining
knowledge thereof, (ii) Borrower shall diligently and in good faith contest the
same by appropriate legal proceedings which shall operate to prevent the
enforcement of collection of the same and the sale of the Mortgaged Property or
any part thereof, to satisfy the same, (iii) Borrower shall have furnished to
Lender a cash deposit, or an indemnity
bond satisfactory to Lender with a surety satisfactory to Lender, in the amount
of such imposition or lien claim, plus a reasonable additional sum to pay all
costs, interest and penalties that may be imposed or incurred in connection
therewith, to ensure payment of the matters under contest and to prevent any
sale or forfeiture of the Mortgaged Property or any part thereof, (iv) Borrower
shall promptly upon final determination thereof pay the amount of any such
imposition or lien claim so determined, together with all costs, interest and
penalties which may be payable in connection therewith, (v) the failure to pay
such imposition or lien claim does not constitute a default under any other lien
instrument, mortgage or security interest covering or affecting any part of the
Mortgaged Property, and (vi) notwithstanding the foregoing, Borrower shall
immediately upon request of Lender pay any such imposition or lien claim
notwithstanding such contest, if in the reasonable opinion of Lender the
Mortgaged Property shall be in jeopardy or in danger of being forfeited or
foreclosed. Lender may pay over any such cash deposit or part thereof to the
claimant entitled thereto at any time when, in the judgment of Lender, the
entitlement of such claimant is established.
CONTRACTS: All of the right, title, and interest of Borrower in, to, and
under any and all (i) agreements relating in any way to the construction of the
Improvements or provision of materials therefore; (ii) contracts for the sale of
all or any portion of the Mortgaged Property, whether such Contracts are now or
at any time hereafter existing, together with all payments, earnings, income,
and profits arising from sale of all or any portion of the Mortgaged Property or
from the Contracts and all other sums due or to become due under and pursuant
thereto; (iii) contracts, licenses, permits, and rights relating to utility
services whether executed, granted, or issued by a private person or entity or a
governmental or quasi-governmental agency, which are directly or indirectly
related to, or connected with, the Mortgaged Property; and (iv) all other
contracts which in any way relate to the design, use, enjoyment, occupancy,
operation, maintenance, or ownership of the Mortgaged Property (save and except
any and all leases, subleases or other agreements pursuant to which Borrower is
granted a possessory interest in the Land), including but not limited to,
engineer contracts, architect's contracts, maintenance agreements, construction
contracts and service contracts.
DEBTOR RELIEF LAWS: Title 11 of the United States Code, as now or
hereafter in effect, or any other applicable law, domestic or foreign, as now or
hereafter in effect, relating to bankruptcy, insolvency, liquidation,
receivership, reorganization, arrangement or composition, extension or
adjustment of debts, or similar laws affecting the rights of creditors.
DEFAULT RATE: The rate of interest specified in the Note to be paid by
the maker of the Note from and after the occurrence of a default in payment
under the provisions of the Note and Loan Documents but not in excess of the
Maximum Lawful Rate.
DISPOSITION: Any sale, lease (except as expressly permitted pursuant to
the Loan Documents), exchange, assignment, conveyance, transfer, trade, or other
disposition of all or any portion of the Mortgaged Property (or any interest
therein) or all or any part, directly or indirectly, of the beneficial ownership
interest in Borrower (if Borrower is a corporation, limited liability company,
partnership, general partnership, limited partnership, joint venture, trust, or
other type of business association or legal entity).
Page 2
ENVIRONMENTAL INDEMNIFICATION AGREEMENT: That certain Certificate and
Indemnification Regarding Hazardous Substances of even date herewith executed by
Borrower for the benefit of Lender.
EVENT OF DEFAULT: Any happening or occurrence described in ARTICLE VI
hereof.
FINANCING STATEMENT: The financing statement or financing statements (on
Standard Form UCC-1 or otherwise) executed and delivered by Borrower in
connection with the Loan Documents.
FIXTURES: All materials, supplies, equipment, systems, apparatus, and
other items now owned or hereafter acquired by Borrower and now or hereafter
attached to, installed in, or used in connection with (temporarily or
permanently) any of the Improvements or the Land, which are now owned or
hereafter acquired by Borrower and are now or hereafter attached to the Land or
the Improvements, together with all accessions, appurtenances, replacements,
betterments, and substitutions for any of the foregoing and the proceeds
thereof.
GOVERNMENTAL AUTHORITY: Any and all applicable courts, boards, agencies,
commissions, offices, or authorities of any nature whatsoever for any
governmental xxxx (xxxxxxx, xxxxx, xxxxxx, xxxxxxxx, xxxxxxxxx, xxxx or
otherwise), whether now or hereafter in existence.
GROUND LEASE: That certain Amended and Restated Lease dated September
30, 1998 by and between Xxxxx X. Xxxxx and Oly Uptown General Partnership, a
memorandum of which was recorded on November 1, 1998 in Volume 98192, Page 1322
of the Real Property Records of Dallas County, Texas, in which a leasehold
interest was granted in, among other things, the real property located in the
City of Dallas, Dallas County, Texas and more particularly described as Tract
III on EXHIBIT A, as such lease has been amended, restated, modified, renewed,
extended and assigned to Borrower.
GUARANTOR: Not applicable.
GUARANTY: Not applicable.
IMPOSITIONS: (i) All real estate and personal property taxes, charges,
assessments, standby fees, excises, and levies and any interest, costs, or
penalties with respect thereto, general and special, ordinary and extraordinary,
foreseen and unforeseen, of any kind and nature whatsoever which at any time
prior to or after the execution hereof may be assessed, levied, or imposed upon
the Mortgaged Property or the ownership, use, occupancy, or enjoyment thereof,
or any portion thereof, or the sidewalks, streets, or alleyways adjacent
thereto; (ii) any charges, fees, license payments, or other sums payable for or
under any easement, license, or agreement maintained for the benefit of the
Mortgaged Property; (iii) water, gas, sewer, electricity, and other utility
charges and fees relating to the Mortgaged Property; and (iv) assessments and
charges arising under any subdivision, condominium, planned unit development, or
other declarations, restrictions, regimes, or agreements affecting the Mortgaged
Property.
IMPROVEMENTS: Any and all buildings, covered garages, air conditioning
towers, open parking areas, structures and other improvements, and any and all
additions, alterations,
Page 3
betterments or appurtenances thereto, now or at any time hereafter situated,
placed, or constructed upon the Land or any part thereof.
INDEBTEDNESS: (i) The principal of, interest on, or other sums evidenced
by the Note or the Loan Documents; (ii) any other amounts, payments, or premiums
payable under the Loan Documents; (iii) such additional sums, with interest
thereon, as may hereafter be borrowed from Lender, its successors or assigns, by
the then record owner of the Mortgaged Property, when evidenced by a promissory
note which, by its terms, is secured hereby (it being contemplated by Borrower
and Lender that such future indebtedness may be incurred); (iv) any and all
other indebtedness, obligations, and liabilities of any kind or character of the
Borrower to Lender, now or hereafter existing, absolute or contingent, due or
not due, arising by operation of law or otherwise, or direct or indirect,
primary or secondary, joint, several, joint and several, fixed or contingent,
secured or unsecured by additional or different security or securities,
including indebtedness, obligations, and liabilities to Lender of the Borrower
as a member of any partnership, joint venture, trust or other type of business
association, or other group, and whether incurred by Borrower as principal,
surety, endorser, guarantor, accommodation party or otherwise, it being
contemplated by Borrower and Lender that Borrower may hereafter become indebted
to Lender in further sum or sums; and (v) any and all renewals, modifications,
amendments, restatements, rearrangements, consolidations, substitutions,
replacements, enlargements, and extensions of any of the foregoing, it being
contemplated by Borrower and Lender that Borrower may hereafter become indebted
to Lender in further sum or sums. Notwithstanding the foregoing provisions of
this definition, this Lien Instrument shall not secure any such other loan,
advance, debt, obligation or liability with respect to which Lender is by
applicable law prohibited from obtaining a lien on real estate, nor shall this
definition operate or be effective to constitute or require any assumption or
payment by any person, in any way, of any debt or obligation of any other person
to the extent that the same would violate or exceed the limit provided in any
applicable usury or other law.
LAND: The real property or interest therein described in EXHIBIT A
attached hereto and incorporated herein by this reference, together with all
right, title, interest, and privileges of Borrower in and to (i) all streets,
ways, roads, alleys, easements, rights-of-way, licenses, rights of ingress and
egress, vehicle parking rights and public places, existing or proposed,
abutting, adjacent, used in connection with or pertaining to such real property
or the improvements thereon; (ii) any strips or gores of real property between
such real property and abutting or adjacent properties; (iii) all water and
water rights, timber, crops, pertaining to such real property; and (iv) all
appurtenances and all reversions and remainders in or to such real property.
LEASES: Any and all leases, master leases, subleases, licenses,
concessions, or other agreements (written or oral, now or hereafter in effect)
which grant to third parties a possessory interest in and to, or the right to
use, all or any part of the Mortgaged Property, together with all security and
other deposits or payments made in connection therewith.
LEGAL REQUIREMENTS: Any and all present and future judicial decisions,
statutes, rulings, rules, regulations, permits, certificates, or ordinances of
any Governmental Authority in any way applicable to Borrower, any Guarantor or
the Mortgaged Property.
Page 4
LENDER: BENCHMARK BANK, a Texas state bank, whose address for notice
hereunder is 0000 Xxxxxx Xxxxx, Xxxxx 00, Xxxxx, Xxxxx 00000, Attention: Xxxxxx
Xxxxxx, and the subsequent holder or holders, from time to time, of the Note.
LOAN DOCUMENTS: The Note, this Lien Instrument, the Financing Statement,
the Guaranty, the Assignment, the Environmental Indemnification Agreement, and
any and all other documents now or hereafter executed by the Borrower,
Guarantor, or any other person or party in connection with the loan evidenced by
the Note or in connection with the payment of the Indebtedness or the
performance and discharge of the Obligations.
MAXIMUM LAWFUL RATE: The rate utilized by Lender pursuant to either (i)
the weekly rate ceiling from time to time in effect as provided in Chapter 303,
as amended, of the Texas Finance Code, or (ii) United States federal law which
permits Lender to contract for, charge, or receive a greater amount of interest
than that provided by such Chapter 303, as amended, for the purpose of
determining the maximum lawful rate allowed by applicable laws. Additionally, to
the extent permitted by applicable law now or hereinafter in effect, Lender may,
at its option and from time to time, implement any other method of computing the
Maximum Lawful Rate under such Chapter 303, as amended, or under other
applicable law by giving notice, if required, to Borrower as provided by
applicable law now or hereafter in effect.
MINERALS: All substances in, on, or under the Land which are now, or may
become in the future, intrinsically valuable, that is, valuable in themselves,
and which now or may be in the future enjoyed through extraction or removal from
the Land, including without limitation, oil, gas, and all other hydrocarbons,
coal, lignite, carbon dioxide and all other nonhydrocarbon gases, uranium and
all other radioactive substances, and gold, silver, copper, iron and all other
metallic substances or ores.
MORTGAGED PROPERTY: The Land, Minerals, Fixtures, Improvements,
Personalty, Contracts, Leases, Rents and any interest of Borrower now owned or
hereafter acquired in and to the Land, Minerals, Fixtures, Improvements,
Personalty, Contracts, Leases, Rents, together with any and all other security
and collateral of any nature whatsoever, now or hereafter given for the
repayment of the Indebtedness or the performance and discharge of the
Obligations. As used in this Lien Instrument, the term "MORTGAGED PROPERTY"
shall be expressly defined as meaning all or, where the context permits or
requires, any portion of the above and all or, where the context permits or
requires, any interest therein.
NOTE: That certain Promissory Note of even date herewith, incorporated
herein by this reference, executed by Borrower and payable to the order of
Lender in the principal amount of THREE MILLION SIX HUNDRED THOUSAND AND NO/100
Dollars ($3,600,000.00) and any and all renewals, modifications, rearrangements,
reinstatements, enlargements, or extensions of such promissory note or of any
promissory note or notes given in renewal, substitution or replacement therefor.
OBLIGATIONS: Any and all of the covenants, conditions, warranties,
representations, and other obligations (other than to repay the Indebtedness)
made or undertaken by Borrower, Guarantor, or any other person or party to the
Loan Documents to Lender, Trustee, or others as set forth in the Loan Documents,
the Leases, and in any deed, lease, sublease, or other form of
Page 5
conveyance, or any other agreement pursuant to which Borrower is granted a
possessory interest in the Land.
PERMITTED DISPOSITION: Collectively, (i) the transfer of limited
partnership interests in either the Borrower or any general partner of Borrower
to any party that controls, is controlled by or is under common control with
Borrower, or (ii) the transfer of limited liability company membership interests
or shareholder's interests in the general partner of Borrower to any party that
controls, is controlled by or is under common control with Borrower, so long as
the effect of any such transfer or assignment does not change the effective
majority ownership or control of such general partner entities.
PERMITTED EXCEPTIONS: The liens, easements, restrictions, security
interests and other title matters (if any) as reflected on the mortgagee policy
of title insurance accepted by Lender with respect to this Lien Instrument.
PERSONALTY: All of the right, title, and interest of Borrower in and to
(i) furniture, furnishings, equipment, machinery, goods (including, but not
limited to, crops, farm products, timber and timber to be cut, and extracted
Minerals); (ii) general intangibles (including payment intangibles), money,
insurance proceeds, accounts, contract and subcontract rights, trademarks, trade
names, inventory, monetary obligations, chattel paper (including electronic
chattel paper), investment property, instruments, documents, letter of credit
rights, and commercial tort claims; (iii) all refundable, returnable, or
reimbursable fees, deposit accounts, deposits or other funds or evidences of
credit or indebtedness deposited by or on behalf of Borrower with any
governmental agencies, boards, corporations, providers of utility services,
public or private, including specifically, but without limitation, all
refundable, returnable, or reimbursable tap fees, utility deposits, commitment
fees and development costs, any awards, remunerations, reimbursements,
settlements, or compensation heretofore made or hereafter to be made by any
Governmental Authority pertaining to the Land, Improvements, Fixtures, Contracts
or Personalty, including but not limited to those for any vacation of, or change
of grade in, any streets affecting the Land or the Improvements and those for
municipal utility district or other utility costs incurred or deposits made in
connection with the Land; and (iv) all other personal property of any kind or
character as defined in and subject to the provisions of the Code (Article 9 -
Secured Transactions); any and all of which are now owned or hereafter acquired
by Borrower, and which are now or hereafter situated in, on, or about the Land
or the Improvements, or used in or necessary to the complete and proper
planning, development, construction, financing, use, occupancy, or operation
thereof, or acquired (whether delivered to the Land or stored elsewhere) for use
in or on the Land or the Improvements, together with all accessions,
replacements, and substitutions thereto or therefor and the proceeds thereof.
RENTS: All of the rents, revenues, income, proceeds, profits, security
and other types of deposits (after Borrower acquires title thereto), and other
benefits paid or payable by parties to the Contracts and/or Leases, other than
Borrower for using, leasing, licensing, possessing, operating from, residing in,
selling, or otherwise enjoying all or any portion of the Mortgaged Property.
SUBORDINATE MORTGAGE: Any mortgage, lien instrument, pledge, lien
(statutory, constitutional, or contractual), security interest, encumbrance or
charge, or conditional sale or
Page 6
other title retention agreement, covering all or any portion of the Mortgaged
Property executed and delivered by Borrower, the lien of which is subordinate
and inferior to the lien of this Lien Instrument.
TRUSTEE: The individual described as Trustee in the initial paragraph of
this Lien Instrument.
ARTICLE II
GRANT
2.1 GRANT. To secure the full and timely payment of the Indebtedness
and the full and timely performance and discharge of the Obligations, Borrower
has GRANTED, BARGAINED, SOLD and CONVEYED, and by these presents does GRANT,
BARGAIN, SELL and CONVEY, unto Trustee, in trust, with power of sale, the
Mortgaged Property, subject, however, to the Permitted Exceptions, TO HAVE AND
TO HOLD the Mortgaged Property unto Trustee, forever, and Borrower does hereby
bind itself, its successors, and assigns, to WARRANT AND FOREVER DEFEND the
title to the Mortgaged Property unto Trustee against every person whomsoever
lawfully claiming or to claim the same or any part thereof.
ARTICLE III
WARRANTIES AND REPRESENTATIONS
Borrower hereby unconditionally warrants and represents to Lender, as of
the date hereof and at all times during the term of this Lien Instrument, as
follows:
3.1 TITLE AND LIEN. Borrower has good and indefeasible title to the
Land (in fee simple, if the lien created hereunder be on the fee, or a first and
prior leasehold estate, if it be created on the leasehold estate) and
Improvements, and good and marketable title to the Fixtures and Personalty, free
and clear of any liens, charges, encumbrances, security interests, claims,
easements, restrictions, options, leases (other than the Leases), covenants, and
other rights, titles, interests, or estates of any nature whatsoever, except the
Permitted Exceptions. This Lien Instrument constitutes a valid, subsisting first
lien on the Land, the Improvements, and the Fixtures; a valid, subsisting first
priority security interest in and to the Personalty, Contracts and to the extent
that the terms Leases and Rents include items covered by the Code, in and to the
Leases and Rents; and a valid, subsisting first priority assignment of the
Leases and Rents not covered by the Code, all in accordance with the terms
hereof.
3.2 TAXES. Borrower, each Constituent Party, and Guarantor have
filed all federal, state, county, municipal, and city income and other tax
returns required to have been filed by them and have paid all taxes and related
liabilities which have become due pursuant to such returns or pursuant to any
assessments received by them. Neither Borrower, any Constituent Party, nor
Guarantor knows of any basis for any additional assessment in respect of any
such taxes and related liabilities except that which may result from increased
valuation or tax rate resulting from the construction of the Improvements.
Page 7
3.3 MAILING ADDRESS. Borrower's mailing address, as set forth in the
opening paragraph hereof or as changed pursuant to the provisions hereof, is
true and correct.
3.4 LEGAL REQUIREMENTS. To the best of Borrower's knowledge after
investigation and due inquiry, no violation of any Legal Requirements exists or
will exist with respect to the Mortgaged Property and neither the Borrower nor
the Guarantor are, nor will they be, in default with respect to any Legal
Requirements.
3.5 UTILITY SERVICES. All utility services of sufficient size and
capacity necessary for the use of the Improvements for their intended purposes
are available at the property line(s) of the Land for connection to the
Improvements, including potable water, storm and sanitary sewer, gas, electric
and telephone facilities.
3.6 ACCESS. All roads necessary for the full utilization of the
Improvements for their intended purposes have been completed and have been
dedicated to the public use and accepted by the appropriate Governmental
Authority.
3.7 FINANCIAL STATEMENTS. Each financial statement of Borrower and
Guarantors delivered heretofore, concurrently herewith or hereafter to Lender
was and will be prepared in conformity with general accepted accounting
principles, or other good accounting principles approved by Lender in writing,
applied on a basis consistent with that of previous statements and completely
and accurately disclose the financial condition of Borrower and Guarantors
(including all contingent liabilities) as of the date thereof and for the period
covered thereby, and as of the date hereof there has been no material adverse
change in either Borrower's or Guarantors' financial condition subsequent to the
date of the most recent financial statement of Borrower and Guarantors delivered
to Lender.
3.8 STATEMENTS. No certificate, statement, report or other
information delivered heretofore, concurrently herewith or hereafter by Borrower
or Guarantors to Lender in connection herewith, or in connection with any
transaction contemplated hereby, contains or will contain any untrue statement
of a material fact or fails to state any material fact necessary to keep the
statements contained therein from being misleading, and same were true, complete
and accurate as of the date hereof.
3.9 ERISA. The Borrower, Guarantor, Borrower's Constituent Parties,
and Guarantor's Constituent Parties are not an "employee benefit plan" as
defined in Section 3(3) of ERISA, which is subject to Title I of ERISA, and the
assets of such parties do not constitute "plan assets" of one or more such plans
within the meaning of 29 C.F.R. Section 2510.3101 of any "employee benefit plan"
as defined in Section 3(3) of ERISA which is sponsored or maintained solely by
Lender, American Bank of Texas, W. Xxxxx Xxxxxxx, Xxxxx X. Xxxxxx, Xxxxx X.
Xxxxxxx or MS Family Limited Partnership.
3.10 INDEBTEDNESS, OPERATIONS AND FUNDAMENTAL CHANGES OF BORROWER.
Borrower does not own any encumbered asset other than (i) the Mortgaged
Property, and (ii) incidental personal property necessary for the operation of
the Mortgaged Property; (b) is not engaged in any business other than the
ownership, management and operation of the Mortgaged Property; (c) has not
incurred any debt, secured or unsecured, direct or contingent (including
guaranteeing any
Page 8
obligation), other than (i) the Indebtedness, and (ii) trade payables or accrued
expenses incurred in the ordinary course of business of operating the Mortgaged
Property; no debt whatsoever may be secured (senior, subordinate or pari passu)
by the Mortgaged Property except the Indebtedness; (d) has not made any loans or
advances to any third party (including any member, manager, general partner,
principal or affiliate of Borrower, or any Guarantor); (e) is solvent and is
able to pay its debts from its assets as the same shall become due; (f) has done
all things necessary to preserve its existence and corporate and partnership
formalities; (g) has maintained its assets in such a manner that it is not
costly or difficult to segregate, ascertain or identify its individual assets
from those of any affiliate or any other person; (h) has, and any general
partner of Borrower has, at all times since their respective formation, observed
all legal and customary formalities regarding their respective formation; and
(i) does not hold itself out to be responsible for the debts and obligations of
any other person.
ARTICLE IV
AFFIRMATIVE COVENANTS
Borrower hereby unconditionally covenants and agrees with Lender, until
the entire Indebtedness shall have been paid in full and all of the Obligations
shall have been fully performed and discharged, as follows:
4.1 PAYMENT AND PERFORMANCE. Borrower will pay the Indebtedness as
and when specified in the Loan Documents, and will perform and discharge all of
the Obligations, in full and on or before the dates same are to be performed.
4.2 EXISTENCE. Borrower will and will cause each Constituent Party
to preserve and keep in full force and effect its existence (separate and apart
from its affiliates), rights, franchises, and trade names.
4.3 FIRST LIEN STATUS. Borrower will protect the first lien and
security interest status of this Lien Instrument and the other Loan Documents
and will not permit to be created or to exist in respect of the Mortgaged
Property or any part thereof any lien or security interest on a parity with,
superior to, or inferior to any of the liens or security interests hereof,
except for the Permitted Exceptions.
4.4 TAX ON LIEN INSTRUMENT. At any time any law shall be enacted
imposing or authorizing the imposition of any tax upon this Lien Instrument, or
upon any rights, titles, liens, or security interests created hereby, or upon
the Indebtedness or any part thereof, Borrower will immediately pay all such
taxes, provided that if such law as enacted makes it unlawful for Borrower to
pay such tax, Borrower shall not pay nor be obligated to pay such tax.
Nevertheless, if a law is enacted making it unlawful for Borrower to pay such
taxes, then Borrower must prepay the Indebtedness in full within sixty (60) days
after demand therefor by Lender.
4.5 EXPENSES. Subject to the provisions of SECTION 12.11 hereof,
Borrower will pay on demand all reasonable and bona fide out-of-pocket costs,
fees, and expenses and other expenditures, including, but not limited to,
reasonable attorneys' fees and expenses, paid or incurred by Lender or Trustee
to third parties incident to this Lien Instrument or any other Loan
Page 9
Document (including without limitation, reasonable attorneys' fees and expenses
in connection with the negotiation, preparation, and execution of any of the
Loan Documents and any amendment thereto, any release hereof, any consent,
approval or waiver hereunder or under any of the Loan Documents, and any suit to
which Lender or Trustee is a party involving this Lien Instrument or the
Mortgaged Property) or incident to the enforcement of the Indebtedness or the
exercise of any right or remedy of Lender under any Loan Document.
4.6 ADDRESS. Borrower shall give written notice to Lender and
Trustee of any change of address of Borrower at least thirty (30) days prior to
the effective date of such change of address. Absent such official written
notice of a change in address for Borrower, then Lender and Trustee shall be
entitled for all purposes under the Loan Documents to rely upon Borrower's
address as set forth in the initial paragraph of this Lien Instrument, as same
may have been theretofore changed in accordance with the provisions hereof.
4.7 PROHIBITED PERSON COMPLIANCE. Borrower warrants, represents and
covenants that neither Borrower, Guarantor nor any of their respective
affiliated entities is or will be an entity or person (i) that is listed in the
Annex to, or is otherwise subject to the provisions of Executive Order 13224
issued on September 24, 2001 ("EO13224"), (ii) whose name appears on the United
States Treasury Department's Office of Foreign Assets Control ("OFAC") most
current list of "Specially Designated Nationals and Blocked Persons," (which
list may be published from time to time in various mediums including, but not
limited to, the OFAC website, http:xxx.xxxxx.xxx/xxxx/x00xxx.xxx), (iii) who
commits, threatens to commit or supports "terrorism", as that term is defined in
EO13224, or (iv) who is otherwise affiliated with any entity or person listed
above (any and all parties or persons described in SUBPARTS (I) - (IV) above are
herein referred to as a "PROHIBITED PERSON"). Borrower covenants and agrees that
neither Borrower, Guarantor nor any of their respective affiliated entities will
(A) conduct any business, nor engage in any transaction or dealing, with any
Prohibited Person, including, but not limited to, the making or receiving of any
contribution of funds, goods, or services, to or for the benefit of a Prohibited
Person, or (B) engage in or conspire to engage in any transaction that evades or
avoids, or has the purpose of evading or avoiding, or attempts to violate, any
of the prohibitions set forth in EO13224. Borrower further covenants and agrees
to deliver (from time to time) to Lender any such certification or other
evidence as may be requested by Lender in its sole and absolute discretion,
confirming that (x) neither Borrower nor Guarantor is a Prohibited Person, and
(y) neither Borrower nor Guarantor has engaged in any business, transaction or
dealings with a Prohibited Person, including, but not limited to, the making or
receiving of any contribution of funds, goods, or services, to or for the
benefit of a Prohibited Person.
4.8 COMPLIANCE WITH RESTRICTIVE COVENANTS. Borrower will comply with
all restrictive covenants, if any, affecting the Mortgaged Property. To
Borrower's knowledge, there are no structural defects in the Improvements.
4.9 PAYMENT OF EXPENSES. Borrower shall pay or reimburse to Lender
all costs and expenses relating to the Mortgaged Property, including (without
limitation), title insurance and examination charges, survey costs, insurance
premiums, filing and recording fees, and other expenses payable to third parties
incurred by Lender in connection with the consummation of the transactions
contemplated by this Lien Instrument.
Page 10
4.10 NOTICES RECEIVED. Borrower will promptly deliver to Lender a
true and correct copy of all notices received by Borrower from any person or
entity with respect to Borrower, Guarantors, the Mortgaged Property, or any or
all of them, which in any way relates to or affects the Loan or the Mortgaged
Property.
4.11 LEASES. Borrower will deliver to Lender, upon request of Lender,
executed counterparts of all leases and rental agreements affecting the
Mortgaged Property.
4.12 APPROVAL TO LEASE REQUIRED. In the event that Borrower elects to
utilize a form of lease that is different from that form delivered to the Lender
as of the date hereof, Borrower will obtain the prior written consent of Lender
as to such new form of tenant lease to be utilized in leasing the Mortgaged
Property, or any part thereof, prior to entering into any lease of all or any
part of the Mortgaged Property. Once approved, Borrower shall utilize a form of
lease in leasing all or any part of the Mortgaged Property, or any part thereof,
and shall provide Lender with a rental rate schedule acceptable to Lender
pursuant to which rental rates for tenants of the Mortgaged Property, or any
part thereof, will be established.
4.13 STATEMENTS AND REPORTS. Borrower agrees to deliver to Lender,
during the term of the Loan and until the Loan has been fully paid and
satisfied, the following statements and reports:
(a) Annual, unaudited financial statements of Borrower and
Guarantors within sixty (60) days after the end of each calendar year,
prepared and certified to by the Borrower and Guarantors respectively;
(b) Monthly, unaudited financial statements of Borrower,
within thirty (30) days after the end of each calendar month, prepared
in accordance with generally accepted accounting principles and
certified to by the chief financial officer of Borrower;
(c) Copies of all state and federal tax returns prepared
with respect to Borrower, and each Guarantor within thirty (30) days of
such returns being filed with the Internal Revenue Service or applicable
state authority;
(d) Copies of extension requests or similar documents with
respect to federal or state income tax filings for Borrower and each
Guarantor within thirty (30) days of such documents being filed with the
Internal Revenue Service or applicable state authority;
(e) Annual operating statements with respect to the
Mortgaged Property within sixty (60) days after the end of each calendar
year, prepared in such form and detail as Lender may require and
certified to by the chief financial officer of Borrower;
(f) Monthly operating statements with respect to the
Mortgaged Property, within thirty (30) days after the end of each
calendar month, prepared in such form and detail as Lender may require
and in accordance with generally accepted accounting principles and
certified to by the chief financial officer of Borrower; and
Page 11
(g) Such other reports and statements as Lender may
reasonably require from time to time.
4.14 INSURANCE. Borrower shall, at Borrower's expense, maintain in
force and effect on the Mortgaged Property at all times while this Lien
Instrument continues in effect the following insurance:
(a) "All-risk" coverage insurance against loss or damage to
the Mortgaged Property from all-risk perils. The amount of such
insurance shall be not less than one hundred percent (100%) of the full
replacement cost of the Improvements, furniture, furnishings, fixtures,
equipment and other items (whether personalty or fixtures) included in
the Mortgaged Property and owned by Borrower from time to time, without
reduction for depreciation. The determination of the replacement cost
amount shall be adjusted annually to comply with the requirements of the
insurer issuing such coverage or, at Lender's election, by reference to
such indexes, appraisals or information as Lender determines in its
reasonable discretion. Full replacement cost, as used herein, means,
with respect to the Improvements, the cost of replacing the Improvements
without regard to deduction for depreciation, exclusive of the cost of
excavations, foundations and footings below the lowest basement floor,
and means, with respect to such furniture, furnishings, fixtures,
equipment and other items, the cost of replacing the same. Each policy
or policies shall contain a replacement cost endorsement and either an
agreed amount endorsement (to avoid the operation of any co-insurance
provisions) or a waiver of any co-insurance provisions, all subject to
Lender's approval.
(b) Commercial general liability insurance for personal
injury, bodily injury, death and property damage liability in amounts
not less than $5,000,000.00 per occurrence, $6,000,000.00 aggregate
(inclusive of umbrella coverage) or such lesser amount as Lender in
Lender's sole discretion may accept, for bodily injury, personal injury
and property damage. Lender hereby retains the right to periodically
review the amount of said liability insurance being maintained by
Borrower and to require an increase in the amount of said liability
insurance should Lender deem an increase to be reasonably prudent under
then existing circumstances.
(c) Insurance covering the major components of the central
heating, air conditioning and ventilating systems, boilers, other
pressure vessels, high pressure piping and machinery, elevators and
escalators, if any, and other similar equipment installed in the
Improvements, in an amount equal to one hundred percent (100%) of the
full replacement cost of the Improvements which policies shall insure
against physical damage to and loss of occupancy and use of the
Improvements arising out of an accident or breakdown covered thereunder.
(d) If the Land or any part thereof is identified by the
Secretary of Housing and Urban Development as being situated in an area
now or subsequently designated as having special flood hazards
(including, without limitation, those areas designated as Zone A or Zone
V), flood insurance in an amount equal to one hundred percent (100%) of
the replacement cost of the Improvements or the maximum amount of flood
insurance available, whichever is the lesser.
Page 12
(e) During the period of any construction on the Land or
renovation or alteration of the Improvements, including tenant
improvements, a so-called "Builder's All-Risk Completed Value" or
"Course of Construction" insurance policy in non-reporting form for any
Improvements under construction, renovation or alteration in an amount
approved by Lender and Worker's Compensation Insurance covering all
persons engaged in such construction, renovation or alteration.
(f) Rental value or rental income insurance in amounts
sufficient to compensate Borrower for all Rents and profits during a
period of not less than one (1) year in which the Mortgaged Property may
be damaged or destroyed.
(g) Law and ordinance coverage in an amount satisfactory to
Lender if the Mortgaged Property, or any part thereof, shall constitute
a nonconforming use or structure under applicable zoning ordinances,
sub-division and building codes or other laws, ordinances, orders and
requirements.
(h) Such other insurance on the Mortgaged Property or on any
replacements or substitutions thereof or additions thereto as may from
time to time be required by Lender against other insurable hazards or
casualties which at the time are commonly insured against in the case of
property similarly situated, due regard being given to the height and
type of buildings, their construction, location, use and occupancy.
All such insurance shall (i) be with insurers authorized to do business
in the state within which the Land is located and who have and maintain a rating
of at least A-, V or better from Best, (ii) contain the complete address of the
Land (or a complete legal description), (iii) be for a term of at least one (1)
year, (iv) contain deductibles no greater than $10,000.00 or as otherwise
required by Lender, and (v) be subject to the approval of Lender as to insurance
companies, amounts, content, forms of policies, method by which premiums are
paid and expiration dates.
Borrower shall as of the date hereof deliver to Lender evidence that
said insurance policies have been paid current as of the date hereof and
certified copies of such insurance policies and original certificates of
insurance signed by an authorized agent evidencing such insurance satisfactory
to Lender. Borrower shall renew all such insurance and deliver to Lender
certificates evidencing such renewals at least thirty (30) days before any such
insurance shall expire. Without limiting the required endorsements to insurance
policies, Borrower further agrees that all such policies shall provide that
proceeds thereunder shall be payable to Lender, its successors and assigns,
pursuant and subject to a mortgagee clause (without contribution) of standard
form attached to, or otherwise made a part of, the applicable policy and that
Lender, its successors and assigns, shall be named as an additional insured
under all liability insurance policies. Borrower further agrees that all such
insurance policies: (i) shall provide for at least thirty (30) days' prior
written notice to Lender prior to any cancellation or termination thereof and
prior to any modification thereof which affects the interest of Lender; (ii)
shall contain an endorsement or agreement by the insurer that any loss shall be
payable to Lender in accordance with the terms of such policy notwithstanding
any act or negligence of Borrower which might otherwise result in forfeiture of
such insurance; and (iii) shall either name Lender as an additional insured or
waive all rights of subrogation against Lender. The delivery to Lender of the
insurance policies or the certificates of insurance as provided above shall
constitute an
Page 13
assignment of all proceeds payable under such insurance policies by Borrower to
Lender as further security for the indebtedness secured hereby. In the event of
foreclosure of the Lien Instrument, or other transfer of title to the Mortgaged
Property in extinguishment in whole or in part of the secured indebtedness, all
right, title and interest of Borrower in and to all proceeds payable under such
policies then in force concerning the Mortgaged Property shall thereupon vest in
the purchaser at such foreclosure, or in Lender or other transferee in the event
of such other transfer of title. Approval of any insurance by Lender shall not
be a representation of the solvency of any insurer or the sufficiency of any
amount of insurance. In the event Borrower fails to provide, maintain, keep in
force or deliver and furnish to Lender the policies of insurance required by
this Lien Instrument or evidence of their renewal as required herein, Lender
may, but shall not be obligated to, procure such insurance and Borrower shall
pay all amounts advanced by Lender, together with interest thereon at the
Default Rate from and after the date advanced by Lender until actually repaid by
Borrower, promptly upon demand by Lender. Any amounts so advanced by Lender,
together with interest thereon, shall be secured by this Lien Instrument, the
Lien Instrument and by all of the other Loan Documents securing all or any part
of the Indebtedness. Lender shall not be responsible for nor incur any liability
for the insolvency of the insurer or other failure of the insurer to perform,
even though Lender has caused the insurance to be placed with the insurer after
failure of Borrower to furnish such insurance.
4.15 REMOTE PARKING AGREEMENT. Within one hundred twenty (120) days
hereof, Borrower shall terminate or cause the termination of that certain Remote
Parking Agreement dated February 20, 1996 and recorded in Volume 96036, Page
2027 in the Real Property Records of Dallas County, Texas.
ARTICLE V
NEGATIVE COVENANTS
Borrower hereby unconditionally covenants and agrees with Lender, that
until the entire Indebtedness shall have been paid in full and all of the
Obligations shall have been fully performed and discharged, as follows:
5.1 USE VIOLATIONS. Borrower will not use, maintain, operate, or
occupy, or allow the use, maintenance, operation, or occupancy of, the Mortgaged
Property in any manner which (i) violates any Legal Requirement, (ii) may be
dangerous unless safeguarded as required by law and/or appropriate insurance,
(iii) constitutes a public or private nuisance, or (iv) makes void, voidable, or
cancellable, or increases the premium of, any insurance then in force with
respect thereto.
5.2 WASTE; ALTERATIONS. Borrower will not commit or permit any waste
or impairment of the Mortgaged Property and will not (subject to the provisions
of SECTIONS 4.3 AND 4.6 hereof), without the prior written consent of Lender,
make or permit to be made any alterations or additions to the Mortgaged Property
of a material nature, except in accordance with the Plans.
5.3 REPLACEMENT OF FIXTURES AND PERSONALTY. Borrower will not,
without the prior written consent of Lender, permit any of the Fixtures or
Personalty to be removed at any time from the Land or Improvements unless the
removed item is removed temporarily for
Page 14
maintenance and repair or, if removed permanently, is replaced by an article of
equal suitability and value, owned by Borrower, free and clear of any lien or
security interest except as may be approved in writing by Lender.
5.4 CHANGE IN ZONING. Borrower will not seek or acquiesce in a
zoning reclassification of all or any portion of the Mortgaged Property or grant
or consent to any easement, dedication, plat, or restriction (or allow any
easement to become enforceable by prescription), or any amendment or
modification thereof, covering all or any portion of the Mortgaged Property,
without Lender's prior written consent.
5.5 NO DRILLING. 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 subsurface of the
Land regardless of the depth thereof or the method of mining or extraction
thereof.
5.6 NO DISPOSITION. Borrower will not make a Disposition (other than
a Permitted Disposition) without obtaining Lender's prior written consent to the
Disposition.
5.7 NO SUBORDINATE MORTGAGES. Borrower will not create, place, or
permit to be created or placed, or through any act or failure to act, acquiesce
in the placing of, or allow to remain any Subordinate Mortgage regardless of
whether such Subordinate Mortgage is expressly subordinate to the liens or
security interests of the Loan Documents with respect to the Mortgaged Property,
other than the Permitted Exceptions.
5.8 ERISA. Borrower 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 or any of the other Loan
Documents) to be a non-exempt (under a statutory or administrative class
exemption) prohibited transaction under ERISA involving any employee benefit
plans sponsored and maintained solely by Lender, American Bank of Texas, W.
Xxxxx Xxxxxxx, Xxxxx X. Xxxxxx, MS Family Limited Partnership or Xxxxx X.
Xxxxxxx. Borrower further covenants and agrees to deliver to Lender such
certifications or other evidence from time to time throughout the term of the
Loan, as requested by Lender in its sole discretion, that: (a) 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(3) of ERISA; and (b) Borrower is not engaged in a prohibited transaction
involving any employee benefit plans; sponsored and maintained solely by Lender,
American Bank of Texas, W. Xxxxx Xxxxxxx, Xxxxx X. Xxxxxx, MS Family Limited
Partnership or Xxxxx X. Xxxxxxx.
5.9 INDEBTEDNESS, OPERATIONS AND FUNDAMENTAL CHANGES OF BORROWER.
Borrower: (a) will not own any asset other than (i) the Mortgaged Property, and
(ii) incidental personal property necessary for the operation of the Mortgaged
Property; (b) will not engage in any business other than the ownership,
management and operation of the Mortgaged Property; (c) will not enter into any
contract or agreement (other than that certain management agreement with HPT
Management Services LP) with any member, manager, general partner, principal or
affiliate of Borrower or any affiliate thereof, except upon terms and conditions
that are intrinsically fair and substantially similar to those that would be
available on an arm's length basis with third parties other than an affiliate;
(d) will not incur any debt, secured or unsecured,
Page 15
direct or contingent (including guaranteeing any obligation), other than (i) the
Indebtedness, and (ii) trade payables or accrued expenses incurred in the
ordinary course of business of operating the Mortgaged Property; no debt
whatsoever may be secured (senior, subordinate or pari passu) by the Mortgaged
Property except the Indebtedness; (e) will not make any loans or advances to any
third party (including any member, manager, general partner, principal or
affiliate of Borrower, or any Guarantor); (f) will be solvent and pay its debts
from its assets as the same shall become due; (g) will do all things necessary
to preserve its existence and corporate and partnership formalities, and will
not, nor will any general partner thereof, amend, modify or otherwise change its
partnership certificate, partnership agreement, certificate, articles of
incorporation or by-laws in a manner which adversely affects Borrower or any
such general partner's existence as a single-purpose, single-asset "bankruptcy
remote" entity; (h) will conduct and operate its business as presently conducted
and operated; (i) will maintain books and records and bank accounts separate
from those of its affiliates, including its general partners, principals and
members; (j) will be, and at all times will hold itself out to the public as, a
legal entity separate and distinct from any other entity (including any general
partner, principal, member or affiliate thereof); (k) will file its own tax
returns; (l) will maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in light of
its contemplated business operations; (m) will not, nor will any member,
manager, shareholder, partner, principal or affiliate, seek the dissolution or
winding up, in whole or in part, of Borrower; (n) will not enter into any
transaction of merger or consolidation, or acquire by purchase or otherwise all
or substantially all of the business or assets of, or any stock or beneficial
ownership of, any entity; (n) will not commingle the funds and other assets of
Borrower with those of any member, manager, general partner, principal or
affiliate or any other person; (o) will maintain its assets in such a manner
that it is not costly or difficult to segregate, ascertain or identify its
individual assets from those of any affiliate or any other person; (p) will, and
any general partner of Borrower will, continue to observe all legal formalities;
(q) will not hold itself out to be responsible for the debts and obligations of
any other person; and (r) upon the commencement of a voluntary or involuntary
bankruptcy proceeding by or against Borrower, Borrower shall not seek a
supplemental stay or otherwise pursuant to 11 U.S.C. 105 or any other Debtor
Relief Law of any jurisdiction whatsoever, now or hereafter in effect, which may
be or become applicable, to stay, interdict, condition, reduce or inhibit the
ability of Lender to enforce any rights of Lender against any guarantor or
indemnitor of the Indebtedness or the Obligations or any other party liable with
respect thereto by virtue of any indemnity, guaranty or otherwise.
5.10 DEVELOPMENT OF RAW LAND. Borrower shall not, without Lender's
prior written consent, construct Improvements on or otherwise develop that
certain tract of vacant land consisting of approximately 0.265 acres and
identified as Tract 2 on EXHIBIT A hereto.
ARTICLE VI
EVENTS OF DEFAULT
6.1 EVENTS OF DEFAULT. Each of the following shall constitute an
"EVENT OF DEFAULT" hereunder:
Page 16
(a) If Borrower shall fail, refuse, or neglect to pay, in
full, any installment or portion of the Indebtedness as and when the
same shall become due and payable, whether at the due date thereof
stipulated in the Loan Documents, upon acceleration or otherwise.
(b) If Borrower shall fail, refuse or neglect, or cause
others to fail, refuse, or neglect to comply with, perform and discharge
fully and timely any of the Obligations as and when called for;
provided, HOWEVER, that a failure by Borrower to timely satisfy an
Obligation shall not constitute an "Event of Default" hereunder if (i)
such failure does not constitute an Event of Default pursuant to any
other subsection of this SECTION 6.1 other than this SUBSECTION (B), and
(ii) such failure is fully cured by Borrower on or before the expiration
of the Cure Period (hereinafter defined). As used in this SUBSECTION
6.1(B), the term "CURE PERIOD" means a 30-day period commencing upon
Lender's written notice to Borrower of Borrower's failure to satisfy the
subject Obligation; provided, HOWEVER, if (1) the subject failure is, by
its nature, not readily susceptible to cure within thirty (30) days, and
(2) Borrower commences such cure process within the initial 30-day
period and diligently pursues same to completion within sixty (60) days
of the initial failure by Borrower to satisfy the subject Obligation,
then such failure shall not constitute an "Event of Default".
(c) If any representation, warranty, or statement made by
Borrower, Guarantor, or others in, under, or pursuant to the Loan
Documents or any affidavit or other instrument executed or delivered
with respect to the Loan Documents or the Indebtedness is determined by
Lender to be false or misleading in any material respect as of the date
hereof or thereof or shall become so at any time prior to the repayment
in full of the Indebtedness.
(d) If Borrower shall default or commit an event of default
under and pursuant to any other mortgage or security agreement (which is
not a Loan Document) which covers or affects any part of the Mortgaged
Property that is continuing beyond any applicable notice and grace
period.
(e) If Borrower (i) shall execute an assignment for the
benefit of creditors or an admission in writing by Borrower of
Borrower's inability to pay, or Borrower's failure to pay, debts
generally as the debts become due; or (ii) shall allow the levy against
the Mortgaged Property or any part thereof, of any execution,
attachment, sequestration or other writ which is not vacated within
sixty days after the levy; or (iii) shall allow the appointment of a
receiver, trustee or custodian of Borrower or of the Mortgaged Property
or any part thereof, which receiver, trustee or custodian is not
discharged within sixty (60) days after the appointment; or (iv) files
as a debtor a petition, case, proceeding or other action pursuant to, or
voluntarily seeks of the benefit or benefits of any Debtor Relief Law,
or takes any action in furtherance thereof; or (v) files either a
petition, complaint, answer or other instrument which seeks to effect a
suspension of, or which has the effect of suspending any of the rights
or powers of Lender or the trustee under the Lien Instrument granted in
the Note, herein or in any Loan Document; or (vi) allows the filing of a
petition, case, proceeding or other action against Borrower as a debtor
under any Debtor Relief Law or seeks appointment of a receiver, trustee,
custodian or liquidator of Borrower or of the Mortgaged Property, or any
part thereof, or of any significant
Page 17
portion of Borrower's other property and (a) Borrower admits, acquiesces
in or fails to contest diligently the material allegations thereof, or
(b) the petition, case, proceeding or other action results in the entry
of an order for relief or order granting the relief sought against
Borrower, or (c) the petition, case, proceeding or other action is not
permanently dismissed or discharged on or before the earlier of trial
thereon or sixty (60) days next following the date of filing.
(f) If Borrower, any Constituent Party or any Guarantor,
shall die, dissolve, terminate or liquidate, or merge with or be
consolidated into any other entity, or become permanently disabled.
(g) If Borrower creates, places, or permits to be created or
placed, or through any act or failure to act, acquiesces in the placing
of, or allows to remain, any Subordinate Mortgage, regardless of whether
such Subordinate Mortgage is expressly subordinate to the liens or
security interests of the Loan Documents, with respect to the Mortgaged
Property, other than the Permitted Exceptions and any Contested Item.
(h) If Borrower makes a Disposition without the prior
written consent of Lender.
(i) If any condemnation proceeding is instituted which
would, in Lender's reasonable judgment, materially impair the use and
enjoyment of the Mortgaged Property for its intended purposes.
(j) If the Mortgaged Property is demolished, destroyed, or
substantially damaged so that, in Lender's reasonable judgment, it
cannot be restored or rebuilt with available funds to the condition
existing immediately prior to such demolition, destruction, or damage
within a reasonable period of time.
(k) If Borrower abandons all or any portion of the Mortgaged
Property.
(l) The occurrence of any event referred to in SECTIONS
7.1(E) AND (F) hereof with respect to any Guarantor, Constituent Party
or other person or entity obligated in any manner to pay or perform the
Indebtedness or Obligations, respectively, or any part thereof (as if
such Guarantor, Constituent Party or other person or entity were the
"Borrower" in such Sections).
(m) An Event of Default as defined in any of the Loan
Documents.
(n) If, except with respect to any Contested Item, any levy,
attachment or garnishment is issued, or if any lien for the performance
of work or the supply of materials is filed, against any part of the
Mortgaged Property and remains unsatisfied or unbonded for five (5) days
after the date of filing thereof.
(o) If Borrower or any Guarantor shall fail to pay when due
any principal of or interest on any debt (other than the Indebtedness)
or the maturity of any such debt shall have been accelerated, or any
such debt shall have been required to be prepaid prior to the stated
maturity thereof (other than the Indebtedness).
Page 18
(p) If Borrower is in default beyond any applicable grace
and cure period under the Ground Lease or if the Ground Lease terminates
for any reason.
(q) If Borrower shall fail, refuse, or neglect to pay, in
full, any installment or portion of the Indebtedness as and when the
same shall become due and payable, whether at the due date thereof
stipulated in the Loan Documents, upon acceleration or otherwise;
PROVIDED, HOWEVER, that a failure by Borrower to pay a regularly
scheduled monthly payment due pursuant to the Note shall not constitute
an "Event of Default" hereunder unless such failure continues for at
least ten (10) days after the due date thereof.
ARTICLE VII
REMEDIES
7.1 LENDER'S REMEDIES UPON DEFAULT. Upon the occurrence of an Event
of Default, Lender may, at Lender's option, and by or through Trustee, by Lender
itself or otherwise, do any one or more of the following:
(a) RIGHT TO PERFORM BORROWER'S COVENANTS. If Borrower has
failed to keep or perform any covenant whatsoever contained in any of
the 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 shall be and become a part of the Indebtedness.
(b) RIGHT OF ENTRY. Lender may, prior or subsequent to the
institution of any foreclosure proceedings, enter upon the Mortgaged
Property, or any part thereof, and take exclusive possession of the
Mortgaged 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 Mortgaged 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 the Lender in collecting such
Rents and in managing, operating, maintaining, protecting, or preserving
the Mortgaged Property and to apply the remainder of such Rents on the
Indebtedness in such manner as Lender may elect. All such costs,
expenses, and liabilities incurred by the Lender in collecting such
Rents and in managing, operating, maintaining, protecting, or preserving
the Mortgaged 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
Indebtedness. If necessary to obtain the possession provided for above,
Lender may invoke any and all legal remedies to dispossess Borrower,
including specifically one or more actions for forcible entry and
detainer, trespass to try title, and restitution. In connection with any
action taken by Lender pursuant to this subsection, Lender shall not be
liable for any loss sustained by Borrower resulting from any failure to
let the Mortgaged Property, or any part thereof, or from any other act
or omission of Lender in managing the Mortgaged 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
Page 19
liability under any Lease or under or by reason hereof or the exercise
of rights or remedies hereunder. EXCEPT FOR THE WILLFUL MISCONDUCT OR
GROSS NEGLIGENCE OF LENDER, BORROWER SHALL AND DOES HEREBY AGREE TO
INDEMNIFY LENDER FOR, AND TO HOLD LENDER HARMLESS FROM, ANY AND ALL
LIABILITY, LOSS, OR DAMAGE, WHICH MAY OR MIGHT BE INCURRED BY LENDER
UNDER ANY SUCH LEASE OR UNDER OR BY REASON HEREOF OR THE EXERCISE OF
RIGHTS OR REMEDIES HEREUNDER, AND FROM ANY AND ALL CLAIMS AND DEMANDS
WHATSOEVER WHICH MAY BE ASSERTED AGAINST LENDER BY REASON OF ANY ALLEGED
OBLIGATIONS OR UNDERTAKINGS ON LENDER'S PART TO PERFORM OR DISCHARGE ANY
OF THE TERMS, COVENANTS, OR AGREEMENTS CONTAINED IN ANY SUCH LEASE.
SHOULD LENDER INCUR ANY SUCH LIABILITY, THE AMOUNT THEREOF, INCLUDING
WITHOUT LIMITATION, COSTS, EXPENSES, AND REASONABLE ATTORNEYS' FEES,
TOGETHER WITH INTEREST THEREON FROM THE DATE OF EXPENDITURE UNTIL PAID
AT THE DEFAULT RATE, SHALL BE SECURED HEREBY, AND BORROWER SHALL
REIMBURSE LENDER THEREFOR IMMEDIATELY UPON DEMAND. Nothing in this
subsection shall impose any duty, obligation, or responsibility upon
Lender for the control, care, management, leasing, or repair of the
Mortgaged 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 Mortgaged Property
by the tenants or by any other parties, or for any hazardous substances
on or under the Mortgaged Property, or for any dangerous or defective
condition of the Mortgaged Property or for any negligence in the
management, leasing, upkeep, repair, or control of the Mortgaged
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 the Lender with respect to the Mortgaged
Property taken under this subsection.
The remedies in this subsection are in addition to other
remedies available to the Lender and the exercise of the remedies in
this subsection shall not be deemed to be an election of nonjudicial or
judicial remedies otherwise available to the Lender. The remedies in
this Article VII are available under and governed by the real property
laws of Texas and, except as described in SECTION 7.1(G) hereof, are not
governed by the personal property laws of Texas, including but not
limited to, the power to dispose of personal property in a commercially
reasonable manner under Section 9.610 of the Code. No action by Lender,
taken pursuant to this subsection, shall be deemed to be an election to
dispose of personal property under Section 9.620 of the Code. Any
receipt of consideration received by Lender pursuant to this subsection
shall be immediately credited against the Indebtedness (in the inverse
order of maturity) and the value of said consideration shall be treated
like any other payment against the Indebtedness.
(c) RIGHT TO ACCELERATE. Lender may, without notice, demand,
presentment, notice of nonpayment or nonperformance, protest, notice of
protest, notice of intent to accelerate, notice of acceleration, or any
other notice or any other action, all of which are hereby waived by
Borrower and all other parties obligated in any manner whatsoever on the
Indebtedness, declare the entire unpaid balance of the Indebtedness
immediately due
Page 20
and payable, and upon such declaration, the entire unpaid balance of the
Indebtedness shall be immediately due and payable. The failure to
exercise any remedy available to the Lender shall not be deemed to be a
waiver of any rights or remedies of the Lender under the Loan Documents,
at law or in equity.
(d) FORECLOSURE - POWER OF SALE. Lender may request Trustee
to proceed with foreclosure under the power of sale which is hereby
conferred, such foreclosure to be accomplished in accordance with the
following provisions:
(i) PUBLIC SALE. Trustee is hereby authorized and
empowered, and it shall be Trustee's special duty, upon such
request of Lender, to sell the Mortgaged Property, or any part
thereof, at public auction to the highest bidder for cash, with
or without having taken possession of same. Any such sale
(including notice thereof) shall comply with the applicable
requirements, at the time of the sale, of Section 51.002 of the
Texas Property Code, as amended, or, if and to the extent such
statute is not then in force, with the applicable requirements,
at the time of the sale, of the successor statute or statutes,
if any, governing sales of Texas real property under powers of
sale conferred by deeds of trust. If there is no statute in
force at the time of the sale governing sales of Texas real
property under powers of sale conferred by deeds of trust, such
sale shall comply with applicable law at the time of the sale.
(ii) RIGHT TO REQUIRE PROOF OF FINANCIAL ABILITY
AND/OR CASH BID. At any time during the bidding, the Trustee may
require a bidding party (1) to disclose its full name, state and
city of residence, occupation, and specific business office
location, and the name and address of the principal the bidding
party is representing (if applicable), and (2) to demonstrate
reasonable evidence of the bidding party's financial ability
(or, if applicable, the financial ability of the principal of
such bidding party), as a condition to the bidding party
submitting bids at the foreclosure sale. If any such bidding
party (the "QUESTIONED ----------- BIDDER") declines to comply
with the Trustee's requirement in this regard, or if such ------
Questioned Bidder does respond but the Trustee, in Trustee's
sole and absolute discretion, deems the information or the
evidence of the financial ability of the Questioned Bidder (or,
if applicable, the principal of such bidding party) to be
inadequate, then the Trustee may continue the bidding with
reservation; and in such event (A) the Trustee shall be
authorized to caution the Questioned Bidder concerning the legal
obligations to be incurred in submitting bids, and (B) if the
Questioned Bidder is not the highest bidder at the sale, or if
having been the highest bidder the Questioned Bidder fails to
deliver the cash purchase price payment promptly to the Trustee,
all bids by the Questioned Bidder shall be null and void. The
Trustee may, in Trustee's sole and absolute discretion,
determine that a credit bid may be in the best interest of the
Borrower and Lender, and elect to sell the Mortgaged Property
for credit or for a combination of cash and credit; provided,
however, that the Trustee shall have no obligation to accept any
bid except an all cash bid. In the event the Trustee requires a
cash bid and cash is not delivered within a reasonable time
after conclusion of the bidding process, as specified by the
Trustee, but in no event later than 3:45 p.m. local time on the
day
Page 21
of sale, then said contingent sale shall be null and void, the
bidding process may be recommenced, and any subsequent bids or
sale shall be made as if no prior bids were made or accepted.
(iii) SALE SUBJECT TO UNMATURED INDEBTEDNESS. In
addition to the rights and powers of sale granted under the
preceding provisions of this subsection, if default is made in
the payment of any installment of the Indebtedness, Lender may,
at Lender's option, at once or at any time thereafter while any
matured installment remains unpaid, without declaring the entire
Indebtedness to be due and payable, orally or in writing direct
Trustee to enforce this trust and to sell the Mortgaged Property
subject to such unmatured Indebtedness and to the rights,
powers, liens, security interests, and assignments securing or
providing recourse for payment of such unmatured Indebtedness,
in the same manner, all as provided in the preceding provisions
of this subsection. Sales made without maturing the Indebtedness
may be made hereunder whenever there is a default in the payment
of any installment of the Indebtedness, without exhausting the
power of sale granted hereby, and without affecting in any way
the power of sale granted under this subsection, the unmatured
balance of the Indebtedness or the rights, powers, liens,
security interests, and assignments securing or providing
recourse for payment of the Indebtedness.
(iv) PARTIAL FORECLOSURE. Sale of a part of the
Mortgaged Property shall not exhaust the power of sale, but
sales may be made from time to time until the Indebtedness is
paid and the Obligations are performed and discharged in full.
It is intended by each of the foregoing provisions of this
subsection that Trustee may, after any request or direction by
Lender, sell not only the Land and the Improvements, but also
the Fixtures and Personalty and other interests constituting a
part of the Mortgaged Property or any part thereof, along with
the Land and the Improvements or any part thereof, as a unit and
as a part of a single sale, or may sell at any time or from time
to time any part or parts of the Mortgaged Property separately
from the remainder of the Mortgaged Property. It shall not be
necessary to have present or to exhibit at any sale any of the
Mortgaged Property.
(v) TRUSTEE'S DEEDS. After any sale under this
subsection, Trustee shall make good and sufficient deeds,
assignments, and other conveyances to the purchaser or
purchasers thereunder in the name of Borrower, conveying the
Mortgaged Property or any part thereof so sold to the purchaser
or purchasers with general warranty of title by Borrower. It is
agreed that in any deeds, assignments or other conveyances given
by Trustee, any and all statements of fact or other recitals
therein made as to the identity of Lender, the occurrence or
existence of any Event of Default, the notice of intention to
accelerate, or acceleration of, the maturity of the
Indebtedness, the request to sell, notice of sale, time, place,
terms and manner of sale, and receipt, distribution, and
application of the money realized therefrom, the due and proper
appointment of a substitute trustee, and without being limited
by the foregoing, any other act or thing having been duly done
by or on behalf of Lender or by or on behalf of Trustee, shall
be
Page 22
taken by all courts of law and equity as PRIMA FACIE evidence
that such statements or recitals state true, correct, and
complete facts and are without further question to be so
accepted, and Borrower does hereby ratify and confirm any and
all acts that Trustee may lawfully do in the premises by virtue
hereof.
(e) 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 Indebtedness and the performance
and discharge of the Obligations in accordance with the terms hereof, of
the Note, and the other Loan Documents, to foreclose the liens and
security interests of this Lien Instrument as against all or any part of
the Mortgaged Property, and to have all or any part of the Mortgaged
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 the Lender with respect to the 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 the Lender.
(f) LENDER'S RIGHT TO APPOINTMENT OF RECEIVER. Lender, as a
matter of right and without regard to the sufficiency of the security
for repayment of the Indebtedness and performance and discharge of the
Obligations, without notice to Borrower and without any showing of
insolvency, fraud, or mismanagement on the part of Borrower, and without
the necessity of filing any judicial or other proceeding other than the
proceeding for appointment of a receiver, shall be entitled to the
appointment of a receiver or receivers of the Mortgaged Property or any
part thereof, and of the Rents, and 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.
(g) LENDER'S UNIFORM COMMERCIAL CODE REMEDIES. Lender may
exercise its rights of enforcement with respect to Fixtures and
Personalty under the Code, and in conjunction with, in addition to or in
substitution for the rights and remedies under the Code:
(i) Lender may without demand or notice to Borrower,
enter upon the Mortgaged Property to take possession of,
assemble, receive, and collect the Personalty, or any part
thereof, or to render it unusable;
(ii) Lender may require Borrower to assemble the
Personalty and make it available at a place the Lender
designates which is mutually convenient to allow the Lender to
take possession or dispose of the Personalty;
(iii) written notice mailed to Borrower as provided
herein at least ten (10) days prior to the date of public sale
of the Personalty or prior to the date after which private sale
of the Personalty will be made shall constitute reasonable
notice;
Page 23
(iv) any sale made pursuant to the provisions of this
subsection shall be deemed to have been a public sale conducted
in a commercially reasonable manner if held contemporaneously
with the sale of the other Mortgaged Property under the power of
sale as provided herein, upon giving the same notice with
respect to the sale of the Personalty hereunder as is required
for such sale of the other Mortgaged Property under power of
sale, and such sale shall be deemed to be pursuant to a security
agreement covering both real and personal property under 9.604
of the Code;
(v) in the event of a foreclosure sale, whether made
by the Trustee under the terms hereof, or under judgment of a
court, the Personalty and the other Mortgaged Property may, at
the option of the Lender, be sold as a whole;
(vi) it shall not be necessary that the Lender take
possession of the Personalty, or any part thereof, prior to the
time that any sale pursuant to the provisions of this subsection
is conducted, and it shall not be necessary that the Personalty
or any part thereof be present at the location of such sale;
(vii) prior to application of proceeds of disposition
of the Personalty to the Indebtedness, such proceeds shall be
applied to the reasonable expenses of retaking, holding,
preparing for sale or lease, selling, leasing and the like, and
the reasonable attorneys' fees and legal expenses incurred by
the Lender;
(viii) after notification, if any, hereafter provided
in this subsection, Lender may sell, lease, or otherwise dispose
of the Personalty, or any part thereof, in one or more parcels
at public or private sale or sales, at Lender's offices or
elsewhere, for cash, on credit, or for future delivery. Upon the
request of Lender, Borrower shall assemble the Personalty and
make it available to Lender at any place designated by Lender
that is reasonably convenient to Borrower and Lender. Borrower
agrees that Lender shall not be obligated to give more than ten
(10) days' written notice of the time and place of any public
sale or of the time after which any private sale may take place
and that such notice shall constitute reasonable notice of such
matters. Borrower shall be liable for all expenses of retaking,
holding, preparing for sale, or the like, and all attorneys'
fees, legal expenses, and all other costs and expenses incurred
by Lender in connection with the collection of the Indebtedness
and the enforcement of Lender's rights under the Loan Documents.
Lender shall apply the proceeds of the sale of the Personalty
against the Indebtedness in accordance with the provisions of
SECTION 7.4 of this Lien Instrument. Borrower shall remain
liable for any deficiency if the proceeds of any sale or
disposition of the Personalty are insufficient to pay the
Indebtedness in full. Borrower waives all rights of marshalling
in respect of the Personalty;
(ix) any and all statements of fact or other recitals
made in any xxxx of sale or assignment or other instrument
evidencing any foreclosure sale hereunder, the nonpayment of the
Indebtedness, the occurrence of any Event of Default, the Lender
having declared all or a portion of such Indebtedness to be due
and
Page 24
payable, the notice of time, place, and terms of sale and of the
properties to be sold having been duly given, or any other act
or thing having been duly done by the Lender, shall be taken as
PRIMA FACIE evidence of the truth of the facts so stated and
recited; and
(x) the Lender may appoint or delegate any one or
more persons as agent to perform any act or acts necessary or
incident to any sale held by the Lender, including the sending
of notices and the conduct of the sale, but in the name and on
behalf of the Lender.
(h) RIGHTS RELATING TO LEASES AND RENTS. Borrower has,
pursuant to ARTICLE IX of this Lien Instrument, assigned, as collateral,
to Lender all Rents under each of the Leases covering all or any portion
of the Mortgaged Property. Lender, or Trustee on Lender's behalf, may at
any time, and without notice, either in person, by agent, or by receiver
to be appointed by a court, enter and take possession of the Mortgaged
Property or any part thereof, and in its own name, xxx for or otherwise
collect the Rents. Borrower hereby agrees that Lender may, upon notice
from Trustee or Lender to Borrower of the occurrence of an Event of
Default, terminate the limited license granted to Borrower in SECTION
9.2 hereof, and thereafter direct the lessees under the Leases to pay
direct to Lender the Rents due and to become due under the Leases and
attorn in respect of all other obligations thereunder direct to Lender,
or Trustee on Lender's behalf, without any obligation on their part to
determine whether an Event of Default does in fact exist or has in fact
occurred. All Rents collected by Lender, or Trustee acting on Lender's
behalf, shall be applied as provided for in SECTION 7.4 of this Lien
Instrument; provided, however, that if the costs, expenses, and
attorneys' fees shall exceed the amount of Rents collected, the excess
shall be added to the Indebtedness, shall bear interest at the Default
Rate, and shall be immediately due and payable. The entering upon and
taking possession of the Mortgaged Property, the collection of Rents,
and the application thereof as aforesaid shall not cure or waive any
Event of Default or notice of default, if any, hereunder nor invalidate
any act done pursuant to such notice, except to the extent any such
default is fully cured. In addition, from time to time, Lender may
elect, and notice hereby is given to each lessee under any Lease, to
subordinate the lien of this Lien Instrument to any Lease by
unilaterally executing and recording an instrument of subordination, and
upon such election the lien of this Lien Instrument shall be subordinate
to the Lease identified in such instrument of subordination; provided,
however, in each instance such subordination will not affect or be
applicable to, and expressly excludes any lien, charge, encumbrance,
security interest, claim, easement, restriction, option, covenant and
other rights, titles, interests or estates of any nature whatsoever with
respect to all or any portion of the Mortgaged Property to the extent
that the same may have arisen or intervened during the period between
the recordation of this Lien Instrument and the execution of the Lease
identified in such instrument of subordination.
(i) OTHER RIGHTS. Lender (i) may surrender the insurance
policies maintained pursuant to any of the Loan Documents or any part
thereof, and upon receipt shall apply the unearned premiums as a credit
on the Indebtedness, in accordance with the provisions of SECTION 7.4
hereof, and, in connection therewith, Borrower hereby appoints Lender as
Page 25
agent and attorney-in-fact (which is coupled with an interest and is
therefore irrevocable) for Borrower to collect such premiums; and (ii)
apply the reserve for Impositions and insurance premiums, if any,
required by the provisions of this Lien Instrument, toward payment of
the Indebtedness; 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 Loan Document or under the Code, or otherwise.
(j) LENDER AS PURCHASER. Lender may be the purchaser of the
Mortgaged Property or any part thereof, at any sale thereof, whether
such sale be under the power of sale herein vested in Trustee or upon
any other foreclosure of the liens and security interests hereof, or
otherwise, and Lender shall, upon any such purchase, acquire good title
to the Mortgaged Property so purchased, free of the liens and security
interests hereof, unless the sale was made subject to an unmatured
portion of the Indebtedness. The Lender, as purchaser, shall be treated
in the same manner as any third party purchaser and the proceeds of the
Lender's purchase shall be applied in accordance with SECTION 7.4 of
this Lien Instrument.
7.2 OTHER RIGHTS OF LENDER. Should any part of the Mortgaged
Property come into the possession of Lender, whether before or after default,
Lender may (for itself or by or through other persons, firms, or entities) hold,
lease, manage, use, or operate the Mortgaged Property for such time and upon
such terms as Lender may deem prudent under the circumstances (making such
repairs, alterations, additions, and improvements thereto and taking such other
action as Lender may from time to time deem necessary or desirable) for the
purpose of preserving the Mortgaged Property or its value, pursuant to the order
of a court of appropriate jurisdiction or in accordance with any other rights
held by Lender in respect of the Mortgaged Property. Borrower covenants to
promptly reimburse and pay to Lender on demand, at the place where the Note is
payable, the amount of all reasonable expenses (including without limitation the
cost of any insurance, Impositions, or other charges) incurred by Lender in
connection with Lender's custody, preservation, use, or operation of the
Mortgaged Property, together with interest thereon from the date incurred by
Lender at the Default Rate; and all such expenses, costs, taxes, interest, and
other charges shall be and become a part of the Indebtedness. It is agreed,
however, that the risk of loss or damage to the Mortgaged Property is on
Borrower, and Lender shall have no liability whatsoever for decline in value of
the Mortgaged Property, for failure to obtain or maintain insurance, or for
failure to determine whether insurance in force is adequate as to amount or as
to the risks insured. Possession by the Lender shall not be deemed an election
of judicial relief, if any such possession is requested or obtained, with
respect to any Mortgaged Property or collateral not in Lender's possession.
7.3 POSSESSION AFTER FORECLOSURE. If the liens or security interests
hereof shall be foreclosed by power of sale granted herein, by judicial action,
or otherwise, the purchaser at any such sale shall receive, as an incident to
purchaser's ownership, immediate possession of the property purchased, and if
Borrower or Borrower's successors shall hold possession of said property or any
part thereof subsequent to foreclosure, Borrower and Borrower's successors shall
be considered as tenants at sufferance of the purchaser at foreclosure sale
(without limitation of other rights or remedies, at a reasonable rental per day,
due and payable daily, based upon the value of the portion of the Mortgaged
Property so occupied and sold to such purchaser), and anyone occupying such
portion of the Mortgaged Property, after demand is made for possession
Page 26
thereof, shall be guilty of forcible detainer and shall be subject to eviction
and removal, forcible or otherwise, with or without process of law, and all
damages by reason thereof are hereby expressly waived.
7.4 APPLICATION OF PROCEEDS. The proceeds from any sale, lease, or
other disposition made pursuant to this ARTICLE VII, or the proceeds from the
surrender of any insurance policies pursuant hereto, or any Rents collected by
Lender from the Mortgaged Property, or the reserve for Impositions and insurance
premiums, if any, required by the provisions of this Lien Instrument or sums
received pursuant to SECTION 8.1 hereof, or proceeds from insurance which Lender
elects to apply to the Indebtedness pursuant to SECTION 8.2 hereof, shall be
applied by Trustee, or by Lender, as the case may be, to the Indebtedness in the
following order and priority: (i) to the payment of all expenses of advertising,
selling, and conveying the Mortgaged Property or part thereof, and/or
prosecuting or otherwise collecting Rents, proceeds, premiums, or other sums
including reasonable attorneys' fees and a reasonable fee or commission to
Trustee, not to exceed five percent of the proceeds thereof or sums so received;
(ii) to the remainder of the Indebtedness as follows: first, to the remaining
accrued but unpaid interest, second, to the matured portion of principal of the
Indebtedness, and third, to prepayment of the unmatured portion, if any, of
principal of the Indebtedness applied to installments of principal in inverse
order of maturity; and (iii) the balance, if any, and to the extent applicable,
remaining after the full and final payment of the Indebtedness and full
performance and discharge of the Obligations to the holder or Lender of any
inferior liens covering the Mortgaged Property, if any, in order of the priority
of such inferior liens (Trustee and Lender shall hereby be entitled to rely
exclusively upon a commitment for title insurance issued to determine such
priority); and (iv) 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 Indebtedness like any other payment. The balance
of the Indebtedness remaining unpaid, if any, shall remain fully due and owing
in accordance with the terms of the Note or the other Loan Documents.
7.5 ABANDONMENT OF SALE. In the event a foreclosure hereunder is
commenced by Trustee in accordance with SUBSECTION 7.1(D) hereof, at any time
before the sale, Trustee may abandon the sale, and Lender may then institute
suit for the collection of the Indebtedness and for the foreclosure of the liens
and security interests hereof and of the Loan Documents. If Lender should
institute a suit for the collection of the Indebtedness and for a foreclosure of
the liens and security interests, Lender may, at any time before the entry of a
final judgment in said suit, dismiss the same and require Trustee to sell the
Mortgaged Property or any part thereof in accordance with the provisions of this
Lien Instrument.
7.6 PAYMENT OF FEES. If the Note or any other part of the
Indebtedness shall be collected or if any of the Obligations shall be enforced
by legal proceedings, whether through a probate or bankruptcy court or
otherwise, or shall be placed in the hands of an attorney for collection after
maturity, whether matured by the expiration of time or by an option given to the
Lender to mature same, or if Lender becomes a party to any suit where this Lien
Instrument or the Mortgaged Property or any part thereof is involved, Borrower
agrees to pay Lender's attorneys' fees and expenses incurred, and such fees
shall be and become a part of the Indebtedness and shall bear interest from the
date such costs are incurred at the Default Rate.
7.7 MISCELLANEOUS.
Page 27
(a) In case Lender shall have proceeded to invoke any right,
remedy, or recourse permitted under the Loan Documents and shall
thereafter elect to discontinue or abandon same for any reason, Lender
shall have the unqualified right to do so and, in such event, Borrower
and Lender shall be restored to their former positions with respect to
the Indebtedness, the Loan Documents, the Mortgaged Property or
otherwise, and the rights, remedies, recourses and powers of Lender
shall continue as if same had never been invoked.
(b) In addition to the remedies set forth in this ARTICLE
VII, upon the occurrence of an Event of Default, the Lender and Trustee
shall, in addition, have all other remedies available to them at law or
in equity.
(c) All rights, remedies, and recourses of Lender granted in
any of the 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 Mortgaged 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 Mortgaged Property
prior to Lender bringing suit to recover the Indebtedness or suit on the
Obligations; and (vi) in the event Lender elects to bring suit on the
Indebtedness and/or the Obligations and obtains a judgment against
Borrower prior to exercising any remedies in relation to Mortgaged
Property, all liens and security interests, including the lien of this
Lien Instrument, shall remain in full force and effect and may be
exercised at Lender's option.
(d) Lender may release, regardless of consideration, any
part of the Mortgaged Property without, as to the remainder, in any way
impairing, affecting, subordinating, or releasing the lien or security
interests evidenced by this Lien Instrument or the other Loan Documents
or affecting the obligations of Borrower, or any other party, to pay the
Indebtedness or perform and discharge the Obligations. For payment of
the Indebtedness, Lender may resort to any of the collateral therefor in
such order and manner as Lender may elect. No collateral heretofore,
herewith, or hereafter taken by Lender shall in any manner impair or
affect the collateral given pursuant to the Loan Documents, and all
collateral shall be taken, considered, and held as cumulative.
(e) To the extent permitted by law, Borrower hereby
irrevocably and unconditionally waives and releases: (i) all benefits
that might accrue to Borrower by virtue of any present or future law
exempting the Mortgaged Property from attachment, levy or sale on
execution or providing for any appraisement, valuation, stay of
execution, exemption from civil process, redemption, or extension of
time for payment; (ii) all notices of any Event of Default or of
Trustee's exercise of any right, remedy, or recourse provided for under
the Loan Documents; and (iii) any right to a marshaling of assets or a
sale in inverse order of alienation.
Page 28
(f) Borrower and Lender mutually agree that there are no,
nor shall there be any, implied covenants of good faith and fair dealing
or other similar covenants or agreements in the Loan Documents. All
agreed contractual duties are set forth in the Loan Documents.
(g) Subject to the provisions of SECTION 7.1(G) hereof, the
remedies in this ARTICLE VII are available under and governed by the
real property laws of Texas and are not governed by the personal
property laws of Texas, including but not limited to, the power to
dispose of personal property in a commercially reasonable manner under
Section 9.610 of the Code.
(h) If Borrower defaults under the Ground Lease and Lender
cures the default for purposes of the Ground Lease, Lender's action in
and of itself will not cure the corresponding Event of Default under the
Loan Documents.
(i) If Borrower or any other entity exercises any right of
redemption after foreclosure, the amount payable to effect the
redemption will include all rents paid and other sums advanced by Lender
to satisfy obligations of Borrower as lessee under the Ground Lease.
7.8 WAIVER OF DEFICIENCY STATUTE.
In the event an interest in any of the Mortgaged Property is foreclosed
upon pursuant to a judicial or nonjudicial foreclosure sale, Borrower hereby
makes the agreements as set forth in this SECTION 7.8. The following shall be
the basis for the finder of fact's determination of the fair market value of the
Mortgaged Property as of the date of the foreclosure sale in proceedings
governed by Sections 51.003, 51.004 and 51.005 of the Texas Property Code (as
amended from time to time): (i) the Mortgaged Property shall be valued in an "as
is" condition as of the date of the foreclosure sale, without any assumption or
expectation that the Mortgaged Property will be repaired or improved in any
manner before a resale of the Mortgaged Property after foreclosure; (ii) the
valuation shall be based upon an assumption that the foreclosure purchaser
desires a resale of the Mortgaged Property for cash promptly (but no later than
twelve (12) months) following the foreclosure sale; (iii) all reasonable closing
costs customarily borne by the seller in commercial real estate transactions
should be deducted from the gross fair market value of the Mortgaged Property,
including, without limitation, brokerage commissions, title insurance, a survey
of the Mortgaged Property, tax prorations, attorneys' fees, and marketing costs;
(iv) the gross fair market value of the Mortgaged Property shall be further
discounted to account for any estimated holding costs associated with
maintaining the Mortgaged Property pending sale, including, without limitation,
utilities expenses, property management fees, taxes and assessments (to the
extent not accounted for in CLAUSE (III) above), and other maintenance,
operational and ownership expenses; and (v) any expert opinion testimony given
or considered in connection with a determination of the fair market value of the
Mortgaged Property must be given by persons having at least five (5) years
experience in appraising property similar to the Mortgaged Property and who have
conducted and prepared a complete written appraisal of the Mortgaged Property
taking into consideration the factors set forth above.
Page 29
ARTICLE VIII
SPECIAL PROVISIONS
8.1 CONDEMNATION PROCEEDS.
(a) Lender shall be entitled to receive any and all sums
which may be awarded and become payable to Borrower for condemnation of
the Mortgaged Property or any part thereof, for public or quasi-public
use, or by virtue of private sale in lieu thereof, and any sums which
may be awarded or become payable to Borrower for damages caused by
public works or construction on or near the Mortgaged Property. All such
sums are hereby assigned to Lender, and Borrower shall, upon request of
Lender, make, execute, acknowledge, and deliver any and all additional
assignments and documents as may be necessary from time to time to
enable Lender to collect and receipt for any such sums. Lender shall not
be, under any circumstances, liable or responsible for failure to
collect, or exercise diligence in the collection of, any of such sums.
(b) Borrower will give Lender prompt notice of any
instituted or threatened condemnation proceeding affecting a part of the
Mortgaged Property and if there shall occur any condemnation of a part
of the Mortgaged Property, and if (i) in the judgment of Lender the
Mortgaged Property can be restored, within a reasonable time and in any
event prior to the Maturity Date (as defined in the Note), to an
economic unit not less valuable than the same was prior to such
condemnation and adequately securing the Indebtedness, and (ii) Lender
receives assurances satisfactory to Lender that tenancies or other
sources of revenue from the Mortgaged Property will continue in full
force and effect after restoration subject only to rent abatement during
the period when any leased premises are untenantable, then, if and so
long as there is no default hereunder, Lender will make available to
Borrower for such restoration, proceeds of condemnation, if any,
collected by Lender because of the act or occurrence and not restricted
by any adverse claim thereto.
8.2 INSURANCE PROCEEDS. The proceeds of any and all insurance upon
the Mortgaged Property (other than proceeds of general public liability
insurance) shall be collected by Lender, and Lender shall apply any proceeds so
collected in accordance with the terms and conditions set forth below. Borrower
will give Lender prompt notice of any damage to or destruction of the Mortgaged
Property, and:
(a) In case of loss covered by policies of insurance, Lender
(or, after foreclosure, the purchaser at the foreclosure sale) is hereby
authorized, at Lender's option, either (1) to settle and adjust any
claim under such policies 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 $50,000 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 receipt for any such
insurance proceeds; and the expenses incurred by Lender in the
adjustment and collection of insurance proceeds shall be so much
additional indebtedness hereby secured and shall be reimbursed to Lender
upon demand.
Page 30
(b) In the event of any insured damage to or destruction of
the Mortgaged Property or any part thereof (herein called an "INSURED
CASUALTY") which is a Restoration Casualty (hereinafter defined), then,
the proceeds of insurance shall be applied to the cost of restoring,
repairing, replacing or rebuilding the Mortgaged Property or part
thereof subject to such Restoration Casualty, as provided for below; and
Borrower hereby covenants and agrees to commence and diligently
prosecute such restoring, repairing, replacing or rebuilding; provided
always, that Borrower shall pay all costs (and if required by Lender,
Borrower shall deposit the total thereof with Lender in advance) of such
restoring, repairing, replacing or rebuilding in excess of the net
proceeds of insurance made available pursuant to the terms hereof. As
used herein, the term "RESTORATION CASUALTY" shall mean an Insured
Casualty which (i) has a likely cost of full restoration of the
Improvement as determined by Lender not exceeding $100,000.00, (ii)
relates to damage to the Improvements that is less than twenty-five
percent (25%) of the net rentable square feet of the Mortgaged Property,
(iii) occurs when no Event of Default has occurred and is then
continuing, and (iv) in the reasonable judgment of Lender, the Mortgaged
Property can be restored prior to the Maturity Date to an economic unit
no less valuable than the same was prior to the Insured Casualty and
adequately securing the outstanding balance of the Loan.
(c) Except as provided above, the proceeds of insurance
consequent upon any Insured Casualty shall be applied to the payment of
the Indebtedness hereby secured.
(d) In the event that proceeds of insurance, if any, shall
be made available to Borrower for the restoring, repairing, replacing or
rebuilding of the Mortgaged 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 approved in advance by Lender.
In the event 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 of the estimated cost of completion of the restoration, repair,
replacement and rebuilding, (2) funds, or, at Lender's option,
assurances satisfactory to Lender that such funds are available,
sufficient in addition to the proceeds of insurance to complete the
proposed restoration, repair, replacement and rebuilding, and (3) 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 for such restoration, repair, replacement and rebuilding
be submitted to and approved by Lender prior to commencement of work. 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; funds other than proceeds
of insurance shall be disbursed prior to disbursement of such proceeds;
and 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
Page 31
cost of completion of the restoration, repair, replacement or
rebuilding, free and clear of all liens or claims for lien. Any surplus
which may remain out of insurance proceeds held by Lender after payment
of such costs of restoration, repair, replacement or rebuilding shall be
paid to any party entitled thereto.
8.3 INDEMNITY. BORROWER SHALL INDEMNIFY, DEFEND, AND HOLD HARMLESS
LENDER FROM AND AGAINST ANY AND ALL LIABILITY, DAMAGE, LOSS, COST, OR EXPENSE
(INCLUDING, WITHOUT LIMITATION, ATTORNEYS' FEES AND EXPENSES), ACTION,
PROCEEDING, CLAIM OR DISPUTE INCURRED OR SUFFERED BY LENDER, WHETHER VOLUNTARILY
OR INVOLUNTARILY INCURRED OR SUFFERED, IN RESPECT OF THE FOLLOWING:
(a) ANY LITIGATION CONCERNING THIS LIEN INSTRUMENT, THE
OTHER LOAN DOCUMENTS OR THE MORTGAGED PROPERTY, OR ANY INTEREST OF
BORROWER OR LENDER THEREIN, OR THE RIGHT OF OCCUPANCY THEREOF BY
BORROWER OR LENDER, WHETHER OR NOT ANY SUCH LITIGATION IS PROSECUTED TO
A FINAL, NON-APPEALABLE JUDGMENT;
(b) ANY DISPUTE, INCLUDING DISPUTES AS TO THE DISBURSEMENT
OF PROCEEDS OF THE NOTE NOT YET DISBURSED, AMONG OR BETWEEN ANY OF THE
CONSTITUENT PARTIES OR OTHER PARTNERS OR VENTURERS OF BORROWER IF
BORROWER IS A GENERAL OR LIMITED PARTNERSHIP, OR AMONG OR BETWEEN ANY
EMPLOYEES, OFFICERS, DIRECTORS OR SHAREHOLDERS OF BORROWER IF BORROWER
IS A CORPORATION, OR AMONG OR BETWEEN ANY MEMBERS, TRUSTEES OR OTHER
RESPONSIBLE PARTIES IF BORROWER IS AN ASSOCIATION, TRUST OR OTHER
ENTITY;
(c) EXCEPT FOR THOSE ACTIONS THAT ARE CAUSED BY THE WILLFUL
MISCONDUCT OR GROSS NEGLIGENCE OF THE LENDER OR TRUSTEE, ANY ACTION
TAKEN OR NOT TAKEN BY LENDER OR TRUSTEE WHICH IS ALLOWED OR PERMITTED
UNDER THIS LIEN INSTRUMENT OR ANY OF THE OTHER LOAN DOCUMENTS RELATING
TO BORROWER, THE MORTGAGED PROPERTY, ANY CONSTITUENT PARTIES OR
OTHERWISE IN CONNECTION WITH THE LOAN DOCUMENTS, INCLUDING WITHOUT
LIMITATION, THE PROTECTION OR ENFORCEMENT OF ANY LIEN, SECURITY INTEREST
OR OTHER RIGHT, REMEDY OR RECOURSE CREATED OR AFFORDED BY THIS LIEN
INSTRUMENT OR THE OTHER LOAN DOCUMENTS; AND
(d) ANY ACTION BROUGHT BY LENDER OR TRUSTEE AGAINST BORROWER
UNDER THIS LIEN INSTRUMENT OR THE OTHER LOAN DOCUMENTS, WHETHER OR NOT
SUCH ACTION IS PROSECUTED TO A FINAL, NON-APPEALABLE JUDGMENT.
Page 32
LENDER AND/OR TRUSTEE MAY EMPLOY AN ATTORNEY OR ATTORNEYS TO PROTECT OR ENFORCE
ITS RIGHTS, REMEDIES AND RECOURSES UNDER THIS LIEN INSTRUMENT AND THE OTHER LOAN
DOCUMENTS, AND TO ADVISE AND DEFEND LENDER AND/OR TRUSTEE WITH RESPECT TO ANY
SUCH ACTIONS AND OTHER MATTERS. BORROWER SHALL REIMBURSE LENDER AND/OR TRUSTEE
FOR THEIR RESPECTIVE ATTORNEYS' FEES AND EXPENSES (INCLUDING EXPENSES AND COSTS
FOR EXPERTS) IMMEDIATELY UPON RECEIPT OF A WRITTEN DEMAND THEREFOR, WHETHER ON A
MONTHLY OR OTHER TIME INTERVAL, AND WHETHER OR NOT AN ACTION IS ACTUALLY
COMMENCED OR CONCLUDED. ALL OTHER REIMBURSEMENT AND INDEMNITY OBLIGATIONS
HEREUNDER SHALL BECOME DUE AND PAYABLE WHEN ACTUALLY INCURRED BY LENDER AND/OR
TRUSTEE. ANY PAYMENTS NOT MADE WITHIN FIVE (5) DAYS AFTER WRITTEN DEMAND
THEREFOR SHALL BEAR INTEREST AT THE DEFAULT RATE FROM THE DATE OF SUCH DEMAND
UNTIL FULLY PAID. THE PROVISIONS OF THIS SECTION 8.3 SHALL SURVIVE REPAYMENT OF
THE INDEBTEDNESS AND PERFORMANCE OF THE OBLIGATIONS, THE RELEASE OF THE LIEN OF
THIS LIEN INSTRUMENT, ANY FORECLOSURE (OR ACTION IN LIEU OF FORECLOSURE) AND THE
EXERCISE BY LENDER OF ANY AND ALL REMEDIES SET FORTH HEREIN OR IN THE LOAN
DOCUMENTS.
8.4 SUBROGATION. Borrower waives any and all right to claim,
recover, or subrogation against Lender or its officers, directors, employees,
agents, attorneys, or representatives for loss or damage to Borrower, the
Mortgaged 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 the Loan Documents.
8.5 SETOFF. Lender shall be entitled to exercise both the rights of
setoff and banker's lien, if applicable, against the interest of Borrower in and
to each and every account and other property of Borrower which are in the
possession of Lender to the full extent of the outstanding balance of the
Indebtedness.
8.6 GROUND LEASE COVENANTS. With respect to the Ground Lease:
(a) Borrower will pay or cause to be paid all rent and other
charges required under the Ground Lease as and when the same are due
other than payments that are being disputed in good faith and provided
that no such payment shall be more than thirty (30) days past due and
Borrower will keep, observe and perform, or cause to be kept, observed
and performed in all material respects, all of the other terms,
covenants, provisions and agreements of the Ground Lease on the part of
the lessee thereunder to be kept, observed and performed, and will not
in any manner cancel, terminate or surrender, or permit any
cancellation, termination or surrender of the Ground Lease, in whole or
in part, or, without the written consent of Lender, either orally or in
writing, modify, amend or permit any modification or amendment of any of
the terms thereof in any respect, and any attempt on the part of
Borrower to exercise any such right without such written consent of
Lender shall be null and void and of no effect.
Page 33
(b) Borrower will do, or cause to be done, all things
necessary to preserve and keep unimpaired the rights of Borrower as
lessee under the Ground Lease, and to prevent any default under the
Ground Lease, or any termination, surrender, cancellation, forfeiture or
impairment thereof, and in the event of the failure of Borrower to make
any payment required to be made by Borrower pursuant to the provisions
of the Ground Lease or to keep, observe or perform, or cause to be kept,
observed or performed, any of the terms, covenants, provisions or
agreements of the Ground Lease, Borrower agrees that Lender may (but
shall not be obligated to), after notice to Borrower (provided, however,
that no such notice shall be required to be given after the occurrence
of an Event of Default hereunder or under any of the other Loan
Documents) take any action on behalf of Borrower, to make or cause to be
kept, observed or performed any such terms, covenants, provisions or
agreements and to enter upon the Property and take all such action
thereof as may be necessary therefor, to the end that the rights of
Borrower in and to the leasehold estate created by the Ground Lease
shall be kept unimpaired and free from default, and all money so
expended by Lender, with interest thereon at the Default Rate from the
date of each such expenditure, shall be paid by Borrower to Lender
promptly upon demand by Lender and shall be added to the Indebtedness
and secured by the Lien Instrument and Lender shall have, in addition to
any other remedy of Lender, the same rights and remedies in the event of
non-payment of any such sum by Borrower as in the case of a default by
Borrower in the payment of any sums due under the Note.
(c) If any action or proceeding shall be instituted to evict
Borrower or to recover possession of the Property or for any other
purpose affecting the Ground Lease or this Lien Instrument, Borrower
will, immediately upon service thereof on or to Borrower, deliver to
Lender a true copy of each petition, summons, complaint, notice of
motion, order to show cause and of all other provisions, pleadings, and
papers, however designated, served in any such action or proceeding.
(d) Borrower covenants and agrees that unless Lender shall
otherwise expressly consent in writing, the fee title to the property
demised by the Ground Lease and the leasehold estate shall not merge but
shall always remain separate and distinct, notwithstanding the union of
said estates either in the lessor, Borrower, or a third party by
purchase or otherwise; and in case Borrower acquires the fee title or
any other estate, title or interest in the Property, this Lien
Instrument shall attach to and cover and be a lien upon the fee title or
such other estate so acquired, and such fee title or other estate shall,
without further assignment, Lien Instrument or conveyance, become and be
subject to the lien of and covered by this Lien Instrument.
(e) Upon the occurrence of an Event of Default, Borrower
shall not make any election or give any consent or approval (other than
the exercise of a renewal, extension, option or right pursuant to this
Section) for which a right to do so is conferred upon Borrower as lessee
under the Ground Lease without Lender's prior written consent. In case
of any Event of Default under this Lien Instrument, all such rights,
together with the right of termination, cancellation, modification,
change, supplement, alteration or amendment of the Ground Lease, all of
which have been assigned for collateral purpose to Lender, shall vest in
and be exercisable solely by Lender.
Page 34
(f) Borrower may exercise any option or right to renew or
extend the term of the Ground Lease or exercise the fee option contained
therein without the prior written consent of Lender. Borrower shall give
Lender simultaneous written notice of the exercise of such option or
right to renew or extend, together with a copy of the instrument given
to the lessor under the Ground Lease exercising such option or right,
and, thereafter, shall promptly deliver to Lender a copy of any
acknowledgment by the lessor under the Ground Lease with respect to the
exercise of such option or right.
(g) The lien of this Lien Instrument shall attach to all of
Borrower's rights and remedies at any time arising under or pursuant to
Subsection 365(h) of the Bankruptcy Code, 11 U.S.C. Sec. 365(h),
including, without limitation, all of Borrower's rights to remain in
possession of the Property. Borrower shall not, without Lender's prior
written consent, elect to treat the Ground Lease as terminated under
Subsection 365(h)(1) of the Bankruptcy Code, 11 U.S.C. Sec. 365(h)(1).
Any such election made without Lender's consent shall be void.
(h) Borrower hereby unconditionally assigns, transfers and
sets over to Lender all of Borrower's claims and rights to the payment
of damages arising from any rejection of the Ground Lease by the lessor
thereunder or any other fee owner of the Property under the Bankruptcy
Code. Lender shall have the right to proceed in its own name or in the
name of Borrower in respect of any claim, suit, action or proceeding
relating to the rejection of the Ground Lease, including, without
limitation, the right to file and prosecute, either in its own name or
in the name of Borrower, any proofs of claim, complaints, motions,
applications, notices and other documents, in any case in respect to
such lessor or any such fee owner under the Bankruptcy Code. This
assignment constitutes a present, irrevocable and unconditional
assignment of the foregoing claims, rights and remedies, and shall
continue in effect until all of the obligations secured by this Lien
Instrument shall have been satisfied and discharged in full. Any amounts
received by Lender as damages arising out of the rejection of the Ground
Lease as aforesaid shall be applied first to all costs and expenses of
Lender (including, without limitation, attorney fees) incurred in
connection with the exercise of any of its rights or remedies under this
section and then in accordance with the provisions of SECTION 7.4 of
this Lien Instrument. Borrower shall promptly make, execute, acknowledge
and deliver, in form and substance satisfactory to Lender, a UCC
Financing Statement (Form UCC-1) and all such additional instruments,
agreements and other documents, as may at any time hereafter be required
by Lender to effectuate and carry out the assignment made pursuant to
this section.
(i) If pursuant to Subsection 365(h)(2) of the Bankruptcy
Code, 11 U.S.C. Sec. 365(h)(2), Borrower shall seek to offset against
the rent reserved in the Ground Lease the amount of any damages caused
by the nonperformance by the lessor or any fee owner of any of their
obligations under the Ground Lease after the rejection by the lessor or
any fee owner of the Ground Lease under the Bankruptcy Code, Borrower
shall, prior to effecting such offset, notify Lender of its intent to do
so, setting forth the amounts proposed to be so offset and the basis
therefor. Lender shall have the right to object to all or any part of
such offset that, in the reasonable judgment of Lender, would constitute
a breach of the Ground Lease, and in the event of such objection,
Borrower shall not effect
Page 35
any offset of the amounts so objected to by Lender. Neither Lender's
failure to object as aforesaid nor any objection relating to such offset
shall constitute an approval of any such offset by Lender.
(j) If any action, proceeding, motion or notice shall be
commenced or filed in respect of the lessor or any fee owner, the
Property or the Ground Lease in connection with any case under the
Bankruptcy Code, Lender shall have the option, exercisable upon notice
from Lender to Borrower, to conduct and control any such litigation with
counsel of Lender's choice. Lender may proceed in its own name or in the
name of Borrower in connection with any such litigation, and Borrower
agrees to execute any and all powers, authorizations, consents or other
documents reasonably required by Lender in connection therewith.
Borrower shall, upon demand, pay to Lender all costs and expenses
(including attorney fees) paid or incurred by Lender in connection with
the prosecution or conduct of any such proceedings. Any such costs or
expenses not paid by Borrower as aforesaid shall be secured by the lien
of this Lien Instrument and shall be added to the principal amount of
the obligations secured hereby. Borrower shall not commence any action,
suit, proceeding or case, or file any application or make any motion
(unless such motion is for the purpose of protecting the Ground Lease
and its value as security for the obligations secured by this Lien
Instrument), in respect of the Ground Lease in any such case under the
Bankruptcy Code without the prior written consent of Lender, which
consent shall not be unreasonably withheld or delayed.
(k) Borrower shall, after obtaining knowledge thereof,
promptly notify Lender of any filing by or against the lessor or other
fee owner of a petition under the Bankruptcy Code. Borrower shall
promptly deliver to Lender, following receipt, copies of any and all
notices, summonses, pleadings, applications and other documents received
by Borrower in connection with any such petition and any proceedings
relating thereto.
(l) If there shall be filed by or against Borrower a
petition under the Bankruptcy Code and Borrower, as lessee under the
Ground Lease, shall determine to reject the Ground Lease pursuant to
Section 365(a) of the Bankruptcy Code, Borrower shall give Lender not
less than thirty (30) days' prior notice of the date on which Borrower
shall apply to the Bankruptcy Court for authority to reject the Ground
Lease. Lender shall have the right, but not the obligation, to serve
upon Borrower within such thirty (30) day period a notice stating that
Lender demands that Borrower assume and assign the Ground Lease to
Lender pursuant to Section 365 of the Bankruptcy Code. If Lender shall
serve upon Borrower the notice described in the preceding sentence,
Borrower shall not seek to reject the Ground Lease and shall comply with
the demand provided for in the preceding sentence.
8.7 GROUND LEASE REPRESENTATIONS AND WARRANTIES. Borrower hereby
warrants and represents that (i) Borrower has delivered to Lender or Lender's
agent a true, correct and complete copy of the Ground Lease, all assignments
thereof, and all related recorded memoranda of such Ground Lease; (ii) the
Ground Lease is in full force and effect as of the effective date hereof; (iii)
no defaults have occurred and are continuing as of the effective date hereof
with respect to the Ground Lease; (iv) all payments due under the Ground Lease
prior to February 9,
Page 36
2004 have been made; and (v) Borrower's interest in the Ground Lease is not
subject to any claim, setoff or encumbrance except for Permitted Exceptions.
ARTICLE IX
ASSIGNMENT OF LEASES AND RENTS
9.1 ASSIGNMENT. For Ten Dollars ($10.00) and other good and valuable
consideration, including the indebtedness evidenced by the Note, the receipt and
sufficiency of which are hereby acknowledged and confessed, Borrower has
GRANTED, BARGAINED, SOLD, and CONVEYED, and by these presents does GRANT,
BARGAIN, SELL, and CONVEY unto Lender, as security for the payment of the
Indebtedness and the performance and discharge of the Obligations, the Leases
and the Rents subject only to the Permitted Exceptions applicable thereto and
the License (hereinafter defined); TO HAVE AND TO HOLD the Leases and the Rents
unto Lender, forever, and Borrower does hereby bind itself, its successors, and
assigns to warrant and forever defend the title to the Leases and the Rents unto
Lender against every person whomsoever lawfully claiming or to claim the same or
any part thereof; provided, however, that if Borrower shall pay or cause to be
paid the Indebtedness as and when same shall become due and payable and shall
perform and discharge or cause to be performed and discharged the Obligations on
or before the date same are to be performed and discharged, then this assignment
shall terminate and be of no further force and effect, and all rights, titles,
and interests conveyed pursuant to this assignment shall become vested in
Borrower without the necessity of any further act or requirement by Borrower,
Trustee, or Lender.
9.2 LIMITED LICENSE. Lender hereby grants to Borrower a limited
license (the "LICENSE") to exercise and enjoy all incidences of the status of a
lessor of the Leases and the Rents, including without limitation, the right to
collect, demand, xxx for, attach, levy, recover, and receive the Rents, and to
give proper receipts, releases, and acquittances therefor. Borrower hereby
agrees to receive all Rents and hold the same as a trust fund to be applied, and
to apply the Rents so collected, first to the payment of the Indebtedness, next
to the payment of the Impositions, and then to the performance and discharge of
the Obligations. Thereafter, Borrower may use the balance of the Rent collected
in any manner not inconsistent with the Loan Documents. From and after the
occurrence of an Event of Default and so long as such Event of Default shall be
continuing (whether or not Lender shall have exercised Lender's option to
declare the Note immediately due and payable), the License shall be revoked.
Neither this Assignment nor the receipt of Rents by Lender shall effect a PRO
TANTO payment of the indebtedness evidenced by, or arising under the
Indebtedness, and such Rents shall be applied as provided in this SECTION 9.2.
Furthermore, and notwithstanding the provisions of this Section 9.2, no credit
shall be given by Lender for any Rents until the money collected is actually
received by Lender, and no such credit shall be given for any Rents after
foreclosure or other transfer of the Mortgaged Property (or part thereof from
which Rents are derived pursuant to this Lien Instrument) to Lender or any other
third party.
9.3 ENFORCEMENT OF LEASES. So long as the License is in effect,
Borrower shall (i) duly and punctually perform and comply with any and all
representations, warranties, covenants, and agreements expressed as binding upon
the lessor under any Lease, (ii) maintain each of the Leases in full force and
effect during the term thereof, (iii) appear in and defend any
Page 37
action or proceeding in any manner connected with any of the Leases, (iv)
deliver to Lender copies of all Leases, and (v) deliver to Lender such further
information, and execute and deliver to Lender such further assurances and
assignments, with respect to the Leases as Lender may from time to time request.
Without Lender's prior written consent, Borrower shall not (1) do or knowingly
permit to be done anything to impair the value of any of the Leases; (2) except
for security or similar deposits, collect any of the Rent more than one month in
advance of the time when the same becomes due under the terms of any Lease; (3)
discount any future accruing Rents; (4) amend, modify, or terminate any of the
Leases except in the normal course of prudent management; or (5) assign or grant
a security interest in or to the License or any of the Leases and/or Rents.
9.4 NO MERGER OF ESTATES. So long as any part of the Indebtedness
and the Obligations secured hereby remain unpaid and unperformed or
undischarged, the fee and leasehold estates to the Mortgaged Property shall not
merge but rather shall remain separate and distinct, notwithstanding the union
of such estates either in Borrower, Lender, any lessee, or any third party
purchaser or otherwise.
9.5 BORROWER'S INDEMNITIES. EXCEPT FOR A LOSS, COST, DAMAGE, OR
EXPENSE THAT IS CAUSED BY THE WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OF THE
LENDER, SO LONG AS THE LICENSE IS IN EFFECT, BORROWER SHALL INDEMNIFY AND HOLD
HARMLESS LENDER AND TRUSTEE FROM AND AGAINST ANY AND ALL LIABILITY, LOSS, COST,
DAMAGE, OR EXPENSE WHICH LENDER MAY INCUR UNDER OR BY REASON OF THIS ASSIGNMENT,
OR FOR ANY ACTION TAKEN BY LENDER AND/OR TRUSTEE HEREUNDER, OR BY REASON OF OR
IN DEFENSE OF ANY AND ALL CLAIMS AND DEMANDS WHATSOEVER WHICH MAY BE ASSERTED
AGAINST LENDER AND/OR TRUSTEE ARISING OUT OF THE LEASES OR WITH RESPECT TO THE
RENTS. IN THE EVENT LENDER AND/OR TRUSTEE INCURS ANY SUCH LIABILITY, LOSS, COST,
DAMAGE, OR EXPENSE, THE AMOUNT THEREOF TOGETHER WITH ALL REASONABLE ATTORNEYS'
FEES AND INTEREST THEREON AT THE DEFAULT RATE SHALL BE PAYABLE BY BORROWER TO
LENDER AND/OR TRUSTEE IMMEDIATELY, WITHOUT DEMAND, AND SHALL BE DEEMED A PART OF
THE INDEBTEDNESS AND SECURED UNDER ARTICLE II HEREOF.
ARTICLE X
SECURITY AGREEMENT
10.1 SECURITY INTEREST. This Lien Instrument (i) shall be construed
as a deed of trust on real property, and (ii) shall also constitute and serve as
a "Security Agreement" on personal property within the meaning of, and shall
constitute until the grant of this Lien Instrument shall terminate as provided
in SECTION 12.1 hereof, a first and prior security interest under the Code as to
property within the scope thereof and in the state where the Mortgaged Property
is located with respect to the Personalty, Fixtures, Contracts, Leases, Rents,
and Reserves. To this end, Borrower has GRANTED, BARGAINED, CONVEYED, ASSIGNED,
TRANSFERRED, and SET OVER, and by these presents does GRANT, BARGAIN, CONVEY,
ASSIGN, TRANSFER and SET OVER, unto Trustee and Lender, a first and prior
security interest in all of Borrower's right, title and interest in, to, under
and with respect to the Personalty, Fixtures, Contracts, Leases, Rents, and
Reserves to secure the full and timely payment of the Indebtedness and the
Page 38
full and timely performance and discharge of the Obligations. It is the intent
of Borrower, Trustee, and Lender that this Lien Instrument encumber all Leases
and Rents, that all items contained in the definition of "Leases" and "Rents"
which are included within the Code be covered by the security interest granted
in this ARTICLE X, and that all items contained in the definition of "Leases"
and "Rents" which are excluded from the Code be covered by the provisions of
ARTICLE II and ARTICLE IX hereof.
10.2 FINANCING STATEMENTS. Borrower hereby agrees with Lender to
execute and deliver to Lender, in form and substance satisfactory to Lender,
such "Financing Statements" 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, and Lender may cause such statements and
assurances to be recorded and filed, at such times and places as may be required
or permitted by law to so create, perfect, and preserve such security interest.
10.3 FIXTURE FILING. This Lien Instrument shall also constitute a
"fixture filing" for the purposes of the Code. All or part of the Mortgaged
Property are or are to become fixtures; information concerning the security
interest herein granted may be obtained from the parties at the address of the
parties set forth herein. For purposes of the security interest herein granted,
the address of Debtor (Borrower) is set forth in the first paragraph of this
Lien Instrument and the address of the Secured Party (Lender) is set forth in
ARTICLE I hereof. 10.4 REPRESENTATIVE WARRANTIES AND COVENANTS REGARDING UCC
MATTERS. Borrower represents and warrants that (a) Borrower's name, identity,
and state of organization are precisely as referred to in the first paragraph of
this Lien Instrument; (b) Borrower has been using or operating under said name
and identity without change since the date of Borrower's creation; and (c) the
location of all tangible Personalty collateral is located upon the Land.
Borrower covenants and agrees that Borrower shall furnish Lender with notice of
any change in the matters, addressed by CLAUSE (A) OR (B) of this SECTION 10.4
within thirty (30) days prior to the effective date of any such change. Borrower
authorizes Lender, at Borrower's cost, to execute and file instruments deemed
necessary by Lender.
ARTICLE XI
CONCERNING THE TRUSTEE
11.1 NO REQUIRED ACTION. Trustee shall not be required to take any
action toward the execution and enforcement of the trust hereby created or to
institute, appear in, or defend any action, suit, or other proceeding in
connection therewith where, in his opinion, such action would be likely to
involve him in expense or liability, unless requested so to do by a written
instrument signed by Lender and, if Trustee so requests, unless Trustee is
tendered security and indemnity satisfactory to Trustee against any and all
cost, expense, and liability arising therefrom. Trustee shall not be responsible
for the execution, acknowledgment, or validity of the Loan Documents, or for the
proper authorization thereof, or for the sufficiency of the lien and security
interest purported to be created hereby, and Trustee makes no representation in
respect thereof or in respect of the rights, remedies, and recourses of Lender.
Page 39
11.2 CERTAIN RIGHTS. With the approval of Lender, Trustee shall have
the right to take any and all of the following actions: (i) to select, employ,
and advise with counsel (who may be, but need not be, counsel for Lender) upon
any matters arising hereunder, including the preparation, execution, and
interpretation of the Loan Documents, and shall be fully protected in relying as
to legal matters on the advice of counsel, (ii) to execute any of the trusts and
powers hereof and to perform any duty hereunder either directly or through his
agents or attorneys, (iii) to select and employ, in and about the execution of
his duties hereunder, suitable accountants, engineers and other experts, agents
and attorneys-in-fact, either corporate or individual, not regularly in the
employ of Trustee, and Trustee shall not be answerable for any act, default,
negligence, or misconduct of any such accountant, engineer or other expert,
agent or attorney-in-fact, if selected with reasonable care, or for any error of
judgment or act done by Trustee in good faith, or be otherwise responsible or
accountable under any circumstances whatsoever, except for Trustee's gross
negligence or bad faith, and (iv) any and all other lawful action as Lender may
instruct Trustee to take to protect or enforce Lender's rights hereunder.
Trustee shall not be personally liable in case of entry by Trustee, or anyone
entering by virtue of the powers herein granted to Trustee, upon the Mortgaged
Property for debts contracted for or liability or damages incurred in the
management or operation of the Mortgaged Property. Trustee shall have the right
to rely on any instrument, document, or signature authorizing or supporting any
action taken or proposed to be taken by Trustee hereunder, believed by Trustee
in good faith to be genuine. Trustee shall be entitled to reimbursement for
expenses incurred by Trustee in the performance of Trustee's duties hereunder
and to reasonable compensation for such of Trustee's services hereunder as shall
be rendered. Borrower will, from time to time, pay the compensation due to
Trustee hereunder and reimburse Trustee for, and save Trustee harmless against,
any and all liability and expenses which may be incurred by Trustee in the
performance of Trustee's duties.
11.3 RETENTION OF MONEY. All moneys received by Trustee shall, until
used or applied as herein provided, be held in trust for the purposes for which
they were received, but need not be segregated in any manner from any other
moneys (except to the extent required by applicable law) and Trustee shall be
under no liability for interest on any moneys received by Trustee hereunder.
11.4 SUCCESSOR TRUSTEES. Trustee may resign by the giving of notice
of such resignation in writing or verbally to Lender. If Trustee shall die,
resign, or become disqualified from acting in the execution of this trust, or
if, for any reason, Lender shall prefer to appoint a substitute trustee or
multiple substitute trustees, or successive substitute trustees or successive
multiple substitute trustees, to act instead of the aforenamed Trustee, Lender
shall have full power to appoint a substitute trustee (or, if preferred,
multiple substitute trustees) in succession who shall succeed (and if multiple
substitute trustees are appointed, each of such multiple substitute trustees
shall succeed) to all the estates, rights, powers, and duties of the aforenamed
Trustee. Such appointment may be executed by any authorized agent of Lender, and
if such Lender be a corporation and such appointment be executed in its behalf
by any officer of such corporation, such appointment shall be conclusively
presumed to be executed with authority and shall be valid and sufficient without
proof of any action by the board of directors or any superior officer of the
corporation. Borrower hereby ratifies and confirms any and all acts which the
aforenamed Trustee, or his successor or successors in this trust, shall do
lawfully by virtue hereof. If multiple substitute Trustees
Page 40
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 Lien
Instrument or applicable law.
11.5 PERFECTION OF APPOINTMENT. Should any deed, conveyance, or
instrument of any nature be required from Borrower by any Trustee or substitute
Trustee to more fully and certainly vest in and confirm to the Trustee or
substitute Trustee such estates, rights, powers, and duties, then, upon request
by the Trustee or substitute Trustee, any and all such deeds, conveyances and
instruments shall be made, executed, acknowledged, and delivered and shall be
caused to be recorded and/or filed by Borrower.
11.6 SUCCESSION INSTRUMENTS. Any substitute Trustee appointed
pursuant to any of the provisions hereof shall, without any further act, deed,
or conveyance, become vested with all the estates, properties, rights, powers,
and trusts of its 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.
11.7 NO REPRESENTATION BY TRUSTEE OR LENDER. By accepting or
approving anything required to be observed, performed, or fulfilled or to be
given to Trustee or Lender pursuant to the Loan Documents, including without
limitation, any officer's certificate, balance sheet, statement of profit and
loss or other financial statement, survey, appraisal, or insurance policy,
neither Trustee nor Lender shall be deemed to have warranted, consented to, or
affirmed the sufficiency, legality, effectiveness, or legal effect of the same,
or of any term, provision, or condition thereof, and such acceptance or approval
thereof shall not be or constitute any warranty or affirmation with respect
thereto by Trustee or Lender.
ARTICLE XII
MISCELLANEOUS
12.1 RELEASE. If the Indebtedness is paid in full in accordance with
the terms of the Loan Documents, and if Borrower shall well and truly perform
each and every one of the Obligations to be performed and discharged in
accordance with the terms of the Loan Documents, then this conveyance shall
become null and void and be released at Borrower's request and expense, and
Lender shall have no further obligation to make advances under and pursuant to
the provisions hereof or in the other Loan Documents.
12.2 PERFORMANCE AT BORROWER'S EXPENSE. Subject to the provisions of
SECTION 12.11 hereof, Borrower shall (i) pay all legal fees incurred by Lender
in connection with the preparation of the Loan Documents (including any
amendments thereto or consents, releases, or waivers granted thereunder); (ii)
reimburse Lender, promptly upon demand, for all amounts expended, advanced, or
incurred by Lender to satisfy any obligation of Borrower under the Loan
Documents, which amounts shall include all court costs, attorneys' fees
(including, without
Page 41
limitation, for trial, appeal, or other proceedings), fees of auditors and
accountants and other investigation expenses reasonably incurred by Lender in
connection with any such matters; and (iii) any and all other costs and expenses
of performing or complying with any and all of the Obligations. Except to the
extent that costs and expenses are included within the definition of
"Indebtedness," the payment of such costs and expenses shall not be credited, in
any way and to any extent, against any installment on or portion of the
Indebtedness.
12.3 SURVIVAL OF OBLIGATIONS. Each and all of the Obligations shall
survive the execution and delivery of the Loan Documents and the consummation of
the loan called for therein and shall continue in full force and effect until
the Indebtedness shall have been paid in full; provided, however, that nothing
contained in this SECTION 12.3 shall limit the obligations of Borrower as
otherwise set forth herein.
12.4 RECORDING AND FILING. Borrower will cause the Loan Documents
(requested by the Lender) and all amendments and supplements thereto and
substitutions therefor to be recorded, filed, re-recorded, and refiled in such
manner and in such places as Trustee or Lender shall reasonably request, and
will pay all such recording, filing, re-recording and refiling taxes,
documentary stamp taxes, fees, and other charges.
12.5 NOTICES. All notices or other communications required or
permitted to be given pursuant to this Lien Instrument shall be in writing and
shall be considered as properly given if (i) mailed by first class United States
mail, postage prepaid, registered or certified with return receipt requested;
(ii) by delivering same in person to the intended addressee; or (iii) by
delivery to an independent third party commercial delivery service for same day
or next day delivery and providing for evidence of receipt at the office of the
intended addressee. Notice so mailed shall be effective upon its deposit with
the United States Postal Service or any successor thereto; notice sent by a
commercial delivery service shall be effective upon delivery to such commercial
delivery service; notice given by personal delivery shall be effective only if
and when received by the addressee; and notice given by other means shall be
effective only if and when received at the office or designated address of the
intended addressee. For purposes of notice, the addresses of the parties shall
be as set forth on page 1 and ARTICLE I of this Lien Instrument; provided,
however, that either party shall have the right to change its address for notice
hereunder to any other location within the continental United States by the
giving of thirty (30) days notice to the other party in the manner set forth
herein.
12.6 COVENANTS RUNNING WITH THE LAND. All Obligations contained in
this Lien Instrument and the other Loan Documents are intended by Borrower,
Trustee, and Lender to be, and shall be construed as, covenants running with the
Mortgaged Property until the lien of this Lien Instrument has been fully
released by Lender.
12.7 SUCCESSORS AND ASSIGNS. Subject to the provisions of SECTION 5.6
hereof, all of the terms of the Loan Documents shall apply to, be binding upon,
and inure to the benefit of the parties thereto, their successors, assigns,
heirs, and legal representatives and all other persons claiming by, through, or
under them.
12.8 NO WAIVER; SEVERABILITY. Any failure by Trustee or Lender to
insist, or any election by Trustee or Lender not to insist, upon strict
performance by Borrower or others of any
Page 42
of the terms, provisions, or conditions of the Loan Documents shall not be
deemed to be a waiver of same or of any other terms, provisions, or conditions
thereof, and Trustee or Lender shall have the right at any time or times
thereafter to insist upon strict performance by Borrower or others of any and
all of such terms, provisions, and conditions. The Loan Documents are intended
to be performed in accordance with, and only to the extent permitted by, all
applicable Legal Requirements. If any provision of any of the Loan Documents or
the application thereof to any person or circumstance shall, for any reason and
to any extent, be invalid or unenforceable, then neither the remainder of the
instrument in which such provision is contained nor the application of such
provision to other persons or circumstances nor the other instruments referred
to herein shall be affected thereby, but rather shall be enforced to the
greatest extent permitted by law.
12.9 COUNTERPARTS. To facilitate execution, this Lien Instrument may
be executed in as many counterparts as may be convenient or required. It shall
not be necessary that the signature and acknowledgment of, or on behalf of, each
party, or that the signature and acknowledgment of all persons required to bind
any party, appear on each counterpart. All counterparts shall collectively
constitute a single instrument. It shall not be necessary in making proof of
this Lien Instrument to produce or account for more than a single counterpart
containing the respective signatures and acknowledgment of, or on behalf of,
each of the parties hereto. Any signature and acknowledgment page to any
counterpart may be detached from such counterpart without impairing the legal
effect of the signatures and acknowledgments thereon and thereafter attached to
another counterpart identical thereto except having attached to it additional
signature and acknowledgment pages.
12.10 APPLICABLE LAW. THE LOAN DOCUMENTS SHALL BE GOVERNED BY AND
CONSTRUED ACCORDING TO THE LAWS OF THE STATE OF TEXAS FROM TIME TO TIME IN
EFFECT EXCEPT TO THE EXTENT PREEMPTED BY UNITED STATES FEDERAL LAW.
12.11 CONTROLLING AGREEMENT. It is expressly stipulated and agreed to
be the intent of Borrower, Trustee and Lender at all times to comply with
applicable Texas law or applicable United States federal law (to the extent that
it permits Lender to contract for, charge, take, reserve, or receive a greater
amount of interest than under Texas law) and that this section shall control
every other covenant and agreement in the Loan Documents. If the applicable law
is ever judicially interpreted so as to render usurious any amount called for
under any of the Loan Documents, or contracted for, charged, taken, reserved, or
received with respect to the Indebtedness, or if Lender's exercise of the option
to accelerate the maturity of the Note, or if any prepayment by Borrower results
in Borrower having paid any interest in excess of that permitted by applicable
law, then it is Borrower's, Trustee's and Lender's express intent that all
excess amounts theretofore collected by Lender shall be credited on the
principal balance of the Note and all other Indebtedness (or, if the Note and
all other Indebtedness have been or would thereby be paid in full, refunded to
Borrower), and the provisions of the Loan Documents immediately be deemed
reformed and the amounts thereafter collectible hereunder and thereunder
reduced, without the necessity of the execution of any new documents, so as to
comply with the applicable law, but so as to permit the recovery of the fullest
amount otherwise called for hereunder or thereunder. All sums paid or agreed to
be paid to Lender for the use, forbearance, or detention of the Indebtedness
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated, and spread throughout the full stated term of the Indebtedness until
payment
Page 43
in full so that the rate or amount of interest on account of the Indebtedness
does not exceed the Maximum Lawful Rate from time to time in effect and
applicable to the Indebtedness for so long as the Indebtedness is outstanding.
In no event shall the provisions of Chapter 346 of the Texas Finance Code (which
regulates certain revolving credit loan accounts and revolving triparty
accounts) apply to the loan evidenced by the Loan Documents and/or secured
hereby. Notwithstanding anything to the contrary contained in any of the Loan
Documents, it is not the intention of Trustee and/or Lender to accelerate the
maturity of any interest that has not accrued at the time of such acceleration
or to collect unearned interest at the time of such acceleration.
12.12 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 Mortgaged Property, then, to the extent of such funds so used, Lender shall
be subrogated to all of the rights, claims, liens, titles, and interests
existing against the Mortgaged 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 Indebtedness and
the performance and discharge of the Obligations.
12.13 RIGHTS CUMULATIVE. Lender shall have all rights, remedies, and
recourses granted in the Loan Documents and available at law or in equity
(including, without limitation, those granted by the Code and applicable to the
Mortgaged Property or any portion thereof), and the same (i) shall be cumulative
and concurrent, (ii) may be pursued separately, successively, or concurrently
against Borrower or others obligated for the Indebtedness or any part thereof,
or against any one or more of them, or against the Mortgaged Property, 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, discontinuance of
the exercise of or failure to exercise any of the same shall in no event be
construed as a waiver or release thereof or of any other right, remedy, or
recourse, and (iv) are intended to be, and shall be, nonexclusive. All rights
and remedies of Lender hereunder and under the other Loan Documents shall extend
to any period after the initiation of foreclosure proceedings, judicial or
otherwise, with respect to the Mortgaged Property.
12.14 PAYMENTS. Remittances in payment of any part of the Indebtedness
other than in the required amount in funds immediately available at the place
where the Note is payable shall not, regardless of any receipt or credit issued
therefor, constitute payment until the required amount is actually received by
Lender in funds immediately available at the place where the Note is payable (or
such 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.
12.15 EXCEPTIONS TO COVENANTS. Borrower shall not be deemed to be
permitted to take any action or to fail to take any action with respect to any
particular covenant or condition contained in any of the Loan Documents if the
action or omission would result in the breach of any other covenant or condition
contained in any of the Loan Documents which has not been
Page 44
specifically waived or consented to by Lender, nor shall Lender be deemed to
have consented to any such act or omission if the same would provide cause for
acceleration of the Indebtedness as a result of the breach of any other covenant
or condition contained in any of the Loan Documents which has not been
specifically waived or consented to by Lender.
12.16 RELIANCE. Borrower recognizes and acknowledges that in entering
into the loan transaction evidenced by the Loan Documents and accepting this
Lien Instrument, Lender is expressly and primarily relying on the truth and
accuracy of the foregoing warranties and representations set forth in ARTICLE
III hereof without any obligation to investigate the Mortgaged Property and
notwithstanding any investigation of the Mortgaged Property by Lender; that such
reliance exists on the part of Lender prior hereto; that such warranties and
representations are a material inducement to Lender in making the loan evidenced
by the Loan Documents and accepting of this Lien Instrument; and that Lender
would not be willing to make the loan evidenced by the Loan Documents and accept
this Lien Instrument in the absence of any of such warranties and
representations.
12.17 HEADINGS. The Article, Section, and Subsection entitlements
hereof are inserted for convenience of reference only and shall in no way alter,
modify, or define, or be used in construing the text of such Articles, Sections,
or Subsections.
12.18 CONSTRUCTION. All pronouns, whether in masculine, feminine or
neuter form, shall be deemed to refer to the object of such pronoun whether same
is masculine, feminine or neuter in gender, as the context may suggest or
require. All terms used herein, whether or not defined in SECTION 1.1 hereof,
and whether used in singular or plural form, shall be deemed to refer to the
object of such term whether such is singular or plural in nature, as the context
may suggest or require.
12.19 ENTIRE AGREEMENT; AMENDMENT. THIS LIEN INSTRUMENT AND THE OTHER
LOAN DOCUMENTS EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND
SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND
UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF
AND THEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES
HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO. THE PROVISIONS OF
THIS LIEN INSTRUMENT AND THE OTHER LOAN DOCUMENTS MAY BE AMENDED OR WAIVED ONLY
BY AN INSTRUMENT IN WRITING SIGNED BY THE RESPECTIVE PARTIES TO SUCH DOCUMENTS.
12.20 WAIVER OF RIGHT TO TRIAL BY JURY. BORROWER HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT,
PROCEEDING, OR COUNTERCLAIM THAT RELATES TO OR ARISES OUT OF ANY OF THE LOAN
DOCUMENTS OR THE ACTS OR FAILURE TO ACT OF OR BY LENDER IN THE ENFORCEMENT OF
ANY OF THE TERMS OR PROVISIONS OF THIS LIEN INSTRUMENT OR THE OTHER LOAN
DOCUMENTS.
Page 45
12.21 NOTICE OF INDEMNIFICATION: BORROWER HEREBY ACKNOWLEDGES AND
AGREES THAT THIS LIEN INSTRUMENT CONTAINS CERTAIN INDEMNIFICATION PROVISIONS,
INCLUDING, BUT NOT LIMITED TO SECTIONS 7.1, 8.3 AND 9.5 HEREOF WHICH MAY, IN
CERTAIN INSTANCES, INCLUDE INDEMNIFICATION BY BORROWER OR OTHERS AGAINST
LENDER'S OWN NEGLIGENCE.
12.22 CONSTRUCTION FUNDS. A portion of the Indebtedness (the
"CONSTRUCTION FUNDS") has been withheld by Lender, as reflected on the closing
statement executed by Borrower in respect of the Indebtedness. Borrower agrees
that the Construction Funds shall be used only to pay the costs of performing
construction on the Mortgaged Property in the form of tenant improvements on a
basis satisfactory to Lender, and for no other purpose. If Borrower desires to
use the Construction Funds to pay the cost of approved tenant improvements on
the Mortgaged Property, Borrower shall submit a request for the Construction
Funds (or a portion thereof) to Lender together with invoices, lien waivers, and
such other items as may be required by Lender. Lender shall have the right to
approve or disapprove such a request from Borrower in the sole discretion of
Lender. If any Construction Funds are held by Lender at such time as the
Indebtedness is paid in full, Lender shall disburse the Construction Funds to
Borrower upon such payment. Prior to such payment in full, any advances of the
Construction Funds to Borrower shall be part of the Indebtedness and shall be
secured by this Deed of Trust.
(THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.)
Page 46
EXECUTED effective as of the date first above written.
BORROWER:
BEHRINGER HARVARD XXXXXXX XXXXXXX XX,
a Texas limited partnership
By: Behringer Harvard Xxxxxxx
Xxxxxxx XX, LLC,
a Delaware limited liability company,
its General Partner
By: /s/ Xxxxxx X. Xxxxxxx, III
---------------------------------------
Name: Xxxxxx X. Xxxxxxx, III
-------------------------------------
Title: Secretary
------------------------------------
STATE OF TEXAS ss.
ss.
COUNTY OF DALLAS ss.
This instrument was ACKNOWLEDGED before me on the 9th day of February,
2004, by Xxxxxx X. Xxxxxxx, III, the Secretary of Behringer Harvard Xxxxxxx
Xxxxxxx XX, LLC, a Delaware limited liability company, the general partner of
BEHRINGER HARVARD XXXXXXX XXXXXXX XX, a Texas limited partnership, on behalf of
said limited liability company and limited partnership.
[S E A L] /s/ Xxxx X. Xxxxxxxxxxxx
------------------------------------------
Notary Public - State of Texas
My Commission Expires:
Xxxx X. Xxxxxxxxxxxx
------------------------------------------
June 17, 2006 Printed Name of Notary Public
-------------------------------
Page 47
