EXHIBIT 10(c)
XXXXX POST OAK LIMITED PARTNERSHIP, as Grantor
to
XXXXX XXXXXXX, as Trustee
for the benefit of
COLUMN FINANCIAL, INC., as Beneficiary
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DEED OF TRUST AND
SECURITY AGREEMENT
--------------------------------------------------------
Dated: As of December 6, 2002
Location: 0000 Xxxx Xxx Xxxxxxxxx
0000 Xxxx Xxx Xxxxxxxxx and
0000 Xxxx Xxx Xxxxxxxxx
Xxxxxxx, Xxxxx
County: Xxxxxx
PREPARED BY AND UPON
RECORDATION RETURN TO:
Cadwalader, Xxxxxxxxxx & Xxxx
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxxx, Esq.
DEED OF TRUST AND SECURITY AGREEMENT
THIS DEED OF TRUST AND SECURITY AGREEMENT (this "Security Instrument") is
made as of this 6th day of December, 2002, by XXXXX POST OAK LIMITED
PARTNERSHIP, a Delaware limited partnership, having its principal place of
business at 000 Xxxxx Xxxx, Xxxxx 000, Xxxx Xxxxx, Xxxxxxx 00000, as grantor
("Borrower") to XXXXX XXXXXXX, having an address at 0000 Xxxxxxx Xxxx, Xxxxx
0000, Xxxxxx, Xxxxx 00000, as trustee ("Trustee"), for the benefit of COLUMN
FINANCIAL, INC., having an address at 00 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, as beneficiary ("Lender").
W I T N E S S E T H:
WHEREAS, this Security Instrument is given to secure a loan (the "Loan") in
the principal sum of SEVENTY SEVEN MILLION AND NO/100 DOLLARS ($77,000,000.00)
advanced pursuant to that certain Loan Agreement, dated as of the date hereof,
between Borrower and Lender (as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time, the "Loan Agreement") and
evidenced by that certain Promissory Note, dated the date hereof, made by
Borrower in favor of Lender (such Promissory Note, together with all extensions,
renewals, replacements, restatements or modifications thereof being hereinafter
referred to as the "Note");
WHEREAS, Borrower desires to secure the payment of the Debt (as defined in
the Loan Agreement) and the performance of all of its obligations under the
Note, the Loan Agreement and the other Loan Documents (as herein defined); and
WHEREAS, this Security Instrument is given pursuant to the Loan Agreement,
and payment, fulfillment, and performance by Borrower of its obligations
thereunder and under the other Loan Documents are secured hereby, and each and
every term and provision of the Loan Agreement, the Note, and that certain
Assignment of Leases and Rents of even date herewith made by Borrower in favor
of Lender delivered in connection with this Security Agreement (as the same may
be amended, restated, replaced, supplemented or otherwise modified from time to
time, the "Assignment of Leases"), including the rights, remedies, obligations,
covenants, conditions, agreements, indemnities, representations and warranties
of the parties therein, are hereby incorporated by reference herein as though
set forth in full and shall be considered a part of this Security Instrument
(the Loan Agreement, the Note, this Security Instrument, the Assignment of
Leases and Rents and all other documents evidencing or securing the Debt
(including all additional mortgages, deeds to secure debt and assignments of
leases and rents) or executed or delivered in connection therewith, are
hereinafter referred to collectively as the "Loan Documents").
NOW THEREFORE, in consideration of the making of the Loan by Lender and the
covenants, agreements, representations and warranties set forth in this Security
Instrument:
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ARTICLE 1 - GRANTS OF SECURITY
Section 1.1 Property Conveyed. Borrower does hereby irrevocably grant,
bargain, sell, pledge, assign, warrant, transfer and convey to Trustee and its
successors and assigns, in trust, with Power of Sale for the benefit of Lender
as beneficiary in trust, all of Borrower's right, title and interest, if any, in
and to the following property, rights, interests and estates now owned, or
hereafter acquired by Borrower (each only to the extent permitted by applicable
law and the instrument or document creating Borrower's interest thereunder, if
applicable) (collectively, the "Property"):
(a) Land. The real property described in Exhibit A attached hereto and
made a part hereof (the "Land");
(b) Additional Land. All xxxxxxxxxx xxxxx, xxxxxxx and development rights
hereafter acquired by Borrower for use in connection with the Land and
the development of the Land and all additional lands and estates
therein which may, from time to time, by supplemental mortgage or
otherwise be expressly made subject to the lien of this Security
Instrument;
(c) Improvements. The buildings, structures, fixtures, additions,
enlargements, extensions, modifications, repairs, replacements and
improvements now or hereafter erected or located on the Land
(collectively, the "Improvements");
(d) Easements. All easements, rights-of-way or use, rights, strips and
gores of land, streets, ways, alleys, passages, sewer rights, water,
water courses, water rights and powers, air rights and development
rights, and all estates, rights, titles, interests, privileges,
liberties, servitudes, tenements, hereditaments and appurtenances of
any nature whatsoever, in any way now or hereafter belonging, relating
or pertaining to the Land and the Improvements and the reversions and
remainders, and all land lying in the bed of any street, road or
avenue, opened or proposed, in front of or adjoining the Land, to the
center line thereof and all the estates, rights, titles, interests,
rights of dower, rights of curtesy, property, possession, claim and
demand whatsoever, both at law and in equity, of Borrower of, in and
to the Land and the Improvements and every part and parcel thereof,
with the appurtenances thereto;
(e) Equipment. All "equipment," as such term is defined in Article 9 of
the Uniform Commercial Code (as hereinafter defined), now owned or
hereafter acquired by Borrower, which is used at or in connection with
the Improvements or the Land or is located thereon or therein
(including, but not limited to, all machinery, equipment, furnishings,
and electronic data-processing and other office equipment now owned or
hereafter acquired by Borrower and any and all additions,
substitutions and replacements of any of the foregoing), together with
all attachments, components, parts, equipment and accessories
installed thereon or affixed thereto (collectively, the "Equipment").
Notwithstanding the foregoing, Equipment shall not include any
property belonging to tenants under leases except to the extent that
Borrower shall have any right or interest therein;
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(f) Fixtures. All Equipment now owned, or the ownership of which is
hereafter acquired, by Borrower which is so related to the Land and
Improvements forming part of the Property that it is deemed fixtures
or real property under the law of the particular state in which the
Equipment is located, including, without limitation, all building or
construction materials intended for construction, reconstruction,
alteration or repair of or installation on the Property, construction
equipment, appliances, machinery, plant equipment, fittings,
apparatuses, fixtures and other items now or hereafter attached to,
installed in or used in connection with (temporarily or permanently)
any of the Improvements or the Land, including, but not limited to,
engines, devices for the operation of pumps, pipes, plumbing, call and
sprinkler systems, fire extinguishing apparatuses and equipment,
heating, ventilating, incinerating, electrical, air conditioning and
air cooling equipment and systems, gas and electric machinery,
appurtenances and equipment, pollution control equipment, security
systems, disposals, dishwashers, refrigerators and ranges,
recreational equipment and facilities of all kinds, and water, gas,
electrical, storm and sanitary sewer facilities, utility lines and
equipment (whether owned individually or jointly with others, and, if
owned jointly, to the extent of Borrower's interest therein) and all
other utilities whether or not situated in easements, all water tanks,
water supply, water power sites, fuel stations, fuel tanks, fuel
supply, and all other structures, together with all accessions,
appurtenances, additions, replacements, betterments and substitutions
for any of the foregoing and the proceeds thereof (collectively, the
"Fixtures"). Notwithstanding the foregoing, "Fixtures" shall not
include any property which tenants are entitled to remove pursuant to
leases except to the extent that Borrower shall have any right or
interest therein;
(g) Personal Property. All furniture, furnishings, objects of art,
machinery, goods, tools, supplies, appliances, general intangibles,
contract rights, accounts, accounts receivable, franchises, licenses,
certificates and permits, and all other personal property of any kind
or character whatsoever as defined in and subject to the provisions of
the Uniform Commercial Code, whether tangible or intangible, other
than Fixtures, which are now or hereafter owned by Borrower and which
are located within or about the Land and the Improvements, together
with all accessories, replacements and substitutions thereto or
therefor and the proceeds thereof (collectively, the "Personal
Property"), and the right, title and interest of Borrower in and to
any of the Personal Property which may be subject to any security
interests, as defined in the Uniform Commercial Code, as adopted and
enacted by the state or states where any of the Property is located
(the "Uniform Commercial Code"), superior in lien to the lien of this
Security Instrument and all proceeds and products of the above;
(h) Leases and Rents. All leases, subleases or subsubleases, lettings,
licenses, concessions or other agreements (whether written or oral)
pursuant to which any Person is granted a possessory interest in, or
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right to use or occupy all or any portion of the Land and the
Improvements, and every modification, amendment or other agreement
relating to such leases, subleases, subsubleases, or other agreements
entered into in connection with such leases, subleases, subsubleases,
or other agreements and every guarantee of the performance and
observance of the covenants, conditions and agreements to be performed
and observed by the other party thereto, heretofore or hereafter
entered into (collectively, the "Leases"), whether before or after the
filing by or against Borrower of any petition for relief under 11
U.S.C. 101 et seq., as the same may be amended from time to time (the
"Bankruptcy Code") and all right, title and interest of Borrower, its
successors and assigns therein and thereunder, including, without
limitation, cash or securities deposited thereunder to secure the
performance by the lessees of their obligations thereunder and all
rents, additional rents, revenues, issues and profits (including all
oil and gas or other mineral royalties and bonuses) from the Land and
the Improvements whether paid or accruing before or after the filing
by or against Borrower of any petition for relief under the Bankruptcy
Code (collectively, the "Rents") and all proceeds from the sale or
other disposition of the Leases and the right to receive and apply the
Rents to the payment of the Debt;
(i) Condemnation Awards. All awards or payments, including interest
thereon, which may heretofore and hereafter be made with respect to
the Property, whether from the exercise of the right of eminent domain
(including, but not limited to, any transfer made in lieu of or in
anticipation of the exercise of the right), or for a change of grade,
or for any other injury to or decrease in the value of the Property;
(j) Insurance Proceeds. All proceeds in respect of the Property under any
insurance policies covering the Property, including, without
limitation, the right to receive and apply the proceeds of any
insurance, judgments, or settlements made in lieu thereof, for damage
to the Property;
(k) Tax Appeal. All refunds, rebates or credits in connection with
reduction in real estate taxes and assessments charged against the
Property as a result of tax appeal or any applications or proceedings
for reduction;
(l) Conversion. All proceeds of the conversion, voluntary or involuntary,
of any of the foregoing including, without limitation, proceeds of
insurance and condemnation awards, into cash or liquidation claims;
(m) Rights. The right, in the name and on behalf of Borrower, to appear in
and defend any action or proceeding brought with respect to the
Property and to commence any action or proceeding to protect the
interest of Lender in the Property;
(n) Agreements. All agreements, contracts, certificates, instruments,
franchises, permits, licenses, plans, specifications and other
documents, now or hereafter entered into, and all rights therein and
thereto, respecting or pertaining to the use, occupation,
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construction, management or operation of the Land and any part thereof
and any Improvements or any business or activity conducted on the Land
and any part thereof and all right, title and interest of Borrower
therein and thereunder, including, without limitation, the right, upon
the happening of any default hereunder, to receive and collect any
sums payable to Borrower thereunder;
(o) Trademarks. All tradenames, trademarks, servicemarks, logos,
copyrights, goodwill, books and records and all other general
intangibles relating to or used in connection with the operation of
the Property;
(p) Accounts. All reserves, escrows and deposit accounts maintained by
Borrower with respect to the Property, including, without limitation,
all accounts established pursuant to the Cash Management Agreement;
together with all deposits or wire transfers made to the Lockbox
Account and all cash, checks, drafts, certificates, securities,
investment property, financial assets, instruments and other property
held therein from time to time and all proceeds, products,
distributions or dividends or substitutions thereon and thereof; and
(q) Other Rights. Any and all other rights of Borrower in and to the items
set forth in Subsections (a) through (p) above.
AND without limiting any of the other provisions of this Security
Instrument, to the extent permitted by applicable law, Borrower expressly grants
to Lender, as secured party, a security interest in the portion of the Property
which is or may be subject to the provisions of the Uniform Commercial Code
which are applicable to secured transactions; it being understood and agreed
that the Improvements and Fixtures are part and parcel of the Land (the Land,
the Improvements and the Fixtures collectively referred to as the "Real
Property") appropriated to the use thereof and, whether affixed or annexed to
the Real Property or not, shall for the purposes of this Security Instrument be
deemed conclusively to be real estate and mortgaged hereby.
Section 1.2 Assignment of Rents. Borrower hereby absolutely and
unconditionally assigns to Lender all of Borrower's right, title and interest in
and to all current and future Leases and Rents; it being intended by Borrower
that this assignment constitutes a present, absolute assignment and not an
assignment for additional security only. Nevertheless, subject to the terms of
the Assignment of Leases, the Cash Management Agreement and Section 7.1(h) of
this Security Instrument, Lender grants to Borrower a revocable license to
collect, receive, use and enjoy the Rents and Borrower shall hold the Rents, or
a portion thereof sufficient to discharge all current sums due on the Debt, for
use in the payment of such sums.
Section 1.3 Security Agreement. This Security Instrument is both a real
property mortgage and a "security agreement" within the meaning of the Uniform
Commercial Code. The Property includes both real and personal property and all
other rights and interests, whether tangible or intangible in nature, of
Borrower in the Property. By executing and delivering this Security Instrument,
Borrower hereby grants to Lender, as security for the Obligations (hereinafter
defined), a security interest in the Fixtures, the Equipment and the Personal
Property to the full extent that the Fixtures, the Equipment and the Personal
Property may be subject to the Uniform Commercial Code (said portion of the
Property so subject to the Uniform Commercial Code being called the
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"Collateral"). If an Event of Default shall occur and be continuing, Lender, in
addition to any other rights and remedies which it may have, shall have and may
exercise immediately and without demand, any and all rights and remedies granted
to a secured party upon default under the Uniform Commercial Code, including,
without limiting the generality of the foregoing, the right to take possession
of the Collateral or any part thereof, and to take such other measures as Lender
may deem necessary for the care, protection and preservation of the Collateral.
Upon request or demand of Lender after the occurrence and during the continuance
of an Event of Default, Borrower shall, at its expense, assemble the Collateral
and make it available to Lender at a convenient place (at the Land if tangible
property) reasonably acceptable to Lender. Borrower shall pay to Lender on
demand any and all expenses, including reasonable legal expenses and attorneys'
fees, incurred or paid by Lender in protecting its interest in the Collateral
and in enforcing its rights hereunder with respect to the Collateral after the
occurrence and during the continuance of an Event of Default. Any notice of
sale, disposition or other intended action by Lender with respect to the
Collateral sent to Borrower in accordance with the provisions hereof at least
ten (10) business days prior to such action, shall, except as otherwise provided
by applicable law, constitute reasonable notice to Borrower. The proceeds of any
disposition of the Collateral, or any part thereof, may, except as otherwise
required by applicable law, be applied by Lender to the payment of the Debt in
such priority and proportions as Lender in its discretion shall deem proper.
Borrower's (debtor's) principal place of business is as set forth on page one
hereof and the address of Lender (secured party) is as set forth on page one
hereof.
Section 1.4 Fixture Filing. Certain of the Property is or will become
"fixtures" (as that term is defined in the Uniform Commercial Code) on the Land,
and this Security Instrument, upon being filed for record in the real estate
records of the city or county wherein such fixtures are situated, shall operate
also as a financing statement filed as a fixture filing in accordance with the
applicable provisions of said Uniform Commercial Code upon such of the Property
that is or may become fixtures.
Section 1.5 Pledges of Monies Held. Borrower hereby pledges to Lender any
and all monies now or hereafter held by Lender or on behalf of Lender,
including, without limitation, any sums deposited in the Lockbox Account, the
Reserve Funds and Net Proceeds, as additional security for the Obligations until
expended or applied as provided in this Security Instrument.
CONDITIONS TO GRANT
TO HAVE AND TO HOLD the above granted and described Property unto and to
the use and benefit of Trustee and its successors and assigns, forever;
IN TRUST, WITH POWER OF SALE, to secure payment to Lender of the
Obligations at the time and in the manner provided for its payment in the Note
and in this Security Instrument.
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PROVIDED, HOWEVER, these presents are upon the express condition that, if
Borrower shall well and truly pay to Lender the Debt at the time and in the
manner provided in the Note, the Loan Agreement and this Security Instrument,
shall well and truly perform the Other Obligations as set forth in this Security
Instrument and shall well and truly abide by and comply with each and every
covenant and condition set forth herein and in the Note, the Loan Agreement and
the other Loan Documents, these presents and the estate hereby granted shall
cease, terminate and be void and, upon request of Borrower, Lender shall execute
a release of this Security Instrument evidencing the same; provided, however,
that Borrower's obligation to indemnify and hold harmless Lender pursuant to the
provisions hereof shall survive any such payment or release.
ARTICLE 2 - DEBT AND OBLIGATIONS SECURED
Section 2.1 Debt. This Security Instrument and the grants, assignments and
transfers made in Article 1 are given for the purpose of securing the Debt.
Section 2.2 Other Obligations. This Security Instrument and the grants,
assignments and transfers made in Article 1 are also given for the purpose of
securing the following (the "Other Obligations"):
(a) the performance of all other obligations of Borrower contained herein;
(b) the performance of each obligation of Borrower contained in the Loan
Agreement and any other Loan Document; and
(c) the performance of each obligation of Borrower contained in any
renewal, extension, amendment, modification, consolidation, change of,
or substitution or replacement for, all or any part of the Note, the
Loan Agreement or any other Loan Document.
Section 2.3 Debt and Other Obligations. Borrower's obligations for the
payment of the Debt and the performance of the Other Obligations shall be
referred to collectively herein as the "Obligations."
ARTICLE 3 - BORROWER COVENANTS
Borrower covenants and agrees that:
Section 3.1 Payment of Debt. Borrower will pay the Debt at the time and in
the manner provided in the Loan Agreement, the Note and this Security
Instrument.
Section 3.2 Incorporation by Reference. All the covenants, conditions and
agreements contained in (a) the Loan Agreement, (b) the Note and (c) all and any
of the other Loan Documents, are hereby made a part of this Security Instrument
to the same extent and with the same force as if fully set forth herein.
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Section 3.3 Insurance. Borrower shall obtain and maintain, or cause to be
maintained, in full force and effect at all times insurance with respect to
Borrower and the Property as required pursuant to the Loan Agreement.
Section 3.4 Maintenance of Property. Borrower shall cause the Property to
be maintained in a good and safe condition and repair. The Improvements, the
Fixtures, the Equipment and the Personal Property shall not be removed,
demolished or materially altered (except for normal replacement of the Fixtures,
the Equipment or the Personal Property, tenant finish and refurbishment of the
Improvements and otherwise as permitted by the Loan Documents) without the
consent of Lender, which consent shall not be unreasonably withheld or delayed.
Subject to the terms and conditions of the Loan Agreement, Borrower shall
promptly repair, replace or rebuild any part of the Property which may be
destroyed by any Casualty or become damaged, worn or dilapidated or which may be
affected by any Condemnation, and shall complete and pay for any structure at
any time in the process of construction or repair on the Land.
Section 3.5 Waste. Borrower shall not commit or suffer any waste of the
Property or make any change in the use of the Property which will in any way
materially increase the risk of fire or other hazard arising out of the
operation of the Property, or take any action that might invalidate or allow the
cancellation of any Policy, or do or permit to be done thereon anything that may
in any way materially and adversely impair the value of the Property or the
security of this Security Instrument. Borrower will not, without the prior
written consent of Lender, permit any drilling or exploration for or extraction,
removal, or production of any minerals from the surface or the subsurface of the
Land, regardless of the depth thereof or the method of mining or extraction
thereof.
Section 3.6 Payment for Labor and Materials. (a) Borrower will promptly
pay, bond or make other arrangements for payment otherwise acceptable to Lender
in all respects when due all bills and costs for labor, materials, and
specifically fabricated materials ("Labor and Material Costs") incurred in
connection with the Property and never permit to exist beyond the due date
thereof in respect of the Property or any part thereof any lien or security
interest, even though inferior to the liens and the security interests hereof,
and in any event never permit to be created or exist in respect of the Property
or any part thereof any other or additional lien or security interest other than
the liens or security interests hereof except for the Permitted Encumbrances;
provided, however, in the event Borrower receives notice of any such lien or
security interest Borrower shall have thirty (30) days to discharge, bond or
otherwise remove the same of record.
(b) After prior written notice to Lender, Borrower, at its own expense,
may contest by appropriate legal proceeding, promptly initiated and
conducted in good faith and with due diligence, the amount or validity
or application in whole or in part of any of the Labor and Material
Costs, provided that (i) no Event of Default has occurred and is
continuing under the Loan Agreement, the Note, this Security
Instrument or any of the other Loan Documents, (ii) Borrower is
permitted to do so under the provisions of any other mortgage, deed of
trust or deed to secure debt affecting the Property, (iii) such
proceeding shall suspend the collection of the Labor and Material
Costs from Borrower and from the Property or Borrower shall have paid
all of the Labor and Material Costs under protest, (iv) such
proceeding shall be permitted under and be conducted in accordance
with the provisions of any other instrument to which Borrower is
subject and shall not constitute a default thereunder, (v) neither the
Property nor any part thereof or interest therein will be in danger of
being sold, forfeited, terminated, canceled or lost, and (vi) Borrower
shall have furnished the security as may be required in the
proceeding, or as may be reasonably requested by Lender to insure the
payment of any contested Labor and Material Costs, together with all
interest and penalties thereon.
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Section 3.7 Performance of Other Agreements. Borrower shall observe and
perform each and every term, covenant and provision to be observed or performed
by Borrower pursuant to the Loan Agreement, any other Loan Document and any
other agreement or recorded instrument affecting or pertaining to the Property
and any amendments, modifications or changes thereto.
Section 3.8 Change of Name, Identity or Structure. Borrower shall not
change Borrower's name, identity (including its trade name or names) or, if not
an individual, Borrower's corporate, partnership or other structure without
notifying Lender of such change in writing at least fifteen (15) days prior to
the effective date of such change and, in the case of a change in Borrower's
structure, without first obtaining the prior written consent of Lender, which
consent shall not be unreasonably withheld or delayed. Borrower shall execute
and deliver to Lender, prior to or contemporaneously with the effective date of
any such change, any financing statement or financing statement change required
by Lender to establish or maintain the validity, perfection and priority of the
security interest granted herein. At the request of Lender, Borrower shall
execute a certificate in form reasonably satisfactory to Lender listing the
trade names under which Borrower intends to operate the Property, and
representing and warranting that Borrower does business under no other trade
name with respect to the Property.
Section 3.9 Title. Borrower has good and insurable fee simple title to the
real property comprising part of the Property and good title to the balance of
such Property, free and clear all Liens (as defined in the Loan Agreement)
whatsoever except the Permitted Encumbrances (as defined in the Loan Agreement),
such other Liens as are permitted pursuant to the Loan Documents and the Liens
created by the Loan Documents. The Permitted Encumbrances in the aggregate do
not materially and adversely affect the value, operation or use of the Property
or Borrower's ability to repay the Loan. This Security Instrument, when properly
recorded in the appropriate records, together with any Uniform Commercial Code
financing statements required to be filed in connection therewith, will create
(a) a valid, perfected first priority lien on the Property, subject only to
Permitted Encumbrances, other Liens permitted by the Loan Documents and the
Liens created by the Loan Documents and (b) perfected security interests in and
to, and perfected collateral assignments of, all personalty (including the
Leases), all in accordance with the terms thereof, in each case subject only to
any applicable Permitted Encumbrances, such other Liens as are permitted
pursuant to the Loan Documents and the Liens created by the Loan Documents to
the extent the same may be perfected by filing a financing statement. There are
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no claims for payment for work, labor or materials affecting the Property which
are past due and are or may become a lien prior to, or of equal priority with,
the Liens created by the Loan Documents unless such claims for payments are
being contested in accordance with the terms and conditions of this Security
Instrument.
ARTICLE 4 - OBLIGATIONS AND RELIANCES
Section 4.1 Relationship of Borrower and Lender. The relationship between
Borrower and Lender is solely that of debtor and creditor, and Lender has no
fiduciary or other special relationship with Borrower, and no term or condition
of any of the Loan Agreement, the Note, this Security Instrument and the other
Loan Documents shall be construed so as to deem the relationship between
Borrower and Lender to be other than that of debtor and creditor.
Section 4.2 No Reliance on Lender. The general partners, members,
principals and (if Borrower is a trust) beneficial owners of Borrower are
experienced in the ownership and operation of properties similar to the
Property, and Borrower and Lender are relying solely upon such expertise and
business plan in connection with the ownership and operation of the Property.
Borrower is not relying on Lender's expertise, business acumen or advice in
connection with the Property.
Section 4.3 No Lender Obligations. (a) Notwithstanding the provisions of
Subsections 1.1(h) and (n) or Section 1.2, Lender is not undertaking the
performance of (i) any obligations under the Leases; or (ii) any obligations
with respect to such agreements, contracts, certificates, instruments,
franchises, permits, trademarks, licenses and other documents.
(b) By accepting or approving anything required to be observed, performed
or fulfilled or to be given to Lender pursuant to this Security
Instrument, the Loan Agreement, the Note or the other Loan Documents,
including, without limitation, any officer's certificate, balance
sheet, statement of profit and loss or other financial statement,
survey, appraisal, or insurance policy, Lender shall not be deemed to
have warranted, consented to, or affirmed the sufficiency, the
legality or effectiveness of same, and such acceptance or approval
thereof shall not constitute any warranty or affirmation with respect
thereto by Lender.
Section 4.4 Reliance. Borrower recognizes and acknowledges that in
accepting the Loan Agreement, the Note, this Security Instrument and the other
Loan Documents, Lender is expressly and primarily relying on the truth and
accuracy of the warranties and representations set forth in Section 4.1 of the
Loan Agreement without any obligation to investigate the Property and
notwithstanding any investigation of the Property by Lender; that such reliance
existed on the part of Lender prior to the date hereof, that the warranties and
representations are a material inducement to Lender in making the Loan; and that
Lender would not be willing to make the Loan and accept this Security Instrument
in the absence of the warranties and representations as set forth in Section 4.1
of the Loan Agreement.
ARTICLE 5 - FURTHER ASSURANCES
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Section 5.1 Recording of Security Instrument, etc. Borrower forthwith upon
the execution and delivery of this Security Instrument and thereafter, from time
to time, will cause this Security Instrument and any of the other Loan Documents
creating a lien or security interest or evidencing the lien hereof upon the
Property and each instrument of further assurance to be filed, registered or
recorded in such manner and in such places as may be required by any present or
future law in order to publish notice of and fully to protect and perfect the
lien or security interest hereof upon, and the interest of Lender in, the
Property. Borrower will pay all taxes, filing, registration or recording fees,
and all expenses incident to the preparation, execution, acknowledgment and/or
recording of the Note, this Security Instrument, the other Loan Documents, any
note, deed of trust or mortgage supplemental hereto, any security instrument
with respect to the Property and any instrument of further assurance, and any
modification or amendment of the foregoing documents, and all federal, state,
county and municipal taxes, duties, imposts, assessments and charges arising out
of or in connection with the execution and delivery of this Security Instrument,
any deed of trust or mortgage supplemental hereto, any security instrument with
respect to the Property or any instrument of further assurance, and any
modification or amendment of the foregoing documents, except where prohibited by
law so to do.
Section 5.2 Further Acts, etc. Borrower will, at the cost of Borrower, and
without expense to Lender, do, execute, acknowledge and deliver all and every
further acts, deeds, conveyances, deeds of trust, mortgages, assignments,
notices of assignments, transfers and assurances as Lender shall, from time to
time, reasonably require, for the purpose of assuring, conveying, assigning,
transferring, and confirming unto Lender and Trustee the property and rights
hereby deeded, granted, bargained, sold, conveyed, confirmed, pledged, assigned,
warranted and transferred or intended now or hereafter so to be, or which
Borrower may be or may hereafter become bound to convey or assign to Lender, or
for carrying out the intention or facilitating the performance of the terms of
this Security Instrument or for filing, registering or recording this Security
Instrument, or for complying with all Legal Requirements. Borrower, promptly on
demand, will execute and deliver, and in the event it shall fail to so execute
and deliver, hereby authorizes Lender to execute in the name of Borrower or
without the signature of Borrower to the extent Lender may lawfully do so, one
or more financing statements to evidence more effectively the security interest
of Lender in the Property. Borrower grants to Lender an irrevocable power of
attorney coupled with an interest for the purpose of exercising and perfecting
any and all rights and remedies available to Lender at law and in equity,
including without limitation, such rights and remedies available to Lender
pursuant to this Section 5.2; provided, however, Lender will not exercise the
same without giving Borrower three (3) days advance written notice so long as
such notice does not materially effect Lender's ability to exercise its rights
and remedies.
Section 5.3 Changes in Tax, Debt, Credit and Documentary Stamp Laws. (a) If
any law is enacted or adopted or amended after the date of this Security
Instrument which deducts the Debt from the value of the Property for the purpose
of taxation or which imposes a tax, either directly or indirectly, on the Debt
or Lender's interest in the Property, Borrower will pay the tax, with interest
and penalties thereon, if any. If Lender is advised by counsel chosen by it that
the payment of tax by Borrower would be unlawful or taxable to Lender or
unenforceable or provide the basis for a defense of usury then Lender shall have
the option by written notice of not less than one hundred twenty (120) days to
declare the Debt immediately due and payable.
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(b) Borrower will not claim or demand or be entitled to any credit or
credits on account of the Debt for any part of the Taxes or Other
Charges assessed against the Property, or any part thereof, and no
deduction shall otherwise be made or claimed from the assessed value
of the Property, or any part thereof, for real estate tax purposes by
reason of this Security Instrument or the Debt. If such claim, credit
or deduction shall be required by law, Lender shall have the option,
by written notice of not less than one hundred twenty (120) days, to
declare the Debt immediately due and payable.
(c) If at any time the United States of America, any State thereof or any
subdivision of any such State shall require revenue or other stamps to
be affixed to the Note, this Security Instrument, or any of the other
Loan Documents or impose any other tax or charge on the same, Borrower
will pay for the same, with interest and penalties thereon, if any.
Section 5.4 Splitting of Deed of Trust. This Security Instrument and the
Note shall, at any time until the same shall be fully paid and satisfied, at the
sole election of Lender, be severed into two or more notes and two or more
security instruments in such denominations as Lender shall determine in its sole
discretion, each of which shall cover all or a portion of the Property to be
more particularly described therein. To that end, Borrower, upon written request
of Lender, shall execute, acknowledge and deliver, or cause to be executed,
acknowledged and delivered by the then owner of the Property, to Lender and/or
its designee or designees substitute notes and security instruments in such
principal amounts, aggregating not more than the then unpaid principal amount of
this Security Instrument, and containing terms, provisions and clauses similar
to those contained herein and in the Note, and such other documents and
instruments as may be reasonably required by Lender, provided that the costs
incurred herewith shall be at Lender's sole cost and expense. As a condition
hereto, Lender shall contemporaneously with the execution of the substitute
documents, return the old documents to Borrower "marked" VOID or CANCELED or
such documents shall otherwise be satisfied or released to Borrower's reasonable
satisfaction.
Section 5.5 Replacement Documents. Upon receipt of an affidavit of an
officer of Lender as to the loss, theft, destruction or mutilation of the Note
or any other Loan Document which is not of public record, and, in the case of
any such mutilation, upon surrender and cancellation of such Note or other Loan
Document, Borrower will issue, in lieu thereof, a replacement Note or other Loan
Document, dated the date of such lost, stolen, destroyed or mutilated Note or
other Loan Document in the same principal amount thereof and otherwise of like
tenor.
ARTICLE 6 - DUE ON SALE/ENCUMBRANCE
Section 6.1 Lender Reliance. Borrower acknowledges that Lender has examined
and relied on the experience of Borrower and its general partners, members,
principals and (if Borrower is a trust) beneficial owners in owning and
operating properties such as the Property in agreeing to make the Loan, and will
continue to rely on Borrower's ownership of the Property as a means of
maintaining the value of the Property as security for repayment of the Debt and
the performance of the Other Obligations. Borrower acknowledges that Lender has
a valid interest in maintaining the value of the Property so as to ensure that,
should Borrower default in the repayment of the Debt or the performance of the
Other Obligations, Lender can recover the Debt by a sale of the Property.
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Section 6.2 No Sale/Encumbrance. Neither Borrower nor any Restricted Party
shall Transfer the Property or any part thereof or any interest therein or
permit or suffer the Property or any part thereof or any interest therein to be
Transferred other than as expressly permitted pursuant to the terms of the Loan
Agreement.
ARTICLE 7 - RIGHTS AND REMEDIES UPON DEFAULT
Section 7.1 Remedies. Upon the occurrence and during the continuance of any
Event of Default, Borrower agrees that Lender or Trustee, or both may take such
action, without notice or demand, as it deems advisable to protect and enforce
its rights against Borrower and in and to the Property, including, but not
limited to, the following actions, each of which may be pursued concurrently or
otherwise, at such time and in such order as Lender or Trustee may determine, in
their sole discretion, without impairing or otherwise affecting the other rights
and remedies of Lender or Trustee:
(a) declare the entire unpaid Debt to be immediately due and payable;
(b) institute proceedings, judicial or otherwise, for the complete
foreclosure of this Security Instrument under any applicable provision
of law, in which case the Property or any interest therein may be sold
for cash or upon credit in one or more parcels or in several interests
or portions and in any order or manner;
(c) with or without entry, to the extent permitted and pursuant to the
procedures provided by applicable law, institute proceedings for the
partial foreclosure of this Security Instrument for the portion of the
Debt then due and payable, subject to the continuing lien and security
interest of this Security Instrument for the balance of the Debt not
then due, unimpaired and without loss of priority;
(d) to the extent permitted by applicable law, sell for cash or upon
credit the Property or any part thereof and all estate, claim, demand,
right, title and interest of Borrower therein and rights of redemption
thereof, pursuant to power of sale or otherwise, at one or more sales,
as an entirety or in parcels, at such time and place, upon such terms
and after such notice thereof as may be required or permitted by law;
(e) institute an action, suit or proceeding in equity for the specific
performance of any covenant, condition or agreement contained herein,
in the Note, the Loan Agreement or in the other Loan Documents;
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(f) recover judgment on the Note either before, during or after any
proceedings for the enforcement of this Security Instrument or the
other Loan Documents;
(g) apply for the appointment of a receiver, trustee, liquidator or
conservator of the Property, without notice and without regard for the
adequacy of the security for the Debt and without regard for the
solvency of Borrower, any guarantor, indemnitor with respect to the
Loan or of any Person liable for the payment of the Debt;
(h) revoke the license granted to Borrower under Section 1.2 hereof and
Lender may enter into or upon the Property, either personally or by
their agents, nominees or attorneys and dispossess Borrower and its
agents and servants therefrom, without liability for trespass, damages
or otherwise and exclude Borrower and its agents or servants wholly
therefrom, and take possession of all books, records and accounts
relating thereto and Borrower agrees to surrender possession of the
Property and of such books, records and accounts to Lender upon
demand, and thereupon Lender may (i) use, operate, manage, control,
insure, maintain, repair, restore and otherwise deal with all and
every part of the Property and conduct the business thereat; (ii)
complete any construction on the Property in such manner and form as
Lender deems advisable; (iii) make alterations, additions, renewals,
replacements and improvements to or on the Property; (iv) exercise all
rights and powers of Borrower with respect to the Property, whether in
the name of Borrower or otherwise, including, without limitation, the
right to make, cancel, enforce or modify Leases, obtain and evict
tenants, and demand, xxx for, collect and receive all Rents of the
Property and every part thereof; (v) require Borrower to pay monthly
in advance to Lender, or any receiver appointed to collect the Rents,
the fair and reasonable rental value for the use and occupation of
such part of the Property as may be occupied by Borrower; (vi) require
Borrower to vacate and surrender possession of the Property to Lender
or to such receiver and, in default thereof, Borrower may be evicted
by summary proceedings or otherwise; and (vii) apply the receipts from
the Property to the payment of the Debt, in such order, priority and
proportions as Lender shall deem appropriate in its sole discretion
after deducting therefrom all expenses (including reasonable
attorneys' fees) incurred in connection with the aforesaid operations
and all amounts necessary to pay the Taxes, Other Charges, insurance
and other expenses in connection with the Property, as well as just
and reasonable compensation for the services of Lender, its counsel,
agents and employees;
(i) exercise any and all rights and remedies granted to a secured party
upon default under the Uniform Commercial Code, including, without
limiting the generality of the foregoing: (i) the right to take
possession of the Fixtures, the Equipment, the Personal Property or
any part thereof, and to take such other measures as Lender may deem
necessary for the care, protection and preservation of the Fixtures,
the Equipment, the Personal Property, and (ii) request Borrower at its
expense to assemble the Fixtures, the Equipment, the Personal Property
and make it available to Lender at the Real Property or such other
convenient place acceptable to Lender. Any notice of sale, disposition
or other intended action by Lender with respect to the Fixtures, the
Equipment, the Personal Property sent to Borrower in accordance with
the provisions hereof at least ten (10) days prior to such action,
shall constitute commercially reasonable notice to Borrower;
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(j) apply any sums then deposited or held in escrow or otherwise by or on
behalf of Lender in accordance with the terms of the Loan Agreement,
this Security Instrument or any other Loan Document to the payment of
the following items in any order in its uncontrolled discretion:
(i) Taxes and Other Charges;
(ii) Insurance Premiums;
(iii) Interest on the unpaid principal balance of the Note;
(iv) Amortization of the unpaid principal balance of the Note;
(v) All other sums payable pursuant to the Note, the Loan Agreement,
this Security Instrument and the other Loan Documents, including
without limitation advances made by Lender pursuant to the terms
of this Security Instrument;
(k) pursue such other remedies as Lender may have under applicable law; or
(l) apply the undisbursed balance of any Net Proceeds Deficiency deposit,
together with interest thereon, to the payment of the Debt in such
order, priority and proportions as Lender shall deem to be appropriate
in its discretion.
In the event of a sale, by foreclosure, power of sale or otherwise, of less than
all of Property, this Security Instrument shall continue as a lien and security
interest on the remaining portion of the Property unimpaired and without loss of
priority.
Section 7.2 Application of Proceeds. The purchase money, proceeds and
avails of any disposition of the Property, and or any part thereof, or any other
sums collected by Lender pursuant to the Note, this Security Instrument or the
other Loan Documents, may be applied by Lender to the payment of the Debt in
such priority and proportions as Lender in its discretion shall deem proper.
Section 7.3 Right to Cure Defaults. Upon the occurrence and during the
continuance of any Event of Default, Lender may, but without any obligation to
do so and without notice to or demand on Borrower and without releasing Borrower
from any obligation hereunder, make any payment or do any act required of
Borrower hereunder in such manner and to such extent as Lender may deem
necessary to protect the security hereof. Lender is authorized to enter upon the
Property for such purposes, or appear in, defend, or bring any action or
proceeding to protect its interest in the Property or to foreclose this Security
15
Instrument or collect the Debt, and the cost and expense thereof (including
reasonable attorneys' fees to the extent permitted by law), with interest as
provided in this Section 7.3, shall constitute a portion of the Debt and shall
be due and payable to Lender upon demand. All such costs and expenses incurred
by Lender in remedying such Event of Default or such failed payment or act or in
appearing in, defending, or bringing any such action or proceeding shall bear
interest at the Default Rate, for the period after notice from Lender that such
cost or expense was incurred to the date of payment to Lender. All such costs
and expenses incurred by Lender together with interest thereon calculated at the
Default Rate shall be deemed to constitute a portion of the Debt and be secured
by this Security Instrument and the other Loan Documents and shall be
immediately due and payable upon demand by Lender therefor.
Section 7.4 Actions and Proceedings. Lender or Trustee has the right to
appear in and defend any action or proceeding brought with respect to the
Property and to bring any action or proceeding, in the name and on behalf of
Borrower, which Lender, in its discretion, decides should be brought to protect
its interest in the Property.
Section 7.5 Recovery of Sums Required To Be Paid. Lender shall have the
right from time to time to take action to recover any sum or sums which
constitute a part of the Debt as the same become due, without regard to whether
or not the balance of the Debt shall be due, and without prejudice to the right
of Lender or Trustee thereafter to bring an action of foreclosure, or any other
action, for a default or defaults by Borrower existing at the time such earlier
action was commenced.
Section 7.6 Examination of Books and Records. At reasonable times and upon
reasonable notice, Lender, its agents, accountants and attorneys shall have the
right to examine the records, books, management and other papers of Borrower
which reflect upon their financial condition, at the Property or at any office
regularly maintained by Borrower where the books and records are located. Lender
and its agents shall have the right to make copies and extracts from the
foregoing records and other papers. In addition, at reasonable times and upon
reasonable notice, Lender, its agents, accountants and attorneys shall have the
right to examine and audit the books and records of Borrower pertaining to the
income, expenses and operation of the Property during reasonable business hours
at any office of Borrower where the books and records are located. This Section
7.6 shall apply throughout the term of the Note and without regard to whether an
Event of Default has occurred or is continuing.
Section 7.7 Other Rights, etc. (a) The failure of Lender or Trustee to
insist upon strict performance of any term hereof shall not be deemed to be a
waiver of any term of this Security Instrument. Borrower shall not be relieved
of Borrower's obligations hereunder by reason of (i) the failure of Lender or
Trustee to comply with any request of Borrower or any guarantor or indemnitor
with respect to the Loan to take any action to foreclose this Security
Instrument or otherwise enforce any of the provisions hereof or of the Note or
the other Loan Documents, (ii) the release, regardless of consideration, of the
whole or any part of the Property, or of any person liable for the Debt or any
portion thereof, or (iii) any agreement or stipulation by Lender extending the
time of payment or otherwise modifying or supplementing the terms of the Note,
this Security Instrument or the other Loan Documents.
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(b) It is agreed that the risk of loss or damage to the Property is on
Borrower, and Lender shall have no liability whatsoever for decline in
value of the Property, for failure to maintain the Policies, or for
failure to determine whether insurance in force is adequate as to the
amount of risks insured. Possession by Lender shall not be deemed an
election of judicial relief if any such possession is requested or
obtained with respect to any Property or collateral not in Lender's
possession.
(c) Lender may resort for the payment of the Debt to any other security
held by Lender in such order and manner as Lender, in its discretion,
may elect. Lender or Trustee may take action to recover the Debt, or
any portion thereof, or to enforce any covenant hereof without
prejudice to the right of Lender or Trustee thereafter to foreclose
this Security Instrument. The rights of Lender or Trustee under this
Security Instrument shall be separate, distinct and cumulative and
none shall be given effect to the exclusion of the others. No act of
Lender or Trustee shall be construed as an election to proceed under
any one provision herein to the exclusion of any other provision.
Neither Lender nor Trustee shall be limited exclusively to the rights
and remedies herein stated but shall be entitled to every right and
remedy now or hereafter afforded at law or in equity.
Section 7.8 Right to Release Any Portion of the Property. Lender may
release any portion of the Property for such consideration as Lender may require
without, as to the remainder of the Property, in any way impairing or affecting
the lien or priority of this Security Instrument, or improving the position of
any subordinate lienholder with respect thereto, except to the extent that the
obligations hereunder shall have been reduced by the actual monetary
consideration, if any, received by Lender for such release, and may accept by
assignment, pledge or otherwise any other property in place thereof as Lender
may require without being accountable for so doing to any other lienholder. This
Security Instrument shall continue as a lien and security interest in the
remaining portion of the Property.
Section 7.9 Violation of Laws. If the Property is not in material
compliance with Legal Requirements, Lender may impose additional requirements
upon Borrower in connection herewith including, without limitation, monetary
reserves or financial equivalents.
Section 7.10 Recourse and Choice of Remedies. Notwithstanding any other
provision of this Security Instrument or the Loan Agreement, including, without
limitation, Section 9.4 of the Loan Agreement, Lender and other Indemnified
Parties (as hereinafter defined) are entitled to enforce the obligations of
Borrower, any guarantor and indemnitor contained in Sections 9.2, 9.3 and 9.4
herein without first resorting to or exhausting any security or collateral and
without first having recourse to the Note or any of the Property, through
foreclosure or acceptance of a deed in lieu of foreclosure or otherwise, and in
the event Lender commences a foreclosure action against the Property, or
otherwise causes Trustee to exercise the power of sale pursuant to this Security
Instrument, Lender is entitled to pursue a deficiency judgment with respect to
such obligations against Borrower and any guarantor or indemnitor with respect
to the Loan. The provisions of Sections 9.2, 9.3 and 9.4 herein are exceptions
to any non-recourse or exculpation provisions in the Loan Agreement, the Note,
this Security Instrument or the other Loan Documents, and Borrower and any
guarantor or indemnitor with respect to the Loan are fully and personally liable
for the obligations pursuant to Sections 9.2, 9.3 and 9.4 herein. The liability
17
of Borrower and any guarantor or indemnitor with respect to the Loan pursuant to
Sections 9.2, 9.3 and 9.4 herein is not limited to the original principal amount
of the Note. Notwithstanding the foregoing, nothing herein shall inhibit or
prevent Lender or Trustee from foreclosing or exercising a power of sale
pursuant to this Security Instrument or exercising any other rights and remedies
pursuant to the Loan Agreement, the Note, this Security Instrument and the other
Loan Documents, whether simultaneously with foreclosure proceedings or in any
other sequence. A separate action or actions may be brought and prosecuted
against Borrower pursuant to Sections 9.2, 9.3 and 9.4 herein whether or not
action is brought against any other Person or whether or not any other Person is
joined in the action or actions. In addition, Lender shall have the right but
not the obligation to join and participate in, as a party if it so elects, any
administrative or judicial proceedings or actions initiated in connection with
any matter addressed in Article 8 or Section 9.4 herein.
Section 7.11 Right of Entry. Upon reasonable notice to Borrower, Lender and
its agents shall have the right to enter and inspect the Property at all
reasonable times.
ARTICLE 8 - ENVIRONMENTAL HAZARDS
Section 8.1 Environmental Representations and Warranties. Except as
otherwise disclosed by that certainPhase I environmental report (or Phase II
environmental report, if required) delivered to Beneficiary by Grantor in
connection with the origination of the Loan (such report is referred to below as
the "Environmental Report"), (a) there are no Hazardous Substances (defined
below) or underground storage tanks in, on, or under the Secured Property,
except those that are both (i) in compliance with Environmental Laws (defined
below) and with permits issued pursuant thereto and (ii) fully disclosed to
Beneficiary in writing pursuant the Environmental Report; (b) there are no past,
present or to Borrower's knowledge, threatened Releases (defined below) of
Hazardous Substances in, on, under or from the Secured Property which has not
been fully remediated in accordance with Environmental Law; (c) to Borrower's
knowledge there is no threat of any Release of Hazardous Substances migrating to
the Secured Property; (d) to Borrower's knowledge there is no past or present
non-compliance with Environmental Laws, or with permits issued pursuant thereto,
in connection with the Secured Property which has not been fully remediated in
accordance with Environmental Law; (e) Grantor does not know of, and has not
received, any written or oral notice or other communication from any Person
(including but not limited to a Governmental Authority) relating to Hazardous
Substances or Remediation (defined below) thereof, of possible liability of any
Person pursuant to any Environmental Law, other environmental conditions in
connection with the Secured Property, or any actual or potential administrative
or judicial proceedings in connection with any of the foregoing; and (f) Grantor
has truthfully and fully provided to Beneficiary, in writing, any and all
information relating to conditions in, on, under or from the Secured Property
that is known to Grantor and all information that is contained in Grantor's
files and records, including, but not limited to, any reports relating to
Hazardous Substances in, on, under or from the Secured Property and/or to the
environmental condition of the Secured Property.
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"Environmental Law" means any present and future federal, state and local
laws, statutes, ordinances, rules, regulations and the like, as well as common
law, relating to protection of human health or the environment, relating to
Hazardous Substances, relating to liability for or costs of Remediation or
prevention of Releases of Hazardous Substances or relating to liability for or
costs of other actual or threatened danger to human health or the environment.
Environmental Law includes, but is not limited to, the following statutes, as
amended, any successor thereto, and any regulations promulgated pursuant
thereto, and any state or local statutes, ordinances, rules, regulations and the
like addressing similar issues: the Comprehensive Environmental Response,
Compensation and Liability Act; the Emergency Planning and Community
Right-to-Know Act; the Hazardous Substances Transportation Act; the Resource
Conservation and Recovery Act (including but not limited to Subtitle I relating
to underground storage tanks); the Solid Waste Disposal Act; the Clean Water
Act; the Clean Air Act; the Toxic Substances Control Act; the Safe Drinking
Water Act; the Occupational Safety and Health Act; the Federal Water Pollution
Control Act; the Federal Insecticide, Fungicide and Rodenticide Act; the
Endangered Species Act; the National Environmental Policy Act; and the River and
Harbors Appropriation Act. Environmental Law also includes, but is not limited
to, any present and future federal, state and local laws, statutes, ordinances,
rules, regulations and the like, as well as common law: conditioning transfer of
property upon a negative declaration or other approval of a governmental
authority of the environmental condition of the Secured Property; requiring
notification or disclosure of Releases of Hazardous Substances or other
environmental condition of the Secured Property to any governmental authority or
other Person, whether or not in connection with transfer of title to or interest
in property; imposing conditions or requirements in connection with permits or
other authorization for lawful activity; relating to nuisance, trespass or other
causes of action related to the Secured Property; or relating to wrongful death,
personal injury, or property or other damage in connection with any physical
condition or use of the Secured Property.
"Hazardous Substances" include but are not limited to any and all
substances (whether solid, liquid or gas) defined, listed, or otherwise
classified as pollutants, hazardous wastes, hazardous substances, hazardous
materials, extremely hazardous wastes, or words of similar meaning or regulatory
effect under any present or future Environmental Laws or that may have a
negative impact on human health or the environment, including but not limited to
petroleum and petroleum products, asbestos and asbestos-containing materials,
polychlorinated biphenyls, lead, radon, radioactive materials, flammables and
explosives, but excluding substances of kinds and in amounts ordinarily and
customarily used or stored in similar properties for the purpose of cleaning or
other maintenance or operations and otherwise in compliance with all
Environmental Laws.
"Release" of any Hazardous Substance includes but is not limited to any
release, deposit, discharge, emission, leaking, spilling, seeping, migrating,
injecting, pumping, pouring, emptying, escaping, dumping, disposing or other
movement of Hazardous Substances.
"Remediation" includes but is not limited to any response, remedial,
removal, or corrective action, any activity to cleanup, detoxify, decontaminate,
contain or otherwise remediate any Hazardous Substance, any actions to prevent,
cure or mitigate any Release of any Hazardous Substance, any action to comply
with any Environmental Laws or with any permits issued pursuant thereto, any
inspection, investigation, study, monitoring, assessment, audit, sampling and
testing, laboratory or other analysis, or evaluation relating to any Hazardous
Substances or to anything referred to in Article 8.
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Section 8.2 Environmental Covenants. Grantor covenants and agrees that: (a)
all uses and operations on or of the Secured Property, whether by Grantor or any
other Person, shall be in compliance with all Environmental Laws and permits
issued pursuant thereto; (b) except in compliance with Environmental Law, there
shall be no Releases of Hazardous Substances in, on, under or from the Secured
Property; (c) there shall be no Hazardous Substances in, on, or under the
Secured Property, except those that are both (i) in compliance with all
Environmental Laws and with permits issued pursuant thereto and (ii) fully
disclosed to Beneficiary in writing; (d) Grantor shall keep the Secured Property
free and clear of all liens and other encumbrances imposed pursuant to any
Environmental Law, whether due to any act or omission of Grantor or any other
Person (the "Environmental Liens"); (e) Grantor shall, at its sole cost and
expense, fully and expeditiously cooperate in all activities pursuant to Section
8.3 below, including but not limited to providing all relevant information and
making knowledgeable persons available for interviews; (f) Grantor shall, at its
sole cost and expense, perform any environmental site assessment or other
investigation of environmental conditions in connection with the Secured
Property, pursuant to any reasonable written request of Beneficiary made in the
event that Beneficiary has reason to believe that an environmental hazard exists
on the Secured Property (including but not limited to sampling, testing and
analysis of soil, water, air, building materials and other materials and
substances whether solid, liquid or gas provided that Grantor shall only make
such request if Beneficiary has good faith reason to believe that an undisclosed
Release of Hazardous Substance has occurred and/or that any provision of this
Security Deed has been breached), and share with Beneficiary the reports and
other results thereof, and Beneficiary and other Indemnified Parties shall be
entitled to rely on such reports and other results thereof to the extent
permitted by the Person preparing the same; (g) Grantor shall, at its sole cost
and expense, comply with all reasonable written requests of Beneficiary made in
the event that Beneficiary has reason to believe that an environmental hazard
exists on the Secured Property (i) reasonably effectuate Remediation of any
adverse environmental condition (including but not limited to a Release of a
Hazardous Substance other than a Release in compliance with Environmental Law)
in, on, under or from the Secured Property; (ii) comply with any Environmental
Law; (iii) comply with any directive from any Governmental Authority; and (iv)
take any other reasonable action necessary or appropriate for protection of
human health or the environment; (h) with respect to the existence of Hazardous
Substances on the Property, Grantor shall not do or allow any tenant or other
user of the Secured Property to do any act that materially increases the dangers
to human health or the environment, poses an unreasonable risk of harm to any
Person (whether on or off the Secured Property), impairs or may impair the value
of the Secured Property, is contrary to any requirement of any insurer,
constitutes a public or private nuisance, constitutes waste, or violates any
covenant, condition, agreement or easement applicable to the Secured Property;
and (i) Grantor shall immediately notify Beneficiary in writing of (A) any
presence or Releases or threatened Releases of Hazardous Substances in, on,
under, from or migrating towards the Secured Property; (B) any non-compliance
with any Environmental Laws related in any way to the Secured Property; (C) any
actual or potential Environmental Lien; (D) any required or proposed Remediation
of environmental conditions relating to the Secured Property; and (E) any
written or oral notice or other communication of which Grantor becomes aware
from any source whatsoever (including but not limited to a governmental entity)
relating in any way to Hazardous Substances or Remediation thereof, possible
liability of any Person pursuant to any Environmental Law, other environmental
conditions in connection with the Secured Property, or any actual or potential
administrative or judicial proceedings in connection with anything referred to
in this Article 8.
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Section 8.3 Beneficiary's Rights. In the event that Beneficiary has reason
to believe that an environmental hazard exists on the Secured Property that does
not, in Beneficiary's sole discretion, endanger any tenants or other occupants
of the Secured Property or their guests or the general public or materially and
adversely affect the value of the Secured Property, upon reasonable notice from
Beneficiary, Grantor shall, at Grantor's expense, promptly cause an engineer or
consultant satisfactory to Beneficiary to conduct any environmental assessment
or audit (the scope of which shall be determined in Beneficiary's sole and
absolute discretion) and take any samples of soil, groundwater or other water,
air, or building materials or any other invasive testing requested by
Beneficiary and promptly deliver the results of any such assessment, audit,
sampling or other testing; provided, however, if such results are not delivered
to Beneficiary within a reasonable period or if Beneficiary has reason to
believe that an environmental hazard exists on the Secured Property that, in
Beneficiary's sole judgment, endangers any tenant or other occupant of the
Secured Property or their guests or the general public or may materially and
adversely affect the value of the Secured Property, upon reasonable notice to
Grantor, Beneficiary and any other Person designated by Beneficiary, including
but not limited to any receiver, any representative of a governmental entity,
and any environmental consultant, shall have the right, but not the obligation,
to enter upon the Secured Property at all reasonable times to assess any and all
aspects of the environmental condition of the Secured Property and its use,
including but not limited to conducting any environmental assessment or audit
(the scope of which shall be determined in Beneficiary's sole and absolute
discretion) and taking samples of soil, groundwater or other water, air, or
building materials, and reasonably conducting other invasive testing. Grantor
shall cooperate with and provide Beneficiary and any such Person designated by
Beneficiary with access to the Secured Property.
ARTICLE 9 - INDEMNIFICATION
Section 9.1 General Indemnification. Borrower shall, at its sole cost and
expense, protect, defend, indemnify, release and hold harmless the Indemnified
Parties from and against any and all claims, suits, liabilities (including,
without limitation, strict liabilities), actions, proceedings, obligations,
debts, damages, losses, costs, expenses, diminutions in value, fines, penalties,
charges, fees, expenses, judgments, awards, amounts paid in settlement, punitive
damages, foreseeable and unforeseeable consequential damages, of whatever kind
or nature (including but not limited to reasonable attorneys' fees and other
costs of defense) (collectively, the "Losses") imposed upon or incurred by or
asserted against any Indemnified Parties and directly or indirectly arising out
of or in any way relating to any one or more of the following: (a) ownership of
this Security Instrument, the Property or any interest therein or receipt of any
Rents; (b) any amendment to, or restructuring of, the Debt, the Note, the Loan
Agreement, this Security Instrument, or any other Loan Documents; (c) any and
all lawful action that may be taken by Lender in connection with the enforcement
of the provisions of this Security Instrument, the Loan Agreement, the Note or
any of the other Loan Documents, whether or not suit is filed in connection with
same, or in connection with Borrower, any guarantor or indemnitor and/or any
partner, joint venturer or shareholder thereof becoming a party to a voluntary
or involuntary federal or state bankruptcy, insolvency or similar proceeding;
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(d) any accident, injury to or death of persons or loss of or damage to property
occurring in, on or about the Property or any part thereof or on the adjoining
sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways;
(e) any use, nonuse or condition in, on or about the Property or any part
thereof or on the adjoining sidewalks, curbs, adjacent property or adjacent
parking areas, streets or ways; (f) any failure on the part of Borrower to
perform or be in compliance with any of the terms of this Security Instrument,
the Note, the Loan Agreement or any of the other Loan Documents; (g) performance
of any labor or services or the furnishing of any materials or other property in
respect of the Property or any part thereof; (h) the failure of any person to
file timely with the Internal Revenue Service an accurate Form 0000-X, Xxxxxxxxx
for Recipients of Proceeds from Real Estate, Broker and Barter Exchange
Transactions, which may be required in connection with this Security Instrument,
or to supply a copy thereof in a timely fashion to the recipient of the proceeds
of the transaction in connection with which this Security Instrument is made;
(i) any failure of the Property to be in compliance with any Legal Requirements;
(j) the enforcement by any Indemnified Party of the provisions of this Article
9; (k) any and all claims and demands whatsoever which may be asserted against
Lender by reason of any alleged obligations or undertakings on its part to
perform or discharge any of the terms, covenants, or agreements contained in any
Lease; (l) the payment of any commission, charge or brokerage fee to anyone
claiming through Borrower which may be payable in connection with the funding of
the Loan; or (m) any misrepresentation made by Borrower in this Security
Instrument or any other Loan Document. Any amounts payable to Lender by reason
of the application of this Section 9.1 shall become immediately due and payable
and shall bear interest at the Default Rate from the date ten (10) days after
Borrower receives written notice from Lender of the existence and amount of such
Losses by Lender until paid. For purposes of this Article 9, the term
"Indemnified Parties" means Lender and any Person in whose name the encumbrance
created by this Security Instrument is or will have been recorded, persons and
entities who may hold or acquire or will have held a full or partial interest in
the Loan secured hereby (including, but not limited to, investors or prospective
investors in the Securities, as well as custodians, trustees and other
fiduciaries who hold or have held a full or partial interest in the Loan secured
hereby for the benefit of third parties) as well as the respective directors,
officers, shareholders, partners, employees, agents, servants, representatives,
contractors, subcontractors, affiliates, subsidiaries, participants, successors
and assigns of any and all of the foregoing (including, but not limited to, any
other Person who holds or acquires or will have held a participation or other
full or partial interest in the Loan, whether during the term of the Loan or as
a part of or following a foreclosure of the Loan and any successors by merger,
consolidation or acquisition of all or a substantial portion of Lender's assets
and business). Notwithstanding anything contained herein to the contrary,
Borrower's obligations to indemnify the Indemnified Parties in this Section 9.1
shall not include any Losses (i) incurred as a result of the gross negligence or
willful misconduct of any Indemnified Party, or (ii) accruing after any
Indemnified Party obtains possession of the Property or exercises its rights
hereunder with respect to the Leases.
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Section 9.2 Mortgage and/or Intangible Tax. Borrower shall, at its sole
cost and expense, protect, defend, indemnify, release and hold harmless the
Indemnified Parties from and against any and all Losses imposed upon or incurred
by or asserted against any Indemnified Parties and directly or indirectly
arising out of or in any way relating to any tax on the making and/or recording
of this Security Instrument, the Note or any of the other Loan Documents, but
excluding any income, franchise or other similar taxes.
Section 9.3 ERISA Indemnification. Borrower shall, at its sole cost and
expense, protect, defend, indemnify, release and hold harmless the Indemnified
Parties from and against any and all Losses (including, without limitation,
reasonable attorneys' fees and costs incurred in the investigation, defense, and
settlement of Losses incurred in correcting any prohibited transaction or in the
sale of a prohibited loan, and in obtaining any individual prohibited
transaction exemption under ERISA that may be required, in Lender's sole
discretion) that Lender may incur, directly or indirectly, as a result of a
default under Sections 4.1.9 or 5.2.9 of the Loan Agreement.
Section 9.4 Environmental Indemnification. Borrower shall, at its sole cost
and expense, protect, defend, indemnify, release and hold harmless the
Indemnified Parties from and against any and all Losses and costs of Remediation
(whether or not performed voluntarily), engineers' fees, environmental
consultants' fees, and costs of investigation (including but not limited to
sampling, testing, and analysis of soil, water, air, building materials and
other materials and substances whether solid, liquid or gas) imposed upon or
incurred by or asserted against any Indemnified Parties, and directly or
indirectly arising out of or in any way relating to any one or more of the
following: (a) any presence of any Hazardous Substances in, on, above, or under
the Property; (b) any past, present or threatened Release of Hazardous
Substances in, on, above, under or from the Property; (c) any activity by
Borrower, any Person affiliated with Borrower or any tenant or other user of the
Property in connection with any actual, proposed or threatened use, treatment,
storage, holding, existence, disposition or other Release, generation,
production, manufacturing, processing, refining, control, management, abatement,
removal, handling, transfer or transportation to or from the Property of any
Hazardous Substances at any tine located in, under, on or above the Property;
(d) any activity by Borrower, any Person affiliated with Borrower or any tenant
or other user of the Property in connection with any actual or proposed
Remediation of any Hazardous Substances at any time located in, under, on or
above the Property, whether or not such Remediation is voluntary or pursuant to
court or administrative order, including but not limited to any removal,
remedial or corrective action; (e) any past or present non-compliance or
violations of any Environmental Laws (or permits issued pursuant to any
Environmental Law) in connection with the Property or operations thereon,
including but not limited to any failure by Borrower, any Affiliate of Borrower
or any tenant or other user of the Property to comply with any order of any
Governmental Authority in connection with any Environmental Laws; (f) the
imposition, recording or filing of any Environmental Lien encumbering the
Property; (g) any administrative processes or proceedings or judicial
proceedings in any way connected with any matter addressed in Article 8 and this
Section 9.4; (h) any past, present or threatened injury to, destruction of or
loss of natural resources in any way connected with the Property, including but
not limited to costs to investigate and assess such injury, destruction or loss;
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(i) any acts of Borrower or other users of the Property in arranging for
disposal or treatment, or arranging with a transporter for transport for
disposal or treatment, of Hazardous Substances owned or possessed by such
Borrower or other users, at any facility or incineration vessel owned or
operated by another Person and containing such or any similar Hazardous
Substance; (j) any acts of Borrower or other users of the Property, in accepting
any Hazardous Substances for transport to disposal or treatment facilities,
incineration vessels or sites selected by Borrower or such other users, from
which there is a Release, or a threatened Release of any Hazardous Substance
which causes the incurrence of costs for Remediation; (k) any personal injury,
wrongful death, or property damage arising under any statutory or common law or
tort law theory, including but not limited to damages assessed for the
maintenance of a private or public nuisance or for the conducting of an
abnormally dangerous activity on or near the Property; and (1) any
misrepresentation or inaccuracy in any representation or warranty or material
breach or failure to perform any covenants or other obligations pursuant to
Article 8. This indemnity shall survive any termination, satisfaction or
foreclosure of this Security Instrument, subject to the provisions of Section
10.5.
Section 9.5 Duty to Defend; Attorneys' Fees and Other Fees and Expenses.
Upon written request by any Indemnified Party, Borrower shall defend such
Indemnified Party (if requested by any Indemnified Party, in the name of the
Indemnified Party), with respect to a claim covered by this Security Instrument
and/or any of the other Loan Documents, by attorneys and other professionals
approved by the Indemnified Parties, which approval shall not be unreasonably
withheld or delayed. Notwithstanding the foregoing, if the defendants in any
such claim or proceeding include both Borrower and any Indemnified Party and
Borrower and such Indemnified Party shall have reasonably concluded that there
are any legal defenses available to it and/or other Indemnified Parties that are
different from or additional to those available to Borrower, such Indemnified
Party shall have the right to select separate counsel to assert such legal
defenses and to otherwise participate in the defense of such action on behalf of
such Indemnified Party, provided that no compromise or settlement shall be
entered without Borrower's consent, which consent shall not be unreasonably
withheld. Upon demand, Borrower shall pay or, in the sole and absolute
discretion of the Indemnified Parties, reimburse, the Indemnified Parties for
the payment of reasonable fees and disbursements of attorneys, engineers,
environmental consultants, laboratories and other professionals in connection
therewith.
ARTICLE 10 - WAIVERS
Section 10.1 Waiver of Counterclaim. To the extent permitted by applicable
law, Borrower hereby waives the right to assert a counterclaim, other than a
mandatory or compulsory counterclaim, in any action or proceeding brought
against it by Lender arising out of or in any way connected with this Security
Instrument, the Loan Agreement, the Note, any of the other Loan Documents, or
the Obligations.
Section 10.2 Marshalling and Other Matters. To the extent permitted by
applicable law, Borrower hereby waives the benefit of all appraisement,
valuation, stay, extension, reinstatement and redemption laws now or hereafter
in force and all rights of marshalling in the event of any sale hereunder of the
Property or any part thereof or any interest therein. Further, Borrower hereby
expressly waives any and all rights of redemption from sale under any order or
decree of foreclosure of this Security Instrument on behalf of Borrower, and on
behalf of each and every person acquiring any interest in or title to the
Property subsequent to the date of this Security Instrument and on behalf of all
persons to the extent permitted by applicable law.
Section 10.3 Waiver of Notice. To the extent permitted by applicable law,
Borrower shall not be entitled to any notices of any nature whatsoever from
Lender or Trustee except with respect to matters for which this Security
Instrument specifically and expressly provides for the giving of notice by
Lender or Trustee to Borrower and except with respect to matters for which
Lender or Trustee is required by applicable law to give notice, and Borrower
hereby expressly waives the right to receive any notice from Lender or Trustee
with respect to any matter for which this Security Instrument does not
specifically and expressly provide for the giving of notice by Lender or Trustee
to Borrower.
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Section 10.4 Waiver of Statute of Limitations. To the extent permitted by
applicable law, Borrower hereby expressly waives and releases to the fullest
extent permitted by law, the pleading of any statute of limitations as a defense
to payment of the Debt or performance of its Other Obligations.
Section 10.5 Survival. The indemnifications made pursuant to Sections 9.3
and 9.4 herein and the representations and warranties, covenants, and other
obligations arising under Article 8, shall continue indefinitely in full force
and effect and shall survive and shall in no way be impaired by any of the
following: any satisfaction or other termination of this Security Instrument,
any assignment or other transfer of all or any portion of this Security
Instrument or Lender's interest in the Property (but, in such case, shall
benefit both Indemnified Parties and any assignee or transferee; provided that
in the event of a sale to a third party purchaser of the Property that is not an
Affiliate of Lender this indemnification shall not benefit such purchaser), any
exercise of Lender's rights and remedies pursuant hereto including, but not
limited to, foreclosure or acceptance of a deed in lieu of foreclosure, any
exercise of any rights and remedies pursuant to the Loan Agreement, the Note or
any of the other Loan Documents, any transfer of all or any portion of the
Property (whether by Borrower or by Lender following foreclosure or acceptance
of a deed in lieu of foreclosure or at any other time), any amendment to this
Security Instrument, the Loan Agreement, the Note or the other Loan Documents,
and any act or omission that might otherwise be construed as a release or
discharge of Borrower from the obligations pursuant hereto.
ARTICLE 11 - EXCULPATION
The provisions of Section 9.4 of the Loan Agreement are hereby incorporated
by reference into this Security Instrument to the same extent and with the same
force as if fully set forth herein.
ARTICLE 12 - NOTICES
All notices or other written communications hereunder shall be delivered in
accordance with Section 10.6 of the Loan Agreement.
ARTICLE 13 - APPLICABLE LAW
Section 13.1 Governing Law. This security instrument shall be governed in
accordance with the terms and provisions of Section 10.3 of the Loan Agreement.
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Section 13.2 Usury Laws. Notwithstanding anything to the contrary, (a) all
agreements and communications between Borrower and Lender are hereby and shall
automatically be limited so that, after taking into account all amounts deemed
interest, the interest contracted for, charged or received by Lender shall never
exceed the maximum lawful rate or amount, (b) in calculating whether any
interest exceeds the lawful maximum, all such interest shall be amortized,
prorated, allocated and spread over the full amount and term of all principal
indebtedness of Borrower to Lender, and (c) if through any contingency or event,
Lender receives or is deemed to receive interest in excess of the lawful
maximum, any such excess shall be deemed to have been applied toward payment of
the principal of any and all then outstanding indebtedness of Borrower to
Lender, or if there is no such indebtedness, shall immediately be returned to
Borrower.
Section 13.3 Provisions Subject to Applicable Law. All rights, powers and
remedies provided in this Security Instrument may be exercised only to the
extent that the exercise thereof does not violate any applicable provisions of
law and are intended to be limited to the extent necessary so that they will not
render this Security Instrument invalid, unenforceable or not entitled to be
recorded, registered or filed under the provisions of any applicable law. If any
term of this Security Instrument or any application thereof shall be invalid or
unenforceable, the remainder of this Security Instrument and any other
application of the term shall not be affected thereby.
ARTICLE 14 - DEFINITIONS
All capitalized terms not defined herein shall have the respective meanings
set forth in the Loan Agreement. Unless the context clearly indicates a contrary
intent or unless otherwise specifically provided herein, words used in this
Security Instrument may be used interchangeably in singular or plural form and
the word "Borrower" shall mean "each Borrower and any subsequent owner or owners
of the Property or any part thereof or any interest therein (provided that in
the event of a subsequent owner such owner assumes the Loan in accordance with
the terms and conditions of the Loan Agreement)," the word "Lender" shall mean
"Lender and any subsequent holder of the Note," the word "Note" shall mean "the
Note and any other evidence of indebtedness secured by this Security
Instrument," the word "Property" shall include any portion of the Property and
any interest therein, and the phrases "attorneys' fees", "legal fees" and
"counsel fees" shall include any and all attorneys', paralegal and law clerk
fees and disbursements, including, but not limited to, fees and disbursements at
the pre-trial, trial and appellate levels incurred or paid by Lender in
protecting its interest in the Property, the Leases and the Rents and enforcing
its rights hereunder.
ARTICLE 15 - MISCELLANEOUS PROVISIONS
Section 15.1 No Oral Change. This Security Instrument, and any provisions
hereof, may not be modified, amended, waived, extended, changed, discharged or
terminated orally or by any act or failure to act on the part of Borrower or
Lender, but only by an agreement in writing signed by the party against whom
enforcement of any modification, amendment, waiver, extension, change, discharge
or termination is sought.
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Section 15.2 Successors and Assigns. This Security Instrument shall be
binding upon and inure to the benefit of Borrower and Lender and their
respective successors and assigns forever.
Section 15.3 Inapplicable Provisions. If any term, covenant or condition of
the Loan Agreement, the Note or this Security Instrument is held to be invalid,
illegal or unenforceable in any respect, the Loan Agreement, the Note and this
Security Instrument shall be construed without such provision.
Section 15.4 Headings, etc. The headings and captions of various Sections
of this Security Instrument are for convenience of reference only and are not to
be construed as defining or limiting, in any way, the scope or intent of the
provisions hereof.
Section 15.5 Number and Gender. Whenever the context may require, any
pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns and pronouns shall include the
plural and vice versa.
Section 15.6 Subrogation. If any or all of the proceeds of the Note have
been used to extinguish, extend or renew any indebtedness heretofore existing
against the Property, then, to the extent of the funds so used, Lender shall be
subrogated to all of the rights, claims, liens, titles, and interests existing
against the Property heretofore held by, or in favor of, the holder of such
indebtedness and such former rights, claims, liens, titles, and interests, if
any, are not waived but rather are continued in full force and effect in favor
of Lender and are merged with the lien and security interest created herein as
cumulative security for the repayment of the Debt, the performance and discharge
of Borrower's obligations hereunder, under the Loan Agreement, the Note and the
other Loan Documents and the performance and discharge of the Other Obligations.
Section 15.7 Entire Agreement. The Note, the Loan Agreement, this Security
Instrument and the other Loan Documents constitute the entire understanding and
agreement between Borrower and Lender with respect to the transactions arising
in connection with the Debt and supersede all prior written or oral
understandings and agreements between Borrower and Lender with respect thereto.
Borrower hereby acknowledges that, except as incorporated in writing in the
Note, the Loan Agreement, this Security Instrument and the other Loan Documents,
there are not, and were not, and no persons are or were authorized by Lender to
make, any representations, understandings, stipulations, agreements or promises,
oral or written, with respect to the transaction which is the subject of the
Note, the Loan Agreement, this Security Instrument and the other Loan Documents.
Section 15.8 Limitation on Lender's Responsibility. No provision of this
Security Instrument shall operate to place any obligation or liability for the
control, care, management or repair of the Property upon Lender, nor shall it
operate to make Lender responsible or liable for any waste committed on the
Property by the tenants or any other Person, or for any dangerous or defective
condition of the Property, or for any negligence in the management, upkeep,
repair or control of the Property resulting in loss or injury or death to any
tenant, licensee, employee or stranger. Nothing herein contained shall be
construed as constituting Lender a "mortgagee in possession."
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ARTICLE 16 - DEED OF TRUST PROVISIONS
Section 16.1 Concerning the Trustee. Trustee shall be under no
duty to take any action hereunder except as expressly required hereunder or by
law, or to perform any act which would involve Trustee in any material expense
or liability or to institute or defend any suit in respect hereof, unless
properly indemnified to Trustee's reasonable satisfaction. Trustee, by
acceptance of this Security Instrument, covenants to perform and fulfill the
trusts herein created, being liable, however, only for negligence or willful
misconduct, and hereby waives any statutory fee and agrees to accept reasonable
compensation, in lieu thereof, for any services rendered by Trustee in
accordance with the terms hereof. Trustee may resign at any time upon giving
thirty (30) days' notice to Borrower and to Lender. Lender may remove Trustee at
any time or from time to time and select a successor trustee. In the event of
the death, removal, resignation, refusal to act, or inability to act of Trustee,
or in its sole discretion for any reason whatsoever Lender may, without notice
and without specifying any reason therefor and without applying to any court,
select and appoint a successor trustee, by an instrument recorded wherever this
Security Instrument is recorded and all powers, rights, duties and authority of
Trustee, as aforesaid, shall thereupon become vested in such successor. Such
substitute trustee shall not be required to give bond for the faithful
performance of the duties of Trustee hereunder unless required by Lender. The
procedure provided for in this paragraph for substitution of Trustee shall be in
addition to and not in exclusion of any other provisions for substitution, by
law or otherwise.
Section 16.2 Trustee's Fees. Borrower shall pay all reasonable costs, fees
and expenses incurred by Trustee and Trustee's agents and counsel in connection
with the performance by Trustee of Trustee's duties hereunder and all such
costs, fees and expenses shall be secured by this Security Instrument.
Section 16.3 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 Agreement, the Note, this Security
Instrument or the other 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 Property
for debts contracted for or liability or damages incurred in the management or
operation of the Property. Trustee shall have the right to rely on any
instrument, document, or signature authorizing or supporting an 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 actual 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.
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Section 16.4 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.
Section 16.5 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 written
request by the Trustee or substitute trustee, any and all such deeds,
conveyances and instruments reasonably requested shall be made, executed,
acknowledged, and delivered and shall be caused to be recorded and/or filed by
Borrower.
Section 16.6 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.
ARTICLE 17 - SPECIAL TEXAS PROVISIONS
Section 17.1 Principles of Construction. In the event of any
inconsistencies between the terms and provisions of this Article 17 and the
terms and provisions of any other Article of this Deed of Trust, the terms and
provisions of this Article 17 shall govern and control.
Section 17.2 Warranty of Title. Borrower warrants that Borrower has good,
insurable and fee simple indefeasible title to the Property and has the full
power, authority and right to execute, deliver and perform its obligations under
this Security Instrument and to deed, encumber, mortgage, give, grant, bargain,
sell, alienate, enfeoff, convey, confirm, pledge, assign and hypothecate the
same and that Borrower possesses an unencumbered fee simple indefeasible estate
in the Property and the Improvements, subject to those exceptions and
encumbrances shown in the title insurance policy insuring the lien of this
Security Instrument, and that it owns the Property free and clear of all liens,
encumbrances and charges whatsoever except for those exceptions shown in the
title insurance policy insuring the lien of this Security Instrument and that
this Security Instrument is and will remain a valid and enforceable first lien
on and security interest in the Property, subject only to said exceptions.
Borrower shall forever warrant, defend and preserve such title and the validity
and priority of the lien of this Security Instrument and shall forever warrant
and defend the same to Lender against the claims of all persons whomsoever.
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Section 17.3 Instrument. This Security Instrument shall be deemed and shall
be enforceable as a deed of trust and financing statement.
Section 17.4 Foreclosure. Upon the occurrence of any Event of Default,
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:
(a) Public Sale. Trustee is hereby authorized and empowered, and it shall
be Trustee's special duty, upon such request of Lender, to sell the
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 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, governing sales of Texas real property under powers of sale
conferred by deeds of trust. Trustee or his successor or substitute
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 Trustee,
including the posting of notices, and the conduct of sale, but in the
name and on behalf of Trustee, his successor or substitute.
(b) Right to Require Proof of Financial Ability and/or Cash Bid. At any
time during the bidding, the Trustee may require a bidding party (A)
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 (B)
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 (1) the Trustee shall be authorized to
caution the Questioned Bidder concerning the legal obligations to be
incurred in submitting bids, and (2) 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 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 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.
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(c) Sale Subject to Unmatured Debt. 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 Debt, Lender may, at Lender's
option, at once or at any time thereafter while any matured installment remains
unpaid, without declaring the entire Debt to be due and payable, orally or in
writing direct Trustee to enforce this Security Instrument and to sell the
Property subject to such unmatured Debt and to the rights, powers, liens,
security interests, and assignments securing or providing recourse for payment
of such unmatured Debt, in the same manner, all as provided in the preceding
provisions of this subsection. Sales made without maturing the Debt may be made
hereunder whenever there is a default in the payment of any installment of the
Debt, 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 Debt or the rights, powers, liens, security interests, and
assignments securing or providing recourse for payment of the Debt.
(d) Partial Foreclosure. Sale of a part of the Property shall not exhaust
the power of sale, but sales may be made from time to time until the Debt is
paid 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 Property and the Improvements, but also the Equipment and other
interests constituting a part of the Property or any part thereof, along with
the Property 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 Property separately from the remainder of the Property. It shall not be
necessary to have present or to exhibit at any sale any of the Property. Any
sale of personal property made hereunder shall be deemed to have been a public
sale conducted in a commercially reasonable manner if held contemporaneously
with, or as part of, and upon the same notice as required for the sale of real
property under the power of sale granted herein.
(e) 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
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 Debt, 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 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 Property by virtue hereof.
Section 17.5 Receiver. Lender, as a matter of right and without regard to
the sufficiency of the security for repayment of the Debt and performance and
discharge of the obligations hereunder, 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 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.
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Section 17.6 Inapplicability of Credit Code. In no event shall the
provisions of Article 5069, ch. 15 of the Revised Civil Statutes of Texas (which
regulates certain revolving credit loan accounts and revolving triparty
accounts) apply to the loan evidenced by the Loan Documents and/or secured
hereby.
Section 17.7 Maturity Date. The Maturity date of the Note secured hereby is
December 9, 2004, as such Maturity Date may be extended pursuant to the terms of
the Loan Documents.
Section 17.8 Notice of Indemnification. BORROWER ACKNOWLEDGES THAT THIS
SECURITY INSTRUMENT PROVIDES FOR INDEMNIFICATION OF LENDER AND TRUSTEE BY
BORROWER. IT IS SPECIFICALLY INTENDED BY BORROWER, LENDER, AND TRUSTEE THAT ALL
INDEMNITY OBLIGATIONS AND LIABILITIES ASSUMED BY BORROWER HEREUNDER BE WITHOUT
LIMIT AND WITHOUT REGARD TO THE CAUSE OR CAUSES THEREOF (INCLUDING PREEXISTING
CONDITIONS), STRICT LIABILITY, OR THE NEGLIGENCE OF ANY PARTY OR PARTIES
(INCLUDING LENDER AND TRUSTEE) WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR
CONCURRENT, OR PASSIVE. THE PARTIES SPECIFICALLY INTEND THAT LENDER AND TRUSTEE
ARE TO BE INDEMNIFIED AGAINST THEIR OWN NEGLIGENCE.
Section 17.9 THE BORROWER HEREBY DECLARES AND ACKNOWLEDGES THAT THE
BORROWER HAS RECEIVED, WITHOUT CHARGE, A TRUE COPY OF THIS SECURITY INSTRUMENT.
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IN WITNESS WHEREOF, the party hereto has caused this Security Instrument to
be duly executed by its duly authorized representative, as of the day and year
first above written.
BORROWER:
XXXXX POST OAK LIMITED PARTNERSHIP,
a Delaware limited partnership
By: XXXXX POST OAK, INC., a Delaware
corporation, its general partner
By: /S/ Xxxxxx X. Xxxxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President
33
STATE OF FLORIDA )
) ss.
COUNTY OF PALM BEACH )
This instrument was acknowledged before me on the 6th day of December, 2002, by
Xxxxxx X. Xxxxxxxxx, the Vice President of Xxxxx Post Oak, Inc., a Delaware
corporation, the general partner of Xxxxx Post Oak Limited Partnership, a
Delaware limited partnership.
(SEAL) /S/ Xxxxx X. Xxxxxxxx
----------------------------------
My commission Expires: Print Name of Notary:
34
EXHIBIT A
(Legal Description)
