Exhibit 4.42
DISCOVERY ZONE, INC.
(Grantor),
to
THE PUBLIC TRUSTEE OF ▇▇▇▇▇▇▇ COUNTY,
COLORADO, as Trustee
(Trustee)
for the benefit of
▇▇▇▇▇▇▇▇'▇ CORPORATION
(Beneficiary)
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AMENDED AND RESTATED DEED OF TRUST, ASSIGNMENT OF LEASES AND
RENTS, SECURITY AGREEMENT AND FIXTURE FILING
--------------------------------------------
Dated as of July 29, 1997
DOCUMENT PREPARED BY AND
AFTER RECORDING RETURN TO:
Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
[LITTLETON, COLORADO PROPERTY]
THIS AMENDED AND RESTATED DEED OF TRUST, ASSIGNMENT OF LEASES AND
RENTS, SECURITY AGREEMENT AND FIXTURE FILING (as the same may from time to time
be extended, renewed or modified, this "Deed of Trust"), made as of the 29th day
of July, 1997, by DISCOVERY ZONE, INC., a Delaware corporation ("Grantor"),
having its principal place of business at One Corporate Center, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, as successor by merger to LEAPS &
BOUNDS, INC., to The Public Trustee of ▇▇▇▇▇▇▇ County, Colorado (and any
subsequent substitutes or successors thereof pursuant to Section 50 below,
"Trustee"), to and for the benefit of ▇▇▇▇▇▇▇▇'▇ CORPORATION a Delaware
corporation ("Beneficiary"), having an address at ▇▇▇ ▇▇▇▇▇▇▇▇'▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
W I T N E S S E T H:
A. WHEREAS, prior to Grantor's several predecessors in interest
filing their voluntary petitions for relief under chapter 11, title 11, United
States Code (the "Bankruptcy Code"), Grantor's predecessors in interest with
respect to the Trust Property (as hereinafter defined), Leaps & Bounds, Inc.
("LBI") had provided Beneficiary with a First Deed of Trust on the Trust
Property (as hereinafter defined), dated as of August 30, 1994 (the "Original
Deed of Trust") and identified by the recording information set forth on
Schedule A hereto, to secure certain obligations owed to Beneficiary under the
Agreement and Plan of Merger among Beneficiary, Grantor, Discovery Zone, Inc., a
Delaware corporation ("Old DZI") and Discovery Zone International, Inc.
("DZII"), a Delaware corporation, dated as of August 30, 1994 (the "Merger
Agreement"); and
B. WHEREAS, pursuant to Section 11.2(a)(iii) of the Merger
Agreement, Old DZI agreed to defend, indemnify and hold Beneficiary and its
affiliates harmless in respect of all expenses, losses, costs, deficiencies,
liabilities and damages (including related and reasonable counsel fees and
expenses, and compensatory and demonstrable consequential damages) incurred or
suffered by Beneficiary as a direct result of, inter alia, any breach by Old DZI
or LBI of the leases or subleases relating to certain properties that result in
any payment by Beneficiary in connection with any guarantee by Beneficiary of
such leases and pursuant to Section 10.3(f) of the Merger Agreement it was
agreed that certain security would be provided to secure the obligations under
Section 11.2(a)(iii) of the Merger Agreement, including without limitation, a
first priority security interest in the Land and Improvements (the "Agreement to
Indemnify"); and
C. WHEREAS, following the filing of their respective prayers for
relief under the Bankruptcy Code, Grantor's predecessors in interest, Old DZI,
their affiliated debtors, including DZII and LBI (the "Debtors"), and
Beneficiary entered into the Stipulation and Order Between Debtors and
▇▇▇▇▇▇▇▇'▇ Corporation Providing For The Resolution, Settlement And Compromise
of Disputes And For Rent Deferrals And Allowance of Certain Claims (the
"Stipulation and Order") that was entered by the United States Bankruptcy Court
for the District of Delaware (the "Bankruptcy Court") on November 18, 1996,
which was not appealed or otherwise challenged, became a final order, remains in
full force and effect and to
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which Grantor is bound, Section 7 of which is captioned "CONTINUING SECURITY"
and provides, in pertinent part, that the valid and enforceable first priority
security interest on the Land and Improvements and certain other collateral
shall secure the performance and payment of all of the obligations of Grantor to
Beneficiary under the Notes (as hereinafter defined), any obligations of
Beneficiary that may arise in connection with the Assumption Locations whether
pursuant to any guaranty, lease, sublease or otherwise, any obligations of
Grantor that may arise in the event of a Liquidation, and any continuing
obligations of Grantor relating to the Rejection Location(s) and the Prior
Rejection Locations (as such terms are defined therein); and
D. WHEREAS, pursuant to the Stipulation and Order and 11 U.S.C.
Section 365, the Debtors, as predecessors in interest to Grantor, assumed the
subleases relating to certain properties (the "Assumed Properties") which
subleases (the "Assumed Property Subleases") expressly incorporate the Agreement
to Indemnify as it relates to any current or future obligations of Beneficiary
relating to the Assumed Properties; and
E. WHEREAS, pursuant to the Stipulation and Order and the Plan (as
hereinafter defined), this Deed of Trust hereby amends and restates the Original
Deed of Trust in its entirety in accordance with the terms and provisions set
forth herein; and
F. WHEREAS, this Deed of Trust, together with certain other Deeds of
Trust, Mortgages or similar encumbrances, are intended to and do secure the
obligations of Grantor and its predecessors in interest and the other Debtors,
to Beneficiary under all of the Stipulation and Order, the Agreement to
Indemnify, the Secured Rent Deferral Notes (as hereinafter defined) and the
Secured Rejection Note (as hereinafter defined); and
G. WHEREAS, pursuant to the plan of reorganization for Old DZI and
its affiliated debtors confirmed by the Bankruptcy Court by order entered on
July 18, 1997 (the "Plan"), and as required by the terms of the Stipulation
and Order, Grantor, as the reorganized successor of the Debtors, is obligated
to issue to Beneficiary Secured Rent Deferral Notes in the aggregate original
principal amount of $266,466.24, which amount is subject to increase each
month in accordance with the terms thereof (the "Secured Rent Deferral
Notes") and Secured Rejection Note in the aggregate original principal amount
of $4,416,237.90 (the "Secured Reduction Note" and, together with the Secured
Rent Deferral Notes, the "Notes"); and
H. WHEREAS, pursuant to the Plan, all of the Debtors and their
reorganized successors have merged into Grantor, and simultaneously with such
merger, all property of LBI and the other Debtors, including the Trust Property,
has been revested in Grantor, as the successor entity of the Debtors; and
1. WHEREAS, in accordance with the foregoing, Grantor is the fee
simple owner of the real estate described in Exhibit A attached hereto commonly
known as ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ (the "Land");
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NOW THEREFORE, with reference to the foregoing recitals and for good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Grantor and Beneficiary hereby agree that the Original Deed of
Trust is hereby amended and restated in its entirety as follows:
For the purpose of securing the payment and performance of all of the
obligations (the "Obligations") of Grantor to Beneficiary, including without
limitation, any and all obligations of Grantor, as successor in interest to Old
DZI, DZII, LBI and their affiliated debtors, under this Deed of Trust, the
Agreement to Indemnify (including, without limitation, any contingent
obligations thereunder), the Stipulation and Order (including, without
limitation, the obligations described in Section 7 thereof which are referred to
in paragraph C of the recitals above), the Plan and the Notes (including any and
all subsequent advances made pursuant to the terms of the Notes), and all other
documents evidencing or securing any such obligations (collectively, the
"Relevant Documents"), Grantor by these presents hereby GRANTS, BARGAINS, SELLS,
WARRANTS, PLEDGES, ASSIGNS AND CONVEYS to Trustee and its successors and assigns
forever in trust, WITH POWER OF SALE, for the benefit of Beneficiary, the Land
and the buildings, structures and improvements of every nature whatsoever now or
hereafter located thereon to the extent owned by Grantor (including, but not
limited to, all gas and electric fixtures, radiators, heaters, docks and docking
facilities, engines and machinery, boilers, elevators and motors, plumbing,
heating and air conditioning fixtures, carpeting and other floor coverings,
water heaters, awnings and storm sashes which are or shall be attached to the
Land or said buildings, structures or improvements) (the "Improvements");
TOGETHER WITH: all right, title, interest and estate of Grantor now
owned, or hereafter acquired, in and to the following property, rights, interest
and estates relating to the Land and the Improvements, together with Grantor's
interest in the following property, rights, interests and estates hereinafter
described (the Land, Improvements, and the following property, rights, interests
and estates being hereinafter collectively referred to as the "Trust Property"):
(a) all easements, rights-of-way, strips and gores of land, streets,
ways, alleys, passages, sewer rights, water, water courses, water rights and
powers, air rights and development rights, construction and equipment
warranties, and all estates, rights, titles, interests, privileges, liberties,
tenements, hereditaments and appurtenances of any nature whatsoever, in any way
belonging, relating to or pertaining to the Land and the Improvements and the
reversion and reversions, remainder and remainders, and all land lying in the
bed of any street, road or avenue, opened or proposed, in front of or adjoining
the Land, to the center line thereof and all the estates, rights, titles,
interests, dower and rights of dower, curtesy and rights of curtesy, property,
possession, claim and demand whatsoever, both at law and in equity, of Grantor
of, in and to the Land and the Improvements and every part and parcel thereof,
with the appurtenances thereto, and in and to any streets, ways, alleys,
passages, strips or gores of land adjoining the Land or any part thereof;
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(b) all fixtures, attachments and other articles attached to the Land
or the Improvements constituting realty or real property now or hereafter owned
by Grantor or in which Grantor has or shall acquire an interest, now or
hereafter located on, attached to or contained in or used or usable in
connection with the Trust Property, and including, without limitation, all
building or construction materials intended for construction, reconstruction,
alteration or repair of or installation on or in the Trust Property, of every
kind and nature whatsoever now owned or hereafter acquired by Grantor, and all
proceeds thereof, as well as all additions to, appurtenances, substitutions for,
replacements of or accessions to any of the items recited as aforesaid and all
attachments, components, parts (including spare parts) and accessories, whether
installed thereon or affixed thereto, now or hereafter owned by Grantor and used
or intended to be used in connection with, or with the operation of, the Trust
Property, to the extent constituting real property, but not including play
equipment or other similar-type entertainment equipment relating to the
operation of the "Discovery Zone" facility on the Trust Property unless removal
of such equipment would cause structural damage to the Land or the Improvements
(collectively, the "Fixtures");
(c) all awards or payments, including interest thereon, which may
heretofore and hereafter be made with respect to the Trust 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 said rights),
or for a change of grade, or for any other injury to or decrease in the value of
the Trust Property;
(d) to the extent assignable (and to the extent relating to the
general occupancy and use of the Trust Property as opposed to the operation of
the "Discovery Zone" entertainment facility on the Trust Property), leases,
subleases (including sub-subleases), lettings, licenses, concessions, occupancy
agreements and other agreements which grant a possessory interest in, or the
right to use or occupy, all or any part of the Trust Property now or hereafter
entered into, and all amendments, extensions, renewals and guarantees thereof,
and all security therefor (collectively, the "Leases") and all rents, issues,
profits, revenues (including all oil and gas or other mineral royalties and
bonuses) and deposits (including, without limitation, security deposits) under
the Leases (including, without limitation, from the rental of any office space,
retail space or other space, halls, stores, and offices, and security deposits
therefor, exhibit or sales space of every kind, license, lease, sublease fees
and rentals, letters of credit or cash instruments securing or evidencing
obligations under Leases, service charges, vending machine sales and proceeds,
if any, from business interruption or other loss of income insurance))
(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
Obligations;
(e) subject to the rights of Grantor hereunder, all proceeds of any
insurance policies covering the Trust 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 Trust Property);
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(f) all refundable, returnable or reimbursable fees deposits or other
funds or evidences of credit or indebtedness deposited by or on behalf of
Grantor with any governmental authorities, boards, corporations, providers of
utility services, public or private, including specifically, but without
limitation, all refundable, returnable or reimbursable tap fees, utility
deposits and development costs in connection with the Trust Property, and all of
the records and books of account now or hereafter maintained by or on behalf of
Grantor in connection with the operation of the Trust Property (collectively,
"Security Accounts");
(g) all proceeds (as defined in the Uniform Commercial Code) of the
Trust Property which, in any event, shall include, without limitation, (i) cash,
instruments and other property received, receivable or otherwise distributed in
exchange for any or all of the Trust Property, (ii) the collection or other
disposition of, or realization upon, any item or portion of the Trust Property
(including, without limitation, all claims of Grantor against third parties for
loss of, damage to, destruction of, or for proceeds payable under policies of
insurance in respect of, the Trust Property now existing or hereafter arising),
(iii) any and all proceeds of any insurance, indemnity, warranty or guaranty
payable to Grantor from time to time with respect to damage or loss of or to any
of the Trust Property, (iv) any and all payments (in any form whatsoever) made
or due and payable to Grantor from time to time in connection with the
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Trust Property by any Governmental Authority (or any person acting
under color of Governmental Authority), and (v) any and all real estate tax
refunds payable to Grantor with respect to the Trust Property, and refunds or
reimbursements payable with respect to bonds, escrow accounts, or other sums
payable in connection with the use, development or ownership of the Trust
Property, but excluding any proceeds obtained, earned or arising directly from
the operation of the "Discovery Zone" entertainment facility operated by Grantor
on the Trust Property as opposed to general occupancy and use of the Trust
Property (collectively, the "Proceeds");
(h) to the extent permitted under applicable law, all licenses,
permits (other than proprietary permits of Grantor relating to the ordinary
operation of a "Discovery Zone" entertainment facility, as opposed to the
general use and occupancy of the Trust Property), variances and certificates
used in connection with the ownership, operation, use or occupancy of the Trust
Property (including, without limitation, business licenses, state health
department licenses, food service licenses, liquor licenses, licenses to conduct
business and all such other permits, licenses and rights, obtained from any
Governmental Authority or private Person concerning ownership, operation, use or
occupancy of the Trust Property) (collectively, "Permits");
(i) all plans, specifications, shop drawings and other technical
descriptions prepared for construction, repair or alteration of the Improvements
(including diskettes containing any such data), and all amendments and
modifications thereof; and
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(j) any escrows or escrow accounts established hereunder to secure
the Obligations of Grantor, including, without limitation, the Proceeds Escrow
Account described in Section 6(b) hereof; and
(k) any and all replacements and renewals of or additions and
substitutions to any of the foregoing and all proceeds of any of the foregoing.
TO HAVE AND TO HOLD the above granted and described Trust Property
unto and to the use and benefit of Trustee, and the successors, substitutes and
assigns of Trustee forever, IN TRUST WITH POWER OF SALE, for the benefit of
Beneficiary, and its successors and assigns, and Grantor does hereby bind
itself, its successors and assigns to WARRANT AND FOREVER DEFEND the title to
the Trust Property unto Trustee and its successors, substitutes and assigns, for
the benefit of Beneficiary, and its successors and assigns;
AND, TO PROTECT THE SECURITY OF THIS DEED OF TRUST, Grantor represents
and warrants to and covenants and agrees with Beneficiary as follows:
1. Defined Terms. The following terms, when used herein, shall have
the meanings set forth below:
"Environmental Laws" means any and all present and future federal,
state or local laws, statutes, ordinances or regulations, any judicial or
administrative orders, decrees or judgments thereunder, and any permits,
approvals, licenses, registrations, filings and authorizations, in each case as
now or hereafter in effect, relating to the protection of the environment, the
impact of Hazardous Substances or the generation, disposal or remediation
thereof on human health or safety, or the Release or threatened Release of
Hazardous Substances or otherwise relating to the Use of Hazardous Substances.
For purposes of this definition, (A) "Hazardous Substances" means collectively,
(i) any petroleum or petroleum products or waste oils, explosives, radioactive
materials, asbestos, urea formaldehyde foam insulation, polychlorinated
biphenyls ("PCBs"), and lead-based paint, (ii) any chemicals or other materials
or substances which are now or hereafter become defined as or included in the
definitions of "hazardous substances", "hazardous wastes", "hazardous
materials", "extremely hazardous wastes", "restricted hazardous wastes", "toxic
substances", "toxic pollutants", "contaminants", "pollutants" or words of
similar import under any Environmental Law and (iii) any other chemical or any
other material or substance, exposure to which is now or hereafter prohibited,
limited or regulated under any Environmental Law; (B) "Use" means, with respect
to any Hazardous Substance, the generation, manufacture, processing,
distribution, handling, use, treatment, recycling or storage of such Hazardous
Substance or transportation of such Hazardous Substance; and (C) "Release" means
any release, spill, emission, leaking, pumping, injection, deposit, disposal,
discharge, dispersal, leaching or migration into the indoor or outdoor
environment (including, without limitation, the movement of Hazardous Substances
through ambient air, soil, surface water, ground water, wetlands, land or
subsurface strata).
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"Governmental Authority" means any national or federal government, any
state, regional, local or other political subdivision thereof with jurisdiction
and any Person with jurisdiction exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government (including
without limitation any court).
"Impositions" means all taxes (including, without limitation, all real
estate, ad valorem, sales (including those imposed on lease rentals), use,
single business, gross receipts, value added, intangible transaction privilege,
privilege or license or similar taxes), assessments (including, without
limitation, all assessments for public improvements or benefits, whether or not
commenced or completed within the term of this Deed of Trust), ground rents,
water, sewer or other rents and charges, excises, levies, fees (including,
without limitation, license, permit, inspection, authorization and similar
fees), and all other governmental impositions and other charges (including,
without limitation, vault charges and license fees for the use of vaults, chutes
and similar areas adjoining the Trust Property), in each case whether general or
special, ordinary or extraordinary, foreseen or unforeseen, of every character
in respect of the Trust Property, which at any time prior to, during or in
respect of the term hereof may be assessed or imposed on or in respect of or be
a lien upon (i) Grantor (including, without limitation, all income, franchise,
single business or other taxes imposed on Grantor for the privilege of doing
business in the jurisdiction in which the Trust Property is located), (ii) the
Trust Property, or any part thereof or any revenues therefrom or any estate,
right, title or interest therein, or (iii) any occupancy, operation, use or
possession of, or sales from, or activity conducted on, or in connection with
the Trust Property by Grantor or the leasing or use of the Trust Property or any
part thereof by Grantor.
"Legal Requirements" means (i) all governmental statutes, laws, rules,
orders, regulations, ordinances, judgments, decrees and injunctions of
Governmental Authorities (including, without limitation, Environmental Laws)
affecting either the Borrower or any Property or any part thereof or the
construction, ownership, use, alteration or operation thereof, or any part
thereof (whether now or hereafter enacted and in force), (ii) all permits,
licenses and authorizations and regulations relating thereto, and (iii) all
covenants, conditions and restrictions contained in any instruments at any time
in force (whether or not involving Governmental Authorities) affecting the Trust
Property or any part thereof which, in the case of this clause (iii), require
repairs, modifications or alterations in or to the Trust Property or any part
thereof, or in any material way limit or restrict the existing use and enjoyment
thereof.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, estate, trust, unincorporated association, any
federal, state, county or municipal government or any bureau, department or
agency thereof and any fiduciary acting in such capacity on behalf of any of the
foregoing.
"Uniform Commercial Code" means the Uniform Commercial Code, as
adopted, enacted and amended from time to time by the state or states where any
of the Trust Property is located.
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2. Payment of Obligations and Incorporation of Covenants, Conditions
and Agreements. Grantor will pay the Obligations at the time and in the manner
provided in the Relevant Documents and in this Deed of Trust. All the
representations, warranties, covenants, conditions and agreements of Grantor
contained in the Relevant Documents are hereby made a part of this Deed of Trust
to the same extent and with the same force as if fully set forth herein. If
there shall be any inconsistencies between the terms, covenants, conditions and
provisions set forth in this Deed of Trust and the terms, covenants, conditions
and provisions set forth in the Relevant Documents, then the terms, covenants,
conditions and provisions of the Relevant Documents shall prevail.
3. Warranty of Title/Organization. Grantor warrants that Grantor
has good, marketable and insurable fee simple title to Land and the Improvements
and has good title to the remainder of the Trust Property and has the full
power, authority and right to execute, deliver and perform its obligations under
this Deed of Trust and to encumber, mortgage, give, grant, bargain, sell,
alienate, enfeoff, convey, confirm, warrant, pledge, assign and hypothecate the
Trust Property and that Grantor possesses an unencumbered fee estate in the Land
and the Improvements and that it owns the Trust Property free and clear of all
liens, encumbrances and charges whatsoever except for (x) those exceptions to
title which are existing on the date hereof and approved by Beneficiary and (y)
those exceptions of title that are permitted under the other terms and
conditions of this Deed of Trust (collectively, the "Permitted Encumbrances")
and that this Deed of Trust is and will remain a valid and enforceable first
lien on and security interest in the Trust Property, subject only to the
Permitted Encumbrances. Grantor shall forever warrant, defend and preserve such
title and the validity and priority of the lien of this Deed of Trust and shall
forever warrant and defend the same to Beneficiary against the claims of all
persons whomsoever. Grantor is duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization. Grantor is
qualified to do business and in good standing in the State in which the Trust
Property is located, and to the extent that Grantor is not so qualified or in
good standing in such State, Grantor shall promptly qualify to do business and
become in good standing in such State and shall promptly present evidence of
such qualification to do business and good standing to Beneficiary, and shall in
any event take such steps as are necessary to insure the enforceability of the
Notes and this Deed of Trust.
4. Taxes. Grantor hereby warrants, covenants and agrees to pay
before any penalty attaches all real property taxes, general and special, and
all other taxes and assessments of any kind or nature whatsoever, against the
Trust Property when due and shall, upon written request, furnish to Beneficiary
duplicate receipts therefor, Grantor may, in good faith and with reasonable
diligence, contest the validity or amount of any such taxes or assessments
provided that such contest shall have the effect of preventing the collection of
the tax or assessment so contested and the sale or forfeiture of said Trust
Property or any part thereof, or any interest therein, to satisfy the same.
5. Indemnification. Grantor shall indemnify, defend and hold
harmless Beneficiary from and against all of the following (collectively, and
individually referred to as a
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"Loss"): claims, demands, causes of action, judgments, costs, expenses,
liabilities, losses and damages (including consequential and punitive damages),
reasonable attorneys' fees and expenses and court costs, disbursements and court
costs, and all risk of damage to property and injury to persons in or upon the
Trust Property, arising from: (i) Grantor's use of the Property or from the
conduct of its business in or about the Trust Property; (ii) Grantor's default
or breach of any term under this Deed of Trust; and (iii) Grantor's violation or
failure to comply with any Legal Requirements, including Environmental Laws;
provided that Grantor shall not be liable for Loss arising from Beneficiary's or
Trustee's negligence or willful misconduct or from Beneficiary's or Trustee's
breach of any of their obligations hereunder.
6. Transfer or Encumbrance of the Trust Property. (a) Except as
may otherwise be permitted hereunder or pursuant to the Relevant Documents,
Grantor shall not sell, convey, alienate, mortgage, encumber, pledge or
otherwise transfer the Trust Property or any part thereof or any of its interest
therein. Beneficiary shall not be required to demonstrate any actual impairment
of its security or any increased risk of default hereunder in order to declare
the Obligations immediately due and payable upon Grantor's conveyance,
alienation, mortgage, encumbrance, pledge or transfer of the Trust Property in
violation of this Deed of Trust or any other Relevant Document. This provision
shall apply to every sale, conveyance, alienation, mortgage, encumbrance, pledge
or transfer of the Trust Property that is not permitted pursuant to the Relevant
Documents, regardless of whether voluntary or not, or whether or not Beneficiary
has consented to any previous sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer of the Trust Property.
(b) Notwithstanding Section 6(a), Grantor shall have the right to
sell the Trust Property at any time to a third party bona fide purchaser after
consultation with Beneficiary and upon the prior written consent of Beneficiary
to such sale and the sales price (such consent not to be unreasonably withheld),
provided that the net proceeds of such sale of the Trust Property (after payment
of transfer taxes and reasonable brokerage commissions, if any, and other
reasonable closing costs) shall be applied towards repayment of the Obligations,
including, without limitation, repayment of the Secured Rejection Note
(including prepayment of any amounts not yet due and payable) and payment of the
Principal Amounts (as defined in the Rent Deferral Notes) then outstanding under
the Rent Deferral Notes, in the order and manner set forth in the Notes. After
the Secured Rejection Note and all Principal Amounts outstanding under the Notes
have been repaid in full, any remaining net proceeds (including proceeds from
any sale or other disposition of the Trust Property pursuant to Section 24
hereof) not applied towards repayment of the Obligations shall be deposited into
an escrow account designated by Beneficiary for Grantor's account and as
security for the performance by Grantor of its Obligations to Beneficiary under
the Relevant Documents (the "Proceeds Escrow Account") which escrow account
shall be administered by Beneficiary, or, at Beneficiary's discretion and in
accordance with Beneficiary's instructions, may be administered by an escrow
agent (an "Escrow Agent") selected by Beneficiary (whose reasonable fees shall
be paid by Grantor). Grantor may also from time to time deposit additional
funds into the Proceeds Escrow Account as further security for the Obligations.
At Beneficiary's request, Grantor agrees to enter into a separate escrow
agreement to further evidence the provisions of this Section 6(b), and in the
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event that Beneficiary chooses an Escrow Agent to administer the Proceeds Escrow
Account, Grantor agrees to execute an escrow agreement in form and substance
reasonably satisfactory to Beneficiary (including provisions consistent with the
provisions of this Section 6(b)) to evidence the duties and responsibilities of
such Escrow Agent. Beneficiary or, if applicable, the Escrow Agent at the
direction of Beneficiary, shall invest the funds in the Proceeds Escrow Account
in obligations of the U.S. Government or its agencies, interest in time accounts
or certificates of deposits, or other interest bearing account of any bank or
bank and trust company or in money market funds available to Beneficiary.
Grantor agrees, and shall agree under any escrow agreement entered into pursuant
to this Section 6(b), that the funds on deposit under the escrow arrangement
described herein shall not constitute property of the estate (within the meaning
of ▇▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Bankruptcy Code) and that Grantor shall only
have such rights to such funds as are provided herein and in any escrow
agreement entered into pursuant to this Section. Funds in the Proceeds Escrow
Account shall be disbursed (together with accrued interest) from time to time to
Beneficiary, at Beneficiary's direction (upon seven (7) days prior notice to
Grantor), to pay any Obligations that may arise from time to time under the
Agreement to Indemnify, the Notes, the Stipulation and Order or the other
Relevant Documents. Notwithstanding the foregoing, after December 31, 2005,
Grantor shall be entitled to retain any net proceeds in excess of the Minimum
Amount set forth below from the sale of the Trust Property, including amounts
previously deposited and remaining in the Proceeds Escrow Account (including
accrued interest thereon) which have not been applied towards payment of the
Obligations, provided that (i) no Obligations are then due and owing by Grantor
pursuant to the Agreement to Indemnify, the Stipulation and Order, the Notes or
otherwise, (ii) no default or Event of Default has occurred and is continuing
under any of the Relevant Documents; and (iii) the amount remaining in the
Proceeds Escrow Account is no less than the Minimum Amount (as hereinafter
defined). Except as otherwise set forth in the following sentence, the "Minimum
Amount" shall mean the product of (A) 1.5 times (B) the sum of the gross rent
(including additional rent and percentage rent charges, if any), common area
maintenance charges, taxes, insurance and other charges computed on a gross
basis (collectively, the "Base Charges") which are due or shall become due under
any Assumed Property Subleases still in existence as of December 31, 2005 (the
"Surviving Assumed Property Subleases") from December 31, 2005 until the
expiration of the terms of such Assumed Property Subleases. Upon the expiration
after December 31, 2005 of any Surviving Assumed Property Sublease, Beneficiary
shall re-calculate the Minimum Amount based upon the product of 1.5 times the
Base Charges of the remaining Surviving Assumed Property Subleases as of the end
of the term of such Surviving Assumed Property Sublease (such Base Charges to be
calculated as the sum of the Base Charges from such date through the end of the
expiration dates of the remaining Surviving Assumed Property Subleases), and
provided that (i) no Obligations are then due and owing by Grantor pursuant to
the Agreement to Indemnify, the Notes, the Stipulation and Order or otherwise
and that (ii) no default or Event of Default has occurred and is continuing
under any of the Relevant Documents, Beneficiary shall, on the first anniversary
of the expiration of such expired Surviving Assumed Property Sublease, release
to Grantor, or cause the Escrow Agent to release to Grantor, the excess of all
funds in the Proceeds Escrow Account over the re-calculated Minimum Amount. Any
calculation of Base Charges under this Section 6(b) shall be made by Beneficiary
and,
11
absent manifest error, shall be conclusive and binding upon Grantor. Provided
that (i) an amount equal to at least the Minimum Amount is deposited or on
deposit in the Proceeds Escrow Account to secure the payment of the Obligations,
(ii) no default or Event of Default has occurred and is continuing under any of
the Relevant Documents, (iii) the Notes have been repaid in full and (iv) no
Obligations are then due and owing by Grantor pursuant to the Agreement to
Indemnify, the Stipulation and Order or otherwise, Grantor shall be entitled to
receive a release of this Deed of Trust from Beneficiary at any time after
December 31, 2005. Provided that no default or Event of Default has occurred or
is continuing under any of the Relevant Documents and that no amounts are then
owing by Grantor or outstanding pursuant to or under any of the Relevant
Documents (and that an amount equal to the Minimum Amount is at all times on
deposit in the Proceeds Escrow Account), interest earned on the amounts
deposited in the Proceeds Escrow Account after December 31, 2005 shall be
distributed to Grantor on a quarterly basis. All remaining amounts in the
Proceeds Escrow Account which have not been applied towards payment of the
Obligations shall be released to Grantor on the later of (A) December 31, 2014
provided, however, that no Obligations are then due and owing by Grantor
pursuant to the Agreement to Indemnify, the Stipulation and Order or otherwise,
and (B) the end of the term of this Deed of Trust as set forth in Section 13(c)
hereof. Grantor shall pay any income taxes attributable to the interest or
other income earned on the Proceeds Escrow Account. Notwithstanding any release
of this Deed of Trust pursuant to this Section 6(b) or otherwise, the terms and
provisions of this Section 6(b) shall survive the release of this Deed of Trust.
7. Amendment to Legal Description. If it becomes evident that the
legal description attached to any Relevant Document is inaccurate or does not
fully describe all of the real property which is reasonably connected to the
Land, Grantor hereby agrees to an amendment of such legal description and the
legal description contained on the corresponding title policy so that such error
is corrected and to execute and cause to be recorded, if applicable, such
document as may be appropriate for such purpose.
8. Assignment of Leases and Rents. Grantor does hereby absolutely
and unconditionally assign to Beneficiary, Grantor's right, title and interest
in all current and future Leases and Rents, it being intended by Grantor that
this assignment constitutes a present, absolute assignment and not an assignment
for additional security only. Such assignment to Beneficiary shall not be
construed to bind Beneficiary to the performance of any of the covenants,
conditions or provisions contained in any such Lease or otherwise impose any
obligation upon Beneficiary. Beneficiary shall have no responsibility on
account of this assignment for the control, care, maintenance, management or
repair of the Trust Property, for any dangerous or defective condition of the
Trust Property, or for any negligence in the management, upkeep, repair or
control of the Trust Property. Grantor agrees to execute and deliver to
Beneficiary such additional instruments, in form and substance satisfactory to
Beneficiary, as may hereafter be requested by Beneficiary to further evidence
and confirm such assignment. Nevertheless, subject to the terms of this
paragraph, Beneficiary grants to Grantor a revocable license to collect all of
the Rents and retain, use and enjoy the same and otherwise exercise all rights
of Grantor under any Lease, in each case, subject to the terms
12
hereof and of the Relevant Documents. Upon an Event of Default, the license
granted to Grantor herein shall immediately and automatically be revoked, and
Beneficiary shall immediately be entitled to possession of all Rents, whether or
not Beneficiary enters upon or takes control of the Trust Property, provided
that if such Event of Default ceases to exist, the license shall automatically
be reinstated. In addition, during the continuation of an Event of Default,
Beneficiary may, either in person or by agent, without bringing any action or
proceeding, or by a receiver appointed by a court, without the necessity of
taking possession of the Trust Property in its own name, and in addition to and
without limiting any of Beneficiary's rights and remedies hereunder, under the
Notes and any other Relevant Documents and as otherwise available at law or in
equity, (a) notify any lessee or other person that the Leases have been assigned
to Beneficiary and that all Rents are to be paid directly to Beneficiary,
whether or not Beneficiary has commenced or completed foreclosure or taken
possession of the Trust Property; (b) settle, compromise, release, extend the
time of payment of, and make allowances, adjustments and discounts of any Rents
or other obligations in, to and under the Leases; (c) demand, ▇▇▇ for or
otherwise collect, receive, and enforce payment of Rents, including those
past-due and unpaid and other rights under the Leases, prosecute any action or
proceeding, and defend against any claim with respect to the Rents and Leases;
(d) enter upon, take possession of and operate the Trust Property; (e) lease all
or any part of the Trust Property; and/or (f) perform any and all obligations of
Grantor under the Leases and exercise any and all rights of Grantor therein
contained to the full extent of Grantor's rights and obligations thereunder,
with or without the bringing of any action or the appointment of a receiver and
without need for any other authorization or other action by Beneficiary or
Grantor. At Beneficiary's request, Grantor shall deliver a copy of this
assignment to each tenant under a Lease and to each manager and managing agent
or operator of the Trust Property. Grantor irrevocably directs any tenant,
manager, managing agent, or operator of the Property, without any requirement
for notice to or consent by Grantor, to comply with all demands of Beneficiary
under this Section 8 and to turn over to Beneficiary on demand all Rents which
it receives. Grantor hereby acknowledges and agrees that payment of any Rents
by a person to Beneficiary as hereinabove provided shall constitute payment by
such person, as fully and with the same effect as if such Rents had been paid to
Grantor. Beneficiary is hereby granted and assigned by Grantor the right, at
its option, upon revocation of the license granted herein, to enter upon the
Trust Property in person or by agent, without bringing any action or proceeding,
or by court-appointed receiver to collect the Rents. Any Rents collected after
the revocation of the license shall be applied towards the payment of the
Obligations. Neither the enforcement of any of the remedies under this Section
8 nor any other remedies or security interests afforded to Beneficiary under the
Relevant Documents, at law or in equity shall cause Beneficiary to be deemed or
construed to be a Beneficiary in possession of the Trust Property, to obligate
Beneficiary to lease the Trust Property or attempt to do so, or to take any
action, incur any expense, or perform or discharge any obligation, duty or
liability whatsoever under any of the Leases or otherwise. Grantor shall, and
hereby agrees to indemnify Beneficiary for, and to hold Beneficiary harmless
from and against, any and all claims, liability, expenses, losses or damages
which may or might be asserted against or incurred by Beneficiary solely by
reason of Beneficiary's status as an assignee pursuant to the assignment of
Rents and Leases contained herein, but excluding any claim (a) to the extent
caused by Beneficiary's gross
13
negligence or willful misconduct, or (b) to the extent arising solely from
Beneficiary's actions after Beneficiary has taken possession of the Trust
Property. Should Beneficiary incur any such claim, liability, expense, loss or
damage, the amount thereof, including all actual expenses and reasonable fees of
attorneys, shall constitute Obligations secured hereby, and Grantor shall
reimburse Beneficiary therefor immediately upon demand. Grantor agrees that all
Leases shall be subject to the prior written approval of Beneficiary, such
approval not to be unreasonably withheld.
9. Maintenance of Trust Property. Grantor shall cause the Trust
Property to be maintained in a good and safe condition and repair (subject to
ordinary wear and tear), and shall otherwise operate and maintain the Trust
Property in a manner consistent with the manner in which it operates and
maintains the other properties on which it operates similar businesses ("Similar
Properties"). Except as otherwise permitted by the Relevant Documents, the
Improvements, the Fixtures and the equipment located on the Land or the
Improvements shall not be removed, demolished or materially altered (except for
normal replacement of equipment) without the consent of Beneficiary which shall
not unreasonably be withheld or delayed. Grantor shall comply with all laws,
orders and ordinances affecting the Trust Property, or the use thereof. Except
to the extent that Beneficiary fails to turn over insurance proceeds, if any,
received by Beneficiary pursuant to Sections 10 and 11 with respect to the Trust
Property to Grantor, Grantor shall promptly repair, replace or rebuild any part
of the Trust Property that, following the date hereof, becomes damaged, worn or
dilapidated and Grantor shall complete and pay for any structure at any time in
the process of construction or repair on the Land. Notwithstanding anything to
the contrary contained herein, Grantor hereby confirms its obligation to comply
with all relevant Legal Requirements, including Environmental Laws, with respect
to the Trust Property. Grantor shall not initiate, join in, acquiesce in, or
consent to any change in any private restrictive covenant, zoning law or other
public or private restriction, limiting or defining the uses which may be made
of the Trust Property or any part thereof, unless Grantor shall have received
Beneficiary's prior written consent, such consent not to be unreasonably
withheld or delayed. If under applicable zoning provisions the use of all or
any portion of the Trust Property is or shall become a nonconforming use,
Grantor will not cause such nonconforming use to be discontinued or abandoned
without the express written consent of Beneficiary, such consent not to be
unreasonably withheld or delayed. Grantor shall not (i) change the use of the
Land in any material respect or (ii) permit or suffer to occur any waste on or
to the Trust Property or to any portion thereof.
10. Insurance.
(a) Grantor shall maintain casualty, liability and other policies of
insurance relating to the Trust Property in form and substance, and with
insurers and coverages, reasonably satisfactory to Beneficiary and consistent
with insurance that it maintains on Similar Properties. Grantor shall keep the
Trust Property insured against loss by flood if the Trust Property is located in
an area identified by the Secretary of Housing and Urban Development as an area
having a special flood hazards and in which flood insurance has been made
available
14
under the National Flood Insurance Act of 1968 (or any successor act thereto).
All policies of insurance to be furnished hereunder (i) shall have standard
non-contributory mortgagee clauses attached to all policies in favor of
Beneficiary, without contribution, under a standard New York (or local
equivalent) mortgagee clause naming Beneficiary as the party to which all
payments made under such insurance policies in excess of $150,000 should be
paid, (ii) shall contain an endorsement providing that neither Grantor nor
Beneficiary nor any other party shall be a co-insurer under said policies and
shall contain a provision requiring that the coverage evidenced thereby shall
not be terminated or materially modified without ten (10) days prior written
notice to Beneficiary, (iii) shall provide that no act or thing done by Grantor
shall invalidate the policy as against Beneficiary, and (iv) with respect to
property insurance policies, shall contain a waiver of subrogation against
Beneficiary. Grantor shall deliver certificates evidencing additional and
renewal policies, together with evidence of payment of premiums thereon, to
Beneficiary, and in the case of all insurance about to expire, shall deliver
renewal policies or certificates evidencing such policies not less than ten (10)
days prior to their respective dates of expiration.
(b) Grantor shall not take out separate insurance concurrent in form
or contributing in the event of loss with that required to be maintained
hereunder unless Beneficiary is included thereon under a standard,
non-contributory mortgagee clause acceptable to Beneficiary. Grantor shall
promptly notify Beneficiary whenever any such separate insurance is taken out
and shall promptly deliver to Beneficiary the certificates evidencing the policy
or policies of such insurance.
(c) The insurance required by this Deed of Trust, at the option of
Grantor, may be effected by blanket and/or umbrella policies covering the Trust
Property and other properties, provided, however, that in each case, such
insurance policies otherwise comply with the provisions of this Deed of Trust
and allocate to the Trust Property, from time to time, the coverage specified in
this Deed of Trust without possibility of reduction or co-insurance by reason
of, or damage to, any other property named therein. If the insurance required
by this Deed of Trust shall be effected by any such blanket or umbrella
policies, Grantor shall furnish to Beneficiary certificates with respect to,
with schedules attached thereto showing the amount of the insurance provided
under such policies which is applicable to the Trust Property.
(d) If Grantor fails to maintain insurance in compliance with this
Section, Beneficiary may obtain such insurance and pay the premium therefor and
Grantor shall, on demand, reimburse Beneficiary for all expenses incurred in
connection therewith. Grantor shall deliver original certificates to
Beneficiary of all insurance policies maintained pursuant to this Section 10.
Each property insurance policy shall name Beneficiary as mortgagee, and loss
payee with respect to all casualty coverage and each liability policy shall name
Beneficiary as an additional insured thereunder.
11. Casualty. (a) Grantor shall give Beneficiary prompt notice of
any loss or damage to the Trust Property.
15
(b) In case of loss or damage to the Trust Property covered by any of
the insurance policies described in Section 10 above, Beneficiary (or, after
entry of decree of foreclosure, the purchaser at the foreclosure sale or decree
creditor, as the case may be) is hereby authorized at its option either (i) to
settle and adjust any claim under such insurance policies without the consent of
Grantor or (ii) to allow Grantor to settle and adjust such claim (either jointly
with Beneficiary or by Grantor alone at Beneficiary's discretion); provided that
in either case Beneficiary shall, and is hereby authorized to, collect and
receipt for any such insurance proceeds. Notwithstanding anything in the
preceding sentence to the contrary, Beneficiary agrees that it will allow
Grantor to settle and adjust any claims under the insurance policies which are
in an amount less than $150,000, per incident of loss, up to an aggregate amount
of no greater than $300,000. The expenses incurred by Beneficiary in the
adjustment and collection of insurance proceeds shall be included in the
Obligations, and shall be reimbursed to Beneficiary upon demand or may be
deducted by Beneficiary from said insurance proceeds prior to another
application thereof. Interest on such amount shall accrue at the Default Rate,
beginning ten (10) days after Grantor receives notice of a request for payment
of such amount from Beneficiary, until such amount, plus interest, is paid in
full.
(c) Beneficiary shall permit Grantor to apply the proceeds of
insurance policies received in connection with any casualty to pay for the cost
of restoring, repairing, replacing or rebuilding the loss or damage to the Trust
Property resulting from the casualty ("Restoration") if: (i) there is no Event
of Default hereunder at the time of such application; (ii) restoration can, in
the reasonable judgment of Beneficiary, be completed prior to the maturity of
the Obligations; and (iii) restoration can, in the reasonable judgment of
Beneficiary, be effected with two (2) years after the date of such casualty and
in such a manner so that the Trust Property will be of at least equal or greater
value to the value than the Trust Property prior to such casualty. Otherwise,
Beneficiary may elect in its sole discretion to apply such proceeds either (x)
towards payment of the Obligations, notwithstanding the fact that the
Obligations, or a portion thereof, may not then be due and payable, or (y) to
pay for the cost of Restoration. In all events, disbursement of insurance
proceeds by Beneficiary (or at Beneficiary's election by a disbursing or escrow
agent who shall be selected by Beneficiary and whose fees shall be paid by
Grantor), to pay the cost of restoration shall require (i) evidence reasonably
satisfactory to Beneficiary of the estimated costs of Restoration, (iii) funds
(or assurances reasonably satisfactory to Beneficiary that such funds are
available) sufficient in addition to the proceeds of insurance to complete and
fully pay for Restoration; and (iii) such architect's certificates, waivers of
lien, contractor's sworn statements, title insurance endorsements, plats of
surveys and such other evidences of cost, payment and performance as Beneficiary
may reasonably require and approve. Except to the extent Beneficiary fails to
turn over insurance proceeds, if any, received by Beneficiary hereunder with
respect to such casualty to Grantor, Grantor hereby covenants to restore,
repair, replace or rebuild the Improvements, to be of at least equal value, and
of substantially the same character as prior to such loss or damage, all to be
effected in accordance with plans, specifications and procedures to be first
submitted to and reasonably approved by Beneficiary, and Grantor shall pay all
costs of such restoring, repairing, replacing or rebuilding.
16
12. Eminent Domain. Grantor warrants, covenants and agrees that
should the Trust Property, or any part thereof or interest therein, be taken or
damaged by reason of any public improvement or condemnation proceeding, or in
any other manner, or should Grantor receive any notice of other information
regarding such proceeding, Grantor shall give written notice thereof within five
(5) business days to Beneficiary. Without Beneficiary's prior consent, Grantor
(1) shall not agree to any compensation or award, and (2) shall not take any
action or fail to take any action which would cause the compensation to be
determined. Beneficiary shall be entitled to: (1) all compensation awards and
other payments or relief therefor, (2) to commence, appear in and prosecute in
its own name any action or proceedings, and (3) to make any compromise or
settlement in connection with such taking or damage. Grantor authorizes
Beneficiary to collect and receive such awards and compensation, to give proper
receipts and acquittances therefor and in Beneficiary's discretion to apply the
same toward the payment of the Obligations, notwithstanding the fact that the
Obligations, or a portion thereof, may not then be due and payable, or to the
restoration of the Trust Property in accordance with the provisions set forth in
the second-to-last sentence of Section 11(c) above. Grantor further agrees to
make, execute, and deliver to Beneficiary, at any time upon request, free and
clear of any encumbrance of any kind whatsoever, any and all further assignments
and other instruments deemed necessary by Beneficiary for the purpose of validly
and sufficiently assigning all compensations and awards made to Grantor for any
taking, either permanent or temporary, under any such proceeding.
13. Release of Deed of Trust. Beneficiary agrees to promptly and
unconditionally release this Deed of Trust (subject to the provisions set forth
in Section 6(b)) as follows:
(a) in the event of a bona fide sale (other than a "sale leaseback"or
other similar financing transaction) of the Trust Property to a third party that
is not affiliated with Grantor, provided that each of the following conditions
is satisfied: (i) neither Grantor nor any of its respective affiliates continue
to use or occupy the Trust Property or any part thereof; (ii) Grantor shall
consult with Beneficiary prior to such sale and shall obtain Beneficiary's prior
written consent with respect to such sale and the sales price (such consent not
to be unreasonably withheld); and (iii) all of the proceeds of such sale are
applied towards repayment of the Obligations or otherwise applied in compliance
with the provisions of Section 6(b) hereof, notwithstanding the fact that the
Obligations, or a portion thereof, may not then be due and payable.
(b) in the event that Beneficiary is paid in full for all amounts
owing (or which shall or may become owing under the Relevant Documents) to
Beneficiary by Grantor and any of its former affiliated debtors, including the
indefeasible payment and satisfaction in full of the Obligations.
(c) on December 31, 2014 (or on such earlier date as permitted under
and pursuant to the provisions of Section 6(b) hereof); provided, however, that
if on such date, any
17
amount secured by this Deed of Trust has not been indefeasibly paid in full,
then this Deed of Trust shall be deemed amended to extend the term hereof until
such obligations are so paid.
14. Changes in the Laws Regarding Taxation. If any law is enacted or
adopted or amended after the date of this Deed of Trust which imposes a tax,
either directly or indirectly, on the Obligations or Beneficiary's interest in
the Trust Property, Grantor will pay such tax, with interest and penalties
thereon, if any, provided, however, that Grantor shall not be obligated to pay
any tax which is imposed on the net income of Beneficiary or franchise taxes or
doing business taxes imposed on Beneficiary. In the event that the payment of
such tax or interest and penalties by Grantor would be unlawful or taxable to
Beneficiary or unenforceable or provide the basis for a defense of usury, then
in any such event, Beneficiary shall have the option, by written notice of not
less than ninety (90) days, to declare the Obligations immediately due and
payable.
15. No Credits on Account of the Obligations. (i) Grantor will not
claim or demand or be entitled to any credit or credits on account of the
Obligations for any part of the Impositions assessed against the Trust Property,
or any part thereof, and (ii) no deduction shall otherwise be made or claimed
from the assessed value of the Trust Property, or any part hereof, for real
estate tax purposes by reason of this Deed of Trust or the Obligations if the
effect of such deduction would impose on Beneficiary a tax, either directly or
indirectly, for which it otherwise would not have been liable.
16. Documentary Stamps. 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 Notes or this Deed of Trust, or impose any
other tax or charge on the same, Grantor will pay for the same, with interest
and penalties thereon, if any.
17. Controlling Agreement. It is expressly stipulated and agreed to
be the intent of Grantor and Beneficiary at all times to comply with applicable
state law or applicable United States federal law (to the extent that it permits
Beneficiary to contract for, charge, take, reserve, or receive a greater amount
of interest than under state law) and that this Section shall control every
other covenant and agreement in this Deed of Trust and the other Relevant
Documents. If the applicable law (state or federal) is ever judicially
interpreted so as to render usurious any amount called for under the Notes or
under any of the other Relevant Documents, or contracted for, charged, taken,
reserved, or received with respect to the Obligations, or if Beneficiary's
exercise of the option to accelerate the maturity of the Notes, or if any
prepayment by Grantor results in Grantor having paid any interest in excess of
that permitted by applicable law, then it is Grantor's and Beneficiary's express
intent that all excess amounts theretofore collected by Beneficiary shall be
credited on the principal balance of the Notes and all other Obligations (or, if
the Notes and all other Obligations have been or would thereby be paid in full,
refunded to Grantor), and the provisions of the Notes and the other Relevant
Documents immediately be deemed reformed and the amounts thereafter collectible
hereunder and thereunder reduced, without the necessity of the execution of any
new documents, so as to comply with the applicable law, but so as to permit the
recovery of the
18
fullest amount otherwise called for hereunder or thereunder. All sums paid or
agreed to be paid to Beneficiary for the use, forbearance, or detention of the
Obligations shall, to the extent permitted by applicable law, be amortized,
prorated, allocated, and spread throughout the full stated term of the
Obligations until payment in full so that the rate or amount of interest on
account of the Obligations does not exceed the maximum rate of interest
permitted by law from time to time in effect and applicable to the Obligations
for so long as the Obligations are outstanding.
18. Performance of Other Agreements. Grantor shall observe and
perform in all respects the terms to be observed or performed by Grantor under
any agreement or recorded instrument affecting or pertaining to the Trust
Property.
19. Right to Perform the Obligations. Subject to the terms of the
Relevant Documents, if any default exists, Beneficiary shall have the right, but
not the obligation, to cure such default in the name and on behalf of Grantor.
All sums advanced and expenses incurred at any time by Beneficiary under this
Section 19, or otherwise under this Deed of Trust or any of the other Relevant
Documents or applicable law (including, without limitation, the costs and
expenses of Beneficiary and its agents incurred in connection with the
preservation, collection and enforcement of this Deed of Trust or of the liens
created hereby), shall bear interest from the date that such sum is advanced or
expense incurred, to and including the date of reimbursement, computed at the
Default Rate (as defined in the Notes), and all such sums, together with
interest thereon, shall constitute additions to the Obligations and shall be
secured by this Deed of Trust and Grantor covenants and agrees to pay them to
the order of the Beneficiary promptly upon demand.
20. Further Acts, etc. Grantor will, at the cost of Grantor, and
without expense to Beneficiary, do, execute, acknowledge and deliver all and
every such further acts, deeds, conveyances, mortgages, deeds of trust,
assignments, notices of assignment, Uniform Commercial Code financing statements
or continuation statements, transfers and assurances as Beneficiary shall, from
time to time, reasonably require, for the better assuring, conveying, assigning,
transferring, and confirming unto Beneficiary the property and rights hereby
mortgaged, given, granted, bargained, sold, alienated, enfeoffed, conveyed,
confirmed, warranted, pledged, assigned and hypothecated (including, without
limitation, the assignment of leases and rents contained in Section 8 hereof) or
intended now or hereafter so to be, or which Grantor may be or may hereafter
become bound to convey or assign to Beneficiary, or for carrying out the
intention or facilitating the performance of the terms of this Deed of Trust or
for filing, registering or recording this Deed of Trust. Grantor, on demand,
will execute and deliver and, Grantor hereby authorizes Beneficiary to execute
in the name of Grantor or without the signature of Grantor to the extent
Beneficiary may lawfully do so, one or more financing statements, chattel
mortgages or other instruments, to evidence more effectively the security
interest of Beneficiary in the Trust Property. Notwithstanding anything to the
contrary contained herein, Grantor shall not be obligated to execute, deliver,
file or record any additional documents which increase Grantor's obligations
under this Deed of Trust or the Relevant Documents. Grantor grants to
Beneficiary an irrevocable power of attorney coupled
19
with an interest for the purpose of exercising the rights provided for in
Section 19 and this Section 20.
21. Recording of Deed of Trust, etc. Grantor forthwith upon the
execution and delivery of this Deed of Trust and thereafter, from time to time,
will cause this Deed of Trust, and any security instrument creating a lien or
security interest or evidencing the lien hereof upon the Trust 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 the lien or security interest
hereof upon, and the interest of Beneficiary in, the Trust Property. Grantor
will pay all filing, registration or recording fees, the costs and fees of local
counsel for Beneficiary, including, without limitation, costs and fees for local
counsel review of the Deed of Trust and Subordinated Agreement, and the
preparation of opinion letters in connection therewith, and all expenses
incident to the execution and acknowledgment of this Deed of Trust (but not
including fees of Beneficiary's New York counsel in connection with the
preparation of this Deed of Trust), any deed of trust or mortgage supplemental
hereto, any security instrument with respect to the Trust Property and any
instrument of further assurance, 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 Deed of Trust, any deed of trust or
mortgage supplemental hereto, any security instrument with respect to the Trust
Property or any instrument of further assurance (other than income or franchise
taxes imposed on Beneficiary), except where prohibited by law so to do. Grantor
shall hold harmless and indemnify Beneficiary, its successors and assigns,
against any liability incurred by reason of the imposition of any tax on the
making and recording of this Deed of Trust. Grantor shall pay all title costs
and premiums in connection with the ALTA lender's title insurance policy issued
by Chicago Title Insurance Company for the benefit of Beneficiary in connection
with this Deed of Trust (including payment for the cost of any property surveys
prepared in connection therewith), which title insurance policy shall be in form
and substance satisfactory to Beneficiary containing such endorsements as
Beneficiary may reasonably request, including, without limitation, the deletion
of any creditor's rights exception and (to the extent available) a variable rate
endorsement; survey endorsement; comprehensive endorsement; first loss
endorsement; last dollar endorsement; tie-in endorsement; future advances
endorsement; access coverage; tax parcel coverage; contiguity (if applicable)
coverage; and such other endorsements as Beneficiary shall reasonably require.
In the event that any Survey with respect to the Trust Property reveals any
encumbrances, restrictions, building code or zoning violations or other matters
which in Beneficiary's reasonable judgment, materially impair Beneficiary's
first priority lien in the Trust Property, Grantor agrees to cooperate with
Beneficiary in performing any acts reasonably requested by Beneficiary to cause
such encumbrances, restrictions, violations or other matters to be removed or
remedied as appropriate.
22. Reporting Requirements. Grantor agrees to give prompt notice to
Beneficiary of the insolvency or bankruptcy filing of Grantor. In addition,
Grantor will give notice to Beneficiary in writing not later than ten (10) days
after: (i) the occurrence of any Event of Default with respect to Grantor
hereunder, or (ii) notice to Grantor of any action,
20
litigation or proceeding instituted to recover possession of the Trust Property
from Grantor or for any other purpose affecting this Deed of Trust or of any
other action, litigation or proceeding instituted against Grantor or judgment
rendered against Grantor; and such notice to Beneficiary shall include a true
copy of any notice of default, or if any action is then proceeding, copies of
any pleadings and papers received by Grantor.
23. Events of Default. The term "Event of Default" as used herein
shall mean the occurrence or happening, at any time and from time to time, of
one or more of the following events:
(a) a default or event of default under any of the Notes (including,
without limitation, any event of default described in Section 3 of any of the
Notes), which remains uncured following the expiration of any applicable cure
periods;
(b) Grantor (i) shall fail to perform when due any payment obligation
under the terms of this Deed of Trust or the other Relevant Documents within ten
days after such amount becomes due, or (ii) shall be in violation of any of the
obligations or covenants contained herein or therein and such default shall
continued unremedied for a period of thirty (30) days, provided that if such
default is not readily susceptible of cure in such thirty (30) day period, and
provided that Grantor proceeds in a diligent manner to cure such default,
Grantor shall have such additional time to effect such cure as shall be
reasonably necessary to effect such cure;
(c) Failure by Grantor to maintain insurance and deliver evidence
thereof pursuant to Section 10; or
(d) a default under any other mortgage, deed of trust or other
security instrument covering the Trust Property or a portion thereof which
remains uncured following the expiration of any applicable cure periods.
24. Remedies. (a) Upon the occurrence of any Event of Default,
Beneficiary may take such action or cause Trustee to take such action permitted
in law or at equity, without notice or demand, as it deems advisable to protect
and enforce its rights against Grantor and in and to the Trust Property, by
Beneficiary itself, or through Trustee or otherwise, 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 Beneficiary may determine, in its
sole discretion, without impairing or otherwise affecting the other rights and
remedies of Beneficiary:
(i) declare the entire principal amount of the indebtedness and
Obligations secured hereby with interest accrued thereon to be
immediately due and payable;
21
(ii) institute a proceeding or proceedings, judicial or nonjudicial,
by advertisement or otherwise, for the complete foreclosure of this Deed
of Trust in which case the Trust 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 in accordance with the laws of the
jurisdiction in which such Trust Property is located;
(iii) with or without entry, to the extent permitted, and pursuant to
the procedures provided by, applicable law, institute proceedings for the
foreclosure of this Deed of Trust for the Obligations then due and payable
subject to the continuing lien of this Deed of Trust, in accordance with
the laws of the jurisdiction in which such Trust Property is located. for
the balance of the Obligations not then due;
(iv) sell for cash or upon credit the Trust Property or any part
thereof and all estate, claim, demand, right, title and interest of Grantor
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 the laws of the jurisdiction in which such Trust Property
is located;
(v) institute an action, suit or proceeding in equity for the
specific performance of any covenant, condition or agreement contained
herein or in the other Relevant Documents;
(vi) recover judgment on the Notes either before, during or after any
proceedings for the enforcement of this Deed of Trust;
(vii) prior to, concurrently with, or subsequent to the institution of
foreclosure proceedings, apply for the appointment of a trustee, receiver,
liquidator or conservator of the Trust Property, as a matter of strict
right, ex parte and without notice and without regard for the adequacy of
the security for the Obligations or the interest of the Grantor therein and
without regard for the solvency of the Grantor or of any person, firm or
other entity liable for the payment of the Obligations, and Grantor hereby
consents to such appointment;
(viii) prior to, concurrently with or subsequent to the institution of
foreclosure proceedings, enforce Beneficiary's interest in the Leases and
Rents and enter into or upon the Trust Property and take exclusive
possession thereof, either personally or by its agents, nominees or
attorneys and dispossess Grantor and its agents and servants therefrom, and
thereupon Beneficiary may (whether or not a receiver has been appointed) as
attorney-in-fact or agent of Grantor, or in its own name and under the
powers herein granted,(A) use, operate, manage, control, insure, maintain,
repair, restore and otherwise deal with all and every part of the Trust
Property and conduct the business thereat; (B) complete any
22
construction on the Trust Property in such manner and form as Beneficiary
deems advisable; (C) make alterations, additions, renewals, replacements
and improvements to or on the Trust Property; (D) exercise all rights and
powers of Grantor with respect to the Trust Property, whether in the name
of Grantor or otherwise (including, without limitation, the right to make,
cancel, enforce or modify Leases, obtain and evict tenants, and demand, ▇▇▇
for, collect and receive all earnings, revenues, rents, issues, profits and
other income of the Trust Property and every part thereof); and (E) apply
the receipts from the Trust Property to the payment of the Obligations,
after deducting therefrom all reasonable expenses (including, without
limitation, reasonable attorneys' fees) incurred in connection with the
aforesaid operations and all amounts necessary to pay the taxes,
assessments, insurance and other charges in connection with the Trust
Property, it being agreed that should Beneficiary incur any liability, loss
or damage in the defense of any claims or demands, the amount thereof,
including costs, expenses and reasonable attorneys' fees shall be secured
hereby, and Grantor shall reimburse Beneficiary therefor immediately upon
demand;
(ix) require Grantor to pay monthly in advance to Beneficiary,
or any receiver appointed to collect the Rents, the fair and reasonable
rental value for the use and occupation of any portion of the Trust
Property occupied by Grantor and require Grantor to vacate and surrender
possession to Beneficiary of the Trust Property or to such receiver and, in
default thereof, evict Grantor by summary proceedings or otherwise; and
(x) pursue such other rights and remedies as may be available under
the Relevant Documents or otherwise at law or in equity or under the
Uniform Commercial Code including the right to establish a lock box for all
Rents and other receivables of Grantor relating to the Trust Property.
In the event of a sale, by foreclosure or otherwise, of less than all of the
Trust Property, this Deed of Trust shall continue as a lien on the remaining
portions of the Trust Property.
The proceeds of any sale made under or by virtue of this Section 24,
together with any other sums which then may be held by Beneficiary under this
Deed of Trust, whether under the provisions of this Section or otherwise,
shall be applied by Beneficiary in the following order of priority: first, on
account of all reasonable costs and expenses incident to the foreclosure
proceedings, including all such items as are mentioned in this Section 24;
second, all other items which under the terms hereof constitute secured
indebtedness, which are any amounts due under this Deed of Trust, or under
the other Relevant Documents (including any amounts required to be escrowed
pursuant to Section 6(b)); third, any surplus to Grantor, its successors or
assigns, as their rights may appear.
(b) Upon any sale made under or by virtue of this Section 24,
whether made under the power of sale herein granted or under or by virtue of
judicial proceedings or of a
23
judgment or decree of foreclosure and sale, Beneficiary may bid for and
acquire the Trust Property or any part thereof and in lieu of paying cash
therefor may make settlement for the purchase price by crediting upon the
Obligations the net sales price after deducting therefrom the expenses of the
sale and costs of the action and any other sums which Beneficiary is
authorized to deduct under this Deed of Trust.
(c) No recovery of any judgment by Beneficiary and no levy of an
execution under any judgment upon the Trust Property or upon any other
property of Grantor shall affect in any manner or to any extent the lien of
this Deed of Trust upon the Trust Property or any part thereof, or any liens,
rights, powers or remedies of Beneficiary hereunder, but such liens, rights,
powers and remedies of Beneficiary shall continue unimpaired as before.
(d) Beneficiary may adjourn, terminate or rescind any proceeding or
other action brought in connection with its exercise of the remedies provided
in this Section 24 at any time before the conclusion thereof, as determined
in Beneficiary's sole discretion and without prejudice to Beneficiary.
(e) Beneficiary may resort to any remedies and the security given
by this Deed of Trust or the other Relevant Documents in whole or in part,
and in such portions and in such order as determined by Beneficiary's sole
discretion. No such action shall in any way be considered a waiver of any
rights, benefits or remedies evidenced or provided by this Deed of Trust or
the other Relevant Documents. The failure of Beneficiary to exercise any
right, remedy or option provided in this Deed of Trust or the other Relevant
Documents shall not be deemed a waiver of such right, remedy or option or of
any covenant or obligation secured by this Deed of Trust or the other
Relevant Documents. Subject to the provisions of the Relevant Documents, no
acceptance by Beneficiary of any payment after the occurrence of any Event of
Default and no payment by Beneficiary of any obligation for which Grantor is
liable hereunder shall be deemed to waive or cure any Event of Default with
respect to Grantor, or Grantor's liability to pay such obligation. No sale
of all or any portion of the Trust Property, no forbearance on the part of
Beneficiary and no extension of time for the payment of the whole or any
portion of the Obligations or any other indulgence given by Beneficiary to
Grantor, shall operate to release or in any manner affect the interest of
Beneficiary in the remaining Trust Property or the liability of Grantor to
pay the Obligations. No waiver by Beneficiary shall be effective, unless it
is in writing and then only to the extent specifically stated.
(f) The interests and rights of Beneficiary under this Deed of
Trust and the other Relevant Documents, and the liens and security interests
created and evidenced by this Deed of Trust and the other Relevant Documents,
shall not be impaired by any indulgence, including (i) any renewal, extension
or modification which Beneficiary may grant with respect to any of the
Obligations, (ii) any surrender, compromise, release, renewal, extension,
exchange or substitution which Beneficiary may grant with respect to the
Trust Property or any portion thereof; or (iii) any release or indulgence
granted to any maker, endorser, guarantor or surety of any of the Obligations.
24
(g) Upon the occurrence of any Event of Default under Section 23,
in any suit to foreclose the lien hereof or enforce any other remedy of
Beneficiary under this Deed of Trust, there shall be allowed and included as
additional indebtedness in the decree for sale or other judgment or decree
all reasonable expenditures and expenses which may be paid or incurred by or
on behalf of Beneficiary for attorneys' fees, appraiser's fees, outlays for
documentary and expert evidence, stenographers' charges, publication costs,
and costs (which may be estimated as to items to be expended after entry of
the decree) of procuring all such abstracts of title, title searches and
examinations, title insurance policies, Torrens certificates, and similar
data and assurances with respect to title as Beneficiary may deem reasonably
necessary either to prosecute such suit or to evidence to bidders at any sale
which may be had pursuant to such decree the true condition of the title to
or the value of the Trust Property. All such reasonable expenditures and
expenses which Beneficiary may incur as permitted by this Section for the
protection of the Trust Property and the maintenance of the lien of this Deed
of Trust, including, but not limited to, the fees and out-of-pocket
disbursements of any attorney employed by Beneficiary in any litigation or
proceeding affecting this Deed of Trust, including, but not limited to,
bankruptcy proceedings or preparations for the commencement or defense of any
proceeding or threatened suit or proceeding, shall be immediately due and
payable by Grantor and shall be secured by this Deed of Trust.
25. Right of Access. Grantor shall permit agents, representatives
and employees of Beneficiary to (i) inspect the Trust Property or any part
thereof, provided that such inspection does not materially interfere with the
tenants of the Trust Property or violate the terms of any Lease, (ii) to
examine and make abstracts from any of Grantor's books and records and (iii)
to discuss the business, operations, properties and financial and other
condition of Grantor with officers of Grantor and with its independent
certified public accountants, at such reasonable times as may be requested by
Beneficiary upon reasonable advance notice.
26. Security Agreement. This Deed of Trust is both a real property
deed of trust and a "security agreement" within the meaning of the Uniform
Commercial Code. The Trust Property includes both real and personal property
and all other rights and interests, whether tangible or intangible in nature,
of Grantor in the Trust Property. Grantor by executing and delivering this
Deed of Trust has granted and hereby grants to Beneficiary, as security for
the Obligations, a security interest in the Trust Property to the full extent
that the Trust Property may be subject to the Uniform Commercial Code (said
portion of the Trust Property so subject to the Uniform Commercial Code being
called in this paragraph the "Collateral"). Grantor hereby agrees with
Beneficiary to execute and deliver to Beneficiary, in form and substance
satisfactory to Beneficiary, such financing statements and such further
assurances as Beneficiary may from time to time, reasonably consider
necessary to create, perfect, and preserve Beneficiary's security interest
herein granted. All or part of the Trust Property is or is to become
"fixtures" as defined in the Uniform Commercial Code, and this Deed of Trust,
upon being filed for record in the real estate records of the city or county
wherein such fixtures are situated, shall also constitute a "fixture filing"
for the purposes of the Uniform Commercial Code upon such of the Trust
Property that is or may become
25
fixtures. Information concerning the security interest herein granted may be
obtained from the parties at the addresses of the parties set forth in the
first paragraph of this Deed of Trust. Grantor's chief executive office and
principal place of business is the Grantor's address set forth in the first
paragraph of this Deed of Trust, and the place where Grantor's books and
records in respect of where the Trust Property is located are kept is the
address of Grantor set forth in the first paragraph of this Deed of Trust.
If an Event of Default shall occur which shall remain uncured, Beneficiary,
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 limitation, to the extent permitted by law, the
right to take possession of the Collateral or any part thereof, and to take
such other measures as Beneficiary may deem necessary for the care,
protection and preservation of the Collateral). Upon request or demand of
Beneficiary or Trustee, Grantor shall at its expense assemble the Collateral
and make it available to Beneficiary at a convenient place acceptable to
Beneficiary. Grantor shall pay to Beneficiary on demand therefor any and all
reasonable expenses (including, without limitation, reasonable legal expenses
and attorneys' fees) incurred or paid by Beneficiary in protecting the
interest in the Collateral and in enforcing the rights hereunder with respect
to the Collateral. Any notice of sale, disposition or other intended action
by Beneficiary with respect to the Collateral sent to Grantor at least ten
(10) business days prior to such action or such notice as is otherwise
required by law or the Relevant Documents, shall constitute commercially
reasonable notice to Grantor. The proceeds of any disposition of the
Collateral, or any part thereof, may be applied by Beneficiary to the payment
of the Obligations in such priority and proportions as Beneficiary shall
determine in its sole discretion. In the event of any change in name,
identity or structure of Grantor, Grantor shall notify Beneficiary thereof
and, promptly after request, shall execute, file and record such Uniform
Commercial Code forms as are necessary to maintain the priority of
Beneficiary's lien upon and security interest in the Collateral, and shall
pay all expenses and fees in connection with the filing and recording
thereof. If Beneficiary shall require the filing or recording of additional
Uniform Commercial Code forms or continuation statements, Grantor shall,
promptly after request, execute, file and record such Uniform Commercial Code
forms or continuation statements as Beneficiary shall deem necessary, and
shall pay all expenses and fees in connection with the filing and recording
thereof, it being understood and agreed, however, that no such additional
documents shall materially increase Grantor's obligations under this Deed of
Trust or the other Relevant Documents. Grantor hereby irrevocably appoints
Beneficiary as its attorney-in-fact, coupled with an interest, to file with
the appropriate public office on its behalf any UCC financing statements (or
related documents) signed only by Beneficiary, as secured party, in
connection with the Collateral covered by this Deed of Trust, such
appointment to terminate upon the release of this Deed of Trust.
27. Actions and Proceedings. Beneficiary has the right to
appear in and defend any action or proceeding brought with respect to the
Trust Property and to bring any action or proceeding, in the name and on behalf
of Grantor, which Beneficiary, in its reasonable discretion, decides should be
brought to protect its interest under this Deed of Trust or in the Trust
Property. Subject to the foregoing, Grantor shall appear in and contest any
26
action or proceeding purporting to affect the security hereof and shall pay
all reasonable costs and expenses including cost of evidence of title and
attorney's fees, in any such action or proceeding in which Beneficiary may
appear. Beneficiary shall, at its option, be subrogated to the lien of any
mortgage or other security instrument discharged in whole or in part by the
Obligations, and any such subrogation rights shall constitute additional
security for the payment of the Obligations.
28. Waiver of Setoff and Counterclaim. Except as may be permitted
under the Relevant Documents, all amounts due under this Deed of Trust, the
Notes and the other Relevant Documents shall be payable without setoff or
counterclaim whatsoever.
29. Liens. Grantor warrants, covenants and agrees to pay and
promptly discharge, at Grantor's cost and expense, all taxes, assessments and
governmental charges levied upon it, its income and assets as and when such
taxes, assessments and charges are due and payable (including, without
limitation, all Impositions), as well as all lawful claims for labor
materials and supplies or otherwise which could become a lien, and all liens,
encumbrances and charges upon the Trust Property, or any part thereof or
interest therein; provided that the existence of any mechanic's, laborer's,
materialman's, supplier's or vendor's lien or right thereto shall not
constitute a violation of this Section if payment is not yet due under the
contract which is the foundation thereof. Notwithstanding the foregoing,
Grantor shall not be in default for failure to pay or discharge Impositions
or mechanic's or materialman's or similar lien asserted against the Trust
Property if, and so long as, (a) Grantor shall have notified Beneficiary of
same within seven (7) days of obtaining knowledge thereof; (b) Grantor shall
diligently and in good faith contest the same by appropriate legal
proceedings which shall operate to prevent the enforcement or collection of
the same and the sale of the Trust Property or any part thereof, to satisfy
the same; (c) unless funds are otherwise reserved, Grantor shall furnish to
Beneficiary such security as Beneficiary may reasonably request to insure
payment of such Impositions and to secure and indemnify Beneficiary against
any cost, expense, loss or damage in connection with such contest or
postponement of payment, (d) Grantor shall timely upon final determination
thereof pay the amount of any such Impositions, claim, fine or penalty so
determined, together with all costs, interest and penalties which may be
payable in connection therewith; (e) the failure to pay the Impositions, or
mechanic's or materialman's or similar lien claim does not constitute a
default under any other deed of trust, mortgage or security interest covering
or affecting any part of the Trust Property; and (f) notwithstanding the
foregoing, Grantor shall immediately upon request of Beneficiary pay (and if
Grantor shall fail so to do, Beneficiary may, but shall not be required to,
pay or cause to be discharged or bonded against) any such Impositions, or
claim notwithstanding such contest, if in the reasonable opinion of
Beneficiary, the Trust Property or any part thereof or interest therein may
be in imminent danger of being sold, forfeited, foreclosed, terminated,
canceled or lost.
30. Recovery of Sums Required to Be Paid. Beneficiary shall have
the right from time to time to take action to recover any sum or sums
which constitute a part of the Obligations as the same become due and
owing, without regard to whether or not the balance
27
of the Obligations shall be due, and without prejudice to the right of
Beneficiary thereafter to bring an action of foreclosure, or any other
action, for a default or defaults by Grantor existing at the time such
earlier action was commenced.
31. Marshaling, Waiver of Redemption and Other Matters. Grantor
hereby waives, to the extent permitted by law, the benefit of all
appraisement, valuation, stay, extension, reinstatement, moratorium and
redemption laws now or hereafter in force and all rights of marshaling in the
event of any sale hereunder of the Trust Property or any part thereof or any
interest therein. Further, Grantor hereby expressly waives any and all rights
of redemption from sale under any order or decree of foreclosure of this Deed
of Trust on behalf of Grantor, and on behalf of each and every person
acquiring any interest in or title to the Trust Property subsequent to the
date of this Deed of Trust and on behalf of all persons to the extent
permitted by applicable law.
32. Notice. Any notice which either party hereto may desire or be
required to give to the other party shall be in writing and delivered by: (x)
a commercial courier or messenger service or (y) by U.S. registered or
certified mail with return receipt requested. Notice by commercial messenger
or courier service will be deemed to have been given on the day when
delivered before 4:00 p.m. on a business day in the city in which notice is
delivered, provided that payment for the cost of delivery is not requested of
the recipient. Notice by mail shall be given by registered or certified U.S.
Mail, return receipt requested. Delivery of notice by commercial messenger
or courier service or mail shall be assumed if acceptance of delivery is
refused. Notice may be given by fax but will only be treated as delivered
hereunder if: (x) sent between the hours of 9:00 a m. and 5:00 p.m. (based
on local time at the destination); and (y) receipt is acknowledged by fax and
delivery will be deemed to have been given on the date the fax acknowledgment
is sent. Notices shall be delivered as follows or at such other place as
either party hereto may by notice in writing (given in accordance with this
Section 32) designate:
To Grantor: Discovery Zone, Inc.
One Corporate Center
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
To Beneficiary: ▇▇▇▇▇▇▇▇'▇ Corporation
▇▇▇ ▇▇▇▇▇▇▇▇'▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General Counsel
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
28
33. Sole Discretion of Beneficiary. Wherever pursuant to this Deed
of Trust, Beneficiary exercises any right given to it to approve or
disapprove, or any arrangement or term is to be satisfactory to Beneficiary,
the decision of Beneficiary to approve or disapprove or to decide that
arrangements or terms are satisfactory or not satisfactory shall be in the
sole discretion of Beneficiary and shall be final and conclusive, except as
may be otherwise expressly and specifically provided herein.
34. Non-Waiver. The failure of Beneficiary to insist upon strict
performance of any term hereof shall not be deemed to be a waiver of any term
of this Deed of Trust. Grantor shall not be relieved of Grantor's
Obligations hereunder by reason of (a) the failure of Beneficiary to comply
with any request of Grantor to take any action to foreclose this Deed of
Trust or otherwise enforce any of the provisions hereof or of the other
Relevant Documents, (b) the release, regardless of consideration, of the
whole or any part of the Trust Property, or of any person liable for the
Obligations or any portion thereof, or (c) any agreement or stipulation by
Beneficiary extending the time of payment or otherwise modifying or
supplementing the terms of this Deed of Trust or the other Relevant
Documents. Beneficiary may resort for the payment of the Obligations to any
other security held by Beneficiary in such order and manner as Beneficiary,
in its discretion, may elect. Beneficiary may take action to recover the
Obligations, or any portion thereof, or to enforce any covenant hereof
without prejudice to the right of Beneficiary thereafter to foreclosure this
Deed of Trust. The rights and remedies of Beneficiary under this Deed of
Trust shall be separate, distinct and cumulative and none shall be given
effect to the exclusion of the others. No act of Beneficiary shall be
construed as an election to proceed under any one provision herein to the
exclusion of any other provision. Beneficiary shall not 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.
35. No Oral Change. This Deed of Trust and the other Relevant
Documents constitute the final expression of the entire agreement among the
parties pertaining to the subject matter hereof and thereof and supersede all
prior and contemporaneous agreements, understanding, representations or other
arrangements, whether express or implied, written or oral, of the parties in
connection herewith or therewith except to the extent expressly incorporated
or specifically referred to herein or therein. This Deed of Trust, 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 Grantor or Beneficiary, 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.
36. Successors and Assigns. Subject to the provisions hereof
requiring Beneficiary's consent to any transfer of the Trust Property, this
Deed of Trust shall be binding upon and inure to the benefit of Grantor and
Beneficiary and their respective permitted successors and assigns forever.
29
37. Severability. If any term, covenant or condition of this Deed
of Trust or the Relevant Documents is held to be invalid, illegal or
unenforceable in any respect, this Deed of Trust and any such other Relevant
Document shall be construed without such provision.
38. Headings, etc. The headings and captions of various
paragraphs of this Deed of Trust 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.
39. Duplicate Originals. This Deed of Trust may be executed in any
number of duplicate originals and each such duplicate original shall be
deemed to be an original.
40. Definitions. Unless the context clearly indicates a contrary
intent or unless otherwise specifically provided herein, words used in this
Deed of Trust may be used interchangeably in singular or plural form and the
word "Grantor" shall mean "each Grantor and any subsequent owner or owners of
the Trust Property or any part thereof or any interest therein," the word
"Beneficiary" shall mean "Beneficiary and any subsequent holder(s) of the
Notes," the word "person" shall include an individual, corporation,
partnership, trust, unincorporated association, government, governmental
authority, and any other entity, and the words "Trust Property" shall include
any portion of the Trust Property and any interest therein and the words
"attorneys' fees" shall include any and all attorneys' fees, paralegal and
law clerk fees (including, without limitation, fees at the pre-trial, trial
and appellate levels incurred or paid by Beneficiary in protecting its
interest in the Trust Property and Collateral and enforcing its rights
hereunder and all such fees incurred in connection with any bankruptcy or
insolvency proceedings). 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.
41. Homestead. Grantor hereby waives and renounces all homestead
and exemption rights provided by the constitution and the laws of the United
States and of any state, in and to the Land as against the collection of the
Obligations, or any part hereof.
42. Assignments. Consistent with and subject to the applicable
provisions of the Relevant Documents, Beneficiary shall have the right to
assign or transfer its rights under this Deed of Trust without limitation.
Any Beneficiary or transferee shall he entitled to all the benefits afforded
Beneficiary under this Deed of Trust.
43. Waiver of Jury Trial. TO THE MAXIMUM EXTENT PERMITTED BY
APPLICABLE LAW, EACH PARTY HERETO HEREBY AGREES NOT TO ELECT A TRIAL BY JURY
OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY
FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH
REGARD TO THE NOTES, THIS DEED OF TRUST, OR THE OTHER RELEVANT DOCUMENTS, OR
ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH.
30
THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY
SUCH PARTY, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH
ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE.
BENEFICIARY IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY
PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY GRANTOR.
44. Consent to Jurisdiction. GRANTOR AND BENEFICIARY HERETO
CONSENT FOR THEMSELVES AND IN RESPECT OF THEIR PROPERTIES, GENERALLY,
UNCONDITIONALLY AND IRREVOCABLY, TO THE NONEXCLUSIVE JURISDICTION OF THE
FEDERAL AND STATE COURTS IN THE STATE OF NEW YORK WITH RESPECT TO ANY
PROCEEDING RELATING TO ANY MATTER, CLAIM OR DISPUTE ARISING UNDER THE
RELEVANT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY. GRANTOR FURTHER
CONSENTS, GENERALLY, UNCONDITIONALLY AND IRREVOCABLY, TO THE NONEXCLUSIVE
JURISDICTION OF THE STATE AND FEDERAL COURTS OF THE STATE IN WHICH ANY OF THE
COLLATERAL IS LOCATED IN RESPECT OF ANY PROCEEDING RELATING TO ANY MATTER,
CLAIM OR DISPUTE ARISING WITH RESPECT TO SUCH COLLATERAL. GRANTOR FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS, GENERALLY, UNCONDITIONALLY
AND IRREVOCABLY, AT THE ADDRESSES SET FORTH IN THE FIRST PARAGRAPH HEREOF IN
CONNECTION WITH ANY OF THE AFORESAID PROCEEDINGS IN ACCORDANCE WITH THE RULES
APPLICABLE TO SUCH PROCEEDINGS. TO THE EXTENT PERMITTED BY APPLICABLE LAW,
GRANTOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW HAVE OR HAVE
IN THE FUTURE TO THE LAYING OF VENUE IN RESPECT OF ANY OF THE AFORESAID
PROCEEDINGS BROUGHT IN THE COURTS REFERRED TO ABOVE AND AGREES NOT TO PLEAD
OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING HEREIN SHALL
AFFECT THE RIGHT OF BENEFICIARY TO SERVE PROCESS IN ANY MANNER PERMITTED BY
LAW OR TO COMMENCE PROCEEDINGS OR OTHERWISE PROCEED AGAINST GRANTOR IN ANY
JURISDICTION.
45. Governing Law. This Deed of Trust shall be governed by and
construed in accordance with the laws of the State of New York including,
without limitation, Section 5-1401 of the General Obligations Law, but
otherwise without regard to conflict of law principles; provided, however,
that with respect to the creation, attachment, perfection, priority and
procedures relating to the enforcement of the liens and security interests
created by or pursuant to this Deed of Trust and relating to real property,
this Deed of Trust shall be governed by and construed in accordance with the
laws of the state in which the Land is located.
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46. Lien Absolute, Multi-site Real Estate and Multiple Collateral
Transaction. Grantor acknowledges that this Deed of Trust and a number of
other Relevant Documents and those documents required by the Relevant
Documents together secure the Obligations. Grantor agrees that the lien of
this Deed of Trust and all obligations of the Grantor hereunder shall be
absolute and unconditional and shall not in any manner be affected or
impaired by:
(a) any lack of validity or enforceability of the Notes or any
other Relevant Document, any agreement with respect to any of the Obligations
or any other agreement or instrument relating to any of the foregoing;
(b) any acceptance by Beneficiary of any security for or guarantees
of any of the indebtedness hereby secured;
(c) any failure, neglect or omission on the part of Beneficiary to
realize upon or protect any of the indebtedness hereby secured or any of the
collateral security therefor, including the Relevant Documents;
(d) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Obligations;
(e) any release (except as to the property or obligation released),
sale, pledge, surrender, compromise, settlement, nonperfection, renewal
extension, indulgence, alteration, exchange, modification or disposition of
any of the Obligations hereby secured or of any of the collateral security
therefor;
(f) any amendment or waiver of or any consent to any departure from
the Notes or any other Relevant Documents or of any guaranty thereof (except
to the extent of such amendment, waiver or consent in writing by
Beneficiary), if any, and Beneficiary may in its discretion foreclose,
exercise any power of sale, or exercise any other remedy available to it
under any or all of the Relevant Documents without first exercising or
enforcing any of its rights and remedies hereunder; and
(g) any exercise of the rights or remedies of Beneficiary hereunder
or under any or all of the Relevant Documents.
Grantor specifically consents and agrees that Beneficiary may exercise its
rights and remedies hereunder and under the other Relevant Documents
separately or concurrently and in any order that Beneficiary may deem
appropriate.
47. Future Advances. This Deed of Trust shall secure not only
existing indebtedness, but also such future advances, whether such advances
are obligatory or are to be made at the option of Beneficiary, or otherwise,
as are made by Beneficiary to Grantor after the date hereof, to the same
extent as if such future advances were made on the date of the
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execution of this Deed of Trust. Nothing in this Deed of Trust shall be
deemed an obligation on the part of the Beneficiary to make any future
advances.
48. State Specific Provisions. The provisions of Exhibit B are
hereby incorporated by reference as though set forth in full herein.
49. No Merger of Estates. It is the intention and agreement of
Grantor and Beneficiary that there shall be no merger of any leasehold estate
in the Trust Property with the fee interest in the Trust Property or any
other estate or interest in the Trust Property, and there shall be no merger
of this Deed of Trust and any estate in the Trust Property, by reason of the
fact that the same person may own or hold (a) any leasehold interest in the
Trust Property, and/or (b) this Deed of Trust, and/or (c) the fee interest in
the Trust Property or any other estate or interest in the Trust Property.
50. 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 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 Deed of
Trust, covenants to perform and fulfill the trusts herein created, being
liable, however, only for willful negligence or misconduct.
51. Trustee's Fees. Grantor 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 Deed of Trust.
TRUSTEE SHALL BE INDEMNIFIED, HELD HARMLESS AND REIMBURSED BY GRANTOR FOR ANY
LIABILITY, DAMAGE OR EXPENSE, INCLUDING REASONABLE ATTORNEYS' FEES AND
AMOUNTS PAID IN SETTLEMENT, WHICH TRUSTEE MAY INCUR OR SUSTAIN IN CONNECTION
WITH THIS DEED OF TRUST OR IN THE DOING OF ANY ACT WHICH TRUSTEE IS REQUIRED
OR PERMITTED TO DO BY THE TERMS HEREOF OR BY LAW (EXCEPT TO THE EXTENT
ARISING FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF TRUSTEE), AND
SHALL BE REIMBURSED THEREFOR UPON DEMAND.
52. Subordinate Lien. Notwithstanding anything to the contrary
contained herein, Grantor shall be permitted to grant a subordinate lien on
the Trust Property in favor of State Street Bank and Trust Company, solely in
its capacity as trustee and collateral agent under and pursuant to the
Indenture (as hereinafter defined) (the "Subordinated Creditor") as security
for the obligations of Grantor under that certain Indenture between Grantor
and the Subordinated Creditor dated as of July 22, 1997 (the "Indenture"),
provided that such lien in favor of the Subordinated Creditor is junior,
subject and subordinate to the lien of this Deed of Trust in accordance with
and pursuant to the terms and conditions set forth in that certain
Subordination Agreement dated as of the date hereof between Beneficiary and
the Subordinated Creditor with respect to the Trust Property (the
"Subordinated Agreement"), and provided,
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further, that any event which gives the Subordinated Creditor the right to
accelerate the obligations secured by such subordinate lien shall
automatically constitute an Event of Default hereunder.
[Remainder of page intentionally left blank; signature and notary pages follow.]
34
Grantor has executed this instrument as of the day and year first above written.
GRANTOR:
DISCOVERY ZONE, INC.,
a Delaware corporation, as successor in
interest to LEAPS & BOUNDS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Its: Sr. V.P.
STATE OF NEW YORK )
COUNTY OF WESTCHESTER)
This instrument was acknowledged before me this 28th day of July,
1997, by ▇▇▇▇▇▇ ▇▇▇▇▇▇ as Sr. V.P. of Discovery Zone, Inc., a Delaware
corporation, on behalf of said corporation.
WITNESS my hand and official seal.
My Commission Expires:
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------- ----------------------------
Notary Public
[NOTARIAL SEAL]
Commission Expires June 15, 1998
Denver
▇▇▇▇▇▇▇ County, Colorado
EXHIBIT A
▇▇▇ ▇,
▇▇▇▇▇ ▇,
▇▇▇▇▇▇▇ SUBDIVISION FILING ▇▇. ▇,
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇
STATE SPECIFIC PROVISIONS (Colorado)
The following provisions are incorporated by reference into Section
48 of the attached Deed of Trust. If any conflict or inconsistency exists
between this Exhibit B and the remainder of the attached Deed of Trust, this
Exhibit B shall govern.
A. Special Foreclosure Provisions. Notwithstanding anything to
the contrary contained in Section 24 hereof, Beneficiary may foreclose this
Deed of Trust either by judicial action or through Trustee. Foreclosure
through Trustee will be initiated by Beneficiary's filing of its notice of
election and demand for sale with Trustee. Upon the filing of such notice of
election and demand for sale, Trustee shall promptly comply with all notice
and other requirements of the laws of Colorado then in force with respect to
such sales, and shall give four weeks' public notice of the time and place of
such sale by advertisement weekly in some newspaper of general circulation
then published in the county or city and county in which the Land is located.
Any sale conducted by Trustee pursuant to this paragraph shall be held at
the front door of the county courthouse for such county or city and county,
or on the Land, or at such other place as similar sales are then customarily
held in such county or city and county, provided that the actual place of
sale shall be specified in the notice of sale. In any such sale, it shall
and may be lawful for the Trustee to sell and dispose of the Trust Property
en masse or in separate parcels, as the Trustee may think best.
All fees, costs and expenses of any kind incurred by Beneficiary in
connection with foreclosure of this Deed of Trust, including, without
limitation, the costs of any appraisals of the Land obtained by Beneficiary,
all costs of any receivership for the Land advanced by Beneficiary, all costs
of any environmental audits or tests incurred by Beneficiary and all
attorneys' and consultants' fees incurred by Beneficiary, shall constitute a
part of the Obligations and may be included as part of the amount owing from
Grantor to Beneficiary at any foreclosure sale. The proceeds of any sale
under this paragraph shall be applied first to the fees and expenses of the
officer conducting the sale, and then as set forth in Section 24(a) of this
Deed of Trust. At the conclusion of any foreclosure sale, the officer
conducting the sale shall execute and deliver to the purchaser at the sale a
certificate of purchase which shall describe the property sold to such
purchaser and shall state that upon the expiration of the applicable periods
for redemption, the holder of such certificate will be entitled to a deed to
the property described in the certificate. After the expiration of all
applicable periods of redemption, unless the property sold has been redeemed
by Grantor, the officer who conducted such sale shall, upon request, execute
and deliver an appropriate deed to the holder of the certificate of purchase
or the last certificate of redemption, as the case may be. Nothing in this
paragraph dealing with foreclosure procedures or specifying particular
actions to be taken by Beneficiary or by Trustee or any similar officer shall
be deemed to contradict or add to the requirements and procedures now or
hereafter specified by Colorado law, and any such inconsistency shall be
resolved in favor of Colorado law applicable at the time of foreclosure.
B. Non-Agricultural Use. The Land encumbered by this Deed of
Trust is not used principally or primarily for agricultural or farming
purposes.
C. Maximum Amount Secured by this Deed of Trust. The portion of
the Obligations which shall be secured by this Deed of Trust shall be limited
to an amount equal to $6,000,000.
SCHEDULE A
DESCRIPTION OF ORIGINAL DEED OF TRUST
Property Recording Office Book Page Recording Date
-------- ---------------- ---- ---- --------------
Littleton, CO Office of the Recorder of the County 1218 420 9/12/94
of ▇▇▇▇▇▇▇, CO