EXHIBIT 10.29
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MSDWMC Loan No. 01-09970
GOLDFISH (DE) LP, as grantor
(Borrower)
to
____________________________________, as trustee
(Trustee)
and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ BANK, as beneficiary
(Lender)
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DEED OF TRUST AND
SECURITY AGREEMENT
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Dated: November 28, 2001
Location: Southlake, Texas
PREPARED BY AND UPON
RECORDATION RETURN TO:
Cadwalader, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
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TABLE OF CONTENTS
Page
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ARTICLE I
GRANTS OF SECURITY
Section 1.1 Property Mortgaged........................................... 1
Section 1.2 Assignment of Leases and Rents............................... 3
Section 1.3 Security Agreement........................................... 3
Section 1.4 Pledge of Monies Held........................................ 4
Section 1.5 Conditions to Grant.......................................... 4
ARTICLE II
DEBT AND OBLIGATIONS SECURED
Section 2.1 Debt......................................................... 4
Section 2.2 Other Obligations............................................ 5
Section 2.3 Debt and Other Obligations................................... 5
Section 2.4 Payments..................................................... 5
ARTICLE III
BORROWER COVENANTS
Section 3.1 Payment of Debt.............................................. 5
Section 3.2 Incorporation by Reference................................... 5
Section 3.3 Insurance.................................................... 6
Section 3.4 Payment of Taxes, etc........................................ 8
Section 3.5 Escrow Fund.................................................. 9
Section 3.6 Condemnation................................................. 10
Section 3.7 Restoration After Casualty/Condemnation...................... 10
Section 3.8 Leases and Rents............................................. 14
Section 3.9 Maintenance and Use of Property.............................. 16
Section 3.10 Waste........................................................ 16
Section 3.11 Compliance With Laws......................................... 17
Section 3.12 Books and Records............................................ 17
Section 3.13 Payment For Labor and Materials.............................. 20
Section 3.14 Performance of Other Agreements.............................. 20
Section 3.15 Change of Name, Identity or Structure........................ 20
Section 3.16 Existence.................................................... 20
Section 3.17 Management................................................... 20
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ARTICLE IV
SPECIAL COVENANTS
Section 4.1 Property Use................................................. 21
Section 4.2 Single Purpose Entity........................................ 21
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Section 5.1 Warranty of Title............................................ 24
Section 5.2 Legal Status and Authority................................... 24
Section 5.3 Validity of Documents........................................ 25
Section 5.4 Litigation................................................... 25
Section 5.5 Status of Property........................................... 25
Section 5.6 No Foreign Person............................................ 27
Section 5.7 Separate Tax Lot............................................. 27
Section 5.8 Leases....................................................... 27
Section 5.9 Financial Condition.......................................... 28
Section 5.10 Business Purposes............................................ 28
Section 5.11 Taxes........................................................ 28
Section 5.12 Mailing Address.............................................. 28
Section 5.13 No Change in Facts or Circumstances.......................... 28
Section 5.14 Disclosure................................................... 29
Section 5.15 Third Party Representations.................................. 29
Section 5.16 Illegal Activity............................................. 29
Section 5.17 Regulations T, U and X....................................... 29
Section 5.18 Non-Consolidation............................................ 29
ARTICLE VI
OBLIGATIONS AND RELIANCE
Section 6.1 Relationship of Borrower and Lender.......................... 29
Section 6.2 No Reliance on Lender........................................ 29
Section 6.3 No Lender Obligations........................................ 30
Section 6.4 Reliance..................................................... 30
ARTICLE VII
FURTHER ASSURANCES
Section 7.1 Recording of Security Instrument, etc........................ 30
Section 7.2 Further Acts, etc............................................ 31
Section 7.3 Changes in Tax, Debt Credit and Documentary Stamp Laws....... 31
Section 7.4 Estoppel Certificates........................................ 32
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Section 7.5 Flood Insurance.............................................. 32
Section 7.6 Replacement Documents........................................ 32
ARTICLE VIII
DUE ON SALE/ENCUMBRANCE
Section 8.1 No Sale/Encumbrance.......................................... 33
Section 8.2 Sale/Encumbrance Defined..................................... 33
Section 8.3 Lender's Rights.............................................. 34
Section 8.4 Permitted Transfers.......................................... 34
ARTICLE IX
PREPAYMENT
Section 9.1 Prepayment................................................... 37
ARTICLE X
DEFAULT
Section 10.1 Events of Default............................................ 37
ARTICLE XI
RIGHTS AND REMEDIES
Section 11.1 Remedies..................................................... 39
Section 11.2 Application of Proceeds...................................... 42
Section 11.3 Right to Cure Defaults....................................... 42
Section 11.4 Actions and Proceedings...................................... 42
Section 11.5 Recovery of Sums Required to be Paid......................... 42
Section 11.6 Examination of Books and Records............................. 43
Section 11.7 Other Rights, etc............................................ 43
Section 11.8 Right to Release Any Portion of the Property................. 43
Section 11.9 Violation of Laws............................................ 44
Section 11.10 Right of Entry............................................... 44
Section 11.11 Subrogation.................................................. 44
ARTICLE XII
ENVIRONMENTAL MATTERS
Section 12.1 Environmental Representations and Warranties................. 44
Section 12.2 Environmental Covenants...................................... 45
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Section 12.3 Lender's Rights.............................................. 46
Section 12.4 Operations and Maintenance Programs.......................... 46
ARTICLE XIII
INDEMNIFICATIONS
Section 13.1 General Indemnification...................................... 46
Section 13.2 Mortgage and/or Intangible Tax............................... 47
Section 13.3 Duty to Defend; Attorneys' Fees and Other Fees and Expenses.. 47
Section 13.4 Environmental Indemnity...................................... 47
ARTICLE XIV
WAIVERS
Section 14.1 Waiver of Counterclaim....................................... 47
Section 14.2 Marshalling and Other Matters................................ 48
Section 14.3 Waiver of Notice............................................. 48
Section 14.4 Waiver of Statute of Limitations............................. 48
Section 14.5 Sole Discretion of Lender.................................... 48
Section 14.6 WAIVER OF TRIAL BY JURY...................................... 48
ARTICLE XV
EXCULPATION
Section 15.1 Exculpation.................................................. 49
ARTICLE XVI
NOTICES
Section 16.1 Notices...................................................... 49
ARTICLE XVII
APPLICABLE LAW
Section 17.1 Choice of Law................................................ 49
Section 17.2 Provisions Subject to Applicable Law......................... 51
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ARTICLE XVIII
SECONDARY MARKET
Section 18.1 Transfer of Loan............................................. 51
Section 18.2 Cooperation.................................................. 51
ARTICLE XIX
COSTS
Section 19.1 Performance at Borrower's Expense............................ 52
Section 19.2 Legal Fees for Enforcement................................... 52
ARTICLE XX
DEFINITIONS
Section 20.1 General Definitions.......................................... 53
Section 20.2 Headings, etc................................................ 53
ARTICLE XXI
MISCELLANEOUS PROVISIONS
Section 21.1 No Oral Change............................................... 53
Section 21.2 Liability.................................................... 53
Section 21.3 Inapplicable Provisions...................................... 53
Section 21.4 Duplicate Originals; Counterparts............................ 53
Section 21.5 Number and Gender............................................ 54
Section 21.6 Cross Default................................................ 54
ARTICLE XXII
SPECIAL [NAME OF STATE] PROVISIONS
Section 22.1 Principles of Construction................................... 54
Section 22.2 [State]...................................................... 54
ARTICLE XXIII
DEED OF TRUST PROVISIONS
Section 23.1 Concerning The Trustee....................................... 60
Section 23.2 Trustee's Fees............................................... 60
Section 23.3 Certain Rights............................................... 60
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Section 23.4 Retention of Money........................................... 61
Section 23.5 Perfection of Appointment.................................... 61
Section 23.6 Succession Instruments....................................... 61
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THIS DEED OF TRUST AND SECURITY AGREEMENT (the "Security
Instrument") is made as of the __ day of November, 2001, by GOLDFISH (DE) LP, a
Delaware limited partnership, having its principal place of business at c/o W.P.
▇▇▇▇▇ & Co. LLC, ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, as
grantor ("Borrower") to _____________________, as trustee ("Trustee") for the
benefit of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ BANK, a Utah industrial loan company, having an
address at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, as
beneficiary ("Lender").
RECITALS:
Borrower by its promissory note of even date herewith given to
Lender is indebted to Lender in the principal sum of TWENTY-NINE MILLION EIGHT
HUNDRED SEVENTY FIVE THOUSAND AND NO/100 DOLLARS ($29,875,000.00) (the "Loan
Amount") in lawful money of the United States of America (the note together with
all extensions, renewals, modifications, substitutions and amendments thereof
shall collectively be referred to as the "Note"), with interest from the date
thereof at the rates set forth in the Note, principal and interest to be payable
in accordance with the terms and conditions provided in the Note.
Borrower desires to secure the payment of the Debt (as
defined in Article 2) and the performance of all of its obligations under the
Note and the Other Obligations (as defined in Article 2).
ARTICLE I
GRANTS OF SECURITY
Section 1.1 Property Mortgaged. Borrower does hereby
irrevocably mortgage, grant, bargain, sell, pledge, assign, warrant, transfer
and convey to Trustee, its successors and assigns, for the benefit of Lender,
and grant a security interest to Lender and Trustee in, the following property,
rights, interests and estates now owned, or hereafter acquired by Borrower
(collectively, the "Property"):
(a) Land. The real property described in Exhibit A attached
hereto and made a part hereof (the "Land");
(b) Additional Land. All ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ and
development rights hereafter acquired by Borrower for use in connection with the
Land and the development of the Land and all additional lands and estates
therein which may, from time to time, by supplemental mortgage or otherwise be
expressly made subject to the lien of this Security Instrument;
(c) Improvements. The buildings, structures, fixtures,
additions, enlargements, extensions, modifications, repairs, replacements and
improvements now or hereafter erected or located on the Land (the
"Improvements");
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(d) Easements. All easements, rights-of-way or use, rights,
strips and gores of land, streets, ways, alleys, passages, sewer rights, water,
water courses, water rights and powers, air rights and development rights, and
all estates, rights, titles, interests, privileges, liberties, servitudes,
tenements, hereditaments and appurtenances of any nature whatsoever, in any way
now or hereafter belonging, relating or pertaining to the Land and the
Improvements and the reversion and reversions, remainder and remainders, and all
land lying in the bed of any street, road or avenue, opened or proposed, in
front of or adjoining the Land, to the center line thereof and all the estates,
rights, titles, interests, dower and rights of dower, curtesy and rights of
curtesy, property, possession, claim and demand whatsoever, both at law and in
equity, of Borrower of, in and to the Land and the Improvements and every part
and parcel thereof, with the appurtenances thereto;
(e) Fixtures and Personal Property. All machinery, equipment,
fixtures (including, but not limited to, all heating, air conditioning,
plumbing, lighting, communications and elevator fixtures and other property of
every kind and nature whatsoever owned by Borrower, or in which Borrower has or
shall have an interest, now or hereafter located upon the Land and the
Improvements, or appurtenant thereto, and usable in connection with the present
or future operation and occupancy of the Land and the Improvements and all
building equipment, materials and supplies of any nature whatsoever owned by
Borrower, or in which Borrower has or shall have an interest, now or hereafter
located upon the Land and the Improvements, or appurtenant thereto, or usable in
connection with the present or future operation and occupancy of the Land and
the Improvements (collectively, the "Personal Property"), and the right, title
and interest of Borrower in and to any of the Personal Property which may be
subject to any security interests, as defined in the Uniform Commercial Code, as
adopted and enacted by the state or states where any of the Property is located
(the "Uniform Commercial Code"), and all proceeds and products of the above;
(f) Leases and Rents. All leases, subleases and other
agreements affecting the use, enjoyment or occupancy of the Land and/or the
Improvements heretofore or hereafter entered into and all extensions, amendments
and modifications thereto, whether before or after the filing by or against
Borrower of any petition for relief under 11 U.S.C. [Section].101 et seq., as
the same may be amended from time to time (the "Bankruptcy Code") (the "Leases")
and all right, title and interest of Borrower, its successors and assigns
therein and thereunder, including, without limitation, any guaranties of the
lessees' obligations thereunder, cash or securities deposited thereunder to
secure the performance by the lessees of their obligations thereunder and all
rents, additional rents, revenues, issues and profits (including all oil and gas
or other mineral royalties and bonuses) from the Land and the Improvements,
whether paid or accruing before or after the filing by or against Borrower of
any petition for relief under the Bankruptcy Code (the "Rents") and all
proceeds from the sale or other disposition of the Leases and the right to
receive and apply the Rents to the payment of the Debt;
(g) Insurance Proceeds. All proceeds of and any unearned
premiums on any insurance policies covering the Property, including, without
limitation, the right to receive and apply the proceeds of any insurance,
judgments, or settlements made in lieu thereof, for damage to the Property;
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(h) Condemnation Awards. All awards or payments, including
interest thereon, which may heretofore and hereafter be made with respect to the
Property, whether from the exercise of the right of eminent domain (including
but not limited to any transfer made in lieu of or in anticipation of the
exercise of the right), or for a change of grade, or for any other injury to or
decrease in the value of the Property;
(i) Tax Certiorari. All refunds, rebates or credits in
connection with a reduction in real estate taxes and assessments charged against
the Property as a result of tax certiorari or any applications or proceedings
for reduction;
(j) Conversion. All proceeds of the conversion, voluntary or
involuntary, of any of the foregoing including, without limitation, proceeds of
insurance and condemnation awards, into cash or liquidation claims;
(k) Rights. The right, in the name and on behalf of Borrower,
to appear in and defend any action or proceeding brought with respect to the
Property and to commence any action or proceeding to protect the interest of
Lender in the Property;
(l) Agreements. All agreements, contracts, certificates,
instruments, franchises, permits, licenses, plans, specifications and other
documents, now or hereafter entered into, and all rights therein and thereto,
respecting or pertaining to the use, occupation, construction, management or
operation of the Land and any part thereof and any Improvements or respecting
any business or activity conducted on the Land and any part thereof and all
right, title and interest of Borrower therein and thereunder, including, without
limitation, the right, upon the occurrence and during the continuance of an
Event of Default (defined below), to receive and collect any sums payable to
Borrower thereunder;
(m) Intangibles. All trade names, trademarks, servicemarks,
logos, copyrights, goodwill, books and records and all other general intangibles
relating to or used in connection with the operation of the Property; and
(n) Other Rights. Any and all other rights of Borrower in and
to the items set forth in Subsections (a) through (m) above.
Section 1.2 Assignment of Leases and Rents. Borrower
hereby absolutely and unconditionally assigns to Lender and Trustee Borrower's
right, title and interest in and to all current and future Leases and Rents; it
being intended by Borrower that this assignment constitutes a present, absolute
assignment and not an assignment for additional security only. Nevertheless,
subject to the terms of this Section 1.2 and Section 3.8, Lender grants to
Borrower a revocable license to collect and receive the Rents. Borrower shall
hold a portion of the Rents sufficient to discharge all current sums due on the
Debt for use in the payment of such sums.
Section 1.3 Security Agreement. This Security
Instrument is both a real property mortgage and a "security agreement" within
the meaning of the Uniform Commercial Code. The Property includes both real and
personal property and all other rights and interests, whether tangible or
intangible in nature, of Borrower in the Property. By executing and delivering
this Security Instrument, Borrower hereby grants to Lender and Trustee, as
security
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for the Obligations (defined in Section 2.3), a security interest in the
Personal Property to the full extent that the Personal Property may be subject
to the Uniform Commercial Code.
Section 1.4 Pledge of Monies Held. Borrower hereby
pledges to Lender any and all monies now or hereafter held by Lender, including,
without limitation, any sums deposited in the Escrow Fund (as defined in Section
3.5), Net Proceeds (as defined in Section 3.7) and condemnation awards or
payments described in Section 3.6, as additional security for the Obligations
until expended or applied as provided in this Security Instrument.
Section 1.5 Conditions to Grant. TO HAVE AND TO HOLD
the above granted and described Property unto and to the use and benefit of
Lender and of Trustee, and for their successors and assigns, forever; IN TRUST,
WITH POWER OF SALE, to secure payment to Lender of the Debt at the time and in
the manner provided for its payment in the Note and in this Security Instrument;
PROVIDED, HOWEVER, these presents are upon the express condition that, if
Borrower shall well and truly pay to Lender the Debt at the time and in the
manner provided in the Note and this Security Instrument, shall well and truly
perform the Other Obligations as set forth in this Security Instrument and shall
well and truly abide by and comply with each and every covenant and condition
set forth herein and in the Note, these presents and the estate hereby granted
shall cease, terminate and be void.
ARTICLE II
DEBT AND OBLIGATIONS SECURED
Section 2.1 Debt. This Security Instrument and the
grants, assignments and transfers made in Article 1 are given for the purpose of
securing the payment of the following, in such order of priority as Lender may
determine in its sole discretion (the "Debt"):
(a) the indebtedness evidenced by the Note in lawful money of
the United States of America;
(b) interest, default interest, late charges and other sums,
as provided in the Note, this Security Instrument or the Other Security
Documents (defined below);
(c) the Default Consideration (as defined in the Note), if
any;
(d) all other moneys agreed or provided to be paid by Borrower
in the Note, this Security Instrument or the Other Security Documents;
(e) all sums advanced pursuant to this Security Instrument to
protect and preserve the Property and the lien and the security interest created
hereby; and
(f) all sums advanced and costs and expenses incurred by
Lender in connection with the Debt or any part thereof, any renewal, extension,
or change of or substitution for the Debt or any part thereof, or the
acquisition or perfection of the security therefor, whether made or incurred at
the request of Borrower or Lender.
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Section 2.2 Other Obligations. This Security Instrument
and the grants, assignments and transfers made in Article 1 are also given for
the purpose of securing the performance of the following (the "Other
Obligations"):
(a) all other obligations of Borrower contained herein;
(b) each obligation of Borrower contained in the Note and in
the Other Security Documents; and
(c) each obligation of Borrower contained in any renewal,
extension, amendment, modification, consolidation, change of, or substitution or
replacement for, all or any part of the Note, this Security Instrument or the
Other Security Documents.
Section 2.3 Debt and Other Obligations. Borrower's
obligations for the payment of the Debt and the performance of the Other
Obligations shall be referred to collectively below as the "Obligations."
Section 2.4 Payments. Unless payments are made in the
required amount in immediately available funds at the place where the Note is
payable, remittances in payment of all or any part of the Debt shall not,
regardless of any receipt or credit issued therefor, constitute payment until
the required amount is actually received by Lender in funds immediately
available at the place where the Note is payable (or any other place as Lender,
in Lender's sole discretion, may have established by delivery of written notice
thereof to Borrower) and shall be made and accepted subject to the condition
that any check or draft may be handled for collection in accordance with the
practice of the collecting bank or banks. Acceptance by Lender of any payment in
an amount less than the amount then due shall be deemed an acceptance on account
only, and the failure to pay the entire amount then due shall be and continue to
be an Event of Default.
ARTICLE III
BORROWER COVENANTS
Borrower covenants and agrees that:
Section 3.1 Payment of Debt. Borrower will pay the Debt
at the time and in the manner provided in the Note and in this Security
Instrument.
Section 3.2 Incorporation by Reference. All the
covenants, conditions and agreements contained in (a) the Note and (b) all and
any of the documents other than the Note or this Security Instrument now or
hereafter executed by Borrower and/or others and by or in favor of Lender, which
wholly or partially secure or guaranty payment of the Note (the "Other Security
Documents"), are hereby made a part of this Security Instrument to the same
extent and with the same force as if fully set forth herein.
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Section 3.3 Insurance.
(a) Borrower shall obtain and maintain, or cause to be
maintained, insurance for Borrower and the Property providing at least the
following coverages:
(i) Property Insurance. Insurance with respect to the
Improvements and building equipment insuring against any peril now or
hereafter included within the classification "All Risks of Physical
Loss" in amounts at all times sufficient to prevent Lender from
becoming a co-insurer within the terms of the applicable policies and
under applicable law, but in any event such insurance shall be
maintained in an amount which, after application of deductible, shall
be equal to the full insurable value of the Improvements and building
equipment, the term "full insurable value" to mean the actual
replacement cost of the Improvements and building equipment (without
taking into account any depreciation, and exclusive of excavations,
footings and foundations, landscaping and paving) determined annually
by an insurer, a recognized independent insurance broker or an
independent appraiser selected and paid by Borrower and in no event
less than the coverage required pursuant to the terms of any Lease;
(ii) Liability Insurance. Comprehensive general liability
insurance, including bodily injury, death and property damage
liability, insurance against any and all claims, including all legal
liability to the extent insurable and imposed upon Lender and all court
costs and attorneys' fees and expenses, arising out of or connected
with the possession, use, leasing, operation, maintenance or condition
of the Property in such amounts as are generally available at
commercially reasonable premiums and are generally required by
institutional lenders for properties comparable to the Property but in
any event for a combined single limit of at least $5,000,000;
(iii) Workers' Compensation Insurance. Statutory workers'
compensation insurance with respect to any work on or about the
Property;
(iv) Business Interruption Insurance. Business interruption
and/or loss of "rental income" insurance in an amount sufficient to
avoid any co-insurance penalty and to provide proceeds which will cover
a period of not less than twenty-four (24) months, from the date of
casualty or loss, the term "rental income" to mean the sum of (A) the
total then ascertainable Rents payable under the Leases and (B) the
total ascertainable amount of all other amounts to be received by
Borrower from third parties which are the legal obligation of the
tenants, reduced to the extent such amounts would not be received
because of operating expenses not incurred during a period of
non-occupancy of that portion of the Property then not being occupied;
(v) Boiler and Machinery Insurance. Broad form boiler and
machinery insurance (without exclusion for explosion) covering all
boilers or other pressure vessels, machinery, and equipment located in,
on or about the Property and insurance against loss of occupancy or use
arising from any breakdown in such amounts as are generally required by
institutional lenders for properties comparable to the Property;
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(vi) Flood Insurance. If required by Subsection 5.5(j)
hereof, flood insurance in an amount at least equal to the lesser of
(A) the principal balance of the Note, or (B) the maximum limit of
coverage available for the Property under the National Flood Insurance
Act of 1968, The Flood Disaster Protection Act of 1973 or the National
Flood Insurance Reform Act of 1994, as each may be amended;
(vii) Builder's Risk Insurance. At all times during which
structural construction, repairs or alterations are being made with
respect to the Improvements (A) owner's contingent or protective
liability insurance covering claims not covered by or under the terms
or provisions of the above mentioned commercial general liability
insurance policy; and (B) the insurance provided for in Subsection
3.3(a)(i) written in a so-called builder's risk completed value form
(1) on a non-reporting basis, (2) against all risks insured against
pursuant to Subsection 3.3(a)(i), (3) including permission to occupy
the Property, and (4) with an agreed amount endorsement waiving
co-insurance provisions; and
(viii) Other Insurance. Such other insurance with respect to
the Property against loss or damage of the kinds from time to time
customarily insured against and in such amounts as are required by
institutional lenders for properties comparable to the Property.
(b) All insurance provided for in Subsection 3.3(a) hereof
shall be obtained under valid and enforceable policies (the "Policies" or in the
singular, the "Policy"), and shall be issued by one or more domestic primary
insurer(s) having (i) a general policy rating of A or better and a financial
class of VI or better by A.M. Best Company, Inc. (or if a rating of A.M. Best
Company Inc. is no longer available, a similar rating from a similar or
successor service) and (ii) a claims paying ability rating by a credit rating
agency approved by Lender (a "Rating Agency") of not less than AA by Standard &
Poor's Corp. or such comparable rating by such other Rating Agency. All insurers
providing insurance required by this Security Instrument shall be authorized to
issue insurance in the state in which the Property is located. The Policy
referred to in Subsection 3.3(a)(ii) above shall name Lender as an additional
named insured and the Policies referred to in Subsection 3.3(a)(i), (iv), (v),
(vi) and (vii), and as applicable (viii), above shall provide that all proceeds
be payable to Lender as set forth in Section 3.7 hereof. The Policies referred
to in Subsections 3.3(a)(i), (v), (vi) and (vii) shall also contain: (i) a
standard "non-contributory mortgagee" endorsement or its equivalent relating,
inter alia, to recovery by Lender notwithstanding the negligent or willful acts
or omission of Lender; (ii) to the extent available at commercially reasonable
rates, a waiver of subrogation endorsement as to Lender; and (iii) an
endorsement providing for a deductible per loss of an amount not more than that
which is customarily maintained by prudent owners of similar properties in the
general vicinity of the Property, but in no event in excess of $25,000. The
Policy referred to in Subsection 3.3(a)(i) above shall provide coverage for
contingent liability from Operation of Building Laws, Demolition Costs and
Increased Cost of Construction Endorsements together with an "Ordinance or Law
Coverage" or "Enforcement" endorsement if any of the Improvements or the use of
the Property shall at any time constitute legal non-conforming structures or
uses. All Policies shall contain (i) a provision that such Policies shall not be
cancelled or terminated, nor shall they expire, without at least thirty (30)
days' prior written notice to Lender in each instance; and (ii) include
effective waivers by the insurer of all claims for Insurance Premiums (defined
below) against any loss payees, additional insureds and named
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insureds (other than Borrower). Certificates of insurance with respect to all
renewal and replacement Policies shall be delivered to Lender not less than
twenty (20) days prior to the expiration date of any of the Policies required to
be maintained hereunder, which certificates shall bear notations evidencing
payment of applicable premiums (the "Insurance Premiums"). Originals or
certificates of such replacement Policies shall be delivered to Lender promptly
after Borrower's receipt thereof but in any case within thirty (30) days after
the effective date thereof. If Borrower fails to maintain and deliver to Lender
the original Policies or certificates of insurance required by this Security
Instrument, upon ten (10) days' prior notice to Borrower, Lender may procure
such insurance at Borrower's sole cost and expense. Notwithstanding the
foregoing, so long as (i) the lease between Borrower, as landlord, and PetsMART,
Inc., a Delaware corporation ("PetsMART"), as the sole tenant at the Property,
dated November __, 2001, as such may be amended with Lender's consent except as
otherwise specifically permitted pursuant to Section 3.8 hereof, (collectively,
the "PetsMART Lease") or a replacement "triple net" lease for the entire
Property acceptable to Lender in its sole discretion (an "Acceptable Replacement
Lease") with another single-user tenant acceptable to lender in its sole
discretion) an "Acceptable Replacement Tenant") remains in full force and effect
with PetsMART or its assignee as the tenant thereunder, or an Acceptable
Replacement Tenant, (ii) PetsMART or an Acceptable Replacement Tenant is not in
default under the PetsMART Lease or an Acceptable Replacement Lease, as
applicable, beyond any applicable notice and cure periods set forth in the
PetsMART Lease, and (iii) Borrower provides Lender with original Policies or
certificates of insurance evidencing that PetsMART or an Acceptable Replacement
Tenant is carrying all insurance required under the PetsMART Lease, then the
requirements of Section 3.3(a) and (b) shall be deemed satisfied.
(c) Borrower shall comply with all insurance requirements and
shall not bring or keep or permit to be brought or kept any article upon any of
the Property or cause or permit any condition to exist thereon which would be
prohibited by an insurance requirement, or would invalidate the insurance
coverage required hereunder to be maintained by Borrower on or with respect to
any part of the Property pursuant to this Section 3.3.
Section 3.4 Payment of Taxes, etc.
(a) Borrower shall pay or cause to be paid all taxes,
assessments, water rates, sewer rents, governmental impositions, and other
charges, including without limitation vault charges and license fees for the use
of vaults, chutes and similar areas adjoining the Land, now or hereafter levied
or assessed or imposed against the Property or any part thereof (the "Taxes"),
all ground rents, maintenance charges and similar charges, now or hereafter
levied or assessed or imposed against the Property or any part thereof (the
"Other Charges"), and all charges for utility services provided to the Property
prior to the date on which interest or delinquency charges begins to accrue
thereon or any non-payment thereof would result in the application of any
penalties, provided, however, that taxes may be paid in installments to the
extent permitted by the taxing authority. Borrower will deliver to Lender,
promptly upon Lender's request, evidence satisfactory to Lender that the Taxes,
Other Charges and utility service charges have been so paid or are not then
delinquent. Borrower shall not suffer and shall promptly cause to be paid and
discharged any lien or charge whatsoever which may be or become a lien or charge
against the Property. Except to the extent sums sufficient to pay all Taxes and
Other Charges have been deposited with Lender in accordance with the terms of
this Security Instrument, Borrower shall
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furnish to Lender paid receipts for the payment of the Taxes and Other Charges
prior to the date the same shall become delinquent.
(b) After prior written notice to Lender, Borrower or, if the
PetsMART Lease or an Acceptable Replacement Lease is in full force and effect,
PetsMART or an Acceptable Replacement Tenant, as applicable, at its own expense,
may contest by appropriate legal proceeding, promptly initiated and conducted in
good faith and with due diligence, the amount or validity or application in
whole or in part of any of the Taxes, provided that (i) no Event of Default has
occurred and is continuing under the Note, this Security Instrument or any of
the Other Security Documents, (ii) Borrower is permitted to do so under the
provisions of any other mortgage, deed of trust or deed to secure debt affecting
the Property, (iii) such proceeding shall suspend the collection of the Taxes
from Borrower and from the Property or Borrower shall have paid all of the Taxes
under protest, (iv) such proceeding shall be permitted under and be conducted in
accordance with the provisions of any other instrument to which Borrower is
subject and shall not constitute a default thereunder, (v) neither the Property
nor any part thereof or interest therein will be in danger of being sold,
forfeited, terminated, cancelled or lost, and (vi) Borrower shall have deposited
with Lender adequate reserves, a bond, or other reasonable security for the
payment of the Taxes, together with all interest and penalties thereon, unless
Borrower has paid all of the Taxes under protest, or Borrower or PetsMART or an
Acceptable Replacement Tenant shall have furnished the security as may be
required in the proceeding, or as may be reasonably requested by Lender to
insure the payment of any contested Taxes, together with all interest and
penalties thereon, taking into consideration the amount in the Escrow Fund
available for payment of Taxes.
Section 3.5 Escrow Fund. In addition to the initial
deposits with respect to Taxes and Insurance Premiums made by Borrower to Lender
on the date hereof to be held by Lender in escrow, Borrower shall pay to Lender
on the first day of each calendar month (a) one-twelfth of an amount which would
be sufficient to pay the Taxes payable, or estimated by Lender to be payable,
during the next ensuing twelve (12) months and (b) one-twelfth of an amount
which would be sufficient to pay the Insurance Premiums due for the renewal of
the coverage afforded by the Policies upon the expiration thereof (the amounts
in (a) and (b) above shall be called the "Escrow Fund"). Borrower agrees to
notify Lender immediately of any changes to the amounts, schedules and
instructions for payment of any Taxes and Insurance Premiums of which it has or
obtains knowledge and authorizes Lender or its agent to obtain the bills for
Taxes directly from the appropriate taxing authority. The Escrow Fund and the
payments of interest or principal or both, payable pursuant to the Note shall be
added together and shall be paid as an aggregate sum by Borrower to Lender.
Provided there are sufficient amounts in the Escrow Fund and no Event of Default
exists, Lender shall be obligated to pay the Taxes and Insurance Premiums as
they become due on their respective due dates on behalf of Borrower by applying
the Escrow Fund to the payments of such Taxes and Insurance Premiums required to
be made by Borrower pursuant to Sections 3.3 and 3.4 hereof. If the amount of
the Escrow Fund shall exceed the amounts due for Taxes and Insurance Premiums
pursuant to Sections 3.3 and 3.4 hereof, Lender shall, in its discretion, return
any excess to Borrower or credit such excess against future payments to be made
to the Escrow Fund. In allocating such excess, Lender may deal with the person
shown on the records of Lender to be the owner of the Property. If the Escrow
Fund is not sufficient to pay the items set forth in (a) and (b) above, Borrower
shall promptly pay to Lender, upon demand, an amount which Lender shall
reasonably estimate as sufficient to
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make up the deficiency. The Escrow Fund shall not constitute a trust fund and
may be commingled with other monies held by Lender. Unless otherwise required by
Applicable Laws (defined in Section 3.11), no earnings or interest on the Escrow
Fund shall be payable to Borrower. Notwithstanding the foregoing, so long as (i)
no Event of Default has occurred and is continuing, (ii) PetsMART or an
Acceptable Replacement Tenant, as the sole tenant of the Property, is not in
default under the terms of the PetsMART or an Acceptable Replacement Lease
beyond any applicable notice and cure periods set forth therein, and (iii)
PetsMART or an Acceptable Replacement Tenant is paying the Taxes pursuant to the
terms of Section 3.4 hereof and Insurance Premiums in accordance with the terms
of the last sentence of Section 3.3(b) hereof, directly pursuant to the terms
hereof, and such Taxes are current, then Borrower shall not be required to make
monthly payments into the Escrow Fund.
Section 3.6 Condemnation. Borrower shall promptly give
Lender notice of the actual or threatened commencement of any condemnation or
eminent domain proceeding and shall deliver to Lender copies of any and all
papers served in connection with such proceedings. Notwithstanding any taking by
any public or quasi-public authority through eminent domain or otherwise
(including but not limited to any transfer made in lieu of or in anticipation of
the exercise of such taking), Borrower shall continue to pay the Debt at the
time and in the manner provided for its payment in the Note and in this Security
Instrument and the Debt shall not be reduced until any award or payment therefor
shall have been actually received and applied by Lender, after the deduction of
expenses of collection, to the reduction or discharge of the Debt. Borrower
shall cause the award or payment made in any condemnation or eminent domain
proceeding, which is payable to Borrower, to be paid directly to Lender. Lender
shall not be limited to the interest paid on the award by the condemning
authority but shall be entitled to receive out of the award interest at the rate
or rates provided herein or in the Note. Lender may apply any award or payment
to the reduction or discharge of the Debt whether or not then due and payable.
If the Property is sold, through foreclosure or otherwise, prior to the receipt
by Lender of the award or payment, Lender shall have the right, whether or not a
deficiency judgment on the Note (to the extent permitted in the Note or herein)
shall have been sought, recovered or denied, to receive the award or payment, or
a portion thereof sufficient to pay the Debt.
Section 3.7 Restoration After Casualty/Condemnation. In
the event of a casualty or a taking by eminent domain, the following provisions
shall apply in connection with the Restoration (defined below) of the Property:
(a) If the Property shall be damaged or destroyed, in whole or
in part, by fire or other casualty, or if the Property or any portion thereof is
taken by the power of eminent domain Borrower shall give prompt notice of such
damage or taking to Lender and, subject to the terms of Paragraph 18 of the
PetsMART Lease, shall promptly commence or cause to be commenced and diligently
prosecute or cause to be prosecuted the completion of the repair and restoration
of the Property as nearly as possible to the condition the Property was in
immediately prior to such fire or other casualty or taking, with such
alterations as may be approved by Lender (the "Restoration"). Use of the Net
Proceeds to pay down the Debt as may be required by Lender herein will not cause
Borrower to incur either a premium or penalty.
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(b) The term "Net Proceeds" for purposes of this Section 3.7
shall mean: (i) the net amount of all insurance proceeds under the Policies
carried pursuant to Subsections 3.3(a)(i), (iv), (v), (vi), (vii) and (viii) of
this Security Instrument as a result of such damage or destruction, after
deduction of Lender's reasonable costs and expenses (including, but not limited
to reasonable counsel fees), if any, in collecting the same, or (ii) the net
amount of all awards and payments received by Lender with respect to a taking
referenced in Section 3.6 of this Security Instrument, after deduction of
Lender's reasonable costs and expenses (including, but not limited to reasonable
counsel fees), if any, in collecting the same, whichever the case may be. If (i)
the Net Proceeds do not exceed $250,000 (the "Net Proceeds Availability
Threshold"); (ii) the costs of completing the Restoration as reasonably
estimated by Borrower shall be less than or equal to the Net Proceeds; (iii) no
Event of Default shall have occurred and be continuing under the Note, this
Security Instrument or any of the Other Security Documents; (iv) the Property
and the use thereof after the Restoration will be in compliance with, and
permitted under, all applicable zoning laws, ordinances, rules and regulations
(including, without limitation, all applicable Environmental Laws (defined in
Section 12.1); (v) (A) in the event that the Net Proceeds are insurance
proceeds, less than twenty-five percent (25%) of the total floor area of the
Improvements has been damaged or destroyed, or rendered unusable as a result of
such fire or other casualty; or (B) in the event that the Net Proceeds are
condemnation awards, less than 25% of the Land constituting the Property is
taken, such Land that is taken is located along the perimeter or periphery of
the Property, no portion of the Improvements is located in such Lands, and such
taking does not materially impair access to the Property; and (vi) Lender shall
be satisfied that any operating deficits, including all scheduled payments of
principal and interest under the Note which will be incurred with respect to the
Property as a result of the occurrence of any such fire or other casualty or
taking, whichever the case may be, will be covered out of (1) the Net Proceeds,
or (2) other funds of Borrower, then the Net Proceeds will be disbursed directly
to Borrower. Notwithstanding anything to the contrary contained in this Section
3.7(b), so long as (i) the PetsMART Lease remains in full force and effect and
(ii) PetsMART is not in default under the PetsMART Lease beyond any applicable
notice and cure periods set forth in the PetsMART Lease, then subsections (iv)
and (v) of Section 3.7(b) shall be deemed not applicable.
(c) If the Net Proceeds are greater than the Net Proceeds
Availability Threshold or Borrower is not otherwise entitled to have the Net
Proceeds disbursed directly to Borrower pursuant to Subsection 3.7(b), such Net
Proceeds shall be forthwith paid to Lender to be held by Lender in a segregated
account to be made available to Borrower for the Restoration in accordance with
the provisions of this Subsection 3.7(c).
The Net Proceeds held by Lender pursuant to this Subsection
3.7(c) shall be made available to Borrower for payment or reimbursement of
Borrower's expenses in connection with the Restoration, subject to the following
conditions:
(i) no Event of Default shall have occurred and be
continuing under the Note, this Security Instrument or any of the Other
Security Documents;
(ii) Lender shall, within a reasonable period of time
prior to request for initial disbursement, be furnished with an
estimate of the cost of the Restoration accompanied by an independent
architect's certification as to such costs and appropriate plans and
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specifications for the Restoration, such plans and specifications and
cost estimates to be subject to Lender's approval, not to be
unreasonably withheld or delayed;
(iii) the Net Proceeds, together with any cash or cash
equivalent deposited by Borrower with Lender, are sufficient to cover
the cost of the Restoration as such costs are certified by the
independent architect;
(iv) Net Proceeds are less than the then outstanding
principal balance of the Note;
(v) (A) in the event that the Net Proceeds are insurance
proceeds, less than twenty-five percent (25%) of the total floor area
of the Improvements has been damaged or destroyed, or rendered unusable
as a result of such fire or other casualty; or (B) in the event that
the Net Proceeds are condemnation awards, less than 25% of the Land
constituting the Property is taken, such Land that is taken is located
along the perimeter or periphery of the Property, no portion of the
Improvements is located in such Lands and such taking does not
materially impair access to the Property, provided, however, that the
terms of this Section 3.7(c)(v) shall not apply so long as PetsMART is
obligated to perform the Restoration pursuant to the terms of the
PetsMART Lease;
(vi) Lender shall be satisfied that any operating
deficits, including all scheduled payments of principal and interest
under the Note which will be incurred with respect to the Property as a
result of the occurrence of any such fire or other casualty or taking,
whichever the case may be, will be covered out of (1) the Net Proceeds,
or (2) other funds of Borrower;
(vii) Lender shall be satisfied that, upon the completion
of the Restoration, the net cash flow of the Property will be restored
to a level sufficient to cover all carrying costs and operating
expenses of the Property, including, without limitation, debt service
on the Note and all required replacement reserves, reserves for tenant
improvements and leasing commissions;
(viii) the Restoration can reasonably be completed on or
before the earliest to occur of (A) six (6) months prior to the
Maturity Date (as defined in the Note), (B) the earliest date required
for such completion under the terms of any Major Leases (defined below)
and (C) such time as may be required under applicable zoning law,
ordinance, rule or regulation in order to repair and restore the
Property to as nearly as possible the condition it was in immediately
prior to such fire or other casualty or to such taking, as applicable;
(ix) the Property and the use thereof after the
Restoration will be in compliance with, and permitted under, all
applicable zoning laws, ordinances, rules and regulations (including,
without limitation, all applicable Environmental Laws (defined in
Section 12.1); and
(x) each Major Lease (defined in Section 3.8) in effect
as of the date of the occurrence of such fire or other casualty shall
remain in full force and effect during and
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after the completion of the Restoration without abatement of rent
beyond the time required for Restoration.
(d) The Net Proceeds held by Lender until disbursed in
accordance with the provisions of this Section 3.7 shall constitute additional
security for the Obligations. The Net Proceeds other than the Net Proceeds paid
under the Policy described in Subsection 3.3(a)(iv) shall be disbursed by Lender
to, or as directed by, Borrower, in an amount equal to the costs actually
incurred from time to time for work in place as part of the Restoration less
customary retainage from time to time during the course of the Restoration, not
more frequently than once per month, upon receipt of evidence satisfactory to
Lender that (A) all materials installed and work and labor performed (except to
the extent that they are to be paid for out of the requested disbursement) in
connection with the Restoration have been paid for in full, and (B) there exist
no notices of pendency, stop orders, mechanic's or materialman's liens or
notices of intention to file same, or any other liens or encumbrances of any
nature whatsoever on the Property arising out of the Restoration which have not
either been fully bonded and discharged of record or in the alternative fully
insured to the satisfaction of Lender by the title company insuring the lien of
this Security Instrument. The Net Proceeds paid under the Policy described in
Subsection 3.3(a)(iv) shall be disbursed by Lender to pay for debt service under
the loan evidenced by the Note, to pay other expenses incurred by Borrower in
connection with the ownership and operation of the Property, and the remainder
thereof, to, or as directed by, Borrower to pay for the cost of the Restoration
in accordance with this Section 3.7(d). Final payment shall be made after
submission to Lender of all licenses, permits, certificates of occupancy and
other required approvals of governmental authorization having jurisdiction and
Casualty Consultant's (as defined below) certification that the Restoration has
been fully completed.
(e) Subject to the rights of PetsMART under the PetsMART Lease
so long as the PetsMART Lease remains in full force and effect, Lender shall
have the use of the plans and specifications and all permits, licenses and
approvals required or obtained in connection with the Restoration. The identity
of the contractors, subcontractors and materialmen engaged in the Restoration,
as well as the contracts under which they have been engaged, shall be subject to
prior review and acceptance by Lender and an independent consulting engineer
selected by Lender (the "Casualty Consultant"), such acceptance not to be
unreasonably withheld or delayed. All costs and expenses incurred by Lender in
connection with making the Net Proceeds available for the Restoration including,
without limitation, reasonable counsel fees and disbursements and the Casualty
Consultant's fees, shall be paid by Borrower.
(f) If at any time the Net Proceeds or the undisbursed balance
thereof shall not, in the reasonable opinion of Lender, be sufficient to pay in
full the balance of the costs which are estimated by the Casualty Consultant to
be incurred in connection with the completion of the Restoration, Borrower shall
deposit or cause to be deposited the deficiency (the "Net Proceeds Deficiency")
with Lender before any further disbursement of the Net Proceeds shall be made.
The Net Proceeds Deficiency deposited with Lender shall be held by Lender and
shall be disbursed for costs actually incurred in connection with the
Restoration on the same conditions applicable to the disbursement of the Net
Proceeds, and until so disbursed pursuant to this Section 3.7 shall constitute
additional security for the Obligations.
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(g) Except upon the occurrence and continuance of an Event of
Default, Borrower shall settle any insurance claims with respect to the Net
Proceeds which in the aggregate are less than the Net Proceeds Availability
Threshold. Lender shall have the right to participate in and reasonably approve
any settlement for insurance claims with respect to the Net Proceeds which in
the aggregate are greater than the Net Proceeds Availability Threshold. If an
Event of Default shall have occurred and be continuing, Borrower hereby
irrevocably empowers Lender, in the name of Borrower as its true and lawful
attorney-in-fact, to file and prosecute such claim and to collect and to make
receipt for any such payment. If the Net Proceeds are received by Borrower, such
Net Proceeds shall, until the completion of the related work, be held in trust
for Lender and shall be segregated from other funds of Borrower to be used to
pay for the cost of the Restoration in accordance with the terms hereof.
(h) The excess, if any, of the Net Proceeds and the remaining
balance, if any, of the Net Proceeds Deficiency deposited with Lender after (i)
the Casualty Consultant certifies to Lender that the Restoration has been
completed in accordance with the provisions of this Section 3.7, and (ii) the
receipt by Lender of evidence satisfactory to Lender that all costs incurred in
connection with the Restoration have been paid in full and all required permits,
licenses, certificates of occupancy and other required approvals of governmental
authorities having jurisdiction have been issued, shall be remitted by Lender to
Borrower, provided no Event of Default shall have occurred and shall be
continuing under the Note, this Security Instrument or any of the Other Security
Documents.
(i) All Net Proceeds not required (i) to be made available for
the Restoration or (ii) to be returned to Borrower as excess Net Proceeds
pursuant to Subsection 3.7(h) shall be retained and applied by Lender toward the
payment of the Debt without penalty or prepayment premium whether or not then
due and payable in such order, priority and proportions as Lender in its
discretion shall deem proper or, at the discretion of Lender, the same shall be
paid, either in whole or in part, to Borrower. If Lender shall receive and
retain Net Proceeds, the lien of this Security Instrument shall be reduced only
by the amount received and retained by Lender and actually applied by Lender in
reduction of the Debt.
Section 3.8 Leases and Rents.
(a) Borrower may enter into a proposed Lease (including the
renewal or extension of an existing Lease (a "Renewal Lease")) without the prior
written consent of Lender, provided such proposed Lease or Renewal Lease (i)
provides for rental rates and terms comparable to existing local market rates
and terms (taking into account the type and quality of the tenant) as of the
date such Lease is executed by Borrower (unless, in the case of a Renewal Lease,
the rent payable during such renewal, or a formula or other method to compute
such rent, is provided for in the original Lease), (ii) is an arms-length
transaction with a bona fide, independent third party tenant, (iii) does not
have a materially adverse effect on the value of the Property taken as a whole,
(iv) is subject and subordinate to the Security Instrument and the lessee
thereunder agrees to attorn to Lender, and (v) is written on the standard form
of lease approved by Lender. All proposed Leases which do not satisfy the
requirements set forth in this Subsection 3.8(a) shall be subject to the prior
approval of Lender and its counsel, at Borrower's expense. Borrower shall
promptly deliver to Lender copies of all Leases which are entered into pursuant
to this
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Subsection together with Borrower's certification that it has satisfied all of
the conditions of this Subsection.
(b) Borrower (i) shall observe and perform all the obligations
imposed upon the lessor under the Leases and shall not do or permit to be done
anything to impair the value of any of the Leases as security for the Debt; (ii)
upon request, shall promptly send copies to Lender of all notices of default
which Borrower shall send or receive thereunder; (iii) shall enforce all of the
material terms, covenants and conditions contained in the Leases upon the part
of the tenant thereunder to be observed or performed, (iv) shall not collect any
of the Rents more than one (1) month in advance (except security deposits shall
not be deemed Rents collected in advance); (v) shall not execute any other
assignment of the lessor's interest in any of the Leases or the Rents; and (vi)
shall not consent to any assignment of or subletting under any Leases not in
accordance with their terms, without the prior written consent of Lender.
(c) Borrower may, without the consent of Lender, amend, modify
or waive the provisions of any Lease or terminate, reduce rents under, accept a
surrender of space under, or shorten the term of, any Lease (including any
guaranty, letter of credit or other credit support with respect thereto)
provided that such action (taking into account, in the case of a termination,
reduction in rent, surrender of space or shortening of term, the planned
alternative use of the affected space) does not have a materially adverse effect
on the value of the Property taken as a whole, and provided that such Lease, as
amended, modified or waived, is otherwise in compliance with the requirements of
this Security Instrument and any subordinate agreement binding upon Lender with
respect to such Lease. A termination of a Lease with a tenant who is in default
beyond applicable notice and grace periods shall not be considered an action
which has a materially adverse effect on the value of the Property taken as a
whole. Any amendment, modification, waiver, termination, rent reduction, space
surrender or term shortening which does not satisfy the requirements set forth
in this Subsection shall be subject to the prior approval of Lender and its
counsel, which approval shall not be unreasonably withheld or delayed, at
Borrower's expense. Borrower shall promptly deliver to Lender copies of
amendments, modifications and waivers which are entered into pursuant to this
Subsection together with Borrower's certification that it has satisfied all of
the conditions of this Subsection.
(d) Notwithstanding anything contained herein to the contrary,
Borrower shall not, without the prior written consent of Lender, enter into,
renew, extend, amend, modify, waive any provisions of, terminate, reduce rents
under, accept a surrender of space under, or shorten the term of, any Major
Lease. The term "Major Lease" shall mean any Lease between Borrower as landlord
and a third party as tenant demising in the aggregate more than the lesser of
(i) 15,000 rentable square feet or (ii) fifteen percent (15%) of the total
rentable square feet at the Property.
(e) Provided no Event of Default has occurred and is
continuing, Borrower shall have the right, upon notice to, but without the
consent of, Lender, to accept or reject any offer by PetsMART to terminate the
PetsMART Lease with respect to the Property in connection with a casualty or
condemnation to the Property pursuant to and in accordance with the terms and
provisions of Paragraph 17 of the PetsMART Lease so long as the amount payable
by PetsMART to Borrower pursuant to the PetsMART Lease in connection with such
termination and/or the amount of insurance proceeds or condemnation award, as
applicable, which Borrower is entitled to retain pursuant to the PetsMART Lease
in connection therewith is not less than
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(i) the Allocated Loan Amount (as defined in the Note) for the Property, in the
event Borrower is prepaying a portion of the Debt in connection with such
casualty or condemnation pursuant to Article VI of the Note or (ii) an amount
sufficient to purchase the Partial Defeasance Collateral (as defined in the
Note) for the Property, in the event Borrower is defeasing a portion of the Debt
in connection with such casualty or condemnation pursuant to Article VI of the
Note, and provided, further, that such prepayment or defeasance is made in
accordance with the terms of the Note, this Security Instrument and the Other
Security Documents.
(f) Borrower hereby covenants and agrees that (A) prior to the
Release Date (as defined in the Note) Borrower shall not, without the prior
written consent of Lender, (i) require Tenant to repurchase the Property and pay
to Borrower the Termination Amount (as defined in the PetsMART Lease) pursuant
to Paragraph 36(b) or 36(c) of the PetsMART Lease or (ii) declare the entire
Basic Rent (as defined in the PetsMART Lease) to be immediately due and payable
pursuant to Paragraph 23(b) of the PetsMART Lease and (B) that in the event
Borrower elects to exercise either such right from and after the Release Date,
Borrower shall simultaneously defease the portion of the Loan allocable to the
Premises or the entire Loan, as applicable, pursuant to and in accordance with
the terms and provisions of Article VI of the Note. Any breach by Borrower of
the foregoing covenant and agreement shall constitute an Event of Default.
Section 3.9 Maintenance and Use of Property. Borrower
shall cause the Property to be maintained in a good and safe condition and
repair. The Improvements and the Personal Property shall not be removed,
demolished or materially altered (except for normal replacement of the Personal
Property or as permitted in the PetsMART Lease) without the consent of Lender.
Except as provided in Section 3.8(f) hereof, Borrower shall promptly repair,
replace or rebuild or cause to be repaired, replaced or rebuilt, any part of the
Property which may be destroyed by any casualty, or become damaged, worn or
dilapidated or which may be affected by any proceeding of the character referred
to in Section 3.6 hereof and shall complete and pay for any structure at any
time in the process of construction or repair on the Land. Borrower shall not
initiate, join in, 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 Property or any part
thereof, provided, that Borrower shall be permitted to enter into easement
agreements or grant rights of way so long as such agreements or grants do not
reduce the value of the Property or impair its use, and so long as Borrower has
delivered to Lender a title endorsement satisfactory to Lender with respect to
such agreements and/or rights of way. If under applicable zoning provisions the
use of all or any portion of the Property is or shall become a nonconforming
use, Borrower will not cause or permit the nonconforming use to be discontinued
or the nonconforming Improvement to be abandoned without the express written
consent of Lender.
Section 3.10 Waste. Borrower shall not commit or suffer
any waste of the Property or make any change in the use of the Property which
will in any way materially increase the risk of fire or other hazard arising out
of the operation of the Property, or take any action that might invalidate or
give cause for cancellation of any Policy, or do or permit to be done thereon
anything that may in any way impair the value of the Property or the security of
this Security Instrument. Borrower will not, without the prior written consent
of Lender, permit any drilling or exploration for or extraction, removal, or
production of any minerals from the
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surface or the subsurface of the Land, regardless of the depth thereof or the
method of mining or extraction thereof.
Section 3.11 Compliance With Laws.
(a) Borrower shall promptly comply or cause compliance with
all existing and future federal, state and local laws, orders, ordinances,
governmental rules and regulations or court orders affecting the Property, or
the use thereof ("Applicable Laws").
(b) Borrower shall from time to time, upon Lender's request,
provide Lender with evidence reasonably satisfactory to Lender that the Property
complies with all Applicable Laws or is exempt from compliance with Applicable
Laws.
(c) Notwithstanding any provisions set forth herein or in any
document regarding Lender's approval of alterations of the Property, but subject
to any rights of PetsMART to perform alterations at the Property pursuant to and
in accordance with the terms and provisions of the PetsMART Lease, Borrower
shall not alter the Property in any manner which would materially increase
Borrower's responsibilities for compliance with Applicable Laws without the
prior written approval of Lender. Lender's approval of the plans,
specifications, or working drawings for alterations of the Property shall create
no responsibility or liability on behalf of Lender for their completeness,
design, sufficiency or their compliance with Applicable Laws. The foregoing
shall apply to tenant improvements constructed by Borrower or by any of its
tenants. Lender may condition any such approval upon receipt of a certificate of
compliance with Applicable Laws from an independent architect, engineer, or
other person acceptable to Lender.
(d) Borrower shall give prompt notice to Lender of the receipt
by Borrower of any notice related to a violation of any Applicable Laws and of
the commencement of any proceedings or investigations which relate to compliance
with Applicable Laws.
(e) After prior written notice to Lender, Borrower, at its own
expense, may contest by appropriate legal proceeding, promptly initiated and
conducted in good faith and with due diligence, the Applicable Laws affecting
the Property, provided that (i) no Event of Default has occurred and is
continuing under the Note, this Security Instrument or any of the Other Security
Documents; (ii) Borrower is permitted to do so under the provisions of any other
mortgage, deed of trust or deed to secure debt affecting the Property; (iii)
such proceeding shall be permitted under and be conducted in accordance with the
provisions of any other instrument to which Borrower or the Property is subject
and shall not constitute a default thereunder; (iv) neither the Property, any
part thereof or interest therein, any of the tenants or occupants thereof, nor
Borrower shall be affected in any material adverse way as a result of such
proceeding; (v) non-compliance with the Applicable Laws shall not impose civil
or criminal liability on Borrower or Lender; and (vi) Borrower shall have
furnished to Lender all other items reasonably requested by Lender.
Section 3.12 Books and Records.
(a) Borrower and any Guarantors (defined in Subsection
10.1(e)) and Indemnitor(s) (defined in Section 13.4), if any, shall keep
adequate books and records of account
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in accordance with generally accepted accounting principles ("GAAP"), or in
accordance with other methods acceptable to Lender in its sole discretion,
consistently applied and furnish to Lender:
(i) monthly, or if the Loan (defined below) has been
securitized or sold as a whole loan by Lender, quarterly and annual
certified rent rolls in the form attached hereto as Exhibit B signed
and dated by Borrower, detailing the names of all tenants of the
Improvements, the portion of Improvements occupied by each tenant, the
base rent and any other charges payable under each Lease and the term
of each Lease, including the expiration date, the extent to which any
tenant is in default under any Lease, and any other information as is
reasonably required by Lender, within twenty (20) days after the end of
each calendar month, thirty (30) days after the end of each fiscal
quarter or sixty (60) days after the close of each fiscal year of
Borrower, as applicable;
(ii) on a monthly basis, operating statements of the
Property in the form attached as Exhibit C for the immediately
preceding month (and for previous periods if required by Lender), or if
the Loan has been securitized or sold as a whole loan by Lender,
quarterly and annual operating statements of the Property in the form
attached hereto as Exhibit D and Exhibit E, all of which shall be
prepared and certified by Borrower in the form required by Lender,
detailing the revenues received, the expenses incurred and the net
operating income before and after debt service (principal and interest)
and major capital improvements completed by Borrower for each month and
containing appropriate year to date information, within twenty (20)
days after the end of each calendar month, thirty (30) days after the
end of each fiscal quarter or sixty (60) days after the close of each
fiscal year of Borrower, as applicable;
(iii) an annual operating statement of the Property in the
form attached hereto as Exhibit E detailing the total revenues
received, total expenses incurred, total cost of all capital
improvements, total debt service and total cash flow, to be prepared
and certified by Borrower in the form required by Lender, within sixty
(60) days after the close of each fiscal year of Borrower;
(iv) quarterly and annual balance sheet in the form
attached hereto as Exhibit F and profit and loss statements of
Borrower, any Guarantors and any Indemnitor(s) in the form required by
Lender, prepared and certified by the respective Borrower, Guarantors
and/or Indemnitor(s), within thirty (30) days after the end of each
fiscal quarter and within sixty (60) days after the end of each fiscal
year, with respect to Borrower, and within sixty (60) days (or, at any
time after the Loan is securitized, ninety (90) days) after the end of
each fiscal quarter with respect to any Guarantors and Indemnitor(s);
and audited financial statements prepared by an independent certified
public accountant acceptable to Lender, within one hundred twenty (120)
days after the close of each fiscal year, with respect to any Guarantor
and Indemnitor; and
(v) an annual operating budget in the form attached
hereto as Exhibit G presented on a monthly basis consistent with the
annual operating statement described above for the Property, including
cash flow projections for the upcoming year, and all
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proposed capital replacements and improvements at least fifteen (15)
days prior to the start of each fiscal year.
(b) Upon request from Lender, Borrower, any Guarantor
and any Indemnitor shall furnish in a timely manner to Lender:
(i) at any time the PetsMART Lease is no longer in effect
or if PetsMART has otherwise vacated the Property, a property
management report for the Property, showing the number of inquiries
made and/or rental applications received from tenants or prospective
tenants and deposits received from tenants and any other information
requested by Lender, in reasonable detail and certified by Borrower (or
an officer, general partner, member or principal of Borrower if
Borrower is not an individual) under penalty of perjury to be true and
complete, but no more frequently than quarterly; and
(ii) an accounting of all security deposits held in
connection with any Lease of any part of the Property, including the
name and identification number of the accounts in which such security
deposits are held, the name and address of the financial institutions
in which such security deposits are held and the name of the person to
contact at such financial institution, along with any authority or
release necessary for Lender to obtain information regarding such
accounts directly from such financial institutions.
(c) Borrower, any Guarantor and any Indemnitor shall
furnish Lender with such other additional financial or management information
(including State and Federal tax returns, if any) as may, from time to time, be
reasonably required by Lender in form and substance satisfactory to Lender.
(d) Borrower acknowledges the importance to Lender of the
timely delivery of each of the items required by this Section 3.12 (each, a
"Required Financial Item" and collectively, the "Required Financial Items"). In
the event Borrower fails to deliver to Lender any of the Required Financial
Items within the time frame specified herein and such failure is not cured
within ten (10) business days after notice from Lender (each such event, a
"Reporting Failure"), without limiting Lender's other rights and remedies with
respect to the occurrence of such an Event of Default, Borrower shall pay to
Lender the sum of $1,000.00 per occurrence for each Reporting Failure. It shall
constitute a further Event of Default hereunder if any such payment is not
received by Lender within thirty (30) days of the date on which such payment is
due, and Lender shall be entitled to the exercise of all of its rights and
remedies provided hereunder.
(e) In the event that two (2) Reporting Failures occur
during any twelve (12) month period during the term of the Loan, Borrower agrees
to establish a lockbox and lockbox account pursuant to Lender's requirements,
each in the name of Lender, and to execute Lender's standard form Cash
Management Agreement, together with any documentation ancillary thereto as
required by Lender, including, without limitation, a lockbox agreement with a
bank acceptable to Lender, signature cards and letters to tenants, credit card
companies and other account receivable counterparties directing them to pay all
rents, receivables and other sums directly to the lockbox account.
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Section 3.13 Payment For Labor and Materials. (a)
Borrower will promptly pay or cause to be paid when due all bills and costs for
labor, materials, and specifically fabricated materials incurred in connection
with the Property and never permit to exist in respect of the Property or any
part thereof any lien or security interest, even though inferior to the liens
and the security interests hereof, and in any event never permit to be created
or exist in respect of the Property or any part thereof any other or additional
lien or security interest other than the liens or security interests hereof,
except for the Permitted Exceptions (defined below).
(b) After prior written notice to Lender, Borrower or, if the
PetsMART Lease or an Acceptable Replacement Lease is in full force and effect,
as applicable, at its own expense, may contest by appropriate legal proceeding,
promptly initiated and conducted in good faith and with due diligence, the
amount or validity or application in whole or in party of any of such lien,
provided that (i) no Event of Default has occurred and is continuing under the
Note, this Security instrument or any of the Other Security Documents, (ii) such
proceeding shall suspend the collection of the such lien from Borrower and from
the Property or Borrower shall have paid such lien under protest, (iii) neither
the Property nor any part thereof or interest therein will be in danger of being
sold, forfeited, terminated, cancelled or lost, and (iv) Borrower shall have
deposited with Lender adequate reserves, a bond, or other reasonable security
for the payment of the lien, together with all interest and penalties thereon,
unless Borrower has paid all of the lien under protest, or Borrower or PetsMART
or an Acceptable Replacement Tenant shall have furnished the security as may be
required in the proceeding, or as may be reasonably requested by Lender to
insure the payment of any contested lien together with all interest and
penalties thereon.
Section 3.14 Performance of Other Agreements. Borrower
shall observe and perform or cause to be observed and performed each and every
term to be observed or performed by Borrower pursuant to the terms of any
agreement or recorded instrument affecting or pertaining to the Property, or
given by Borrower to Lender for the purpose of further securing an Obligation
secured hereby and any amendments, modifications or changes thereto.
Section 3.15 Change of Name, Identity or Structure.
Except as may be permitted under Article 8 hereof, Borrower will not change
Borrower's name, identity (including its trade name or names) or, if not an
individual, Borrower's corporate, partnership or other structure without
notifying the Lender of such change in writing at least thirty (30) days prior
to the effective date of such change and, in the case of a change in Borrower's
structure, without first obtaining the prior written consent of the Lender.
Section 3.16 Existence. Borrower will continuously
maintain (a) its existence and shall not dissolve or permit its dissolution, (b)
its rights to do business in the state where the Property is located and (c) its
franchises and trade names, if any.
Section 3.17 Management. The management of the Property
shall be by either: (a) Borrower or an entity affiliated with Borrower approved
by Lender for so long as Borrower or said affiliated entity is managing the
Property in a first class manner; (b) a professional property management company
approved by Lender; or (c) by PetsMART or an Acceptable Replacement Tenant, so
long as the PetsMART Lease or an Acceptable Replacement Lease is in full force
and effect and provided there is no uncured default under the PetsMART Lease or
the
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Acceptable Replacement Lease. Such management by an affiliated entity or a
professional property management company shall be pursuant to a written
agreement approved by Lender. In no event shall any manager be removed or
replaced or the terms of any management agreement modified or amended without
the prior written consent of Lender. In the event of default hereunder or under
any management contract then in effect, which default is not cured within any
applicable grace or cure period, Lender shall have the right to immediately
terminate, or to direct Borrower to immediately terminate, such management
contract and to retain, or to direct Borrower to retain, a new management agent
approved by Lender. All Rents generated by or derived from the Property shall
first be utilized solely for current expenses directly attributable to the
ownership and operation of the Property, including, without limitation, current
expenses relating to Borrower's liabilities and obligations with respect to the
Note, this Security Instrument and the Other Security Documents, and none of the
Rents generated by or derived from the Property shall be diverted by Borrower
and utilized for any other purpose unless all such current expenses attributable
to the ownership and operation of the Property have been fully paid and
satisfied.
ARTICLE IV
SPECIAL COVENANTS
Borrower covenants and agrees that:
Section 4.1 Property Use. The Property shall be used
only as a retail facility and uses ancillary thereto, and, except for any
permitted use by PetsMART or an Acceptable Replacement Tenant as set forth in
the PetsMART Lease or an Acceptable Replacement Lease, for no other use, without
the prior written consent of Lender.
Section 4.2 Single Purpose Entity. It has not and shall
not and agrees that its general partner(s), if Borrower is a partnership, or its
managing member(s), if Borrower is a limited liability company (in each case,
"Principal"), has not and shall not:
(a) with respect to any Principal, fail to be organized as a
corporation;
(b) with respect to Borrower, fail to be organized solely for
the purpose of (i) acquiring, developing, owning, managing or operating the
Property, (ii) entering into this Security Instrument and the documents related
hereto, and (iii) engaging in any activity that is incidental, necessary or
appropriate to accomplish the foregoing and, with respect to a Principal, be
organized for any purpose other than (I) owning at least a 0.5% interest in
Borrower, (II) serving as a manager of Borrower and (III) engaging in any
activity that is incidental, necessary or appropriate to owning an interest in
Borrower and serving as a manager of Borrower;
(c) with respect to Borrower, engage in any business or
activity other than the ownership, operation and maintenance of the Property,
and activities incidental thereto and with respect to Principal, engage in any
business or activity other than the ownership of its interest in Borrower, and
activities incidental thereto including the management of the Property;
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(d) with respect to Borrower, acquire or own any material
assets other than (i) the Property, and (ii) such incidental Personal Property
as may be necessary for the operation of the Property and with respect to
Principal, acquire or own any material asset other than (i) its interest in
Borrower, and (ii) such incidental Personal Property as may be necessary to
effectuate its purpose;
(e) merge into or consolidate with any person or entity or
dissolve, terminate or liquidate in whole or in part, transfer or otherwise
dispose of all or substantially all of its assets or change its legal structure;
(f) fail to preserve its existence as an entity duly
organized, validly existing and in good standing (if applicable) under the laws
of the jurisdiction of its organization or formation, and qualification to do
business in the state where the Property is located, if applicable, or without
the prior written consent of Lender, amend, modify, terminate or fail to comply
with the provisions of Borrower's Partnership Agreement, Articles or Certificate
of Incorporation, Articles of Organization, Certificate of Formation, Operating
Agreement or similar organizational documents, as the case may be, or of
Principal's Articles or Certificate of Incorporation or similar organizational
documents, as the case may be;
(g) own, form or acquire any subsidiary or make any investment
in, any person or entity, other than Principal's investment in Borrower;
(h) commingle its assets with the assets of any of its
members, general partners, affiliates, principals or of any other person or
entity nor fail to hold all of its assets in its own name;
(i) with respect to Borrower, incur any debt, secured or
unsecured, direct or contingent (including guaranteeing any obligation), other
than the Debt, except for trade payables in the ordinary course of its business
of owning and operating the Property, provided that such debt is not evidenced
by a note and is paid when due and, with respect to Principal, incur any debt
secured or unsecured, direct or contingent (including guaranteeing any
obligations), except for trade payables in the ordinary course of its business
of owning an interest in Borrower and serving as a manager of Borrower, provided
that such debt is not evidenced by a note and is paid when due;
(j) become insolvent or fail to pay its debts and liabilities
from its assets as the same shall become due;
(k) fail to maintain its records and books of account separate
and apart from those of the members, general partners, principals and affiliates
of Borrower or of Principal, as the case may be, the affiliates of a member,
general partner or principal of Borrower or Principal, as the case may be, and
any other person or entity or fail to maintain such books and records in the
ordinary course of its business;
(l) enter into any contract or agreement with any member,
general partner, principal or affiliate of Borrower or of Principal, as the case
may be, Guarantor or Indemnitor, or any member, general partner, principal or
affiliate thereof, except upon terms and conditions that are intrinsically fair,
commercially reasonable and substantially similar to those that would be
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available on an arms-length basis with third parties other than any member,
general partner, principal or affiliate of Borrower or of Principal, as the case
may be, Guarantor or Indemnitor, or any member, general partner, principal or
affiliate thereof;
(m) seek the dissolution or winding up in whole, or in part,
of Borrower or of Principal, as the case may be;
(n) fail to correct any known misunderstandings regarding the
separate identity of Borrower, or of Principal, as the case may be, from any
member, general partner, principal or affiliate thereof or any other person;
(o) guaranty or become obligated for the debts of any other
person or entity or hold out its credit as being able to satisfy the debts of
another person or entity, except if a Principal is a general partner of
Borrower, such an entity may be under state law liable for the debts of Borrower
in its capacity as a "general partner";
(p) make any loans or advances to any third party, including
any member, general partner, principal or affiliate of Borrower, or of
Principal, as the case may be, or any member, general partner, principal or
affiliate thereof, nor buy or hold evidence of indebtedness issued by any other
person or entity (other than cash or investment grade securities);
(q) fail to hold itself out to the public as a legal entity
separate and distinct from any other entity or person, fail to conduct its
business solely in its own name, mislead others as to the identity with which
such other party is transacting business, or suggest that Borrower or Principal,
as the case may be, is responsible for the debts of any third party (including
any member, general partner, principal or affiliate of Borrower, or of
Principal, as the case may be, or any member, general partner, principal or
affiliate thereof);
(r) fail to maintain adequate capital for the normal
obligations reasonably foreseeable in a business of its size and character and
in light of its contemplated business operations;
(s) share any common logo with or hold itself out as or be
considered as a department or division of (i) any general partner, principal,
member or affiliate of Borrower or of Principal, as the case may be, (ii) any
affiliate of a general partner, principal or member of Borrower or of Principal,
as the case may be, or (iii) any other person or entity;
(t) fail to maintain separate financial statements showing its
assets and liabilities separate and apart from those of any other person or
entity, provided that Lender acknowledges that Borrower may file consolidated
tax returns with Corporate Property Associates 14 Incorporated, a Maryland
corporation;
(u) fail to observe all applicable organizational formalities;
(v) pledge its assets for the benefit of any other person or
entity, other than in the case of Borrower, in connection with the loan secured
hereby;
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(w) with respect to Principal, fail at any time to have at
least one independent director (an "Independent Director") who is not at the
time of initial appointment, or at any time while serving as a director of
Principal, and who has not been at any time during the preceding five (5) years:
(a) a stockholder, director (with the exception of serving as the independent
director of Principal), officer, employee, partner, attorney or counsel of
Principal, Borrower or any affiliate of either of them; (b) a customer, supplier
or other person who derives any of its purchases or revenues from its activities
with Principal, Borrower or any affiliate of either of them; (c) a person or
other entity controlling or under common control with any such stockholder,
partner, customer, supplier or other person; or (d) a member of the immediate
family of any such stockholder, director, officer, employee, partner, customer,
supplier or other person. (As used herein, the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of management, policies or activities of a person or entity, whether
through ownership of voting securities by contract or otherwise);
(x) allow or cause Principal to take any action requiring the
unanimous vote of its Board of Directors unless an Independent Director shall
participate in such vote; or
(y) take for itself or cause any other entity to take any of
the following actions without the unanimous consent of its partners or members,
as applicable, and the unanimous affirmative vote of the Board of Directors of
Principal (including the Independent Director): (i) file or consent to the
filing of any bankruptcy, insolvency or reorganization case or proceeding;
institute any proceedings under any applicable insolvency law or otherwise seek
any relief under any laws relating to the relief from debts or the protection of
debtors generally, (ii) seek or consent to the appointment of a receiver,
liquidator, assignee, trustee, sequestrator, custodian or any similar official
for itself or any other entity, (iii) make an assignment of its assets for the
benefit of its creditors or an assignment of the assets of another entity for
the benefit of such entity's creditors, or (iv) take any action in furtherance
of the foregoing.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Lender that:
Section 5.1 Warranty of Title. Borrower has good title
to the Property and has the right to mortgage, grant, bargain, sell, pledge,
assign, warrant, transfer and convey the same and that Borrower possesses an
unencumbered fee simple absolute estate in the Land and the Improvements and
that it owns the Property free and clear of all liens, encumbrances and charges
whatsoever except for those exceptions shown in the title insurance policy
insuring the lien of this Security Instrument (the "Permitted Exceptions").
Borrower shall forever warrant, defend and preserve the title and the validity
and priority of the lien of this Security Instrument and shall forever warrant
and defend the same to Lender and/or Trustee against the claims of all persons
whomsoever.
Section 5.2 Legal Status and Authority. Borrower (a) is
duly organized, validly existing and in good standing under the laws of its
state of organization or incorporation; (b) is duly qualified to transact
business and is in good standing in the state where the Property is
-24-
located; and (c) has all necessary approvals, governmental and otherwise, and
full power and authority to own, operate and lease the Property. Borrower (and
the undersigned representative of Borrower, if any) has full power, authority
and legal right to execute this Security Instrument, and to mortgage, grant,
bargain, sell, pledge, assign, warrant, transfer and convey the Property
pursuant to the terms hereof and to keep and observe all of the terms of this
Security Instrument on Borrower's part to be performed.
Section 5.3 Validity of Documents. (a) The execution,
delivery and performance of the Note, this Security Instrument and the Other
Security Documents and the borrowing evidenced by the Note (i) are within the
power and authority of Borrower; (ii) have been authorized by all requisite
organizational action; (iii) have received all necessary approvals and consents,
corporate, governmental or otherwise; (iv) will not violate, conflict with,
result in a breach of or constitute (with notice or lapse of time, or both) a
material default under any provision of law, any order or judgment of any court
or governmental authority, the articles of incorporation, by-laws, partnership
or trust agreement, articles of organization, operating agreement, or other
governing instrument of Borrower, or any indenture, agreement or other
instrument to which Borrower is a party or by which it or any of its assets or
the Property is or may be bound or affected; (v) will not result in the creation
or imposition of any lien, charge or encumbrance whatsoever upon any of its
assets, except the lien and security interest created hereby; and (vi) will not
require any authorization or license from, or any filing with, any governmental
or other body (except for the recordation of this Security Instrument in
appropriate land records in the State where the Property is located and except
for Uniform Commercial Code filings relating to the security interest created
hereby); and (b) to the best knowledge of Borrower, the Note, this Security
Instrument and the Other Security Documents constitute the legal, valid and
binding obligations of Borrower.
Section 5.4 Litigation. There is no action, suit or
proceeding, judicial, administrative or otherwise (including any condemnation or
similar proceeding), pending or, to the best of Borrower's knowledge, threatened
or contemplated against Borrower, a Guarantor, if any, an Indemnitor, if any, or
against or affecting the Property that (a) has not been disclosed to Lender by
Borrower in writing, and has a material adverse affect on the Property or
Borrower's, any Guarantor's or any Indemnitor's ability to perform its
obligations under the Note, this Security Instrument or the Other Security
Documents, or (b) is not adequately covered by insurance, each as determined by
Lender in its sole discretion.
Section 5.5 Status of Property.
(a) Borrower has obtained or caused to be obtained all
necessary certificates, licenses and other approvals, governmental and
otherwise, necessary for the operation of the Property and the conduct of its
business and all required zoning, building code, land use, environmental and
other similar permits or approvals, all of which are in full force and effect as
of the date hereof and not subject to revocation, suspension, forfeiture or
modification.
(b) The Property and the present use and occupancy thereof are
in full compliance with all applicable zoning ordinances, building codes, land
use laws, Environmental Laws and other similar laws.
-25-
(c) The Property is served by all utilities required for the
current or contemplated use thereof. All utility service is provided by public
utilities and the Property has accepted or, to the best of Borrower's knowledge,
is equipped to accept such utility service.
(d) All public roads and streets necessary for service of and
access to the Property for the current or contemplated use thereof have been
completed, are serviceable and all-weather and are physically and legally open
for use by the public.
(e) The Property is served by public water and sewer systems.
(f) The Property is free from damage caused by fire or other
casualty.
(g) To the best of Borrower's knowledge, all costs and
expenses of any and all labor, materials, supplies and equipment used in the
construction of the Improvements and for which Borrower is or may be responsible
or which may otherwise become a lien upon the Property have been paid in full.
(h) Borrower has paid in full for, and is the owner of, all
furnishings, fixtures and equipment (other than tenants' property) used in
connection with the operation of the Property, free and clear of any and all
security interests, liens or encumbrances, except the lien and security interest
created hereby.
(i) To the best of Borrower's knowledge, liquid and solid
waste disposal, septic and sewer systems located on the Property are in a good
and safe condition and repair and in compliance with all Applicable Laws.
(j) No portion of the Improvements is located in an area
identified by the Secretary of Housing and Urban Development or any successor
thereto as an area having special flood hazards pursuant to the Flood Insurance
Acts or, if any portion of the Improvements is located within such area,
Borrower has obtained and will maintain the insurance prescribed in Section 3.3
hereof.
(k) All the Improvements lie within the boundaries of the
Land.
(l) As to any declarations of covenants, conditions and
restrictions or similar agreements that run with the Land (the "Declarations")
to which Tenant is a party or by which Tenant or any Property or any portion
thereof may be bound, and which are listed on Exhibit "C" hereto, except as may
be specifically set forth in Exhibit "C":
(i) All of the Declarations are in full force and effect
in accordance with their respective terms, and none of the Declarations
has been modified or amended;
(ii) All work required under the Declarations to be
performed by Tenant as of the closing date and all work required under
the Declarations to be performed by any third party for the benefit of
Tenant or any Property, as of the closing date, has been performed.
-26-
(iii) There are no written or oral promises, agreements,
understandings or commitments between Tenant and any party to any of
the Declarations other than those contained in the Declarations and
the other instruments listed on said Exhibit "C"; and
(iv) There is written claim of default under any of the
Declarations by any party thereto which has not been cured; and to
Tenant's knowledge there exists no event which alone, or with notice or
the lapse of time or both, would constitute a default under any of the
Declarations by any party thereto. Neither Tenant, the current owner of
any Property nor any Property is in default under any of the
Declarations or in violation of any provision of any Declaration. All
sums due and payable by Tenant or the current owner of any Property
under the Declarations as of the closing date have been paid in full
prior to the closing date. There are no rights of first refusal or
options to purchase any Property (or any part thereof) contained in the
Declarations or in any other agreement affecting any Property (or any
part thereof).
Section 5.6 No Foreign Person. Borrower is not a
"foreign person" within the meaning of Section 1445(f)(3) of the Internal
Revenue Code of 1986, as amended and the related Treasury Department
regulations.
Section 5.7 Separate Tax Lot. The Property is assessed
for real estate tax purposes as one or more wholly independent tax lot or lots,
separate from any adjoining land or improvements not constituting a part of such
lot or lots, and no other land or improvements is assessed and taxed together
with the Property or any portion thereof.
Section 5.8 Leases. (a) Except as disclosed in the rent
roll for the Property delivered to and approved by Lender in writing prior to
the date hereof, (i) Borrower is the sole owner of the entire lessor's interest
in the Leases; (ii) the Leases are valid and enforceable and in full force and
effect; (iii) all of the Leases are arms-length agreements with bona fide,
independent third parties; (iv) no party under any Lease is in default; (v) all
Rents due have been paid in full; (vi) the terms of all alterations,
modifications and amendments to the Leases are reflected in the certified
occupancy statement delivered to and approved by Lender; (vii) none of the Rents
reserved in the Leases have been assigned or otherwise pledged or hypothecated;
(viii) none of the Rents have been collected for more than one (1) month in
advance (except a security deposit shall not be deemed rent collected in
advance); (ix) the premises demised under the Leases have been completed and the
tenants under the Leases have accepted the same and have taken possession of the
same on a rent-paying basis; (x) there exist no offsets or defenses to the
payment of any portion of the Rents and Borrower has no monetary obligation to
any tenant under any Lease; (xi) Borrower has received no notice from any tenant
challenging the validity or enforceability of any Lease; (xii) there are no
agreements with the tenants under the Leases other than expressly set forth in
each Lease; (xiii) the Leases are valid and enforceable against Borrower and the
tenants set forth therein; (xiv) no Lease contains an option to purchase, right
of first refusal to purchase, or any other similar provision; (xv) no person or
entity has any possessory interest in, or right to occupy, the Property except
under and pursuant to a Lease; (xvi) each Lease is subordinate to this Security
Instrument, either pursuant to its terms or a recordable subordination
agreement; (xvii) no Lease has the benefit of a non-disturbance agreement that
would be considered unacceptable to prudent institutional lenders, (xviii) all
security deposits relating to the Leases reflected on the certified rent roll
delivered to Lender
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have been collected by Borrower; and (xix) no brokerage commissions or finders
fees are due and payable regarding any Lease.
(b) Notwithstanding anything contained herein to the
contrary, Borrower shall not willfully withhold from Lender any information
regarding renewal, extension, amendment, modification, waiver of provisions of,
termination, rental reduction of, surrender of space of, or shortening of the
term of, any Lease during the term of the Loan. Borrower further covenants and
agrees that, to the best of Borrower's knowledge, one of the entities comprising
PetsMART, as of the date hereof, is in physical occupancy of each of the
premises demised under the PetsMART Lease and is paying full rent under the
PetsMART Lease.
Section 5.9 Financial Condition. (a) (i) Borrower is
solvent, and no bankruptcy, reorganization, insolvency or similar proceeding
under any state or federal law with respect to Borrower has been initiated, and
(ii) Borrower has received reasonably equivalent value for the granting of this
Security Instrument.
(b) No petition in bankruptcy has ever been filed by or
against Borrower, any Guarantor, any Indemnitor or any related entity, or any
principal, general partner or member thereof, in the last seven (7) years, and
neither Borrower, any Guarantor, any Indemnitor nor any related entity, or any
principal, general partner or member thereof, in the last seven (7) years has
ever made any assignment for the benefit of creditors or taken advantage of any
insolvency act or any act for the benefit of debtors, provided, however, that
this representation specifically excludes any shareholder in Guarantor.
Section 5.10 Business Purposes. The loan evidenced by
the Note secured by the Security Instrument and the Other Security Documents
(the "Loan") is solely for the business purpose of Borrower, and is not for
personal, family, household, or agricultural purposes.
Section 5.11 Taxes. Borrower, any Guarantor and any
Indemnitor have filed all federal, state, county, municipal, and city income and
other tax returns required to have been filed by them and have paid all taxes
and related liabilities which have become due pursuant to such returns or
pursuant to any assessments received by them. Neither Borrower, any Guarantor
nor any Indemnitor knows of any basis for any additional assessment in respect
of any such taxes and related liabilities for prior years. Borrower confirms
that its federal tax identification number is: ▇▇-▇▇▇▇▇▇▇.
Section 5.12 Mailing Address. Borrower's mailing
address, as set forth in the opening paragraph hereof or as changed in
accordance with the provisions hereof, is true and correct.
Section 5.13 No Change in Facts or Circumstances. All
information in the application for the Loan submitted to Lender (the "Loan
Application") and in all financing statements, rent rolls, reports, certificates
and other documents submitted in connection with the Loan Application or in
satisfaction of the terms thereof, are accurate, complete and correct in all
respects. There has been no adverse change in any condition, fact, circumstance
or event that would make any such information inaccurate, incomplete or
otherwise misleading.
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Section 5.14 Disclosure. Borrower has disclosed to
Lender all material facts and has not failed to disclose any material fact that
could cause any representation or warranty made herein to be materially
misleading.
Section 5.15 Third Party Representations. Each of the
representations and the warranties made by each Guarantor and Indemnitor herein
or in any Other Security Document(s) is true and correct in all material
respects.
Section 5.16 Illegal Activity. No portion of the
Property has been or will be purchased, improved, equipped or furnished with
proceeds of any illegal activity and to the best of Borrower's knowledge, there
are no illegal activities or activities relating to controlled substance at the
Property.
Section 5.17 Regulations T, U and X. Borrower does not
own any "margin stock" as such term is defined in Regulation U of the Board of
Governors of the Federal Reserve System (12 CFR Part 221), as amended. Borrower
will not use any part of the proceeds from the loan to be made under this
Security Instrument (a) directly or indirectly, to purchase or carry any such
stock or to reduce or retire any Obligations originally incurred to purchase any
such stock within the meaning of such Regulation, (b) so as to involve Borrower
in a violation of Regulation T, U or X of such Board (12 CFR Parts 220, 221 and
224), as amended, or (c) for any other purpose not permitted by Section 7 of the
Securities Exchange Act of 1934, as amended, or any of the rules and regulations
respecting the extension of credit promulgated thereunder.
Section 5.18 Non-Consolidation. All of the assumptions
made in that certain substantive non-consolidation opinion letter of even date
herewith delivered by Borrower's counsel in connection herewith and any
subsequent non-consolidation opinion delivered in accordance with the terms and
conditions of this Mortgage and/or the Note, including, but not limited to, any
exhibits attached thereto (the "Non-Consolidation Opinion"), are true and
correct in all respects. Borrower has complied and will comply with all of the
assumptions made with respect to it in the Non-Consolidation Opinion. Each
entity other than Borrower with respect to which an assumption is made in the
Non-Consolidation Opinion has complied and will comply with all of the
assumptions made with respect to it in the Non-Consolidation Opinion.
ARTICLE VI
OBLIGATIONS AND RELIANCE
Section 6.1 Relationship of Borrower and Lender. The
relationship between Borrower and Lender is solely that of debtor and creditor,
and Lender has no fiduciary or other special relationship with Borrower, and no
term or condition of any of the Note, this Security Instrument and the Other
Security Documents shall be construed so as to deem the relationship between
Borrower and Lender to be other than that of debtor and creditor.
Section 6.2 No Reliance on Lender. The members, general
partners, principals and (if Borrower is a trust) beneficial owners of Borrower
are experienced in the ownership and operation of properties similar to the
Property, and Borrower and Lender are relying solely upon such expertise and
business plan in connection with the ownership and operation of the Property.
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Borrower is not relying on Lender's expertise, business acumen or advice in
connection with the Property.
Section 6.3 No Lender Obligations. Notwithstanding the
provisions of Subsections 1.1(f) and (l) or Section 1.2, Lender is not
undertaking the performance of (i) any obligations under the Leases; or (ii) any
obligations with respect to such agreements, contracts, certificates,
instruments, franchises, permits, trademarks, licenses and other documents. By
accepting or approving anything required to be observed, performed or fulfilled
or to be given to Lender pursuant to this Security Instrument, the Note or the
Other Security Documents, including without limitation, any officer's
certificate, balance sheet, statement of profit and loss or other financial
statement, survey, appraisal, or insurance policy, Lender shall not be deemed to
have warranted, consented to, or affirmed the sufficiency, the legality or
effectiveness of same, and such acceptance or approval thereof shall not
constitute any warranty or affirmation with respect thereto by Lender.
Section 6.4 Reliance. Borrower recognizes and
acknowledges that in accepting the Note, this Security Instrument and the Other
Security Documents, Lender is expressly and primarily relying on the truth and
accuracy of the warranties and representations set forth in Article 5 and
Article 12 without any obligation to investigate the Property and
notwithstanding any investigation of the Property by Lender; that such reliance
existed on the part of Lender prior to the date hereof; that the warranties and
representations are a material inducement to Lender in accepting the Note, this
Security Instrument and the Other Security Documents; and that Lender would not
be willing to make the Loan and accept this Security Instrument in the absence
of the warranties and representations as set forth in Article 5 and Article 12.
ARTICLE VII
FURTHER ASSURANCES
Section 7.1 Recording of Security Instrument, etc.
Borrower forthwith upon the execution and delivery of this Security Instrument
and thereafter, from time to time, will cause this Security Instrument and any
of the Other Security Documents creating a lien or security interest or
evidencing the lien hereof upon the Property and each instrument of further
assurance to be filed, registered or recorded in such manner and in such places
as may be required by any present or future law in order to publish notice of
and fully to protect and perfect the lien or security interest hereof upon, and
the interest of Lender in, the Property. Borrower will pay all taxes, filing,
registration or recording fees, and all expenses incident to the preparation,
execution, acknowledgment and/or recording of the Note, this Security
Instrument, the Other Security Documents, any note or deed of trust or mortgage
supplemental hereto, any security instrument with respect to the Property and
any instrument of further assurance, and any modification or amendment of the
foregoing documents, and all federal, state, county and municipal taxes, duties,
imposts, assessments and charges arising out of or in connection with the
execution and delivery of this Security Instrument, any deed of trust or
mortgage supplemental hereto, any security instrument with respect to the
Property or any instrument of further assurance, and any modification or
amendment of the foregoing documents, except where prohibited by law so to do.
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Section 7.2 Further Acts, etc. Borrower will, at the
cost of Borrower, and without expense to Lender, do, execute, acknowledge and
deliver all and every such further acts, deeds, conveyances, deeds of trust,
mortgages, assignments, notices of assignments, transfers and assurances as
Lender shall, from time to time, require, for the better assuring, conveying,
assigning, transferring, and confirming unto Lender and Trustee the Property and
rights hereby deeded, mortgaged, granted, bargained, sold, conveyed, confirmed,
pledged, assigned, warranted and transferred or intended now or hereafter so to
be, or which Borrower may be or may hereafter become bound to convey or assign
to Lender, or for carrying out the intention or facilitating the performance of
the terms of this Security Instrument or for filing, registering or recording
this Security Instrument, or for complying with all Applicable Laws. Borrower,
on demand, will execute and deliver and hereby authorizes Lender, following 10
days' notice to Borrower, to execute in the name of Borrower or without the
signature of Borrower to the extent Lender may lawfully do so, (i) one or more
financing statements, chattel mortgages or other instruments, to evidence more
effectively the security interest of Lender in the Property and (ii) any
amendments or modifications to the Note, this Security Instrument and/or the
Other Security Documents in order to correct any scrivener's errors contained
herein or therein, including, without limitation, any errors with respect to the
spelling of Borrower's name, the address of the Property, the legal description
of the Property and/or the date of execution of the Note, this Security
Instrument and/or the Other Security Documents. Borrower grants to Lender an
irrevocable power of attorney coupled with an interest for the purpose of
exercising and perfecting any and all rights and remedies available to Lender
pursuant to this Section 7.2.
Section 7.3 Changes in Tax, Debt Credit and Documentary
Stamp Laws.
(a) If any law is enacted or adopted or amended after the date
of this Security Instrument which deducts the Debt from the value of the
Property for the purpose of taxation or which imposes a tax, either directly or
indirectly, on the Debt or Lender's interest in the Property, Borrower will pay
the tax, with interest and penalties thereon, if any. If Lender is advised by
counsel chosen by it that the payment of tax by Borrower would be unlawful or
taxable to Lender or unenforceable or provide the basis for a defense of usury,
then Lender shall have the option, exercisable by written notice of not less
than one hundred twenty (120) days, to declare the Debt immediately due and
payable.
(b) Borrower will not claim or demand or be entitled to any
credit or credits on account of the Debt for any part of the Taxes or Other
Charges assessed against the Property, or any part thereof, and no deduction
shall otherwise be made or claimed from the assessed value of the Property, or
any part thereof, for real estate tax purposes by reason of this Security
Instrument or the Debt. If such claim, credit or deduction shall be required by
law, Lender shall have the option, exercisable by written notice of not less
than one hundred twenty (120) days, to declare the Debt immediately due and
payable.
(c) If at any time the United States of America, any State
thereof or any subdivision of any such State shall require revenue or other
stamps to be affixed to the Note, this Security Instrument, or any of the Other
Security Documents or impose any other tax or charge on the same, Borrower will
pay for the same, with interest and penalties thereon, if any.
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Section 7.4 Estoppel Certificates.
(a) After request by Lender, Borrower, within fifteen (15)
days, shall furnish Lender or any proposed assignee with a statement, duly
acknowledged and certified, setting forth (i) the original principal amount of
the Note, (ii) the unpaid principal amount of the Note, (iii) the rate of
interest of the Note, (iv) the terms of payment and maturity date of the Note,
(v) the date installments of interest and/or principal were last paid, (vi)
that, except as provided in such statement, there are no defaults or events
which with the passage of time or the giving of notice or both, would constitute
an event of default under the Note or the Security Instrument, (vii) that the
Note and this Security Instrument are valid, legal and binding obligations and
have not been modified or if modified, giving particulars of such modification,
(viii) whether any offsets or defenses exist against the obligations secured
hereby and, if any are alleged to exist, a detailed description thereof, (ix)
that all Leases are in full force and effect and (provided the Property is not a
residential multifamily property) have not been modified (or if modified,
setting forth all modifications), (x) the date to which the Rents thereunder
have been paid pursuant to the Leases, (xi) whether or not, to the best
knowledge of Borrower, any of the lessees under the Leases are in default under
the Leases, and, if any of the lessees are in default, setting forth the
specific nature of all such defaults, (xii) the amount of security deposits held
by Borrower under each Lease and that such amounts are consistent with the
amounts required under each Lease, and (xiii) as to any other matters reasonably
requested by Lender and reasonably related to the Leases, the obligations
secured hereby, the Property or this Security Instrument.
(b) Borrower shall use its best efforts to deliver to Lender,
promptly upon request, duly executed estoppel certificates from any one or more
lessees as required by Lender attesting to such facts regarding the Lease as
Lender reasonably may require, including but not limited to attestations that
each Lease covered thereby is in full force and effect with no defaults
thereunder on the part of any party, that none of the Rents have been paid more
than one month in advance, and that the lessee claims no defense or offset
against the full and timely performance of its obligations under the Lease.
(c) Upon any transfer or proposed transfer contemplated by
Section 18.1 hereof, at Lender's request, Borrower, any Guarantors and any
Indemnitor(s) shall provide an estoppel certificate to the Investor (defined in
Section 18.1) or any prospective Investor in such form, substance and detail as
Lender, such Investor or prospective Investor may require.
(d) After written request by Borrower not more than once
annually, and at Borrower's sole cost and expense, Lender shall furnish to
Borrower a statement setting forth (i) the unpaid principal amount of the Note,
and (ii) the balance of the sums held in escrow pursuant to the Reserve and
Security Agreement.
Section 7.5 Flood Insurance. After Lender's request,
Borrower shall deliver evidence satisfactory to Lender that no portion of the
Improvements is situated in a federally designated "special flood hazard area"
or if it is, that Borrower has obtained or caused to be obtained insurance
meeting the requirements of Section 3.3(a)(vi).
Section 7.6 Replacement Documents. Upon receipt of an
affidavit of an officer of Lender as to the loss, theft, destruction or
mutilation of the Note or any Other Security
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Document which is not of public record, and, in the case of any such mutilation,
upon surrender and cancellation of such Note or Other Security Document,
Borrower will issue, in lieu thereof, a replacement Note or Other Security
Document, dated the date of such lost, stolen, destroyed or mutilated Note or
Other Security Document in the same principal amount thereof and otherwise of
like tenor.
ARTICLE VIII
DUE ON SALE/ENCUMBRANCE
Section 8.1 No Sale/Encumbrance. Borrower agrees that
Borrower shall not, without the prior written consent of Lender, sell, convey,
mortgage, grant, bargain, encumber, pledge, assign, or otherwise transfer the
Property or any part thereof or any interest therein or any direct or indirect
interest in Borrower or permit the Property or any part thereof or any interest
therein or any direct or indirect interest in Borrower to be sold, conveyed,
mortgaged, granted, bargained, encumbered, pledged, assigned, or otherwise
transferred, other than pursuant to Leases of space in the Improvements to
tenants in accordance with the provisions of Section 3.8.
Section 8.2 Sale/Encumbrance Defined. A sale,
conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment, or
transfer within the meaning of this Article 8 shall be deemed to include, but
not be limited to, (a) an installment sales agreement wherein Borrower agrees to
sell the Property or any part thereof for a price to be paid in installments;
(b) an agreement by Borrower leasing all or a substantial part of the Property
for other than actual occupancy by a space tenant thereunder or a sale,
assignment or other transfer of, or the grant of a security interest in,
Borrower's right, title and interest in and to any Leases or any Rents; (c) if
Borrower, any Guarantor, any Indemnitor, or any general or limited partner or
member of Borrower, any Guarantor or any Indemnitor is a corporation, any
merger, consolidation or voluntary or involuntary sale, conveyance, transfer or
pledge of such corporation's stock (or the stock of any corporation directly or
indirectly controlling such corporation by operation of law or otherwise) or the
creation or issuance of new stock in one or a series of transactions by which an
aggregate of more than 10% of such corporation's stock shall be vested in a
party or parties who are not now stockholders; (d) if Borrower, any Guarantor or
any Indemnitor or any general or limited partner or member of Borrower, any
Guarantor or any Indemnitor is a limited or general partnership or joint
venture, the change, removal or resignation of a general partner or the transfer
or pledge of the partnership interest of any general partner or any profits or
proceeds relating to such partnership interest or the voluntary or involuntary
sale, conveyance, transfer or pledge of limited partnership interests (or the
limited partnership interests of any limited partnership directly or indirectly
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controlling such limited liability company by operation of law or otherwise).
Notwithstanding the foregoing, so long as the Guarantor and/or Indemnitor is
Corporate Property Associates 14 Incorporated or an Affiliate (as defined in
Section 8.4(b) hereof) (the "Guarantor"), the provisions of clauses (c), (d) and
(e) above shall not apply to the Guarantor, any Indemnitor or any interest
holder therein.
Section 8.3 Lender's Rights. Lender reserves the right
to condition the consent required hereunder upon a modification of the terms
hereof and on assumption of the Note, this Security Instrument and the Other
Security Documents as so modified by the proposed transferee, payment of a
transfer fee equal to one percent (1%) of the then outstanding principal balance
of the Note, and all of Lender's expenses incurred in connection with such
transfer, the approval by a Rating Agency of the proposed transferee, the
proposed transferee's continued compliance with the covenants set forth in this
Security Instrument, including, without limitation, the covenants in Section 4.2
hereof, or such other conditions as Lender shall determine in its sole
discretion to be in the interest of Lender. All of Lender's expenses incurred
shall be payable by Borrower whether or not Lender consents to the transfer.
Lender shall not be required to demonstrate any actual impairment of its
security or any increased risk of default hereunder in order to declare the Debt
immediately due and payable upon Borrower's sale, conveyance, mortgage, grant,
bargain, encumbrance, pledge, assignment, or transfer of the Property without
Lender's consent. This provision shall apply to every sale, conveyance,
mortgage, grant, bargain, encumbrance, pledge, assignment, or transfer of the
Property regardless of whether voluntary or not, or whether or not Lender has
consented to any previous sale, conveyance, mortgage, grant, bargain,
encumbrance, pledge, assignment, or transfer of the Property.
Section 8.4 Permitted Transfers. (a) Notwithstanding
the foregoing provisions of this Section, Lender shall not unreasonably withhold
consent to the simultaneous sale, conveyance or transfer of all of the
Individual Properties (as defined in the Note) in their entirety on a single
occasion (a "Sale") after the first anniversary of the first day of the first
calendar month after the date hereof (or the date hereof if dated the first day
of a calendar month) and with respect to such Sale, Lender shall not require a
modification of the material economic terms hereof (other than a corresponding
increase in Borrower's deposits into the Escrow Fund with respect to Taxes in
the event such Sale results in an increase in the real property tax assessment
by the applicable taxing authority), to any person or entity provided that each
of the following terms and conditions are satisfied:
(i) no default after the expiration of notice or grace
periods is then continuing hereunder, under the Note, or any of the
Other Security Documents;
(ii) Borrower gives Lender written notice of the terms of
such prospective Sale not less than thirty (30) days before the date on
which such Sale is scheduled to close and, concurrently therewith,
gives Lender all such information concerning the proposed transferee of
the Property (hereinafter, "Buyer") as Lender would reasonably require
in evaluating an initial extension of credit to a borrower and pays to
Lender a non-refundable application fee in the amount of $2,500.00.
Lender shall have the right to approve or disapprove the proposed
Buyer, such approval not to be unreasonably withheld or delayed. In
determining whether to give or withhold its approval of the
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proposed Buyer, Lender shall consider the Buyer's experience and track
record in owning and operating facilities similar to the Property, the
Buyer's financial strength, the Buyer's general business standing and
the Buyer's relationships and experience with contractors, vendors,
tenants, lenders and other business entities; provided, however, that,
notwithstanding Lender's agreement to consider the foregoing factors in
determining whether to give or withhold such approval, such approval
shall be given or withheld based on what Lender determines to be
commercially reasonable and, if given, may be given subject to such
conditions as Lender may deem reasonably appropriate;
(iii) Borrower pays Lender, concurrently with the closing
of such Sale, a non-refundable assumption fee in an amount equal to all
out-of-pocket costs and expenses, including, without limitation,
reasonable attorneys' fees, incurred by Lender in connection with the
Sale plus an amount equal to one percent (1.0%) of the then outstanding
principal balance of the Note. Borrower also pays, concurrently with
the closing of such Sale, all costs and expenses of all third parties
and Rating Agencies in connection with the Sale;
(iv) Buyer (a) assumes and agrees to pay all indebtedness
secured hereby as and when due subject to the provisions of Article 11
of the Note and, (b) prior to or concurrently with the closing of such
Sale, the Buyer executes, without any cost or expense to Lender, such
documents and agreements as Lender shall reasonably require to evidence
and effectuate said assumption;
(v) Borrower and the Buyer execute, without any cost or
expense to Lender, new financing statements or financing statement
amendments and any additional documents reasonably requested by Lender;
(vi) Borrower delivers to Lender, without any cost or
expense to Lender, such endorsements to Lender's title insurance
policy, hazard insurance endorsements or certificates and other similar
materials as Lender may deem necessary at the time of the Sale, all in
form and substance satisfactory to Lender, including, without
limitation, an endorsement or endorsements to Lender's title insurance
policy insuring the lien of this Security Instrument insuring that fee
simple title to the Property is vested in the Buyer;
(vii) Buyer shall furnish, if the Buyer is a corporation,
partnership or other entity, all appropriate papers evidencing the
Buyer's capacity and good standing, and the qualification of the
signers to execute the assumption of the indebtedness secured hereby,
which papers shall include certified copies of all documents relating
to the organization and formation of the Buyer and of the entities, if
any, which are partners or members of the Buyer. The Buyer and such
constituent partners, members or shareholders of Buyer (as the case may
be), as Lender shall require, shall be single purpose, "bankruptcy
remote" entities which satisfy the requirements of Article IV hereof
and the requirements of the Rating Agencies, and whose formation
documents shall be approved by counsel to Lender. An individual
recommended by the Buyer and approved by Lender shall serve as an
independent director of the Buyer (if the Buyer is a corporation) or
the Buyer's corporate general partner or an independent member or, in
Lender's discretion, manager, of Buyer if the Buyer is a limited
liability company. The consent of such independent
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party shall be required for, among other things, any merger,
consolidation, dissolution, bankruptcy or insolvency of such
independent party or of the Buyer;
(viii) Buyer shall assume the obligations of Borrower under
any management agreements pertaining to the Property or assign to
Lender as additional security any new management agreement entered into
in connection with such Sale;
(ix) Buyer shall furnish an opinion of counsel
satisfactory to Lender and its counsel (A) that the Buyer's formation
documents provide for the matters described in subparagraph (vii)
above, (B) that the assumption of the indebtedness evidenced hereby has
been duly authorized, executed and delivered, and that the Note, this
Security Instrument, the assumption agreement and the Other Security
Documents are valid, binding and enforceable against the Buyer in
accordance with their terms, (C) that the Buyer and any entity which is
a controlling stockholder, member or general partner of Buyer, have
been duly organized, and are in existence and good standing, (D) if
required by Lender, that the assets of the Buyer will not be
consolidated with the assets of any other entity having an interest in,
or affiliation with, the Buyer, in the event of bankruptcy or
insolvency of any such entity, and (E) with respect to such other
matters as Lender may reasonably request;
(x) Lender shall have received confirmation in writing
from the Rating Agencies that rate the Securities or Participations (as
defined in Section 18.1) to the effect that the Sale will not result in
a qualification, downgrade or withdrawal of any rating initially
assigned or then currently assigned or to be assigned to the Securities
or Participations, as applicable;
(xi) An affiliate of Buyer with a net worth (as determined
by Lender) of not less than Twenty-Five Million Dollars ($25,000,000)
shall have assumed, from and after the date of such Sale, all of the
obligations of Guarantor under the Environmental Indemnity and the
Guaranty of Recourse Obligations of Borrower of even date herewith (the
"Guaranty") pursuant to such documents and agreements as Lender shall
reasonably require to evidence and effectuate such assumption and
thereafter Guarantor shall be released from all liabilities and
obligations under the Environmental Indemnity and the Guaranty arising
from matters first occurring from and after the date of such Sale; and
(xii) Borrower's obligations under the contract of sale
pursuant to which the Sale is proposed to occur shall expressly be
subject to the satisfaction of the terms and conditions of this Section
8.4;
(b) Notwithstanding the foregoing provision of this Section
and provided Borrower has not exercised its right to sell, convey or transfer
all of the Individual Properties pursuant to Section 8.4(a) above, Borrower
shall be permitted, after the first anniversary of the first day of the first
calendar month after the date hereof (or the date hereof if dated the first day
of a calendar month), to transfer or convey all of its interests in all of the
Individual Properties to any Affiliate (hereinafter defined) whose key
principal's (the "Key Principal") net worth as determined by Lender shall be not
less than Twenty-Five Million Dollars ($25,000,000) without Lender's approval or
consent and without payment of the one percent (1%) transfer fee (but with
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payment of all out-of-pocket expenses, including without limitation, reasonable
attorney's fees, incurred by Lender in connection with the transfer and all
costs and expenses of all third parties and Rating Agencies in connection with
the Sale) so long as the terms and conditions set forth in Sections 8.4(a)(i),
(iv), (v), (vi), (vii), (viii), (ix) and (x) are satisfied. Borrower shall, not
less than thirty (30) days before any such transfer, deliver to Lender written
notice of such transfer which notice shall (i) describe the proposed transfer in
reasonable detail, (ii) include evidence reasonably satisfactory to Lender that
the proposed transferee is an Affiliate of Borrower and that such Key Principal
has a net worth of not less than Twenty-Five Million Dollars ($25,000,000), and
(c) include evidence reasonably satisfactory to Lender that the applicable
provisions of Section 8.4 hereof have been satisfied. In connection with any
such transfer to an Affiliate, Key Principal shall assume, from and after the
date of such transfer, all of the obligations of Guarantor under the
Environmental Indemnity and the Guaranty pursuant to such documents and
agreements as Lender shall reasonably require to evidence and effectuate such
assumption and thereafter Guarantor shall be released from all liabilities and
obligations under the Environmental Indemnity and the Guaranty arising from
matters first occurring from and after the date of such transfer. As used
herein, the term "Affiliate" shall mean an entity which controls, is controlled
by or is under common control with Borrower, Corporate Property Associates 10
Incorporated, Corporate Property Associates 14 Incorporated, Corporate Property
Associates 15 Incorporated, ▇▇▇▇▇ Institutional Properties Incorporated or W.P.
▇▇▇▇▇ Co. LLC; and
(c) Notwithstanding the foregoing provision of this Section,
Corporate Property Associates 15 Incorporated shall be permitted to acquire up
to a thirty percent (30%) interest in the Borrower, without Lender's approval or
consent and without payment of the one percent (1%) transfer fee provided that
no Event of Default shall have occurred and be continuing, such transfer does
not affect the single purpose bankruptcy remote structure of the Borrower and
Borrower pays all out-of-pocket expenses, if any, including without limitation,
reasonable attorney's fees, incurred by Lender in connection with the transfer
and all costs and expenses of all third parties and Rating Agencies in
connection with such transfer).
ARTICLE IX
PREPAYMENT
Section 9.1 Prepayment. The Debt may not be prepaid in
whole or in part except in strict accordance with the express terms and
conditions of the Note.
ARTICLE X
DEFAULT
Section 10.1 Events of Default. The occurrence of any
one or more of the following events shall constitute an "Event of Default":
(a) if any portion of the Debt is not paid prior to the fifth
(5th) day after the same is due or if the entire Debt is not paid on or before
the Maturity Date (as defined in the Note);
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(b) if any of the Taxes or Other Charges is not paid prior to
delinquency, penalty or interest except to the extent sums sufficient to pay
such Taxes and Other Charges have been deposited with Lender in accordance with
the terms of this Security Instrument or such items are being contested in
accordance with the terms of the Security Instrument;
(c) if the Policies are not kept in full force and effect, or
if the Policies are not delivered to Lender upon request;
(d) if Borrower violates or does not comply with any of the
provisions of Section 4.2 or Article 8;
(e) if any representation or warranty of Borrower, any
Indemnitor or any person guaranteeing payment of the Debt or any portion thereof
or performance by Borrower of any of the terms of this Security Instrument (a
"Guarantor"), or any member, general partner, principal or beneficial owner of
any of the foregoing, made herein other than an unintentional representation or
warranty under Section 5.5(a), (b) or (l) or in the Environmental Indemnity
(defined below) or in any guaranty, or in any certificate, report, financial
statement or other instrument or document furnished to Lender shall have been
false or misleading in any material respect when made;
(f) if (i) Borrower or any managing member or general partner
of Borrower, or any Guarantor or Indemnitor shall commence any case, proceeding
or other action (A) under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency, reorganization,
conservatorship or relief of debtors, seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent,
or seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian, conservator or other
similar official for it or for all or any substantial part of its assets, or the
Borrower or any managing member or general partner of Borrower, or any Guarantor
or Indemnitor shall make a general assignment for the benefit of its creditors;
or (ii) there shall be commenced against Borrower or any managing member or
general partner of Borrower, or any Guarantor or Indemnitor any case, proceeding
or other action of a nature referred to in clause (i) above which (A) results in
the entry of an order for relief or any such adjudication or appointment or (B)
remains undismissed, undischarged or unbonded for a period of sixty (60) days;
or (iii) there shall be commenced against the Borrower or any managing member or
general partner of Borrower, or any Guarantor or Indemnitor any case, proceeding
or other action seeking issuance of a warrant of attachment, execution,
distraint or similar process against all or any substantial part of its assets
which results in the entry of any order for any such relief which shall not have
been vacated, discharged, or stayed or bonded pending appeal within sixty (60)
days from the entry thereof; or (iv) the Borrower or any managing member or
general partner of Borrower, or any Guarantor or Indemnitor shall take any
action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above;
or (v) the Borrower or any managing member or general partner of Borrower, or
any Guarantor or Indemnitor shall generally not, or shall be unable to, or shall
admit in writing its inability to, pay its debts as they become due;
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(g) if Borrower shall be in default beyond applicable notice
and grace periods under any other mortgage, deed of trust, deed to secure debt
or other security agreement covering any part of the Property whether it be
superior or junior in lien to this Security Instrument;
(h) if the Property becomes subject to any mechanic's,
materialman's or other lien other than a lien for local real estate taxes and
assessments not then due and payable and the lien shall remain undischarged of
record (by payment, bonding or otherwise) for a period of thirty (30) days;
(i) if any federal tax lien is filed against Borrower, any
member or general partner of Borrower, any Guarantor, any Indemnitor or the
interest of Borrower in the Property and same is not discharged of record within
thirty (30) days after same is filed;
(j) if any default occurs under any guaranty or indemnity
executed in connection herewith (including the Environmental Indemnity, defined
in Section 13.4) and such default continues after the expiration of applicable
grace periods, if any;
(k) if Borrower shall fail to deliver to Lender, within
fifteen (15) days after receipt of written request from Lender, the estoppel
certificates required pursuant to Section 7.4(a);
(l) if for more than ten (10) days after notice from Lender,
Borrower shall continue to be in default under any other term, covenant or
condition of the Note, this Security Instrument or the Other Security Documents
in the case of any default which can be cured by the payment of a sum of money
or for thirty (30) days after notice from Lender in the case of any other
default including, without limitation an unintentional under Section 5.5(a), (b)
or (l), provided that if such default cannot reasonably be cured within such
thirty (30) day period and Borrower shall have commenced to cure such default
within such thirty (30) day period and thereafter diligently and expeditiously
proceeds to cure the same, such thirty (30) day period shall be extended for so
long as it shall require Borrower in the exercise of due diligence to cure such
default, it being agreed that no such extension shall be for a period in excess
of ninety (90) days or
(m) if any of the assumptions contained in the
Non-Consolidation Opinion were not true and correct as of the date of such
opinion.
ARTICLE XI
RIGHTS AND REMEDIES
Section 11.1 Remedies. Upon the occurrence of any Event
of Default, Borrower agrees that Lender may or acting by or through Trustee may
take such action, without notice or demand, as it deems advisable to protect and
enforce its rights against Borrower and in and to the Property, including, but
not limited to, the following actions, each of which may be pursued concurrently
or otherwise, at such time and in such order as Lender or Trustee may determine,
in their sole discretion, without impairing or otherwise affecting the other
rights and remedies of Lender or Trustee:
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(a) declare the entire unpaid Debt to be immediately due and
payable;
(b) institute proceedings, judicial or otherwise, for the
complete foreclosure of this Security Instrument under any applicable provision
of law in which case the Property or any interest therein may be sold for cash
or upon credit in one or more parcels or in several interests or portions and in
any order or manner;
(c) with or without entry, to the extent permitted and
pursuant to the procedures provided by applicable law, institute proceedings for
the partial foreclosure of this Security Instrument for the portion of the Debt
then due and payable, subject to the continuing lien and security interest of
this Security Instrument for the balance of the Debt not then due, unimpaired
and without loss of priority;
(d) sell for cash or upon credit the Property or any part
thereof and all estate, claim, demand, right, title and interest of Borrower
therein and rights of redemption thereof, pursuant to power of sale or
otherwise, at one or more sales, in one or more parcels, at such time and place,
upon such terms and after such notice thereof as may be required or permitted by
law;
(e) subject to the provisions of Article 11 of the Note,
institute an action, suit or proceeding in equity for the specific performance
of any covenant, condition or agreement contained herein, in the Note or in the
Other Security Documents;
(f) subject to the provisions of Article 11 of the Note,
recover judgment on the Note either before, during or after any proceedings for
the enforcement of this Security Instrument or the Other Security Documents;
(g) apply for the appointment of a receiver, trustee,
liquidator or conservator of the Property, without notice and without regard for
the adequacy of the security for the Debt and without regard for the solvency of
Borrower, any Guarantor, Indemnitor or of any person, firm or other entity
liable for the payment of the Debt;
(h) subject to any applicable law, the license granted to
Borrower under Section 1.2 shall automatically be revoked and Lender may enter
into or upon the Property, either personally or by its agents, nominees or
attorneys and dispossess Borrower and its agents and servants therefrom, without
liability for trespass, damages or otherwise and exclude Borrower and its agents
or servants wholly therefrom, and take possession of all books, records and
accounts relating thereto and Borrower agrees to surrender possession of the
Property and of such books, records and accounts to Lender upon demand, and
thereupon Lender may (i) use, operate, manage, control, insure, maintain,
repair, restore and otherwise deal with all and every part of the Property and
conduct the business thereat; (ii) complete any construction on the Property in
such manner and form as Lender deems advisable; (iii) make alterations,
additions, renewals, replacements and improvements to or on the Property; (iv)
exercise all rights and powers of Borrower with respect to the Property, whether
in the name of Borrower or otherwise, including, without limitation, the right
to make, cancel, enforce or modify Leases, obtain and evict tenants, and demand,
▇▇▇ for, collect and receive all Rents of the Property and every part thereof;
(v) require Borrower to pay monthly in advance to Lender, or any receiver
appointed to collect the Rents, the fair and reasonable rental value for the use
and occupation of such part of
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the Property as may be occupied by Borrower; (vi) require Borrower to vacate and
surrender possession of the Property to Lender or to such receiver and, in
default thereof, Borrower may be evicted by summary proceedings or otherwise;
and (vii) apply the receipts from the Property to the payment of the Debt, in
such order, priority and proportions as Lender shall deem appropriate in its
sole discretion after deducting therefrom all expenses (including reasonable
attorneys' fees) incurred in connection with the aforesaid operations and all
amounts necessary to pay the Taxes, Other Charges, insurance and other expenses
in connection with the Property, as well as just and reasonable compensation for
the services of Lender, its counsel, agents and employees;
(i) exercise any and all rights and remedies granted to a
secured party upon default under the Uniform Commercial Code, including, without
limiting the generality of the foregoing: (i) the right to take possession of
the Personal Property or any part thereof, and to take such other measures as
Lender or Trustee may deem necessary for the care, protection and preservation
of the Personal Property, and (ii) request Borrower at its expense to assemble
the Personal Property and make it available to Lender at a convenient place
acceptable to Lender. Any notice of sale, disposition or other intended action
by Lender or Trustee with respect to the Personal Property sent to Borrower in
accordance with the provisions hereof at least five (5) days prior to such
action, shall constitute commercially reasonable notice to Borrower;
(j) apply any sums then deposited in the Escrow Fund and any
other sums held in escrow or otherwise by Lender in accordance with the terms of
this Security Instrument or any Other Security Document to the payment of the
following items in any order in its sole discretion: (i) Taxes and Other
Charges; (ii) Insurance Premiums; (iii) interest on the unpaid principal balance
of the Note; (iv) amortization of the unpaid principal balance of the Note; (v)
all other sums payable pursuant to the Note, this Security Instrument and the
Other Security Documents, including without limitation advances made by Lender
pursuant to the terms of this Security Instrument;
(k) surrender the Policies maintained pursuant to Article 3
hereof, collect the unearned Insurance Premiums and apply such sums as a credit
on the Debt in such priority and proportion as Lender in its discretion shall
deem proper, and in connection therewith, Borrower hereby appoints Lender as
agent and attorney-in-fact (which is coupled with an interest and is therefore
irrevocable) for Borrower to collect such Insurance Premiums;
(l) apply the undisbursed balance of any Net Proceeds
Deficiency deposit, together with interest thereon, to the payment of the Debt
in such order, priority and proportions as Lender shall deem to be appropriate
in its discretion;
(m) proceed under this Security Instrument against all or any
part of the Individual Properties and/or all or any Property covered by this
Security Instrument or the other Security Documents in one or more parcels and
in such manner and order as Lender shall elect. Borrower hereby irrevocably
waives and releases, to the extent permitted by law, and whether or not
hereafter enforced, any right to have all or any part of the Individual Property
covered by the other Security Documents and/or all or any part of the Property
covered by this Security Instrument marshaled upon any foreclosure of this
Security Instrument and/or and one or more of the Other Security Documents or
upon any other sale of all or any part of the Individual Properties and/or the
Property covered by this Security Instrument; or
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(n) pursue such other remedies as Lender may have under
applicable law.
In the event of a sale, by foreclosure, power of sale, or otherwise, of less
than all of the Property, this Security Instrument shall continue as a lien and
security interest on the remaining portion of the Property unimpaired and
without loss of priority. Notwithstanding the provisions of this Section 11.1 to
the contrary, if any Event of Default as described in clause (i) or (ii) of
Subsection 10.1(f) shall occur, the entire unpaid Debt shall be automatically
due and payable, without any further notice, demand or other action by Lender.
Section 11.2 Application of Proceeds. The purchase
money, proceeds and avails of any disposition of the Property, or any part
thereof, or any other sums collected by Lender pursuant to the Note, this
Security Instrument or the Other Security Documents, may be applied by Lender to
the payment of the Debt in such priority and proportions as Lender in its
discretion shall deem proper.
Section 11.3 Right to Cure Defaults. Upon the occurrence
of any Event of Default or if Borrower fails to make any payment or to do any
act as herein provided, Lender may, but without any obligation to do so and
without notice to or demand on Borrower and without releasing Borrower from any
obligation hereunder, make or do the same in such manner and to such extent as
Lender may deem necessary to protect the security hereof. Lender or Trustee is
authorized to enter upon the Property for such purposes, or appear in, defend,
or bring any action or proceeding to protect its interest in the Property or to
foreclose this Security Instrument or collect the Debt. The cost and expense of
any cure hereunder (including reasonable attorneys' fees to the extent permitted
by law), with interest as provided in this Section 11.3, shall constitute a
portion of the Debt and shall be due and payable to Lender upon demand. All such
costs and expenses incurred by Lender or Trustee in remedying such Event of
Default or such failed payment or act or in appearing in, defending, or bringing
any such action or proceeding shall bear interest at the Default Rate (as
defined in the Note), for the period after notice from Lender that such cost or
expense was incurred to the date of payment to Lender. All such costs and
expenses incurred by Lender together with interest thereon calculated at the
Default Rate shall be deemed to constitute a portion of the Debt and be secured
by this Security Instrument and the Other Security Documents and shall be
immediately due and payable upon demand by Lender therefor.
Section 11.4 Actions and Proceedings. Lender or Trustee
has the right to appear in and defend any action or proceeding brought with
respect to the Property and, after the occurrence and during the continuance of
an Event of Default, to bring any action or proceeding, in the name and on
behalf of Borrower, which Lender, in its discretion, decides should be brought
to protect its interest in the Property.
Section 11.5 Recovery of Sums Required to be Paid.
Lender shall have the right from time to time to take action to recover any sum
or sums which constitute a part of the Debt as the same become due, without
regard to whether or not the balance of the Debt shall be due, and without
prejudice to the right of Lender or Trustee thereafter to bring an action of
foreclosure, or any other action, for a default or defaults by Borrower existing
at the time such earlier action was commenced.
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Section 11.6 Examination of Books and Records. Lender,
its agents, accountants and attorneys shall have the right, upon prior written
notice to Borrower if no Event of Default exists, to examine and audit, during
reasonable business hours, the records, books, management and other papers of
Borrower and its affiliates or of any Guarantor or Indemnitor which pertain to
their financial condition or the income, expenses and operation of the Property,
at the Property, if Borrower or Guarantor maintain such records at the Property,
or at any office regularly maintained by Borrower, its affiliates or any
Guarantor or Indemnitor where the books and records are located. Lender and its
agents shall have the right to make copies and extracts from the foregoing
records and other papers.
Section 11.7 Other Rights, etc. (a) The failure of
Lender or Trustee to insist upon strict performance of any term hereof shall not
be deemed to be a waiver of any term of this Security Instrument. Borrower shall
not be relieved of Borrower's obligations hereunder by reason of (i) the failure
of Lender or Trustee to comply with any request of Borrower, any Guarantor or
any Indemnitor to take any action to foreclose this Security Instrument or
otherwise enforce any of the provisions hereof or of the Note or the Other
Security Documents, (ii) the release, regardless of consideration, of the whole
or any part of the Property, or of any person liable for the Debt or any portion
thereof, or (iii) any agreement or stipulation by Lender extending the time of
payment or otherwise modifying or supplementing the terms of the Note, this
Security Instrument or the Other Security Documents.
(b) It is agreed that the risk of loss or damage to the
Property is on Borrower, and Lender shall have no liability whatsoever for
decline in value of the Property, for failure to maintain the Policies, or for
failure to determine whether insurance in force is adequate as to the amount of
risks insured. Possession by Lender shall not be deemed an election of judicial
relief, if any such possession is requested or obtained, with respect to any
Property or collateral not in Lender's possession.
(c) Lender may resort for the payment of the Debt to any other
security held by Lender in such order and manner as Lender, in its discretion,
may elect. Lender or Trustee may take action to recover the Debt, or any portion
thereof, or to enforce any covenant hereof without prejudice to the right of
Lender or Trustee thereafter to foreclose this Security Instrument. The rights
of Lender or Trustee under this Security Instrument shall be separate, distinct
and cumulative and none shall be given effect to the exclusion of the others. No
act of Lender or Trustee shall be construed as an election to proceed under any
one provision herein to the exclusion of any other provision. Neither Lender nor
Trustee shall be limited exclusively to the rights and remedies herein stated
but shall be entitled to every right and remedy now or hereafter afforded at law
or in equity.
Section 11.8 Right to Release Any Portion of the
Property. Lender may release any portion of the Property for such consideration
as Lender may require without, as to the remainder of the Property, in any way
impairing or affecting the lien or priority of this Security Instrument, or
improving the position of any subordinate lienholder with respect thereto,
except to the extent that the obligations hereunder shall have been reduced by
the actual monetary consideration, if any, received by Lender for such release,
and may accept by assignment, pledge or otherwise any other property in place
thereof as Lender may require without being
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accountable for so doing to any other lienholder. This Security Instrument shall
continue as a lien and security interest in the remaining portion of the
Property.
Section 11.9 Violation of Laws. If the Property is not
in compliance with Applicable Laws, Lender may impose additional requirements
upon Borrower in connection herewith including, without limitation, monetary
reserves or financial equivalents.
Section 11.10 Right of Entry. Lender and its agents shall
have the right to enter and inspect the Property at all reasonable times.
Section 11.11 Subrogation. If any or all of the proceeds
of the Note have been used to extinguish, extend or renew any indebtedness
heretofore existing against the Property, then, to the extent of the funds so
used, Lender shall be subrogated to all of the rights, claims, liens, titles,
and interests existing against the Property heretofore held by, or in favor of,
the holder of such indebtedness and such former rights, claims, liens, titles,
and interests, if any, are not waived but rather are continued in full force and
effect in favor of Lender and are merged with the lien and security interest
created herein as cumulative security for the repayment of the Debt, the
performance and discharge of Borrower's obligations hereunder, under the Note
and the Other Security Documents and the performance and discharge of the Other
Obligations.
ARTICLE XII
ENVIRONMENTAL MATTERS
Section 12.1 Environmental Representations and
Warranties. Borrower represents and warrants, based upon an environmental site
assessment of the Property and information that Borrower knows or should
reasonably have known, that: (a) there are no Hazardous Materials (defined
below) or underground storage tanks in, on, or under the Property, except those
that are both (i) in compliance with Environmental Laws (defined below) and with
permits issued pursuant thereto (if such permits are required), if any, and (ii)
either (A) in amounts not in excess of that necessary to operate the Property or
(B) fully disclosed to and approved by Lender in writing pursuant to the written
reports resulting from the environmental site assessments of the Property
delivered to Lender (the "Environmental Report"); (b) there are no past, present
or threatened Releases (defined below) of Hazardous Materials in violation of
any Environmental Law and which would require remediation by a governmental
authority in, on, under or from the Property except as described in the
Environmental Report; (c) there is no threat of any Release of Hazardous
Materials migrating to the Property except as described in the Environmental
Report; (d) there is no past or present non-compliance with Environmental Laws,
or with permits issued pursuant thereto, in connection with the Property except
as described in the Environmental Report; (e) Borrower does not know of, and has
not received, any written or oral notice or other communication from any person
or entity (including but not limited to a governmental entity) relating to
Hazardous Materials in, on, under or from the Property; and (f) Borrower has
truthfully and fully provided to Lender, in writing, any and all information
relating to environmental conditions in, on, under or from the Property known to
Borrower or contained in Borrower's files and records, including but not limited
to any reports relating to Hazardous Materials in, on, under or migrating to or
from the Property and/or to the environmental condition of the Property.
"Environmental Law" means any present and future
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federal, state and local laws, statutes, ordinances, rules, regulations,
standards, policies and other government directives or requirements, as well as
common law, including but not limited to the Comprehensive Environmental
Response, Compensation and Liability Act and the Resource Conservation and
Recovery Act, that apply to Borrower or the Property and relate to Hazardous
Materials. "Hazardous Materials" shall mean petroleum and petroleum products and
compounds containing them, including gasoline, diesel fuel and oil; explosives,
flammable materials; radioactive materials; polychlorinated biphenyls ("PCBs")
and compounds containing them; lead and lead-based paint; asbestos or
asbestos-containing materials in any form that is or could become friable;
underground or above-ground storage tanks, whether empty or containing any
substance; any substance the presence of which on the Property is prohibited by
any federal, state or local authority; any substance that requires special
handling; and any other material or substance now or in the future defined as a
"hazardous substance," "hazardous material," hazardous waste," toxic substance,"
"toxic pollutant," "contaminant," or "pollutant" within the meaning of any
Environmental Law. "Release" of any Hazardous Materials includes but is not
limited to any release, deposit, discharge, emission, leaking, spilling,
seeping, migrating, injecting, pumping, pouring, emptying, escaping, dumping,
disposing or other movement of Hazardous Materials.
Section 12.2 Environmental Covenants. Borrower covenants
and agrees that so long as Borrower owns, manages, is in possession of, or
otherwise controls the operation of the Property: (a) all uses and operations on
or of the Property, whether by Borrower or any other person or entity, shall be
in compliance with all Environmental Laws and permits issued pursuant thereto;
(b) there shall be no Releases of Hazardous Materials in, on, under or from the
Property, except in compliance with Environmental Laws; (c) there shall be no
Hazardous Materials in, on, or under the Property, except those that are both
(i) in compliance with all Environmental Laws and with permits issued pursuant
thereto, if and to the extent required, and (ii) (A) in amounts not in excess of
that necessary to operate the Property or (B) fully disclosed to and approved by
Lender in writing; (d) Borrower shall keep the Property free and clear of all
liens and other encumbrances imposed pursuant to any Environmental Law, whether
due to any act or omission of Borrower or any other person or entity (the
"Environmental Liens"); (e) Borrower shall, at its sole cost and expense, fully
and expeditiously cooperate in all activities pursuant to Section 12.3 below,
including but not limited to providing all relevant information and making
knowledgeable persons available for interviews; (f) Borrower shall, at its sole
cost and expense, perform any environmental site assessment or other
investigation of environmental conditions in connection with the Property,
pursuant to any reasonable written request of Lender, upon Lender's reasonable
belief that the Property is not in full compliance with all Environmental Laws,
and share with Lender the reports and other results thereof, and Lender and
other Indemnified Parties shall be entitled to rely on such reports and other
results thereof; (g) Borrower shall, at its sole cost and expense, comply with
all reasonable written requests of Lender to (i) reasonably effectuate
remediation of any Hazardous Materials in, on, under or from the Property in
violation of Environmental Law; and (ii) comply with any Environmental Law; (h)
Borrower shall not allow any tenant or other user of the Property to violate any
Environmental Law; and (i) Borrower shall immediately notify Lender in writing
after it has become aware of (A) any presence or Release or threatened Releases
of Hazardous Materials in, on, under, from or migrating towards the Property;
(B) any non-compliance with any Environmental Laws related in any way to the
Property; (C) any actual or potential Environmental Lien; (D) any required or
proposed remediation of environmental conditions
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relating to the Property; and (E) any written or oral notice or other
communication of which Borrower becomes aware from any source whatsoever
(including but not limited to a governmental entity) relating in any way to
Hazardous Materials. Any failure of Borrower to perform its obligations pursuant
to this Section 12.2 shall constitute bad faith waste with respect to the
Property.
Section 12.3 Lender's Rights. Lender and any other
person or entity designated by Lender, including but not limited to any
representative of a governmental entity, and any environmental consultant, and
any receiver appointed by any court of competent jurisdiction, shall have the
right, but not the obligation, to enter upon the Property at all reasonable
times to assess any and all aspects of the environmental condition of the
Property and its use, including but not limited to conducting any environmental
assessment or audit (the scope of which shall be determined in Lender's sole
discretion) and taking samples of soil, groundwater or other water, air, or
building materials, and conducting other invasive testing. Borrower shall
cooperate with and provide access to Lender and any such person or entity
designated by Lender.
Section 12.4 Operations and Maintenance Programs. Where
recommended by the Environmental Report or as a result of any other
environmental assessment or audit of the Property, Borrower shall establish and
comply with an operations and maintenance program with respect to the Property,
in form and substance reasonably acceptable to Lender, prepared by an
environmental consultant reasonably acceptable to Lender, which program shall
address any asbestos containing material or lead based paint that may now or in
the future be detected at or on the Property. Without limiting the generality of
the preceding sentence, Lender may require (a) periodic notices or reports to
Lender in form, substance and at such intervals as Lender may specify, (b) an
amendment to such operations and maintenance program to address changing
circumstances, laws or other matters, (c) at Borrower's sole expense,
supplemental examination of the Property by consultants specified by Lender, (d)
access to the Property by Lender, its agents or servicer, to review and assess
the environmental condition of the Property and Borrower's compliance with any
operations and maintenance program, and (e) variation of the operations and
maintenance program in response to the reports provided by any such consultants.
ARTICLE XIII
INDEMNIFICATIONS
Section 13.1 General Indemnification. Borrower shall, at
its sole cost and expense, protect, defend, indemnify, release and hold harmless
the Indemnified Parties (defined below) from and against any and all Losses
(defined below) imposed upon or incurred by or asserted against any Indemnified
Parties and directly or indirectly arising out of or in any way relating to any
one or more of the following: (a) any accident, injury to or death of persons or
loss of or damage to property occurring in, on or about the Property or any part
thereof or on the adjoining sidewalks, curbs, adjacent property or adjacent
parking areas, streets or ways; (b) any use, nonuse or condition in, on or about
the Property or any part thereof or on the adjoining sidewalks, curbs, adjacent
property or adjacent parking areas, streets or ways; (c) performance of any
labor or services or the furnishing of any materials or other property in
respect of the Property or any part thereof; (d) any failure of the Property to
be in compliance with any Applicable Laws; (e) any and all claims and demands
whatsoever which may be asserted against
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Lender by reason of any alleged obligations or undertakings on its part to
perform or discharge any of the terms, covenants, or agreements contained in any
Lease; or (f) the payment of any commission, charge or brokerage fee to anyone
which may be payable in connection with the funding of the Loan evidenced by the
Note and secured by this Security Instrument, except in each of the above cases,
to the extent arising out of the gross negligence or willful misconduct of the
Indemnified Parties. Any amounts payable to Lender by reason of the application
of this Section 13.1 shall become immediately due and payable and shall bear
interest at the Default Rate from the date loss or damage is sustained by Lender
until paid.
The term "Losses" shall mean any and all claims, suits,
liabilities (including, without limitation, strict liabilities), actions,
proceedings, obligations, debts, damages, losses, costs, expenses, fines,
penalties, charges, fees, expenses, judgments, awards, amounts paid in
settlement of whatever kind or nature (including but not limited to attorneys'
fees and other costs of defense). The term "Indemnified Parties" shall mean (a)
Lender, (b) any prior owner or holder of the Note, (c) any servicer or prior
servicer of the Loan, (d) the officers, directors, shareholders, partners,
members, employees and trustees of any of the foregoing, and (e) the heirs,
legal representatives, successors and assigns of each of the foregoing.
Section 13.2 Mortgage and/or Intangible Tax. Borrower
shall, at its sole cost and expense, protect, defend, indemnify, release and
hold harmless the Indemnified Parties from and against any and all Losses
imposed upon or incurred by or asserted against any Indemnified Parties and
directly or indirectly arising out of or in any way relating to any tax on the
making and/or recording of this Security Instrument, the Note or any of the
Other Security Documents.
Section 13.3 Duty to Defend; Attorneys' Fees and Other
Fees and Expenses. Upon written request by any Indemnified Party, Borrower
shall defend such Indemnified Party (if requested by any Indemnified Party, in
the name of the Indemnified Party) by attorneys and other professionals approved
by the Indemnified Parties. Notwithstanding the foregoing, any Indemnified
Parties may, in their sole discretion, engage their own attorneys and other
professionals to defend or assist them, and, at the option of Indemnified
Parties, their attorneys shall control the resolution of any claim or
proceeding. Upon demand, Borrower shall pay or, in the sole discretion of the
Indemnified Parties, reimburse, the Indemnified Parties for the payment of
reasonable fees and disbursements of attorneys, engineers, environmental
consultants, laboratories and other professionals in connection therewith.
Section 13.4 Environmental Indemnity. Simultaneously
with this Security Instrument, Borrower and any other person(s) or entity(ies)
identified therein (collectively, the "Indemnitors") have executed and delivered
that certain environmental indemnity agreement dated the date hereof to Lender
(the "Environmental Indemnity").
ARTICLE XIV
WAIVERS
Section 14.1 Waiver of Counterclaim. Borrower hereby
waives the right to assert a counterclaim, other than a mandatory or compulsory
counterclaim, in any action or
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proceeding brought against it by Lender arising out of or in any way connected
with this Security Instrument, the Note, any of the Other Security Documents, or
the Obligations.
Section 14.2 Marshalling and Other Matters. Borrower
hereby waives, to the extent permitted by law, the benefit of all appraisement,
valuation, stay, extension, reinstatement and redemption laws now or hereafter
in force and all rights of marshalling in the event of any sale hereunder of the
Property or any part thereof or any interest therein. Further, Borrower hereby
expressly waives any and all rights of redemption from sale under any order or
decree of foreclosure of this Security Instrument on behalf of Borrower, and on
behalf of each and every person acquiring any interest in or title to the
Property subsequent to the date of this Security Instrument and on behalf of all
persons to the extent permitted by Applicable Laws.
Section 14.3 Waiver of Notice. Borrower shall not be
entitled to any notices of any nature whatsoever from Lender or Trustee except
(a) with respect to matters for which this Security Instrument specifically and
expressly provides for the giving of notice by Lender or Trustee to Borrower and
(b) with respect to matters for which Lender or Trustee is required by
Applicable Laws to give notice, and Borrower hereby expressly waives the right
to receive any notice from Lender or Trustee with respect to any matter for
which this Security Instrument does not specifically and expressly provide for
the giving of notice by Lender or Trustee to Borrower.
Section 14.4 Waiver of Statute of Limitations. Borrower
hereby expressly waives and releases to the fullest extent permitted by law, the
pleading of any statute of limitations as a defense to payment of the Debt or
performance of its Other Obligations.
Section 14.5 Sole Discretion of Lender. Wherever pursuant
to this Security Instrument (a) Lender exercises any right given to it to
approve or disapprove, (b) any arrangement or term is to be satisfactory to
Lender, or (c) any other decision or determination is to be made by Lender, the
decision of Lender to approve or disapprove, all decisions that arrangements or
terms are satisfactory or not satisfactory and all other decisions and
determinations made by Lender, shall be in the sole discretion of Lender, except
as may be otherwise expressly and specifically provided herein.
Section 14.6 WAIVER OF TRIAL BY JURY. BORROWER HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE,
RELATING DIRECTLY OR INDIRECTLY TO THE LOAN EVIDENCED BY THE NOTE, THE
APPLICATION FOR THE LOAN EVIDENCED BY THE NOTE, THE NOTE, THIS SECURITY
INSTRUMENT OR THE OTHER SECURITY DOCUMENTS OR ANY ACTS OR OMISSIONS OF LENDER,
ITS OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN CONNECTION THEREWITH.
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ARTICLE XV
EXCULPATION
Section 15.1 Exculpation. The provisions of Article 11
of the Note are hereby incorporated by reference to the fullest extent as if the
text of such Article were set forth in its entirety herein.
ARTICLE XVI
NOTICES
Section 16.1 Notices. All notices or other written
communications hereunder shall be deemed to have been properly given (i) upon
delivery, if delivered in person or by facsimile transmission with receipt
acknowledged by the recipient thereof and confirmed by telephone by sender, (ii)
one (1) Business Day (defined below) after having been deposited for overnight
delivery with any reputable overnight courier service, or (iii) three (3)
Business Days after having been deposited in any post office or mail depository
regularly maintained by the U.S. Postal Service and sent by registered or
certified mail, postage prepaid, return receipt requested, addressed to Borrower
or Lender, as the case may be, at the addresses set forth on the first page of
this Security Instrument or addressed as such party may from time to time
designate by written notice to the other parties.
Notices to Borrower shall be addressed to the attention of
Director, Asset Management, with a copy to ▇▇▇▇ ▇▇▇▇▇ LLP, 2500 One Liberty
Place, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention:
Managing Partner, Real Estate. Borrower's telephone number is (▇▇▇) ▇▇▇-▇▇▇▇ and
facsimile number is (▇▇▇) ▇▇▇-▇▇▇▇.
Either party by notice to the other may designate additional
or different addresses for subsequent notices or communications.
For purposes of this Subsection, "Business Day" shall mean a
day on which commercial banks are not authorized or required by law to close in
New York, New York.
ARTICLE XVII
APPLICABLE LAW
Section 17.1 Choice of Law. (A) THIS SECURITY INSTRUMENT
WAS NEGOTIATED IN THE STATE OF NEW YORK, AND MADE BY BORROWER AND ACCEPTED BY
LENDER IN THE STATE OF NEW YORK, AND THE PROCEEDS OF THE NOTE SECURED HEREBY
WERE DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A
SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION
EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING, WITHOUT LIMITING THE GENERALITY
OF THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS
SECURITY INSTRUMENT AND THE
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OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND
PERFORMED IN SUCH STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICT LAWS) AND ANY
APPLICABLE LAW OF THE UNITED STATES OF AMERICA, EXCEPT THAT AT ALL TIMES THE
PROVISIONS FOR THE CREATION, PERFECTION, AND ENFORCEMENT OF THE LIENS AND
SECURITY INTERESTS CREATED PURSUANT HERETO AND PURSUANT TO THE OTHER SECURITY
DOCUMENTS WITH RESPECT TO THE PROPERTY SHALL BE GOVERNED BY AND CONSTRUED
ACCORDING TO THE LAW OF THE STATE IN WHICH THE PROPERTY IS LOCATED, IT BEING
UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE, THE
LAW OF THE STATE OF NEW YORK SHALL GOVERN THE CONSTRUCTION, VALIDITY AND
ENFORCEABILITY OF ALL LOAN DOCUMENTS AND ALL OF THE OBLIGATIONS ARISING
HEREUNDER OR THEREUNDER. TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER HEREBY
UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY
OTHER JURISDICTION GOVERNS THIS SECURITY INSTRUMENT OR THE OTHER LOAN DOCUMENTS,
AND THIS SECURITY INSTRUMENT AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO
SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
(B) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER
OR BORROWER ARISING OUT OF OR RELATING TO THIS SECURITY INSTRUMENT MAY AT
LENDER'S OPTION BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇, ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW, AND BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR
HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT,
ACTION OR PROCEEDING, AND BORROWER HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. BORROWER DOES
HEREBY DESIGNATE AND APPOINT
GOLDFISH (DE) LP
C/O W.P. ▇▇▇▇▇ & CO. LLC
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
WITH A COPY TO:
▇▇▇▇ ▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ATTENTION: CHAIRMAN, REAL ESTATE DEPARTMENT
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AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY
AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN
ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF
PROCESS UPON SUCH AGENT AT SUCH ADDRESS AND WRITTEN NOTICE OF SUCH SERVICE
MAILED OR DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN
EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER IN ANY SUCH SUIT,
ACTION OR PROCEEDING IN THE STATE OF NEW YORK. BORROWER (I) SHALL GIVE PROMPT
NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II)
MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT
WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE
DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL
PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN
OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.
Section 17.2 Provisions Subject to Applicable Law. All
rights, powers and remedies provided in this Security Instrument may be
exercised only to the extent that the exercise thereof does not violate any
applicable provisions of law and are intended to be limited to the extent
necessary so that they will not render this Security Instrument invalid,
unenforceable or not entitled to be recorded, registered or filed under the
provisions of any Applicable Laws.
ARTICLE XVIII
SECONDARY MARKET
Section 18.1 Transfer of Loan. Lender may, at any time,
sell, transfer or assign the Note, this Security Instrument and the Other
Security Documents, and any or all servicing rights with respect thereto, or
grant participations therein (the "Participations") or issue mortgage pass-
through certificates or other securities evidencing a beneficial interest in a
rated or unrated public offering or private placement (the "Securities"). Lender
may forward to each purchaser, transferee, assignee, servicer, participant, or
investor in such Participations or Securities (collectively, the "Investor") or
any Rating Agency rating such Securities, each prospective Investor, and any
organization maintaining databases on the underwriting and performance of
commercial mortgage loans, all documents and information which Lender now has or
may hereafter acquire relating to the Debt and to Borrower, any Guarantor, any
Indemnitor(s) and the Property, whether furnished by Borrower, any Guarantor,
any Indemnitor(s) or otherwise, as Lender determines necessary or desirable.
Borrower irrevocably waives any and all rights it may have under Applicable Laws
to prohibit such disclosure, including but not limited to any right of privacy.
Section 18.2 Cooperation. Borrower, any Guarantor and
any Indemnitor agree to cooperate with Lender in connection with any transfer
made or any Securities created pursuant to this Article XVIII, including,
without limitation, the taking, or refraining from taking, of such
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action as may be necessary to satisfy all of the conditions of any Investor, the
delivery of an estoppel certificate required in accordance with Subsection
7.4(c) hereof and such other documents as may be reasonably requested by Lender
and the execution of amendments to the Note, this Security Instrument and Other
Security Documents and Borrower's organizational documents as reasonably
requested by Lender. Borrower shall also furnish and Borrower, any Guarantor and
any Indemnitor consent to Lender furnishing to such Investors or such
prospective Investors or such Rating Agency any and all information concerning
the Property, the Leases, the financial condition of Borrower, any Guarantor and
any Indemnitor as may be requested by Lender, any Investor, any prospective
Investor or any Rating Agency in connection with any sale, transfer or
Participations or Securities.
ARTICLE XIX
COSTS
Section 19.1 Performance at Borrower's Expense. Borrower
acknowledges and confirms that Lender shall impose certain administrative
processing and/or commitment fees in connection with (a) the extension, renewal,
modification, amendment and termination of the Loan, (b) the release or
substitution of collateral therefor, (c) obtaining certain consents, waivers and
approvals with respect to the Property, or (d) the review of any Lease or
proposed Lease or the preparation or review of any subordination,
non-disturbance agreement (the occurrence of any of the above shall be called an
"Event"). Borrower further acknowledges and confirms that it shall be
responsible for the payment of all costs of reappraisal of the Property or any
part thereof, whether required by law, regulation, Lender or any governmental or
quasi-governmental authority. Borrower hereby acknowledges and agrees to pay,
immediately, with or without demand, all such fees (as the same may be increased
or decreased from time to time), and any additional fees of a similar type or
nature which may be imposed by Lender from time to time, upon the occurrence of
any Event or otherwise. Wherever it is provided for herein that Borrower pay any
costs and expenses, such costs and expenses shall include, but not be limited
to, all reasonable legal fees and disbursements of Lender, whether with respect
to retained firms, the reimbursement for the expenses of in-house staff or
otherwise.
Section 19.2 Legal Fees for Enforcement. (a) Borrower
shall pay all reasonable legal fees incurred by Lender in connection with (i)
the preparation of the Note, this Security Instrument and the Other Security
Documents and (ii) the items set forth in Section 19.1 above, and (b) Borrower
shall pay to Lender on demand any and all expenses, including legal expenses and
attorneys' fees, incurred or paid by Lender in protecting its interest in the
Property or in collecting any amount payable hereunder or in enforcing its
rights hereunder with respect to the Property, whether or not any legal
proceeding is commenced hereunder or thereunder, together with interest thereon
at the Default Rate from the date paid or incurred by Lender until such expenses
are paid by Borrower.
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ARTICLE XX
DEFINITIONS
Section 20.1 General Definitions. Unless the context
clearly indicates a contrary intent or unless otherwise specifically provided
herein, words used in this Security Instrument may be used interchangeably in
singular or plural form and the word "Borrower" shall mean "each Borrower and
any subsequent owner or owners of the Property or any part thereof or any
interest therein," the word "Lender" shall mean "Lender and any subsequent
holder of the Note," the word "Trustee" shall mean "Trustee and any substitute
Trustee of the estates, properties, powers, trusts and rights conferred upon
Trustee pursuant to this Security Instrument," the word "Note" shall mean "the
Note and any other evidence of indebtedness secured by this Security
Instrument," the word "person" shall include an individual, corporation,
partnership, limited liability company, trust, unincorporated association,
government, governmental authority, and any other entity, the word "Property"
shall include any portion of the Property and any interest therein, and the
phrases "attorneys' fees" and "counsel fees" shall include any and all
attorneys', paralegal and law clerk fees and disbursements, including, but not
limited to, fees and disbursements at the pre-trial, trial and appellate levels
incurred or paid by Lender in protecting its interest in the Property, the
Leases and the Rents and enforcing its rights hereunder.
Section 20.2 Headings, etc. The headings and captions of
various Articles and Sections of this Security Instrument are for convenience of
reference only and are not to be construed as defining or limiting, in any way,
the scope or intent of the provisions hereof.
ARTICLE XXI
MISCELLANEOUS PROVISIONS
Section 21.1 No Oral Change. This Security Instrument,
and any provisions hereof, may not be modified, amended, waived, extended,
changed, discharged or terminated orally or by any act or failure to act on the
part of Borrower or Lender, but only by an agreement in writing signed by the
party against whom enforcement of any modification, amendment, waiver,
extension, change, discharge or termination is sought.
Section 21.2 Liability. If Borrower consists of more
than one person, the obligations and liabilities of each such person hereunder
shall be joint and several. This Security Instrument shall be binding upon and
inure to the benefit of Borrower and Lender and their respective successors and
assigns forever.
Section 21.3 Inapplicable Provisions. If any term,
covenant or condition of the Note or this Security Instrument is held to be
invalid, illegal or unenforceable in any respect, the Note and this Security
Instrument shall be construed without such provision.
Section 21.4 Duplicate Originals; Counterparts. This
Security Instrument may be executed in any number of duplicate originals and
each duplicate original shall be deemed to be an original. This Security
Instrument may be executed in several counterparts, each of which
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counterparts shall be deemed an original instrument and all of which together
shall constitute a single Security Instrument. The failure of any party hereto
to execute this Security Instrument, or any counterpart hereof, shall not
relieve the other signatories from their obligations hereunder.
Section 21.5 Number and Gender. Whenever the context may
require, any pronouns used herein shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns and pronouns shall
include the plural and vice versa.
Section 21.6 Cross Default. An Event of Default under
this Security Instrument shall constitute an Event of Default under the Note and
each of the Other Security Documents and an Event of Default under the Note
and/or any of the Other Security Documents shall constitute an Event of Default
under this Security Instrument.
ARTICLE XXII
SPECIAL TEXAS PROVISIONS
Section 22.1 Principles of Construction. In the event of
any inconsistencies between the terms and provisions of this Section 22 and the
terms and provision of the other Sections of this Security Instrument, the terms
and provisions of this Section 22 shall govern and control.
Section 22.2 Rights and Remedies. Article XI of this
Security Instrument is hereby amended to add the following provisions:
(a) Delivery upon Sale. Upon the completion of any sale or
sales pursuant hereto, Trustee shall execute and deliver to the
accepted purchaser or purchasers a good and sufficient instrument, or
good and sufficient instruments, conveying, assigning and transferring
all estate, right, title and interest in and to the Property and rights
sold by general warranty of title. Trustee is hereby irrevocably
appointed the true and lawful attorney of Borrower, in its name and
stead, to make all necessary conveyances, assignments, transfers and
deliveries of the Property and rights so sold and for that purpose
Trustee may execute all necessary instruments of conveyance, assignment
and transfer, and may substitute one or more persons with like power,
Borrower hereby ratifying and confirming all that its said attorney or
such substitute or substitutes shall lawfully do by virtue hereof. Any
sale or sales made under or by virtue of this Section, whether made
under the power of sale herein granted or under or by virtue of
judicial proceedings or of a judgment or decree of foreclosure and
sale, shall operate to divest all the estate, right, title, interest,
claim and demand whatsoever, whether at law or in equity, of Borrower
in and to the Property and rights so sold, and shall be a perpetual bar
both at law and in equity against Borrower and against any and all
persons claiming or who may claim the same, or any part thereof from,
through or under Borrower.
(b) Option to Bid. Upon any sale made under or by virtue of
this paragraph, whether made under the power of sale herein granted or
under or by virtue of judicial proceedings or of a judgment or decree
of foreclosure and sale, Lender may bid for and acquire the Property or
any part thereof and in lieu of paying cash therefor may make
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settlement for the purchase price by crediting upon the Debt the net
sales price after deducting therefrom the reasonable out-of-pocket
expenses of the sale and costs of the action and any other sums which
Lender is authorized to deduct under this Security Instrument.
(c) Remaining Liens. No recovery of any judgment by Lender
and no levy of an execution under any judgment upon the Property or
upon any other property of Borrower shall affect in any manner or to
any extent the lien of this Security Instrument upon the Property or
any part thereof, or any liens, rights, powers or remedies of Lender
hereunder, but such liens, rights, powers and remedies of Lender shall
continue unimpaired as before.
(d) No Waiver of Remedies. Lender may resort to any remedies
and the security given by the Note, this Security Instrument or the
Other Security Documents in whole or in part, and in such portions and
in such order as determined by Lender in its sole discretion. No such
action shall in any way be considered a waiver of any rights, benefits
or remedies evidenced or provided by the Note, this Security Instrument
or any of the Other Security Documents. The failure of Lender to
exercise any right, remedy or option provided in the Note, this
Security Instrument or any of the Other Security Documents shall not be
deemed a waiver of such right, remedy or option or of any covenant or
obligation secured by the Note, this Security Instrument or the Other
Security Documents. No acceptance by Lender of any payment after the
occurrence of any Event of Default and no payment by Lender of any
obligation for which Borrower is liable hereunder shall be deemed to
waive or cure any Event of Default with respect to Borrower, or
Borrower's liability to pay such obligation, unless simultaneously with
such acceptance or payment by Lender, Lender waives in writing the
Event of Default cured thereby. No sale of all or any portion of the
Property, no forbearance on the part of Lender, and no extension of
time for the payment of the whole or any portion of the Debt or any
other indulgence given by Lender to Borrower, shall operate to release
or in any manner affect the interest of Lender in the remaining
Property or the liability of Borrower to pay the Debt. No waiver by
Lender shall be effective unless it is in writing and then only to the
extent specifically stated. All reasonable out-of-pocket costs and
expenses of Lender in exercising its rights and remedies under this
Article (including reasonable attorneys' fees and disbursements to the
extent permitted by law), shall be paid by Borrower within five (5)
days after notice from Lender, and such costs and expenses shall
constitute a portion of the Debt and shall be secured by this Security
Instrument. The interests and rights of Lender under the Note, this
Security Instrument or in any of the Other Security Documents shall not
be impaired by any indulgence, including (i) any renewal, extension or
modification which Lender may grant with respect to any of the Debt,
(ii) any surrender, compromise, release, renewal, extension, exchange
or substitution which Lender may grant with respect to the Property or
any portion thereof; or (iii) any release or indulgence granted to any
maker, endorser, guarantor or surety of any of the Debt.
(e) Foreclosure. Upon the occurrence and the continuance of
any Event of Default, Lender may request Trustee to proceed with
foreclosure under the power of sale
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which is hereby conferred, such foreclosure to be accomplished in
accordance with the following provisions:
(i) Public Sale. Trustee is hereby authorized and
empowered, and it shall be Trustee's special duty, upon such request of
Lender, to sell the Property, or any part thereof, at public auction to
the highest bidder for cash, with or without having taken possession of
same. Any such sale (including notice thereof) shall comply with the
applicable requirements, at the time of the sale, of Section 51.002 of
the Texas Property Code or, if and to the extent such statute is not
then in force, with the applicable requirements, at the time of the
sale, of the successor statute or statutes, if any, governing sales of
Texas real property under powers of sale conferred by deeds of trust.
If there is no statute in force at the time of the sale governing sales
of Texas real property under powers of sale conferred by deeds of
trust, such sale shall comply with applicable law, at the time of the
sale, governing sales of Texas real property under powers of sale
conferred by deeds of trust. Trustee or his successor or substitute may
appoint or delegate any one or more persons as agent to perform any act
or acts necessary or incident to any sale held by Trustee, including
the posting of notices, and the conduct of sale, but in the name and on
behalf of Trustee, his successor or substitute.
(ii) Right to Require Proof of Financial Ability
and/or Cash Bid. At any time during the bidding, the Trustee may
require a bidding party (A) to disclose its full name, state and city
of residence, occupation, and specific business office location, and
the name and address of the principal the bidding party is representing
(if applicable), and (B) to demonstrate reasonable evidence of the
bidding party's financial ability (or, if applicable, the financial
ability of the principal of such bidding party), as a condition to the
bidding party submitting bids at the foreclosure sale. If any such
bidding party (the "Questioned Bidder") declines to comply with the
Trustee's requirement in this regard, or if such Questioned Bidder does
respond but the Trustee, in Trustee's sole and absolute discretion,
deems the information or the evidence of the financial ability of the
Questioned Bidder (or, if applicable, the principal of such bidding
party) to be inadequate, then the Trustee may continue the bidding with
reservation; and in such event (I) the Trustee shall be authorized to
caution the Questioned Bidder concerning the legal obligations to be
incurred in submitting bids, and (II) if the Questioned Bidder is not
the highest bidder at the sale, or if having been the highest bidder
the Questioned Bidder fails to deliver the cash purchase price payment
promptly to the Trustee, all bids by the Questioned Bidder shall be
null and void. The Trustee may, in Trustee's sole and absolute
discretion, determine that a credit bid may be in the best interest of
the Borrower and Lender, and elect to sell the Property for credit or
for a combination of cash and credit; provided, however, that the
Trustee shall have no obligation to accept any bid except an all cash
bid. In the event the Trustee requires a cash bid and cash is not
delivered within a reasonable time after conclusion of the bidding
process, as specified by the Trustee, but in no event later than 3:45
p.m. local time on the day of sale, then said contingent sale shall be
null and void, the bidding process may be recommenced, and any
subsequent bids or sale shall be made as if no prior bids were made or
accepted.
(iii) Sale Subject to Unmatured Debt. In addition to
the rights and powers of sale granted under the preceding provisions of
this subsection, if default is made in the
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payment of any installment of the Debt and is not cured within
applicable cure periods, Lender may, at Lender's option, at once or at
any time thereafter while any matured installment remains unpaid,
without declaring the entire Debt to be due and payable, orally or in
writing direct Trustee to enforce this Security Instrument and to sell
the Property subject to such unmatured Debt and to the rights, powers,
liens, security interests, and assignments securing or providing
recourse for payment of such unmatured Debt, in the same manner, all as
provided in the preceding provisions of this subsection. Sales made
without maturing the Debt may be made hereunder whenever there is a
default in the payment of any installment of the Debt, without
exhausting the power of sale granted hereby, and without affecting in
any way the power of sale granted under this subsection, the unmatured
balance of the Debt or the rights, powers, liens, security interests,
and assignments securing or providing recourse for payment of the Debt.
(iv) Partial Foreclosure. Sale of a part of the
Property shall not exhaust the power of sale, but sales may be made
from time to time until the Debt is paid in full. It is intended by
each of the foregoing provisions of this subsection that Trustee may,
after any request or direction by Lender, sell not only the Land and
the Improvements, but also the Personal Property and other interests
constituting a part of the Property or any part thereof, along with the
Land and the Improvements or any part thereof, as a unit and as a part
of a single sale, or may sell at any time or from time to time any part
or parts of the Property separately from the remainder of the Property.
It shall not be necessary to have present or to exhibit at any sale any
of the Property. Any sale of personal property made hereunder shall be
deemed to have been a public sale conducted in a commercially
reasonable manner if held contemporaneously with, or as part of, and
upon the same notice as required for the sale of real property under
the power of sale granted herein.
(v) Trustee's Deeds. After any sale under this
subsection, Trustee shall make good and sufficient deeds, assignments,
and other conveyances to the purchaser or purchasers thereunder in the
name of Borrower, conveying the Property or any part thereof so sold to
the purchaser or purchasers with general warranty of title by Borrower.
It is agreed that in any deeds, assignments or other conveyances given
by Trustee, absent fraud or gross negligence, any and all statements of
fact or other recitals therein made as to the identity of Lender, the
occurrence or existence of any Event of Default, the notice of
intention to accelerate, or acceleration of, the maturity of the Debt,
the request to sell, notice of sale, time, place, terms and manner of
sale, and receipt, distribution, and application of the money realized
therefrom, the due and proper appointment of a substitute trustee, and
without being limited by the foregoing, any other act or thing having
been duly done by or on behalf of Lender or by or on behalf of Trustee,
shall be taken by all courts of law and equity as prima facie evidence
that such statements or recitals state true, correct, and complete
facts and are without further question to be so accepted, and Borrower
does hereby ratify and confirm any and all acts that Trustee may
lawfully do in the premises by virtue hereof.
Section 22.3 Notices. Section 16.1 is hereby amended by
deleting Section 16.1 in its entirety and replacing it with the following:
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"Notices. Any notice, report, demand or other instrument
authorized or required to be given or furnished ("NOTICES") shall be in writing
and shall be given as follows, unless applicable law requires a specific method
or means of notice, in which case, such law shall govern and any notice given
thereunder shall be sufficient notice hereunder: (a) by hand delivery; (b) by
deposit in the United States mail as first class certified mail, return receipt
requested, postage paid; (c) by overnight nationwide commercial courier service;
or (d) by telecopy transmission (other than for notices of default) with a
confirmation copy to be delivered by duplicate notice in accordance with any of
clauses (a)-(c) above, in each case, addressed to the party intended to receive
the same at the following address(es):
Beneficiary: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Bank
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
with copies to: Cadwalader, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Phone number: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile number: (▇▇▇) ▇▇▇-▇▇▇▇
Trustor: Goldfish (DE) LP
c/o W.P. ▇▇▇▇▇ & Co. LLC
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Director, Asset Management
Phone number: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile number: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇ ▇▇▇▇▇ LLP
2500 One Liberty Place
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Managing Partner, Real Estate.
Section 22.4 Deed of Trust Provisions. Section 23.1 is
hereby amended by inserting the following at the end of the second sentence of
Section 23.1:
"without further formality than an appointment and designation
in writing, which appointment and designation shall be full evidence of the
right and authority to make the same
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and of all facts therein recited; and this conveyance shall vest in the
successor or substitute trustee the powers, and duties conferred on the Trustee
named herein and the conveyance by the successor or substitute trustee to the
purchaser at any sale made pursuant hereto shall be valid and effective as fully
as herein provided in the case of a conveyance by the Trustee."
Section 22.5 Assignment of Leases and Rents. The
assignment of leases and rents set forth in this Security Instrument is not
intended to constitute payment to Lender or Trustee unless Borrower's license to
collect Rents is terminated, and then only to the extent that the Rents are
actually received by Lender (as opposed to constituting a portion of the
voluntary payments of principal and interest on the Note) and are not used for
the operation or maintenance of the Property or for the payment of costs and
expenses in connection therewith, taxes, assessments, water charges, sewer
rents, and other charges levied, assessed or imposed against the Property,
insurance premiums, costs and expenses with respect to any litigation affecting
the Property, the leases, the concessions, and the rent, any wages and salaries
of employees, commissions of agents and attorneys' fees, all in accordance with
the terms of the Note, this Security Instrument and/or the Other Security
Documents. It is further the intent of Borrower and Lender that the Rents hereby
absolutely assigned are no longer, during the term of this Security Instrument,
property of Borrower or property of any estate of Borrower as defined in 11
U.S.C. [Section] 541 and shall not constitute collateral, cash or otherwise, of
Borrower. The term Rents as used herein shall mean the gross rents without
deduction or offsets of any kind.
Section 22.6 Inapplicability of Credit Code. In no event
shall the provisions of Chapter 346 of the Texas Finance Code (which regulates
certain revolving credit loan accounts and revolving tri-party accounts) apply
to the loan evidenced by the Note, this Security Instrument and the Other
Security Documents and/or secured hereby.
Section 22.7 Entire Agreement. THE NOTE, THIS SECURITY
AGREEMENT AND THE OTHER SECURITY DOCUMENTS EMBODY THE FINAL, ENTIRE AGREEMENT
AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS,
AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL,
RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED OR
VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR
DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE
PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF.
Section 22.8 Maturity Date. The maturity date of the
Note secured hereby is December 1, 2011.
Section 22.9 Notice of Indemnification. BORROWER
ACKNOWLEDGES THAT THIS SECURITY INSTRUMENT PROVIDES FOR INDEMNIFICATION OF
LENDER BY BORROWER PURSUANT TO ARTICLE XIII. SUBJECT TO THE TERMS THEREOF, IT IS
SPECIFICALLY INTENDED BY BORROWER AND LENDER THAT ALL INDEMNITY OBLIGATIONS AND
LIABILITIES ASSUMED BY BORROWER HEREUNDER BE WITHOUT LIMIT AND WITHOUT REGARD TO
THE CAUSE OR CAUSES THEREOF (INCLUDING PREEXISTING CONDITIONS), STRICT
LIABILITY,
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OR THE NEGLIGENCE OF ANY PARTY OR PARTIES (INCLUDING LENDER AND TRUSTEE) WHETHER
SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, OR PASSIVE. THE PARTIES
SPECIFICALLY INTEND THAT LENDER IS TO BE INDEMNIFIED AGAINST ITS OWN NEGLIGENCE.
Section 22.10 Receipt of Copy. THE BORROWER HEREBY
DECLARES AND ACKNOWLEDGES THAT THE BORROWER HAS RECEIVED, WITHOUT CHARGE, A TRUE
COPY OF THIS SECURITY INSTRUMENT.
ARTICLE XXIII
DEED OF TRUST PROVISIONS
Section 23.1 Concerning The Trustee. Trustee shall be
under no duty to take any action hereunder except as expressly required
hereunder or by law, or to perform any act which would involve Trustee in any
expense or liability or to institute or defend any suit in respect hereof,
unless properly indemnified to Trustee's reasonable satisfaction. Trustee, by
acceptance of this Security Instrument, covenants to perform and fulfill the
trusts herein created, being liable, however, only for gross negligence or
willful misconduct, and hereby waives any statutory fee and agrees to accept
reasonable compensation, in lieu thereof, for any services rendered by Trustee
in accordance with the terms hereof. Trustee may resign at any time upon giving
thirty (30) days' notice to Borrower and to Lender. Lender may remove Trustee at
any time or from time to time and select a successor trustee. In the event of
the death, removal, resignation, refusal to act, or inability to act of Trustee,
or in its sole discretion for any reason whatsoever Lender may, without notice
and without specifying any reason therefor and without applying to any court,
select and appoint a successor trustee, by an instrument recorded wherever this
Security Instrument is recorded and all powers, rights, duties and authority of
Trustee, as aforesaid, shall thereupon become vested in such successor. Such
substitute trustee shall not be required to give bond for the faithful
performance of the duties of Trustee hereunder unless required by Lender. The
procedure provided for in this paragraph for substitution of Trustee shall be in
addition to and not in exclusion of any other provisions for substitution, by
law or otherwise.
Section 23.2 Trustee's Fees. Borrower shall pay all
reasonable costs, fees and expenses incurred by Trustee and Trustee's agents and
counsel in connection with the performance by Trustee of Trustee's duties
hereunder and all such costs, fees and expenses shall be secured by this
Security Instrument.
Section 23.3 Certain Rights. With the approval of
Lender, Trustee shall have the right to take any and all of the following
actions: (i) to select, employ, and advise with counsel (who may be, but need
not be, counsel for Lender) upon any matters arising hereunder, including the
preparation, execution, and interpretation of the Note, this Security Instrument
or the Other Security Documents, and shall be fully protected in relying as to
legal matters on the advice of counsel, (ii) to execute any of the trusts and
powers hereof and to perform any duty hereunder either directly or through
his/her agents or attorneys, (iii) to select and employ, in and
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about the execution of his/her duties hereunder, suitable accountants, engineers
and other experts, agents and attorneys-in-fact, either corporate or individual,
not regularly in the employ of Trustee, and Trustee shall not be answerable for
any act, default, negligence, or misconduct of any such accountant, engineer or
other expert, agent or attorney-in-fact, if selected with reasonable care, or
for any error of judgment or act done by Trustee in good faith, or be otherwise
responsible or accountable under any circumstances whatsoever, except for
Trustee's gross negligence or bad faith, and (iv) any and all other lawful
action as Lender may instruct Trustee to take to protect or enforce Lender's
rights hereunder. Trustee shall not be personally liable in case of entry by
Trustee, or anyone entering by virtue of the powers herein granted to Trustee,
upon the Property for debts contracted for or liability or damages incurred in
the management or operation of the Property. Trustee shall have the right to
rely on any instrument, document, or signature authorizing or supporting an
action taken or proposed to be taken by Trustee hereunder, believed by Trustee
in good faith to be genuine. Trustee shall be entitled to reimbursement for
actual expenses incurred by Trustee in the performance of Trustee's duties
hereunder and to reasonable compensation for such of Trustee's services
hereunder as shall be rendered.
Section 23.4 Retention of Money. All moneys received by
Trustee shall, until used or applied as herein provided, be held in trust for
the purposes for which they were received, but need not be segregated in any
manner from any other moneys (except to the extent required by applicable law)
and Trustee shall be under no liability for interest on any moneys received by
Trustee hereunder.
Section 23.5 Perfection of Appointment. Should any deed,
conveyance, or instrument of any nature be required from Borrower by any Trustee
or substitute trustee to more fully and certainly vest in and confirm to the
Trustee or substitute trustee such estates rights, powers, and duties, then,
upon request by the Trustee or substitute trustee, any and all such deeds,
conveyances and instruments shall be made, executed, acknowledged, and delivered
and shall be caused to be recorded and/or filed by Borrower.
Section 23.6 Succession Instruments. Any substitute
trustee appointed pursuant to any of the provisions hereof shall, without any
further act, deed, or conveyance, become vested with all the estates,
properties, rights, powers, and trusts of its or his/her predecessor in the
rights hereunder with like effect as if originally named as Trustee herein; but
nevertheless, upon the written request of Lender or of the substitute trustee,
the Trustee ceasing to act shall execute and deliver any instrument transferring
to such substitute trustee, upon the trusts herein expressed, all the estates,
properties, rights, powers, and trusts of the Trustee so ceasing to act, and
shall duly assign, transfer and deliver any of the property and moneys held by
such Trustee to the substitute trustee so appointed in the Trustee's place.
[NO FURTHER TEXT ON THIS PAGE]
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IN WITNESS WHEREOF, Borrower has executed this Security
Instrument under seal as of the day and year first above written.
BORROWER:
GOLDFISH (DE) LP,
a Delaware limited partnership
By: Catfish (DE) QRS 14-79, Inc.
a Delaware corporation,
its general partner
By: _____________________________________
Name:
Title:
THE STATE OF ______________
COUNTY OF _________________
This instrument was acknowledged before me on the ____ day of
_____________, 2001, by ______________________, __________________ of
_____________________________, a ______________________ corporation, on behalf
of said corporation.
_______________________________________
Notary Public in and for
the State of Texas
_______________________________________
Printed Name of Notary
My commission expires: ______________________
EXHIBIT A
[Attach Legal Description of Property]
A-1
EXHIBIT B
W.P. ▇▇▇▇▇ & Co. LLC
GOLDFISH (DE) LP
[__________]
____________________
____________________
MSMC Loan No. 01-09970
GMAC Loan No. ________
RENT ROLL CERTIFICATION
CURRENT
SQUARE LEASE MONTHLY RENT CURRENT CURRENT ANNUAL CURRENT ANNUAL
TENANT FEET EXPIRATION PSF MONTHLY RENT PSF RENT
[PetsMART] $ $ $ $
TOTAL FOR PROPERTY $ $ $ $
B-1
EXHIBIT C
W.P. ▇▇▇▇▇ & Co. LLC
GOLDFISH (DE) LP
[PetsMART]
____________________
____________________
MSMC Loan No. 01-09970
GMAC Loan No. ________
MONTHLY OPERATING STATEMENT CERTIFICATION
INCOME
Current Base Rent for Period $
Reimbursements $
Other $
Total Income
OPERATING EXPENSES
(None-NNN bond-type lease. Tenant is responsible) $
Total Operating Expenses $
Net Operating Income $
======
C-1
EXHIBIT D
W.P. ▇▇▇▇▇ & Co. LLC
GOLDFISH (DE) LP
[PetsMART]
____________________
____________________
MSMC Loan No. 01-09970
GMAC Loan No. ________
QUARTERLY OPERATING STATEMENT CERTIFICATION
INCOME
Current Base Rent for Period $
Reimbursements $
Other $
Total Income
OPERATING EXPENSES
(None-NNN bond-type lease. Tenant is responsible) $
Total Operating Expenses $
Net Operating Income $
======
D-1
EXHIBIT E
W.P. ▇▇▇▇▇ & Co. LLC
GOLDFISH (DE) LP
[PetsMART]
____________________
____________________
MSMC Loan No. 01-09724
GMAC Loan No. _________
ANNUAL OPERATING STATEMENT CERTIFICATION
INCOME
Current Base Rent for Period $
Reimbursements $
Other $
Total Income
OPERATING EXPENSES
(None-NNN bond-type lease. Tenant is responsible) $
Total Operating Expenses $
Net Operating Income $
======
E-1
EXHIBIT F
W.P. ▇▇▇▇▇ & Co. LLC
GOLDFISH (DE) LP
[PetsMART]
____________________
____________________
MSMC Loan No. 01-09970
GMAC Loan No. _________
BALANCE SHEET CERTIFICATION
ASSETS
CURRENT ASSETS:
Cash $
Restricted Deposits (TI/LC Reserve Account) $
Tenant Receivables $
Prepaid Expenses $
Other $
Total Current Assets $
FIXED ASSETS:
Building & Improvements (at total acquisition cost) $
Furniture & Equipment $
Other $
Total Fixed Assets $
TOTAL ASSETS $
======
LIABILITIES
CURRENT LIABILITIES:
Restricted Deposits (TI/LC Reserve Account) $
Other Current Liabilities $
Total Current Liabilities $
LONG-TERM LIABILITIES:
Outstanding Loan Balance $
Other $
TOTAL LONG-TERM LIABILITIES $
======
NET WORTH $
======
F-1
EXHIBIT G
(ATTACH FORM OF ANNUAL OPERATING BUDGET)
G-1