EXHIBIT 10.5
Loan No. V_05536
TECHCOURT, LLC, as grantor (Borrower)
to
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., as trustee (Trustee)
for the benefit of
▇▇▇▇▇▇ GUARANTY TRUST COMPANY OF NEW YORK, as beneficiary (Lender)
---------------------------------
DEED OF TRUST AND
SECURITY AGREEMENT
---------------------------------
Dated: September 17, 1999
PREPARED BY AND UPON
RECORDATION RETURN TO:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, PLLC
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇, Esq.
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
Table of Contents
Page
ARTICLE 1 - GRANTS OF SECURITY....................................................... 1
Section 1.1 - PROPERTY CONVEYED.............................................. 1
Section 1.2 - ASSIGNMENT OF RENTS............................................ 4
Section 1.3 - DEFINITION OF PERSONAL PROPERTY................................ 4
Section 1.4 - PLEDGE OF MONIES HELD.......................................... 4
ARTICLE 2 - DEBT AND OBLIGATIONS SECURED............................................. 5
Section 2.1 - DEBT........................................................... 5
Section 2.2 - OTHER OBLIGATIONS.............................................. 5
Section 2.3 - DEBT AND OTHER OBLIGATIONS..................................... 5
Section 2.4 - PAYMENTS....................................................... 6
ARTICLE 3 - BORROWER COVENANTS....................................................... 6
Section 3.1 - INCORPORATION BY REFERENCE..................................... 6
Section 3.2 - INSURANCE...................................................... 6
Section 3.3 - PAYMENT OF TAXES, ETC.......................................... 12
Section 3.4 - CONDEMNATION................................................... 13
Section 3.5 - USE AND MAINTENANCE OF PROPERTY................................ 13
Section 3.6 - WASTE.......................................................... 14
Section 3.7 - COMPLIANCE WITH LAWS; ALTERATIONS.............................. 14
Section 3.8 - BOOKS AND RECORDS.............................................. 15
Section 3.9 - PAYMENT FOR LABOR AND MATERIALS................................ 16
Section 3.10 - PERFORMANCE OF OTHER AGREEMENTS............................... 16
ARTICLE 4 - SPECIAL COVENANTS........................................................ 16
Section 4.1 - PROPERTY USE................................................... 16
Section 4.2 - ERISA.......................................................... 16
Section 4.3 - SINGLE PURPOSE ENTITY.......................................... 17
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES........................................... 19
Section 5.1 - BORROWER'S REPRESENTATIONS..................................... 19
Section 5.2 - WARRANTY OF TITLE.............................................. 19
Section 5.3 - STATUS OF PROPERTY............................................. 20
Section 5.4 - NO FOREIGN PERSON.............................................. 21
Section 5.5 - SEPARATE TAX LOT............................................... 21
ARTICLE 6 - OBLIGATIONS AND RELIANCES................................................ 21
Section 6.1 - RELATIONSHIP OF BORROWER AND LENDER............................ 21
Section 6.2 - NO RELIANCE ON LENDER.......................................... 21
Section 6.3 - NO LENDER OBLIGATIONS.......................................... 21
Section 6.4 - RELIANCE....................................................... 22
ARTICLE 7 - FURTHER ASSURANCES....................................................... 22
Section 7.1 - RECORDING FEES................................................. 22
Section 7.2 - FURTHER ACTS................................................... 22
Section 7.3 - CHANGES IN TAX, DEBT CREDIT AND DOCUMENTARY STAMP LAWS......... 23
Section 7.4 - CONFIRMATION STATEMENT......................................... 23
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
i
Section 7.5 - SPLITTING OF SECURITY INSTRUMENT........................................... 24
Section 7.6 - REPLACEMENT DOCUMENTS...................................................... 24
ARTICLE 8 - DUE ON SALE/ENCUMBRANCE.............................................................. 24
Section 8.1 - LENDER RELIANCE............................................................ 24
Section 8.2 - NO SALE/ENCUMBRANCE........................................................ 24
Section 8.3 - EXCLUDED AND PERMITTED TRANSFERS........................................... 25
Section 8.4 - NO IMPLIED FUTURE CONSENT.................................................. 27
Section 8.5 - COSTS OF CONSENT........................................................... 27
Section 8.6 - CONTINUING SEPARATENESS REQUIREMENTS....................................... 27
ARTICLE 9 - DEFAULT.............................................................................. 27
Section 9.1 - EVENTS OF DEFAULT.......................................................... 27
Section 9.2 - DEFAULT INTEREST........................................................... 30
ARTICLE 10 - RIGHTS AND REMEDIES................................................................. 30
Section 10.1 - REMEDIES.................................................................. 30
Section 10.2 - RIGHT OF ENTRY............................................................ 30
ARTICLE 11 - INDEMNIFICATION; SUBROGATION........................................................ 36
Section 11.1 - GENERAL INDEMNIFICATION................................................... 36
Section 11.2 - ENVIRONMENTAL INDEMNIFICATION............................................. 37
Section 11.3 - EXCLUDED OCCURRENCES...................................................... 39
Section 11.4 - DUTY TO DEFEND AND ATTORNEYS AND OTHER FEES AND EXPENSES.................. 39
Section 11.5 - SURVIVAL OF INDEMNITIES................................................... 40
ARTICLE 12 - SECURITY AGREEMENT.................................................................. 40
Section 12.1 - SECURITY AGREEMENT........................................................ 40
ARTICLE 13 - WAIVERS............................................................................. 41
Section 13.1 - MARSHALLING AND OTHER MATTERS............................................. 41
Section 13.2 - WAIVER OF NOTICE.......................................................... 41
Section 13.3 - SOLE DISCRETION OF LENDER................................................. 42
Section 13.4 - SURVIVAL.................................................................. 42
Section 13.5 - WAIVER OF TRIAL BY JURY................................................... 42
Section 13.6 - WAIVER OF AUTOMATIC OR SUPPLEMENTAL STAY.................................. 43
ARTICLE 14 - NOTICES............................................................................. 43
Section 14.1 - NOTICES................................................................... 43
ARTICLE 15 - APPLICABLE LAW...................................................................... 44
Section 15.1 - GOVERNING LAW; JURISDICTION............................................... 44
Section 15.2 - USURY LAWS................................................................ 44
Section 15.3 - PROVISIONS SUBJECT TO APPLICABLE LAW...................................... 45
ARTICLE 16 - SECONDARY MARKET.................................................................... 45
Section 16.1 - TRANSFER OF LOAN.......................................................... 45
ARTICLE 17 - COSTS............................................................................... 45
Section 17.1 - PERFORMANCE AT BORROWER'S EXPENSE......................................... 45
Section 17.2 - ATTORNEY'S FEES FOR ENFORCEMENT........................................... 46
ARTICLE 18 - DEFINITIONS......................................................................... 46
Section 18.1 - GENERAL DEFINITIONS....................................................... 46
ARTICLE 19 - MISCELLANEOUS PROVISIONS............................................................ 46
Section 19.1 - NO ORAL CHANGE............................................................ 46
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
ii
Section 19.2 - LIABILITY.................................... 47
Section 19.3 - INAPPLICABLE PROVISIONS...................... 47
Section 19.4 - HEADINGS, ETC................................ 47
Section 19.5 - DUPLICATE ORIGINALS; COUNTERPARTS............ 47
Section 19.6 - NUMBER AND GENDER............................ 47
Section 19.7 - SUBROGATION.................................. 47
Section 19.8 - ENTIRE AGREEMENT............................. 48
ARTICLE 20 - TRUSTEE................................................ 48
ARTICLE 21 - SPECIAL COMMONWEALTH OF VIRGINIA PROVISIONS............
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
iii
Index of Defined Terms
Page
"ADA" .................................. 15
"Applicable Laws" ...................... 15
"attorneys' fees" ...................... 47
"attorneys" ............................ 38
"Bankruptcy Code" ...................... 2
"Borrower" ............................. 1, 46
"Business Day" ......................... 45
"Collateral" ........................... 41
"counsel fees" ......................... 47
"Debt" ................................. 5
"Default Rate" ......................... 31
"Enforcement" .......................... 7
"Environmental Indemnity" .............. 6
"Environmental Law" .................... 39
"Environmental Lien" ................... 39
"ERISA" ................................ 17
"Escrow Agreement" ..................... 3
"Event of Default" ..................... 28
"Event" ................................ 46
"Exculpated Portion" ................... 36
"family members" ....................... 27
"fees and expenses" .................... 38
"Full Replacement Cost" ................ 6
"Guarantor" ............................ 18
"Hazardous Substances" ................. 39
"Improvements" ......................... 1
"Indemnified Parties" .................. 40
"Indemnitor" ........................... 6
"Insurance Premiums" ................... 9
"Insured Casualty" ..................... 11
"Intangibles" .......................... 3
"Investor" ............................. 46
"Land" ................................. 1
"Leases" ............................... 2
"Lease" ................................ 2
"legal fees" ........................... 47
"Lender" ............................... 1, 46
"Loan Documents" ....................... 6
"Loan" ................................. 27
"Losses" ............................... 40
"Note" ................................. 1, 47
"Obligations" .......................... 5
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
Index Page 1
"Ordinance or Law Coverage" ........................... 7
"Original Principals" ................................. 26
"Other Charges" ....................................... 12
"Other Loan Documents" ................................ 6
"Other Obligations" ................................... 5
"Permitted Exceptions" ................................ 20
"Personal Property" ................................... 4
"person" .............................................. 47
"Policies" ............................................ 9
"Policy" .............................................. 9
"Principal" ........................................... 18
"Property" ............................................ 1, 47
"Qualified Insurer" ................................... 9
"Rating Agency" ....................................... 46
"Release" ............................................. 40
"Remediation" ......................................... 40
"Rents" ............................................... 2
"Securities" .......................................... 46
"Security Instrument" ................................. 1
"Taxes" ............................................... 12
"Uniform Commercial Code" ............................. 2
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
Index Page 2
THIS DEED OF TRUST AND SECURITY AGREEMENT (this "Security Instrument")
is made as of the 17 day of September, 1999, by TECHCOURT, LLC, a Virginia
limited liability company, having its principal place of business at c/o First
Potomac Realty Trust, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, #▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
("Borrower"), to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., a resident of Fairfax County, Virginia
("Trustee"), having an address c/o Tri-State Commercial Closings, Inc., ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, for the benefit of ▇▇▇▇▇▇ GUARANTY
TRUST COMPANY OF NEW YORK, a New York banking corporation, having its principal
place of business at ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, as
beneficiary ("Lender").
RECITALS:
Borrower by its Fixed Rate Note of even date herewith given to Lender
is indebted to Lender in the principal sum of $1,900,000.00 in lawful money of
the United States of America (such Fixed Rate Note, together with all
extensions, renewals, modifications, substitutions and amendments thereof, shall
collectively be referred to as the "Note"), with interest from the date thereof
at the rates set forth in the Note, principal and interest to be payable in
accordance with the terms and conditions provided in the Note, and with a
maturity date of October 1, 2029.
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 1 - GRANTS OF SECURITY
Section 1.1 - PROPERTY CONVEYED
Borrower does hereby irrevocably, unconditionally and
absolutely, grant, bargain, sell, pledge, enfeoff, assign, warrant, transfer and
convey to Trustee (with power of sale) in trust for the purposes herein set
forth, the following property, rights, interests and estates now owned, or
hereafter acquired, by Borrower (collectively, the "Property"):
(a) Land. The real property described in Exhibit A
attached hereto and made a part hereof (collectively, the "Land"), together with
additional lands, estates and development rights hereafter acquired by Borrower
for use in connection with the development, ownership or occupancy of such real
property, and all additional lands and estates therein which may, from time to
time, by supplemental deed of trust or otherwise be expressly made subject to
the lien of this Security Instrument;
(b) Improvements. The buildings, structures, fixtures,
additions, accessions, enlargements, extensions, modifications, repairs,
replacements and improvements now or hereafter erected or located on the Land
(the "Improvements");
(c) Easements. All easements, rights-of-way or use,
rights, strips and gores of land, streets, ways, alleys, passages, sewer rights,
water, water courses, water rights and powers, air rights and development
rights, and all estates, rights, titles, interests, privileges, liberties,
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
1
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, courtesy and rights of
courtesy, property, possession, claim and demand whatsoever, both at law and in
equity, of Borrower of, in and to the Land and the Improvements and every part
and parcel thereof, with the appurtenances thereto;
(d) Fixtures and Personal Property. All machinery,
equipment, goods, inventory, consumer goods, fixtures (including, but not
limited to, all heating, air conditioning, plumbing, lighting, communications
and elevator fixtures) and other property of every kind and nature whatsoever
owned by Borrower, or in which Borrower has or shall have an interest, now or
hereafter located upon the Land and the Improvements, or appurtenant thereto,
and usable in connection with the present or future use, maintenance, enjoyment,
operation and occupancy of the Land and the Improvements and all building
equipment, materials and supplies of any nature whatsoever owned by Borrower, or
in which Borrower has or shall have an interest, now or hereafter located upon
the Land and the Improvements, or appurtenant thereto, or usable in connection
with the present or future operation and occupancy of the Land and the
Improvements, and the right, title and interest of Borrower in and to any of the
Personal Property (as hereinafter defined) which may be subject to any security
interests, as defined in the Uniform Commercial Code, as adopted and enacted by
the state or states where any of the Property is located (the "Uniform
Commercial Code"), superior in lien to the lien of this Security Instrument and
all proceeds and products of the above;
(e) Leases and Rents. All leases and other agreements
affecting the use, enjoyment or occupancy of the Land and the Improvements
heretofore or hereafter entered into, whether before or after the filing by or
against Borrower of any petition for relief under 11 U.S.C. Section 101 et seq.,
as the same may be amended from time to time (the "Bankruptcy Code")
(individually, a "Lease"; collectively, the "Leases") and all right, title and
interest of Borrower, its successors and assigns therein and thereunder,
including, without limitation, cash or securities deposited thereunder to secure
the performance by the lessees of their obligations thereunder and all rents
(including all tenant security and other deposits), additional rents, revenues,
issues and profits (including all oil and gas or other mineral royalties and
bonuses) from the Land and the Improvements whether paid or accruing before or
after the filing by or against Borrower of any petition for relief under the
Bankruptcy Code (collectively the "Rents") and all proceeds from the sale or
other disposition of the Leases and the right to receive and apply the Rents to
the payment of the Debt;
(f) Condemnation Awards. All awards or payments,
including interest thereon, which may heretofore and hereafter be made with
respect to the Property, whether from the exercise of the right of eminent
domain (including but not limited to any transfer made in lieu of or in
anticipation of the exercise of the right), or for a change of grade, or for any
other injury to or decrease in the value of the Property;
(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
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
2
apply the proceeds of any insurance, judgments, or settlements made in lieu
thereof, for damage to the Property;
(h) Tax Certiorari. All refunds, rebates or credits in
connection with a reduction in real estate taxes and assessments charged against
the Property as a result of tax certiorari or any applications or proceedings
for reduction;
(i) Conversion. All proceeds of the conversion, voluntary
or involuntary, of any of the foregoing including, without limitation, proceeds
of insurance and condemnation awards, into cash or liquidation claims;
(j) Rights. The right, in the name and on behalf of
Borrower, to appear in and defend any action or proceeding brought with respect
to the Property and to commence any action or proceeding to protect the interest
of Trustee and/or Lender in the Property;
(k) Agreements. All agreements, contracts (including
purchase, sale, option, right of first refusal and other contracts pertaining to
the Property), certificates, instruments, franchises, permits, licenses,
approvals, consents, plans, specifications and other documents, now or hereafter
entered into, and all rights therein and thereto, respecting or pertaining to
the use, occupation, construction, management or operation of the Property
(including any Improvements or respecting any business or activity conducted on
the Land and any part thereof) and all right, title and interest of Borrower
therein and thereunder, including, without limitation, the right, upon the
happening of any default hereunder, to receive and collect any sums payable to
Borrower thereunder;
(1) Trademarks. All tradenames, trademarks, servicemarks,
logos, copyrights, goodwill, books and records and all other general intangibles
relating to or used in connection with the operation of the Property;
(m) Accounts. All accounts, accounts receivable, escrows
(including, without limitation, all escrows, deposits, reserves and impounds
established pursuant to that certain Escrow Agreement for Reserves and Impounds
of even date herewith between Borrower and Lender; hereinafter, the "Escrow
Agreement"), documents, instruments, chattel paper, claims, reserves (including
deposits) representations, warranties and general intangibles, as one or more of
the foregoing terms may be defined in the Uniform Commercial Code, and all
contract rights, franchises, books, records, plans, specifications, permits,
licenses (to the extent assignable), approvals, actions, choses, claims, suits,
proofs of claim in bankruptcy and causes of action which now or hereafter relate
to, are derived from or are used in connection with the Property, or the use,
operation, maintenance, occupancy or enjoyment thereof or the conduct of any
business or activities thereon (hereinafter collectively called the
"Intangibles"); and
(n) Other Rights. Any and all other rights of Borrower in
and to the Property and any accessions, renewals, replacements and substitutions
of all or any portion of the Property and all proceeds derived from the sale,
transfer, assignment or financing of the Property or any portion thereof.
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
3
Section 1.2 - ASSIGNMENT OF RENTS
Borrower hereby absolutely and unconditionally assigns to
Lender Borrower's right, title and interest in and to all current and future
Leases and Rents; it being intended by Borrower that this assignment constitutes
a present, absolute and unconditional assignment and not an assignment for
additional security only. Nevertheless, subject to the terms of this Section 1.2
and the terms and conditions of that certain Assignment of Rents and Leases, of
even date herewith between Borrower and Lender, Lender grants to Borrower a
revocable license to collect and receive the Rents. Borrower shall hold the
Rents, or a portion thereof sufficient to discharge all current sums due on the
Debt, for use in the payment of such sums.
Section 1.3 - DEFINITION OF PERSONAL PROPERTY
For purposes of this Security Instrument, the Property
identified in Subsections 1.1(d) through 1.1(n), inclusive, shall be
collectively referred to herein as the "Personal Property."
Section 1.4 - PLEDGE OF MONIES HELD
Borrower hereby pledges to Lender any and all monies now or
hereafter held by Lender, including, without limitation, any sums deposited in
the Funds (as defined in the Escrow Agreement), all insurance proceeds described
in Section 3.2 and condemnation awards or payments described in Section 3.4, as
additional security for the Obligations until expended or applied as provided in
this Security Instrument.
CONDITIONS TO GRANT
TO HAVE AND TO HOLD the above granted and described Property unto and
to the use and benefit of Trustee, and the successors and assigns of Trustee,
forever;
PROVIDED, HOWEVER, these presents are upon the express condition that,
if Borrower shall well and truly pay to Lender the Debt at the time and in the
manner provided in the Note and this Security Instrument, shall well and truly
perform the Other Obligations as set forth in this Security Instrument and shall
well and truly abide by and comply with each and every covenant and condition
set forth herein and in the Note, these presents and the estate hereby granted
shall cease, terminate and be void; provided however, that Borrower's obligation
to indemnify and hold harmless Lender pursuant to the provisions hereof with
respect to matters relating to any period of time during which this Security
Instrument was in effect shall survive any such payment or release.
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
4
ARTICLE 2 - DEBT AND OBLIGATIONS SECURED
Section 2.1 - DEBT
This Security Instrument and the grants, assignments and
transfers made in Article 1 are given for the purpose of securing the following,
in such order of priority as Lender may determine in its sole discretion (the
"Debt"):
(a) the payment of the indebtedness evidenced by the Note
in lawful money of the United States of America;
(b) the payment of interest, default interest, late
charges and other sums, as provided in the Note, this Security Instrument or the
Other Loan Documents (as hereinafter defined);
(c) the payment of all other moneys agreed or provided to
be paid by Borrower in the Note, this Security Instrument or the Other Loan
Documents;
(d) the payment of all sums advanced pursuant to this
Security Instrument to protect and preserve the Property and the lien and the
security interest created hereby; and
(e) the payment of all sums advanced and costs and
expenses incurred by Lender in connection with the Debt or any 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.
Section 2.2 - OTHER OBLIGATIONS
This Security Instrument and the grants, assignments and
transfers made in Article 1 are also given for the purpose of securing the
following (the "Other Obligations"):
(a) the performance of all other obligations of Borrower
contained herein;
(b) the performance of each obligation of Borrower
contained in any other agreement given by Borrower to Lender which is for the
purpose of further securing the obligations secured hereby, and any amendments,
modifications and changes thereto; and
(c) the performance of each obligation of Borrower
contained in any renewal, extension, amendment, modification, consolidation,
change of, or substitution or replacement for, all or any part of the Note, this
Security Instrument or the Other Loan Documents.
Section 2.3 - DEBT AND OTHER OBLIGATIONS
Borrower's obligations for the payment of the Debt and the
performance of the Other Obligations shall be referred to collectively herein as
the "Obligations."
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
5
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 (as hereinafter
defined).
ARTICLE 3 - BORROWER COVENANTS
Borrower covenants and agrees that:
Section 3.1 - INCORPORATION BY REFERENCE
All the covenants, conditions and agreements contained in (a)
the Note, and (b) all and any of the documents other than the Note or this
Security Instrument now or hereafter executed by Borrower and/or others and by
or in favor of Lender in connection with the creation of the Obligations, the
payment of any other sums owed by Borrower to Lender or the performance of any
Obligations (collectively the "Other Loan Documents"), are hereby made a part of
this Security Instrument to the same extent and with the same force as if fully
set forth herein. The term "Loan Documents" as used herein shall individually
and collectively refer to the Note, this Security Instrument and the Other Loan
Documents; provided, however, that notwithstanding any provision of this
Security Instrument to the contrary, the Obligations of the indemnitor(s) under
that certain Environmental Indemnity Agreement of even date herewith executed by
Borrower and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (whether one
or more, "Indemnitor")] in favor of Lender (the "Environmental Indemnity") shall
not be deemed or construed to be secured by this Security Instrument or
otherwise restricted or affected by the foreclosure of the lien hereof or any
other exercise by Lender of its remedies hereunder or under any other Loan
Document, such Environmental Indemnity being intended by the signatories thereto
to be its (or their) unsecured obligation.
Section 3.2 - INSURANCE
(a) Borrower shall obtain and maintain, and shall pay all
premiums in accordance with Subsection 3.2(b) below for, insurance for Borrower
and the Property providing at least the following coverages:
(i) comprehensive all risk insurance (including,
without limitation, riot and civil commotion, vandalism, malicious mischief,
water, fire, burglary and theft) on the Improvements and the Personal Property
and in each case (A) in an amount equal to the lesser of the principal balance
of the Note or 100% of the "Full Replacement Cost", which for purposes of
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
6
this Security Instrument shall mean actual replacement value (exclusive of costs
of excavations, foundations, underground utilities and footings) with a waiver
of depreciation; (B) containing an agreed amount endorsement with respect to the
Improvements and Personal Property waiving all co-insurance provisions; (C)
providing that the deductible shall not exceed the lesser of $10,000.00 or one
percent (1%) of the face value of the policy; and (D) containing Demolition
Costs, Increased Cost of Construction and "Ordinance or Law Coverage" or
"Enforcement" endorsements if any of the Improvements or the use of the Property
shall at any time constitute legal non-conforming structures or uses or the
ability to rebuild the Improvements is restricted or prohibited. The Full
Replacement Cost may be redetermined from time to time by an appraiser or
contractor designated and paid by Lender or by an engineer or appraiser in the
regular employ of the insurer. No omission on the part of Lender to request any
such appraisals shall relieve Borrower of any of its obligations under this
Subsection;
(ii) comprehensive general liability insurance
against claims for personal injury, bodily injury, death or property damage
occurring upon, in or about the Property, such insurance (A) to be on the
so-called "occurrence" form with a combined single limit of not less than
$1,000,000.00 and not less than $3,000,000.00 if the Property has one or more
elevators, as well as liquor liability insurance in a minimum amount of
$2,000,000.00 if any part of the Property is covered by a liquor license; (B) to
continue at not less than the aforesaid limit until required to be changed by
Lender in writing by reason of changed economic conditions making such
protection inadequate; (C) to cover at least the following hazards: (1) premises
and operations; (2) products and completed operations on an "if any" basis; (3)
independent contractors; (4) blanket contractual liability for all written and
oral contracts; (5) contractual liability covering the indemnities contained in
Article 11 hereof to the extent the same is available; and (D) to be without
deductible;
(iii) business income insurance (A) with loss
payable to Lender; (B) covering losses of income and Rents derived from the
Property and any non-insured property on or adjacent to the Property resulting
from any risk or casualty whatsoever; (C) containing an extended period of
indemnity endorsement which provides that after the physical loss to the
Improvements and Personal Property has been repaired, the continued loss of
income will be insured until such income either returns to the same level it was
at prior to the loss, or the expiration of eighteen (18) months from the date of
the loss, whichever first occurs, and notwithstanding that the policy may expire
prior to the end of such period; and (D) in an amount equal to 100% of the
projected gross income from the Property for a period of eighteen (18) months.
The amount of such business income insurance shall be determined by Lender prior
to the date hereof and at least once each year thereafter based on Borrower's
reasonable estimate of the gross income from the Property for the succeeding
eighteen (18) month period. All insurance proceeds payable to Lender pursuant to
this Subsection 3.2(a) shall be held by Lender and shall be applied to the
obligations secured hereunder from time to time due and payable hereunder and
under the Note; provided, however, that nothing herein contained shall be deemed
to relieve Borrower of its obligations to pay the obligations secured hereunder
on the respective dates of payment provided for in the Note except to the extent
such amounts are actually paid out of the proceeds of such business income
insurance;
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
7
(iv) at all times during which structural
construction, repairs or alterations are being made with respect to the
Improvements: (A) owner's contingent or protective liability insurance covering
claims not covered by or under the terms or provisions of the above mentioned
commercial general liability insurance policy; and (B) the insurance provided
for in Subsection 3.2(a)(i) written in a so-called builder's risk completed
value form (1) on a non-reporting basis, (2) against all risks insured against
pursuant to Subsection 3.2(a)(i), (3) including permission to occupy the
Property, and (4) with an agreed amount endorsement waiving co-insurance
provisions;
(v) workers' compensation, subject to the
statutory limits of the state in which the Property is located, and employer's
liability insurance with a limit of at least $1,000,000.00 per accident and per
disease per employee, and $1,000,000.00 for disease aggregate in respect of any
work or operations on or about the Property, or in connection with the Property
or its operation (if applicable);
(vi) if required by Lender, and if available in
the area where the Property is located, earthquake of sinkhole insurance in the
amount reasonably required by Lender;
(vii) comprehensive boiler and machinery insurance
(without exclusion for explosion), if applicable, in amounts as shall be
reasonably required by Lender and covering all boilers or other pressure
vessels, machinery and equipment located at or about the Property (including,
without limitation, electrical equipment, sprinkler systems, heating and air
conditioning equipment, refrigeration equipment and piping);
(viii) flood hazard insurance' if any portion of
the Improvements is currently or at any time in the future located in a
federally designated "special flood hazard area," flood hazard insurance in an
amount equal to the lesser of (a) the outstanding principal balance of the Note,
(b) the Full Replacement Cost, or (c) the maximum amount of such insurance
available 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; and
(ix) such other insurance and in such amounts as
Lender from time to time may reasonably request against such other insurable
hazards which at the time are commonly insured against for property similar to
the Property located in or around the region in which the Property is located,
including, without limitation, earthquake insurance (in the event the Property
is located in an area with a high degree of seismic activity), mine subsidence
insurance and environmental insurance.
(b) All insurance provided for in Subsection 3.2(a)
hereof shall be obtained under valid and enforceable policies (the "Policies" or
in the singular, the "Policy"), in such forms and, from time to time after the
date hereof, in such amounts as may from time to time be satisfactory to Lender,
issued by financially sound and responsible insurance companies authorized to do
business in the state in which the Property is located as admitted or unadmitted
carriers which, in either case, have been approved by Lender and which have a
general policy.
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
8
rating of A- or better and a financial class of VIII or better by A.M. Best Co.
or claims paying ability rating of A or better issued by Standard & Poor's
Ratings Group (each such insurer shall be referred to below as a "Qualified
Insurer"). Such Policies shall not be subject to invalidation due to the use or
occupancy of the Property for purposes more hazardous than the use of the
Property at the time such Policies were issued. Not less than thirty (30) days
prior to the expiration dates of the Policies theretofore furnished to Lender
pursuant to Subsection 3.2(a), certified copies of the Policies marked "premium
paid" or accompanied by evidence satisfactory to Lender of payment of the
premiums due thereunder (the "Insurance Premiums"), shall be delivered by
Borrower to Lender; provided, however, that in the case of renewal Policies,
Borrower may furnish Lender with binders therefor to be followed by the original
Policies when issued.
(c) Borrower shall not obtain (i) separate insurance
concurrent in form or contributing in the event of loss with that required in
Subsection 3.2(a) to be furnished by, or which may be reasonably required to be
furnished by, Borrower, or (ii) any umbrella or blanket liability or casualty
Policy unless, in each case, Lender's interest is included therein as provided
in this Security Instrument and such Policy is issued by a Qualified Insurer. If
Borrower obtains separate insurance or an umbrella or a blanket Policy, Borrower
shall notify Lender of the same and shall cause certified copies of each Policy
to be delivered as required in Subsection 3.2(a). Any blanket insurance Policy
shall specifically allocate to the Property the amount of coverage from time to
time required hereunder and shall otherwise provide the same protection as would
a separate Policy insuring only the Property in compliance with the provisions
of Subsection 3.2(a).
(d) All Policies of insurance provided for or
contemplated by Subsection 3.2(a) shall name Lender, its successors and assigns,
including any servicers, trustees or other designees of Lender, and Borrower as
the insured or additional insured, as their respective interests may appear, and
in the case of property damage, boiler and machinery, and flood insurance, shall
contain a so-called New York standard non-contributing Lender clause in favor of
Lender providing that the loss thereunder shall be payable to Lender.
(e) All Policies of insurance provided for in Subsection
3.2(a) shall contain clauses or endorsements to the effect that:
(i) no act or negligence of Borrower, or anyone
acting for Borrower, or of any tenant under any Lease or other occupant, or
failure to comply with the provisions of any Policy which might otherwise result
in a forfeiture of the insurance or any part thereof, shall in any way affect
the validity or enforceability of the insurance insofar as Lender is concerned;
(ii) the Policy shall not be materially changed
(other than to increase the coverage provided on the Property thereby) or
canceled without at least thirty (30) days' prior written notice to Lender and
any other party named therein as an insured;
(iii) each Policy shall provide that the issuers
thereof shall give written notice to Lender if the Policy has not been renewed
thirty (30) days prior to its expiration; and
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
9
(iv) Lender shall not be liable for any Insurance
Premiums thereon or subject to any assessments thereunder.
(f) Borrower shall furnish to Lender within ten (10)
calendar days after Lender's request therefor, a statement certified by Borrower
or a duly authorized officer of Borrower of the amounts of insurance maintained
in compliance herewith, of the risks covered by such insurance and of the
insurance company or companies which carry such insurance and, if requested by
Lender, verification of the adequacy of such insurance by an independent
insurance broker or appraiser acceptable to Lender.
(g) If at any time Lender is not in receipt of written
evidence that all insurance required hereunder is in full force and effect,
Lender shall have the right but not the obligation, without notice to Borrower,
to take such action as Lender deems necessary to protect its interest in the
Property, including, without limitation, the obtaining of such insurance
coverage as Lender in its sole discretion deems appropriate, and all expenses
incurred by Lender in connection with such action or in obtaining such insurance
and keeping it in effect shall be paid by Borrower to Lender upon demand and
until paid shall be secured by this Security Instrument and shall bear interest
at the Default Rate (as hereinafter defined).
(h) If the Property shall be damaged or destroyed, in
whole or in part, by fire or other casualty, Borrower shall give prompt notice
thereof to Lender.
(i) In case of loss covered by Policies, Lender
may either (1) settle and adjust any claim without the consent of Borrower, or
(2) allow Borrower to agree with the insurance company or companies on the
amount to be paid upon the loss; provided, that Borrower may adjust losses
aggregating not in excess of $100,000.00 if such adjustment is carried out in a
competent and timely manner, and provided that in any case Lender shall and is
hereby authorized to collect and receive any such insurance proceeds; and the
expenses incurred by Lender in the adjustment and collection of insurance
proceeds shall become part of the Debt and be secured hereby and shall be
reimbursed by Borrower to Lender upon demand (unless deducted by and reimbursed
to Lender from such proceeds). Notwithstanding the foregoing, provided there has
been no Event of Default (hereinafter defined), if the potential loan proceeds
exceed the outstanding principal amount of the Loan then Borrower may settle and
adjust any such claim.
(ii) In the event of any insured damage to or
destruction of the Property or any part thereof (herein called an "Insured
Casualty"), if (A) in the reasonable judgment of Lender, the Property can be
restored within Nine Months after insurance proceeds are made available to an
economic unit not less valuable (including an assessment by Lender of the impact
of the termination of any Leases due to such Insured Casualty) and not less
useful than the same was prior to the Insured Casualty, and after such
restoration will adequately secure the outstanding balance of the Debt, and (B)
no Event of Default (hereinafter defined) shall have occurred and be then
continuing, then the proceeds of insurance shall be applied to reimburse
Borrower for the cost of restoring, repairing, replacing or rebuilding the
Property or part thereof subject to Insured Casualty, as provided below; and
Borrower hereby covenants and agrees forthwith to commence and diligently to
prosecute such restoring, repairing, replacing or
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
10
rebuilding; provided, however, in any event Borrower shall pay all costs (and if
required by Lender, Borrower shall deposit the total thereof with Lender in
advance) of such restoring, repairing, replacing or rebuilding in excess of the
net proceeds of insurance made available pursuant to the terms hereof.
(iii) Except as provided above, the proceeds of
insurance collected upon any Insured Casualty shall, at the option of Lender in
its sole discretion, be applied to the payment of the Debt or applied to
reimburse Borrower for the cost of restoring, repairing, replacing or rebuilding
the Property or part thereof subject to the Insured Casualty, in the manner set
forth below. Any such application to the Debt shall not be considered a
voluntary prepayment requiring payment of the prepayment consideration provided
in the Note, and shall not reduce or postpone any payments otherwise required
pursuant to the Note, other than the final payment on the Note.
(iv) If proceeds of insurance, if any, are made
available to Borrower for the restoring, repairing, replacing or rebuilding of
the Property, Borrower hereby covenants to restore, repair, replace or rebuild
the same to be of at least equal value and of substantially the same character
as prior to such damage or destruction, all to be effected in accordance with
applicable law and plans and specifications approved in advance by Lender.
(v) If Borrower is entitled to reimbursement out
of insurance proceeds held by Lender, such proceeds shall be disbursed from time
to time upon Lender being furnished with (1) evidence satisfactory to it (which
evidence may include inspection[s] of the work performed) that the restoration,
repair, replacement and rebuilding covered by the disbursement has been
completed in accordance with plans and specifications approved by Lender, (2)
evidence satisfactory to it of the estimated cost of completion of the
restoration, repair, replacement and rebuilding, (3) funds, or, at Lender's
option, assurances satisfactory to Lender that such funds are available,
sufficient in addition to the proceeds of insurance to complete the proposed
restoration, repair, replacement and rebuilding, and (4) such architect's
certificates, waivers of lien, contractor's sworn statements, title insurance
endorsements, bonds, plats of survey and such other evidences of cost, payment
and performance as Lender may reasonably require and approve; and Lender may, in
any event, require that all plans and specifications for such restoration,
repair, replacement and rebuilding be submitted to and approved by Lender prior
to commencement of work. With respect to disbursements to be made by Lender: (A)
no payment made prior to the final completion of the restoration, repair,
replacement and rebuilding shall exceed ninety percent (90%) of the value of the
work performed from time to time; (B) funds other than proceeds of insurance
shall be disbursed prior to disbursement of such proceeds; and (C) at all times,
the undisbursed balance of such proceeds remaining in the hands of Lender,
together with funds deposited for that purpose or irrevocably committed to the
satisfaction of Lender by or on behalf of Borrower for that purpose, shall be at
least sufficient in the reasonable judgment of Lender to pay for the cost of
completion of the restoration, repair, replacement or rebuilding, free and clear
of all liens or claims for lien and the costs described in Subsection 3.2(h)(vi)
below. Any surplus which may remain out of insurance proceeds held by Lender
after payment of such costs of restoration, repair, replacement or rebuilding
shall be paid to any party entitled thereto. In no event shall Lender assume any
duty or obligation for the adequacy, form
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
11
or content of any such plans and specifications, nor for the performance,
quality or workmanship of any restoration, repair, replacement and rebuilding.
(vi) Notwithstanding anything to the contrary
contained herein, the proceeds of insurance reimbursed to Borrower in accordance
with the terms and provisions of this Security Instrument shall be reduced by
the reasonable costs (if any) incurred by Lender in the adjustment and
collection thereof and in the reasonable costs incurred by Lender of paying out
such proceeds (including, without limitation, reasonable attorneys' fees and
costs paid to third parties for inspecting the restoration, repair, replacement
and rebuilding and reviewing the plans and specifications therefor).
Section 3.3 - PAYMENT OF TAXES, ETC.
(a) Borrower shall pay all taxes, assessments, water
rates, sewer rents, governmental impositions, and other charges, including
without limitation, vault charges and license fees for the use of vaults, chutes
and similar areas adjoining the Land, now or hereafter levied or assessed or
imposed against the Property or any part thereof (the "Taxes"), all ground
rents, maintenance charges and similar charges, now or hereafter levied or
assessed or imposed against the Property or any part thereof (the "Other
Charges"), and all charges for utility services provided to the Property as same
become due and payable. Borrower will deliver to Lender, promptly upon Lender's
request, evidence satisfactory to Lender that the Taxes, Other Charges and
utility service charges have been so paid or are not then delinquent. Borrower
shall not allow and shall promptly cause to be paid and discharged any lien or
charge whatsoever which may be or become a lien or charge against the Property.
Except to the extent sums sufficient to pay all Taxes and Other Charges have
been deposited with Lender in accordance with the terms of this Security
Instrument, Borrower shall furnish to Lender paid receipts for the payment of
the Taxes and Other Charges prior to the date the same shall become delinquent.
(b) After prior written notice to Lender, Borrower, at
its own expense, may contest by appropriate legal proceeding, promptly initiated
and conducted in good faith and with due diligence, the amount or validity or
application in whole or in part of any of the Taxes, provided that (i) no Event
of Default has occurred and is continuing under the Note, this Security
Instrument or any of the Other Loan Documents, (ii) Borrower is permitted to do
so under the provisions of any other mortgage, deed of trust or deed to secure
debt affecting the Property, (iii) such proceeding shall suspend the collection
of the Taxes from Borrower and from the Property or Borrower shall have paid all
of the Taxes under protest, (iv) such proceeding shall be permitted under and be
conducted in accordance with the provisions of any other instrument to which
Borrower is subject and shall not constitute a default thereunder, (v) neither
the Property nor any part thereof or interest therein will be in danger of being
sold, forfeited, terminated, canceled or lost, (vi) Borrower shall have set
aside and deposited with Lender adequate reserves for the payment of the Taxes,
together with all interest and penalties thereon, unless Borrower has paid all
of the Taxes under protest, and (vii) Borrower shall have furnished the security
as may be required in the proceeding, or as may be requested by Lender to insure
the payment of any contested Taxes, together with all interest and penalties
thereon.
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
12
Section 3.4 - CONDEMNATION
(a) Borrower shall promptly give Lender notice of the
actual or threatened commencement of any condemnation or eminent domain
proceeding and shall deliver to Lender copies of any and all papers served in
connection with such proceedings. Lender is hereby irrevocably appointed as
Borrower's attorney-in-fact, coupled with an interest, with exclusive power to
collect, receive and retain any award or payment for said condemnation or
eminent domain and to make any compromise or settlement in connection with such
proceeding, subject to the provisions of this Security Instrument.
Notwithstanding any taking by any public or quasi-public authority through
eminent domain or otherwise (including but not limited to any transfer made in
lieu of or in anticipation of the exercise of such taking), Borrower shall
continue to pay the Debt at the time and in the manner provided for its payment
in the Note and in this Security Instrument and the Debt shall not be reduced
until any award or payment therefor shall have been actually received and
applied by Lender, after the deduction of expenses of collection, to the
reduction or discharge of the Debt. Lender shall not be limited to the interest
paid on the award by the condemning authority but shall be entitled to receive
out of the award interest at the rate or rates provided herein or in the Note.
Borrower shall cause the award or payment made in any condemnation or eminent
domain proceeding, which is payable to Borrower, to be paid directly to Lender.
Lender may apply any award or payment to the reduction or discharge of the Debt
whether or not then due and payable (such application to be free from any
prepayment consideration provided in the Note, except that if an Event of
Default, or an event which with notice and/or the passage of time, or both,
would constitute an Event of Default, has occurred, then such application shall
be subject to the full prepayment consideration computed in accordance with the
Note). If the Property is sold, through foreclosure or otherwise, prior to the
receipt by Lender of the award or payment, Lender shall have the right, whether
or not a deficiency judgment on the Note shall have been sought, recovered or
denied, to receive the award or payment, or a portion thereof sufficient to pay
the Debt.
Section 3.5 - USE AND MAINTENANCE OF PROPERTY
Borrower shall cause the Property to be maintained and
operated in a good and safe condition and repair and in keeping with the
condition and repair of properties of a similar use, value, age, nature and
construction. Borrower shall not use, maintain or operate the Property in any
manner which constitutes a public or private nuisance or which makes void,
voidable, or cancelable, or increases the premium of, any insurance then in
force with respect thereto. The Improvements and the Personal Property shall not
be removed, demolished or materially altered (except for normal replacement of
the Personal Property or system elements of the Improvements with items of the
same utility and of equal or greater value and non-structural alterations in
connection with tenant improvements under leases approved by Lender or for which
Lender's approval is not required under this Security Instrument) without the
prior written consent of Lender. Borrower shall promptly repair, replace or
rebuild any part of the Property which may be destroyed by any casualty, or
become damaged, worn or dilapidated or which may be affected by any proceeding
of the character referred to in Section 3.4 hereof and shall complete and pay
for any structure at any time in the process of construction or repair on the
Land. Borrower shall not initiate, join in or consent to any change in any
private restrictive covenant, zoning law or other public or private restriction,
limiting or defining the uses which
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
13
may be made of the Property or any part thereof which would decrease the value
of the Property. If under applicable zoning provisions the use of all or any
portion of the Property is or shall become a nonconforming use, Borrower will
not cause or permit the nonconforming use to be discontinued or abandoned
without the express written consent of Lender unless there are replacement
tenants with conforming uses.
Borrower shall not take any steps whatsoever to convert the Property, or any
portion thereof, to a condominium or cooperative form of management.
Section 3.6 - WASTE
Borrower shall not commit or suffer any waste of the Property
or, without first obtaining such additional insurance as may be necessary to
cover a proposed change in use of the Property, make any change in the use of
the Property which will in any way materially increase the risk of fire or other
hazard arising out of the operation of the Property, or take any action that
might invalidate or give cause for cancellation of any Policy, or do or permit
to be done thereon anything that may in any way impair the value of the Property
or the security of this Security Instrument. Borrower will not, without the
prior written consent of Lender, permit any drilling or exploration for or
extraction, removal, or production of any minerals from the surface or the
subsurface of the Land, regardless of the depth thereof or the method of mining
or extraction thereof.
Section 3.7 - COMPLIANCE WITH LAWS; ALTERATIONS
(a) Borrower shall promptly comply with all existing and
future federal, state and local laws, orders, ordinances, governmental rules and
regulations or court orders affecting or which may be interpreted to affect the
Property, or the use thereof, including, but not limited to, the Americans with
Disabilities Act (the "ADA") (collectively "Applicable Laws").
(b) Notwithstanding any provisions set forth herein or in
any document regarding Lender's approval of alterations of the Property,
Borrower shall not alter the Property in any manner which would increase
Borrower's responsibilities for compliance with Applicable Laws without the
prior written approval of Lender. Lender's approval of the plans,
specifications, or working drawings for alterations of the Property shall create
no responsibility or liability on behalf of Lender for their completeness,
design, sufficiency or their compliance with Applicable Laws. The foregoing
shall apply to tenant improvements constructed by Borrower or by any of its
tenants. Lender may condition any such approval upon receipt of a certificate of
compliance with Applicable Laws from an independent architect, engineer, or
other person acceptable to Lender.
(c) Borrower shall give prompt notice to Lender of the
receipt by Borrower of any notice related to a violation of any Applicable Laws
and of the commencement of any proceedings or investigations which relate to
compliance with Applicable Laws.
(d) Borrower shall take appropriate measures to prevent
and will not engage in or knowingly permit any illegal activities at the
Property.
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
14
Section 3.8 - BOOKS AND RECORDS
(a) Borrower shall keep accurate books and records of
account in accordance with sound accounting principles in which full, true and
correct entries shall be promptly made with respect to Borrower, the Property
and the operation thereof, and will permit all such books and records (including
without limitation all contracts, statements, invoices, bills and claims for
labor, materials and services supplied for the construction, repair or operation
to Borrower of the Improvements) to be inspected or audited and copies made by
Lender and its representatives during normal business hours and at any other
reasonable times upon reasonable advance written notice except in emergencies.
Borrower represents that its chief executive office is as set forth in the
introductory paragraph of this Security Instrument and that all books and
records pertaining to the Property are maintained at the Property or such other
location as may be expressly disclosed to Lender in writing. Borrower will
furnish, or cause to be furnished, to Lender on or before forty-five (45)
calendar days after the end of each calendar quarter the following items, each
certified by Borrower as being true and correct, in such format and in such
detail as Lender or its servicer may request:
(i) a written statement (rent roll) dated as of
the last day of each such calendar quarter identifying each of the Leases by the
term, space occupied, rental required to be paid (including percentage rents and
tenant sales), security deposit paid, any rental concessions, all rent
escalations, any rents paid more than one (1) month in advance, any special
provisions or inducements granted to tenants, any taxes, maintenance and other
common charges paid by tenants, all vacancies and identifying any defaults or
payment delinquencies thereunder; and
(ii) quarterly and year-to-date operating
statements prepared for each calendar quarter during each such reporting period
detailing the total revenues received, total expenses incurred, total cost of
all capital improvements, total debt service and total cash flow.
(b) Within ninety (90) calendar days following the end of
each calendar year, Borrower shall furnish a statement of the financial affairs
and condition of the Borrower and the Property including a statement of profit
and loss for the Property in such format and in such detail as Lender or its
servicer may request, and setting forth the financial condition and the income
and expenses for the Property for the immediately preceding calendar year
prepared by an independent certified public accountant. Borrower shall deliver
to Lender copies of all income tax returns, requests for extension and other
similar items contemporaneously with its delivery of same to the Internal
Revenue Service.
(c) Borrower will permit representatives appointed by
Lender, including independent accountants, agents, attorneys, appraisers and any
other persons, upon reasonable advance notice except in emergencies, subject to
the rights of tenants, to visit and inspect during its normal business hours and
at any other reasonable times any of the Property and to make photographs
thereof, and to write down and record any information such representatives
obtain, and shall permit Lender or its representatives to investigate and verify
the accuracy of the information furnished to Lender under or in connection with
this Security Instrument or any of the Other Loan Documents and to discuss all
such matters with its officers, employees and representatives. Borrower will
furnish to Lender at Borrower's expense all evidence which
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
15
Lender may from time to time reasonably request as to the accuracy and validity
of or compliance with all representations and warranties made by Borrower in the
Loan Documents and satisfaction of all conditions contained therein. Any
inspection or audit of the Property or the books and records of Borrower, or the
procuring of documents and financial and other information, by or on behalf of
Lender, shall be for Lender's protection only, and shall not constitute any
assumption of responsibility or liability by Lender to Borrower or anyone else
with regard to the condition, construction, maintenance or operation of the
Property, nor Lender's approval of any certification given to Lender nor relieve
Borrower of any of Borrower's obligations.
Section 3.9 - PAYMENT FOR LABOR AND MATERIALS
Borrower will promptly pay when due all bills and costs for
labor, materials, and specifically fabricated materials incurred in connection
with the Property and never permit to exist beyond the due date thereof in
respect of the Property or any part thereof any lien or security interest, even
though inferior to the liens and the security interests hereof, and in any event
never permit to be created or exist in respect of the Property or any part
thereof any other or additional lien or security interest other than the liens
or security interests hereof, except for the Permitted Exceptions (as
hereinafter defined).
Section 3.10 - PERFORMANCE OF OTHER AGREEMENTS
Borrower shall observe and perform each and every term to be
observed or performed by Borrower pursuant to the terms of any agreement or
recorded instrument affecting or pertaining to the Property, or given by
Borrower to Lender for the purpose of further securing an obligation secured
hereby and any amendments, modifications or changes thereto.
ARTICLE 4 - SPECIAL COVENANTS
Borrower covenants and agrees that:
Section 4.1 - PROPERTY USE
The Property shall be used only for office/warehouse purposes,
and for no other use without the prior written consent of Lender, which consent
may be withheld in Lender's sole and absolute discretion.
Section 4.2 - ERISA
(a) It shall not engage in any transaction which would
cause any obligation, or action taken or to be taken, hereunder (or the exercise
by Lender of any of its rights under the Note, this Security Instrument and the
Other Loan Documents) to be a non-exempt (under a statutory or administrative
class exemption) prohibited transaction under the Employee Retirement Income
Security Act of 1974, as amended ("ERISA").
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
16
(b) It shall deliver to Lender such certifications or
other evidence from time to time throughout the term of the Security Instrument,
as requested by Lender in its sole discretion, that (i) Borrower is not an
"employee benefit plan" as defined in Section 3(3) of ERISA, which is subject to
Title I of ERISA, or a "governmental plan" within the meaning of Section 3(32)
of ERISA; (ii) Borrower is not subject to state statutes regulating investments
and fiduciary obligations with respect to governmental plans; and (iii) one or
more of the following circumstances is true:
(i) Equity interests in Borrower are publicly
offered securities, within the meaning of 29 C.F.R. Section 2510.3-101(b)(2);
(ii) Less than twenty-five percent (25%) of each
outstanding class of equity interests in Borrower are held by "benefit plan
investors" within the meaning of 29 C.F.R. Section 2510.3-101(f)(2); or
(iii) Borrower qualifies as an "operating company"
or a "real estate operating company" within the meaning of 29 C.F.R. Section
2510.3-101 (c) or (e) or an investment company registered under The Investment
Company Act of 1940.
Section 4.3 - SINGLE PURPOSE ENTITY
Borrower covenants and agrees that it has not and shall not:
(a) engage in any business or activity other than the
acquisition, ownership, operation and maintenance of the Properly, and
activities incidental thereto;
(b) acquire or own any material asset other than (i) the
Property, and (ii) such incidental Personal Property as may be necessary for the
operation of the Property;
(c) Merge into or consolidate with any person or entity
or dissolve, terminate or liquidate in whole or in part, transfer or otherwise
dispose of all or substantially all of its assets or change its legal structure,
without in each case Lender's consent;
(d) fail to preserve its existence as an entity duly
organized, validly existing and in good standing (if applicable) under the laws
of the jurisdiction of its organization or formation, or without the prior
written consent of Lender, amend, modify, terminate or fail to comply with the
provisions of Borrower's Partnership Agreement, Articles or Certificate of
Incorporation, Articles of Organization, Operating Agreement or similar
organizational documents, as the case may be;
(e) own any subsidiary or make any investment in or
acquire the obligations or securities of any other person or entity without the
consent of Lender;
(f) commingle its assets with the assets of any of its
general partner(s), if Borrower is a partnership, its managing members, if
Borrower is a limited liability company, or
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
17
its principal shareholders, if Borrower is a corporation (in each case,
"Principal"), affiliates, or of any other person or entity;
(g) incur any debt, secured or unsecured, direct or
contingent (including guaranteeing any obligation), other than the Debt, except
unsecured trade and operational debt incurred with trade creditors in the
ordinary course of its business of owning and operating the Property in such
amounts as are normal and reasonable under the circumstances, provided that such
debt is not evidenced by a note and is paid when due and provided in any event
the outstanding principal balance of such debt shall not exceed at any one time
one percent (1%) of the Outstanding Debt;
(h) fail to pay its debts and liabilities from its own
assets;
(i) fail to maintain its records, books of account and
bank accounts separate and apart from those of the general partners, members,
principals and affiliates of Borrower, the affiliates of a general partner or
member of Borrower, and any other person or entity;
(j) enter into any contract or agreement with any general
partner, member, principal or affiliate of Borrower, any guarantor of all or a
portion of the Debt (a "Guarantor") or Indemnitor, or any general partner,
member, principal or affiliate thereof, except upon terms and conditions that
are intrinsically fair and substantially similar to those that would be
available on an arms-length basis with third parties other than any general
partner, member, principal or affiliate of Borrower, Guarantor or Indemnitor, or
any general partner, member, principal or affiliate thereof;
(k) seek dissolution or winding up in whole, or in part;
(1) fail to correct any known misunderstandings regarding
the separate identity of Borrower;
(m) hold itself out to be responsible (or pledge its
assets as security) for the debts of another person;
(n) make any loans or loan advances to any third party,
excluding tenants in connection with leasehold improvements, including any
general partner, member, principal or affiliate of Borrower, or any general
partner, member, principal or affiliate thereof;
(o) fail to file its own tax returns as legally required
or to use separate invoices and checks;
(p) agree to, enter into or consummate any transaction
which would render Borrower unable to furnish the certification or other
evidence referred to in Subsection 4.2(b) hereof;
(q) fail either to hold itself out to the public as a
legal entity separate and distinct from any other entity or person or to conduct
its business solely in its own name in order not (i) to mislead others as to the
entity with which such other party is transacting business, or
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
18
(ii) to suggest that Borrower is responsible for the debts of any third party
(including any general partner, member, principal or affiliate of Borrower, or
any general partner, member, principal or affiliate thereof);
(r) fail to allocate fairly and reasonably among Borrower
and any third party (including, without limitation, any Guarantor) any overhead
for shared office space;
(s) fail to pay the salaries of its own employees and
maintain a sufficient number of employees for its contemplated business
operations;
(t) 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;
(u) file or consent to the filing of any petition, either
voluntary or involuntary, to take advantage of any applicable insolvency,
bankruptcy, liquidation or reorganization statute, or make an assignment for the
benefit of creditors; or
(v) 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, (ii) any affiliate of a general partner of
Borrower, or (iii) any other person or entity.
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES
Section 5.1 - BORROWER'S REPRESENTATIONS
Borrower represents and warrants to Lender that each of the
representations and warranties set forth in that certain Closing Certificate of
even date herewith executed by Borrower in favor of Lender are true and correct
as of the date hereof and are hereby incorporated and restated in this Security
Instrument by this reference.
Section 5.2 - WARRANTY OF TITLE
Borrower represents and warrants that it has good and
marketable title to the Property and has the right to grant, bargain, sell,
pledge, assign, warrant, transfer and convey the same and that Borrower
possesses an unencumbered fee simple absolute estate in the Land and the
Improvements and that it owns the Property free and clear of all liens,
encumbrances and charges whatsoever except for those exceptions shown in the
title insurance policy insuring the lien of this Security Instrument (the
"Permitted Exceptions"). Borrower shall, at its sole cost and expense, forever
warrant, defend and preserve the title and the validity and priority of the lien
of this Security Instrument and shall, at its sole cost and expense, forever
warrant and defend the same to Trustee and Lender against the claims of all
persons whomsoever.
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
19
Section 5.3 - STATUS OF PROPERTY
(a) No portion of the Improvements is located in an area
identified by the Secretary of Housing and Urban Development or any successor
thereto as an area having special flood hazards pursuant to the National Flood
Insurance Act of 1968 or the Flood Disaster Protection Act of 1973, as amended,
or any successor law, or, if located within any such area, Borrower has obtained
and will maintain the insurance prescribed in Section 3.2 hereof.
(b) Borrower has obtained all necessary certificates,
permits, licenses and other approvals, governmental and otherwise, necessary for
the use, occupancy and operation of the Property and the conduct of its business
(including, without limitation, certificates of completion and certificates of
occupancy) and all required zoning, building code, land use, environmental and
other similar permits or approvals, all of which are in full force and effect as
of the date hereof and not subject to revocation, suspension, forfeiture or
modification.
(c) The Property and the present and contemplated use and
occupancy thereof are to the best knowledge of Borrower in full compliance with
all Applicable Laws, including, without limitation, zoning ordinances, building
codes, land use and environmental laws, laws relating to the disabled
(including, but not limited to, the ADA) and other similar laws.
(d) The Property is served by all utilities required for
the current or contemplated use thereof. All utility service is provided by
public utilities and the Property has accepted or is equipped to accept such
utility service.
(e) All public roads and streets necessary for service of
and access to the Property for the current or contemplated use thereof Have been
completed, are serviceable and are physically and legally open for use by the
public.
(f) The Property is served by public water and sewer
systems.
(g) The Property is free from damage caused by fire or
other casualty. There is no pending or, to the best knowledge of Borrower,
threatened condemnation proceedings affecting the Property or any portion
thereof.
(h) All costs and expenses of any and all labor,
materials, supplies and equipment used in the construction of the Improvements
have been paid in full and no notice of any mechanics' or materialmen's liens or
of any claims of right to any such liens have been received.
(i) Borrower has paid in full for, and is the owner of,
all furnishings, fixtures and equipment (other than tenants' property) used in
connection with the operation of the Property, free and clear of any and all
security interests, liens or encumbrances, except the lien and security interest
created hereby.
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
20
(j) All liquid and solid waste disposal, septic and sewer
systems located on the Property are to the best knowledge of Borrower in a good
and safe condition and repair and in compliance with all Applicable Laws.
(k) All Improvements lie within the boundary of the Land.
Section 5.4 - NO FOREIGN PERSON
Borrower is not a "foreign person" within the meaning of
Section 1445(f)(3) of the Internal Revenue Code of 1986, as amended, and the
related Treasury Department regulations, including temporary regulations.
Section 5.5 - SEPARATE TAX LOT
The Property is assessed for real estate tax purposes as one
or more wholly independent tax lot or lots, separate from any adjoining land or
improvements not constituting a part of such lot or lots, and no other land or
improvements is assessed and taxed together with the Property or any portion
thereof.
ARTICLE 6 - OBLIGATIONS AND RELIANCES
Section 6.1 - RELATIONSHIP OF BORROWER AND LENDER
The relationship between Borrower and Lender is solely that of
debtor and creditor, and Lender has no fiduciary or other special relationship
with Borrower, and no term or condition of any of the Note, this Security
Instrument and the other Loan Documents shall be construed so as to deem the
relationship between Borrower and Lender to be other than that of debtor and
creditor.
Section 6.2 - NO RELIANCE ON LENDER
The general partners, members, principals and (if Borrower is
a trust) beneficial owners of Borrower are experienced in the ownership and
operation of properties similar to the Property, and Borrower and Lender are
relying solely upon such expertise and business plan in connection with the
ownership and operation of the Property. Borrower is not relying on Lender's
expertise, business acumen or advice in connection with the Property.
Section 6.3 - NO LENDER OBLIGATIONS
(a) Notwithstanding the provisions of Subsections 1.l(e)
and 1.1(1) or Section 1.2, Lender is not undertaking (i) any obligations under
the Leases; or (ii) any obligations with respect to such agreements, contracts,
certificates, instruments, franchises, permits, trademarks, licenses and other
documents.
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
21
(b) By accepting or approving anything required to be
observed, performed or fulfilled or to be given to Lender pursuant to this
Security Instrument, the Note or the Other Loan Documents, including without
limitation, any officer's certificate, balance sheet, statement of profit and
loss or other financial statement, survey, appraisal, or insurance policy,
Lender shall not be deemed to have warranted, consented to, or affirmed the
sufficiency, legality or effectiveness of same, and such acceptance or approval
thereof shall not constitute any warranty or affirmation with respect thereto by
Lender.
Section 6.4 - RELIANCE
Borrower recognizes and acknowledges that in accepting the
note, this Security Instrument and the Other Loan Documents, Lender is expressly
and primarily relying on the truth and accuracy of the warranties and
representations set forth in Article 5 and that certain Closing Certificate of
even date herewith executed by Borrower, without any obligation to investigate
the Property and notwithstanding any investigation of the Property by Lender;
that such reliance existed on the part of Lender prior to the date hereof; that
such warranties and representations are a material inducement to Lender in
accepting the Note, this Security Instrument and the Other Loan Documents; and
that Lender would not be willing to make the Loan (as hereinafter defined) and
accept this Security Instrument in the absence of the warranties and
representations as set forth in Article 5 and such Closing Certificate.
ARTICLE 7 - FURTHER ASSURANCES
Section 7.1 - RECORDING FEES
Borrower will pay all taxes, filing, registration or recording
fees, and all expenses incident to the preparation, execution, acknowledgment
and/or recording of the Note, this Security Instrument, the Other Loan
Documents, any note or deed of trust supplemental hereto, any security
instrument with respect to the Property and any instrument of further assurance,
and any modification or amendment of 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 deliver of this Security
Instrument, any deed of trust supplemental hereto, any security instrument with
respect to the Property or any instrument of further assurance, and any
modification or amendment of the foregoing documents, except where prohibited by
law so to do.
Section 7.2 - FURTHER ACTS
Borrower will, at the cost of Borrower, and without expense to
Lender, do, execute, acknowledge and deliver all and every such further acts,
deeds, conveyances, deeds of trust, assignments, notices of assignments,
transfers and assurances as Lender shall, from time to time, require, for the
better assuring, conveying, assigning, transferring, and confirming unto Lender
the property and rights hereby granted, bargained, sold, conveyed, confirmed,
pledged, assigned, warranted and transferred or intended now or hereafter so to
be, or which Borrower may be or may hereafter become bound to convey or assign
to Lender, or for carrying out the intention or facilitating the performance of
the terms of this Security Instrument or for filing,
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
22
registering or recording this Security Instrument, or for complying with all
Applicable Laws. Borrower, on demand, will execute and deliver and hereby
authorizes Lender to execute in the name of Borrower or without the signature of
Borrower to the extent Lender may lawfully do so, one or more financing
statements, chattel mortgages or other instruments, to evidence more effectively
the security interest of Lender in the Property. Borrower grants to Lender an
irrevocable power of attorney coupled with an interest for the purpose of
exercising and perfecting any and all rights and remedies available to Lender at
law and in equity, including without limitation such rights and remedies
available to Lender pursuant to this Section 7.2.
Section 7.3 - CHANGES IN TAX, DEBT CREDIT AND DOCUMENTARY
STAMP LAWS
(a) If any law is enacted or adopted or amended after the
date of this Security Instrument which imposes a tax, either directly or
indirectly, on the Debt or Lender's interest in the Property, requires revenue
or other stamps to be affixed to the Note, this Security Instrument, or the
Other Loan Documents, or imposes any other tax or charge on the same, Borrower
will pay the same, with interest and penalties thereon, if any. If Lender is
advised by counsel chosen by it that the payment of tax by Borrower would be
unlawful or taxable to Lender or unenforceable or provide the basis for a
defense of usury, then Lender shall have the option, by written notice of not
less than ninety (90) calendar days, to declare the Debt immediately due and
payable.
(b) Borrower will not claim or demand or be entitled to
any credit or credits on account of the Debt for any part of the Taxes or Other
Charges assessed against the Property, or any part thereof, and no deduction
shall otherwise be made or claimed from the assessed value of the Property, or
any part thereof, for real estate tax purposes by reason of this Security
Instrument or the Debt. If such claim, credit or deduction shall be required by
law, Lender shall have the option, by written notice of not less than ninety
(90) calendar days, to declare the Debt immediately due and payable.
Section 7.4 - CONFIRMATION STATEMENT
(a) After request by Lender, Borrower, within ten (10)
days, shall furnish Lender or any proposed assignee with a statement, duly
acknowledged and certified, confirming to Lender (or its designee) (i) the
amount of 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, and (vi) that, except as provided in such
statement, there are no defaults or events which with the passage of time or the
giving of notice or both, would constitute an event of default under the Note or
this Security Instrument; provided, however, Lender shall not be entitled
hereunder to receive more than one (1) such statement in each calendar year.
(b) Subject to the provisions of the Leases, Borrower
shall deliver to Lender, promptly upon request (but not more frequently than
once annually so long as Borrower is not in default hereunder), duly executed
estoppel certificates from any one or more lessees as required by Lender
attesting to such facts regarding the Lease as Lender may require, including but
not
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
23
limited to attestations that each Lease covered thereby is in full force and
effect with no defaults thereunder on the part of any party, that none of the
Rents have been paid more than one month in advance, and that the lessee claims
no defense or offset against the full and timely performance of its obligations
under the Lease.
(c) Upon any transfer or proposed transfer contemplated
by Section 16.1 hereof, at Lender's request, Borrower, any Guarantors and any
Indemnitors shall provide an estoppel certificate to the Investor (defined in
Section 16.1) or any prospective Investor in such form, substance and detail as
Lender, such Investor or prospective Investor may require.
Section 7.5 - [INTENTIONALLY OMITTED]
Section 7.6 - REPLACEMENT DOCUMENTS
Upon receipt of an affidavit of an officer of Lender as to the
loss, theft, destruction or mutilation of the Note or any Other Loan Document
which is not of public record, and, in the case of any such mutilation, upon
surrender and cancellation of such Note or Other Loan Document, Borrower, at its
expense, will issue, in lieu thereof, a replacement Note or Other Loan Document,
dated the date of such lost, stolen, destroyed or mutilated Note or Other Loan
Document in the same principal amount thereof and otherwise of like tenor.
ARTICLE 8 - DUE ON SALE/ENCUMBRANCE
Section 8.1 - LENDER RELIANCE
Borrower acknowledges that Lender has examined and relied on
the creditworthiness of Borrower and experience of Borrower and its general
partners, members, principals and (if Borrower is a trust) beneficial owners in
owning and operating properties such as the Property in agreeing to make the
Loan, and will continue to rely on Borrower's ownership of the Property as a
means of maintaining the value of the Property as security for repayment of the
Debt and the performance of the Other Obligations. Borrower acknowledges that
Lender has a valid interest in maintaining the value of the Property so as to
ensure that, should Borrower default in the repayment of the Debt or the
performance of the Other Obligations, Lender can recover the Debt by a sale of
the Property.
Section 8.2 - NO SALE/ENCUMBRANCE
(a) 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 permit the Property or any part thereof to be sold, conveyed, mortgaged,
granted, bargained, encumbered, pledged, assigned, or otherwise transferred.
Lender shall not be required to demonstrate any actual impairment of its
security or any increased risk of default hereunder in order to declare the Debt
immediately due and payable upon Borrower's sale, conveyance, mortgage, grant,
bargain, encumbrance, pledge, assignment, or transfer of the Property without
Lender's consent.
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
24
(b) Subsection 8.2(a) shall apply to: (i) an installment
sales agreement wherein Borrower agrees to sell the Property or any part thereof
for a price to be paid in installments; (ii) an agreement by Borrower leasing
all or a substantial part of the Property for other than actual occupancy by a
space tenant thereunder 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; (iii) if Borrower, Guarantor, or any general partner of
Borrower or Guarantor is a corporation, any merger, consolidation or the
voluntary or involuntary sale, conveyance or transfer 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 often percent
(10%) or more of such corporation's stock shall be vested in a party or parties
who are not now stockholders (provided, however, in no event shall this subpart
[iii] apply to any Guarantor whose stock, shares or partnership interests are
traded on a nationally recognized stock exchange); (iv) if Borrower, Guarantor,
or any general partner of Borrower or Guarantor is a limited liability company
or limited partnership, the voluntary or involuntary sale, conveyance or
transfer by which an aggregate of fifty percent (50%) or more of the ownership
interest in such limited liability company or fifty percent (50%) or more of the
limited partnership interests in such limited partnership shall be vested in
parties not having an ownership interest as of the date of this Security
Instrument; and (v) if Borrower, any Guarantor or any general partner of
Borrower or any Guarantor is a limited or general partnership or joint venture,
the change, removal or resignation of a general partner, managing partner or
joint venturer or the transfer of all or any portion of the partnership interest
of any general partner, managing partner or joint venturer.
Section 8.3 - EXCLUDED AND PERMITTED TRANSFERS
(a) A sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer within the meaning of this Article 8 shall not
include (i) transfers made by devise or descent or by operation of law upon the
death of a joint tenant, partner, member or shareholder, subject, however, to
all the following requirements: (A) written notice of any transfer under this
Section 8.3 , whether by will, trust or other written instrument, operation of
law or otherwise, is provided to Lender or its servicer, together with copies of
such documents relating to the transfer as Lender or its servicer may reasonably
request, (B) control over the management and operation of the Property is
retained by one or more of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
(the "Original Principals", whether one or more) at all times prior to the death
or legal incapacity of all the Original Principals and is thereafter assumed by
persons who are acceptable in all respects to Lender in its sole and absolute
discretion, (C) no such transfer by any of the Original Principals will release
the respective estate from any liability as a Guarantor, and (D) no such
transfer, death or other event has any adverse effect either on the
bankruptcy-remote status of Borrower under the requirements of any national
rating agency for the Securities (hereinafter defined) or on the status of
Borrower as a continuing legal entity liable for the payment of the Debt and the
performance of all other obligations secured hereby, (ii) transfers otherwise by
operation of law in the event of a bankruptcy, or (iii) a Lease of a portion of
the Property to a space tenant.
(b) Notwithstanding any provision of this Security
Instrument to the contrary, the prohibitions in Subsection 8.2(a) shall not
apply to (i) an inter vivos or testamentary transfer
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
25
of all or any portion of the Property to one or more family members of Original
Principals or a trust in which all of the beneficial interest is held by one or
more family members of Original Principals or a partnership or limited liability
company in which a majority of the capital and profits interests are held by one
or more family members of Original Principals, or (ii) any inter vivos or
testamentary transfer or issuance of capital stock in Borrower or the general
partner of Borrower to one or more family members of Original Principals a trust
in which all of the beneficial interest is held by one or more family members of
Original Principals or a partnership or limited liability company in which a
majority of the capital and profits interests are held by one or more family
members of Original Principals; provided, that any inter vivos transfer of all
or any portion of the Property or any inter vivos transfer or issuance of
capital stock in Borrower or Borrower's general partner is made in connection
with Original Principals' bona fide, good faith estate planning and that the
person(s) with voting control of Borrower or the management of the Property are
(i) the same person(s) who had such voting control and management rights
immediately prior to the transfer in question, or (ii) reasonably acceptable to
Lender. Lender acknowledges that Original Principals and/or an Original
Principal's spouse are acceptable to exercise voting control of Borrower and the
management of the Property. As used herein, "family members" shall include the
spouse, children and grandchildren and any lineal descendants.
(c) Notwithstanding the provisions of Section 8.2 above,
Lender will give its consent to a sale or transfer of Property, if (but only if)
no Event of Default under the Loan Documents has occurred and is continuing, and
if each of the following conditions precedent have been fully satisfied (as
determined in Lender's sole and absolute discretion): (i) the grantee's or
transferee's integrity, reputation, financial condition, character and
management ability are satisfactory to Lender in its sole discretion, and all
information relating thereto requested by Lender is delivered to Lender at least
30 days prior to the proposed transfer, (ii) the grantee's or transferee's (and
its sole general partner's) single purpose and bankruptcy remote character are
satisfactory to Lender in its sole discretion, and all information relating
thereto requested by Lender is delivered to Lender at least 30 days prior to the
proposed transfer, (iii) Lender has obtained such estoppels from any guarantors
of the Note or replacement guarantors and such other legal opinions, Securities
and similar matters as Lender may require, (iv) all of Lender's costs and
expenses associated with the sale or transfer (including reasonable attorneys'
fees) are paid by Borrower or the grantee or transferee, (v) the payment of a
transfer fee not to exceed 1% of the then unpaid principal balance of the loan
evidenced by the Note and secured hereby (the "Loan"), (vi) the execution and
delivery to Lender of a written assumption agreement and substitute guaranty (in
its sole and absolute discretion) and such modifications to the Loan Documents
executed by such parties and containing such terms and conditions as Lender may
require in its sole and absolute discretion prior to such sale or transfer
(provided that in the event the Loan is included in a REMIC and is a performing
Loan, no modification to the terms and conditions shall be made or permitted
that would cause (A) any adverse tax consequences to the REMIC or any holders of
any Mortgage-Backed Pass-Through Securities, (B) the Security Instrument to fail
to be a Qualifying Security Instrument under applicable federal law relating to
REMIC's, or (C) result in a taxation of the income from the Loan to the REMIC or
cause a loss of REMIC status), and (vii) the delivery to Lender of an
endorsement (at Borrower's sole cost and expense) to Lender's policy of title
insurance then insuring the ▇▇▇▇
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
26
created by this Security Instrument in form and substance acceptable to Lender
in its sole judgment.
(d) Without limiting the foregoing, if Lender shall
consent to any such transfer, the written assumption agreement described in
Subsection 8.3(c)(vi) above shall provide for the release of Borrower and, if
approved by Lender, each Guarantor and Indemnitor of personal liability under
the Note and Other Loan Documents, but as to acts or events occurring, or
obligations arising, after the closing of such transfer.
Section 8.4 - NO IMPLIED FUTURE CONSENT
Lender's consent to one sale, conveyance, alienation,
mortgage, encumbrance, pledge or transfer of the Property shall not be deemed to
be a waiver of Lender's right to require such consent to any future occurrence
of same. Any sale, conveyance, alienation, mortgage, encumbrance, pledge or
transfer of the Property made in contravention of this Article 8 shall be null
and void and of no force and effect.
Section 8.5 - COSTS OF CONSENT
Borrower agrees to bear and shall pay or reimburse Lender on
demand for all reasonable expenses (including, without limitation, all recording
costs, reasonable attorneys' fees and disbursements and title search costs)
incurred by Lender in connection with the review, approval and documentation of
any such sale, conveyance, alienation, mortgage, encumbrance, pledge or
transfer.
Section 8.6 - CONTINUING SEPARATENESS REQUIREMENTS
In no event shall any of the terms and provisions of this
Article 8 amend or modify the terms and provisions contained in Section 4.3
herein.
ARTICLE 9 - DEFAULT
Section 9.1 - EVENTS OF DEFAULT
The occurrence of any one or more of the following events
shall constitute an "Event of Default":
(a) if any portion of the Debt is not paid prior to the
tenth (1 Oth) calendar day after the same is due or if the entire Debt is not
paid on or before the maturity date, along with applicable prepayment premiums,
if any;
(b) if Borrower, or Principal, if applicable, violates or
does not comply with any of the provisions of Section 4.3 or Article 8;
(c) if any representation or warranty of Borrower or of
its members, general partners, principals, affiliates, agents or employees, or
of any Guarantor or Indemnitor made
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
27
herein or in the Environmental Indemnity or in any other Loan Document, in any
guaranty, or in any certificate, report, financial statement or other instrument
or document furnished to Lender shall have been false or misleading in any
material respect when made;
(d) if Borrower or any Guarantor or any Indemnitor shall
make an assignment for the benefit of creditors or if Borrower or any Guarantor
or Indemnitor shall admit in writing its inability to pay, or Borrower's or any
Guarantor's or any Indemnitor's failure to pay its debts as they become due;
(e) if (i) Borrower or any subsidiary or general partner
or member of Borrower, or any Guarantor or any 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 Borrower or any subsidiary or general partner or member of Borrower,
or any Guarantor or any Indemnitor shall make a general assignment for the
benefit of its creditors; or (ii) there shall be commenced against Borrower or
any subsidiary or general partner or member of Borrower, or any Guarantor or any
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 ninety (90) calendar days; or (iii) there shall be
commenced against Borrower or any subsidiary or general partner or member of
Borrower or any Guarantor or any 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 ninety (90) calendar days
from the entry thereof; or (iv) Borrower or any subsidiary or general partner or
member of Borrower, or any Guarantor or any 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) Borrower or
any subsidiary or general partner or member of Borrower, or any Guarantor or any
Indemnitor shall generally not, or shall be unable to, or shall admit in writing
its inability to, pay its debts as they become due;
(f) subject to Borrower's right to contest certain liens
as provided in this Security Instrument, if the Property becomes subject to any
mechanic's, materialman's or other lien other than a lien for local real estate
taxes and assessments not then due and payable and the lien shall remain
undischarged of record (by payment, bonding or otherwise) for a period of thirty
(30) calendar days;
(g) if any federal tax lien is filed against Borrower,
any general partner of Borrower, any Guarantor, any Indemnitor or the Property
and same is not discharged of record within thirty (30) calendar days after same
is filed;
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
28
(h) except as permitted in this Security Instrument, the
alteration, improvement, demolition or removal of any of the Improvements
without the prior consent of Lender;
(i) damage to the Property in any manner which is not
covered by insurance, which lack of coverage arises solely as a result of
Borrower's failure to maintain the insurance required under this Security
Instrument;
(j) without Lender's prior consent, (i) the managing
agent for the Property resigns or is removed, (ii) the ownership, management or
control of such managing agent is transferred to a person or entity other than
the general partner, managing partner or managing member or Principal of the
Borrower, or (iii) there is any material change in the property management
agreement of the Property;
(k) this Security Instrument shall cease to constitute a
first-priority lien on the Property (other than in accordance with its terms);
(1) seizure or forfeiture of the Property, or any portion
thereof, or Borrower's interest therein, resulting from criminal wrongdoing or
other unlawful action of Borrower, its affiliates, or any tenant in the Property
under any federal, state or local law;
(m) if Borrower consummates a transaction which would
cause this Security Instrument or Lender's exercise of its rights under this
Security Instrument, the Note or the Other Loan Documents to constitute a
nonexempt prohibited transaction under ERISA or result in a violation of a state
statute regulating governmental plans, subjecting Lender to liability for a
violation of ERISA or a state statute;
(n) if any default occurs under the Environmental
Indemnity given by Borrower and Indemnitor to Lender and other Indemnified
Parties (as hereinafter defined) and such default continues after the expiration
of applicable notice and grace periods, if any;
(o) if any default occurs under any guaranty or indemnity
executed in connection herewith and such default continues after the expiration
of applicable grace periods, if any; and
(p) if Borrower, any Guarantor or any Indemnitor, as the
case may be, shall continue to be in default under any other term, covenant or
condition of this Security Instrument or any Other Loan Documents (excluding the
Note) for thirty (30) calendar days after notice from Lender; provided that if
such default cannot reasonably be cured within such thirty (30) calendar day
period and Borrower (or such Guarantor or Indemnitor as the case may be) shall
have commenced to cure such default within such thirty (30) calendar day period
and thereafter diligently and expeditiously proceeds to cure the same, such
thirty (30) calendar day period shall be extended for so long as it shall
require Borrower (or such Guarantor or Indemnitor as the case may be) in the
exercise of due diligence to cure such default, it being agreed that no such
extension shall be for a period in excess of sixty (60) calendar days after the
notice from Lender referred to above.
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
29
Section 9.2 - DEFAULT INTEREST
Borrower will pay, from the date of an Event of Default
through the earlier of the date upon which the Event of Default is cured or the
date upon which the Debt is paid in full, interest on the unpaid principal
balance of the Note at a per annum rate equal to the lesser of (a) the greater
of (i) five percent (5%) plus the Prime Rate (as defined in the Note), and (ii)
five percent (5%) plus the Applicable Interest Rate (as defined in the Note),
and (b) the maximum interest rate which Borrower may by law pay or Lender may
charge and collect (the "Default Rate").
ARTICLE 10 - RIGHTS AND REMEDIES
Section 10.1 - REMEDIES
Upon the occurrence of any Event of Default, Borrower agrees
that Lender may take such action, by or through Trustee, by Lender itself or
otherwise, without notice or demand, as it deems advisable to protect and
enforce its rights against Borrower and in and to the Property, including, but
not limited to, the following actions, each of which may be pursued concurrently
or otherwise, at such time and in such order as Lender may determine, in its
sole discretion, without impairing or otherwise affecting the other rights and
remedies of Lender:
(a) Right to Perform Borrower's Covenants. If Borrower
has failed to keep or perform any covenant whatsoever contained in this Security
Instrument or the Other Loan Documents, Lender may, but shall not be obligated
to any person to do so, perform or attempt to perform said covenant and any
payment made or expense incurred in the performance or attempted performance of
any such covenant, together with any sum expended by Lender that is chargeable
to Borrower or subject to reimbursement by Borrower under the Loan Documents,
shall be and become a part of the "Debt", and Borrower promises, upon demand, to
pay to Lender, at the place where the Note is payable, all sums so incurred,
paid or expended by Lender, with interest from the date when paid, incurred or
expended by Lender at the Default Rate.
(b) Right of Entry. Lender may, prior or subsequent to
the institution of any foreclosure proceedings, enter upon the Property, or any
part thereof, and take exclusive possession of the Property and of all books,
records, and accounts relating thereto and to exercise without interference from
Borrower any and all rights which Borrower has with respect to the management,
possession, operation, protection, or preservation of the Property, including
without limitation the right to rent the same for the account of Borrower and to
deduct from such Rents all costs, expenses, and liabilities of every character
incurred by Lender in collecting such Rents and in managing, operating,
maintaining, protecting, or preserving the Property and to apply the remainder
of such Rents on the Debt in such manner as Lender may elect. All such costs,
expenses, and liabilities incurred by Lender in collecting such Rents and in
managing, operating, maintaining, protecting, or preserving the Property, if not
paid out of Rents as hereinabove provided, shall constitute a demand obligation
owing by Borrower and shall bear interest from the date of expenditure until
paid at the Default Rate, all of which shall constitute a
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
30
portion of the Debt. If necessary to obtain the possession provided for above,
Lender may invoke any and all legal remedies to dispossess Borrower, including
specifically one or more actions for forcible entry and detainer, trespass to
try title, and restitution. In connection with any action taken by Lender
pursuant to this Subsection 10.l(b), Lender shall not be liable for any loss
sustained by Borrower resulting from any failure to let the Property, or any
part thereof, or from any other act or omission of Lender in managing the
Property unless such loss is caused by the willful misconduct of Lender, nor
shall Lender be obligated to perform or discharge any obligation, duty, or
liability under any Lease or under or by reason hereof or the exercise of rights
or remedies hereunder. Borrower shall and does hereby agree to indemnify Lender
for, and to hold Lender harmless from, any and all liability, loss, or damage,
which may or might be incurred by Lender under any such Lease or under or by
reason hereof or the exercise of rights or remedies hereunder, and from any and
all claims and demands whatsoever which may be asserted against Lender by reason
of any alleged obligations or undertakings on its part to perform or discharge
any of the terms, covenants, or agreements contained in any such Lease. Should
Lender incur any such liability, the amount thereof, including without
limitation costs, expenses, and reasonable attorneys' fees, together with
interest thereon from the date of expenditure until paid at the Default Rate,
shall be secured hereby, and Borrower shall reimburse Lender therefor
immediately upon demand. Nothing in this Subsection 10.1(b) shall impose any
duty, obligation, or responsibility upon Lender for the control, care,
management, leasing, or repair of the Property, nor for the carrying out of any
of the terms and conditions of any such Lease; nor shall it operate to make
Lender responsible or liable for any waste committed on the Property by the
tenants or by any other parties, or for any hazardous substances or
environmental conditions on or under the Property, or for any dangerous or
defective condition of the Property or for any negligence in the management,
leasing, upkeep, repair, or control of the Property resulting in loss or injury
or death to any tenant, licensee, employee, or stranger. Borrower hereby assents
to, ratifies, and confirms any and all actions of Lender with respect to the
Property taken under this subsection.
(c) Right to Accelerate. Lender may, without notice
(except as provided in Section 9.1(p) above) demand, presentment, notice of
nonpayment or nonperformance, protest, notice of protest, notice of intent to
accelerate, notice of acceleration, or any other notice or any other action, all
of which are hereby waived by Borrower and ail other parties obligated in any
manner whatsoever on the Debt, declare the entire unpaid balance of the Debt
immediately due and payable, and upon such declaration, the entire unpaid
balance of the Debt shall be immediately due and payable.
(d) Foreclosure-Power of Sale. Lender may institute a
proceeding or proceedings, judicial, or nonjudicial, by advertisement or
otherwise, for the complete or partial foreclosure of this Security Instrument
or the complete or partial sale of the Property under power of sale or under any
applicable provision of law. Lender may, through the Trustee, sell the Property,
and all estate, right, title, interest, claim and demand of Borrower therein,
and all rights of redemption thereof, at one or more sales, as an entirety or in
parcels, with such elements of real and/or personal property, and at such time
and place and upon such terms as it may deem expedient, or as may be required by
applicable law, and in the event of a sale, by foreclosure or otherwise, of less
than all of the Property, this Security Instrument shall continue as a lien and
security interest on the remaining portion of the Property.
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
31
(e) Rights Pertaining to Sales. Subject to the
requirements of applicable law and except as otherwise provided herein, the
following provisions shall apply to any sale or sales of all or any portion of
the Property under or by virtue of Subsection 10.1(d) above, whether made under
the power of sale herein granted or by virtue of judicial proceedings or of a
judgment or decree of foreclosure and sale:
(i) Trustee or Lender may conduct any number of
sales from time to time. The power of sale set forth above shall not be
exhausted by any one or more such sales as to any part of the Property which
shall not have been sold, nor by any sale which is not completed or is defective
in Lender's opinion, until the Debt shall have been paid in full.
(ii) Any sale may be postponed or adjourned by
public announcement at the time and place appointed for such sale or for such
postponed or adjourned sale without further notice.
(iii) After each sale, Lender, Trustee or an
officer of any court empowered to do so shall execute and deliver to the
purchaser or purchasers at such sale a good and sufficient instrument or
instruments granting, conveying, assigning and transferring all right, title and
interest of Borrower in and to the property and rights sold and shall receive
the proceeds of said sale or sales and apply the same as specified in the Note.
Each of Trustee and Lender is hereby appointed the true and lawful
attorney-in-fact of Borrower, which appointment is irrevocable and shall be
deemed to be coupled with an interest, in Borrower's name and stead, to make all
necessary conveyances, assignments, transfers and deliveries of the property and
rights so sold, Borrower hereby ratifying and confirming all that said attorney
or such substitute or substitutes shall lawfully do by virtue thereof.
Nevertheless, Borrower, if requested by Trustee or Lender, shall ratify and
confirm any such sale or, sales by executing and delivering to Trustee, Lender
or such purchaser or purchasers all such instruments as may be advisable, in
Trustee's or Lender's judgment, for the purposes as may be designated in such
request.
(iv) Any and all statements of fact or other
recitals made in any of the instruments referred to in Subsection 10.1(e)(iii)
given by Trustee or Lender shall be taken as conclusive and binding against all
persons as to evidence of the truth of the facts so stated and recited.
(v) Any such sale or sales shall operate to
divest all of the estate, right, title, interest, claim and demand whatsoever,
whether at law or in equity, of Borrower in and to the properties and rights so
sold, and shall be a perpetual bar both at law and in equity against Borrower
and any and all persons claiming or who may claim the same, or any part thereof
or any interest therein, by, through or under Borrower to the fullest extent
permitted by applicable law.
(vi) Upon any such sale or sales, Lender may bid
for and acquire the Property and, in lieu of paying cash therefor, may make
settlement for the purchase price by crediting against the Debt the amount of
the bid made therefor, after deducting therefrom the expenses of the sale, the
cost of any enforcement proceeding hereunder, and any other sums
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
32
which Trustee or Lender is authorized to deduct under the terms hereof, to the
extent necessary to satisfy such bid.
(vii) Upon any such sale, it shall not be
necessary for Trustee, Lender or any public officer acting under execution or
order of court to have present or constructively in its possession any of the
Property.
(f) Lender's Judicial Remedies. Lender, or Trustee upon
written request of Lender, may proceed by suit or suits, at law or in equity, to
enforce the payment of the Debt to foreclose the liens and security interests of
this Security Instrument as against all or any part of the Property, and to have
all or any part of the Property sold under the judgment or decree of a court of
competent jurisdiction. This remedy shall be cumulative of any other nonjudicial
remedies available to Lender under this Security Instrument, the Note or the
Other Loan Documents. Proceeding with a request or receiving a judgment for
legal relief shall not be or be deemed to be an election of remedies or bar any
available nonjudicial remedy of Lender.
(g) Lender's Right to Appointment of Receiver. Lender, as
a matter of right and (i) without regard to the sufficiency of the security for
repayment of the Debt and without notice to Borrower, (ii) without any showing
of insolvency, fraud, or mismanagement on the part of Borrower, (iii) without
the necessity of filing any judicial or other proceeding other than the
proceeding for appointment of a receiver, and (iv) without regard to the then
value of the Property, shall be entitled to the appointment of a receiver or
receivers for the protection, possession, control, management and operation of
the Property, including (without limitation), the power to collect the Rents,
enforce this Security Instrument and, in case of a sale and deficiency, during
the full statutory period of redemption (if any), whether there be a redemption
or not, as well as during any further times when Borrower, except for the
intervention of such receiver, would be entitled to collection of such Rents.
Borrower hereby irrevocably consents to the appointment of a receiver or
receivers. Any receiver appointed pursuant to the provisions of this subsection
shall have the usual powers and duties of receivers in such matters.
(h) Commercial Code Remedies. Lender may exercise any and
all rights and remedies granted to a secured party upon default under the
Uniform Commercial Code, including, without limiting the generality of the
foregoing: (i) the right to take possession of the Personal Property or any part
thereof, and to take such other measures as Lender may deem necessary for the
care, protection and preservation of the Personal Property, and (ii) request
Borrower at its expense to assemble the Personal Property and make it available
to Lender at a convenient place acceptable to Lender. Any notice of sale,
disposition or other intended action by Lender with respect to the Personal
Property sent to Borrower in accordance with the provisions hereof at least five
(5) days prior to such action, shall constitute commercially reasonable notice
to Borrower.
(i) Apply Escrow Funds. Lender may apply any Funds (as
defined in the Escrow Agreement) and any other sums held in escrow or otherwise
by Lender in accordance with the terms of this Security Instrument or any Other
Loan Document to the payment of the following items in any order in its
uncontrolled discretion:
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
33
(i) Taxes and Other Charges;
(ii) Insurance Premiums;
(iii) Interest on the unpaid principal balance of
the Note;
(iv) Amortization of the unpaid principal balance
of the Note; and
(v) All other sums payable pursuant to the Note,
this Security Instrument and the Other Loan Documents, including without
limitation advances made by Lender pursuant to the terms of this Security
Instrument.
(j) Other Rights. Lender (i) may surrender the Policies
maintained pursuant to this Security Instrument or any part thereof, and upon
receipt shall apply the unearned premiums as a credit on the Debt, and, in
connection therewith, Borrower hereby appoints Lender as agent and
attorney-in-fact (which is coupled with an interest and is therefore
irrevocable) for Borrower to collect such premiums; and (ii) may apply the Tax
and Insurance Escrow Fund (as defined in the Escrow Agreement) and/or the
Replacement Escrow Fund (as defined in the Escrow Agreement) and any other funds
held by Lender toward payment of the Debt; and (iii) shall have and may exercise
any and all other rights and remedies which Lender may have at law or in equity,
or by virtue of any of the Loan Documents, or otherwise.
(k) Discontinuance of Remedies. In case Lender shall have
proceeded to invoke any right, remedy, or recourse permitted under the Loan
Documents and shall thereafter elect to discontinue or abandon same for any
reason, Lender shall have the unqualified right so to do and, in such event,
Borrower and Lender shall be 'restored to their former positions with respect to
the Debt, the Loan Documents, the Property or otherwise, and the rights,
remedies, recourses and powers of Lender shall continue as if same had never
been invoked.
(1) Remedies Cumulative. All rights, remedies, and
recourses of Lender granted in the Note, this Security Instrument and the Other
Loan Documents, any other pledge of collateral, or otherwise available at law or
equity: (i) shall be cumulative and concurrent; (ii) may be pursued separately,
successively, or concurrently against Borrower, the Property, or any one or more
of them, at the sole discretion of Lender; (iii) may be exercised as often as
occasion therefor shall arise, it being agreed by Borrower that the exercise or
failure to exercise any of same shall in no event be construed as a waiver or
release thereof or of any other right, remedy, or recourse; (iv) shall be
nonexclusive; (v) shall not be conditioned upon Lender exercising or pursuing
any remedy in relation to the Property prior to Lender bringing suit to recover
the Debt; and (vi) in the event Lender elects to bring suit on the Debt and
obtains a judgment against Borrower prior to exercising any remedies in relation
to the Property, all liens and security interests, including the lien of this
Security Instrument, shall remain in full force and effect and may be exercised
thereafter at Lender's option.
(m) Bankruptcy Acknowledgment. In the event the Property
or any portion thereof or any interest therein becomes property of any
bankruptcy estate or subject to any state or federal insolvency proceeding, then
Lender shall immediately become entitled, in addition to
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
34
all other relief to which Lender may be entitled under this Security Instrument,
to obtain (i) an order from the Bankruptcy Court or other appropriate court
granting immediate relief from the automatic stay pursuant to Section 362 of the
Bankruptcy Code so to permit Lender to pursue its rights and remedies against
Borrower as provided under this Security Instrument and all other rights and
remedies of Lender at law and in equity under applicable state law, and (ii) an
order from the Bankruptcy Court prohibiting Borrower's use of all "cash
collateral" as defined under Section 363 of the Bankruptcy Code. In connection
with such Bankruptcy Court orders, Borrower shall not contend or allege in any
pleading or petition filed in any court proceeding that Lender does not have
sufficient grounds for relief from the automatic stay. Any bankruptcy petition
or other action taken by the Borrower to stay, condition, or inhibit Lender from
exercising its remedies are hereby admitted by Borrower to be in bad faith and
Borrower further admits that Lender would have just cause for relief from the
automatic stay in order to take such actions authorized under state law.
(n) Application of Proceeds. The proceeds from any sale,
lease, or other disposition made pursuant to this Security Instrument, or the
proceeds from the surrender of any insurance policies pursuant hereto, or any
Rents collected by Lender from the Property, or the Tax and Insurance Escrow
Fund or the Replacement Escrow Fund (as defined in the Escrow Agreement) or
proceeds from insurance which Lender elects to apply to the Debt pursuant to
Article 3 hereof, shall-be applied by Trustee, or by Lender, as the case may be,
to the Debt in the following order and priority: (1) to the payment of all
expenses of advertising, selling, and conveying the Property or part thereof,
and/or prosecuting or otherwise collecting Rents, proceeds, premiums or other
sums including reasonable attorneys' fees and a reasonable fee or commission to
Trustee, not to exceed five percent of the proceeds thereof or sums so received;
(2) to that portion, if any, of the Debt with respect to which no person or
entity has personal or entity liability for payment (the "Exculpated Portion"),
and with respect to the Exculpated Portion as follows: first, to accrued but
unpaid interest, second, to matured principal, and third, to unmatured principal
in inverse order of maturity; (3) to the remainder of the Debt as follows:
first, to the remaining accrued but unpaid interest, second, to the matured
portion of principal of the Debt, and third, to prepayment of the unmatured
portion, if any, of principal of the Debt applied to installments of principal
in inverse order of maturity; (4) the balance, if any or to the extent
applicable, remaining after the full and final payment of the Debt to the holder
or beneficiary of any inferior liens covering the Property, if any, in order of
the priority of such inferior liens (Trustee and Lender shall hereby be entitled
to rely exclusively on a commitment for title insurance issued to determine such
priority); and (5) the cash balance, if any, to the Borrower. The application of
proceeds of sale or other proceeds as otherwise provided herein shall be deemed
to be a payment of the Debt like any other payment. The balance of the Debt
remaining unpaid, if any, shall remain fully due and owing in accordance with
the terms of the Note and the other Loan Documents.
Section 10.2 - [INTENTIONALLY OMITTED]
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
35
ARTICLE 11 - INDEMNIFICATION; SUBROGATION
Section 11.1 - GENERAL INDEMNIFICATION
(a) Borrower shall indemnify, defend and hold Lender and
Trustee harmless against: (i) any and all claims for brokerage, leasing,
finder's or similar fees which may be made relating to the Property or the Debt,
and (ii) any and all liability, obligations, losses, damages, penalties, claims,
actions, suits, costs and expenses (including Lender's reasonable attorneys'
fees, together with reasonable appellate counsel fees, if any) of whatever kind
or nature which may be asserted against, imposed on or incurred by Lender or
Trustee in connection with the Debt, this Security Instrument, the Property, or
any part thereof, or the exercise by Lender or Trustee of any rights or remedies
granted to it under this Security Instrument; provided, however, that nothing
herein shall be construed to obligate Borrower to indemnify, defend and hold
harmless Lender from and against any and all liabilities, obligations, losses,
damages, penalties, claims, actions, suits, costs and expenses enacted against,
imposed on or incurred by Lender by reason of Lender's willful misconduct or
gross negligence.
(b) If Lender is made a party defendant to any litigation
or any claim is threatened or brought against Lender concerning the secured
indebtedness, this Security Instrument, the Property, or any part thereof, or
any interest therein, or the construction, maintenance, operation or occupancy
or use thereof, then Lender shall notify Borrower of such litigation or claim
and Borrower shall indemnify, defend and hold Lender harmless from and against
all liability by reason of said litigation or claims, including reasonable
attorneys' fees (together with reasonable appellate counsel fees, if any). The
right to such attorneys' fees (together with reasonable appellate counsel fees,
if any) and expenses incurred by Lender in any such litigation or claim of the
type described in this Subsection 11.1 (b), whether or not any such litigation
or claim is prosecuted to judgment, shall be deemed to have accrued on the
commencement of such claim or action and shall be enforceable whether or not
such claim or action is prosecuted to judgment. If Lender commences an action
against Borrower to enforce any of the terms hereof or to prosecute any breach
by Borrower of any of the terms hereof or to recover any sum secured hereby.
Borrower shall pay to Lender its reasonable attorneys' fees (together with
reasonable appellate counsel fees, if any) and expenses. If Borrower breaches
any term of this Security Instrument, Lender may engage the services of an
attorney or attorneys to protect its rights hereunder, and in the event of such
engagement following any breach by Borrower, Borrower shall pay Lender
reasonable attorneys' fees (together with reasonable appellate counsel fees, if
any) and expenses incurred by Lender, whether or not an action is actually
commenced against Borrower by reason of such breach. All references to
"attorneys" in this Subsection 11.1 (b) and elsewhere in this Security
Instrument shall include without limitation any attorney or law firm engaged by
Lender and Lender's in-house counsel, and all references to "fees and expenses"
in this Subsection 11.l(b) and elsewhere in this Security Instrument shall
include without limitation any fees of such attorney or law firm and any
allocation charges and allocation costs of Lender's in-house counsel.
(c) A waiver of subrogation shall be obtained by Borrower
from its insurance carrier and, consequently, Borrower waives any and all right
to claim or recover against Lender, its officers, employees, agents and
representatives, for loss of or damage to Borrower, the
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
36
Property, Borrower's property or the property of others under Borrower's control
from any cause insured against or required to be insured against by the
provisions of this Security Instrument.
Section 11.2 - ENVIRONMENTAL INDEMNIFICATION
Borrower shall, at its sole cost and expense, protect, defend,
indemnify, release and hold harmless the Indemnified Parties from and against
any and all Losses (as hereinafter defined) imposed upon or incurred by or
asserted against any Indemnified Parties (other than those arising solely from a
state of facts that first came into existence after Lender acquired title to the
Property through foreclosure or a deed in lieu thereof), and directly or
indirectly arising out of or in any way relating to any one or more of the
following: (a) any presence of any Hazardous Substances (as hereinafter defined)
in, on, above, or under the Property; (b) any past, present or future Release
(as hereinafter defined) of Hazardous Substances in, on, above, under or from
the Property; (c) any activity by Borrower, any person or entity affiliated with
Borrower, and any tenant or other user of the Property in connection with any
actual, proposed or threatened use, treatment, storage, holding, existence,
disposition or other Release, generation, production, manufacturing, processing,
refining, control, management, abatement, removal, handling, transfer or
transportation to or from the Property of any Hazardous Substances at any time
located in, under, on or above the Property; (d) any activity by Borrower, any
person or entity affiliated with Borrower, and any tenant or other user of the
Property in connection with any actual or proposed Remediation (as hereinafter
defined) of any Hazardous Substances at any time located in, under, on or above
the Property, whether or not such Remediation is voluntary or pursuant to court
or administrative order, including but not limited to any removal, remedial or
corrective action; (e) any past, present or threatened non-compliance or
violations of any Environmental Law (as hereinafter defined) (or permits issued
pursuant to any Environmental Law) in connection with the Property or
operations, thereon, including but not limited to any failure by Borrower, any
person or entity affiliated with Borrower, and any tenant or other user of the
Property to comply with any order of any governmental authority in connection
with any Environmental Laws; (f) the imposition, recording or filing or the
future imposition, recording or filing of any Environmental Lien (as hereinafter
defined) encumbering the Property; (g) any administrative processes or
proceedings or judicial proceedings in any way connected with any matter
addressed in this Section 11.2; (h) any misrepresentation or inaccuracy in any
representation or warranty or material breach or failure to perform any
covenants or other obligations under the Environmental Indemnity of even date
executed by Borrower and Indemnitor; and (i) any diminution in value of the
Property in any way connected with any occurrence or other matter referred to in
this Section 11.2.
The term "Environmental Law" means any present and future
federal, state and local laws, statutes, ordinances, rules, regulations and the
like, as well as common law, relating to protection of human health or the
environment, in both cases relating to Hazardous Substances, or liability for or
costs of Remediation or prevention of Releases of Hazardous Substances. The term
"Environmental Law" includes, but is not limited to, the following statutes, as
amended, any successor thereto, and any regulations promulgated pursuant
thereto, and any state or local statutes, ordinances, rules, regulations and the
like addressing similar issues: the Comprehensive Environmental Response,
Compensation and Liability Act; the Emergency Planning and
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
37
Community Right-to-Know Act; the Hazardous Substances Transportation Act; the
Resource Conservation and Recovery Act (including but not limited to Subtitle I
relating to underground storage tanks); the Solid Waste Disposal Act; the Clean
Water Act; the Clean Air Act; the Toxic Substances Control Act; the Safe
Drinking Water Act; the Occupational Safety and Health Act; the Federal Water
Pollution Control Act; the Federal Insecticide, Fungicide and Rodenticide Act;
the Endangered Species Act; the National Environmental Policy Act; and the River
and Harbors Appropriation Act. The term "Environmental Law" also includes, but
is not limited to, any present and future federal, state and local laws,
statutes, ordinances, rules, regulations and the like, as well as common law:
conditioning transfer of property upon a negative declaration or other approval
of a governmental authority of the environmental condition of the Property;
requiring notification or disclosure of Releases of Hazardous Substances or
other environmental condition of the Property to any governmental authority or
other person or entity, whether or not in connection with transfer of title to
or interest in property; imposing conditions or requirements in connection with
permits or other authorization for lawful activity; relating to nuisance,
trespass or other causes of action related to the Property; and relating to
wrongful death, personal injury, or property or other damage in connection with
any physical condition or use of the Property.
The term "Environmental Lien" includes but is not limited to any lien
or other encumbrance imposed pursuant to Environmental Law, whether due to any
act or omission of Borrower or any other person or entity.
The term "Hazardous Substances" includes but is not limited to any and
all substances (whether solid, liquid or gas) defined, listed, or otherwise
classified as pollutants, hazardous wastes, hazardous substances, hazardous
materials, extremely hazardous wastes, or words of similar meaning or regulatory
effect under any present or future Environmental Laws or that may have a
negative impact on human health or the environment, including but not limited to
petroleum and petroleum products, asbestos and asbestos-containing materials,
polychlorinated biphenyls, lead, lead-based paints, radon, radioactive
materials, flammables and explosives.
The term "Indemnified Parties" includes but is not limited to Lender,
any person or entity who is or will have been involved in originating the Loan
evidenced by the Note, any person or entity who is or will have been involved in
servicing the Loan, any person or entity in whose name the encumbrance created
by this Security Instrument is or will have been recorded, persons and entities
who may hold or acquire or will have held a full or partial interest in the Loan
(including but not limited to those who may acquire any interest in Securities,
as well as custodians, trustees and other fiduciaries who hold or have held a
full or partial interest in the Loan for the benefit of third parties), as well
as the respective directors, officers, shareholders, partners, employees,
agents, servants, representatives, contractors, subcontractors, affiliates,
subsidiaries, participants, successors and assign of any and all of the
foregoing (including but not limited to any other person or entity who holds or
acquires or will have held a participation or other full or partial interest in
the Loan or the Property, whether during the term of the Loan or as part of or
following foreclosure pursuant to the Loan) and including but not limited to any
successors by merger, consolidation or acquisition of all or a substantial part
of Lender's assets and business.
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
38
The term "Losses" includes but is not limited to any claims, suits,
liabilities (including but not limited to strict liabilities), administrative or
judicial actions or proceedings, obligations, debts, damages, losses, costs,
expenses, diminutions in value, fines, penalties, charges, fees, expenses, costs
of Remediation (whether or not performed voluntarily), judgments, award, amounts
paid in settlement, foreseeable and unforeseeable consequential damages,
litigation costs, attorneys' fees, engineer's fees, environmental consultants'
fees and investigation costs (including but not limited to costs for sampling,
testing and analysis of soil, water, air, building materials, and other
materials and substances whether solid, liquid or gas), of whatever kind or
nature, and whether or not incurred in connection with any judicial or
administrative proceedings.
The term "Release" with respect to any Hazardous Substance includes but
is not limited to any release, deposit, discharge, emission, leaking, leaching,
spilling, seeping, migrating, injecting, pumping, pouring, emptying, escaping,
dumping, disposing or other movement of Hazardous Substances.
The term "Remediation" includes but is not limited to any response,
remedial, removal, or corrective action; any activity to cleanup, detoxify,
decontaminate, contain or otherwise remediate any Hazardous Substance; any
actions to prevent, cure or mitigate any Release of any Hazardous Substance; any
action to comply with any Environmental Laws or with any permits issued pursuant
thereto; any inspection, investigation, study, monitoring, assessment, audit,
sampling and testing, laboratory or other analysis, or evaluation relating to
any Hazardous Substances or to anything referred to in this Article 11.
Section 11.3 - EXCLUDED OCCURRENCES
Notwithstanding any provision of this Security Instrument to
the contrary, where after the date of this Security Instrument there shall occur
an event (including, without limitation, a Release) for which Borrower would
have an obligation under this Security Instrument to indemnify, defend, protect
or hold harmless the Indemnified Parties, then Borrower shall have no such
obligation to indemnify, defend, protect, release and hold harmless the
Indemnified Parties from and against Losses for acts or omissions the cause(s)
of which is outside or beyond the control of Borrower. For purposes of this
Section 11.3, Borrower shall be deemed and construed to have control over the
acts and omissions of all tenants and subtenants of the Property and each of
their respective agents, vendors, guests, invitees, licensees, servants,
employees, officers, directors, representatives, contractors, subcontractors,
affiliates and subsidiaries.
Section 11.4 - DUTY TO DEFEND AND ATTORNEYS AND OTHER FEES AND EXPENSES
Upon written request by any Indemnified Party, Borrower shall
defend such Indemnified Party (if requested by any Indemnified 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 and absolute discretion, engage their own attorneys and other
professionals to defend or assist them, and, at the option of Indemnified
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
39
Parties, their attorneys shall control the resolution of claim or proceeding.
Upon demand, Borrower shall pay or, in the sole and absolute discretion of the
Indemnified Parties, reimburse, the Indemnified Parties for the payment of
reasonable fees and disbursements of attorneys, engineers, environmental
consultants, laboratories and other professionals in connection therewith.
Section 11.5 - SURVIVAL OF INDEMNITIES
Notwithstanding any provision of this Security Instrument or
any other Loan Document to the contrary, the provisions of Section 11.1 and
Section 11.2, and Borrower's obligations thereunder, shall survive (a) the
repayment of the Note, (b) the foreclosure of this Security Instrument, and (c)
the release (or reconveyance, as applicable) of the lien of this Security
Instrument.
ARTICLE 12 - SECURITY AGREEMENT
Section 12.1 - SECURITY AGREEMENT
This Security Instrument is both a real property mortgage and
a "security agreement" within the meaning of the Uniform Commercial Code. The
Property includes both real and personal property and all other rights and
interests, whether tangible or intangible in nature, of Borrower in the
Property. Borrower by executing and delivering this Security Instrument has
granted and hereby grants to Lender, as security for the Obligations, a security
interest in the Property to the full extent that the Property may be subject to
the Uniform Commercial Code (said portion of the Property so subject to the
Uniform Commercial Code being called in this paragraph the "Collateral").
Borrower hereby agrees with Lender to execute and deliver to Lender, in form and
substance satisfactory to Lender, such financing statements, continuation
statements, other uniform commercial code forms and shall pay all expenses and
fees in connection with the filing and recording thereof, and such further
assurances as Lender may from time to time, reasonably consider necessary to
create, perfect, and preserve Lender's security interest herein granted. This
Security Instrument shall also constitute a "fixture filing" for the purposes of
the Uniform Commercial Code. All or part of the Property are or are to become
fixtures. Information concerning the security interest herein granted may be
obtained from the parties at the addresses of the parties set forth in the first
paragraph of this Security Instrument. If an Event of Default shall occur,
Lender, in addition to any other rights and remedies which they may have, shall
have and may exercise immediately and without demand, any and all rights and
remedies granted to a secured party upon default under the Uniform Commercial
Code, including, without limiting the generality of the foregoing, the right to
take possession of the Collateral or any part thereof, and to take such other
measures as Lender may deem necessary for the care, protection and preservation
of the Collateral. Upon request or demand of Lender, Borrower shall at its
expense assemble the Collateral and make it available to Lender at a convenient
place acceptable to Lender. Borrower shall pay to Lender on demand any and all
expenses, including legal expenses and attorneys' fees, incurred or paid by
Lender in protecting the interest in the Collateral and in enforcing the rights
hereunder with respect to the Collateral. Any notice of sale, disposition or
other intended action by Lender with respect to the Collateral sent to Borrower
in accordance with the provisions hereof at least five (5) days prior to
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
40
such action, shall constitute commercially reasonable notice to Borrower. The
proceeds of any disposition of the Collateral, or any part thereof, may be
applied by Lender to the payment of the Obligations in such priority and
proportions as Lender in its discretion shall deem proper. In the event of any
change in name, identity or structure of any Borrower, such Borrower shall
notify Lender thereof, and promptly after request shall execute, file and record
such Uniform Commercial Code forms as are necessary to maintain the priority of
Lender's lien upon and security interest in the Collateral, and shall pay all
expenses and fees in connection with the filing and recording thereof. If Lender
shall require the filing or recording of additional Uniform Commercial Code
forms or continuation statements, Borrower shall, promptly after request,
execute, file and record such Uniform Commercial Code forms or continuation
statements as Lender shall deem necessary, and shall pay all expenses and fees
in connection with the filing and recording thereof it being understood and
agreed, however, that no such additional documents shall increase Borrower's
obligations under the Note, this Security Instrument and the Other Loan
Documents. Borrower hereby irrevocably appoints Lender as its attorney-in-fact,
coupled with an interest, to file with the appropriate public office on its
behalf any financing or other statements signed only by Lender, as Borrower's
attorney-in-fact, in connection with the Collateral covered by this Security
Instrument. Notwithstanding the foregoing, Borrower shall appear and defend in
any action or proceeding which affects or purports to affect the Property and
any interest or right therein, whether such proceeding effects title or any
other rights in the Property (and in conjunction therewith, Borrower shall fully
cooperate with Lender in the event Lender is a party to such action or
proceeding).
ARTICLE 13-WAIVERS
ARTICLE 14 -
Section 14.1 - MARSHALLING AND OTHER MATTERS
Borrower hereby waives, to the extent permitted by law, the
benefit of all appraisement, valuation, stay, extension, reinstatement and
redemption laws now or hereafter in force and all rights of marshalling in the
event of any sale hereunder of the Property or any part thereof or any interest
therein. Further, Borrower hereby expressly waives any and all rights of
redemption from sale under any order or decree of foreclosure of this Security
Instrument on behalf of Borrower, and on behalf of each and every person
acquiring any interest in or title to the Property subsequent to the date of
this Security Instrument and on behalf of all persons to the extent permitted by
applicable law.
Section 14.2 - WAIVER OF NOTICE
Borrower shall not be entitled to any notices of any nature
whatsoever from Lender except with respect to matters for which this Security
Instrument specifically and expressly provides for the giving of notice by
Lender to Borrower and except with respect to matters for which Lender is
required by applicable law to give notice, and Borrower hereby expressly waives
the right to receive any notice from Lender with respect to any matter for which
this Security Instrument does not specifically and expressly provide for the
giving of notice by Lender to Borrower.
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
41
Section 14.3 - SOLE DISCRETION OF LENDER
Wherever pursuant to this Security Instrument Lender exercises
any right given to it to approve or disapprove, or any arrangement or term is to
be satisfactory to Lender, the decision of Lender to approve or disapprove or to
decide that arrangements or terms are satisfactory or not satisfactory shall be
in the sole discretion of Lender and shall be final and conclusive, except as
may be otherwise expressly and specifically provided herein.
Section 14.4 - SURVIVAL
The indemnifications made pursuant to Article 11, shall
continue indefinitely in full force and effect and shall survive and shall in no
way be impaired by: any satisfaction or other termination of this Security
Instrument, any assignment or other transfer of all or any portion of this
Security Instrument or Lender's interest in the Property (but, in such case,
shall benefit both Indemnified Parties and any assignee or transferee), any
exercise of Lender's rights and remedies pursuant hereto including but not
limited to foreclosure or acceptance of a deed in lieu of foreclosure, any
exercise of any rights and remedies pursuant to the Note or any of the Other
Loan Documents, any transfer of all or any portion of the Property (whether by
Borrower or by Lender following foreclosure or acceptance of a deed in lieu of
foreclosure or at any other time), any amendment to this Security Instrument,
the Note or the Other Loan Documents, and any act or omission that might
otherwise be construed as a release or discharge of Borrower from the
obligations pursuant hereto.
Section 14.5 - WAIVER OF TRIAL BY JURY
BORROWER HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY
ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO
THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS
SECURITY INSTRUMENT, THE NOTE OR THE OTHER LOAN DOCUMENTS, OR ANY CLAM,
COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH INCLUDING, BUT NOT
LIMITED TO THOSE RELATING TO (A) ALLEGATIONS THAT A PARTNERSHIP EXISTS BETWEEN
LENDER AND BORROWER; (B) USURY OR PENALTIES OR DAMAGES THEREFOR; (C) ALLEGATIONS
OF UNCONSCIONABLE ACTS, DECEPTIVE TRADE PRACTICE, LACK OF GOOD FAITH OR FAIR
DEALING, LACK OF COMMERCIAL REASONABLENESS, OR SPECIAL RELATIONSHIPS (SUCH AS
FIDUCIARY, TRUST OR CONFIDENTIAL RELATIONSHIP); (D) ALLEGATIONS OF DOMINION,
CONTROL, ALTER EGO, INSTRUMENTALITY, FRAUD, REAL ESTATE FRAUD,
MISREPRESENTATION, DURESS, COERCION, UNDUE INFLUENCE, INTERFERENCE OR
NEGLIGENCE; (E) ALLEGATIONS OF TORTIOUS INTERFERENCE WITH PRESENT OR PROSPECTIVE
BUSINESS RELATIONSHIPS OR OF ANTITRUST; OR (F) SLANDER, LIBEL OR DAMAGE TO
REPUTATION. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND
VOLUNTARILY BY BORROWER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE
AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE.
LENDER IS
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
42
HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS
CONCLUSIVE EVIDENCE OF THIS WAIVER BY BORROWER.
Section 14.6 - WAIVER OF AUTOMATIC OR SUPPLEMENTAL STAY
In the event of the filing of any voluntary or involuntary
petition under the Bankruptcy Code by or against Borrower (other than an
involuntary petition filed by or joined in by Lender), the Borrower shall not
assert, or request any other party to assert, that the automatic stay under
Section 362 of the Bankruptcy Code shall operate or be interpreted to stay,
interdict, condition, reduce or inhibit the ability of Lender to enforce any
rights it has by virtue of this Security Instrument, or any other rights that
Lender has, whether now or hereafter acquired, against any guarantor of the
Debt. Further, Borrower shall not seek a supplemental stay or any other relief,
whether injunctive or otherwise, pursuant to Section 105 of the Bankruptcy Code
or any other provision therein to stay, interdict, condition, reduce or inhibit
the ability of Lender to enforce any rights it has by virtue of this Security
Instrument against any guarantor of the Debt. The waivers contained in this
paragraph are a material inducement to Lender's willingness to enter into this
Security Instrument and Borrower acknowledges and agrees that no grounds exist
for equitable relief which would bar, delay or impede the exercise by Lender of
Lender's rights and remedies against Borrower or any guarantor of the Debt.
ARTICLE 15 - NOTICES
Section 15.1 - NOTICES
All notices or other written communications hereunder shall be
deemed to have been properly given (i) upon delivery, if delivered in'person or
by facsimile transmission with receipt acknowledged, (ii) one (1) Business Day
after having been deposited for overnight delivery with any reputable overnight
courier service, or (iii) three (3) Business Days after having been deposited in
any post office or mail depository regularly maintained by the U.S. Postal
Service and sent by registered or certified mail, postage prepaid, addressed as
follows:
If to Borrower: c/o First Potomac Realty Trust
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, #▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to: Lurch, Early & ▇▇▇▇▇▇
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esquire
Facsimile No. 301-986-0332:
If to Trustee: ____________________________________
____________________________________
____________________________________
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
43
____________________________________
Attention:__________________________
Facsimile No.: _____________________
If to Lender: ▇▇▇▇▇▇ Guaranty Trust Company of New York
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ Alto, Commercial Mortgage Finance Group
Loan Servicing
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, PLLC
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
or addressed as such party may from time to time designate by written notice to
the other parties. For purposes of this subsection, the term "Business Day"
shall mean a day on which commercial banks are not authorized or required by law
to close in New York, New York.
Any party by notice to the other parties may designate additional or
different addresses for subsequent notices or communications.
ARTICLE 16 - APPLICABLE LAW
Section 16.1 - GOVERNING LAW; JURISDICTION
This Security Instrument shall be governed by and construed in
accordance with applicable federal law and the laws of the Commonwealth of
Virginia, without reference or giving effect to any choice of law doctrine.
Borrower hereby irrevocably submits to the jurisdiction of any court of
competent jurisdiction located in the Commonwealth of Virginia in connection
with any proceeding arising out of or relating to this Security Instrument.
Section 16.2 - USURY LAWS
This Security Instrument and the Note are subject to the
express condition that at no time shall Borrower be obligated or required to pay
interest on the Debt at a rate which could subject the holder of the Note to
either civil or criminal liability as a result of being in excess of the maximum
interest rate which Borrower is permitted by applicable law to contract or agree
to pay. If by the terms of this Security Instrument or the Note, Borrower is at
any time required or obligated to pay interest on the Debt at a rate in excess
of such maximum rate, the rate of interest under the Security Instrument and the
Note shall be deemed to be immediately reduced to such maximum rate and the
interest payable shall be computed at such maximum rate and all prior interest
payments in excess of such maximum rate shall be applied and shall be deemed to
have
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
44
been payments in reduction of the principal balance of the Note. All sums paid
or agreed to be paid to Lender for the use, forbearance, or detention of the
Debt shall, to the extent permitted by applicable law, be amortized, prorated,
allocated, and spread throughout the full stated term of the Note until payment
in full so that the rate or amount of interest on account of the Debt does not
exceed the maximum lawful rate of interest from time to time in effect and
applicable to the Debt for so long as the Debt is outstanding.
ARTICLE 17 -
Section 17.1 - PROVISIONS SUBJECT TO APPLICABLE LAW
All rights, powers and remedies provided in this Security
Instrument may be exercised only to the extent that the exercise thereof does
not violate any applicable provisions of law and are intended to be limited to
the extent necessary so that they will not render this Security Instrument
invalid, unenforceable or not entitled to be recorded, registered or filed under
the provisions of any applicable law. If any term of this Security Instrument or
any application thereof shall be invalid or unenforceable, the remainder of this
Security Instrument and any other application of the term shall not be affected
thereby.
ARTICLE 18 - 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 Loan Documents, and any or all servicing
rights with respect thereto, or grant participations therein or issue mortgage
pass-through certificates or other securities evidencing a beneficial interest
in a rated or unrated public offering or private placement (the "Securities").
Lender may forward to each purchaser, transferee, assignee, servicer,
participant, investor in such Securities or any Rating Agency (as hereinafter
defined) rating such Securities (collectively, the "Investor") and each
prospective Investor, all documents and information which Lender now has or may
hereafter acquire relating to the Debt and to Borrower, any Guarantor, any
Indemnitor and the Property, whether furnished by Borrower, any Guarantor, any
Indemnitor or otherwise, as Lender determines necessary or desirable. The term
"Rating Agency" shall mean each statistical rating agency that has assigned a
rating to the Securities.
ARTICLE 19-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 (excluding the
scheduled maturity of the Note) of its loans, (b) the release or substitution of
collateral therefor, or (c) obtaining certain consents, waivers and approvals
with respect to the Property (the occurrence of any of the above shall be called
an "Event"). Borrower hereby acknowledges and agrees to pay, immediately, upon
demand, all such fees (as the same may be increased or decreased from time to
time), and any
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
45
additional fees of a similar type or nature which may be imposed by Lender from
time to time, upon the occurrence of any Event.
Section 19.2 - ATTORNEY'S FEES FOR ENFORCEMENT
(a) Borrower shall pay all legal fees incurred by Lender in
connection with (i) the preparation of the Note, this Security Instrument and
the Other Loan Documents and (ii) the items set forth in Section 17.1 above, and
(b) Borrower shall pay to Lender on demand any and all expenses, including legal
expenses and attorneys' fees, incurred or paid by Lender in protecting its
interest in the Property or Personal Property and/or collecting any amount
payable or in enforcing its rights hereunder with respect to the Property or
Personal Property, whether or not any legal proceeding is commenced hereunder or
thereunder and whether or not any default or Event of Default shall have
occurred and is continuing, together with interest thereon at the Default Rate
from the date of payment or incurring by Lender until paid by Borrower.
ARTICLE 20 - 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 "Note" shall mean
"the Note and any other evidence of indebtedness secured by this Security
Instrument," the word "person" shall include an individual, corporation,
partnership, trust, unincorporated association, government, governmental
authority, and any other entity, the word "Property" shall include any portion
of the Property and any interest therein, and the phrases "attorneys' fees,"
"legal fees" and "counsel fees" shall include any and all attorneys', paralegal
and law clerk fees and disbursements, including, but not limited to, fees and
disbursements at the pre-trial, trial and appellate levels incurred or paid by
Lender in protecting its interest in the Property, the Leases and the Rents and
enforcing its rights hereunder.
ARTICLE 21 - MISCELLANEOUS PROVISIONS
Section 21.1 - NO ORAL CHANGE
This Security Instrument, the Note, and the Other Loan
Documents and any provisions hereof or thereof, may not be modified, amended,
waived, extended, changed, discharged or terminated orally or by any act or
failure to act on the part of Borrower or Lender, but only by an agreement in
writing signed by the party against whom enforcement of any modification,
amendment, waiver, extension, change, discharge or termination is sought.
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
46
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 - HEADINGS, ETC.
The headings and captions of various Sections of this Security
Instrument are for convenience of reference only and are not to be construed as
defining or limiting, in any way, the scope or intent of the provisions hereof.
Section 21.5 - DUPLICATE ORIGINALS; COUNTERPARTS
This Security Instrument may be executed in any number of
duplicate originals and each duplicate original shall be deemed to be an
original. This Security Instrument may be executed in several counterparts, each
of which counterparts shall be deemed an original instrument and all of which
together shall constitute a single Security Instrument. The failure of any party
hereto to execute this Security Instrument,'or any counterpart hereof, shall not
relieve the other signatories from their obligations hereunder.
Section 21.6 - NUMBER AND GENDER
Whenever the context may require, any pronouns used herein
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns and pronouns shall include the plural and vice versa.
Section 21.7 - SUBROGATION
If any or all of the proceeds of the Note have been used to
extinguish, extend or renew any indebtedness heretofore existing against the
Property, then, to the extent of the funds so used, Lender shall be subrogated
to all of the rights, claims, liens, titles, and interests existing against the
Property heretofore held by, or in favor of, the holder of such indebtedness and
such former rights, claims, liens, titles, and interests, if any, are not waived
but rather are continued in full force and effect in favor of Lender and are
merged with the lien and security interest created herein as cumulative security
for the repayment of the Debt, the performance and discharge of Borrower's
obligations hereunder, under the Note and the Other Loan Documents and the
performance and discharge of the Other Obligations.
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
47
Section 21.8 - ENTIRE AGREEMENT
The Note, this Security Instrument and the Other Loan
Documents constitute the entire understanding and agreement between Borrower and
Lender with respect to the transactions arising in connection with the Debt and
supersede all prior written or oral understandings and agreements between
Borrower and Lender with respect thereto. Borrower hereby acknowledges that,
except as incorporated in writing in the Note, this Security Instrument and the
Other Loan Documents, there are not, and were not, and no persons are or were
authorized by Lender to make, any representations, understandings, stipulations,
agreements or promises, oral or written, with respect to the transaction which
is the subject of the Note, this Security Instrument and the Other Loan
Documents.
ARTICLE 22 - TRUSTEE
Trustee may resign by the giving of notice of such resignation
in writing or verbally to Lender. If Trustee shall die, resign, or become
disqualified from acting in the execution of this trust, or if, for any reason,
Lender shall prefer to appoint a substitute trustee or multiple substitute
trustees, or successive substitute trustees or successive multiple substitute
trustees, to act instead of the aforenamed Trustee, Lender shall have full power
to appoint a substitute trustee (or, if preferred, multiple substitute trustees)
in succession who shall succeed (and if multiple substitute trustees are
appointed, each of such multiple substitute trustees shall succeed) to all the
estates, rights, powers, and duties of the aforenamed Trustee. Such appointment
may be executed by any authorized agent of Lender, and if such Lender be a
corporation and such appointment be executed in its behalf by any officer of
such corporation, such appointment shall be conclusively presumed to be executed
with authority and shall be valid and sufficient without proof of any action by
the board of directors or any superior officer of the corporation. Borrower
hereby ratifies and confirms any and all acts which the aforenamed Trustee, or
his successor or successors in this trust, shall do lawfully by virtue hereof.
If multiple substitute Trustees are appointed, each of such multiple substitute
Trustees shall be empowered and authorized to act alone without the necessity of
the joinder of the other multiple substitute trustees, whenever any action or
undertaking of such substitute trustees is requested or required under or
pursuant to this Security Instrument or applicable law. Any substitute Trustee
appointed pursuant to any of the provisions hereof shall, without any further
act. deed, or conveyance, become vested with all the estates, properties,
rights, powers, and trusts of its or his predecessor in the rights hereunder
with like effect as if originally named as Trustee herein; but nevertheless,
upon the written request of Lender or of the substitute Trustee, the Trustee
ceasing to act shall execute and deliver any instrument transferring to such
substitute Trustee, upon the trusts herein expressed, all the estates,
properties, rights, powers, and trusts of the Trustee so ceasing to act, and
shall duly assign, transfer and deliver any of the property and moneys held by
such Trustee to the substitute Trustee so appointed in the Trustee's place. No
fees or expenses shall be payable to Trustee, except in connection with a
foreclosure of the Property or any part thereof or in connection with the
release of the Property following payment in full of the Debt.
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
48
ARTICLE 23 - SPECIAL COMMONWEALTH OF VIRGINIA PROVISIONS
Section 23.1 Short Form Incorporation. The following short form
provisions are incorporated into this Deed of Trust and Security Agreement by
reference as permitted by Section 55-60 and Section 55-59.2 of the Code of
Virginia as amended (the "CODE"):
(1) Exemptions waived.
(2) Subject to all upon default.
(3) Renewal, extension or reinstatement permitted.
(4) Substitution of trustee permitted.
(5) Any trustee may act.
(6) Advertisement required; Once a week for two weeks.
Section 23.2 Powers and Duties of Trustee. The Trustee shall have all
powers and duties granted and imposed under Code Sections 55-59 through 55-59.4,
inclusive. Any trustee's sale hereunder shall be held, and all proceeds thereof
shall be disbursed, in accordance with the provisions of Code Section 55-59.4.
Section 23.3 Commercial Loan. The Borrower warrants and represents that
the loan made by the Lender to the Borrower in accordance with the Note and the
other Loan Documents is made for the acquisition or conduct of a business or
investment within the meaning ascribed to those terms under 6.1-330.75 of the
Code.
Section 23.4 Limitation on Recourse. Borrower's liability
under this Security Instrument shall be limited as sei forth in Section 10 of
the Note, the terms of which are incorporated herein by reference.
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
49
IN WITNESS WHEREOF, THIS SECURITY INSTRUMENT has been executed by
Borrower the day and year first above written.
BORROWER:
TECHCOURT, LLC,
a Virginia limited liability company
By: First Potomac Realty Investments Limited
Partnership, a Delaware limited partnership
Its Sole Member
By: First Potomac Realty Investment Trust, Inc.
a Maryland corporation
Its Sole General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: President
[Corporate Seal]
State of Maryland
County of ▇▇▇▇▇▇▇▇▇▇
Before me, a Notary Public in a for the jurisdiction aforesaid,
personally appeared this date, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, personally well
known (or satisfactorily proven) to me to be the person whose name is subscribed
to the foregoing and annexed Instrument, who, being by me first duly sworn,
acknowledged that he is the President of First Potomac Realty Investment
Trust, Inc., a Maryland corporation, which corporation is the sole general
partner of First Potomac Realty investments Limited Partnership, a Delaware
limited partnership, which partnership is the sole member of TECHCOURT, LLC, a
Virginia limited liability company, which entity is a party to the foregoing and
annexed Deed of Trust and Security Agreement, and that he, being duly authorized
so to do, executed said Instrument on behalf of said corporation as its free act
and deed and the free act and deed of said partnership and limited liability
company for the uses and purposes therein contained.
WITNESS my hand and official seal this 14th day of September, 1999.
▇▇▇▇▇ ▇▇▇▇▇
------------------------
Notary Public
[Notarial Seal]
My commission expires: 1/1/00
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
50
IN WITNESS WHEREOF, THIS SECURITY INSTRUMENT has been executed by
Borrower the day and year first above written.
BORROWER:
TECHCOURT, LLC,
a Virginia limited liability company
By: First Potomac Realty Investments Limited
Partnership, a Delaware limited partnership
Its Sole Member
By: First Potomac Realty Investment Trust, Inc.
a Maryland corporation
Its Sole General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: President
[Corporate Seal]
State of Maryland
County of ▇▇▇▇▇▇▇▇▇▇
Before me, a Notary Public in a for the jurisdiction aforesaid,
personally appeared this date, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, personally well known (or
satisfactorily proven) to me to be the person whose name is subscribed to the
foregoing and annexed Instrument, who, being by me first duly sworn,
acknowledged that he is the President of First Potomac Realty Investment
Trust, Inc., a Maryland corporation, which corporation is the sole general
partner of First Potomac Realty investments Limited Partnership, a Delaware
limited partnership, which partnership is the sole member of TECHCOURT, LLC, a
Virginia limited liability company, which entity is a party to the foregoing and
annexed Deed of Trust and Security Agreement, and that he, being duly authorized
so to do, executed said Instrument on behalf of said corporation as its free act
and deed and the free act and deed of said partnership and limited liability
company for the uses and purposes therein contained.
WITNESS my hand and official seal this 14th day of September, 1999.
▇▇▇▇▇ ▇▇▇▇▇
------------------------
Notary Public
[Notarial Seal]
My commission expires: 1/1/00
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
50
EXHIBIT A
(Description of Land)
All of that certain lot, piece or parcel of land, with the buliding and
improvements thereon, situate, lying and being described as follows:
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
51
EXHIBIT A
ALL THAT certain lot or parcel of land situate and lying in Fairfax County,
Virginia, and more particularly described as follows:
Parcel 4-A, Lafayette Business Center, as the same is shown on a plat attached
to the Deed of Subdivison and Easement recorded in Deed Book 7612 at page 1070,
among the land reocrds of Fairfax County, Virginia.
Tax Map No: 033-2-04-0004-A
AND BEING the same propoerty conveyed to First Potomac Realty Investment Limited
Partnership, a Delaware limited partnership, by Deed from ▇▇▇▇▇▇▇ Real Estate
Company, a Virginia corporation, dated October 15, 1998 and recorded October 19,
1998 in Deed Book 10612 at page 450.