Exhibit 10.8
Argonaut Hotel
MARITIME HOTEL ASSOCIATES, L.P.,
as Borrower
to
FIRST AMERICAN TITLE INSURANCE COMPANY,
as Trustee for the benefit of
WACHOVIA BANK, NATIONAL ASSOCIATION,
as Lender
DEED OF TRUST, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND FIXTURE FILING
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Dated: February 23, 2007
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PREPARED BY AND UPON RECORDATION RETURN TO:
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Proskauer Rose LLP
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1585 Broadway
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New York, New York 10036
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Attention: David J. Weinberger, Esq.
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THIS DEED OF TRUST, SECURITY AGREEMENT, ASSIGNMENT OF RENTS AND FIXTURE FILING (the
“
Security Instrument
”) is made as of the 23rd day of February, 2007, by MARITIME HOTEL
ASSOCIATES, L.P., having its chief executive office at 222 Kearny Street, Suite 200, San Francisco,
California 94018 (hereinafter referred to as “
Borrower
”), to FIRST AMERICAN TITLE INSURANCE
COMPANY having an address at 1 First American Way, Santa Ana, California 92707 (hereinafter
referred to as “
Trustee
” for the benefit of WACHOVIA BANK, NATIONAL ASSOCIATION, having an
address at Wachovia Bank, National Association, Commercial Real Estate Services, 8739 Research
Drive URP 4, NC 1075, Charlotte, North Carolina 28262 (hereinafter referred to as
“
Lender
”).
W I T N E S S E T H:
WHEREAS, Lender has authorized a loan (hereinafter referred to as the “
Loan
”) to
Borrower in the maximum principal sum of FORTY-TWO MILLION AND NO/100 DOLLARS ($42,000,000.00)
(hereinafter referred to as the “
Loan Amount
”), which Loan is evidenced by that certain
promissory note, dated the date hereof (together with any supplements, amendments, modifications or
extensions thereof, hereinafter referred to as the “
Note
”) given by Borrower, as maker, to
Lender, as payee;
WHEREAS, in consideration of the Loan, Borrower has agreed to make payments in amounts
sufficient to pay and redeem, and provide for the payment and redemption of the principal of,
premium, if any, and interest on the Note when due;
WHEREAS, Borrower desires by this Security Instrument to provide for, among other things, the
issuance of the Note and for the deposit, deed and pledge by Borrower with, and the creation of a
security interest in favor of, Lender, as security for Borrower’s obligations to Lender from time
to time pursuant to the Note and the other Loan Documents;
WHEREAS, Borrower and Lender intend these recitals to be a material part of this Security
Instrument; and
WHEREAS, all things necessary to make this Security Instrument the valid and legally binding
obligation of Borrower in accordance with its terms, for the uses and purposes herein set forth,
have been done and performed.
NOW THEREFORE, to secure the payment of the principal of, prepayment premium (if any) and
interest on the Note and all other obligations, liabilities or sums due or to become due under this
Security Instrument, the Note or any other Loan Document, including, without limitation, interest
on said obligations, liabilities or sums (said principal, premium, interest and other sums being
hereinafter referred to as the “
Debt
”), and the performance of all other covenants,
obligations and liabilities of Borrower pursuant to the Loan Documents, Borrower has executed and
delivered this Security Instrument; and Borrower has irrevocably granted, and by these presents and
by the execution and delivery hereof does hereby irrevocably grant, bargain, sell, alien, demise,
release, convey, assign, transfer, deed, hypothecate, pledge, set over, warrant, mortgage and
confirm to Trustee, forever in trust WITH POWER OF SALE, all right, title and interest of Borrower
in and to all of the following property, rights, interests and estates, to the greatest extent
assignable by law:
(a) the plot(s), piece(s) or parcel(s) of real property described in Exhibit A attached hereto
and made a part hereof (individually and collectively, hereinafter referred to as the
“
Premises
”);
(b) (i) all buildings, foundations, structures, fixtures, additions, enlargements, extensions,
modifications, repairs, replacements and improvements of every kind or nature now or hereafter
located on the Premises (hereinafter collectively referred to as the “
Improvements
”); and
(ii) to the extent permitted by law, the name or names, if any, as may now or hereafter be used for
any of the Improvements, and the goodwill associated therewith;
(c) all easements, servitudes, rights-of-way, strips and gores of land, streets, ways, alleys,
passages, sewer rights, water, water courses, water rights and powers, ditches, ditch rights,
reservoirs and reservoir rights, air rights and development rights, lateral support, drainage, gas,
oil and mineral rights, tenements, hereditaments and appurtenances of any nature whatsoever, in any
way belonging, relating or pertaining to the Premises or the Improvements and the reversion and
reversions, remainder and remainders, whether existing or hereafter acquired, and all land lying in
the bed of any street, road or avenue, opened or proposed, in front of or adjoining the Premises to
the center line thereof and any and all sidewalks, drives, curbs, passageways, streets, spaces and
alleys adjacent to or used in connection with the Premises and/or Improvements and all the estates,
rights, titles, interests, property, possession, claim and demand whatsoever, both in law and in
equity, of Borrower of, in and to the Premises and Improvements and every part and parcel thereof,
with the appurtenances thereto;
(d) all machinery, equipment, systems, fittings, apparatus, appliances, furniture,
furnishings, tools, fixtures, Inventory (as hereinafter defined) and articles of personal property
and accessions thereof and renewals, replacements thereof and substitutions therefor (including,
but not limited to, all plumbing, lighting and elevator fixtures, office furniture, beds, bureaus,
chiffonniers, chests, chairs, desks, lamps, mirrors, bookcases, tables, rugs, carpeting, drapes,
draperies, curtains, shades, venetian blinds, wall coverings, screens, paintings, hangings,
pictures, divans, couches, luggage carts, luggage racks, stools, sofas, chinaware, flatware,
linens, pillows, blankets, glassware, foodcarts, cookware, dry cleaning facilities, dining room
wagons, keys or other entry systems, bars, bar fixtures, liquor and other drink dispensers,
icemakers, radios, television sets, intercom and paging equipment, electric and electronic
equipment, dictating equipment, telephone systems, computerized accounting systems, engineering
equipment, vehicles, medical equipment, potted plants, heating, lighting and plumbing fixtures,
fire prevention and extinguishing apparatus, theft prevention equipment, cooling and
air-conditioning systems, elevators, escalators, fittings, plants, apparatus, stoves, ranges,
refrigerators, laundry machines, tools, machinery, engines, dynamos, motors, boilers, incinerators,
switchboards, conduits, compressors, vacuum cleaning systems, floor cleaning, waxing and polishing
equipment, call systems, brackets, signs, bulbs, bells, ash and fuel, conveyors, cabinets, lockers,
shelving, spotlighting equipment, dishwashers, garbage disposals, washers and dryers), other
customary hotel equipment, inventory 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, or
in, and used in connection with the Premises or the Improvements, or appurtenant thereto, 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, or in, and used in
connection with the Premises or the Improvements
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or appurtenant thereto, (hereinafter, all of the foregoing items described in this paragraph
(d) are collectively called the “
Equipment
”), all of which, and any replacements,
modifications, alterations and additions thereto, to the extent permitted by applicable law, shall
be deemed to constitute fixtures (the “
Fixtures
”), and are part of the real estate and
security for the payment of the Debt and the performance of Borrower’s obligations. To the extent
any portion of the Equipment is not real property or fixtures under applicable law, it shall be
deemed to be personal property, and this Security Instrument shall constitute a security agreement
creating a security interest therein in favor of Lender under the UCC;
(e) all awards or payments, including interest thereon, which may hereafter be made with
respect to the Premises, the Improvements, the Fixtures, or the Equipment, whether from the
exercise of the right of eminent domain (including but not limited to any transfer made in lieu of
or in anticipation of the exercise of said right), or for a change of grade, or for any other
injury to or decrease in the value of the Premises, the Improvements or the Equipment or refunds
with respect to the payment of property taxes and assessments, and all other proceeds of the
conversion, voluntary or involuntary, of the Premises, Improvements, Equipment, Fixtures or any
other Property or part thereof into cash or liquidated claims;
(f) all leases, tenancies, franchises, licenses and permits, Property Agreements and other
agreements affecting the use, enjoyment or occupancy of the Premises, the Improvements, the
Fixtures, or the Equipment or any portion thereof now or hereafter entered into, whether before or
after the filing by or against Borrower of any petition for relief under the Bankruptcy Code and
all reciprocal easement agreements, license agreements (hereinafter collectively referred to as the
“
Leases
”), together with all receivables, revenues, rentals, credit card receipts, receipts
and all payments received which relate to the rental, lease, franchise and use of space at the
Premises and rental and use of guest rooms or meeting rooms or banquet rooms or recreational
facilities or bars, beverage or food sales, vending machines, mini-bars, room service, telephone,
video and television systems, electronic mail, internet connections, guest laundry, bars, the
provision or sale of other goods and services, and all other payments received from guests or
visitors of the Premises, and other items of revenue, receipts or income as identified in the
Uniform System of Accounts (as hereinafter defined), all cash or security deposits, lease
termination payments, advance rentals and payments of similar nature and guarantees or other
security held by, or issued in favor of, Borrower in connection therewith to the extent of
Borrower’s right or interest therein and all remainders, reversions and other rights and estates
appurtenant thereto, and all base, fixed, percentage or additional rents, and other rents, oil and
gas or other mineral royalties, and bonuses, issues, profits and rebates and refunds or other
payments made by any Governmental Authority from or relating to the Premises, the Improvements, the
Fixtures or the Equipment plus all rents, common area charges and other payments now existing or
hereafter arising, whether paid or accruing before or after the filing by or against Borrower of
any petition for relief under the Bankruptcy Code (the “
Rents
”) and all proceeds from the
sale or other disposition of the Leases and the right to receive and apply the Rents to the payment
of the Debt subject in all events to the provisions hereof;
(g) all proceeds of and any unearned premiums on any insurance policies covering the Premises,
the Improvements, the Fixtures, the Rents or the Equipment, including, without limitation, the
right to receive and apply the proceeds of any insurance, judgments, or settlements made in lieu
thereof, for damage to the Premises, the Improvements, the Fixtures or the
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Equipment and all refunds or rebates of Impositions, and interest paid or payable with respect
thereto;
(h) all deposit accounts, securities accounts, funds or other accounts maintained or deposited
with Lender, or its assigns, in connection herewith, including, without limitation, the Escrow
Accounts, the Central Account, the Rent Account, and the Sub-Accounts and all monies and
investments deposited or to be deposited in such accounts;
(i) all accounts receivable, contract rights, franchises, interests, estate or other claims,
both at law and in equity, now existing or hereafter arising, and relating to the Premises, the
Improvements, the Fixtures or the Equipment, not included in Rents;
(j) all now existing or hereafter arising claims against any Person with respect to any damage
to the Premises, the Improvements, the Fixtures or the Equipment, including, without limitation,
damage arising from any defect in or with respect to the design or construction of the
Improvements, the Fixtures or the Equipment and any damage resulting therefrom;
(k) all deposits or other security or advance payments, including rental payments now or
hereafter made by or on behalf of Borrower to others, with respect to (i) insurance policies, (ii)
utility services, (iii) cleaning, maintenance, repair or similar services, (iv) refuse removal or
sewer service, (v) parking or similar services or rights and (vi) rental of Equipment, if any,
relating to or otherwise used in the operation of the Premises, the Improvements, the Fixtures or
the Equipment;
(l) all intangible property now or hereafter relating to the Premises, the Improvements, the
Fixtures or the Equipment or its operation, including, without limitation, software, letter of
credit rights, trade names, trademarks (including, without limitation, any licenses of or
agreements to license trade names or trademarks now or hereafter entered into by Borrower), logos,
building names and goodwill to the greatest extent assignable pursuant to the terms thereof;
(m) all now existing or hereafter arising advertising material, guaranties, warranties,
building permits, other permits, licenses, plans and specifications, shop and working drawings,
soil tests, appraisals and other documents, materials and/or personal property of any kind now or
hereafter existing in or relating to the Premises, the Improvements, the Fixtures, and the
Equipment, to the greatest extent assignable pursuant to the terms thereof;
(n) all now existing or hereafter arising drawings, designs, plans and specifications prepared
by architects, engineers, interior designers, landscape designers and any other consultants or
professionals for the design, development, construction, repair and/or improvement of the Property,
as amended from time to time;
(o) the right, in the name of and on behalf of Borrower, to appear in and defend any now
existing or hereafter arising action or proceeding brought with respect to the Premises, the
Improvements, the Fixtures or the Equipment and to commence any action or proceeding to protect the
interest of Lender in the Premises, the Improvements, the Fixtures or the Equipment to the greatest
extent permitted pursuant to the terms of this Security Instrument;
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(p) the Ground Lease and the leasehold estate created thereby, together with all
modifications, extensions and renewals of the Ground Lease and all credits, deposits, options,
privileges and rights of Borrower as tenant under the Ground Lease including, without limitation,
the right to renew or extend the Ground Lease for a succeeding term or terms to the extent set
forth therein; and
(q) all proceeds, products, substitutions and accessions (including claims and demands
therefor) of each of the foregoing.
All of the foregoing items (a) through (q), together with all of the right, title and interest
of Borrower therein, are collectively referred to as the “
Property
”.
TO HAVE AND TO HOLD the above granted and described Property unto Trustee, in trust, for the
proper use and benefit of Lender, and the successors and assigns of Lender, forever.
PROVIDED, ALWAYS, and these presents are upon this express condition, if Borrower shall well
and truly pay and discharge the Debt and perform and observe the terms, covenants and conditions
set forth in the Loan Documents, then these presents and the estate hereby granted shall cease and
be void.
AND Borrower covenants with and warrants to Lender that:
ARTICLE I: DEFINITIONS
Section 1.01.
Certain Definitions
.
For all purposes of this Security Instrument, except as otherwise expressly provided or unless
the context clearly indicates a contrary intent:
(i) the capitalized terms defined in this Section have the meanings assigned to them in
this Section, and include the plural as well as the singular;
(ii) all accounting terms not otherwise defined herein have the meanings assigned to
them in accordance with GAAP; and
(iii) the words “herein”, “hereof”, and “hereunder” and other words of similar import
refer to this Security Instrument as a whole and not to any particular Section or other
subdivision.
“
Adjusted Net Income
” shall mean trailing twelve (12) month Operating Income minus
trailing twelve (12) month Operating Expenses. The Adjusted Net Income shall be calculated by
Borrower and shall be subject to the reasonable review and approval of Lender. “
Affiliate
”
of any specified Person shall mean any other Person directly or indirectly Controlling or
Controlled by or under direct or indirect common Control with such specified Person.
“
Annual Budget
” shall mean an annual budget submitted by Borrower to Lender in
accordance with the terms of Section 2.09 hereof.
- 5 -
“
Appraisal
” shall mean the appraisal of the Property and all supplemental reports or
updates thereto previously delivered to Lender in connection with the Loan.
“
Appraiser
” shall mean the Person who prepared the Appraisal.
“
Approved Annual Budget
” shall mean, for purposes of Section 5.05 hereof, any Annual
Budget for which Lender has not issued written notice of objections to the amount of specific line
items within thirty (30) days following the receipt thereof pursuant to Section 2.09, which
objections shall be in Lender’s reasonable discretion. Borrower shall not be required to alter the
Annual Budget as a result of any such objections by Lender, but in the event Lender is required to
fund Operating Expenses in accordance with the terms of Section 5.05 hereof, Lender shall only be
required to disburse Operating Expenses to the extent Lender did not object to the same, taking
into account those amounts already expended for such Operating Expenses during such Fiscal Year.
“
Approved Manager Standard
” shall mean the standard of business operations, practices
and procedures customarily employed by entities having a senior executive with at least seven (7)
years’ experience in the management of hotels of the same class and quality as the Improvements,
and which manage not less than five (5) such hotel properties having an aggregate number of hotel
rooms of not less than five hundred (500) hotel rooms.
“
Approved Manager Transfer
” shall mean any change of control in the ownership of
Manager following which (i) Kimpton Group Holding LLC, a Delaware limited liability company,
continues to control Manager or (ii) whereby Manager is controlled by a Person or an Affiliate
thereof previously approved by Lender in writing.
“
Architect
” shall have the meaning set forth in Section 3.04(b)(i) hereof.
“
Assignment
” shall mean the Assignment of Leases and Rents and Security Deposits of
even date herewith relating to the Property given by Borrower to Lender, as the same may be
modified, amended or supplemented from time to time.
“
Bank
” shall mean the bank, trust company, savings and loan association or savings
bank designated by Lender, in its sole and absolute discretion, in which the Central Account shall
be located.
“
Bankruptcy Code
” shall mean 11 U.S.C. §101
et seq.
, as amended from time to
time.
“
Basic Carrying Costs
” shall mean the sum of the following costs associated with the
Property: (a) Real Estate Taxes, (b) insurance premiums and (c) ground rents.
“
Basic Carrying Costs Escrow Account
” shall mean the Escrow Account maintained
pursuant to Section 5.06 hereof.
“
Basic Carrying Costs Monthly Installment
” shall mean Lender’s estimate of one-twelfth
(1/12th) of the annual amount for Basic Carrying Costs.
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“
Basic Carrying Costs Monthly Installment
” shall also include, if required by Lender,
a sum of money which, together with such monthly installments, will be sufficient to make the
payment of each such Basic Carrying Cost at least thirty (30) days prior to the date initially due.
Should such Basic Carrying Costs not be ascertainable at the time any monthly deposit is required
to be made, the Basic Carrying Costs Monthly Installment shall be determined by Lender in its
reasonable discretion on the basis of the aggregate Basic Carrying Costs for the prior Fiscal Year
or month or the prior payment period for such cost. As soon as the Basic Carrying Costs are fixed
for the then current Fiscal Year, month or period, the next ensuing Basic Carrying Costs Monthly
Installment shall be adjusted to reflect any deficiency or surplus in prior monthly payments. If
at any time during the term of the Loan Lender reasonably determines that there will be
insufficient funds in the Basic Carrying Costs Escrow Account to make payments when they become due
and payable, Lender shall have the right to adjust the Basic Carrying Costs Monthly Installment
such that there will be sufficient funds to make such payments, which determination shall be based
on projections of those amounts of Basic Carrying Costs as are reasonably expected to become due
and payable during the relevant Fiscal Year. Notwithstanding the foregoing, provided that no Event
of Default has occurred and is continuing, (a) if Borrower delivers proof reasonably satisfactory
to Lender that the insurance required hereunder is maintained pursuant to a blanket policy and each
installment of the annual insurance premiums relating to the insurance required pursuant to Section
3.01 hereof has been paid in full prior to the applicable due date thereof, the Basic Carrying
Costs Monthly Installment shall not include any amount allocable to insurance premiums and (b) if
Borrower delivers proof reasonably satisfactory to Lender that all ground rent due under the Ground
Lease has been paid in full prior to the applicable due date thereof, the Basic Carrying Costs
Monthly Installment shall not include any amounts allocable to ground rent.
“
Basic Carrying Costs Sub-Account
” shall mean the Sub-Account of the Central Account
established pursuant to Section 5.02 into which the Basic Carrying Costs Monthly Installments shall
be deposited.
“
Borrower
” shall mean Borrower named herein and any successor to the obligations of
Borrower.
“
Borrower Account
” shall have the meaning set forth in Section 5.01 hereof.
“
Borrower’s Knowledge
” or words of similar effect shall mean the actual knowledge of
Borrower or knowledge after making all due inquiry of the Property’s general manager, assistant
general manager and Gregory J. Wolkom.
“
Business Day
” shall mean any day other than (a) a Saturday or Sunday, or (b) a day on
which banking and savings and loan institutions in the State of New York or the State of North
Carolina are authorized or obligated by law or executive order to be closed, or at any time during
which the Loan is an asset of a Securitization, the cities, states and/or commonwealths used in the
comparable definition of “Business Day” in the Securitization documents.
“
Capital Expenditures
” shall mean for any period, the amount expended for items
capitalized under GAAP including expenditures for building improvements or major repairs, leasing
commissions and tenant improvements.
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“
Cash Expenses
” shall mean for any period, (x) the operating expenses (excluding
Capital Expenditures) for the Property as set forth in an Approved Annual Budget to the extent that
such expenses are actually incurred by Borrower minus (y) payments into the Basic Carrying Costs
Sub-Account, the Debt Service Payment Sub-Account and the Recurring Replacement Reserve Sub-Account
(to the extent such sums are for the payment of sums set forth as operating expenses in the
Approved Annual Budget).
“
Central Account
” shall mean an Eligible Account, maintained at the Bank, in the name
of Lender or its successors or assigns (as secured party) as may be designated by Lender.
“
Closing Date
” shall mean the date of the Note.
“
Code
” shall mean the Internal Revenue Code of 1986, as amended and as it may be
further amended from time to time, any successor statutes thereto, and applicable U.S. Department
of Treasury regulations issued pursuant thereto.
“
Condemnation Proceeds
” shall mean all of the proceeds in respect of any Taking or
purchase in lieu thereof.
“
Contractual Obligation
” shall mean, as to any Person, any provision of any security
issued by such Person or of any agreement, instrument or undertaking to which such Person is a
party or by which it or any of the property owned by it is bound.
“
Control
” means, when used with respect to any specific Person, the possession,
directly or indirectly, of the power to direct or cause the direction of the management and
policies of such Person whether through ownership of voting securities, beneficial interests, by
contract or otherwise. The definition is to be construed to apply equally to variations of the
word “Control” including “Controlled,” “Controlling” or “Controlled by.”
“
CPI
” shall mean “The Consumer Price Index (New Series) (Base Period 1982-84=100) (all
items for all urban consumers)” issued by the Bureau of Labor Statistics of the United States
Department of Labor (the “Bureau”). If the CPI ceases to use the 1982-84 average equaling 100 as
the basis of calculation, or if a change is made in the term, components or number of items
contained in said index, or if the index is altered, modified, converted or revised in any other
way, then the index shall be adjusted to the figure that would have been arrived at had the change
in the manner of computing the index in effect at the date of this Security Instrument not been
made. If at any time during the term of this Security Instrument the CPI shall no longer be
published by the Bureau, then any comparable index issued by the Bureau or similar agency of the
United States issuing similar indices shall be used in lieu of the CPI.
“
Credit Card Company
” shall have the meaning set forth in Section 5.01 hereof.
“
Credit Card Payment Direction Letter
” shall have the meaning set forth in Section
5.01 hereof.
“
Debt
” shall have the meaning set forth in the Recitals hereto.
- 8 -
“
Debt Service
” shall mean the amount of interest and principal payments due and
payable in accordance with the Note during an applicable period.
“
Debt Service Coverage
” shall mean the quotient obtained by dividing Adjusted Net
Income by the sum of the (a) aggregate payments of interest, principal and all other sums due for
such specified period under the Note (determined as of the date the calculation of Debt Service
Coverage is required or requested hereunder) but in all events excluding any payouts of principal
due at maturity and (b) aggregate payments of interest, principal and all other sums due for such
specified period pursuant to the terms of subordinate or mezzanine financing, if any, then
affecting or related to the Property or, if Debt Service Coverage is being calculated in connection
with a request for consent to any subordinate or mezzanine financing, then proposed.
“
Debt Service Payment Sub-Account
” shall mean the Sub-Account of the Central Account
established pursuant to Section 5.02 hereof into which the Required Debt Service Payment shall be
deposited.
“
Default
” shall mean any Event of Default or event which would constitute an Event of
Default if all requirements in connection therewith for the giving of notice, the lapse of time,
and the happening of any further condition, event or act, had been satisfied.
“
Default Rate
” shall mean the lesser of (a) the highest rate allowable at law and (b)
five percent (5%) above the interest rate set forth in the Note.
“
Default Rate Interest
” shall mean, to the extent the Default Rate becomes applicable,
interest in excess of the interest which would have accrued on (a) the Principal Amount and (b) any
accrued but unpaid interest, if the Default Rate was not applicable. “
Development Laws
”
shall mean all applicable subdivision, zoning, environmental protection, wetlands protection, or
land use laws or ordinances, and any and all applicable rules and regulations of any Governmental
Authority promulgated thereunder or related thereto.
“
Disclosure Document
” shall mean a prospectus, prospectus supplement, private
placement memorandum, or similar offering memorandum or offering circular, in each case in
preliminary or final form, used to offer securities in connection with a Securitization.
“
Dollar
” and the sign “$” shall mean lawful money of the United States of America.
“
Eligible Account
” shall mean a segregated account which is either (a) an account or
accounts maintained with a federal or state chartered depository institution or trust company the
long term unsecured debt obligations of which are rated by each of the Rating Agencies (or, if not
rated by Fitch, Inc. (“
Fitch
”), otherwise acceptable to Fitch, as confirmed in writing that
such account would not, in and of itself, result in a downgrade, qualification or withdrawal of the
then current ratings assigned to any certificates issued in connection with a Securitization) in
its highest rating category at all times (or, in the case of the Basic Carrying Costs Escrow
Account, the long term unsecured debt obligations of which are rated at least “AA” (or its
equivalent)) by each of the Rating Agencies (or, if not rated by Fitch, otherwise acceptable to
Fitch, as confirmed in writing that such account would not, in and of itself, result in a
downgrade, qualification or withdrawal of the then current ratings assigned to any certificates
issued in connection with a Securitization) or, if the funds in such account are to be held in such
account
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for less than thirty (30) days, the short term obligations of which are rated by each of the
Rating Agencies (or, if not rated by Fitch, otherwise acceptable to Fitch, as confirmed in writing
that such account would not, in and of itself, result in a downgrade, qualification or withdrawal
of the then current ratings assigned to any certificates issued in connection with a
Securitization) in its highest rating category at all times or (b) a segregated trust account or
accounts maintained with a federal or state chartered depository institution or trust company
acting in its fiduciary capacity which, in the case of a state chartered depository institution is
subject to regulations substantially similar to 12 C.F.R. §9.10(b), having in either case a
combined capital and surplus of at least $100,000,000 and subject to supervision or examination by
federal and state authority, or otherwise acceptable (as evidenced by a written confirmation from
each Rating Agency that such account would not, in and of itself, cause a downgrade, qualification
or withdrawal of the then current ratings assigned to any certificates issued in connection with a
Securitization) to each Rating Agency, which may be an account maintained by Lender or its agents.
Eligible Accounts may bear interest. The title of each Eligible Account shall indicate that the
funds held therein are held in trust for the uses and purposes set forth herein.
“
Engineer
” shall have the meaning set forth in Section 3.04(b)(i) hereof.
“
Engineering Escrow Account
” shall mean an Escrow Account established and maintained
pursuant to Section 5.12 hereof relating to payments for any Required Engineering Work.
“
Environmental Problem
” shall mean any of the following:
(a) the presence of any Hazardous Material on, in, under, or above all or any portion
of the Property other than substances of kinds and in amounts ordinarily and customarily
used or stored in properties similar in size and type to the Property for the purpose of
cleaning or other maintenance or operations and otherwise in compliance with all
Environmental Statutes;
(b) the release or threatened release of any Hazardous Material from or onto the
Property other than substances of kinds and in amounts ordinarily and customarily used or
stored in properties similar in size and type to the Property for the purpose of cleaning or
other maintenance or operations and otherwise in compliance with all Environmental Statutes;
(c) the violation or threatened violation of any Environmental Statute with respect to
the Property; or
(d) the failure to obtain or to abide by the terms or conditions of any permit or
approval required under any Environmental Statute with respect to the Property.
A condition described above shall be an Environmental Problem regardless of whether or not any
Governmental Authority has taken any action in connection with the condition and regardless of
whether that condition was in existence on or before the date hereof.
- 10 -
“
Environmental Report
” shall mean collectively, all environmental audit reports for
the Property and any supplements or updates thereto, previously delivered to Lender in connection
with the Loan.
“
Environmental Statute
” shall mean any federal, state or local statute, ordinance,
rule or regulation, any judicial or administrative order (whether or not on consent) or judgment
applicable to Borrower or the Property including, without limitation, any judgment or settlement
based on common law theories, and any provisions or conditions of any permit, license or other
authorization binding on Borrower relating to (a) the protection of the environment, the safety and
health of persons (including employees) or the public welfare from actual or potential exposure (or
effects of exposure) to any actual or potential release, discharge, disposal or emission (whether
past or present) of any Hazardous Materials or (b) the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of any Hazardous Materials, including, but not
limited to, the Comprehensive Environmental Response, Compensation and Liability Act of 1980
(“
CERCLA
”), as amended by the Superfund Amendments and Reauthorization Act of 1986, 42
U.S.C. §9601
et seq.
, the Solid Waste Disposal Act, as amended by the Resource Conservation
and Recovery Act of 1976, as amended by the Solid and Hazardous Waste Amendments of 1984, 42 U.S.C.
§6901
et seq.
, the Federal Water Pollution Control Act, as amended by the Clean Water Act
of 1977, 33 U.S.C. §1251
et seq.
, the Toxic Substances Control Act of 1976, 15 U.S.C. §2601
et seq.
, the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. §1101
et seq.
, the Clean Air Act of 1966, as amended, 42 U.S.C. §7401
et seq.
, the
National Environmental Policy Act of 1975, 42 U.S.C. §4321, the Rivers and Harbors Act of 1899, 33
U.S.C. §401
et seq.
, the Endangered Species Act of 1973, as amended, 16 U.S.C. §1531
et
seq.
, the Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. §651
et
seq.
, and the Safe Drinking Water Act of 1974, as amended, 42 U.S.C. §300(f)
et seq.
,
and all rules, regulations and guidance documents promulgated or published thereunder.
“
Equipment
” shall have the meaning set forth in granting clause (d) of this Security
Instrument.
“
ERISA
” shall mean the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the regulations promulgated thereunder. Section references to ERISA are to
ERISA, as in effect at the date of this Security Instrument and, as of the relevant date, any
subsequent provisions of ERISA, amendatory thereof, supplemental thereto or substituted therefor.
“
ERISA Affiliate
” shall mean any corporation or trade or business that is a member of
any group of organizations (a) described in Section 414(b) or (c) of the Code of which Borrower or
Guarantor is a member and (b) solely for purposes of potential liability under Section 302(c)(11)
of ERISA and Section 412(c)(11) of the Code and the lien created under Section 302(f) of ERISA and
Section 412(n) of the Code, described in Section 414(m) or (o) of the Code of which Borrower or
Guarantor is a member.
“
Escrow Account
” shall mean each of the Engineering Escrow Account, the Basic Carrying
Costs Escrow Account, the Recurring Replacement Reserve Escrow Account, the Operation and
Maintenance Expense Escrow Account and the Management Fee Escrow
- 11 -
Account, each of which shall be an Eligible Account or book entry sub-account of an Eligible
Account.
“
Event of Default
” shall have the meaning set forth in Section 13.01 hereof.
“
Extraordinary Expense
” shall mean an extraordinary operating expense or capital
expense not set forth in the Approved Annual Budget or allotted for in the Recurring Replacement
Reserve Sub-Account.
“
First Payment Date
” shall mean, if the Closing Date is prior to the Payment Date of
the month in which the Closing Date occurs, the Payment Date in the month in which the Closing Date
occurs, or, if the Closing Date is on or subsequent to the Payment Date in the month in which the
Closing Date occurs, the Payment Date in the month following the month in which the Loan is
initially funded.
“
Fiscal Year
” shall mean the twelve (12) month period commencing on January 1 and
ending on December 31 during each year of the term of this Security Instrument, or such other
fiscal year of Borrower as Borrower may select from time to time with the prior written consent of
Lender.
“
Fixtures
” shall have the meaning set forth in granting clause (d) of this Security
Instrument.
“
Franchise Agreement
” shall mean any franchise or license agreement relating to the
branding or operation of the Premises or any other agreement pursuant to which a franchise system,
reservation system or brand affiliation is made available to the hotel operator of the Premises,
together with all renewals and replacements thereof.
“
GAAP
” shall mean generally accepted accounting principles in the United States of
America, as of the date of the applicable financial report, consistently applied.
“
General Partner
” shall mean, if Borrower is a partnership, each general partner of
Borrower and, if Borrower is a limited liability company, each managing member of Borrower and in
each case, each general partner or managing member of such general partner or managing member,
unless the general partner of Borrower is a corporation or Delaware limited liability company, in
each case, which is a Single Purpose Entity.
“
Governmental Authority
” shall mean, with respect to any Person, any federal or State
government or other political subdivision thereof and any entity, including any regulatory or
administrative authority or court, exercising executive, legislative, judicial, regulatory or
administrative or quasi-administrative functions of or pertaining to government, and any
arbitration board or tribunal, in each case having jurisdiction over such applicable Person or such
Person’s property and any stock exchange on which shares of capital stock of such Person are listed
or admitted for trading.
“
Ground Lease
” shall mean the lease of the Premises, together with nine (9) amendments
thereto more particularly described on Exhibit G hereto, together with all exhibits and renewals,
modifications and extensions thereto.
- 12 -
“
Ground Lessor
” shall mean the Person which holds the interest of lessor under the
Ground Lease.
“
Guarantor
” shall mean any Person guaranteeing, in whole or in part, the obligations
of Borrower under the Loan Documents which shall initially be Kimpton Development Opportunity Fund,
L.P., a California limited partnership.
“
Hazardous Material
” shall mean any flammable, explosive or radioactive materials,
hazardous materials or wastes, hazardous or toxic substances, pollutants or related materials,
asbestos or any material containing asbestos, molds, spores and fungus which may pose a risk to
human health or the environment or any other substance or material as defined in or regulated by
any Environmental Statutes.
“
Impositions
” shall mean all taxes (including, without limitation, all real estate, ad
valorem, sales (including those imposed on lease rentals), use, single business, gross receipts,
value added, intangible, transaction, privilege or license or similar taxes), assessments
(including, without limitation, all assessments for public improvements or benefits, whether or not
commenced or completed prior to the date hereof and whether or not commenced or completed within
the term of this Security Instrument), ground rents, water, sewer or other rents and charges,
excises, levies, fees (including, without limitation, license, permit, inspection, authorization
and similar fees), and all other governmental charges, in each case whether general or special,
ordinary or extraordinary, or foreseen or unforeseen, of every character in respect of the Property
and/or any Rent (including all interest and penalties thereon), which at any time prior to, during
or in respect of the term hereof may be assessed or imposed on or in respect of or be a lien upon
(a) Borrower (including, without limitation, all franchise, single business or other taxes imposed
on Borrower for the privilege of doing business in the jurisdiction in which the Property or any
other collateral delivered or pledged to Lender in connection with the Loan is located) or Lender,
(b) the Property or any part thereof or any Rents therefrom or any estate, right, title or interest
therein, or (c) any occupancy, operation, use or possession of, or sales from, or activity
conducted on, or in connection with the Property, or any part thereof, or the leasing or use of the
Property, or any part thereof, or the acquisition or financing of the acquisition of the Property,
or any part thereof, by Borrower.
“
Improvements
” shall have the meaning set forth in granting clause (b) of this
Security Instrument.
“
Indemnified Parties
” shall have the meaning set forth in Section 12.01 hereof.
“
Independent
” shall mean, when used with respect to any Person, a Person who (a) is in
fact independent, (b) does not have any direct financial interest or any material indirect
financial interest in Borrower, or in any Affiliate of Borrower or any constituent partner,
shareholder, member or beneficiary of Borrower, (c) is not affiliated with Borrower or any
Affiliate of Borrower or any constituent partner, shareholder, member or beneficiary of Borrower as
an officer, employee, promoter, underwriter, trustee, partner, director or person performing
similar functions and (d) is not a member of the immediate family of a Person defined in (b) or (c)
above. Whenever it is herein provided that any Independent Person’s opinion or certificate shall
- 13 -
be provided, such opinion or certificate shall state that the Person executing the same is
Independent within the meaning hereof.
“
Initial Engineering Deposit
” shall equal the amount set forth on Exhibit B attached
hereto and made a part hereof.
“
Insolvency Opinion
” shall have the meaning set forth in Section 2.02(g)(xix).
“
Institutional Lender
” shall mean any of the following Persons: (a) any bank, savings
and loan association, savings institution, trust company or national banking association, acting
for its own account or in a fiduciary capacity, (b) any charitable foundation, (c) any insurance
company or pension and/or annuity company, (d) any fraternal benefit society, (e) any pension,
retirement or profit sharing trust or fund within the meaning of Title I of ERISA or for which any
bank, trust company, national banking association or investment adviser registered under the
Investment Advisers Act of 1940, as amended, is acting as trustee or agent, (f) any investment
company or business development company, as defined in the Investment Company Act of 1940, as
amended, (g) any small business investment company licensed under the Small Business Investment Act
of 1958, as amended, (h) any broker or dealer registered under the Securities Exchange Act of 1934,
as amended, or any investment adviser registered under the Investment Adviser Act of 1940, as
amended, (i) any government, any public employees’ pension or retirement system, or any other
government agency supervising the investment of public funds, or (j) any other entity all of the
equity owners of which are Institutional Lenders; provided that each of said Persons shall have net
assets in excess of $1,000,000,000 and a net worth in excess of $500,000,000, be in the business of
making commercial mortgage loans, secured by properties of like type, size and value as the
Property and have a long term credit rating which is not less than “BBB-” (or its equivalent) from
each Rating Agency.
“
Insurance Proceeds
” shall mean all of the proceeds received under the insurance
policies required to be maintained by Borrower pursuant to Article III hereof.
“
Insurance Requirements
” shall mean all terms of any insurance policy required by this
Security Instrument, all requirements of the issuer of any such policy, and all regulations and
then current standards applicable to or affecting the Property or any use or condition thereof,
which may, at any time, be recommended by the Board of Fire Underwriters, if any, having
jurisdiction over the Property, or such other Person exercising similar functions.
“
Interest Accrual Period
” shall mean the period commencing on the Closing Date through
and including the tenth (10th) day of March 2007 and, thereafter, each one (1) month period, which
shall commence on the eleventh (11th) day of each calendar month and end on and include the tenth
(10th) day of the next occurring calendar month.
“
Interest Rate
” shall have the meaning set forth in the Note.
“
Interest Shortfall
” shall mean any shortfall in the amount of interest required to be
paid with respect to the Loan Amount on any Payment Date.
“
Inventory
” shall have the meaning as such term is defined in the Uniform Commercial
Code applicable in the State in which the Property is located, including, without limitation,
- 14 -
provisions in storerooms, refrigerators, pantries and kitchens, beverages in wine cellars and
bars, other merchandise for sale, fuel, mechanical supplies, stationery and other expenses,
supplies and similar items, as defined in the Uniform System of Accounts.
“
Late Charge
” shall have the meaning set forth in Section 13.09 hereof.
“
Leases
” shall have the meaning set forth in granting clause (f) of this Security
Instrument.
“
Legal Requirement
” shall mean as to any Person, the certificate of incorporation,
by-laws, certificate of limited partnership, agreement of limited partnership or other organization
or governing documents of such Person, and any law, statute, order, ordinance, judgement, decree,
injunction, treaty, rule or regulation (including, without limitation, Environmental Statutes,
Development Laws and Use Requirements) or determination of an arbitrator or a court or other
Governmental Authority and all covenants, agreements, restrictions and encumbrances contained in
any instruments, in each case applicable to or binding upon such Person or any of its property or
to which such Person or any of its property is subject.
“
Lender
” shall mean the Lender named herein and its successors or assigns.
“
Loan
” shall have the meaning set forth in the Recitals hereto.
“
Loan Amount
” shall have the meaning set forth in the Recitals hereto.
“
Loan Documents
” shall mean this Security Instrument, the Note, the Assignment, and
any and all other agreements, instruments, certificates or documents executed and delivered by
Borrower or any Affiliate of Borrower in connection with the Loan, together with any supplements,
amendments, modifications or extensions thereof.
“
Loan Year
” shall mean each 365 day period (or 366 day period if the month of February
in a leap year is included) commencing on the first day of the month following the Closing Date
(provided, however, that the first Loan Year shall also include the period from the Closing Date to
the end of the month in which the Closing Date occurs).
“
Lockout Expiration Date
” shall have the meaning set forth in Section 15.01 hereof.
“
Loss Proceeds
” shall mean, collectively, all Insurance Proceeds and all Condemnation
Proceeds.
“
Major Space Lease
” shall mean any Space Lease of a tenant or Affiliate of such tenant
where such tenant, together with such Affiliate, leases, in the aggregate, greater than 5,000
square feet.
“
Management Agreement
” shall have the meaning set forth in Section 7.02 hereof.
“
Management Fee Escrow Account
” shall mean the Escrow Account maintained pursuant to
Section 5.11 hereof relating to the payment of the Required Management Fee.
- 15 -
“
Management Fee Sub-Account
” shall mean the Sub-Account of the Central Account
established pursuant to Section 5.02 hereof into which the Required Management Fee shall be
deposited.
“
Manager
” shall mean the Person, other than Borrower, which manages the Property on
behalf of Borrower.
“
Material Adverse Effect
” shall mean any event or condition that has a material
adverse effect on (a) the Property, (b) the business, prospects, profits, management, operations or
condition (financial or otherwise) of Borrower, (c) the enforceability, validity, perfection or
priority of the lien of any Loan Document or (d) the ability of Borrower to perform any obligations
under any Loan Document.
“
Maturity
”, when used with respect to the Note, shall mean the Maturity Date set forth
in the Note or such other date pursuant to the Note on which the final payment of principal, and
premium, if any, on the Note becomes due and payable as therein or herein provided, whether at
Stated Maturity or by declaration of acceleration, or otherwise.
“
Maturity Date
” shall mean the Maturity Date set forth in the Note.
“
Monthly Debt Service Payment
” shall mean a monthly payment of principal and interest
in an amount equal to that which is required pursuant to the Note.
“
Multiemployer Plan
” shall mean a multiemployer plan defined as such in Section 3(37)
of ERISA to which contributions have been, or were required to have been, made by Borrower,
Guarantor or any ERISA Affiliate and which is covered by Title IV of ERISA.
“
Net Capital Expenditures
” shall mean for any period the amount by which Capital
Expenditures during such period exceed reimbursements for such items during such period from any
fund established pursuant to the Loan Documents.
“
Net Operating Income
” shall mean in each Fiscal Year or portion thereof during the
term hereof, Operating Income less Operating Expenses.
“
Net Proceeds
” shall mean the excess of (a)(i) the purchase price (at foreclosure or
otherwise) actually received by Lender with respect to the Property as a result of the exercise by
Lender of its rights, powers, privileges and other remedies after the occurrence of an Event of
Default, or (ii) in the event that Lender (or Lender’s nominee) is the purchaser at foreclosure by
credit bid, then the amount of such credit bid, in either case, over (b) all costs and expenses,
including, without limitation, all attorneys’ fees and disbursements and any brokerage fees, if
applicable, incurred by Lender in connection with the exercise of such remedies, including the sale
of such Property after a foreclosure against the Property.
“
New Lease
” shall have the meaning set forth in Section 2.05 hereof.
“
Note
” shall have the meaning set forth in the Recitals hereto.
- 16 -
“
OFAC List
” shall mean the list of specially designated nationals and blocked persons
subject to financial sanctions that is maintained by the U.S. Treasury Department, Office of
Foreign Assets Control and accessible through the internet website www.treas.gov/ofac/t11sdn.pdf.
“
Officer’s Certificate
” shall mean a certificate delivered to Lender by Borrower which
is signed on behalf of Borrower by an authorized representative of Borrower which states that the
items set forth in such certificate are true, accurate and complete in all material respects.
“
Operating Expenses
” shall mean, in each Fiscal Year or portion thereof during the
term hereof, all expenses directly attributable to the operation, repair and/or maintenance of the
Property including, without limitation, (a) Impositions, (b) insurance premiums, (c) management
fees, whether or not actually paid, equal to the greater of the actual management fees payable
under the Management Agreement and four percent (4%) of annual gross operating income for the
Property, (d) costs attributable to the operation, repair and maintenance of the systems for
heating, ventilating and air conditioning the Improvements and actually paid for by Borrower and
(e) any other amounts designated as operating expenses or “
Out-of-Pocket Costs
” in the
Management Agreement, including without limitation amounts sufficient for the operation,
maintenance and repair of the Property in accordance with the Approved Manager Standard for the
ownership and operation of the Property, including without limitation all compensation of
employees, costs of supplies and Inventory, amounts payable to vendors and suppliers. Operating
Expenses shall not include interest, principal and premium, if any, due under the Note or otherwise
in connection with the Debt, income taxes, extraordinary capital improvement costs, any non-cash
charge or expense such as depreciation or amortization or any item of expense otherwise includable
in Operating Expenses which is paid directly by any tenant except real estate taxes paid directly
to any taxing authority by any tenant.
“
Operating Income
” shall mean, in each Fiscal Year or portion thereof during the term
hereof, all revenue derived by Borrower arising from the Property including, without limitation,
room revenues, meeting and banquet room revenue, items sold from guestrooms, sales from shops,
sales from restaurants, parking revenues, vending machines revenues, beverage revenues, food
revenues, and packaging revenues, rental revenues (whether denominated as basic rent, additional
rent, escalation payments, electrical payments or otherwise) and other fees, charges and amounts
from income generating activities connected with the Property, such as income from vending
machines, health club memberships, service charges, exhibit or sales space, all revenues for
providing telephone services, and all rents or other fees payable by tenants, licensees and
concessionaires or payable pursuant to Leases or otherwise in connection with the Property, and
business interruption, rent or other similar insurance proceeds. Operating Income shall not
include (a) Insurance Proceeds (other than proceeds of rent, business interruption or other similar
insurance allocable to the applicable period) and Condemnation Proceeds (other than Condemnation
Proceeds arising from a temporary taking or the use and occupancy of all or part of the applicable
Property allocable to the applicable period), or interest accrued on such Condemnation Proceeds,
(b) proceeds of any financing, (c) proceeds of any sale, exchange or transfer of the Property or
any part thereof or interest therein, (d) capital contributions or loans to Borrower or an
Affiliate of Borrower, (e) any item of income otherwise includable in Operating Income but paid
directly by any tenant to a Person other than Borrower except for real estate taxes paid directly
to any taxing authority by any tenant, (f) any other extraordinary, non-recurring
- 17 -
revenues as reasonably determined by Lender, (g) Rent paid by or on behalf of any
lessee under a Space Lease which is the subject of any proceeding or action relating to its
bankruptcy, reorganization or other arrangement pursuant to the Bankruptcy Code or any similar
federal or state law or which has been adjudicated a bankrupt or insolvent unless such Space Lease,
as applicable, has been affirmed by the trustee in such proceeding or action, (h) Rent paid by or
on behalf of any lessee under a Lease the demised premises of which are not occupied either by such
lessee or by a sublessee thereof; (i) Rent paid by or on behalf of any lessee under a Lease in
whole or partial consideration for the termination of any Lease, or (j) sales tax rebates from any
Governmental Authority.
“
Operation and Maintenance Expense Escrow Account
” shall mean the Escrow Account
maintained pursuant to Section 5.09 hereof relating to the payment of Operating Expenses (exclusive
of Basic Carrying Costs).
“
Operation and Maintenance Expense Sub-Account
” shall mean the Sub-Account of the
Central Account established pursuant to Section 5.02 hereof into which sums allocated for the
payment of Cash Expenses, Net Capital Expenditures and approved Extraordinary Expenses shall be
deposited.
“
Payment Date
” shall mean, with respect to each month, the eleventh (11th) calendar
day in such month, or if such day is not a Business Day, the next following Business Day.
“
PBGC
” shall mean the Pension Benefit Guaranty Corporation established under ERISA, or
any successor thereto.
“
Permitted Encumbrances
” shall have the meaning set forth in Section 2.05(a) hereof.
“
Permitted Liens
” shall mean, with respect to the Property, collectively, (a) the
liens created by this Security Instrument and the other Loan Documents, (b) all liens and other
matters disclosed on the title insurance policy insuring the lien of this Security Instrument, (c)
liens, if any, for Impositions imposed by any Governmental Authority not yet delinquent or being
contested in good faith and by appropriate proceedings in accordance with the Loan Documents, (d)
mechanic’s or materialmen’s liens, if any, being contested in good faith and by appropriate
proceedings in accordance with the Loan Documents, (e) rights of existing and future tenants
pursuant to Space Leases entered into in accordance with this Security Instrument, (f) liens
relating to equipment financing which are incurred in the ordinary course of business in connection
with the ownership of the Property in an amount not to exceed two percent (2%) of the Loan Amount
and (g) such other title and survey exceptions as Lender has approved or may approve in writing in
Lender’s reasonable discretion, all of which (other than the liens of the type set forth in clauses
(a) and (b) above) are subordinate to the lien of this Security Instrument.
“
Person
” shall mean any individual, corporation, limited liability company,
partnership, joint venture, estate, trust, unincorporated association, any federal, state, county
or municipal government or any bureau, department or agency thereof and any fiduciary acting in
such capacity on behalf of any of the foregoing.
“
Plan
” shall mean an employee benefit or other plan established or maintained by
Borrower, Guarantor or any ERISA Affiliate during the five-year period ended prior to the date
- 18 -
of this Security Instrument or to which Borrower, Guarantor or any ERISA Affiliate makes, is
obligated to make or has, within the five year period ended prior to the date of this Security
Instrument, been required to make contributions (whether or not covered by Title IV of ERISA or
Section 302 of ERISA or Section 401(a) or 412 of the Code), other than a Multiemployer Plan.
“
Premises
” shall have the meaning set forth in granting clause (a) of this Security
Instrument.
“
Principal Amount
” shall mean the Loan Amount as such amount may be reduced from time
to time pursuant to the terms of this Security Instrument, the Note or the other Loan Documents.
“
Principal Payments
” shall mean all payments of principal made pursuant to the terms
of the Note.
“
Prohibited Person
” shall mean any Person and/or any Affiliate thereof identified on
the OFAC List or any other Person or foreign country or agency thereof with whom a U.S. Person may
not conduct business or transactions by prohibition of Federal law or Executive Order of the
President of the United States of America.
“
Property
” shall have the meaning set forth in the granting clauses of this Security
Instrument.
“
Property Agreements
” shall mean all agreements, grants of easements and/or
rights-of-way, reciprocal easement agreements, permits, declarations of covenants, conditions and
restrictions, disposition and development agreements, planned unit development agreements, parking
agreements, party wall agreements or other instruments affecting the Property, but not including
any brokerage agreements, management agreements, service contracts, Space Leases or the Loan
Documents.
“
Rating Agency
” shall mean each of Standard & Poor’s Ratings Services, a division of
The McGraw-Hill Company, Inc. (“
Standard & Poor’s
”), Fitch, Inc., and Moody’s Investors
Service, Inc. (“
Moody’s
”), and any successor to any of them; provided, however, that at any
time after a Securitization, “
Rating Agency
” shall mean those of the foregoing rating
agencies that from time to time rate the securities issued in connection with such Securitization.
“
Real Estate Taxes
” shall mean all real estate taxes, assessments (including, without
limitation, all assessments for public improvements or benefits, whether or not commenced or
completed prior to the date hereof and whether or not commenced or completed within the term of
this Security Instrument), water, sewer or other rents and charges, and all other governmental
charges, in each case whether general or special, ordinary or extraordinary, or foreseen or
unforeseen, of every character in respect of the Property (including all interest and penalties
thereon), which at any time prior to, during or in respect of the term hereof may be assessed or
imposed on or in respect of or be a lien upon the Property or any part thereof or any estate,
right, title or interest therein.
“
Realty
” shall have the meaning set forth in Section 2.05(b) hereof.
- 19 -
“
Recurring Replacement Expenditures
” shall mean expenditures related to capital
repairs, replacements and improvements performed at the Property from time to time.
“
Recurring Replacement Reserve Escrow Account
” shall mean the Escrow Account
maintained pursuant to Section 5.08 hereof relating to the payment of Recurring Replacement
Expenditures.
“
Recurring Replacement Reserve Monthly Installment
” shall mean the amount per month
equal to four percent (4%) of the trailing twelve (12) month gross revenues of the Property divided
by twelve (12) which shall initially be the amount set forth on Exhibit B attached hereto and made
a part hereof (the “
Initial Recurring Installments
”).
“
Recurring Replacement Reserve Sub-Account
” shall mean the Sub-Account of the Central
Account established pursuant to Section 5.02 hereof into which the Recurring Replacement Reserve
Monthly Installment shall be deposited.
“
Regulation AB
” shall mean Regulation AB under the Securities Act and the Securities
Exchange Act of 1934 (as amended).
“
Rent Account
” shall mean an Eligible Account maintained at a bank reasonably
acceptable to Lender in the name of Lender or its successors or assigns (as secured party) as may
be designated by Lender, and Borrower.
“
Rents
” shall have the meaning set forth in granting clause (f) of this Security
Instrument.
“
Rent Roll
” shall have the meaning set forth in Section 2.05 (o) hereof.
“
Required Debt Service Coverage
” shall mean a Debt Service Coverage of not less than
1.2:1.
“
Required Debt Service Payment
” shall mean, as of any Payment Date, (a) the amount of
interest and principal then due and payable pursuant to the Note, together with any other sums due
thereunder, including, without limitation, any prepayments required to be made or for which notice
has been given under this Security Instrument, Default Rate Interest and premium, if any, paid in
accordance therewith plus (b) reasonable out-of-pocket fees incurred by Lender in connection with
its administration and servicing of the Central Account.
“
Required Engineering Work
” shall mean the immediate engineering and/or environmental
remediation work set forth on Exhibit D attached hereto and made a part hereof.
“
Required Management Fee
” shall mean, as of any Payment Date, 4% of the gross revenues
of the Property for the prior calendar month.
“
Retention Amount
” shall have the meaning set forth in Section 3.04(b)(vii) hereof.
“
RevPAR
” shall mean the average revenues per available room per day.
- 20 -
“
RevPAR Yield Index
” shall mean the percentage amount determined by dividing the
RevPAR of the Property by the RevPAR of the Property’s Competitive Set as set forth by Smith Travel
Research (“
STR
”) as the Property’s Competitive Set is reasonably determined by Lender or if
STR is no longer publishing, a successor reasonably acceptable to Lender.
“
Securities Act
” shall mean the Securities Act of 1933, as the same shall be amended
from time to time.
“
Securitization
” shall mean a public or private offering of securities by Lender or
any of its Affiliates or their respective successors and assigns which are collateralized, in whole
or in part, by this Security Instrument.
“
Security Instrument
” shall mean this Security Instrument as originally executed or as
it may hereafter from time to time be supplemented, amended, modified or extended by one or more
indentures supplemental hereto.
“
Significant Obligor
” shall have the meaning set forth in Item 1101(k) of Regulation
AB.
“
Single Purpose Entity
” shall mean a corporation, partnership, joint venture, limited
liability company, trust or unincorporated association, which is formed or organized solely for the
purpose of holding, directly, an ownership interest in the Property or, with respect to General
Partner, holding an ownership interest in and managing a Person which holds an ownership interest
in the Property, does not engage in any business unrelated to, with respect to Borrower, the
Property and, with respect to General Partner, its interest in Borrower, does not have any assets
other than those related to, with respect to Borrower, its interest in the Property and, with
respect to General Partner, its interest in Borrower, or any indebtedness other than as permitted
by this Security Instrument or the other Loan Documents, has its own separate books and records and
has its own accounts, in each case which are separate and apart from the books and records and
accounts of any other Person, holds itself out as being a Person separate and apart from any other
Person and which otherwise satisfies the criteria of the Rating Agency, as in effect on the Closing
Date, for a special-purpose bankruptcy-remote entity.
“
Solvent
” shall mean, as to any Person, that (a) the sum of the assets of such Person,
at a fair valuation, exceeds its liabilities, including contingent liabilities, (b) such Person has
sufficient capital with which to conduct its business as presently conducted and as proposed to be
conducted and (c) such Person has not incurred debts, and does not intend to incur debts, beyond
its ability to pay such debts as they mature. For purposes of this definition, “debt” means any
liability on a claim, and “claim” means (a) a right to payment, whether or not such right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured or unsecured, or (b) a right to an equitable remedy for
breach of performance if such breach gives rise to a payment, whether or not such right to an
equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed,
undisputed, secured, or unsecured. With respect to any such contingent liabilities, such
liabilities shall be computed in accordance with GAAP at the amount which, in light of all the
facts and circumstances existing at the time, represents the amount which can reasonably be
expected to become an actual or matured liability.
- 21 -
“
Space Leases
” shall mean any Lease or sublease thereunder (including, without
limitation, any Major Space Lease) or any other agreement providing for the use and occupancy of a
portion of the Property as the same may be amended, renewed or supplemented (other than occupancy
agreements entered into with hotel guests, banquet facilities and meeting rooms in the ordinary
course of business for a period of less than ninety (90) consecutive days in the aggregate or seven
(7) consecutive days with respect to meeting rooms and banquet facilities).
“
State
” shall mean any of the states which are members of the United States of
America.
“
Stated Maturity
”, when used with respect to the Note or any installment of interest
and/or principal payment thereunder, shall mean the date specified in the Note as the fixed date on
which a payment of all or any portion of principal and/or interest is due and payable.
“
Sub-Accounts
” shall have the meaning set forth in Section 5.02 hereof.
“
Substantial Casualty
” shall have the meaning set forth in Section 3.04 hereof.
“
Taking
” shall mean a condemnation or taking pursuant to the lawful exercise of the
power of eminent domain.
“
Transfer
” shall mean the conveyance, assignment, sale, mortgaging, encumbrance,
pledging, hypothecation, granting of a security interest in, granting of options with respect to,
or other disposition of (directly or indirectly, voluntarily or involuntarily, by operation of law
or otherwise, and whether or not for consideration or of record) all or any portion of any legal or
beneficial interest (a) in all or any portion of the Property (other than furniture, fixtures,
equipment and other personal property which has become obsolete or unfit for use provided such
furniture, fixtures and equipment is promptly replaced with furniture, fixtures or equipment, as
applicable, of equal value and utility pursuant to Section 8.01(e) hereof or furniture, fixtures
and equipment which is no longer useful in the management, operation or maintenance of the
property); (b) if Borrower is a corporation or, if Borrower is a partnership and any General
Partner, is a corporation, in the stock of Borrower or any General Partner; (c) in Borrower (or any
trust of which Borrower is a trustee); or (d) if Borrower is a limited or general partnership,
joint venture, limited liability company, trust, nominee trust, tenancy in common or other
unincorporated form of business association or form of ownership interest, in any Person having a
legal or beneficial ownership in Borrower, excluding any legal or beneficial interest in any
constituent limited partner, if Borrower is a limited partnership, or in any non-managing member,
if Borrower is a limited liability company, unless such interest would, or together with all other
direct or indirect interests in Borrower which were previously transferred, aggregate 49% or more
of the partnership or membership, as applicable, interest in Borrower or would result in any Person
who, as of the Closing Date, did not own, directly or indirectly, 49% or more of the partnership or
membership, as applicable, interest in Borrower, owning, directly or indirectly, 49% or more of the
partnership or membership, as applicable, interest in Borrower and excluding any legal or
beneficial interest in any General Partner unless such interest would, or together with all other
direct or indirect interest in the General Partner which were previously transferred, aggregate 49%
or more of the partnership or membership, as applicable, interest in the General Partner (or result
in a change in control of the management of the General Partner from the individuals exercising
such control immediately prior to the conveyance or other
- 22 -
disposition of such legal or beneficial interest). “Transfer” shall also include, without
limitation to the foregoing, the following: (a) an installment sales agreement wherein Borrower
agrees to sell the Property or any part thereof or any interest therein for a price to be paid in
installments, (b) an agreement by Borrower leasing all or substantially all of the Property to one
or more Persons pursuant to a single or related transactions (outside of rentals of meeting rooms,
banquet facilities or hotel rooms in the ordinary course of business), 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 Rent, (c) any instrument subjecting the Property to a condominium regime
or transferring ownership to a cooperative corporation, and (d) the dissolution or termination of
Borrower or the merger or consolidation of Borrower with any other Person. Notwithstanding the
foregoing or anything to the contrary contained in any other Loan Document, “Transfer” shall not
include any sale, transfer, conveyance or assignment of any direct or indirect legal or beneficial
ownership interest in Borrower, or any mortgaging, encumbrance, pledging, hypothecation or granting
of a security interest in any indirect ownership interest in any limited partner of Borrower,
provided, in each case, that Kimpton Group Holding LLC, a Delaware limited liability company
(“
KGH
”) continues to Control Borrower and that, in the event that any Person (a
“
Principal Transferee
”) who does not, as of the Closing Date, own or Control, directly or
indirectly, 49% or more of the stock, partnership interest or membership interest, as applicable,
in Borrower acquires, directly or indirectly, 49% or more of the stock, partnership or membership
interest, as applicable, in Borrower as a result of such transfer, conveyance, assignment, sale,
mortgaging, encumbrance, pledging, hypothecation or granting of a security interest, Lender shall
be furnished an opinion, in form and substance and from counsel reasonably satisfactory to Lender,
substantially similar to the Insolvency Opinion which discusses the substantive non-consolidation
of Borrower with the Principal Transferee in the event of a bankruptcy, insolvency or similar
proceeding relating to the Principal Transferee and provided, further, that, in the event that any
Person who does not, as of the Closing Date, own or Control, directly or indirectly, 20% or more of
the stock partnership interest or membership interest, as applicable, in Borrower acquires,
directly or indirectly, 20% or more of the stock, partnership interest or membership interest, as
applicable, in Borrower as a result of such transfer, conveyance, assignment, sale, mortgaging,
encumbrance, pledging, hypothecation or granting of a security interest, Lender shall be entitled
to approve such Person, which approval shall not be unreasonably withheld and shall be granted or
withheld in accordance with Lender’s then standard criteria with respect to approving borrowers for
loans similar to the Loan which are to be included in a Securitization.
“
Trustee
” shall mean the Person or Persons identified in this Security Instrument as
the trustee hereunder and its or their successors and assigns.
“
UCC
” shall mean the Uniform Commercial Code as in effect on the date hereof in the
State in which the Realty is located; provided, however, that if by reason of mandatory provisions
of law, the perfection or the effect of perfection or non-perfection or priority of the security
interest in any item or portion of the collateral is governed by the Uniform Commercial Code as in
effect in a jurisdiction other than the State in which the Realty is located (“
Other UCC
State
”), “UCC” means the Uniform Commercial Code as in effect in such Other UCC State for
purposes of the provisions hereof relating to such perfection or effect of perfection or
non-perfection or priority.
- 23 -
“
Uniform System of Accounts
” shall mean the Uniform System of Accounts for the Lodging
Industry, 9th Revised Edition, Educational Institute of the American Hotel and Motel Association
and Hotel Association of New York City (1996), as from time to time amended.
“
Unscheduled Payments
” shall mean (a) all Loss Proceeds that Borrower has elected or
is required to apply to the repayment of the Debt pursuant to this Security Instrument, the Note or
any other Loan Documents, (b) any funds representing a voluntary or involuntary principal
prepayment other than scheduled Principal Payments and (c) any Net Proceeds.
“
Use Requirements
” shall mean any and all building codes, permits, certificates of
occupancy or compliance, laws, regulations, or ordinances (including, without limitation, health,
pollution, fire protection, medical and day-care facilities, waste product and sewage disposal
regulations), restrictions of record, easements, reciprocal easements, declarations or other
agreements affecting the use of the Property or any part thereof.
“
Welfare Plan
” shall mean an employee welfare benefit plan as defined in Section 3(1)
of ERISA established or maintained by Borrower, Guarantor or any ERISA Affiliate or that covers any
current or former employee of Borrower, Guarantor or any ERISA Affiliate.
“
Work
” shall have the meaning set forth in Section 3.04(a)(i) hereof.
“
Yield Maintenance Premium
” shall have the meaning set forth in Section 15.01 hereof.
ARTICLE II: REPRESENTATIONS, WARRANTIES
AND COVENANTS OF BORROWER
Section 2.01.
Payment of Debt
. Borrower will pay the Debt at the time and in the
manner provided in the Note and the other Loan Documents, all in lawful money of the United States
of America in immediately available funds.
Section 2.02.
Representations, Warranties and Covenants of Borrower
. Borrower
represents and warrants to and covenants with Lender:
(a)
Organization and Authority
. Borrower (i) is a limited liability company, general
partnership, limited partnership or corporation, as the case may be, duly organized, validly
existing and in good standing under the laws of the jurisdiction of its formation, (ii) has all
requisite power and authority and has or has caused Manager to obtain all necessary licenses and
permits to own and operate the Property and to carry on its business as now conducted and as
presently proposed to be conducted and (iii) is duly qualified, authorized to do business and in
good standing in the jurisdiction where the Property is located and in each other jurisdiction
where the conduct of its business or the nature of its activities makes such qualification
necessary. If Borrower is a limited liability company, limited partnership or general partnership,
each general partner or managing member, as applicable, of Borrower which is a corporation is duly
organized, validly existing, and in good standing under the laws of the jurisdiction of its
incorporation.
(b)
Power
. Borrower and, if applicable, each General Partner has full power and
authority to execute, deliver and perform, as applicable, the Loan Documents to which it is a
- 24 -
party, to make the borrowings thereunder, to execute and deliver the Note and to grant to
Lender a first, prior, perfected and continuing lien on and security interest in the Property,
subject only to the Permitted Encumbrances.
(c)
Authorization of Borrowing
. The execution, delivery and performance of the Loan
Documents to which Borrower is a party, the making of the borrowings thereunder, the execution and
delivery of the Note, the grant of the liens on the Property pursuant to the Loan Documents to
which Borrower is a party and the consummation of the Loan are within the powers of Borrower and
have been duly authorized by Borrower and, if applicable, the General Partners, by all requisite
action (and Borrower hereby represents that no approval or action of any member, limited partner or
shareholder, as applicable, of Borrower is required to authorize any of the Loan Documents to which
Borrower is a party or if such authorization is required, it has been obtained) and will constitute
the legal, valid and binding obligation of Borrower, enforceable against Borrower in accordance
with their terms, except as enforcement may be stayed or limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors’ rights generally and by general principles of
equity (whether considered in proceedings at law or in equity) and will not (i) violate any
provision of its partnership agreement or partnership certificate or certificate of incorporation
or by-laws, or operating agreement, certificate of formation or articles of organization, as
applicable, or, to its knowledge, any law, judgment, order, rule or regulation of any court,
arbitration panel or other Governmental Authority, domestic or foreign, or other Person affecting
or binding upon Borrower or the Property, or (ii) violate any provision of any indenture,
agreement, mortgage, deed of trust, contract or other instrument to which Borrower or, if
applicable, any General Partner is a party or by which any of their respective property, assets or
revenues are bound, or be in conflict with, result in an acceleration of any obligation or a breach
of or constitute (with notice or lapse of time or both) a default or require any payment or
prepayment under, any such indenture, agreement, mortgage, deed of trust, contract or other
instrument, or (iii) result in the creation or imposition of any lien, except those in favor of
Lender as provided in the Loan Documents to which it is a party.
(d)
Consent
. Neither Borrower nor, if applicable, any General Partner, is required to
obtain any consent, approval or authorization from, or to file any declaration or statement with,
any Governmental Authority or other agency in connection with or as a condition to the execution,
delivery or performance of this Security Instrument, the Note or the other Loan Documents which has
not been so obtained or filed.
(e)
Interest Rate
. The rate of interest paid under the Note and the method and manner
of the calculation thereof do not violate any usury or other law or applicable Legal Requirement.
(f)
Other Agreements
. Borrower is not a party to nor is otherwise bound by any
agreements or instruments which, individually or in the aggregate, are reasonably likely to have a
Material Adverse Effect. Neither Borrower nor, if applicable, any General Partner, is in violation
of its organizational documents or other restriction or any agreement or instrument by which it is
bound, or any judgment, decree, writ, injunction, order or award of any arbitrator, court or
Governmental Authority, or any Legal Requirement, in each case, applicable to
- 25 -
Borrower or the Property, except for such violations that would not, individually or in the
aggregate, have a Material Adverse Effect.
(g)
Maintenance of Existence
. (i) Borrower and, if applicable, each General Partner
at all times since their formation have been duly formed and existing at all times and at all times
have preserved and shall preserve and has kept and shall keep in full force and effect their
existence as a Single Purpose Entity, it being acknowledged by Lender that, although Borrower and
General Partner conducted themselves in accordance with the provisions of this Section 2.02(g)
since their formation, prior to the Loan the organizational documents of Borrower and General
Partner did not contain all of the covenants as set forth in this Section 2.02(g).
(ii) Borrower and, if applicable, each General Partner, at all times since their
organization have complied, and will continue to comply, with the provisions of its
certificate of limited partnership and agreement of limited partnership or certificate of
incorporation and by-laws or articles of organization, certificate of formation and
operating agreement, as applicable, and the laws of its jurisdiction of organization
relating to partnerships, corporations or limited liability companies, as applicable.
(iii) Borrower and, if applicable, each General Partner have done or caused to be done
and will do all things necessary to observe organizational formalities and preserve their
existence and Borrower and, if applicable, each General Partner will not amend, modify or
otherwise change any material provisions contained in the certificate of limited partnership
and agreement of limited partnership or certificate of incorporation and by-laws or articles
of organization, certificate of formation and operating agreement, as applicable, or other
organizational documents of Borrower and, if applicable, each General Partner (it being
acknowledged that all provisions relating to the requirements of any Person to be a Single
Purpose Entity shall be deemed material).
(iv) Borrower and, if applicable, each General Partner, have at all times accurately
maintained, and will continue to accurately maintain, their respective financial statements,
accounting records and other partnership, company or corporate documents separate from those
of any other Person, have filed and will file their own tax returns or, if Borrower and/or,
if applicable, General Partner is part of a consolidated group for purposes of filing tax
returns, Borrower and, General Partner, as applicable, have been shown and will be shown as
separate members of such group. Borrower and, if applicable, each General Partner have not
at any time since their formation commingled, and will not commingle, their respective
assets with those of any other Person and each has maintained and will maintain their assets
in such a manner such that it will not be costly or difficult to segregate, ascertain or
identify their individual assets from those of any other Person. Borrower and, if
applicable, each General Partner has not permitted and will not permit any Affiliate
independent access to their bank accounts provided that Borrower has granted Manager the
ability to sign checks from its accounts. Borrower and, if applicable, each General Partner
have at all times since their formation accurately maintained and utilized, and will
continue to accurately maintain and utilize, their own separate bank accounts, payroll and
separate books of account, stationery, invoices and checks.
- 26 -
(v) Borrower and, if applicable, each General Partner, have at all times paid, and will
continue to pay, their own liabilities from their own separate assets and each has allocated
and charged and shall each allocate and charge fairly and reasonably any overhead which
Borrower and, if applicable, any General Partner, shares with any other Person, including,
without limitation, for office space and services performed by any employee of another
Person.
(vi) Borrower and, if applicable, each General Partner, have at all times identified
themselves, and will continue to identify themselves, in all dealings with the public, under
their own names and as separate and distinct entities and have corrected and shall correct
any known misunderstanding regarding their status as separate and distinct entities.
Borrower and, if applicable, each General Partner, have not at any time identified
themselves, and will not identify themselves, as being a division of any other Person.
(vii) Borrower and, if applicable, each General Partner, have been at all times, and
will continue to be, adequately capitalized in light of the nature of their respective
businesses.
(viii) Borrower and, if applicable, each General Partner, (A) have not owned, do not
own and will not own any assets or property other than, with respect to Borrower, the
Property and any incidental personal property necessary for the ownership, management or
operation of the Property and, with respect to General Partner, if applicable, its interest
in Borrower, (B) have not engaged and will not engage in any business other than the
ownership, management and operation of the Property or, with respect to General Partner, if
applicable, its interest in Borrower, (C) other than debt secured by the Property being paid
in full on the Closing Date (the “
Previous Loan
”), have not incurred and will not
incur any debt, secured or unsecured, direct or contingent (including guaranteeing any
obligation), other than, with respect to Borrower, (X) the Loan and (Y) unsecured trade and
operational debt which (1) is not evidenced by a note, (2) is incurred in the ordinary
course of the operation of the Property, (3) does not exceed in the aggregate four percent
(4%) of the Loan Amount, and (4) is, unless being contested in accordance with the terms of
this Security Instrument, paid prior to the earlier to occur of the sixtieth (60th) day
after the date incurred and the date when due, (D) other than the pledge securing the
Previous Loan which shall be released on the Closing Date, have not pledged and will not
pledge their assets for the benefit of any other Person, and (E) have not made and will not
make any loans or advances to any Person (including any Affiliate).
(ix) Neither Borrower nor, if applicable, any General Partner will change its name or
principal place of business.
(x) Neither Borrower nor, if applicable, any General Partner has, and neither of such
Persons will have, any subsidiaries (other than, with respect to General Partner, Borrower).
(xi) Borrower has preserved and maintained and will preserve and maintain its existence
as a California limited partnership and all material rights, privileges,
- 27 -
tradenames and franchises. General Partner, if applicable, has preserved and
maintained and will preserve and maintain its existence as a Delaware limited liability
company and all material rights, privileges, tradenames and franchises.
(xii) Neither Borrower, nor, if applicable, any General Partner, has merged or
consolidated with, and neither will merge or consolidate with, and neither has sold all or
substantially all of its respective assets to any Person, and neither will sell all or
substantially all of its respective assets to any Person, and neither has liquidated, wound
up or dissolved itself (or suffered any liquidation, winding up or dissolution) and neither
will liquidate, wind up or dissolve itself (or suffer any liquidation, winding up or
dissolution). Neither Borrower, nor, if applicable, any General Partner has acquired, nor
will acquire any business or assets from, or capital stock or other ownership interest of,
or be a party to any acquisition of, any Person.
(xiii) Borrower and, if applicable, each General Partner, have not at any time since
their formation assumed, guaranteed or held themselves out to be responsible for, and will
not assume, guarantee or hold themselves out to be responsible for the liabilities or the
decisions or actions respecting the daily business affairs of their partners, shareholders
or members or any predecessor company, corporation or partnership, each as applicable, any
Affiliates, or any other Persons. Borrower and, if applicable, each General Partner, have
not at any time since their formation acquired, and will not acquire, obligations or
securities of its partners or shareholders, members or any predecessor company, corporation
or partnership, each as applicable, or any Affiliates (other than, with respect to General
Partner, its interest in Borrower). Borrower and, if applicable, each General Partner, have
not at any time (other than on arms-length market terms) since their formation made, and
will not make, loans to its partners, members or shareholders or any predecessor company,
corporation or partnership, each as applicable, or any Affiliates of any of such Persons.
Borrower and, if applicable, each General Partner, have no knowledge of any contingent
liabilities that could reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect, nor do they have any material financial liabilities under any
indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which
such Person is a party or by which it is otherwise bound other than under the Loan
Documents.
(xiv) Borrower and, if applicable, each General Partner, have not at any time since
their formation entered into and was not a party to, and, will not enter into or be a party
to, any transaction with its Affiliates, members, partners or shareholders, as applicable,
or any Affiliates thereof except in the ordinary course of business of such Person on terms
which are no less favorable to such Person than would be obtained in a comparable arm’s
length transaction with an unrelated third party.
(xv) If Borrower is a limited partnership or a limited liability company, the General
Partner shall be a corporation or limited liability company whose sole asset is its interest
in Borrower and the General Partner will at all times comply, and will cause Borrower to
comply, with each of the representations, warranties, and covenants contained in this
Section 2.02(g) as if such representation, warranty or covenant was made directly by such
General Partner.
- 28 -
(xvi) Borrower shall at all times cause there to be at least one duly appointed member
of the board of directors or board of managers or other governing board or body, as
applicable (an “
Independent Director
”), of, if Borrower is a corporation, Borrower,
and, if Borrower is a limited partnership, of the General Partner, and if Borrower is a
limited liability company, of the General Partner or of Borrower, provided that such
Independent Director may, for purposes hereof, be a member of the General Partner rather
than of the board of directors of the General Partner, reasonably satisfactory to Lender who
shall not have been at the time of such individual’s appointment, and may not be or have
been at any time (A) a shareholder, officer, director, attorney, counsel, partner, member or
employee of Borrower or any of the foregoing Persons or Affiliates thereof, (B) a customer
or creditor of, or supplier or service provider (other than a supplier of registered agent
or registered office services) to, Borrower or any of its shareholders, partners, members or
their Affiliates, (C) a member of the immediate family of any Person referred to in (A) or
(B) above or (D) a Person Controlling, Controlled by or under common Control with any Person
referred to in (A) through (C) above.
(xvii) General Partner and, if applicable, Borrower, shall not cause or permit the
board of directors or board of managers or other governing board or body, as applicable, of
General Partner or, if applicable, Borrower, to take any action which, under the terms of
any certificate of incorporation, by-laws, limited liability company agreement, operating
agreement, certificate of formation or articles of organization requires a vote of the board
of directors or board of managers or other governing board or body of the General Partner,
or, if applicable, Borrower, unless at the time of such action there shall be at least one
member who is an Independent Director.
(xviii) Borrower and, if applicable, each General Partner has paid and shall pay the
salaries of their own employees and has maintained and shall maintain a sufficient number of
employees in light of their contemplated business operations.
(xix) Borrower shall, and shall cause its Affiliates to, and Borrower has and has
caused its Affiliates to, conduct its business so that the assumptions made with respect to
Borrower and, if applicable, each General Partner, in that certain opinion letter relating
to substantive non-consolidation dated the date hereof (the “
Insolvency Opinion
”)
delivered in connection with the Loan has been and shall be true and correct in all material
respects.
(xx) Borrower shall not enter into any franchise agreement without Lender’s prior
written consent.
Notwithstanding anything to the contrary contained in this Section 2.02(g), provided Borrower
is a Delaware single member limited liability company which satisfies the single purpose bankruptcy
remote entity requirements of each Rating Agency for a single member limited liability company, the
foregoing provisions of this Section 2.02(g) shall not apply to the General Partner.
- 29 -
(h)
No Defaults
. No Default or Event of Default has occurred and is continuing or
would occur as a result of the consummation of the transactions contemplated by the Loan Documents.
Borrower is not in default in the payment or material performance of any of its Contractual
Obligations in any respect.
(i)
Consents and Approvals
. Borrower and, if applicable, each General Partner, have
obtained or made all necessary (i) consents, approvals and authorizations, and registrations and
filings of or with all Governmental Authorities and (ii) consents, approvals, waivers and
notifications of partners, stockholders, members, creditors, lessors and other nongovernmental
Persons, in each case, which are required to be obtained or made by Borrower or, if applicable, the
General Partner, in connection with the execution and delivery of, and the performance by Borrower
of its obligations under, the Loan Documents.
(j)
Investment Company Act Status, Etc.
Borrower is not (i) an “investment company,”
or a company “controlled” by an “investment company,” as such terms are defined in the Investment
Company Act of 1940, as amended, (ii) a “holding company” or a “subsidiary company” of a “holding
company” or an “affiliate” of either a “holding company” or a “subsidiary company” within the
meaning of the Public Utility Holding Company Act of 1935, as amended, or (iii) subject to any
other federal or state law or regulation which purports to restrict or regulate its ability to
borrow money.
(k)
Compliance with Law
. (i) Except as previously disclosed to Lender in the
Disclosure Schedule, Borrower has received no written notice of violation of any Legal Requirements
and (ii) except for such violations which would not, individually or in the aggregate, have a
Material Adverse Effect, Borrower is in compliance in all material respects with all Legal
Requirements to which it or the Property is subject, including, without limitation, all
Environmental Statutes, the Occupational Safety and Health Act of 1970, the Americans with
Disabilities Act and ERISA. No portion of the Property has been or will be purchased, improved,
fixtured, equipped or furnished with proceeds of any illegal activity and to Borrower’s knowledge,
no illegal activities are being conducted at or from the Property.
(l)
Financial Information
. All financial data that has been delivered by Borrower to
Lender in connection with the Loan (i) is true, complete and correct in all material respects, (ii)
accurately represents the financial condition and results of operations of the Persons covered
thereby as of the date on which the same shall have been furnished, and (iii) in the case of
audited financial statements, has been prepared in accordance with GAAP and the Uniform System of
Accounts (or such other accounting basis as is reasonably acceptable to Lender) throughout the
periods covered thereby. As of the date hereof, neither Borrower nor, if applicable, any General
Partner, has any contingent liability, liability for taxes or other unusual or forward commitment
not reflected in such financial statements delivered to Lender. Since the date of the last
financial statements delivered by Borrower to Lender except as otherwise disclosed in such
financial statements or notes thereto, there has been no change in the assets, liabilities or
financial position of Borrower nor, if applicable, any General Partner, or in the results of
operations of Borrower, in each case which would have a Material Adverse Effect. Neither Borrower
nor, if applicable, any General Partner, has incurred any obligation or liability, contingent or
otherwise not reflected in such financial statements which would have a Material Adverse Effect.
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(m)
Transaction Brokerage Fees
. Borrower has not dealt with any financial advisors,
brokers, underwriters, placement agents, agents or finders in connection with the transactions
contemplated by this Security Instrument. All brokerage fees, commissions and other expenses
payable in connection with the transactions contemplated by the Loan Documents have been paid in
full by Borrower contemporaneously with the execution of the Loan Documents and the funding of the
Loan. Borrower hereby agrees to indemnify and hold Lender harmless for, from and against any and
all claims, liabilities, costs and expenses of any kind in any way relating to or arising from (i)
a claim by any Person that such Person acted on behalf of Borrower in connection with the
transactions contemplated herein or (ii) any breach of the foregoing representation. The
provisions of this subsection (m) shall survive the repayment of the Debt.
(n)
Federal Reserve Regulations
. No part of the proceeds of the Loan will be used for
the purpose of “purchasing” or “carrying” any “margin stock” within the meaning of Regulations T, U
or X of the Board of Governors of the Federal Reserve System or for any other purpose which would
be inconsistent with such Regulations T, U or X or any other Regulations of such Board of
Governors, or for any purposes prohibited by Legal Requirements or by the terms and conditions of
the Loan Documents.
(o)
Pending Litigation
. There are no actions, suits or proceedings pending or, to the
knowledge of Borrower, threatened against or affecting Borrower or the Property in any court or
before any Governmental Authority which if adversely determined either individually or collectively
has or is reasonably likely to have a Material Adverse Effect.
(p)
Solvency; No Bankruptcy
. Each of Borrower and, if applicable, the General
Partner, (i) is and has at all times been Solvent and will remain Solvent immediately upon the
consummation of the transactions contemplated by the Loan Documents and (ii) is free from
bankruptcy, reorganization or arrangement proceedings or a general assignment for the benefit of
creditors and is not contemplating the filing of a petition under any state or federal bankruptcy
or insolvency laws or the liquidation of all or a major portion of such Person’s assets or property
and Borrower has no knowledge of any Person contemplating the filing of any such petition against
it or, if applicable, the General Partner. None of the transactions contemplated hereby will be or
have been made with an intent to hinder, delay or defraud any present or future creditors of
Borrower and Borrower has received reasonably equivalent value in exchange for its obligations
under the Loan Documents. Borrower’s assets do not, and immediately upon consummation of the
transaction contemplated in the Loan Documents will not, constitute unreasonably small capital to
carry out its business as presently conducted or as proposed to be conducted. Borrower does not
intend to, nor believes that it will, incur debts and liabilities beyond its ability to pay such
debts as they may mature.
(q)
Use of Proceeds
. The proceeds of the Loan shall be applied by Borrower to, inter
alia, (i) satisfy certain mortgage loans presently encumbering all or a part of the Property, (ii)
pay certain transaction costs incurred by Borrower in connection with the Loan, (iii) fund the
Escrow Accounts as required by this Security Instrument, and (iv) make distributions to the
partners of Borrower. No portion of the proceeds of the Loan will be used for family, personal,
agricultural or household use.
- 31 -
(r)
Tax Filings
. Borrower and, if applicable, each General Partner, have filed all
federal, state and local tax returns required to be filed and have paid or made adequate provision
for the payment of all federal, state and local taxes, charges and assessments payable by Borrower
and, if applicable, the General Partners. Borrower and, if applicable, the General Partners,
believe that their respective tax returns properly reflect the income and taxes of Borrower and
said General Partner, if any, for the periods covered thereby, subject only to reasonable
adjustments required by the Internal Revenue Service or other applicable tax authority upon audit.
(s)
Not Foreign Person
. Borrower is not a “foreign person” within the meaning of
§1445(f)(3) of the Code.
(t)
ERISA
. (i) The assets of Borrower and Guarantor are not and will not become
treated as “plan assets”, whether by operation of law or under regulations promulgated under ERISA.
If any Person having a legal or beneficial ownership interest in Borrower is using (or is deemed
under ERISA to be using) “plan assets”, Borrower will qualify as a “real estate operating company”
within the meaning of 29 C.F.R. §2510.3-101(e) at all times that the Loan is outstanding. Each
Plan and Welfare Plan, and, to the knowledge of Borrower, each Multiemployer Plan, is in compliance
in all material respects with, and has been administered in all material respects in compliance
with, its terms and the applicable provisions of ERISA, the Code and any other applicable Legal
Requirement, and no event or condition has occurred and is continuing as to which Borrower would be
under an obligation to furnish a report to Lender under clause (ii)(A) of this Section. Other than
an application for a favorable determination letter with respect to a Plan, there are no pending
issues or claims before the Internal Revenue Service, the United States Department of Labor or any
court of competent jurisdiction related to any Plan or Welfare Plan under which Borrower, Guarantor
or any ERISA Affiliate, directly or indirectly (through an indemnification agreement or otherwise),
could be subject to any material risk of liability under Section 409 or 502(i) of ERISA or Section
4975 of the Code. No Welfare Plan provides or will provide benefits, including, without
limitation, death or medical benefits (whether or not insured) with respect to any current or
former employee of Borrower, Guarantor or any ERISA Affiliate beyond his or her retirement or other
termination of service other than (A) coverage mandated by applicable law, (B) death or disability
benefits that have been fully provided for by fully paid up insurance or (C) severance benefits.
(ii) Borrower will furnish to Lender as soon as possible, and in any event within ten
(10) days after Borrower knows or has reason to believe that any of the events or conditions
specified below with respect to any Plan, Welfare Plan or Multiemployer Plan has occurred or
exists, an Officer’s Certificate setting forth details respecting such event or condition
and the action, if any, that Borrower or its ERISA Affiliate proposes to take with respect
thereto (and a copy of any report or notice required to be filed with or given to PBGC (or
any other relevant Governmental Authority)) by Borrower or an ERISA Affiliate with respect
to such event or condition, if such report or notice is required to be filed with the PBGC
or any other relevant Governmental Authority:
(A) any reportable event, as defined in Section 4043 of ERISA and the
regulations issued thereunder, with respect to a Plan, as to which PBGC has not by
regulation waived the requirement of Section 4043(a) of ERISA that it be
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notified within thirty (30) days of the occurrence of such event (provided that
a failure to meet the minimum funding standard of Section 412 of the Code and of
Section 302 of ERISA, including, without limitation, the failure to make on or
before its due date a required installment under Section 412(m) of the Code and of
Section 302(e) of ERISA, shall be a reportable event regardless of the issuance of
any waivers in accordance with Section 412(d) of the Code), and any request for a
waiver under Section 412(d) of the Code for any Plan;
(B) the distribution under Section 4041 of ERISA of a notice of intent to
terminate any Plan or any action taken by Borrower or an ERISA Affiliate to
terminate any Plan;
(C) the institution by PBGC of proceedings under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan, or the
receipt by Borrower or any ERISA Affiliate of a notice from a Multiemployer Plan
that such action has been taken by PBGC with respect to such Multiemployer Plan;
(D) the complete or partial withdrawal from a Multiemployer Plan by Borrower or
any ERISA Affiliate that results in liability under Section 4201 or 4204 of ERISA
(including the obligation to satisfy secondary liability as a result of a purchaser
default) or the receipt by Borrower or any ERISA Affiliate of notice from a
Multiemployer Plan that it is in reorganization or insolvency pursuant to Section
4241 or 4245 of ERISA or that it intends to terminate or has terminated under
Section 4041A of ERISA;
(E) the institution of a proceeding by a fiduciary of any Multiemployer Plan
against Borrower or any ERISA Affiliate to enforce Section 515 of ERISA, which
proceeding is not dismissed within thirty (30) days;
(F) the adoption of an amendment to any Plan that, pursuant to Section
401(a)(29) of the Code or Section 307 of ERISA, would result in the loss of
tax-exempt status of the trust of which such Plan is a part if Borrower or an ERISA
Affiliate fails to timely provide security to the Plan in accordance with the
provisions of said Sections; or
(G) the imposition of a lien or a security interest in connection with a Plan.
(iii) Borrower shall not knowingly engage in or permit any transaction in connection
with which Borrower, Guarantor or any ERISA Affiliate could be subject to either a civil
penalty or tax assessed pursuant to Section 502(i) or 502(l) of ERISA or Section 4975 of the
Code, permit any Welfare Plan to provide benefits, including without limitation, medical
benefits (whether or not insured), with respect to any current or former employee of
Borrower, Guarantor or any ERISA Affiliate beyond his or her retirement or other termination
of service other than (A) coverage mandated by applicable law, (B) death or disability
benefits that have been fully provided for by paid
- 33 -
up insurance or otherwise or (C) severance benefits, permit the assets of Borrower or
Guarantor to become “plan assets”, whether by operation of law or under regulations
promulgated under ERISA or adopt, amend (except as may be required by applicable law) or
increase the amount of any benefit or amount payable under, or permit any ERISA Affiliate to
adopt, amend (except as may be required by applicable law) or increase the amount of any
benefit or amount payable under, any employee benefit plan (including, without limitation,
any employee welfare benefit plan) or other plan, policy or arrangement, except for normal
increases in the ordinary course of business consistent with past practice that, in the
aggregate, do not result in a material increase in benefits expense to Borrower, Guarantor
or any ERISA Affiliate.
(iv) Labor Matters. No organized work stoppage or labor strike is pending or
threatened by employees or other laborers at the Property and neither Borrower nor Manager
(i) except as otherwise disclosed in writing to Lender, is involved in or threatened with
any labor dispute, grievance or litigation relating to labor matters involving any employees
and other laborers at the Property, including, without limitation, violation of any federal,
state or local labor, safety or employment laws (domestic or foreign) and/or charges of
unfair labor practices or discrimination complaints; (ii) has engaged in any unfair labor
practices within the meaning of the National Labor Relations Act or the Railway Labor Act;
or (iii) is a party to, or bound by, any collective bargaining agreement or union contract
with respect to employees and other laborers at the Property and no such agreement or
contract is currently being negotiated by Borrower, Manager or any of their Affiliates.
(v) Borrower’s Legal Status. Borrower’s exact legal name that is indicated on the
signature page hereto, organizational identification number and place of business or, if
more than one, its chief executive office, as well as Borrower’s mailing address, if
different, which were identified by Borrower to Lender and contained in this Security
Instrument, are true, accurate and complete. Borrower (i) will not change its name, its
place of business or, if more than one place of business, its chief executive office, or its
mailing address or organizational identification number if it has one without giving Lender
at least thirty (30) days prior written notice of such change, (ii) if Borrower does not
have an organizational identification number and later obtains one, Borrower shall promptly
notify Lender of such organizational identification number and (iii) will not change its
type of organization, jurisdiction of organization or other legal structure.
(vi) Compliance with Anti-Terrorism, Embargo and Anti-Money Laundering Laws. (i) None
of Borrower, General Partner, any Guarantor, or any Person who owns any equity interest in
or Controls Borrower, General Partner or any Guarantor currently is identified on the OFAC
List or otherwise qualifies as a Prohibited Person, and Borrower has implemented procedures,
approved by Borrower and, if applicable, General Partner, to ensure that no Person who now
or hereafter owns an equity interest in Borrower or General Partner is a Prohibited Person
or Controlled by a Prohibited Person, (ii) no proceeds of the Loan will be used to fund any
operations in, finance any investments or activities in or make any payments to, Prohibited
Persons, and (iii) none of Borrower, General Partner, or any Guarantor are in violation of
any Legal Requirements relating to anti-money laundering or anti-terrorism, including,
without limitation, Legal
- 34 -
Requirements related to transacting business with Prohibited Persons or the
requirements of the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001, U.S. Public Law 107-56, and the
related regulations issued thereunder, including temporary regulations, all as amended from
time to time. No tenant under a Space Lease at the Property currently is identified on the
OFAC List or otherwise qualifies as a Prohibited Person, and, to Borrower’s knowledge, no
tenant at the Property is owned or Controlled by a Prohibited Person. Borrower has
determined that Manager has implemented procedures, approved by Borrower, to ensure that no
tenant under a Space Lease at the Property is a Prohibited Person or owned or Controlled by
a Prohibited Person.
Section 2.03.
Further Acts, Etc.
Borrower will, at the cost of Borrower, and without
expense to Lender, do, execute, acknowledge and deliver all and every such further acts, deeds,
conveyances, mortgages or deeds of trust, as applicable, assignments, notices of assignments,
transfers and assurances as Lender or Trustee shall, from time to time, reasonably require for the
better assuring, conveying, assigning, transferring, and confirming unto Lender and Trustee the
property and rights hereby mortgaged, given, granted, bargained, sold, alienated, enfeoffed,
conveyed, confirmed, pledged, assigned and hypothecated, or which Borrower may be or may hereafter
become bound to convey or assign to Lender and Trustee, or for carrying out or facilitating the
performance of the terms of this Security Instrument or for filing, registering or recording this
Security Instrument and, 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 comparable security
instruments to evidence more effectively the lien hereof upon the Property. Borrower grants to
Lender an irrevocable power of attorney coupled with an interest for the purpose of protecting,
perfecting, preserving and realizing upon the interests granted pursuant to this Security
Instrument and to effect the intent hereof, all as fully and effectually as Borrower might or could
do; and Borrower hereby ratifies all that Lender shall lawfully do or cause to be done by virtue
hereof; provided, however, that Lender shall not exercise such power of attorney unless and until
Borrower fails to take the required action within the five (5) Business Day time period stated
above unless the failure to so exercise, could, in Lender’s reasonable judgment, result in a
Material Adverse Effect. Upon (a) 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, (b) receipt of an indemnity of Lender related to losses resulting solely from the issuance
of a replacement note or other applicable Loan Document and (c) in the case of any such mutilation,
upon surrender and cancellation of such Note or other applicable Loan Document, Borrower will
issue, in lieu thereof, a replacement Note or other applicable 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.
Section 2.04.
Recording of Security Instrument, Etc.
Borrower forthwith upon the
execution and delivery of this Security Instrument and thereafter, from time to time, will cause
this Security Instrument, and any security instrument creating a lien or security interest or
evidencing the lien hereof upon the Property and each instrument of further assurance to be filed,
registered or recorded in such manner and in such places as may be required by any present or
future law in order to publish notice of and fully protect the lien or security interest hereof
upon, and the interest of Lender in, the Property. Borrower will pay all filing, registration or
recording
- 35 -
fees, and all expenses incident to the preparation, execution and acknowledgment of this
Security Instrument, any mortgage or deed of trust, as applicable, supplemental hereto, any
security instrument with respect to the Property and any instrument of further assurance, and all
federal, state, county and municipal, taxes, duties, imposts, assessments and charges arising out
of or in connection with the execution and delivery of this Security Instrument, any mortgage or
deed of trust, as applicable, supplemental hereto, any security instrument with respect to the
Property or any instrument of further assurance, except where prohibited by law to do so, in which
event Lender may declare the Debt to be immediately due and payable. Borrower shall hold harmless
and indemnify Lender and Trustee, and their successors and assigns, against any liability incurred
as a result of the imposition of any tax on the making and recording of this Security Instrument.
Section 2.05.
Representations, Warranties and Covenants Relating to the Property
.
Borrower represents and warrants to and covenants with Lender with respect to the Property as
follows:
(a)
Lien Priority
. This Security Instrument is a valid and enforceable first lien on
the Property, free and clear of all encumbrances and liens having priority over the lien of this
Security Instrument, except for the items set forth as exceptions to or subordinate matters in the
title insurance policy insuring the lien of this Security Instrument, none of which, individually
or in the aggregate, materially interfere with the benefits of the security intended to be provided
by this Security Instrument, materially affect the value or marketability of the Property as
presently utilized, impair the use or operation of the Property for the use currently being made
thereof or impair Borrower’s ability to pay its obligations in a timely manner (such items being
the “
Permitted Encumbrances
”).
(b)
Title
. Borrower has, subject only to the Permitted Encumbrances, good, insurable
and marketable leasehold title to the Premises, Improvements and Fixtures, other than the Trade
Fixtures described on Exhibit F to the Ground Lease (“
Trade Fixtures
”) and good, insurable
and marketable fee simple title to the Trade Fixtures (the Improvements and Fixtures, including the
Trade Fixtures, together with the Premises are referred to collectively as the “
Realty
”)
and to all easements and rights benefiting the Realty and has the right, power and authority to
mortgage, encumber, give, grant, bargain, sell, alien, enfeoff, convey, confirm, pledge, assign,
and hypothecate the Property. Borrower will preserve its interest in and title to the Property and
will forever warrant and defend the same to Lender against any and all claims made by, through or
under Borrower and will forever warrant and defend the validity and priority of the lien and
security interest created herein against the claims of all Persons whomsoever claiming by, through
or under Borrower. The foregoing warranty of title shall survive the foreclosure of this Security
Instrument and shall inure to the benefit of and be enforceable by Lender in the event Lender
acquires title to the Property pursuant to any foreclosure. In addition, except for a right of
first refusal as set forth in the Management Agreement which is subordinate to the Security
Instrument, there are no outstanding options or rights of first refusal to purchase the Property or
Borrower’s ownership thereof.
(c)
Taxes and Impositions
. All taxes and other Impositions and governmental
assessments due and owing in respect of, and affecting, the Property have been paid. Borrower has
paid all Impositions which constitute special governmental assessments in full, except for
- 36 -
those assessments which are permitted by applicable Legal Requirements to be paid in
installments, in which case all installments which are due and payable have been paid in full.
Other than as previously disclosed to Lender in writing, there are no pending, or to Borrower’s
knowledge, proposed special or other assessments for public improvements or otherwise affecting the
Property, nor are there any contemplated improvements to the Property that may result in such
special or other assessments.
(d)
Casualty; Flood Zone
. The Realty is in good repair and free and clear of any
damage, destruction or casualty (whether or not covered by insurance) that would materially affect
the value of the Realty or the use for which the Realty was intended. There exists no structural
or other material defects or, except as disclosed in the property condition report relating to the
Property which was prepared by IVI Due Diligence, Inc. and delivered to Lender in connection with
the origination of the Loan, damages in or to the Property and Borrower has not received any
written notice from any insurance company or bonding company of any material defect or inadequacies
in the Property, or any part thereof, which would materially and adversely affect the insurability
of the same or cause the imposition of extraordinary premiums or charges thereon or of any
termination or threatened termination of any policy of insurance or bond. No portion of the
Premises is located in an “area of special flood hazard,” as that term is defined in the
regulations of the Federal Insurance Administration, Department of Housing and Urban Development,
under the National Flood Insurance Act of 1968, as amended (24 CFR § 1909.1) or Borrower has
obtained the flood insurance required by Section 3.01(a)(vi) hereof. The Premises either does not
lie in a 100 year flood plain that has been identified by the Secretary of Housing and Urban
Development or any other Governmental Authority or, if it does, Borrower has obtained the flood
insurance required by Section 3.01(a)(vi) hereof.
(e)
Completion; Encroachment
. All Improvements necessary for the use and operation of
the Premises, including, without limitation, all Improvements which were included for purposes of
determining the appraised value of the Property in the Appraisal, have been completed and none of
said Improvements lie outside the boundaries and building restriction lines of the Premises, except
to the extent otherwise disclosed to Lender pursuant to any title insurance policy insuring the
lien of this Security Instrument or on any survey certified to Lender in connection with the Loan.
Except as set forth in the title insurance policy insuring the lien of this Security Instrument, no
improvements on adjoining properties encroach upon the Premises.
(f)
Separate Lot
. The Premises are taxed separately without regard to any other real
estate and constitute a legally subdivided lot under all applicable Legal Requirements (or, if not
subdivided, no subdivision or platting of the Premises is required under applicable Legal
Requirements), and for all purposes may be mortgaged, encumbered, conveyed or otherwise dealt with
as an independent parcel. The Property does not benefit from any tax abatement or exemption.
(g)
Use
. The existence of all Improvements, the present use and operation thereof and
the access of the Premises and the Improvements to all of the utilities and other items referred to
in paragraph (k) below are in compliance in all material respects with all Leases affecting the
Property and all applicable Legal Requirements, including, without limitation, Environmental
Statutes, Development Laws and Use Requirements. Except as previously disclosed to Lender in the
Disclosure Schedule, Borrower has not received any notice from any
- 37 -
Governmental Authority alleging any uncured violation relating to the Property of any
applicable Legal Requirements. In the event that Borrower has received any written notices from
any Governmental Authority alleging an uncured violation relating to the Property or any applicable
Legal Requirement, no such violation could have a Material Adverse Effect.
(h)
Licenses and Permits
. Borrower currently holds and will continue to hold all
certificates of occupancy, licenses, registrations, permits, consents, franchises and approvals of
any Governmental Authority or any other Person which are material for the lawful occupancy and
operation of the Realty or which are material to the ownership or operation of the Property or the
conduct of Borrower’s business. All such certificates of occupancy, licenses, registrations,
permits, consents, franchises and approvals are current and in full force and effect.
(i)
Intentionally Omitted
.
(j)
Property Proceedings
. There are no actions, suits or proceedings pending or, to
the Borrower’s knowledge, threatened in any court or before any Governmental Authority or
arbitration board or tribunal (i) relating to (A) the zoning of the Premises or any part thereof,
(B) any certificates of occupancy, licenses, registrations, permits, consents or approvals issued
with respect to the Property or any part thereof, (C) the condemnation of the Property or any part
thereof, or (D) the condemnation or relocation of any roadways abutting the Premises required for
access or the denial or limitation of access to the Premises or any part thereof from any point of
access to the Premises, (ii) asserting that (A) any such zoning, certificates of occupancy,
licenses, registrations, permits, consents and/or approvals do not permit the operation of any
material portion of the Realty as presently being conducted, (B) any material improvements located
on the Property or any part thereof cannot be located thereon or operated with their intended use
or (C) the operation of the Property or any part thereof is in violation in any material respect of
any Environmental Statutes, Development Laws or other Legal Requirements or Space Leases or
Property Agreements or (iii) which might (A) affect the validity or priority of any Loan Document
or (B) have a Material Adverse Effect. Borrower has no knowledge of any facts or circumstances
which could reasonably be expected to give rise to any actions, suits or proceedings described in
the preceding sentence.
(k)
Utilities
. The Premises has all necessary legal access to water, gas and
electrical supply, storm and sanitary sewerage facilities, other required public utilities (with
respect to each of the aforementioned items, by means of either a direct connection to the source
of such utilities or through connections available on publicly dedicated roadways directly abutting
the Premises or through permanent insurable easements benefiting the Premises), fire and police
protection, parking, and means of direct access between the Premises and public highways over
recognized curb cuts (or such access to public highways is through private roadways which may be
used for ingress and egress pursuant to permanent insurable easements).
(l)
Mechanics’ Liens
. The Property is free and clear of any mechanics’ liens or liens
in the nature thereof, and no rights are outstanding that under law could give rise to any such
liens, any of which liens are or may be prior to, or equal with, the lien of this Security
Instrument, except those which are insured against by the title insurance policy insuring the lien
of this Security Instrument.
- 38 -
(m)
Intentionally Omitted
.
(n)
Insurance
. The Property is insured in accordance with the requirements set forth
in Article III hereof.
(o)
Space Leases
.
(i) Borrower has delivered a true, correct and complete schedule of all Space Leases as
of the date hereof, if any, which accurately and completely sets forth in all material
respects, for each such Space Lease, the following (collectively, the “
Rent Roll
”):
the name and address of the tenant with the name, title and telephone number of the contact
person of such tenant; the base rent and percentage rent payable; all additional rent and
pass-through obligations; and the security deposit held thereunder and the location of such
deposit.
(ii) Each Space Lease constitutes the legal, valid and binding obligation of Borrower
and, to the knowledge of Borrower, is enforceable against the tenant thereof. No default
exists, or with the passing of time or the giving of notice would exist, (A) under any Major
Space Lease (if any) or (B) under any other Space Leases which would, in the aggregate, have
a Material Adverse Effect.
(iii) No tenant under any Space Lease has, as of the date hereof, paid Rent more than
thirty (30) days in advance, and the Rents under such Space Leases have not been waived,
released, or otherwise discharged or compromised.
(iv) All work to be performed by Borrower under the Space Leases has been substantially
performed, all contributions to be made by Borrower to the tenants thereunder have been made
except for any held-back amounts, and all other conditions precedent to each such tenant’s
obligations thereunder have been satisfied.
(v) Except as previously disclosed to Lender in writing, there are no options to
terminate any Space Lease.
(vi) Each tenant under a Major Space Lease (if any) has entered into occupancy of the
demised premises to the extent required under the terms of its Major Space Lease (if any),
and each such tenant is open and conducting business with the public in the demised
premises. To the knowledge of Borrower, after due inquiry, each tenant under a Lease other
than a Major Space Lease has entered into occupancy of its demised premises under its Lease
to the extent required under the terms of its Lease.
(vii) Borrower has delivered to Lender true, correct and complete copies of all Space
Leases.
(viii) Each Space Lease is in full force and effect and, except as previously disclosed
in writing to Lender, to Borrower’s knowledge, has not (i) been assigned by the tenant
thereunder, or (ii) modified, supplemented or amended in any way. Borrower has not assigned
its interest in any Space Lease except pursuant to the terms hereof.
- 39 -
(ix) To Borrower’s knowledge, each tenant under each Space Lease is free from
bankruptcy, reorganization or arrangement proceedings or a general assignment for the
benefit of creditors.
(x) No Space Lease provides any party with the right to obtain a lien or encumbrance
upon the Property superior to the lien of this Security Instrument.
(p)
Property Agreements
.
(i) Borrower has delivered to Lender true, correct and complete copies of all Property
Agreements.
(ii) No Property Agreement provides any party thereto with the right to obtain a lien
or encumbrance upon the Property superior to the lien of this Security Instrument.
(iii) No default exists or with the passing of time or the giving of notice or both
would exist under any Property Agreement which would, individually or in the aggregate, have
a Material Adverse Effect.
(iv) Borrower has not received or given any written communication which is outstanding
which alleges that a default exists or, with the giving of notice or the lapse of time, or
both, would exist under the provisions of any Property Agreement.
(v) No condition exists whereby Borrower or any future owner of the Property may be
required to purchase any other parcel of land which is subject to any Property Agreement or
which gives any Person a right to purchase, or right of first refusal with respect to, the
Property, except for a right of first refusal as set forth in the Management Agreement which
is subordinate to the Security Instrument.
(vi) To the knowledge of Borrower, no offset or any right of offset exists respecting
continued contributions to be made by any party to any Property Agreement except as
expressly set forth therein. Except as previously disclosed to Lender in writing, no
material exclusions or restrictions on the utilization, leasing or improvement of the
Property (including non-compete agreements) exists in any Property Agreement.
(q)
Personal Property
. Borrower has delivered to Lender a depreciation schedule of
the personal property, if any, owned by Borrower and located upon the Property or used in
connection with the use or operation of the Realty which is true, correct and complete in all
material respects and Borrower represents that it has good and marketable title to all such
personal property, free and clear of any liens, except for liens created under the Loan Documents
and liens which describe the equipment and other personal property owned by tenants.
(r)
Leasing Brokerage and Management Fees
. Except as previously disclosed to Lender
in writing or as set forth in the Management Agreement, there are no brokerage fees or commissions
payable by Borrower with respect to the leasing of space at the Property and there are no
management fees payable by Borrower with respect to the management of the Property.
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(s)
Security Deposits
. Borrower is in compliance with all Legal Requirements relating
to such security deposits as to which failure to comply might, individually or in the aggregate,
have a Material Adverse Effect.
(t)
Intentionally Omitted
.
(u)
Representations Generally
. The representations and warranties contained in this
Security Instrument, and the review and inquiry made on behalf of Borrower therefor, have all been
made by Persons having the requisite expertise and knowledge to provide such representations and
warranties. No representation, warranty or statement of fact made by or on behalf of Borrower in
this Security Instrument or in any certificate, document or schedule furnished to Lender pursuant
hereto, contains any untrue statement of a material fact or omits to state any material fact
necessary to make statements contained therein or herein not misleading (which may be to Borrower’s
knowledge where so provided herein). There are no facts presently known to Borrower which have not
been disclosed to Lender which would, individually or in the aggregate, have a Material Adverse
Effect nor as far as Borrower can reasonably foresee might, individually or in the aggregate, have
a Material Adverse Effect.
(v)
Ground Lease
.
(i) Subject to Section 28.15 of the Ground Lease, Borrower is authorized to assign its
interest in any condemnation award which Borrower is entitled to receive pursuant to the
Ground Lease.
(ii) Provided Lender provides to Ground Lessor the certification required pursuant to
Section 28.12.2 of the Ground Lease, if any default by Borrower shall occur under the Ground
Lease, Lender is entitled under the Ground Lease to receive notice of such default
contemporaneously with any notice of default which is given to Borrower from Ground Lessor
and an additional opportunity to cure any such default which is susceptible of cure by
Lender, which in the case of any non-monetary default susceptible of cure by Lender,
includes the right of Lender or its designee to acquire possession of the Premises by means
of foreclosure of this Security Instrument or by other means and to become the lessee under
the Ground Lease subject to Lessor’s approval pursuant to Section 28.13.2(b) of the Ground
Lease. So long as Lender has agreed to effectuate a cure and is proceeding to cure any such
non-monetary default within applicable notice and grace periods and no monetary default
remains uncured beyond any applicable notice and grace periods to which Borrower and Lender
are entitled, Ground Lessor may not terminate the Ground Lease.
(iii) The Ground Lease is in full force and effect and has not been modified or
supplemented. The Ground Lease cannot be amended or modified in any respect whatsoever
except by an instrument in writing signed by Ground Lessor and Borrower.
(iv) All rents (including Annual Rental, Base Rental and Percentage Rental (each as
defined in the Ground Lease) and other charges) reserved for in the Ground Lease and payable
prior to the date hereof have been paid.
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(v) No party to the Ground Lease is in default of any obligation such party has
thereunder and no event has occurred which, with the giving of notice or the lapse of time,
or both, would constitute such a default.
(vi) Other than as set forth in any ground lessor estoppel addressed to Lender which
was delivered to Lender in connection with the origination of the Loan, no notice or other
written or oral communication has been provided to any party under the Ground Lease which
alleges that, as of the date hereof, either a default exists or with the passage of time
will exist under the provisions of such Ground Lease.
(vii) If there shall be a Taking of the fee title to the Premises, subject to amounts
which are applied to restoration, Borrower is entitled to receive such portion of the award
for such Taking as equals the value of Borrower’s estate under the Ground Lease and
improvements made by Borrower. If there shall be a casualty under a Ground Lease, there is
an obligation to use insurance proceeds for a full restoration.
(viii) Provided that no monetary default remains uncured beyond any applicable notice
and grace periods to which Borrower and Lender are entitled, the Ground Lease may not be
terminated by Ground Lessor by reason of any default by Borrower which is not susceptible of
cure by Lender.
(ix) Pursuant and subject to Section 28.13.3 of the Ground Lease, if the Ground Lease
is terminated, upon Lender’s request pursuant to Section 28.13.3.1 of the Ground Lease and
if Lender is then the most senior Leasehold Mortgagee (as defined in the Ground Lease)
giving such notice, Ground Lessor shall enter into a new lease (the “
New Lease
”)
with Lender for the remainder of the term of the Ground Lease upon the same base rent and
additional rent and other terms, covenants, conditions and agreements as are contained in
the Ground Lease in accordance with Section 28.13.3.2 of the Ground Lease.
(w)
Liquor License
. All licenses, permits, approvals and consents which are required
for the sale and service of alcoholic beverages on the Premises have been obtained from the
applicable Governmental Authorities.
(x)
Credit Card Companies
. The only Credit Card Company that serves as a credit card
clearing bank is Wells Fargo Merchant Services.
Section 2.06.
Removal of Lien
. (a) Borrower shall, at its expense, maintain this
Security Instrument as a first lien on the Property and shall keep the Property free and clear of
all liens and encumbrances of any kind and nature other than the Permitted Encumbrances. Borrower
shall, within ten (10) days following the filing thereof, promptly discharge of record, by bond or
otherwise, any such liens and, promptly upon request by Lender, shall deliver to Lender evidence
reasonably satisfactory to Lender of the discharge thereof.
(b) Without limitation to the provisions of Section 2.06(a) hereof, Borrower shall (i) pay,
from time to time when the same shall become due, all claims and demands of mechanics, materialmen,
laborers, and others which, if unpaid, could reasonably be expected to result in, or permit the
creation of, a lien on the Property or any part thereof, (ii) cause to be removed of
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record (by payment or posting of bond or settlement or otherwise) any mechanics’,
materialmens’, laborers’ or other lien on the Property, or any part thereof, or on the revenues,
rents, issues, income or profit arising therefrom, and (iii) in general, do or cause to be done,
without expense to Lender, everything reasonably necessary to preserve in full the lien of this
Security Instrument. If Borrower fails to comply with the requirements of this Section 2.06(b),
then, upon ten (10) Business Days’ prior notice to Borrower, Lender may, but shall not be obligated
to, pay any such lien, and Borrower shall, within ten (10) Business Days after Lender’s demand
therefor, reimburse Lender for all sums so expended, together with interest thereon at the Default
Rate from the date advanced, all of which shall be deemed part of the Debt. Nothing contained
herein shall be deemed a consent or request of Lender, express or implied, by inference or
otherwise, to the performance of any alteration, repair or other work by any contractor,
subcontractor or laborer or the furnishing of any materials by any materialmen in connection
therewith.
(c) Notwithstanding the foregoing, Borrower may contest any lien (other than a lien relating
to non-payment of Impositions, the contest of which shall be governed by Section 4.04 hereof) of
the type set forth in subparagraph (b)(ii) of this Section 2.06 provided that, following prior
notice to Lender (i) Borrower is contesting the validity of such lien with due diligence and in
good faith and by appropriate proceedings, without cost or expense to Lender or any of its agents,
employees, officers, or directors, (ii) Borrower shall preclude the collection of, or other
realization upon, any contested amount from the Property or any revenues from or interest in the
Property, (iii) neither the Property nor any part thereof nor interest therein, shall be in any
danger of being sold, forfeited or lost by reason of such contest by Borrower, (iv) such contest by
Borrower shall not affect the ownership, use or occupancy of the Property, (v) such contest by
Borrower shall not subject Lender, Trustee or Borrower to the risk of civil or criminal liability
(other than the civil liability of Borrower for the amount of the lien in question), (vi) such lien
is subordinate to the lien of this Security Instrument, (vii) Borrower has not consented to such
lien, (viii) Borrower has given Lender prompt notice of the filing of such lien and the bonding
thereof by Borrower and, upon request by Lender from time to time, notice of the status of such
contest by Borrower and/or confirmation of the continuing satisfaction of the conditions set forth
in this Section 2.06(c), (ix) Borrower shall promptly pay the obligation secured by such lien upon
a final determination of Borrower’s liability therefor, and (x) Borrower shall deliver to Lender
cash, a bond or other security acceptable to Lender equal to 125% of the contested amount pursuant
to collateral arrangements reasonably satisfactory to Lender.
Section 2.07.
Cost of Defending and Upholding this Security Instrument Lien
. If any
action or proceeding is commenced to which Lender or Trustee is made a party relating to the Loan
Documents and/or the Property or Lender’s or Trustee’s interest therein or in which it becomes
necessary to defend or uphold the lien of this Security Instrument or any other Loan Document,
Borrower shall, on written demand, reimburse Lender and/or Trustee, as applicable, for all expenses
(including, without limitation, reasonable attorneys’ fees and disbursements) incurred by Lender
and/or Trustee, as applicable, in connection therewith, and such sum, together with interest
thereon at the Default Rate from and after such demand until fully paid, shall constitute a part of
the Debt.
Section 2.08.
Use of the Property
. Borrower will use, or cause to be used, the
Property for such use as is permitted pursuant to the Ground Lease and applicable Legal
Requirements
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including, without limitation, under the certificate of occupancy applicable to the Property,
and which is required by the Loan Documents. Borrower shall not suffer or permit the Property or
any portion thereof to be used by the public, any tenant, or any Person not subject to a Lease, in
a manner as is reasonably likely to impair Borrower’s title to the Property, or in such manner as
may give rise to a claim or claims of adverse usage or adverse possession by the public, or of
implied dedication of the Property or any part thereof.
Section 2.09.
Financial Reports
. (a) Borrower will keep and maintain or will cause
to be kept and maintained on a Fiscal Year basis, in accordance with GAAP and The Uniform System of
Accounts (or such other accounting basis reasonably acceptable to Lender) consistently applied,
proper and accurate books, tax returns, records and accounts reflecting (i) all of the financial
affairs of Borrower and Guarantor and (ii) all items of income and expense in connection with the
operation of the Property or in connection with any services, equipment or furnishings provided in
connection with the operation thereof, whether such income or expense may be realized by Borrower
or by any other Person whatsoever, excepting lessees unrelated to and unaffiliated with Borrower
who have leased from Borrower portions of the Premises for the purpose of occupying the same.
Lender shall have the right from time to time at all times during normal business hours upon
reasonable notice to examine such books, tax returns, records and accounts at the office of
Borrower or other Person maintaining such books, tax returns, records and accounts and to make such
copies or extracts thereof as Lender shall desire, provided that (i) Borrower shall have a right to
have a representative present at all times and (ii) Lender shall do so in a manner so as to avoid
disruption to the operation of the Hotel or to Manager’s management thereof. After the occurrence
and during the continuation of an Event of Default, Borrower shall pay any reasonable costs and
expenses incurred by Lender to examine Borrower’s and Guarantor’s accounting records with respect
to the Property, as Lender shall determine to be necessary or appropriate in the protection of
Lender’s interest.
(b) Borrower will furnish Lender (i) annually, within one hundred twenty (120) days following
the end of each Fiscal Year of Borrower and Guarantor and (ii) on a quarterly basis, within
forty-five (45) days following the end of each fiscal quarter of Borrower, with a complete copy of
Borrower’s financial statement consistently applied covering (i) all of the financial affairs of
Borrower and Guarantor, as applicable, and (ii) the operation of the Property for such Fiscal Year
or fiscal quarters, as applicable, and containing a statement of revenues and expenses, a statement
of assets and liabilities and a statement of Borrower’s equity. Each annual financial statement of
Guarantor shall be audited by an Independent certified public accountant that is reasonably
acceptable to Lender in accordance with GAAP and The Uniform System of Accounts (or such other
accounting basis reasonably acceptable to Lender). Together with the financial statements required
to be furnished pursuant to this Section 2.09(b), Borrower shall furnish to Lender (A) an Officer’s
Certificate certifying as of the date thereof (1) that the financial statements accurately
represent the results of operations and financial condition of Borrower, Guarantor, if applicable,
and the Property all in accordance with GAAP and The Uniform System of Accounts (or such other
accounting basis reasonably acceptable to Lender) consistently applied, provided that Lender
acknowledges that Borrower’s quarterly financial statements do not include any footnote
disclosures, and (2) whether there exists a Default under the Note or any other Loan Document
executed and delivered by Borrower, and if such event or circumstance exists, the nature thereof,
the period of time it has existed and the action then being taken to remedy such event or
circumstance and (B) upon request of Lender with the financial
- 44 -
statements delivered pursuant to Section 2.09(b)(ii) above, a statement showing (1) the
Adjusted Net Income (subject to verification by Lender in its reasonable discretion) and (2) the
calculation of the Debt Service Coverage.
(c) When requested by Lender, Borrower will furnish Lender monthly, within thirty (30) days
following the end of each month, with a true, complete and correct income and expense statement
with respect to the Property in the form attached hereto as Exhibit C and made a part hereof
calculated on an accrual basis, showing (i) all income and expenses with respect to the Property
and (ii) year-to-date summaries of such cash receipts, payments and disbursements, together with a
certification of Borrower stating that such income and expense statement is true, complete and
correct in all material respects and a list of all litigation and proceedings affecting Borrower or
the Property in which the amount involved is $500,000 or more, if not covered by insurance (or
$1,000,000 or more whether or not covered by insurance). Lender hereby agrees and acknowledges
that the form of cash flow statement used by Borrower as of the Closing Date and attached as
Exhibit C shall be satisfactory to Lender which Lender agrees and acknowledges may not be in
accordance with GAAP.
(d) Intentionally Omitted.
(e) Borrower will furnish Lender annually, to the extent not included in any other annual
report delivered by Borrower to Lender within twenty (20) days following the end of each year and
within twenty (20) days following receipt of such request therefor, with a true, complete and
correct rent roll for the Property, including a list of which tenants are in default under their
respective Leases, dated as of the date of Lender’s request, identifying each tenant, the monthly
rent and additional rent, if any, payable by such tenant, the expiration date of such tenant’s
Lease, the security deposit, if any, held by Borrower under the Lease, the space covered by the
Lease, each tenant that has filed a bankruptcy, insolvency, or reorganization proceeding since
delivery of the last such rent roll, and the arrearages for such tenant, if any, and, if requested
by Lender, a summary of the material terms of the Leases, including, without limitation, the dates
of occupancy, the dates of expiration, any Rent concessions, work obligations or other inducements
granted to the tenants thereunder, and any renewal options, and such rent roll shall be accompanied
by an Officer’s Certificate, dated as of the date of the delivery of such rent roll, certifying
that such rent roll is true, correct and complete in all material respects as of its date.
(f) Borrower shall furnish to Lender, within thirty (30) days after Lender’s request therefor,
with such further detailed information with respect to the operation of the Property and the
financial affairs of Borrower as may be reasonably requested by Lender.
(g) To the extent any security deposits with respect to the Space Leases is then held by
Manager or Borrower, Borrower shall cause Manager to furnish to Lender, within thirty (30) days
following the end of each year and within thirty (30) days of Lender’s request, provided that
Lender may not make more than two (2) requests per year unless an Event of Default exists, in which
event no such limit shall apply, a schedule of tenant security deposits for such month, together
with a statement of Manager as to the amount of any security deposits and that such tenant security
deposits are being held in accordance with all Legal Requirements.
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(h) Borrower will furnish Lender annually, within one hundred twenty (120) days after
the end of each Fiscal Year, with a report setting forth (i) the Net Operating Income for such
Fiscal Year, (ii) the average occupancy rate of the Property during such Fiscal Year, (iii) the
capital repairs, replacements and improvements performed at the Property during such Fiscal Year
and the aggregate Recurring Replacement Expenditures made in connection therewith, and (iv) the
balance contained in each of the Escrow Accounts as of the end of such Fiscal Year (which balance
Lender shall provide upon Borrower’s written request therefor).
(i) Intentionally Omitted.
(j) Borrower will furnish Lender monthly, within thirty (30) days following the end of each
month, or with respect to STR Reports, within sixty (60) days following the end of each month, an
occupancy summary for the Property setting forth the occupancy rates, average daily room rates,
RevPAR Yield Index (to the extent available), RevPAR (to the extent available) and room revenues
for each month of the preceding calendar year, as well as annual averages of the same, and, if
requested by Lender, advance booking information (excluding customer names) and such other
information as may customarily be reflected thereon or reasonably requested by Lender, together
with all franchise inspection reports and STR Reports received by Borrower during the preceding
month.
(k) Borrower shall and shall cause Guarantor to furnish to Lender annually, within ninety (90)
days after the end of each Fiscal Year, a statement of net worth of the Guarantor.
(l) Borrower shall submit to Lender an Annual Budget not later than thirty (30) days prior to
the commencement of each Fiscal Year or, with respect to the Fiscal Year in which the Closing Date
occurs, within sixty (60) days of the Closing Date, in form reasonably satisfactory to Lender
setting forth in reasonable detail budgeted monthly operating income and monthly operating capital
and other expenses for the Property. Each Annual Budget shall contain, among other things,
management fees, third party service fees, and other expenses as Borrower may reasonably determine.
(m) In the event that Borrower fails to deliver any of the financial statements, reports or
other information required to be delivered to Lender pursuant to this Section 2.09 on or prior to
their due dates, if any such failure shall continue for ten (10) days following notice thereof from
Lender, Borrower shall pay to Lender an administrative fee in the amount of One Thousand Dollars
($1,000) for each due date with respect to which such a failure occurs (and not on a per-item
basis). Borrower agrees that such administrative fee (i) is a fair and reasonable fee necessary to
compensate Lender for its additional administrative costs and increased costs relating to
Borrower’s failure to deliver the aforementioned statements, reports or other items as and when
required hereunder and (ii) is not a penalty.
Section 2.10.
Litigation
. Borrower will give prompt written notice to Lender of any
litigation or governmental proceedings pending or threatened (in writing) against Borrower which
could reasonably have a Material Adverse Effect.
Section 2.11.
Updates of Representations
. Borrower shall deliver to Lender within
ten (10) Business Days of the request of Lender an Officer’s Certificate updating all of the
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representations and warranties contained in this Security Instrument and the other Loan
Documents and certifying that all of the representations and warranties contained in this Security
Instrument and the other Loan Documents, as updated pursuant to such Officer’s Certificate, are
true, accurate and complete as of the date of such Officer’s Certificate or shall set forth the
exceptions to representations and/or warranties in reasonable detail, as applicable, and, upon
Lender’s request for further information with respect to such exceptions, shall provide Lender such
additional information as Lender may reasonably request. Notwithstanding the foregoing, provided
that no Event of Default has occurred and is continuing, Borrower shall not be required to deliver
the foregoing Officer’s Certificate more than three (3) times during the term of the Loan and,
subsequent to a Securitization, in no event more than one (1) time in any calendar year.
Section 2.12.
Ground Lease
. (a) Borrower will comply in all material respects with
the terms and conditions of the Ground Lease. Borrower will not do or permit anything to be done,
the doing of which, or refrain from doing anything, the omission of which, will impair or tend to
impair the security of the Premises under the Ground Lease or will be grounds for declaring a
forfeiture of the Ground Lease.
(b) Borrower shall enforce the Ground Lease and will not terminate, modify, cancel, change,
supplement, alter or amend the Ground Lease, or waive, excuse, condone or in any way release or
discharge Ground Lessor of or from any of the material covenants and conditions to be performed or
observed by Ground Lessor. Borrower does hereby bargain, sell, assign and set over to Lender, all
of Borrower’s interests in the Ground Lease. The assignment of Borrower’s interest set forth in
this Section 2.12(b) is an absolute, unconditional and present assignment from Borrower to Lender
and not an assignment for security and the existence or exercise of Borrower’s revocable license to
take all actions with respect to the Ground Lease shall not operate to subordinate this assignment
to any subsequent assignment. The exercise by Lender of any of its rights or remedies pursuant to
this Section 2.12(b) shall not be deemed to make Lender a mortgagee-in-possession. So long as
there is no existing or continuing Event of Default, Borrower shall have a revocable license to
take all actions with respect to the Ground Lease subject to the terms of this Security Instrument.
Any surrender of the leasehold estate created by the Ground Lease or termination, cancellation,
modification, change, supplement, alteration or amendment of the Ground Lease without the prior
written consent of Lender shall be void and of no force and effect.
(c) Lender shall have the right, but not the obligation, to perform any obligations of
Borrower under the terms of the Ground Lease during the continuance of an Event of Default. All
costs and expenses (including, without limitation, reasonable attorneys’ fees and expenses) so
incurred, shall be treated as an advance secured by this Security Instrument, shall bear interest
thereon at the Default Rate from the date of payment by Lender until paid in full and shall be paid
by Borrower to Lender during the continuance of an Event of Default within five (5) Business Days
after demand. No performance by Lender of any obligations of Borrower shall constitute a waiver of
any Event of Default arising by reason of Borrower’s failure to perform the same. If Lender shall
make any payment or perform any act or take action in accordance with this Section 2.12(c), Lender
will notify Borrower of the making of any such payment, the performance of any such act, or the
taking of any such action. In any such event, subject to the rights of lessees, sublessees and
other occupants under the Leases, Lender and any Person
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designated by Lender shall have, and are hereby granted, the right to enter upon the Property
at any time and from time to time for the purpose of taking any such action.
(d) To the extent permitted by law, the price payable by Borrower or any other Person in the
exercise of any right of redemption following foreclosure of the Property shall include all rents
paid and other sums advanced by Lender on behalf of Borrower, together with interest thereon at the
Default Rate.
(e) Unless Lender shall otherwise consent, the fee title and the leasehold estate in the
Premises shall not merge but shall always be kept separate and distinct, notwithstanding the union
of said estates either in Ground Lessor or in Borrower, or in a third party, by purchase or
otherwise.
(f) If the Ground Lessor shall deliver to Lender a copy of any notice of default sent by the
Ground Lessor to Borrower, as tenant under the Ground Lease, such notice shall constitute full
protection to Lender for any action taken or omitted to be taken by Lender, in good faith in
accordance with this Security Instrument, in reliance thereon.
(g) Borrower shall exercise each individual option, if any, to extend or renew the term of the
Ground Lease not less than thirty (30) days prior to the last day upon which any such option may be
exercised (and in all events within five (5) days after demand by Lender made at any time within
one (1) year of the last day upon which any such option may be exercised), and Borrower hereby
expressly authorizes and appoints Lender its attorney-in-fact to exercise any such option in the
name of and upon behalf of Borrower to so exercise such option if Borrower fails to exercise as
herein required, which power of attorney shall be irrevocable and shall be deemed to be coupled
with an interest. Borrower shall give Lender notice of Borrower’s exercise of any such option to
extend or renew the term of the Ground Lease within five (5) days of the exercise of any such
option.
(h) Each Space Lease hereafter made and each renewal of any existing Space Lease shall provide
that, in the event of any action for the foreclosure of this Security Instrument, such Space Lease
shall not terminate or be terminable by the lessee by reason of the termination of the Ground Lease
unless the lessee is specifically named and joined in any such action and unless a judgment is
obtained therein against the lessee.
(i) Borrower hereby assigns, transfers and sets over to Lender all of Borrower’s claims and
rights to the payment of damages arising from any rejection by the Ground Lessor of the Ground
Lease under the Bankruptcy Code. Borrower shall notify Lender promptly (and in any event within
ten (10) days) of any claim, suit, action or proceeding relating to the rejection of the Ground
Lease. Lender is hereby irrevocably appointed as Borrower’s attorney-in-fact, coupled with an
interest, with exclusive power to file and prosecute, to the exclusion of Borrower, any proofs of
claim, complaints, motions, applications, notices and other documents, in any case in respect of
the Ground Lessor under the Bankruptcy Code during the continuance of an Event of Default.
Borrower may make any compromise or settlement in connection with such proceedings (subject to
Lender’s reasonable approval); provided, however, that Lender shall be authorized and entitled to
compromise or settle any such proceeding if such compromise or settlement is made after the
occurrence and during the continuance of an Event of Default.
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Borrower shall promptly execute and deliver to Lender any and all instruments reasonably
required in connection with any such proceeding after request therefor by Lender. Except as set
forth above, Borrower shall not adjust, compromise, settle or enter into any agreement with respect
to such proceedings without the prior written consent of Lender, which consent shall not be
unreasonably withheld or delayed.
(j) Borrower shall not, without Lender’s prior written consent, elect to treat the Ground
Lease as terminated under Section 365(h)(1) of the Bankruptcy Code. Any such election made without
Lender’s prior written consent shall be void.
(k) If pursuant to Section 365(h)(2) of the Bankruptcy Code, Borrower seeks to offset against
the rent reserved in the Ground Lease the amount of any damages caused by the non-performance by
the Ground Lessor of any of the Ground Lessor’s obligations under the Ground Lease after the
rejection by the Ground Lessor of the Ground Lease under the Bankruptcy Code, Borrower shall, prior
to effecting such offset, notify Lender of its intention to do so, setting forth the amounts
proposed to be so offset and the basis therefor. If Lender has failed to object as aforesaid
within ten (10) days after notice from Borrower in accordance with the first sentence of this
Section 2.12(k), Borrower may proceed to effect such offset in the amounts set forth in Borrower’s
notice. Neither Lender’s failure to object as aforesaid nor any objection or other communication
between Lender and Borrower relating to such offset shall constitute an approval of any such offset
by Lender. Borrower shall indemnify and save Lender harmless from and against any and all claims,
demands, actions, suits, proceedings, damages, losses, costs and expenses of every nature
whatsoever (including, without limitation, reasonable attorneys’ fees and disbursements) arising
from or relating to any such offset by Borrower against the rent reserved in the Ground Lease.
(l) Borrower shall immediately, after obtaining knowledge thereof, notify Lender of any filing
by or against the Ground Lessor of a petition under the Bankruptcy Code. Borrower shall thereafter
forthwith give written notice of such filing to Lender, setting forth any information available to
Borrower as to the date of such filing, the court in which such petition was filed, and the relief
sought therein. Borrower shall promptly deliver to Lender following receipt any and all notices,
summonses, pleadings, applications and other documents received by Borrower in connection with any
such petition and any proceedings relating thereto.
(m) If there shall be filed by or against Borrower a petition under the Bankruptcy Code, and
Borrower, as the tenant under the Ground Lease, shall determine to reject the Ground Lease pursuant
to Section 365(a) of the Bankruptcy Code, then Borrower shall give Lender not less than ten (10)
days prior notice of the date on which Borrower shall apply to the bankruptcy court for authority
to reject the Ground Lease. Lender shall have the right, but not the obligation, to serve upon
Borrower within such 10-day period a notice stating that (i) Lender demands that Borrower assume
and assign the Ground Lease to Lender pursuant to Section 365 of the Bankruptcy Code and (ii)
Lender covenants to cure or provide adequate assurance of prompt cure of all defaults and provide
adequate assurance of future performance under the Ground Lease. If Lender serves upon Borrower
the notice described in the preceding sentence, Borrower shall not seek to reject the Ground Lease
and shall comply with the demand provided for in clause (i) of the preceding sentence within thirty
(30) days after the notice shall have been given,
- 49 -
subject to the performance by Lender of the covenant provided for in clause (ii) of the
preceding sentence.
(n) Effective upon the entry of an order for relief in respect of Borrower under the
Bankruptcy Code, Borrower hereby assigns and transfers to Lender a non-exclusive right to apply to
the appropriate bankruptcy court under Section 365(d)(4) of the Bankruptcy Code for an order
extending the period during which the Ground Lease may be rejected or assumed.
(o) Borrower will give Lender prompt (and in all events within five (5) Business Days) notice
of any default under the Ground Lease or of the receipt by Borrower of any notice of default from
Ground Lessor. Borrower will promptly (and in all events within (5) Business Days) furnish to
Lender copies of all information furnished to Ground Lessor by the terms of the Ground Lease or the
provisions of this Section 2.12. Borrower will deposit with Lender an exact copy of any notice,
communication, plan, specification or other instrument or document received or given by Borrower in
any way relating to or affecting the Ground Lease which may concern or affect the estate of Ground
Lessor or Borrower thereunder in or under the Ground Lease or in the real estate thereby demised.
(p) Upon acquisition of the fee title or any other estate, title or interest in the Premises
by Borrower, this Security Instrument shall, automatically and without the necessity of execution
of any other documents, attach to and cover and be a lien upon such other estate so acquired, and
such other estate shall be considered as mortgaged, assigned and conveyed to Lender and the lien
hereof spread to cover such estate with the same force and effect as though specifically herein
mortgaged, assigned and conveyed. The provisions of this subsection shall not apply if Lender
acquires title to the Premises unless Lender shall so elect.
ARTICLE III: INSURANCE AND CASUALTY RESTORATION
Section 3.01.
Insurance Coverage
. Borrower shall, at its expense, maintain the
following insurance coverages with respect to the Property during the term of this Security
Instrument:
(a) (i) Insurance against loss or damage by fire, casualty and other hazards included
in an “all-risk” coverage endorsement or its equivalent (which, in the case of insurance
during the time of any construction work (“
Construction
”) shall be in “builder’s
risk completed value non-reporting form” together with rents, earnings and extra expense
insurance covering loss due to delay in completion of the Improvements), with such
endorsements as Lender may from time to time reasonably require and which are customarily
required by Institutional Lenders of similar properties similarly situated, including,
without limitation, if the Property constitutes a legal non-conforming use, an ordinance of
law coverage endorsement which contains “
Demolition Cost
”, “
Loss Due to
Operation of Law
” and “
Increased Cost of Construction
” coverages, covering the
Property in an amount not less than the greater of (A) 100% of the insurable replacement
value of the Property (exclusive of the Premises and footings and foundations) and (B) such
other amount as is necessary to prevent any reduction in such policy by reason of and to
prevent Borrower, Lender or any other insured thereunder from being deemed to be a
co-insurer. Not less frequently than once every three (3) years, Borrower, at its option,
shall either (A) have the Appraisal updated or obtain a new appraisal of the
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Property, (B) have a valuation of the Property made by or for its insurance carrier
conducted by an appraiser experienced in valuing properties of similar type to that of the
Property which are in the geographical area in which the Property is located or (C) provide
such other evidence as will, in Lender’s sole judgment, enable Lender to determine whether
there shall have been an increase in the insurable value of the Property and Borrower shall
deliver such updated Appraisal, new appraisal, insurance valuation or other evidence
acceptable to Lender, as the case may be, and, if such updated Appraisal, new appraisal,
insurance valuation, or other evidence acceptable to Lender reflects an increase in the
insurable value of the Property, the amount of insurance required hereunder shall be
increased accordingly and Borrower shall deliver evidence satisfactory to Lender that such
policy has been so increased.
(ii) Commercial general liability insurance against claims for personal and bodily
injury and/or death to one or more persons or property damage, occurring on, in or about the
Property (including the adjoining streets, sidewalks and passageways therein) in such
amounts as Lender may from time to time reasonably require (but in no event shall Lender’s
requirements be increased more frequently than once during each twelve (12) month period)
and which are customarily required by Institutional Lenders for similar properties similarly
situated, but not less than $1,000,000 per occurrence and $2,000,000 general aggregate on a
per location basis and, in addition thereto, not less than $25,000,000 excess and/or
umbrella liability insurance shall be maintained for any and all claims.
(iii) Business interruption, rent loss or other similar insurance with an unlimited
restoration period (A) with loss payable to Lender, (B) covering all risks required to be
covered by the insurance provided for in Section 3.01(a)(i) hereof and (C) in an amount not
less than 100% of the projected total revenues derived from the Property for the succeeding
eighteen (18) month period based on an occupancy rate taking into account historical and
projected occupancy. The amount of such insurance shall be determined upon the execution of
this Security Instrument, and not more frequently than once each calendar year thereafter
based on Borrower’s reasonable estimate of projected total revenues derived from the
Property for the next succeeding eighteen (18) months together with an eighteen (18) month
extended period of indemnity. In the event the Property shall be damaged or destroyed,
Borrower shall and hereby does assign to Lender all payment of claims under the policies of
such insurance, and all amounts payable thereunder, and all net amounts, shall be collected
by Lender under such policies and shall be applied in accordance with this Security
Instrument; provided, however, that nothing herein contained shall be deemed to relieve
Borrower of its obligations to timely pay all amounts due under the Loan Documents.
(iv) Intentionally omitted.
(v) Insurance against loss or damages from (A) leakage of sprinkler systems and (B)
explosion of steam boilers, air conditioning equipment, pressure vessels or similar
apparatus now or hereafter installed at the Property, in such amounts as Lender may from
time to time reasonably require and which are then customarily required by
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Institutional Lenders of similar properties similarly situated, but in no event less
than $25,000,000.
(vi) Flood insurance in an amount equal to the full insurable value of the Property or
the maximum amount available, whichever is less, if the Improvements are located in an area
designated by the Secretary of Housing and Urban Development as being “an area of special
flood hazard” under the National Flood Insurance Program (i.e., having a one percent or
greater chance of flooding), and if flood insurance is available under the National Flood
Insurance Act.
(vii) Worker’s compensation insurance or other similar insurance which may be required
by Governmental Authorities or Legal Requirements.
(viii) Insurance against loss resulting from mold, spores or fungus on or about the
Premises to the extent maintained as of the Closing Date.
(ix) (A) During any period of the term of the Loan that the Terrorism Risk Insurance
Extension Act of 2005 (“
TRIA
”) is in effect in substantially the same form as its
current form, if “acts of terrorism” or other similar acts or events are hereafter excluded
from Borrower’s comprehensive all risk insurance policy (including business interruption,
rent loss or similar insurance coverage), Borrower shall obtain an endorsement to such
policy, or a separate policy insuring against all “certified acts of terrorism” as defined
by TRIA and “fire following”, each in an amount equal to one hundred percent (100%) of the
“
Full Replacement Cost
,” which for purposes of the Security Instrument shall mean
actual replacement value (exclusive of the Premises, footings and foundations) with a waiver
of depreciation; and
(B) during any period of the term of the Loan that TRIA is not in effect, if “acts of
terrorism” or other similar acts or events or “fire following” are hereafter excluded from
Borrower’s comprehensive all risk insurance policy or business interruption insurance
coverage, Borrower shall obtain an endorsement to such policy, or a separate policy insuring
against all such excluded acts or events, to the extent such policy or endorsement is
available, in an amount determined by Lender in its sole discretion (but in no event greater
than the total insurable value plus required business interruption, rent loss or similar
coverage); provided, however, Borrower shall not be required to pay annual premiums for the
insurance required pursuant to this Section 3.01(a)(ix) in excess of three (3) times the
premium as of the Closing Date for the insurance required pursuant to this Section
3.01(a)(ix) for such coverage.
(x) At all times during Construction, contractor’s liability insurance to a limit of
not less than $25,000,000 on a per occurrence basis covering each contractor’s construction
operation at the Premises.
(xi) Such other insurance as may from time to time be required by Lender and which is
then customarily required by Institutional Lenders for similar properties similarly
situated, against other insurable hazards, including, but not limited to, war risk,
malicious mischief, vandalism, sinkhole and mine subsidence, earthquake (in an amount
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equal to the probable maximum loss multiplied by the insurable replacement value of the
Property (exclusive of the Premises and footings and foundations)) and/or windstorm, due
regard to be given to the size and type of the Premises, Improvements, Fixtures and
Equipment and their location, construction and use.
(xii) If Borrower, any of its Affiliates or Manager holds a liquor license for the
Premises, liquor liability insurance in the amount of no less than $10,000,000.
(xiii) Automobile liability insurance covering owned, hired and not owned vehicles in
an amount of not less than $1,000,000 per accident.
(b) Notwithstanding anything set forth herein, Lender hereby acknowledges that the insurance
coverage maintained by Borrower is, as of the Closing Date, acceptable to Lender and shall, as of
the Closing Date, be deemed to comply with the provisions hereof.
(c) Borrower shall cause any Manager of the Property to maintain fidelity insurance in an
amount equal to Five Hundred Thousand Dollars ($500,000).
Section 3.02.
Policy Terms
. (a) All insurance required by this Article III shall be
in the form (other than with respect to Sections 3.01(a)(vi) and (vii) above when insurance in
those two sub-sections is placed with a governmental agency or instrumentality on such agency’s
forms) and amount and with deductibles as, from time to time, shall be reasonably acceptable to
Lender, under valid and enforceable policies issued by financially responsible insurers authorized
to do business in the State where the Property is located, with a general policyholder’s service
rating of not less than A and a financial rating of not less than XIII as rated in the most
currently available Best’s Insurance Reports (or the equivalent, if such rating system shall
hereafter be altered or replaced) and shall have a claims paying ability rating and/or financial
strength rating, as applicable, of not less than “AA” (or its equivalent), or such lower claims
paying ability rating and/or financial strength rating, as applicable, as Lender shall, in its sole
and absolute discretion, consent to, from a Rating Agency (one of which after a Securitization in
which Standard & Poor’s rates any securities issued in connection with such Securitization, shall
be Standard & Poor’s). Originals or certified copies of all insurance policies shall be delivered
to and held by Lender. All such policies (except policies for worker’s compensation) shall name
Lender, its successors and/or assigns as an additional named insured, with respect to the insurance
required pursuant to Section 3.01(a)(iii) above, shall provide for loss payable to Lender, its
successors and/or assigns and shall contain (or have attached): (i) standard “non-contributory
mortgagee” endorsement or its equivalent relating, inter alia, to recovery by Lender
notwithstanding the negligent or willful acts or omissions of Borrower; (ii) a waiver of
subrogation endorsement as to Lender; (iii) an endorsement indicating that neither Lender nor
Borrower shall be or be deemed to be a co-insurer with respect to any casualty risk insured by such
policies and shall provide for a deductible per loss of an amount not more than $10,000, and (iv) a
provision that such policies shall not be canceled, terminated, denied renewal or amended,
including, without limitation, any amendment reducing the scope or limits of coverage, without at
least thirty (30) days’ prior written notice to Lender in each instance. Not less than thirty (30)
days, or, with respect to non-payment of premiums, ten (10) days, prior to the expiration dates of
the insurance policies obtained pursuant to this Security Instrument, originals or certified copies
of renewals of such policies (or certificates evidencing such renewals) bearing notations
evidencing the payment of
- 53 -
premiums or accompanied by other reasonable evidence of such payment (which premiums shall not
be paid by Borrower through or by any financing arrangement which would entitle an insurer to
terminate a policy unless Borrower has on deposit in the Basic Carrying Costs Escrow Account an
amount, as reasonably determined by Lender, equal to not less than one-fourth of the annual
insurance premium with respect to the insurance required by this Article III) shall be delivered by
Borrower to Lender. Borrower shall not carry separate insurance, concurrent in kind or form or
contributing in the event of loss, with any insurance required under this Article III.
(b) If Borrower fails to maintain and deliver to Lender the original policies or certificates
of insurance required by this Security Instrument, or if there are insufficient funds in the Basic
Carrying Costs Escrow Account to pay the premiums for same, Lender may, at its option, following
five (5) days written notice to Borrower, procure such insurance, and Borrower shall pay, or as the
case may be, reimburse Lender for, all premiums thereon promptly, upon demand by Lender, with
interest thereon at the Default Rate from the date paid by Lender to the date of repayment and such
sum shall constitute a part of the Debt.
(c) Borrower shall notify Lender of the renewal premium of each insurance policy and, if an
Event of Default has occurred and is then continuing, Lender shall be entitled to pay such amount
on behalf of Borrower from the Basic Carrying Costs Escrow Account.
(d) The insurance required by this Security Instrument may, at the option of Borrower, be
effected by blanket and/or umbrella policies issued to Borrower covering the Property provided
that, in each case, the policies otherwise comply with the provisions of this Security Instrument
and allocate to the Property, from time to time (but in no event less than once a year), the
coverage specified by this Security Instrument, without possibility of reduction or coinsurance by
reason of, or damage to, any other property (real or personal) named therein. If the insurance
required by this Security Instrument shall be effected by any such blanket or umbrella policies,
Borrower shall furnish to Lender (i) original policies or certified copies thereof, or an original
certificate of insurance together with reasonable access to the original of such policy to review
such policy’s coverage of the Property, with schedules attached thereto showing the amount of the
insurance provided under such policies applicable to the Property and (ii) an Officer’s Certificate
setting forth (A) the number of properties covered by such policy, (B) the location by city (if
available, otherwise, county) and state of the properties, (C) the average square footage of the
properties, (D) a brief description of the typical construction type included in the blanket policy
and (E) such other information as Lender may reasonably request.
Section 3.03.
Assignment of Policies
. (a) Borrower hereby assigns to Lender the
proceeds of all insurance (other than worker’s compensation and liability insurance) obtained
pursuant to this Security Instrument, all of which proceeds shall be payable to Lender as
collateral and further security for the payment of the Debt and the performance of Borrower’s
obligations hereunder and under the other Loan Documents, and Borrower hereby authorizes and
directs the issuer of any such insurance to make payment of such proceeds directly to Lender.
Except as otherwise expressly provided in Section 3.04 or elsewhere in this Article III, Lender
shall have the option, in its discretion, and without regard to the adequacy of its security, to
apply all or any part of the proceeds it may receive pursuant to this Article in such manner as
Lender may elect to any one or more of the following: (i) the payment of the Debt, whether or not
then
- 54 -
due, in any proportion or priority as Lender, in its discretion, may elect, (ii) the repair or
restoration of the Property, (iii) the cure of any Default or (iv) the reimbursement of the costs
and expenses of Lender incurred pursuant to the terms hereof in connection with the recovery of the
Insurance Proceeds. Nothing herein contained shall be deemed to excuse Borrower from repairing or
maintaining the Property as provided in this Security Instrument or restoring all damage or
destruction to the Property, regardless of the sufficiency of the Insurance Proceeds, and the
application or release by Lender of any Insurance Proceeds shall not cure or waive any Default or
notice of Default.
(b) In the event of the foreclosure of this Security Instrument or any other transfer of title
or assignment of all or any part of the Property in extinguishment, in whole or in part, of the
Debt, all right, title and interest of Borrower in and to all policies of insurance required by
this Security Instrument shall inure to the benefit of the successor in interest to Borrower or the
purchaser of the Property. If, prior to the receipt by Lender of any proceeds, the Property or any
portion thereof shall have been sold on foreclosure of this Security Instrument or by deed in lieu
thereof or otherwise, or any claim under such insurance policy arising during the term of this
Security Instrument is not paid until after the extinguishment of the Debt, and Lender shall not
have received the entire amount of the Debt outstanding at the time of such extinguishment, whether
or not a deficiency judgment on this Security Instrument shall have been sought or recovered or
denied, then, the proceeds of any such insurance to the extent of the amount of the Debt not so
received, shall be paid to and be the property of Lender, together with interest thereon at the
Default Rate, and the reasonable attorney’s fees, costs and disbursements incurred by Lender in
connection with the collection of the proceeds which shall be paid to Lender and Borrower hereby
assigns, transfers and sets over to Lender all of Borrower’s right, title and interest in and to
such proceeds. Notwithstanding any provisions of this Security Instrument to the contrary, Lender
shall not be deemed to be a trustee or other fiduciary with respect to its receipt of any such
proceeds, which may be commingled with any other monies of Lender; provided, however, that Lender
shall use such proceeds for the purposes and in the manner permitted by this Security Instrument.
Any proceeds deposited with Lender shall be held by Lender in an interest-bearing account, but
Lender makes no representation or warranty as to the rate or amount of interest, if any, which may
accrue on such deposit and shall have no liability in connection therewith. Interest accrued, if
any, on the proceeds shall be deemed to constitute a part of the proceeds for purposes of this
Security Instrument. The provisions of this Section 3.03(b) shall survive the termination of this
Security Instrument by foreclosure, deed in lieu thereof or otherwise as a consequence of the
exercise of the rights and remedies of Lender hereunder after a Default.
Section 3.04.
Casualty Restoration
. (a) (i) In the event of any damage to or
destruction of the Property, Borrower shall give prompt written notice to Lender (which notice
shall set forth Borrower’s good faith estimate of the cost of repairing or restoring such damage or
destruction, or if Borrower cannot reasonably estimate the anticipated cost of restoration,
Borrower shall nonetheless give Lender prompt notice of the occurrence of such damage or
destruction, and will diligently proceed to obtain estimates to enable Borrower to quantify the
anticipated cost and time required for such restoration, whereupon Borrower shall promptly notify
Lender of such good faith estimate) and, provided that restoration does not violate any Legal
Requirements, Borrower shall promptly commence and diligently prosecute to completion the repair,
restoration or rebuilding of the Property so damaged or destroyed to a condition such that the
Property shall
- 55 -
be at least equal in value to that immediately prior to the damage to the extent practicable,
in full compliance with all Legal Requirements and the provisions of all Leases, and in accordance
with Section 3.04(b) below. Such repair, restoration or rebuilding of the Property are sometimes
hereinafter collectively referred to as the “
Work
”.
(ii) Borrower shall not adjust, compromise or settle any claim for Insurance Proceeds
without the prior written consent of Lender, which shall not be unreasonably withheld or
delayed and Lender shall have the right, at Borrower’s sole cost and expense, to participate
in any settlement or adjustment of Insurance Proceeds; provided, however, that, except
during the continuance of an Event of Default, Lender’s consent shall not be required with
respect to the adjustment, compromising or settlement of any claim for Insurance Proceeds in
an amount less than $500,000.
(iii) Subject to Section 3.04(a)(iv), Lender shall apply any Insurance Proceeds which
it may receive towards the Work in accordance with Section 3.04(b) and the other applicable
sections of this Article III.
(iv) If (A) an Event of Default shall have occurred and be continuing, (B) Lender is
not reasonably satisfied that the Debt Service Coverage, within eighteen (18) months after
substantial completion of the Work, will be at least equal to the Required Debt Service
Coverage, (C) the cost of restoration exceeds more than thirty percent (30%) of the
reasonably estimated fair market value of the Property immediately prior to the applicable
damage or destruction is damaged or destroyed, (D) Lender is not reasonably satisfied that
the Work can be completed six (6) months prior to Maturity, or (E) Lender is not reasonably
satisfied that the Work can be completed within fifteen (15) months of the damage to or
destruction of the Property (each, a “
Substantial Casualty
”), Lender shall have the
option, in its sole discretion to apply any Insurance Proceeds it may receive pursuant to
this Security Instrument (less any cost to Lender of recovering and paying out such proceeds
incurred pursuant to the terms hereof and not otherwise reimbursed to Lender, including,
without limitation, reasonable attorneys’ fees and expenses) to the payment of the Debt,
without any prepayment fee or charge of any kind, or to allow such proceeds to be used for
the Work pursuant to the terms and subject to the conditions of Section 3.04(b) hereof and
the other applicable sections of this Article III.
(v) In the event that Lender elects or is obligated hereunder to allow Insurance
Proceeds to be used for the Work, any excess proceeds remaining after completion of such
Work shall be held by Lender as additional collateral for the Loan and, if the Debt Service
Coverage is 1.2:1.0 or greater for two (2) consecutive calendar quarters at any time
subsequent to the completion of the Work, and a Default does not exist, shall, at the
request of Borrower be disbursed to Borrower.
(b) If any Condemnation Proceeds in accordance with Section 6.01(a), or any Insurance Proceeds
in accordance with Section 3.04(a), are to be applied to the repair, restoration or rebuilding of
the Property, then such proceeds shall be deposited into a segregated interest-bearing bank account
at the Bank (and the interest accrued thereon shall accrue to the benefit of Borrower), which shall
be an Eligible Account, held by Lender and shall be paid out from time to time to Borrower as the
Work progresses (less any cost to Lender of recovering and paying
- 56 -
out such proceeds, including, without limitation, reasonable attorneys’ fees and costs
allocable to inspecting the Work and the plans and specifications therefor) subject to Section 5.13
hereof and to all of the following conditions:
(i) An Independent architect or engineer selected by Borrower and reasonably acceptable
to Lender (an “
Architect
” or “
Engineer
”) or a Person (which Lender
acknowledges may be personnel employed by Borrower or an Affiliate thereof experienced in
such matters) otherwise reasonably acceptable to Lender, shall have delivered to Lender a
certificate estimating the cost of completing the Work, and, if the amount set forth therein
is more than the sum of the amount of Insurance Proceeds then being held by Lender in
connection with a casualty and amounts agreed to be paid as part of a final settlement under
the insurance policy upon or before completion of the Work, Borrower shall have delivered to
Lender (A) cash collateral in an amount equal to such excess, (B) an unconditional,
irrevocable, clean sight draft letter of credit, in form, substance and issued by a bank
reasonably acceptable to Lender, in the amount of such excess and draws on such letter of
credit shall be made by Lender to make payments pursuant to this Article III following
exhaustion of the Insurance Proceeds therefor, (C) a completion bond in form, substance and
issued by a surety company reasonably acceptable to Lender, or (D) other evidence reasonably
satisfactory to Lender that any such excess shall be provided by Borrower.
(ii) If the cost of the Work is reasonably estimated by an Architect or Engineer in a
certification reasonably acceptable to Lender to be equal to or exceed five percent (5%) of
the Loan Amount, such Work shall be performed under the supervision of an Architect or
Engineer, it being understood that the plans and specifications with respect thereto shall
provide for Work so that, upon completion thereof, the Property shall be at least equal in
replacement value and general utility to the Property prior to the damage or destruction.
(iii) Each request for payment shall be made on not less than ten (10) days’ prior
notice to Lender and shall be accompanied by a certificate of an Architect or Engineer, or,
if the Work is not required to be supervised by an Architect or Engineer, by an Officer’s
Certificate stating (A) that payment is for Work completed in compliance with the plans and
specifications, if required under clause (ii) above, (B) that the sum requested is required
to reimburse Borrower for payments by Borrower to date, or is due to the contractors,
subcontractors, materialmen, laborers, engineers, architects or other Persons rendering
services or materials for the Work (giving a brief description of such services and
materials), and that when added to all sums previously paid out by Lender does not exceed
the value of the Work done to the date of such certificate, (C) if the sum requested is to
cover payment relating to repair and restoration of personal property required or relating
to the Property, that title to the personal property items covered by the request for
payment is vested in Borrower (unless Borrower is lessee of such personal property), and (D)
that the Insurance Proceeds and other amounts deposited by Borrower held by Lender after
such payment is more than or equal to the estimated remaining cost to complete such Work;
provided, however, that if such certificate is given by an Architect or Engineer, such
Architect or Engineer shall certify as to clause (A) above, and such Officer’s Certificate
shall certify as to the remaining clauses above, and provided,
- 57 -
further, that Lender shall not be obligated to disburse such funds if Lender
determines, in Lender’s reasonable discretion, that Borrower shall not be in compliance with
this Section 3.04(b). Additionally, each request for payment shall contain a statement
signed by Borrower stating that the requested payment is for Work satisfactorily done to
date.
(iv) Each request for payment shall be accompanied by waivers of lien, in customary
form and substance, covering that part of the Work for which payment or reimbursement is
being requested and, if required by Lender, a search prepared by a title company or licensed
abstractor, or by other evidence reasonably satisfactory to Lender that there has not been
filed with respect to the Property any mechanic’s or other lien or instrument for retention
of title relating to any part of the Work not discharged of record. Additionally, as to any
personal property covered by the request for payment, Lender shall be furnished with
evidence of Borrower having incurred a payment obligation therefor and such further evidence
reasonably satisfactory to assure Lender that UCC filings therefor provide a valid first
lien on the personal property.
(v) Lender shall have the right to inspect the Work at all reasonable times upon
reasonable prior notice and may condition any disbursement of Insurance Proceeds upon
satisfactory compliance by Borrower with the provisions hereof. Neither the approval by
Lender of any required plans and specifications for the Work nor the inspection by Lender of
the Work shall make Lender responsible for the preparation of such plans and specifications,
or the compliance of such plans and specifications of the Work, with any applicable law,
regulation, ordinance, covenant or agreement.
(vi) Insurance Proceeds shall not be disbursed more frequently than once every thirty
(30) days.
(vii) Until such time as the Work has been substantially completed, Lender shall not be
obligated to disburse up to ten percent (10%) of the cost of the Work (the “
Retention
Amount
”) to Borrower. Upon substantial completion of the Work, Borrower shall send
notice thereof to Lender and, subject to the conditions of Section 3.04(b)(i)-(iv), Lender
shall disburse one-half of the Retention Amount to Borrower; provided, however, that the
remaining one-half of the Retention Amount shall be disbursed to Borrower when Lender shall
have received copies of any and all final certificates of occupancy or other certificates,
licenses and permits required for the ownership, occupancy and operation of the Property in
accordance with all Legal Requirements, if any. Borrower hereby covenants to diligently,
and in a commercially reasonable fashion, seek to obtain any certificates, licenses and
permits required for the use and occupancy of the Property in accordance with all Legal
Requirements.
(viii) Upon failure on the part of Borrower promptly to commence the Work or to proceed
diligently and continuously to completion of the Work, which failure shall continue after
written notice for thirty (30) days, Lender may apply any Insurance Proceeds or Condemnation
Proceeds it then or thereafter holds to the payment of the Debt in accordance with the
provisions of the Note; provided, however, that Lender shall be entitled to apply at any
time all or any portion of the Insurance Proceeds or
- 58 -
Condemnation Proceeds it then holds to the extent necessary to cure any Event of
Default.
(c) If Borrower (i) within one hundred twenty (120) days after the occurrence of any damage to
the Property or any portion thereof (or such shorter period as may be required under any Major
Space Lease) shall fail to submit to Lender for approval plans and specifications for the Work
(approved by the Architect and by all Governmental Authorities whose approval is required), (ii)
after any such plans and specifications are approved by all Governmental Authorities, the Architect
and Lender, shall fail to promptly commence such Work or (iii) shall fail to diligently prosecute
such Work to completion, then, in addition to all other rights available hereunder, at law or in
equity, Lender, or any receiver of the Property or any portion thereof, upon five (5) Business Days
prior notice to Borrower (except in the event of emergency in which case no notice shall be
required), may (but shall have no obligation to) perform or cause to be performed such Work, and
may take such other steps as it reasonably deems advisable. Borrower hereby waives, for Borrower,
any claim, other than for gross negligence or willful misconduct, against Lender and any receiver
arising out of any act or omission of Lender or such receiver pursuant hereto, and Lender may apply
all or any portion of the Insurance Proceeds (without the need to fulfill any other requirements of
this Section 3.04) to reimburse Lender and such receiver, for all costs not reimbursed to Lender or
such receiver upon demand together with interest thereon at the Default Rate from the date such
amounts are advanced until the same are paid to Lender or the receiver.
(d) Borrower hereby irrevocably appoints Lender as its attorney-in-fact, coupled with an
interest, to collect and receive any Insurance Proceeds paid with respect to any portion of the
Property or the insurance policies required to be maintained hereunder in accordance with the terms
hereof, and to endorse any checks, drafts or other instruments representing any Insurance Proceeds
whether payable by reason of loss thereunder or otherwise.
(e) Notwithstanding the foregoing provisions of this Section 3.04, upon the occurrence of any
damage to or destruction of the Property, provided that such damage or destruction is not a
Substantial Casualty, if in Lender’s reasonable judgment the cost of repair of or restoration to
the Property required as a result of any damage or destruction is less than $500,000 in the
aggregate and the Work can be completed in less than one hundred twenty (120) days (but in no event
beyond the date which is six (6) months prior to the Maturity Date), then Lender, upon request by
Borrower, shall permit Borrower to apply for and receive the Insurance Proceeds directly from the
insurer (and Lender shall advise the insurer to pay over such Insurance Proceeds directly to
Borrower), to the extent required to pay for any such Work, with any excess thereof after
completion of such Work to be delivered to Lender to be held by Lender as additional collateral for
the Loan, and if the Debt Service Coverage is 1.2:1.0 or greater for two (2) consecutive calendar
quarters at any time subsequent to the completion of the Work, and a Default does not exist, shall
at the request of Borrower be disbursed to Borrower.
Section 3.05.
Compliance with Insurance Requirements
. Borrower promptly shall comply
with, and shall cause the Property to comply with, all Insurance Requirements, even if such
compliance requires structural changes or improvements or would result in interference with the use
or enjoyment of the Property or any portion thereof; provided, however, Borrower shall have a right
to contest in good faith and with diligence such Insurance Requirements
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provided (a) no Event of Default shall exist during such contest and such contest shall not
subject the Property or any portion thereof to any lien or affect the priority of the lien of this
Security Instrument, (b) failure to comply with such Insurance Requirements will not subject
Lender, Trustee or any of their agents, employees, officers or directors to any civil or criminal
liability, (c) such contest will not cause any reduction in insurance coverage then existing on the
Property, (d) such contest shall not affect the ownership, use or occupancy of the Property, (e)
the Property or any part thereof or any interest therein shall not be in any danger of being sold,
forfeited or lost by reason of such contest by Borrower, (f) Borrower has given Lender prompt
notice of such contest and, upon request by Lender from time to time, notice of the status of such
contest by Borrower and/or information of the continuing satisfaction of the conditions set forth
in clauses (a) through (e) of this Section 3.05, (g) upon a final determination of such contest,
Borrower shall promptly comply with the requirements thereof, and (h) prior to and during such
contest, Borrower shall furnish to Lender security satisfactory to Lender, in its reasonable
discretion, against loss or injury by reason of such contest or the non-compliance with such
Insurance Requirement (and if such security is cash, Lender shall deposit the same in an
interest-bearing account and interest accrued thereon, if any, shall be deemed to constitute a part
of such security for purposes of this Security Instrument, but Lender (i) makes no representation
or warranty as to the rate or amount of interest, if any, which may accrue thereon and shall have
no liability in connection therewith and (ii) shall not be deemed to be a trustee or fiduciary with
respect to its receipt of any such security and any such security may be commingled with other
monies of Lender). If Borrower shall use the Property or any portion thereof in any manner which
permits the insurer to cancel any insurance required to be provided hereunder, Borrower immediately
shall obtain a substitute policy which shall satisfy the requirements of this Security Instrument
and which shall be effective on or prior to the date on which any such other insurance policy shall
be canceled. Borrower shall not by any action or omission invalidate any insurance policy required
to be carried hereunder unless such policy is replaced as aforesaid, or materially increase the
premiums on any such policy above the normal premium charged for such policy. Borrower shall
cooperate with Lender in obtaining for Lender the benefits of any Insurance Proceeds lawfully or
equitably payable to Lender in connection with the transaction contemplated hereby.
Section 3.06.
Event of Default During Restoration
. Notwithstanding anything to the
contrary contained in this Security Instrument including, without limitation, the provisions of
this Article III, if, at the time of any casualty affecting the Property or any part thereof, or at
any time during any Work, or at any time that Lender is holding or is entitled to receive any
Insurance Proceeds pursuant to this Security Instrument, either a Default of which Borrower has
been given notice or an Event of Default exists and is continuing, Lender shall then have no
obligation to make such proceeds available for Work (unless, provided no Event of Default exists,
the disbursement of such Insurance Proceeds will cure the Default, in which event Lender shall
disburse Insurance Proceeds for Work) and Lender shall have the right and option, to be exercised
in its sole and absolute discretion and election, with respect to the Insurance Proceeds, either to
retain and apply such proceeds in reimbursement for the actual costs, fees and expenses incurred by
Lender in accordance with the terms hereof in connection with the adjustment of the loss and, after
the occurrence of an Event of Default, any balance toward payment of the Debt in such priority and
proportions as Lender, in its sole discretion, shall deem proper, or towards the Work, upon such
terms and conditions as Lender shall determine, or to cure such Event of Default, or to any one or
more of the foregoing as Lender, in its sole and absolute discretion,
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may determine. If Lender shall receive and retain such Insurance Proceeds, the lien of this
Security Instrument shall be reduced only by the amount thereof received, after reimbursement to
Lender of expenses of collection, and actually applied by Lender in reduction of the principal sum
payable under the Note in accordance with the Note.
Section 3.07.
Application of Proceeds to Debt Reduction
.
(a) No damage to the Property, or any part thereof, by fire or other casualty whatsoever,
whether such damage be partial or total, shall relieve Borrower from its liability to pay in full
the Debt and to perform its obligations under this Security Instrument and the other Loan
Documents.
(b) If any Insurance Proceeds are applied to reduce the Debt, Lender shall apply the same in
accordance with the provisions of the Note.
ARTICLE IV: IMPOSITIONS
Section 4.01.
Payment of Impositions, Utilities and Taxes, Etc.
Subject to any right
to contest pursuant to the terms of the Loan Documents and Lender’s obligations pursuant to Article
V hereof, Borrower shall pay or cause to be paid all Impositions at least five (5) days prior to
the date upon which any fine, penalty, interest or cost for nonpayment is imposed, and furnish to
Lender, upon request, receipted bills of the appropriate taxing authority or other documentation
reasonably satisfactory to Lender evidencing the payment thereof. If Borrower shall fail to pay
any Imposition in accordance with this Section and is not contesting or causing a contesting of
such Imposition in accordance with Section 4.04 hereof, or if there are insufficient funds in the
Basic Carrying Costs Escrow Account to pay any Imposition, Lender shall have the right, but shall
not be obligated, to pay that Imposition, and Borrower shall repay to Lender, on demand, any amount
paid by Lender, with interest thereon at the Default Rate from the date of the advance thereof to
the date of repayment, and such amount shall constitute a portion of the Debt secured by this
Security Instrument.
(a) Borrower shall, prior to the date upon which any fine, penalty, interest or cost for the
nonpayment is imposed, pay or cause to be paid all charges for electricity, power, gas, water and
other services and utilities in connection with the Property, and shall, upon request, deliver to
Lender receipts or other documentation reasonably satisfactory to Lender evidencing payment
thereof. If Borrower shall fail to pay any amount required to be paid by Borrower pursuant to this
Section 4.01 and is not contesting such charges in accordance with Section 4.04 hereof, Lender
shall have the right, but shall not be obligated, to pay that amount, and Borrower will repay to
Lender, on demand, any amount paid by Lender with interest thereon at the Default Rate from the
date of the advance thereof to the date of repayment, and such amount shall constitute a portion of
the Debt secured by this Security Instrument.
(b) Borrower shall pay all taxes, charges, filing, registration and recording fees, excises
and levies imposed upon Lender by reason of or in connection with its ownership of any Loan
Document or any other instrument related thereto, or resulting from the execution, delivery and
recording of, or the lien created by, or the obligation evidenced by, any of them, other than
income, franchise and other similar taxes imposed on Lender and shall pay all corporate stamp
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taxes, if any, and other taxes, required to be paid on the Loan Documents. If Borrower shall
fail to make any such payment within ten (10) days after written notice thereof from Lender, Lender
shall have the right, but shall not be obligated, to pay the amount due, and Borrower shall
reimburse Lender therefor, on demand, with interest thereon at the Default Rate from the date of
the advance thereof to the date of repayment, and such amount shall constitute a portion of the
Debt secured by this Security Instrument.
Section 4.02.
Deduction from Value
. In the event of the passage after the date of
this Security Instrument of any Legal Requirement deducting from the value of the Property for the
purpose of taxation, any lien thereon or changing in any way the Legal Requirements now in force
for the taxation of this Security Instrument and/or the Debt for federal, state or local purposes,
or the manner of the operation of any such taxes so as to adversely affect the interest of Lender,
or imposing any tax or other charge on any Loan Document, then Borrower will pay such tax, with
interest and penalties thereon, if any, within the statutory period. In the event the payment of
such tax or interest and penalties by Borrower would be unlawful, or taxable to Lender or
unenforceable or provide the basis for a defense of usury, then in any such event, Lender shall
have the option, by written notice of not less than thirty (30) days, to declare the Debt
immediately due and payable, with no prepayment fee or charge of any kind.
Section 4.03.
No Joint Assessment
. Borrower shall not consent to or initiate the
joint assessment of the Premises or the Improvements (a) with any other real property constituting
a separate tax lot and Borrower represents and covenants that the Premises and the Improvements are
and shall remain a separate tax lot or (b) with any portion of the Property which may be deemed to
constitute personal property, or any other procedure whereby the lien of any taxes which may be
levied against such personal property shall be assessed or levied or charged to the Property as a
single lien.
Section 4.04.
Right to Contest
. Borrower shall have the right, after prior notice to
Lender, at its sole expense, to contest by appropriate legal proceedings diligently conducted in
good faith, without cost or expense to Lender or any of its agents, employees, officers or
directors, the validity, amount or application of any Imposition or any charge described in Section
4.01, provided that (a) no Event of Default shall exist during such proceedings and such contest
shall not (unless Borrower shall comply with clause (d) of this Section 4.04) subject the Property
or any portion thereof to any lien or affect the priority of the lien of this Security Instrument,
(b) failure to pay such Imposition or charge will not subject Lender, Trustee or any of their
agents, employees, officers or directors to any civil or criminal liability, (c) the contest
suspends enforcement of the Imposition or charge (unless Borrower first pays the Imposition or
charge), (d) prior to and during such contest, Borrower shall furnish to Lender security
satisfactory to Lender, in its reasonable discretion, against loss or injury by reason of such
contest or the non-payment of such Imposition or charge (and if such security is cash, Lender may
deposit the same in an interest-bearing account and interest accrued thereon, if any, shall be
deemed to constitute a part of such security for purposes of this Security Instrument, but Lender
(i) makes no representation or warranty as to the rate or amount of interest, if any, which may
accrue thereon and shall have no liability in connection therewith and (ii) shall not be deemed to
be a trustee or fiduciary with respect to its receipt of any such security and any such security
may be commingled with other monies of Lender), (e) such contest shall not affect the ownership,
use or occupancy of the Property, (f) the Property or any part thereof or any interest therein
shall not
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be in any danger of being sold, forfeited or lost by reason of such contest by Borrower, (g)
Borrower has given Lender notice of the commencement of such contest and upon request by Lender,
from time to time, notice of the status of such contest by Borrower and/or confirmation of the
continuing satisfaction of clauses (a) through (f) of this Section 4.04, and (h) upon a final
determination of such contest, Borrower shall promptly comply with the requirements thereof. Upon
completion of any contest, Borrower shall immediately pay the amount due, if any, and deliver to
Lender proof of the completion of the contest and payment of the amount due, if any, following
which Lender shall return the security, if any, deposited with Lender pursuant to clause (d) of
this Section 4.04. Borrower shall not pay any Imposition in installments unless permitted by
applicable Legal Requirements, and shall, upon the request of Lender, deliver copies of all notices
and bills relating to any Imposition or other charge covered by this Article IV to Lender.
Section 4.05.
No Credits on Account of the Debt
. Borrower will not claim or demand
or be entitled to any credit or credits on account of the Debt for any part of the Impositions
assessed against the Property or any part thereof and no deduction shall otherwise be made or
claimed from the taxable value of the Property, or any part thereof, by reason of this Security
Instrument or the Debt. In the event such claim, credit or deduction shall be required by Legal
Requirements, Lender shall have the option, by written notice of not less than thirty (30) days, to
declare the Debt immediately due and payable, and Borrower hereby agrees to pay such amounts not
later than thirty (30) days after such notice.
Section 4.06.
Documentary Stamps
. If, at any time, the United States of America, any
State or Commonwealth thereof or any subdivision of any such State shall require revenue or other
stamps to be affixed to the Note, this Security Instrument or any other Loan Document, or impose
any other tax or charges on the same, Borrower will pay the same, with interest and penalties
thereon, if any.
ARTICLE V: CENTRAL CASH MANAGEMENT
Section 5.01.
Cash Flow
. Borrower hereby acknowledges and agrees that the Rents
(which for the purposes of this Section 5.01 shall not include security deposits from tenants under
Leases held by Borrower and not applied towards Rent) derived from the Property and Loss Proceeds
shall be utilized to fund the Sub-Accounts. Borrower shall give each tenant under a Space Lease an
irrevocable direction in the form of Exhibit E attached hereto and made a part hereof to deliver
all rent payments made by tenants and other payments constituting Rent directly into the Rent
Account. All payments constituting Rent, other than payments received from tenants under a Lease
and payments made by credit cards, shall be delivered to Manager.
Manager shall collect all of such Rent and shall deposit such funds, within three (3) Business
Days after receipt thereof in the Rent Account, the name and address of the bank in which such
account is located and the account number of which to be identified in writing by Manager to
Lender. Borrower shall cause Manager to give to the bank in which the Rent Account is located an
irrevocable written instruction, in form and substance acceptable to Lender, that, upon receipt of
notice from Lender that an Event of Default exists (the “
Trigger Notice
”), all funds
deposited in such account shall be automatically transferred through automated clearing house funds
(“
ACH
”) or by Federal wire to the Central Account prior to 5:00
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p.m. (New York City time) on a daily basis. Provided that the bank in which the Rent Account
is located has not received a Trigger Notice, all sums on deposit in the Rent Account shall be
transferred on a daily basis to an account designated in writing by Borrower (the “
Borrower
Account
”). Within two (2) Business Days of the Closing Date, Borrower shall deliver to Lender
a copy of the irrevocable notice which Borrower delivered to the bank in which the Rent Account is
located pursuant to the provisions of this Section 5.01, the receipt of which is acknowledged in
writing by such bank. Additionally, Borrower shall, or shall cause Manager to send to each
respective credit card company or credit card clearing bank with which Borrower or Manager has
entered into merchant’s agreements (each, a “
Credit Card Company
”) a direction letter in
the form of Exhibit F annexed hereto and made a part hereof (the “
Credit Card Payment Direction
Letter
”) directing such Credit Card Company to make all payments due in connection with goods
or services furnished at or in connection with the Property by Federal wire or through ACH directly
to the Rent Account. Without the prior written consent of Lender, neither Borrower nor Manager
shall (i) terminate, amend, revoke or modify any Credit Card Payment Direction Letter in any manner
or (ii) direct or cause any Credit Card Company to pay any amount in any manner other than as
specifically provided in the related Credit Card Payment Direction Letter. Lender may elect to
change the financial institution in which the Central Account shall be maintained; however, Lender
shall give Borrower and the bank in which the Rent Account is located not fewer than five (5)
Business Days’ prior notice of such change. Neither Borrower nor Manager shall change such bank or
the Rent Account without the prior written consent of Lender, which shall not be unreasonably
withheld, conditioned or delayed. All fees and charges of the bank(s) in which the Rent Account
and the Central Account are located shall be paid by Borrower. Promptly following the cure of any
Event of Default which resulted in Lender giving a Trigger Notice, Lender shall inform the bank
holding the Rent Account of the cure of such Event of Default, and at Borrower’s sole cost and
expense take all such actions and execute and deliver all such documents and instruments as are
reasonably required to restore Borrower’s right to daily withdrawals from the Rent Account.
Section 5.02.
Establishment of Accounts
. Lender has established the Escrow Accounts
and the Central Account in the name of Lender as secured party and Borrower has established the
Rent Account in the joint names of Lender, as secured party, and Borrower. The Escrow Accounts,
the Rent Account and the Central Account shall be under the sole dominion and control of Lender and
funds held therein shall not constitute trust funds. Borrower hereby irrevocably directs and
authorizes Lender to withdraw funds from the Rent Account and to deposit into and withdraw funds
from the Central Account and the Escrow Accounts, all in accordance with the terms and conditions
of this Security Instrument. Borrower shall have no right of withdrawal in respect of the Central
Account, the Rent Account or the Escrow Accounts, except to the extent expressly provided for in
this Agreement, including without limitation as provided for in Section 5.01. Each transfer of
funds to be made hereunder shall be made only to the extent that funds are on deposit in the Rent
Account, the Central Account or the affected Sub-Account or Escrow Account, and Lender shall have
no responsibility to make additional funds available in the event that funds on deposit are
insufficient. The Central Account shall contain the Basic Carrying Costs Sub-Account, the Debt
Service Payment Sub-Account, the Recurring Replacement Reserve Sub-Account, the Management Fee
Sub-Account and the Operations and Maintenance Expense Sub-Account, each of which accounts shall be
Eligible Accounts or book-entry sub-accounts of an Eligible Account (each a “
Sub-Account
”
and collectively, the “
Sub-Accounts
”) to which certain funds shall be allocated and from
which disbursements shall be
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made pursuant to the terms of this Security Instrument. Sums held in the Escrow Accounts may
be commingled with other monies held by Lender.
Section 5.03.
Intentionally Omitted
.
Section 5.04.
Servicing Fees
. Provided that no Default has occurred and is
continuing, Borrower shall have no obligation to reimburse Lender for servicing fees incurred in
connection with the ordinary, routine servicing of the Loan; provided, however, that Borrower shall
reimburse Lender for (a) any and all costs and expenses incurred after the occurrence of a Default
of which Borrower has been given notice or an Event of Default and (b) as otherwise provided for in
this Security Instrument. Additionally, in the event that Borrower requests more than one
disbursement from an Escrow Account in any month and Lender, in its sole and absolute discretion,
consents to such disbursement, Borrower shall pay Lender a disbursement fee in the amount of
$250.00 with respect to each Escrow Account from which the additional disbursement is sought.
Section 5.05.
Monthly Funding of Sub-Accounts and Escrow Accounts
. (a) On or before
each Payment Date during the term of the Loan, commencing on the first (1st) Payment Date occurring
after the month in which the Loan is initially funded, Borrower shall pay or cause to be paid to
the Central Account all sums required to be deposited in the Sub-Accounts pursuant to this Section
5.05(a) and all funds transferred or deposited into the Central Account shall be allocated among
the Sub-Accounts as follows and in the following priority:
(i) first, to the Basic Carrying Costs Sub-Account, until an amount equal to the Basic
Carrying Costs Monthly Installment for such Payment Date has been allocated to the Basic
Carrying Costs Sub-Account;
(ii) second, but only if an Event of Default exists, to the Management Fee Sub-Account,
until an amount equal to the Required Management Fee for such Payment Date has been
allocated to the Management Fee Sub-Account;
(iii) third, to the Debt Service Payment Sub-Account, until an amount equal to the
Required Debt Service Payment for such Payment Date has been allocated to the Debt Service
Payment Sub-Account;
(iv) fourth, but only if an Event of Default exists, to the Operation and Maintenance
Expense Sub-Account until an amount equal to the Cash Expenses, other than the Required
Management Fee, for the Interest Accrual Period ending immediately prior to such Payment
Date pursuant to the related Approved Annual Budget; and
(v) fifth, the balance, if any, to the Recurring Replacement Reserve Sub-Account, until
an amount equal to the Recurring Replacement Reserve Monthly Installment for such Payment
Date has been allocated to the Recurring Replacement Reserve Sub-Account.
Provided that no Event of Default has occurred and is continuing, Lender agrees that in each
Interest Accrual Period any amounts deposited into or remaining in the Central Account after the
Sub-Accounts have been funded as set forth in this Section 5.05(a) with respect to such
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Interest Accrual Period and any periods prior thereto, shall be disbursed by Lender to
Borrower on each Payment Date applicable to such Interest Accrual Period. The balance of the funds
distributed to Borrower after payment of all Operating Expenses by or on behalf of Borrower may be
retained by Borrower. Other than as set forth in Section 5.09 and Section 5.11, after the
occurrence, and during the continuance, of an Event of Default, no funds held in the Central
Account shall be distributed to, or withdrawn by, Borrower and Lender shall have the right to apply
all or any portion of the funds held in the Central Account or any Sub Account or any Escrow
Account to the Debt in Lender’s sole discretion; provided, however, notwithstanding anything set
forth herein, Lender shall disburse (i) the Required Management Fee to Manager to the extent of
amounts in the Management Fee Escrow Account and (ii) Operating Expenses incurred by Borrower to
the extent of amounts then in the Operations and Maintenance Expense Escrow Account pursuant to the
Approved Annual Budget from the Operations and Maintenance Expense Escrow Account until the later
to occur of (a) sixty (60) days after the occurrence of an Event of Default and (b) thirty (30)
days following the transfer of the Loan to “special servicing” as provided in the pooling and
servicing agreement, trust and servicing agreement or similar agreement entered into in connection
with a Securitization.
(b) On each Payment Date, (i) sums held in the Basic Carrying Costs Sub Account shall be
transferred to the Basic Carrying Costs Escrow Account, (ii) sums held in the Debt Service Payment
Sub-Account, together with any amounts deposited into the Central Account that are either (x) Loss
Proceeds that Lender has elected to apply to reduce the Debt in accordance with the terms of
Article III hereof or (y) excess Loss Proceeds remaining after the completion of any restoration
required hereunder that have not been transferred to Borrower in accordance with the provisions set
forth in Section 5.13 hereof, shall be transferred to Lender to be applied towards the Required
Debt Service Payment and (iii) sums held in the Recurring Replacement Reserve Sub-Account shall be
transferred to the Recurring Replacement Reserve Escrow Account, (iv) sums held in the Operation
and Maintenance Expense Sub-Account shall be transferred to the Operation and Maintenance Expense
Escrow Account and (v) sums held in the Management Fee Sub-Account shall be transferred to the
Management Fee Escrow Account.
Section 5.06.
Payment of Basic Carrying Costs
. Borrower hereby agrees to pay all
Basic Carrying Costs (without regard to the amount of money in the Basic Carrying Costs Sub Account
or the Basic Carrying Costs Escrow Account). At least ten (10) Business Days prior to the due date
of any Basic Carrying Costs, and not more frequently than once each month, Borrower may notify
Lender in writing and request that Lender pay such Basic Carrying Costs on behalf of Borrower on or
prior to the due date thereof, and, provided that no Event of Default has occurred and that there
are sufficient funds available in the Basic Carrying Costs Escrow Account, Lender shall make such
payments out of the Basic Carrying Costs Escrow Account before same shall be delinquent. Together
with each such request, Borrower shall furnish Lender with bills and all other documents necessary,
as reasonably determined by Lender, for the payment of the Basic Carrying Costs which are the
subject of such request. Borrower’s obligation to pay (or cause Lender to pay) Basic Carrying
Costs pursuant to this Security Instrument shall include, to the extent permitted by applicable
law, Impositions resulting from future changes in law which impose upon Lender an obligation to pay
any property taxes or other Impositions or which otherwise adversely affect Lender’s interests.
Notwithstanding the foregoing, in the event that Lender receives a tax bill directly from a
Governmental Authority relating to any Real Estate Taxes, Lender shall pay all sums due thereunder
prior to the date such Real Estate Taxes would
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accrue late charges or interest thereon or within ten (10) Business Days of the receipt of
such tax bill, whichever is later. In making any payment of Real Estate Taxes, Lender may rely on
any bill, statement or estimate obtained from the applicable Governmental Authority without inquiry
into the accuracy of such bill, statement or estimate or into the validity of any Real Estate Taxes
or claim with respect thereto.
Provided that no Event of Default shall have occurred and be continuing, all funds deposited
into the Basic Carrying Costs Escrow Account shall be held by Lender pursuant to the provisions of
this Security Instrument and shall be applied in payment of Basic Carrying Costs in accordance with
the terms hereof. Should an Event of Default occur and be continuing, the sums on deposit in the
Basic Carrying Costs Sub-Account and the Basic Carrying Costs Escrow Account may be applied by
Lender in payment of any Basic Carrying Costs or may be applied to the payment of the Debt (subject
to any obligations of Lender pursuant to Section 5.05 hereof) or any other charges affecting all or
any portion of the Property as Lender in its sole discretion may determine; provided, however, that
no such application shall be deemed to have been made by operation of law or otherwise until
actually made by Lender as herein provided.
Notwithstanding anything set forth herein, provided no Event of Default has occurred and is
continuing, to the extent all funds required to be collected as part of any future Basic Carrying
Costs Monthly Installment with respect to Impositions during any Fiscal Year of the Loan exceed the
amounts reasonably required by Lender to be escrowed in order to pay Impositions for such Fiscal
Year in accordance with the terms of this Security Instrument at least thirty (30) days prior to
their respective due dates for such Fiscal Year, such excess funds (if any) shall, if requested by
Borrower in writing, be promptly released to Borrower.
Section 5.07.
Intentionally Omitted
.
Section 5.08.
Recurring Replacement Reserve Escrow Account
. Borrower hereby agrees
to pay all Recurring Replacement Expenditures with respect to the Property (without regard to the
amount of money then available in the Recurring Replacement Reserve Sub-Account or the Recurring
Replacement Reserve Escrow Account). Provided that (a) Lender has received written notice from
Borrower at least five (5) Business Days prior to the due date of any payment relating to Recurring
Replacement Expenditures and not more frequently than once each month, and further provided that no
Event of Default has occurred and is continuing, (b) there are sufficient funds available in the
Recurring Replacement Reserve Escrow Account, and (c) Borrower shall have theretofore furnished
Lender with lien waivers (which lien waivers may be conditional pending final payment, if
applicable), copies of bills, invoices and other reasonable documentation as may be required by
Lender to establish that the Recurring Replacement Expenditures which are the subject of such
request represent amounts due for completed or partially completed additions, replacements, capital
work and improvements performed at the Property, then Lender shall make such payments out of the
Recurring Replacement Reserve Escrow Account.
Provided that no Event of Default shall have occurred and be continuing, all funds deposited
into the Recurring Replacement Reserve Escrow Account shall be held by Lender pursuant to the
provisions of this Security Instrument and shall be applied in payment of Recurring Replacement
Expenditures. Should an Event of Default occur and be continuing, the
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sums on deposit in the Recurring Replacement Reserve Sub-Account and the Recurring Replacement
Reserve Escrow Account may be applied by Lender in payment of any Recurring Replacement
Expenditures or may be applied to the payment of the Debt or any other charges affecting all or any
portion of the Property, as Lender in its sole discretion may determine; provided, however, that no
such application shall be deemed to have been made by operation of law or otherwise until actually
made by Lender as herein provided.
Section 5.09.
Operation and Maintenance Expense Escrow Account
. Borrower hereby
agrees to pay all Operating Expenses with respect to the Property (without regard to the amount of
money then available in the Operation and Maintenance Expense Sub-Account or the Operation and
Maintenance Expense Escrow Account). All funds allocated to the Operation and Maintenance Expense
Escrow Account shall be held by Lender pursuant to the provisions of this Security Instrument. Any
sums held in the Operation and Maintenance Expense Escrow Account shall be disbursed to Borrower
within five (5) Business Days of receipt by Lender from Borrower of (a) a written request for such
disbursement which shall indicate the Operating Expenses (exclusive of Basic Carrying Costs and any
Required Management Fee payable to Borrower, or to any Affiliate of Borrower) for which the
requested disbursement is to pay and (b) an Officer’s Certificate stating that no Operating
Expenses with respect to the Property are more than sixty (60) days past due; provided, however, in
the event that Borrower legitimately disputes any invoice for an Operating Expense, and (i) no
Event of Default has occurred and is continuing hereunder, (ii) Borrower shall have set aside
adequate reserves for the payment of such disputed sums together with all interest and late fees
thereon, (iii) Borrower has complied with all the requirements of this Security Instrument relating
thereto, and (iv) the contesting of such sums shall not constitute a default under any other
instrument, agreement, or document to which Borrower is a party (other than any agreement with the
vendor with respect to which the unpaid Operating Expenses relates), then Borrower may, after
certifying to Lender as to items (i) through (iv) hereof, contest such invoice. Together with each
such request, Borrower shall furnish Lender with bills and all other documents necessary for the
payment of the Operating Expenses which are the subject of such request. Borrower may request a
disbursement from the Operation and Maintenance Expense Escrow Account no more than one (1) time
per calendar month. Should an Event of Default occur and be continuing, the sums on deposit in the
Operation and Maintenance Expense Sub-Account or the Operation and Maintenance Expense Escrow
Account shall be applied by Lender in payment of any Operating Expenses for the Property or, if
Lender has accelerated the outstanding Principal Amount, may be applied to the payment of the Debt
or any other charges affecting all or any portion of the Property as Lender, in its sole
discretion, may determine; provided, however, that no such application shall be deemed to have been
made by operation of law or otherwise until actually made by Lender as herein provided.
Section 5.10.
Intentionally Omitted
.
Section 5.11.
Management Fee Escrow Account
. Borrower hereby agrees to pay all
Required Management Fees (without regard to the amount of money then available in the Management
Fee Sub-Account or the Management Fee Escrow Account). All funds allocated to the Management Fee
Escrow Account shall be held by Lender pursuant to the provisions of this Security Instrument. Any
sums held in the Management Fee Escrow Account shall be disbursed
to Borrower within five (5) Business Days of receipt by Lender from Borrower of (a) a written
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request for such disbursement which shall indicate the Required Management Fee for which the
requested disbursement is to pay and (b) an Officer’s Certificate stating that no Required
Management Fees are more than sixty (60) days past due; provided, however, in the event that
Borrower legitimately disputes any invoice for a Required Management Fee, and (i) no Event of
Default has occurred and is continuing hereunder, (ii) Borrower shall have set aside adequate
reserves for the payment of such disputed sums together with all interest and late fees thereon,
(iii) Borrower has complied with all the requirements of this Security Instrument relating thereto,
and (iv) the contesting of such sums shall not constitute a default under any other instrument,
agreement, or document to which Borrower is a party, then Borrower may, after certifying to Lender
as to items (i) through (iv) hereof, contest such invoice. Together with each such request,
Borrower shall furnish Lender with bills and all other documents necessary for the payment of the
Required Management Fees which are the subject of such request. Borrower may request a
disbursement from the Management Fee Escrow Account no more than one (1) time per calendar month.
Should an Event of Default occur, the sums on deposit in the Management Fee Sub-Account or the
Management Fee Escrow Account shall be applied by Lender in payment of any Required Management Fee
or, if Lender has accelerated the outstanding Principal Amount, may be applied to the payment of
the Debt or any other charges affecting all or any portion of the Property as Lender, in its sole
discretion, may determine; provided, however, that no such application shall be deemed to have been
made by operation of law or otherwise until actually made by Lender as herein provided.
Section 5.12.
Performance of Engineering Work
. (a) Borrower shall promptly commence
and diligently thereafter pursue to completion (without regard to the amount of money then
available in the Engineering Escrow Account) the Required Engineering Work prior to the six (6)
month anniversary of the Closing Date. After Borrower completes an item of Required Engineering
Work, Borrower may submit to Lender an invoice therefor with lien waivers (which may be conditional
pending payment, if applicable) and a statement from the Engineer, reasonably acceptable to Lender,
indicating that the portion of the Required Engineering Work in question has been completed in
compliance with all Legal Requirements, and Lender shall, within twenty (20) days thereafter,
although in no event more frequently than once each month, reimburse such amount to Borrower from
the Engineering Escrow Account; provided, however, that Borrower shall not be reimbursed out of the
Engineering Escrow Account more than the amount set forth on Exhibit D hereto as the amount
allocated to the portion of the Required Engineering Work for which reimbursement is sought.
(b) From and after the date all of the Required Engineering Work is completed, Borrower may
submit a written request, which request shall be delivered together with final lien waivers and a
statement from the Engineer, as the case may be, reasonably acceptable to Lender, indicating that
all of the Required Engineering Work has been completed in compliance with all Legal Requirements,
and Lender shall, within twenty (20) days thereafter, disburse any balance of the Engineering
Escrow Account to Borrower. Should an Event of Default occur and be continuing, the sums on
deposit in the Engineering Escrow Account may be applied by Lender in payment of any Required
Engineering Work or may be applied to the payment of the Debt or any other charges affecting all or
any portion of the Property, as Lender in its sole discretion may determine; provided, however,
that no such application shall be deemed to have been made by operation of law or otherwise until
actually made by Lender as herein provided.
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Section 5.13.
Loss Proceeds
. In the event of a casualty to the Property, except to
the extent Lender elects, or is required pursuant to Article III hereof to make all or any portion
of the Insurance Proceeds available to Borrower for restoration, Lender and Borrower shall cause
all such Insurance Proceeds to be paid by the insurer directly to the Central Account, whereupon
Lender shall, after deducting Lender’s costs of recovering and paying out such Insurance Proceeds,
including without limitation, reasonable attorneys’ fees, apply same to reduce the Debt in
accordance with the terms of the Note; provided, however, that if Lender elects, or is deemed to
have elected, or is otherwise required pursuant to the terms of this Security Instrument, to make
all or a portion of the Insurance Proceeds available for restoration, all Insurance Proceeds in
respect of rent loss, business interruption or similar coverage shall be maintained in the Central
Account, to be applied by Lender in the same manner as Rent received with respect to the operation
of the Property; provided, further, however, that in the event that the Insurance Proceeds with
respect to such rent loss, business interruption or similar insurance policy are paid in a lump sum
in advance, Lender shall hold such Insurance Proceeds in a segregated interest-bearing escrow
account, which shall be an Eligible Account, shall estimate, in Lender’s reasonable discretion, the
number of months required for Borrower to restore the damage caused by the casualty, shall divide
the aggregate rent loss, business interruption or similar Insurance Proceeds by such number of
months, and shall disburse from such bank account into the Central Account each month during the
performance of such restoration such monthly installment of said Insurance Proceeds until such time
as the Debt Service Coverage for two (2) consecutive calendar quarters, the first of which shall
not occur prior to the applicable casualty, shall equal the Required Debt Service Coverage or
greater, at which time, after receipt of a written request from Borrower, all sums held by Lender
which related to rent loss, business interruption insurance or similar Insurance Proceeds shall be
disbursed to Borrower. In the event that Insurance Proceeds are to be applied toward restoration,
Lender shall hold such funds in a segregated bank account at the Bank, which shall be an Eligible
Account, and shall disburse same in accordance with the provisions of Section 3.04 hereof. Except
to the extent Lender elects, or is required pursuant to Section 6.01 hereof to make all or a
portion of the Condemnation Proceeds available to Borrower for restoration, Lender and Borrower
shall cause all such Condemnation Proceeds to be paid to the Central Account, whereupon Lender
shall, after deducting Lender’s costs of recovering and paying out such Condemnation Proceeds,
including without limitation, reasonable attorneys’ fees, apply same to reduce the Debt in
accordance with the terms of the Note; provided, however, that any Condemnation Proceeds received
in connection with a temporary Taking shall be maintained in the Central Account, to be applied by
Lender in the same manner as Rent received with respect to the operation of the Property; provided,
further, however, that in the event that the Condemnation Proceeds of any such temporary Taking are
paid in a lump sum in advance, Lender shall hold such Condemnation Proceeds in a segregated
interest-bearing bank account, which shall be an Eligible Account, shall estimate, in Lender’s
reasonable discretion, the number of months that the Property shall be affected by such temporary
Taking, shall divide the aggregate Condemnation Proceeds in connection with such temporary Taking
by such number of months, and shall disburse from such bank account into the Central Account each
month during the pendency of such temporary Taking such monthly installment of said Condemnation
Proceeds. In the event that Condemnation Proceeds are to be applied toward restoration, Lender
shall hold such funds in a segregated bank account at the Bank, which shall be an Eligible Account,
and shall disburse same in accordance with the provisions of Section 3.04 hereof. If any Loss
Proceeds are
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received by Borrower, such Loss Proceeds shall be received in trust for Lender, shall be
segregated from other funds of Borrower, and shall be forthwith paid into the Central Account, or
paid to Lender to hold in a segregated bank account at the Bank, in each case to be applied or
disbursed in accordance with the foregoing. Any Loss Proceeds made available to Borrower for
restoration in accordance herewith, to the extent not used by Borrower in connection with, or to
the extent they exceed the cost of, such restoration, shall be deposited into the Central Account,
to be held by Lender as additional collateral for the Loan, until such time, if any, at any time
subsequent to the completion of the Work, the Debt Service Coverage is 1.2:1.0 or greater for two
(2) consecutive calendar quarters and provided a Default does not exist, at the request of
Borrower, such excess Loss Proceeds shall be disbursed to Borrower provided any such Loss Proceeds
still remain in the Central Account.
ARTICLE VI: CONDEMNATION
Section 6.01.
Condemnation
. (a) Borrower shall notify Lender promptly of the
commencement or threat of any Taking of the Property or any portion thereof. Lender is hereby
irrevocably appointed as Borrower’s attorney-in-fact, coupled with an interest, with exclusive
power to collect, receive and retain the proceeds of any such Taking as to which Borrower is or may
be entitled and to make any compromise or settlement in connection with such proceedings (subject
to Borrower’s reasonable approval, except after the occurrence of an Event of Default, in which
event Borrower’s approval shall not be required), subject to the provisions of this Security
Instrument; provided, however, that Borrower may participate in any such proceedings (without
regard to the extent of the Taking) and Borrower shall be authorized and entitled to compromise or
settle any such proceeding with respect to Condemnation Proceeds in an amount less than five
percent (5%) of the Loan Amount. Borrower shall execute and deliver to Lender any and all
instruments reasonably required in connection with any such proceeding promptly after request
therefor by Lender. Except as set forth above, Borrower shall not adjust, compromise, settle or
enter into any agreement with respect to such proceedings without the prior consent of Lender. All
Condemnation Proceeds are hereby assigned to and shall be paid to Lender to be applied in
accordance with the terms hereof. With respect to Condemnation Proceeds in an amount in excess of
five percent (5%) of the Loan Amount, Borrower hereby authorizes Lender to compromise, settle,
collect and receive such Condemnation Proceeds, and to give proper receipts and acquittance
therefor. Subject to the provisions of this Article VI, Lender may apply such Condemnation
Proceeds (less any cost to Lender of recovering and paying out such proceeds, including, without
limitation, reasonable attorneys’ fees and disbursements and costs allocable to inspecting any
repair, restoration or rebuilding work and the plans and specifications therefor) toward the
payment of the Debt or to allow such proceeds to be used for the Work.
(b) “
Substantial Taking
” shall mean (i) a Taking of such portion of the Property that
would, in Lender’s reasonable discretion, leave remaining a balance of the Property which would not
under then current economic conditions, applicable Development Laws and other applicable Legal
Requirements, permit the restoration of the Property so as to constitute a complete, rentable
facility of the same type as existed prior to the Taking, having adequate ingress and egress to the
Property, capable of producing a projected Net Operating Income (as reasonably determined by
Lender) yielding a projected Debt Service Coverage therefrom for the next two (2) years of not less
than the Required Debt Service Coverage, or (ii) a Taking which occurs less
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than two (2) years prior to the Maturity Date, or (iii) a Taking which Lender is not
reasonably satisfied could be repaired within twelve (12) months and at least six (6) months prior
to the Maturity Date, or (iv) a Taking of fifteen percent (15%) or more of the Premises.
(c) In the case of a Substantial Taking, Condemnation Proceeds shall be payable to Lender in
reduction of the Debt but without any prepayment fee or charge of any kind and, if Borrower elects
to apply any Condemnation Proceeds it may receive pursuant to this Security Instrument to the
payment of the Debt, Borrower may prepay the balance of the Debt without any prepayment fee or
charge of any kind.
(d) In the event of a Taking which is less than a Substantial Taking, Borrower at its sole
cost and expense (whether or not the award shall have been received or shall be sufficient for
restoration) shall proceed diligently to restore, or cause the restoration of, the remaining
Improvements not so taken, to maintain a complete, rentable, self-contained fully operational
facility of the same sort as existed prior to the Taking in as good a condition as is reasonably
possible. In the event of such a Taking, Lender shall receive the Condemnation Proceeds and shall
pay over the same:
(i) first, provided no Event of Default shall have occurred and be continuing, to
Borrower to the extent of any portion of the award as may be necessary to pay the reasonable
cost of restoration of the Improvements remaining, and
(ii) second, to Lender to be held as additional collateral for the Loan and, if the
Debt Service Coverage is 1.2:1.0 or greater for two (2) consecutive calendar quarters at any
time subsequent to the completion of the Work, and a Default does not exist, shall, at the
request of Borrower be disbursed to Borrower.
If one or more Takings in the aggregate create a Substantial Taking, then, in such event, the
sections of this Article VI above applicable to Substantial Takings shall apply.
(e) In the event Lender is obligated to or elects to make Condemnation Proceeds available for
the restoration or rebuilding of the Property, such proceeds shall be disbursed in the manner and
subject to the conditions set forth in Section 3.04(b) hereof. If, in accordance with this Article
VI, any Condemnation Proceeds are used to reduce the Debt, they shall be applied in accordance with
the provisions of the Note and, with no prepayment fee or charge of any kind. Borrower shall
promptly execute and deliver all instruments requested by Lender for the purpose of confirming the
assignment of the Condemnation Proceeds to Lender. Application of all or any part of the
Condemnation Proceeds to the Debt shall be made in accordance with the provisions of Sections 3.06
and 3.07 hereof. No application of the Condemnation Proceeds to the reduction of the Debt shall
have the effect of releasing the lien of this Security Instrument until the remainder of the Debt
has been paid in full. In the case of any Taking, Lender, to the extent that Lender has not been
reimbursed by Borrower, shall be entitled, as a first priority out of any Condemnation Proceeds, to
reimbursement for all costs, fees and expenses reasonably incurred in the determination and
collection of any Condemnation Proceeds. All Condemnation Proceeds deposited with Lender pursuant
to this Section, until expended or applied as provided herein, shall be held in accordance with
Section 3.04(b) hereof and shall constitute additional security for the payment of the Debt and the
payment and performance of Borrower’s obligations, but
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Lender shall not be deemed a trustee or other fiduciary with respect to its receipt of such
Condemnation Proceeds or any part thereof. All awards so deposited with Lender shall be held by
Lender in an Eligible Account, but Lender makes no representation or warranty as to the rate or
amount of interest, if any, which may accrue on any such deposit and shall have no liability in
connection therewith. For purposes hereof, any reference to the award shall be deemed to include
interest, if any, which has accrued thereon.
ARTICLE VII: LEASES AND RENTS
Section 7.01.
Assignment
. (a) Borrower does hereby bargain, sell, assign and set
over unto Lender, all of Borrower’s interest in the Leases and Rents pursuant to the terms hereof.
The assignment of Leases and Rents in this Section 7.01 is an absolute, unconditional and present
assignment from Borrower to Lender and not an assignment for security and the existence or exercise
of Borrower’s revocable license to collect Rent shall not operate to subordinate this assignment to
any subsequent assignment. The exercise by Lender of any of its rights or remedies pursuant to
this Section 7.01 shall not be deemed to make Lender a mortgagee-in-possession. In addition to the
provisions of this Article VII, Borrower shall comply with all terms, provisions and conditions of
the Assignment.
(b) So long as no Event of Default exists or is continuing, Borrower shall have a revocable
license to take all actions with respect to all Leases and Rents, present and future, including the
right to collect and use the Rents, subject to the terms of this Security Instrument and the
Assignment.
(c) In a separate instrument Borrower shall, as requested from time to time by Lender, assign
to Lender or its nominee by specific or general assignment, any and all Leases, such assignments to
be in form and content reasonably acceptable to Lender, but subject to the provisions of Sections
7.01(a) and (b) hereof. Borrower agrees to deliver to Lender, within thirty (30) days after
Lender’s request, a true and complete copy of every Lease.
(d) The rights of Lender contained in this Article VII, the Assignment or any other assignment
of any Lease shall not result in any obligation or liability of Lender to Borrower or any lessee
under a Lease or any party claiming through any such lessee.
(e) At any time during the continuation of an Event of Default, the license granted
hereinabove may be revoked by Lender, and Lender or a receiver appointed in accordance with this
Security Instrument may enter upon the Property, and collect, retain and apply the Rents toward
payment of the Debt in such priority and proportions as Lender in its sole discretion shall deem
proper.
(f) In addition to the rights which Lender may have herein, upon the occurrence of any Event
of Default, Lender, at its option, may require Borrower to pay monthly in advance to Lender, or any
receiver appointed to collect the Rents, the fair and reasonable rental value for the use and
occupation of such part of the Property as may be used and occupied by Borrower and may require
Borrower to vacate and surrender possession of the Property to Lender or to such receiver and, in
default thereof, Borrower may be evicted by summary proceedings or otherwise.
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Section 7.02.
Management of Property
.
(a) Borrower shall manage the Property or cause the Property to be managed in a manner which
is consistent with the Approved Manager Standard. All Space Leases shall provide for rental rates
comparable to then existing local market rates for comparable space in hotel properties and terms
and conditions which constitute good and prudent business practice and are consistent with
prevailing market terms and conditions for comparable space in hotel properties, and shall be
arms-length transactions. All Space Leases shall be on a form reasonably acceptable to Lender and
shall provide that they are subordinate to this Security Instrument and that the lessees thereunder
attorn to Lender. Borrower shall deliver copies of all Leases, amendments, modifications and
renewals thereof to Lender. All proposed Leases for the Property shall be subject to the prior
written approval of Lender, provided, however that Borrower may enter into new leases with
unrelated third parties without obtaining the prior consent of Lender provided that: (i) the
proposed leases conform with the requirements of this Section 7.02; (ii) the space to be leased
pursuant to such proposed lease together with any space leased or to be leased to an Affiliate of
the tenant thereunder does not exceed 5,000 square feet; and (iii) the term of the proposed lease
inclusive of all extensions and renewals, does not exceed five (5) years or, if all extensions and
renewals are at the then prevailing market rates, does not exceed ten (10) years.
(b) Borrower (i) shall observe and perform all of its material obligations under the Leases
pursuant to applicable Legal Requirements and shall not do or permit to be done anything to
materially impair the value of the Leases as security for the Debt; (ii) shall promptly send copies
to Lender of all written notices of default which Borrower shall receive under the Leases; (iii)
shall, consistent with the Approved Manager Standard, enforce all of the terms, covenants and
conditions contained in the Leases to be observed or performed in all material respects; (iv) shall
not collect any of the Rents under the Leases more than one (1) month in advance (except that
Borrower may collect in advance such security deposits as are permitted pursuant to applicable
Legal Requirements and are commercially reasonable in the prevailing market); (v) shall not execute
any other assignment of lessor’s interest in the Leases or the Rents except as otherwise expressly
permitted pursuant to this Security Instrument; (vi) shall not cancel or terminate any of the
Leases or accept a surrender thereof in any manner inconsistent with the Approved Manager Standard;
(vii) shall not convey, transfer or suffer or permit a conveyance or transfer of all or any part of
the Premises or the Improvements or of any interest therein so as to effect a merger of the estates
and rights of, or a termination or diminution of the obligations of, lessees thereunder; (viii)
shall not alter, modify or change the terms of any guaranty of any Major Space Lease or cancel or
terminate any such guaranty; (ix) shall, in accordance with the Approved Manager Standard, make all
reasonable efforts to seek lessees for space as it becomes vacant and enter into Leases in
accordance with the terms hereof; (x) shall not cancel or terminate or materially modify, alter or
amend any Major Space Lease or Property Agreement without Lender’s consent, which consent will not
be unreasonably withheld or delayed; (xi) shall notify Lender promptly if any agreement pursuant to
which uses all or any portion of any adjacent or adjoining property is adversely affected in such a
manner as would have a Material Adverse Effect; and (xii) shall, without limitation to any other
provision hereof, execute and deliver at the request of Lender all such further assurances,
confirmations and assignments in connection with the Property as are required herein and as Lender
shall from time to time reasonably require.
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(c) Any bond or other instrument which Borrower is permitted to hold in lieu of cash security
deposits under applicable Legal Requirements shall be maintained in full force and effect unless
replaced by cash deposits as hereinabove described, shall be issued by a Person reasonably
satisfactory to Lender, shall, if permitted pursuant to Legal Requirements, at Lender’s option,
name Lender as payee or mortgagee thereunder or be fully assignable to Lender and shall, in all
respects, comply with applicable Legal Requirements and otherwise be reasonably satisfactory to
Lender. Borrower shall, upon request, provide Lender with evidence reasonably satisfactory to
Lender of Borrower’s compliance with the foregoing. Following the occurrence and during the
continuance of any Event of Default, Borrower shall, upon Lender’s request, if permitted by
applicable Legal Requirements, turn over the security deposits (and any interest thereon) to Lender
to be held by Lender in accordance with the terms of the Leases and all Legal Requirements.
(d) If requested by Lender, Borrower shall furnish, or shall cause the applicable lessee to
furnish, to Lender financial data and/or financial statements in accordance with Regulation AB for
any lessee of the Property if, in connection with a Securitization, Lender expects there to be,
with respect to such lessee or any group of affiliated lessees, a concentration within all of the
mortgage loans included or expected to be included, as applicable, in such Securitization such that
such lessee or group of affiliated lessees would constitute a Significant Obligor; provided,
however, that in the event the related Space Lease does not require the related lessee to provide
the foregoing information, Borrower shall use commercially reasonable efforts to cause the
applicable lessee to furnish such information.
(e) Borrower covenants and agrees with Lender that (i) the Property will be managed at all
times by Manager pursuant to the management agreement approved by Lender, which management
agreement at present is that certain Hotel Operating Agreement between Kimpton Hotel & Restaurant
Group, LLC, a Delaware limited liability company (“
Kimpton
”), as “
Operator
” and
Borrower dated as of June 14, 2001, as the same may have been amended, modified or supplemented
from time to time with the consent of Lender (the “
Management Agreement
”), (ii) after
Borrower has knowledge of a fifty percent (50%) or more change in control of the ownership of
Manager, Borrower will promptly give Lender notice thereof (a “
Manager Control Notice
”) and
(iii) the Management Agreement may be terminated by Lender if Borrower has the right to terminate
pursuant to the provisions of the Management Agreement (as a result of Manager’s gross negligence,
misappropriation of funds, willful misconduct or fraud) or at any time following (A) the earlier to
occur of (i) the later to occur of (a) sixty (60) days after the occurrence of an Event of Default
of which Manager has been given notice or (b) from and after the occurrence of a Securitization,
thirty (30) days following the transfer of the Loan to “special servicing” as provided in the
pooling and servicing agreement, trust and servicing agreement or similar agreement entered into in
connection with a Securitization and (ii) transfer of title to the Property by foreclosure or
delivery of a deed in lieu thereof, or (B) the receipt of a Manager Control Notice (except to the
extent the same would be an Approved Manager Transfer) and a substitute managing agent shall be
appointed by Borrower, subject to Lender’s prior written approval, which may not be unreasonably
withheld and which may be conditioned on, inter alia, a letter from each Rating Agency confirming
that any rating issued by the Rating Agency in connection with a Securitization will not, as a
result of the proposed change of Manager, be downgraded from the then current ratings thereof,
qualified or withdrawn. Lender acknowledges that, as of the Closing Date, Kimpton is an acceptable
manager. Borrower may
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from time to time appoint a successor manager to manage the Property with Lender’s prior
written consent which consent shall not be unreasonably withheld or delayed, provided that any such
successor manager shall be a reputable management company which meets the Approved Manager Standard
and each Rating Agency shall have confirmed in writing that any rating issued by the Rating Agency
in connection with a Securitization will not, as a result of the proposed change of Manager, be
downgraded from the then current ratings thereof, qualified or withdrawn. Borrower further
covenants and agrees that Borrower shall require Manager (or any successor managers) to maintain at
all times during the term of the Loan worker’s compensation insurance as required by Governmental
Authorities.
(f) There are no Franchise Agreements. Borrower will not enter into any Franchise Agreement
without the express written consent of Lender.
(g) Borrower covenants that it shall not, nor permit Manager, to sell or deliver rooms or
suites and accept payment therefor for more than thirty (30) days in advance of delivery except in
the ordinary course of business and in a manner consistent with the Approved Manager Standard.
(h) Borrower shall fund and operate, or shall cause Manager to fund and operate, the Property
in a manner consistent with a hotel of the same type and category as the Property.
(i) Borrower shall maintain or cause Manager to maintain Inventory in kind and amount
sufficient to meet hotel industry standards for hotels comparable to the hotel located at the
Premises and at levels sufficient for the operation of the hotel located at the Premises at
historic occupancy levels.
(j) Borrower shall deliver to Lender all written notices of default or termination received by
Borrower or Manager with respect to any licenses and permits, contracts, Property Agreements,
Leases or insurance policies within three (3) Business Days of receipt of the same.
(k) Borrower shall not permit any Equipment or other personal property to be removed from the
Property unless the removed item is consumed or sold in the ordinary course of business, removed
temporarily for maintenance and repair, or, if removed permanently, replaced by an article of
equivalent suitability and not materially less value, owned by Borrower free and clear of any lien.
ARTICLE VIII: MAINTENANCE AND REPAIR
Section 8.01.
Maintenance and Repair of the Property; Alterations; Replacement of
Equipment
. Borrower hereby covenants and agrees:
(a) Borrower shall not (i) desert or abandon the Property, (ii) change the use of the Property
or cause or permit the use or occupancy of any part of the Property to be discontinued if such
discontinuance or use change would violate any zoning or other law, ordinance or regulation; (iii)
consent to or seek any lowering of the zoning classification, or greater zoning restriction
affecting the Property; or (iv) take any steps whatsoever to convert the Property, or any portion
thereof, to a condominium or cooperative form of ownership.
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(b) Borrower shall, at its expense, (i) take good care of the Property including grounds
generally, and utility systems and sidewalks, roads, alleys, and curbs therein, and shall keep the
same in good, safe and insurable condition and in compliance with all applicable Legal
Requirements, (ii) promptly make all repairs to the Property necessary or appropriate for the use
or operation thereof, above grade and below grade, interior and exterior, structural and
nonstructural, ordinary and extraordinary, unforeseen and foreseen, and maintain the Property in a
manner appropriate for the facility and (iii) not commit or suffer to be committed any waste of the
Property or do or suffer to be done anything which will increase the risk of fire or other hazard
to the Property or impair the value thereof. Borrower shall keep the sidewalks, vaults, gutters
and curbs comprising, or adjacent to, the Property, clean and free from dirt, snow, ice, rubbish
and obstructions. All repairs made by Borrower shall be made with first-class materials, in a good
and workmanlike manner, shall be equal or better in quality and class to the original work and
shall comply with all applicable Legal Requirements and Insurance Requirements. To the extent any
of the above obligations are obligations of tenants under Space Leases or other Persons under
Property Agreements, Borrower may fulfill its obligations hereunder by causing such tenants or
other Persons, as the case may be, to perform their obligations thereunder. As used herein, the
terms “repair” and “repairs” shall be deemed to include all necessary replacements.
(c) Borrower shall not demolish, remove, construct, or, except as otherwise expressly provided
herein, restore, or alter the Property or any portion thereof; nor consent to or permit any such
demolition, removal, construction, restoration, addition or alteration which would diminish the
value of the Property without Lender’s prior written consent in each instance, which consent shall
not be unreasonably withheld or delayed; provided, however, Borrower may make structural or
exterior alterations to the Improvements or interior alterations of a non-structural type without
Lender’s prior written consent provided that the aggregate cost of such alterations does not exceed
$500,000.
(d) Borrower represents and warrants to Lender that (i) there are no fixtures, machinery,
apparatus, tools, equipment or articles of personal property attached or appurtenant to, or located
on, or used in connection with the management, operation or maintenance of the Property, except for
the Equipment and equipment leased by Borrower for the management, operation or maintenance of the
Property in accordance with the Loan Documents or that is otherwise the property of tenants or
hotel guests; (ii) the Equipment and the leased equipment constitute all of the fixtures,
machinery, apparatus, tools, equipment and articles of personal property necessary to the proper
operation and maintenance of the Property; and (iii) all of the Equipment is free and clear of all
liens, except for the lien of this Security Instrument and the Permitted Encumbrances, and further
provided that Lender acknowledges that certain items of software relating to the accounting system,
property management system and reservation system is presently leased to Manager, and that the
foregoing lease shall terminate, and the Property shall no longer have the use thereof, in the
event that Manager is no longer managing the Property pursuant to the Management Agreement. All
right, title and interest of Borrower in and to all extensions, improvements, betterments, renewals
and appurtenances to the Property hereafter acquired by, or released to, Borrower or constructed,
assembled or placed by Borrower in the Property, and all changes and substitutions of the security
constituted thereby, shall be and, in each such case, without any further mortgage, encumbrance,
conveyance, assignment or other act by Lender or Borrower, shall become subject to the lien and
security interest of this Security
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Instrument as fully and completely, and with the same effect, as though now owned by Borrower
and specifically described in this Security Instrument, but at any and all times Borrower shall
execute and deliver to Lender any documents Lender may reasonably deem necessary or appropriate for
the purpose of specifically subjecting the same to the lien and security interest of this Security
Instrument.
(e) Notwithstanding the provisions of this Security Instrument to the contrary, Borrower shall
have the right, at any time and from time to time, to remove and dispose of Equipment which may
have become obsolete or unfit for use or which is no longer useful in the management, operation or
maintenance of the Property. Borrower shall promptly replace any such Equipment so disposed of or
removed with other Equipment of equal value and utility, free of any security interest or superior
title, liens or claims; except that, if by reason of technological or other developments,
replacement of the Equipment so removed or disposed of is not necessary or desirable for the proper
management, operation or maintenance of the Property, Borrower shall not be required to replace the
same. All such replacements or additional equipment shall be deemed to constitute
“
Equipment
” and shall be covered by the security interest herein granted.
ARTICLE IX: TRANSFER OR ENCUMBRANCE OF THE PROPERTY
Section 9.01.
Other Encumbrances
. Borrower shall not further encumber or permit the
further encumbrance in any manner (whether by grant of a pledge, security interest or otherwise) of
the Property or any part thereof or interest therein, including, without limitation, of the Rents
therefrom other than Permitted Liens. In addition, Borrower shall not further encumber and shall
not permit the further encumbrance in any manner (whether by grant of a pledge, security interest
or otherwise) of Borrower or any direct or indirect interest in Borrower except as expressly
permitted pursuant to this Security Instrument.
Section 9.02.
No Transfer
. Borrower acknowledges that Lender has examined and relied
on the expertise of Borrower and, if applicable, each General Partner, 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 Borrower acknowledges that Lender has a valid interest in
maintaining the value of the Property. Borrower shall not Transfer, nor permit any Transfer,
without the prior written consent of Lender, which consent Lender may withhold in its sole and
absolute discretion. 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 a Transfer without Lender’s consent. This provision shall apply to every Transfer
regardless of whether voluntary or not, or whether or not Lender has consented to any previous
Transfer.
Section 9.03.
Due on Sale
. Lender may declare the Debt immediately due and payable
upon any Transfer or further encumbrance without Lender’s consent without regard to whether any
impairment of its security or any increased risk of default hereunder can be demonstrated. This
provision shall apply to every Transfer or further encumbrance of the Property or any part thereof
or interest in the Property or in Borrower regardless of whether voluntary or not, or whether or
not Lender has consented to any previous Transfer or further encumbrance of the Property or
interest in Borrower.
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Section 9.04.
Permitted Transfer
. Notwithstanding the foregoing provisions of this
Article IX, a sale, conveyance or transfer of the Property in its entirety (hereinafter,
“
Sale
”) shall be permitted hereunder provided that each of the following terms and
conditions are satisfied:
(a) no Event of Default is then continuing hereunder or under any of the other Loan Documents;
(b) Lender shall have, in its reasonable discretion, consented to the Sale, and, if the
proposed Sale is to occur at any time after a Securitization, each Rating Agency shall have
delivered written confirmation that any rating issued by such Rating Agency in connection with the
Securitization will not, as a result of the proposed Sale, be downgraded from the then current
ratings thereof, qualified or withdrawn; provided, however, that no request for consent to the Sale
will be entertained by Lender if the proposed Sale is to occur within sixty (60) days of any
contemplated sale of the Loan by Lender, whether in connection with a Securitization or otherwise;
(c) Borrower gives Lender written notice of the terms of the proposed Sale not less than sixty
(60) days before the date on which such Sale is scheduled to close and, concurrently therewith,
gives Lender (i) all such information concerning the proposed transferee of the Property
(hereinafter, “
Buyer
”) as Lender would require in evaluating an initial extension of credit
to a borrower and Lender determines, in its sole discretion that the Buyer is acceptable to Lender
in all respects and (ii) a non-refundable application fee equal to $7,500;
(d) Borrower pays Lender, concurrently with the closing of such Sale, a non-refundable
assumption fee in an amount equal to one-half of one percent (.5%) of the then outstanding Loan
Amount together with all out-of-pocket costs and expenses, including, without limitation,
reasonable attorneys’ fees, incurred by Lender in connection with the Sale;
(e) Buyer assumes all of the obligations under the Loan Documents and, prior to or
concurrently with the closing of such Sale, Buyer executes, without any cost or expense to Lender,
such documents and agreements as Lender shall reasonably require to evidence and effectuate said
assumption and delivers such legal opinions as Lender may require;
(f) Borrower and Buyer execute, without any cost or expense to Lender, new financing
statements or financing statement amendments and any additional documents reasonably requested by
Lender;
(g) Borrower delivers to Lender, without any cost or expense to Lender, such endorsements to
Lender’s title insurance policy, hazard insurance policy endorsements or certificates and other
similar materials as Lender may deem necessary at the time of the Sale, all in form and substance
satisfactory to Lender, including, without limitation, an endorsement or endorsements to Lender’s
title insurance policy insuring the lien of this Security Instrument, extending the effective date
of such policy to the date of execution and delivery (or, if later, of recording) of the assumption
agreement referenced above in subparagraph (e) of this Section, with no additional exceptions added
to such policy, and insuring that leasehold title to the Property is vested in Buyer;
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(h) Borrower executes and delivers to Lender, without any cost or expense to Lender, a release
of Lender, its officers, directors, employees and agents, from all claims and liability relating to
the transactions evidenced by the Loan Documents, through and including the date of the closing of
the Sale, which agreement shall be in form and substance satisfactory to Lender and shall be
binding upon Buyer;
(i) subject to the provisions of Section 18.32 hereof, such Sale is not construed so as to
relieve Borrower of any personal liability under the Note or any of the other Loan Documents for
any acts or events occurring or obligations arising prior to or simultaneously with the closing of
such Sale, and Borrower executes, without any cost or expense to Lender, such documents and
agreements as Lender shall reasonably require to evidence and effectuate the ratification of said
personal liability;
(j) such Sale is not construed so as to relieve any Guarantor of its obligations under any
guaranty or indemnity agreement executed in connection with the Loan and each such Guarantor
executes, without any cost or expense to Lender, such documents and agreements as Lender shall
reasonably require to evidence and effectuate the ratification of each such guaranty agreement,
provided that if Buyer or a party associated with Buyer approved by Lender in its sole discretion
assumes the obligations of the current Guarantor under its guaranty and Buyer or such party
associated with Buyer, as applicable, executes, without any cost or expense to Lender, a new
guaranty in similar form and substance to the existing guaranty and otherwise satisfactory to
Lender, then Lender shall release the current Guarantor from all obligations arising under its
guaranty after the closing of such Sale; and
(k) Buyer is a Single Purpose Entity and Lender receives a non-consolidation opinion relating
to Buyer from Buyer’s counsel, which opinion is in form and substance reasonably acceptable to
Lender.
ARTICLE X: CERTIFICATES
Section 10.01.
Estoppel Certificates
.
(a) After request by Lender, Borrower, within fifteen (15) days and at its expense, will
furnish Lender with a statement, duly acknowledged and certified, setting forth (i) the amount of
the original principal amount of the Note, and the unpaid principal amount of the Note, (ii) the
rate of interest of the Note, (iii) the date payments of interest and/or principal were last paid,
(iv) any offsets or defenses to the payment of the Debt, and, if any are alleged, the nature
thereof, (v) that the Note, this Security Instrument and the other Loan Documents have not been
modified or if modified, giving particulars of such modification and (vi) that there has occurred
and is then continuing no Event of Default or if such Event of Default exists, the nature thereof,
the period of time it has existed, and the action being taken to remedy such Event of Default.
(b) Within fifteen (15) days after written request by Borrower, Lender shall furnish to
Borrower a written statement confirming the amount of the Debt, the maturity date of the Note and
the date to which interest has been paid.
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(c) Borrower shall use all reasonable efforts to obtain estoppel certificates from tenants
under Space Leases (if any) in form and substance reasonably acceptable to Lender upon request from
Lender.
ARTICLE XI: NOTICES
Section 11.01.
Notices
. Any notice, demand, statement, request or consent made
hereunder shall be in writing and delivered personally or sent to the party to whom the notice,
demand or request is being made by Federal Express or other nationally recognized overnight
delivery service, as follows and shall be deemed given when delivered personally or one (1)
Business Day after being deposited with Federal Express or such other nationally recognized
delivery service:
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If to Lender:
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Wachovia Bank, National Association
Commercial Real Estate Services
8739 Research Drive URP 4
NC 1075
Charlotte, North Carolina 28262
Loan Number: 502858677
Attention: Portfolio Management
Fax No.: (704) 715-0036
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with a copy to:
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Proskauer Rose LLP
1585 Broadway
New York, New York 10036
Attn: David J. Weinberger, Esq.
Fax No.: (212) 969-2900
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If to Borrower:
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To Borrower, c/o Chief Financial Officer, at the
address first written above,
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with a copy to:
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Heller Ehrman LLP
333 Bush Street
San Francisco, California 94104
Attn: Judith C. Miles, Esq.
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If to Trustee:
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To Trustee at the address first written above,
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or such other address as Borrower, Trustee or Lender shall hereafter specify by not less than ten
(10) days prior written notice as provided herein; provided, however, that notwithstanding any
provision of this Article to the contrary, such notice of change of address shall be deemed given
only upon actual receipt thereof. Rejection or other refusal to accept or the inability to deliver
because of changed addresses of which no notice was given as herein required shall be deemed to be
receipt of the notice, demand, statement, request or consent.
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ARTICLE XII: INDEMNIFICATION
Section 12.01.
Indemnification Covering Property
. In addition, and without
limitation, to any other provision of this Security Instrument or any other Loan Document, Borrower
shall protect, indemnify and save harmless Lender, Trustee and their successors and assigns, and
each of their agents, employees, officers, directors, stockholders, partners and members
(collectively, “
Indemnified Parties
”) for, from and against any claims, demands, penalties,
fines, liabilities, settlements, damages, costs and expenses of whatever kind or nature, known or
unknown, contingent or otherwise, whether incurred or imposed within or outside the judicial
process, including, without limitation, reasonable attorneys’ fees and disbursements imposed upon
or incurred by or asserted against any of the Indemnified Parties by reason of (a) ownership of
this Security Instrument, the Assignment, the Property or any part thereof or any interest therein
or receipt of any Rents; (b) any accident, injury to or death of any person or loss of or damage to
property occurring in, on or about the Property or any part thereof or on the adjoining sidewalks,
curbs, parking areas, streets or ways; (c) any use, nonuse or condition in, on or about, or
possession, alteration, repair, operation, maintenance or management of, the Property or any part
thereof or on the adjoining sidewalks, curbs, parking areas, streets or ways; (d) any failure on
the part of Borrower to perform or comply with any of the terms of this Security Instrument or the
Assignment; (e) performance of any labor or services or the furnishing of any materials or other
property in respect of the Property or any part thereof; (f) any claim by brokers, finders or
similar Persons claiming to be entitled to a commission in connection with any Lease or other
transaction involving the Property or any part thereof; (g) any Imposition including, without
limitation, any Imposition attributable to the execution, delivery, filing, or recording of any
Loan Document, Lease or memorandum thereof; (h) any lien or claim arising on or against the
Property or any part thereof under any Legal Requirement or any liability asserted against any of
the Indemnified Parties with respect thereto; (i) any claim arising out of or in any way relating
to any tax or other imposition on the making and/or recording of this Security Instrument, the Note
or any of the other Loan Documents; (j) a Default under Sections 2.02(f), 2.02(g), 2.02(k), 2.02(t)
or 2.02(w) hereof, (k) the failure of any Person to file timely with the Internal Revenue Service
an accurate Form 1099-B, Statement for Recipients of Proceeds from Real Estate, Broker and Barter
Exchange Transactions, which may be required in connection with the Loan, or to supply a copy
thereof in a timely fashion to the recipient of the proceeds of the Loan; (l) the claims of any
lessee or any Person acting through or under any lessee or otherwise arising under or as a
consequence of any Lease or (m) the failure to pay any insurance premiums. Notwithstanding the
foregoing provisions of this Section 12.01 to the contrary, Borrower shall have no obligation to
indemnify the Indemnified Parties pursuant to this Section 12.01 for liabilities, obligations,
claims, damages, penalties, causes of action, costs and expenses relative to the foregoing which
result from Lender’s, and its successors’ or assigns’, willful misconduct or gross negligence or if
the condition or event which gave rise to liability first arose or accrued following the date of
transfer of title to the Property to Lender in connection with any foreclosure of the Property or
acceptance by Lender of a deed-in-lieu thereof. Any amounts payable to Lender by reason of the
application of this Section 12.01 shall constitute a part of the Debt secured by this Security
Instrument and the other Loan Documents and shall become immediately due and payable and shall bear
interest at the Default Rate from the date the liability, obligation, claim, cost or expense is
sustained by Lender, as applicable, until paid. The provisions of this Section 12.01 shall survive
the termination of this Security Instrument whether by repayment of the Debt, foreclosure or
delivery of a deed in lieu thereof, assignment or
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otherwise. In case any action, suit or proceeding is brought against any of the Indemnified
Parties by reason of any occurrence of the type set forth in (a) through (m) above, Borrower shall,
at Borrower’s expense, take all commercially reasonable steps to resist and defend such action,
suit or proceeding or will cause the same to be resisted and defended by counsel at Borrower’s
expense for the insurer of the liability or by counsel designated by Borrower (unless reasonably
disapproved by Lender promptly after Lender has been notified of such counsel); provided, however,
that nothing herein shall compromise the right of Lender (or any other Indemnified Party) to
appoint its own counsel at Borrower’s expense for its defense with respect to any action which, in
the reasonable opinion of Lender or such other Indemnified Party, as applicable, presents a
conflict or potential conflict between Lender or such other Indemnified Party that would make such
separate representation advisable. Any Indemnified Party will give Borrower prompt notice after
such Indemnified Party obtains actual knowledge of any potential claim by such Indemnified Party
for indemnification hereunder. The Indemnified Parties shall not settle or compromise any action,
proceeding or claim as to which it is indemnified hereunder without notice to Borrower.
ARTICLE XIII: DEFAULTS
Section 13.01.
Events of Default
. The Debt shall become immediately due at the
option of Lender upon any one or more of the following events (“
Event of Default
”):
(a) if the final payment or prepayment premium, if any, due under the Note shall not be paid
on Maturity;
(b) if any monthly payment of interest and/or principal due under the Note (other than the
sums described in (a) above) shall not be fully paid on the date upon which the same is due and
payable thereunder;
(c) if payment of any sum (other than the sums described in (a) above or (b) above) required
to be paid pursuant to the Note, this Security Instrument or any other Loan Document shall not be
paid within five (5) days after Lender delivers written notice to Borrower that same is due and
payable thereunder or hereunder;
(d) if Borrower, Guarantor or, if Borrower or Guarantor is a partnership, any general partner
of Borrower or Guarantor, or, if Borrower or Guarantor is a limited liability company, any member
of Borrower or Guarantor, shall institute or cause to be instituted any proceeding for the
termination or dissolution of Borrower, Guarantor or any such general partner or member;
(e) if the insurance policies required hereunder are not kept in full force and effect, or if
the insurance policies are not assigned and delivered to Lender as herein provided;
(f) if Borrower or Guarantor attempts to assign its rights under this Security Instrument or
any other Loan Document or any interest herein or therein, or if any Transfer occurs other than in
accordance with the provisions hereof;
(g) if any representation or warranty of Borrower or Guarantor made herein or in any other
Loan Document or in any certificate, report, financial statement or other instrument or agreement
furnished to Lender shall prove false or misleading in any material respect;
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(h) if Borrower, Guarantor or any general partner of Borrower or Guarantor shall make an
assignment (or with respect to Guarantor only, a general assignment or any assignment which relates
to the Property or any interest in Borrower) for the benefit of creditors or shall admit in writing
its inability to pay its debts generally as they become due;
(i) if a receiver, liquidator or trustee of Borrower, Guarantor or any general partner of
Borrower or Guarantor shall be appointed or if Borrower, Guarantor or their respective general
partners shall be adjudicated a bankrupt or insolvent, or if any petition for bankruptcy,
reorganization or arrangement pursuant to federal bankruptcy law, or any similar federal or state
law, shall be filed by or against, consented to, or acquiesced in by, Borrower, Guarantor or their
respective general partners or if any proceeding for the dissolution or liquidation of Borrower,
Guarantor or their respective general partners shall be instituted; however, if such appointment,
adjudication, petition or proceeding was involuntary and not consented to by Borrower, Guarantor or
their respective general partners, as applicable, upon the same not being discharged, stayed or
dismissed within sixty (60) days or if Borrower, Guarantor or their respective general partners
shall generally not be paying its debts as they become due;
(j) if Borrower shall be in default beyond any notice or grace period, if any, under any other
mortgage or deed of trust or security agreement covering any part of the Property without regard to
its priority relative to this Security Instrument; provided, however, this provision shall not be
deemed a waiver of the provisions of Article IX prohibiting further encumbrances affecting the
Property or any other provision of this Security Instrument;
(k) if the Property becomes subject (i) to any lien which is superior to the lien of this
Security Instrument, other than a lien for real estate taxes and assessments not due and payable,
or (ii) to any mechanic’s, materialman’s or other lien which is or is asserted to be superior to
the lien of this Security Instrument, and such lien shall remain undischarged (by payment, bonding,
or otherwise) for ten (10) days unless contested in accordance with the terms hereof;
(l) if Borrower discontinues the operation of the Property or any part thereof for reasons
other than repair or restoration arising from a casualty or condemnation for ten (10) consecutive
days or more;
(m) except as permitted in this Security Instrument, any material alteration, demolition or
removal of any of the Improvements without the prior consent of Lender;
(n) if Borrower consummates a transaction which would cause this Security Instrument or
Lender’s rights under this Security Instrument, the Note or any other Loan Document to constitute a
non-exempt prohibited transaction under ERISA or result in a violation of a state statute
regulating government plans subjecting Lender to liability for a violation of ERISA or a state
statute;
(o) if Borrower shall fail in the payment of any rent, additional rent or other charge
mentioned in or made payable by the Ground Lease when said rent or other charge is due and payable
subject to Borrower’s right, if any, to timely and properly contest said rent or other charge, so
long as (i) Borrower shall not be in default under the Ground Lease for failure to pay
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said rent or other charge during the pendency of such contest and (ii) Borrower is diligently
and continuously contesting said rent or other charge;
(p) if there shall occur any default by Borrower in the observance or performance of any term,
covenant or condition of the Ground Lease on the part of Borrower to be observed or performed, and
said default is not cured prior to the expiration of any applicable grace period therein provided,
or if any one or more of the events referred to in the Ground Lease shall occur which would cause
the Ground Lease to terminate without notice or action by the Ground Lessor or which would entitle
the Ground Lessor to terminate the Ground Lease and the term thereof by giving notice to Borrower,
as lessee thereunder, or if the leasehold estate created by the Ground Lease shall be surrendered
or the Ground Lease shall be terminated or cancelled for any reason or under any circumstances
whatsoever, or if any of the terms, covenants or conditions of the Ground Lease shall in any manner
be modified, changed, supplemented, altered, or amended without the prior written consent of
Lender, or if Borrower shall fail to exercise any option to renew the Ground Lease or shall fail to
or neglect to pursue diligently all actions necessary to exercise such renewal rights, if any,
pursuant to the terms of the Ground Lease; or
(q) if a default shall occur under any of the other terms, covenants or conditions of the
Note, this Security Instrument or any other Loan Document, other than as set forth in (a) through
(p) above, for ten (10) days after notice from Lender in the case of any default which can be cured
by the payment of a sum of money, or for thirty (30) days after notice from Lender in the case of
any other default or an additional sixty (60) days if Borrower is diligently and continuously
effectuating a cure of a curable non-monetary default, other than as set forth in (a) through (n)
above.
Section 13.02.
Remedies
.
(a) Upon the occurrence and during the continuance of any Event of Default, Lender may, in
addition to any other rights or remedies available to it hereunder or under any other Loan
Document, at law or in equity, take such action, without notice or demand, as it reasonably 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 singly, concurrently or
otherwise, at such time and in such order as Lender may determine, in its sole discretion, without
impairing or otherwise affecting any other rights and remedies of Lender hereunder, at law or in
equity: (i) declare all or any portion of the unpaid Debt to be immediately due and payable;
provided, however, that upon the occurrence of any of the events specified in Section 13.01(i), the
entire Debt will be immediately due and payable without notice or demand or any other declaration
of the amounts due and payable; or (ii) bring, or instruct Trustee to bring, an action to foreclose
this Security Instrument and without applying for a receiver for the Rents, but subject to the
rights of the tenants under the Leases, enter into or upon the Property or any part thereof, either
personally or by its agents, nominees or attorneys, and dispossess Borrower and its agents and
servants therefrom, and thereupon Lender may (A) use, operate, manage, control, insure, maintain,
repair, restore and otherwise deal with all and every part of the Property and conduct the business
thereat, (B) make alterations, additions, renewals, replacements and improvements to or on the
Property or any part thereof, (C) exercise all rights and powers of Borrower with respect to the
Property or any part thereof, whether in the name of Borrower or otherwise, including, without
limitation, the right to make, cancel, enforce or
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modify Leases, obtain and evict tenants, and demand, sue for, collect and receive all
earnings, revenues, rents, issues, profits and other income of the Property and every part thereof
and Borrower shall have no liability under this clause (C) for any actions taken by Lender which
are grossly negligent or which constitute willful misconduct, and (D) apply the receipts from the
Property or any part thereof to the payment of the Debt, after deducting therefrom all expenses
(including, without limitation, reasonable attorneys’ fees and disbursements) reasonably incurred
in connection with the aforesaid operations and all amounts necessary to pay the Impositions,
insurance and other charges in connection with the Property or any part thereof, as well as just
and reasonable compensation for the services of Lender’s third-party agents; or (iii) have an
appraisal or other valuation of the Property or any part thereof performed by an Appraiser (and
Borrower covenants and agrees it shall cooperate in causing any such valuation or appraisal to be
performed) and any cost or expense incurred by Lender in connection therewith shall constitute a
portion of the Debt and be secured by this Security Instrument and shall be immediately due and
payable to Lender with interest, at the Default Rate, until the date of receipt by Lender; or (iv)
sell, or instruct Trustee to sell, the Property or institute, or instruct Trustee to institute,
proceedings for the complete foreclosure of this Security Instrument, or take such other action as
may be allowed pursuant to Legal Requirements, at law or in equity, for the enforcement of this
Security Instrument in which case the Property or any part thereof may be sold for cash or credit
in one or more parcels; or (v) with or without entry, and to the extent permitted and pursuant to
the procedures provided by applicable Legal Requirements, institute proceedings for the partial
foreclosure of this Security Instrument, or take such other action as may be allowed pursuant to
Legal Requirements, at law or in equity, for the enforcement of this Security Instrument for the
portion of the Debt then due and payable, subject to the lien of this Security Instrument
continuing unimpaired and without loss of priority so as to secure the balance of the Debt not then
due; or (vi) sell, or instruct Trustee to sell, the Property or any part thereof and any or all
estate, claim, demand, right, title and interest of Borrower therein and rights of redemption
thereof, pursuant to power of sale or otherwise, at one or more sales, in whole or in parcels, in
any order or manner, at such time and place, upon such terms and after such notice thereof as may
be required or permitted by law, at the discretion of Lender, 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 on the remaining portion of the Property; or (vii) institute an action, suit or
proceeding in equity for the specific performance of any covenant, condition or agreement contained
in the Loan Documents, or any of them; or (viii) recover judgment on the Note or any guaranty
either before, during or after (or in lieu of) any proceedings for the enforcement of this Security
Instrument; or (ix) apply, or direct Trustee to apply, ex parte, for the appointment of a
custodian, trustee, receiver, keeper, liquidator or conservator of the Property or any part
thereof, irrespective of the adequacy of the security for the Debt and without regard to the
solvency of Borrower or of any Person liable for the payment of the Debt, to which appointment
Borrower does hereby consent and such receiver or other official shall have all rights and powers
permitted by applicable law and such other rights and powers as the court making such appointment
may confer, but the appointment of such receiver or other official shall not impair or in any
manner prejudice the rights of Lender to receive the Rent with respect to any of the Property
pursuant to this Security Instrument or the Assignment; or (x) require, at Lender’s option,
Borrower to pay monthly in advance to Lender, or any receiver appointed to collect the Rents, the
fair and reasonable rental value for the use and occupation of any portion of the Property occupied
by Borrower and may require Borrower to vacate and surrender possession to Lender of the
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Property or to such receiver and Borrower may be evicted by summary proceedings or otherwise;
or (xi) without notice to Borrower (A) apply all or any portion of the cash collateral in any
Sub-Account and Escrow Account, including any interest and/or earnings therein, to carry out the
obligations of Borrower under this Security Instrument and the other Loan Documents, to protect and
preserve the Property and for any other purpose permitted under this Security Instrument and the
other Loan Documents (but in all events subject to Lender’s obligations pursuant to Section 5.05
hereof) and/or (B) have all or any portion of such cash collateral immediately paid to Lender to be
applied against the Debt in the order and priority set forth in the Note (but in all events subject
to Lender’s obligations pursuant to Section 5.05 hereof); or (xii) pursue any or all such other
rights or remedies as Lender and Trustee may have under applicable law or in equity; provided,
however, that the provisions of this Section 13.02(a) shall not be construed to extend or modify
any of the notice requirements or grace periods provided for hereunder or under any of the other
Loan Documents. Borrower hereby waives, to the fullest extent permitted by Legal Requirements, any
defense Borrower might otherwise raise or have by the failure to make any tenants parties defendant
to a foreclosure proceeding and to foreclose their rights in any proceeding instituted by Lender or
Trustee.
(b) Any time after and during the continuance of an Event of Default Trustee, at the request
of Lender, shall have the power to sell the Property or any part thereof at public auction, in such
manner, at such time and place, upon such terms and conditions, and upon such public notice as
Lender may deem best for the interest of Lender, or as may be required or permitted by applicable
law, consisting of advertisement in a newspaper of general circulation in the jurisdiction and for
such period as applicable law may require and at such other times and by such other methods, if
any, as may be required by law to convey the Property by Lender’s assignment of ground lease with
special warranty of title, to and at the cost of the purchaser, who shall not be liable to see to
the application of the purchase money. The proceeds or avails of any sale made under or by virtue
of this Section 13.02, together with any other sums which then may be held by Lender under this
Security Instrument, whether under the provisions of this Section 13.02 or otherwise, shall be
applied as follows:
First
: To the payment of the third-party costs and expenses reasonably
incurred in connection with any such sale and to advances, fees and expenses, including,
without limitation, reasonable fees and expenses of Lender’s and Trustee’s legal counsel as
applicable, and of any judicial proceedings wherein the same may be made, and of all
expenses, liabilities and advances reasonably made or incurred by Lender or Trustee under
this Security Instrument, together with interest as provided herein on all such advances
made by Lender, and all Impositions, except any Impositions or other charges subject to
which the Property shall have been sold;
Second
: To the payment of the whole amount then due, owing and unpaid under
the Note for principal and interest thereon, with interest on such unpaid principal at the
Default Rate from the date of the occurrence of the earliest Event of Default that formed a
basis for such sale until the same is paid;
Third
: To the payment of any other portion of the Debt required to be paid by
Borrower pursuant to any provision of this Security Instrument, the Note, or any of the
other Loan Documents; and
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Fourth
: The surplus, if any, to Borrower unless otherwise required by Legal
Requirements.
Lender and any receiver or custodian of the Property or any part thereof shall be liable to
account for only those rents, issues, proceeds and profits actually received by it.
(c) Lender or Trustee, as applicable, may adjourn from time to time any sale by it to be made
under or by virtue of this Security Instrument by announcement at the time and place appointed for
such sale or for such adjourned sale or sales and, except as otherwise provided by any applicable
provision of Legal Requirements, Lender or Trustee, without further notice or publication, may make
such sale at the time and place to which the same shall be so adjourned.
(d) Upon the completion of any sale or sales made by Lender or Trustee under or by virtue of
this Section 13.02, Lender or Trustee, as applicable, or any officer of any court empowered to do
so, shall execute and deliver to the accepted purchaser or purchasers a good and sufficient
instrument, or good and sufficient instruments, granting, conveying, assigning and transferring all
estate, right, title and interest in and to the property and rights sold. Lender is hereby
irrevocably appointed the true and lawful attorney-in-fact of Borrower (coupled with an interest),
in its name and stead, to make all necessary conveyances, assignments, transfers and deliveries of
the property and rights so sold and for that purpose Lender may execute all necessary instruments
of conveyance, assignment, transfer and delivery, and may substitute one or more Persons with like
power, Borrower hereby ratifying and confirming all that its said attorney-in-fact or such
substitute or substitutes shall lawfully do by virtue hereof. Nevertheless, Borrower, if so
requested by Lender, shall ratify and confirm any such sale or sales by executing and delivering to
Lender, or to such purchaser or purchasers all such instruments as may be advisable, in the sole
judgement of Lender, for such purpose, and as may be designated in such request. Any such sale or
sales made under or by virtue of this Section 13.02, whether made under the power of sale herein
granted or under or by virtue of judicial proceedings or a judgment or decree of foreclosure and
sale, shall operate to divest all the estate, right, title, interest, claim and demand whatsoever,
whether at law or in equity, of Borrower in and to the property and rights so sold, and shall, to
the fullest extent permitted under Legal Requirements, be a perpetual bar, both at law and in
equity against Borrower and against any and all Persons claiming or who may claim the same, or any
part thereof, from, through or under Borrower.
(e) In the event of any sale made under or by virtue of this Section 13.02 (whether made under
the power of sale herein granted or under or by virtue of judicial proceedings or a judgment or
decree of foreclosure and sale), the entire Debt immediately thereupon shall, anything in the Loan
Documents to the contrary notwithstanding, become due and payable.
(f) Upon any sale made under or by virtue of this Section 13.02 (whether made under the power
of sale herein granted or under or by virtue of judicial proceedings or a judgment or decree of
foreclosure and sale), Lender may bid for and acquire the Property or any part thereof and in lieu
of paying cash therefor may make settlement for the purchase price by crediting upon the Debt the
net sales price after deducting therefrom the expenses of the sale and the costs of the action.
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(g) No recovery of any judgment by Lender and no levy of an execution under any judgment upon
the Property or any part thereof or upon any other property of Borrower shall release the lien of
this Security Instrument upon the Property or any part thereof, or any liens, rights, powers or
remedies of Lender hereunder, but such liens, rights, powers and remedies of Lender shall continue
unimpaired until all amounts due under the Note, this Security Instrument and the other Loan
Documents are paid in full.
(h) Upon the exercise by Lender of any power, right, privilege, or remedy pursuant to this
Security Instrument which requires any consent, approval, registration, qualification, or
authorization of any Governmental Authority (including, if applicable, Ground Lessor), Borrower
agrees to execute and deliver, or will cause the execution and delivery of, all applications,
certificates, instruments, assignments and other documents and papers that Lender or any purchaser
of the Property may be required to obtain for such governmental consent, approval, registration,
qualification, or authorization and Lender is hereby irrevocably appointed the true and lawful
attorney-in-fact of Borrower (coupled with an interest), in its name and stead, to execute all such
applications, certificates, instruments, assignments and other documents and papers.
(i) Nothing contained in this Security Instrument or any other Loan Document shall waive any
defense by Borrower that Lender and/or Trustee has failed to comply with the terms of this Security
Instrument and the other Loan Documents.
Section 13.03.
Payment of Debt After Default
. If, following the occurrence of any
Event of Default, Borrower shall tender payment of an amount sufficient to satisfy the Debt in
whole or in part at any time prior to a foreclosure sale of the Property, and if at the time of
such tender prepayment of the principal balance of the Note is not permitted by the Note or this
Security Instrument, Borrower shall, in addition to the entire Debt, also pay to Lender a sum equal
to (a) all accrued interest on the Note and all other fees, charges and sums due and payable
hereunder, (b) all costs and expenses in connection with the enforcement of Lender’s rights
hereunder, and (c) a prepayment charge (the “
Prepayment Charge
”) equal to the greater of
(i) 2% of the Principal Amount and (ii) the present value of a series of payments each equal to the
Payment Differential (as hereinafter defined) and payable on each Payment Date over the remaining
original term of the Note and on the Payment Date occurring two months prior to the Maturity Date,
discounted at the Reinvestment Yield (as hereinafter defined) for the number of months remaining as
of the date of such prepayment to each such Payment Date and the Payment Date occurring two months
prior to the Maturity Date. The term “
Payment Differential
” shall mean an amount equal to
(i) the Interest Rate less the Reinvestment Yield, divided by (ii) twelve (12) and multiplied by
(iii) the Principal Amount after application of the constant monthly payment due under the Note on
the date of such prepayment, provided that the Payment Differential shall in no event be less than
zero. The term “
Reinvestment Yield
” shall mean an amount equal to the lesser of (i) the
yield on the U.S. Treasury issue (primary issue) with a maturity date closest to the Payment Date
occurring two months prior to the Maturity Date, or (ii) the yield on the U.S. Treasury issue
(primary issue) with a term equal to the remaining average life of the indebtedness evidenced by
the Note, with each such yield being based on the bid price for such issue as published in the Wall
Street Journal on the date that is fourteen (14) days prior to the date of such prepayment set
forth in the notice of prepayment (or, if such bid price is not published on that date, the next
preceding date on which such bid price is so
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published) and
converted to a monthly compounded nominal yield. In addition to the amounts described above,
if, during the first (1st) Loan Year, Borrower shall tender payment of an amount sufficient to
satisfy the Debt in whole or in part following the occurrence of any Event of Default, Borrower
shall, in addition to the entire Debt, also pay to Lender a sum equal to three percent (3%) of the
Principal Amount. Failure of Lender to require any of these payments shall not constitute a waiver
of the right to require the same in the event of any subsequent default or to exercise any other
remedy available to Lender hereunder, under any other Loan Document or at law or in equity. In the
event that any prepayment charge is due hereunder, Lender shall deliver to Borrower a statement
setting forth the amount and determination of the prepayment fee, and, provided that Lender shall
have in good faith applied the formula described above, Borrower shall not have the right to
challenge the calculation or the method of calculation set forth in any such statement in the
absence of manifest error, which calculation may be made by Lender on any day during the fifteen
(15) day period preceding the date of such prepayment. Lender shall not be obligated or required
to have actually reinvested the prepaid principal balance at the Reinvestment Yield or otherwise as
a condition to receiving the prepayment charge. If at the time of such tender, prepayment of the
principal balance of the Note is permitted, such tender by Borrower shall be deemed to be a
voluntary prepayment of the principal balance of the Note, and Borrower shall, in addition to the
entire Debt, also pay to Lender the applicable prepayment consideration specified in the Note and
this Security Instrument. Notwithstanding the foregoing, Lender acknowledges that, pursuant to
Section 15.01, the Loan may be prepaid at any time in accordance with said Section 15.01 and that
upon the occurrence of an Event of Default the only prepayment charge due pursuant to this Section
13.03 will be as set forth in Section 15.01.
Section 13.04.
Possession of the Property
. Upon the occurrence and during the
continuance of any Event of Default and the acceleration of the Debt or any portion thereof,
Borrower, if an occupant of the Property or any part thereof, upon demand of Lender, shall
immediately surrender possession of the Property (or the portion thereof so occupied) to Lender,
and if Borrower is permitted to remain in possession, the possession shall be as a month-to-month
tenant of Lender and, on demand, Borrower shall pay to Lender monthly, in advance, a reasonable
rental for the space so occupied and in default thereof Borrower may be dispossessed. The
covenants herein contained may be enforced by a receiver of the Property or any part thereof.
Nothing in this Section 13.04 shall be deemed to be a waiver of the provisions of this Security
Instrument making the Transfer of the Property or any part thereof without Lender’s prior written
consent an Event of Default.
Section 13.05.
Interest After Default
. If any amount due under the Note, this
Security Instrument or any of the other Loan Documents is not paid within any applicable notice and
grace period after same is due, whether such date is the stated due date, any accelerated due date
or any other date or at any other time specified under any of the terms hereof or thereof, then, in
such event, Borrower shall pay interest on the amount not so paid from and after the date on which
such amount first becomes due at the Default Rate; and such interest shall be due and payable at
such rate until the earlier of the cure of all Events of Default or the payment of the entire
amount due to Lender, whether or not any action shall have been taken or proceeding commenced to
recover the same or to foreclose this Security Instrument. All unpaid and accrued interest shall
be secured by this Security Instrument as part of the Debt. Nothing in this Section
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13.05 or in any other provision of this Security Instrument shall constitute an extension
of the time for payment of the Debt.
Section 13.06.
Borrower’s Actions After Default
. After the happening of any Event of
Default and immediately upon the commencement of any action, suit or other legal proceedings by
Lender to obtain judgment for the Debt, or of any other nature in aid of the enforcement of the
Loan Documents, Borrower will (a) after receipt of notice of the institution of any such action,
waive the issuance and service of process and enter its voluntary appearance in such action, suit
or proceeding, and (b) if required by Lender, consent to the appointment of a receiver or receivers
of the Property or any part thereof and of all the earnings, revenues, rents, issues, profits and
income thereof.
Section 13.07.
Control by Lender After Default
. Notwithstanding the appointment
during the continuance of an Event of Default of any custodian, receiver, liquidator or trustee of
Borrower, or of any of its property, or of the Property or any part thereof, to the extent
permitted by Legal Requirements, Lender shall be entitled to obtain possession and control of all
property now and hereafter covered by this Security Instrument and the Assignment in accordance
with the terms hereof.
Section 13.08.
Right to Cure Defaults
. (a) Upon the occurrence and during the
continuance of any Event of Default, Lender or its agents may, but without any obligation to do so
and without notice to or demand on Borrower and without releasing Borrower from any obligation
hereunder, make or do the same in such manner and to such extent as Lender may deem necessary to
protect the security hereof. Lender and its agents are authorized to enter upon the Property or
any part thereof for such purposes, or appear in, defend, or bring any action or proceedings to
protect Lender’s interest in the Property or any part thereof or to foreclose this Security
Instrument or collect the Debt, and the cost and expense thereof (including reasonable attorneys’
fees to the extent permitted by law), with interest as provided in this Section 13.08, shall
constitute a portion of the Debt and shall be immediately due and payable to Lender upon demand.
All such costs and expenses incurred by Lender or its agents in remedying such Event of Default or
in appearing in, defending, or bringing any such action or proceeding shall bear interest at the
Default Rate, for the period from the date so demanded to the date of payment to Lender. All such
costs and expenses incurred by Lender or its agents together with interest thereon calculated at
the above rate shall be deemed to constitute a portion of the Debt and be secured by this Security
Instrument.
(b) If Lender makes any payment or advance that Lender is authorized by this Security
Instrument to make in the place and stead of Borrower (i) relating to the Impositions or tax liens
asserted against the Property, Lender may do so according to any bill, statement or estimate
procured from the appropriate public office without inquiry into the accuracy of the bill,
statement or estimate or into the validity of any of the Impositions or the tax liens or claims
thereof; (ii) relating to any apparent or threatened adverse title, lien, claim of lien,
encumbrance, claim or charge, Lender will be the sole judge of the legality or validity of same; or
(iii) relating to any other purpose authorized by this Security Instrument but not enumerated in
this Section 13.08, Lender may do so whenever, in its judgment and discretion, the payment or
advance seems necessary or desirable to protect the Property and the full security interest
intended to be
created by this Security Instrument. In connection with any payment or advance made pursuant
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to this Section 13.08, Lender has the option and is authorized, but in no event shall be obligated,
to obtain a continuation report of title prepared by a title insurance company. The payments and
the advances made by Lender pursuant to this Section 13.08 and the cost and expenses of said title
report will be due and payable by Borrower on demand, together with interest at the Default Rate,
and will be secured by this Security Instrument.
Section 13.09.
Late Payment Charge
. If any portion of the Debt is not paid in full
on or before the day on which it is due and payable hereunder, Borrower shall pay to Lender an
amount equal to five percent (5%) of such unpaid portion of the Debt (“
Late Charge
”) to
defray the expense incurred by Lender in handling and processing such delinquent payment, and such
amount shall constitute a part of the Debt.
Section 13.10.
Recovery of Sums Required to Be Paid
. Lender shall have the right
from time to time to take action to recover any sum or sums which constitute a part of the Debt as
the same become due and payable hereunder (after the expiration of any grace period or the giving
of any notice herein provided, if any), without regard to whether or not the balance of the Debt
shall be due, and without prejudice to the right of Lender thereafter to bring an action of
foreclosure, or any other action, for a default or defaults by Borrower existing at the time such
earlier action was commenced.
Section 13.11.
Marshalling and Other Matters
. Borrower hereby waives, to the fullest
extent permitted by law, the benefit of all appraisement, valuation, stay, extension,
reinstatement, redemption (both equitable and statutory) and homestead 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, whether equitable or statutory and on behalf of each and every Person acquiring any
interest in or title to the Property or any part thereof subsequent to the date of this Security
Instrument and on behalf of all Persons to the fullest extent permitted by applicable law.
Section 13.12.
Tax Reduction Proceedings
. During the continuance of an Event of
Default, Borrower shall be deemed to have appointed Lender as its attorney-in-fact to seek a
reduction or reductions in the assessed valuation of the Property for real property tax purposes or
for any other purpose and to prosecute any action or proceeding in connection therewith. This
power, being coupled with an interest, shall be irrevocable for so long as any part of the Debt
remains unpaid and any Event of Default shall be continuing.
Section 13.13.
General Provisions Regarding Remedies
. (a)
Right to Terminate
Proceedings
. Lender or Trustee may terminate or rescind any proceeding or other action brought
in connection with its exercise of the remedies provided in Section 13.02 at any time before the
conclusion thereof, as determined in Lender’s sole discretion and without prejudice to Lender or
Trustee.
(b)
No Waiver or Release
. The failure of Lender or Trustee to exercise any right,
remedy or option provided in the Loan Documents shall not be deemed a waiver of such right, remedy
or option or of any covenant or obligation contained in the Loan Documents. No
acceptance by Lender of any payment after the occurrence of an Event of Default and no
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payment
by Lender of any payment or obligation for which Borrower is liable hereunder shall be deemed to
waive or cure any Event of Default. No sale of all or any portion of the Property, no forbearance
on the part of Lender, and no extension of time for the payment of the whole or any portion of the
Debt or any other indulgence given by Lender to Borrower or any other Person, shall operate to
release or in any manner affect the interest of Lender in the Property or the liability of Borrower
to pay the Debt. No waiver by Lender shall be effective unless it is in writing and then only to
the extent specifically stated.
(c)
No Impairment; No Releases
. The interests and rights of Lender under the Loan
Documents shall not be impaired by any indulgence, including (i) any renewal, extension or
modification which Lender may grant with respect to any of the Debt; (ii) any surrender,
compromise, release, renewal, extension, exchange or substitution which Lender may grant with
respect to the Property or any portion thereof; or (iii) any release or indulgence granted to any
maker, endorser, guarantor or surety of any of the Debt.
ARTICLE XIV: COMPLIANCE WITH REQUIREMENTS
Section 14.01.
Compliance with Legal Requirements
. (a) Borrower shall promptly
comply with all present and future Legal Requirements, foreseen and unforeseen, ordinary and
extraordinary, whether requiring structural or nonstructural repairs or alterations including,
without limitation, all zoning, subdivision, building, safety and environmental protection, land
use and development Legal Requirements, all Legal Requirements which may be applicable to the curbs
adjoining the Property or to the use or manner of use thereof, and all rent control, rent
stabilization and all other similar Legal Requirements relating to rents charged and/or collected
in connection with the Leases.
(b) Borrower shall have the right to contest by appropriate legal proceedings diligently
conducted in good faith, without cost or expense to Lender or Trustee, the validity or application
of any Legal Requirement and to suspend compliance therewith if permitted under applicable Legal
Requirements, provided (i) failure to comply therewith may not subject Lender or Trustee to any
civil or criminal liability, (ii) prior to and during such contest, Borrower shall furnish to
Lender security reasonably satisfactory to Lender, in its discretion, against loss or injury by
reason of such contest or non-compliance with such Legal Requirement, (iii) no Default or Event of
Default shall exist during such proceedings and such contest shall not otherwise violate any of the
provisions of any of the Loan Documents, (iv) such contest shall not, (unless Borrower shall comply
with the provisions of clause (ii) of this Section 14.01(b)) subject the Property to any lien or
encumbrance the enforcement of which is not suspended or otherwise affect the priority of the lien
of this Security Instrument, (v) such contest shall not affect the ownership, use or occupancy of
the Property, (vi) the Property or any part thereof or any interest therein shall not be in any
danger of being sold, forfeited or lost by reason of such contest by Borrower, (vii) Borrower shall
give Lender prompt notice of the commencement of such proceedings and, upon request by Lender,
notice of the status of such proceedings and/or confirmation of the continuing satisfaction of the
conditions set forth in clauses (i) — (vi) of this Section 14.01(b), and (viii) upon a final
determination of such proceeding, Borrower shall take all steps necessary to comply with any
requirements arising therefrom.
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(c) Borrower shall at all times comply with all applicable Legal Requirements with respect to
the construction, use and maintenance of any vaults adjacent to the Property. If by reason of the
failure to pay taxes, assessments, charges, permit fees, franchise taxes or levies of any kind or
nature, the continued use of the vaults adjacent to Property or any part thereof is discontinued,
Borrower nevertheless shall, with respect to any vaults which may be necessary for the continued
use of the Property, take such steps (including the making of any payment) to ensure the continued
use of vaults or replacements.
Section 14.02.
Compliance with Recorded Documents; No Future Grants
. Borrower shall
promptly perform and observe or cause to be performed and observed, all of the material terms,
covenants and conditions of all Property Agreements and all things necessary to preserve intact and
unimpaired any and all appurtenances or other interests or rights affecting the Property.
ARTICLE XV: PREPAYMENT
Section 15.01.
Prepayment
. (a) Except as set forth in this Section 15.01 or as
otherwise specifically provided in the Loan Documents, no prepayment of the Debt may be made in
whole or in part.
(b) Borrower may prepay the Loan in whole, but not in part, as of the last day of an Interest
Accrual Period in accordance with the following provisions:
(i) Lender shall have received from Borrower, not less than thirty (30) days’, nor more
than ninety (90) days’, prior written notice specifying the date proposed for such
prepayment and the amount which is to be prepaid.
(ii) Borrower shall also pay to Lender all interest due through and including the last
day of the Interest Accrual Period in which such prepayment is being made, together with any
and all other amounts due and owing pursuant to the terms of the Note, this Security
Instrument or the other Loan Documents.
(iii) Any partial prepayment shall be in a minimum amount not less than $25,000 and
shall be in whole multiples of $1,000 in excess thereof.
(iv) In the event that the Loan is prepaid on or prior to the Payment Date in December,
2011, Borrower shall pay to Lender, together with such prepayment and all other amounts due
in connection therewith, a non-refundable amount which shall be deemed earned by Lender upon
the funding of the Loan and shall not count to or be credited to payment of the Principal
Amount, any interest thereon or any other amounts payable under the Note, the Security
Instrument or any of the Loan Documents, equal to the greater of (x) one percent (1%) of the
Principal Amount being repaid and (y) the Yield Maintenance Premium. For the purposes
hereof, the term “
Yield Maintenance Premium
” shall mean the premium which shall be
the product of (A) a fraction, the numerator of which is the positive excess, if any, of (1)
the present value of all future payments of principal and interest due pursuant to the Note,
including the principal amount due at maturity, to be made on the Note before the prepayment
in question, discounted at an interest rate per annum equal to the average yield for
“
This Week
” as
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reported by the Federal Reserve Board in Federal Reserve Statistical Release H.15 (519)
(the “
Treasury Constant Maturity Yield Index
”) published during the second full week
preceding the date on which such premium is payable for instruments having a maturity
coterminous with the Payment Date occurring in December, 2011 (the “
Lockout Expiration
Date
”), over (2) the Principal Amount evidenced by the Note immediately before such
prepayment, and the denominator of which is the Principal Amount evidenced by the Note
immediately prior to the prepayment, and (B) the Principal Amount evidenced by the Note
being prepaid; provided, however, that if there is no Treasury Constant Maturity Yield Index
for instruments having a maturity coterminous with the Lockout Expiration Date, then the
index referred to in (1) above shall be equal to the weighted average yield to maturity of
the Treasury Constant Maturity Yield Indices with maturities next longer and shorter than
such remaining average life to maturity, calculated by averaging (and rounding upward to the
nearest whole multiple of 1/100 of 1% per annum, if the average is not such a multiple) the
yields of the relevant Treasury Constant Maturity Yield Indices (rounded, if necessary, to
the nearest 1/100 of 1% with any figure of 1/200 of 1% or above rounded upward). Subsequent
to the Payment Date occurring in December, 2011, no sum shall be due pursuant to this
paragraph 15.01(b)(iv).
ARTICLE XVI: ENVIRONMENTAL COMPLIANCE
Section 16.01.
Covenants, Representations and Warranties
.
(a) Borrower has not, at any time, and, to Borrower’s knowledge after due inquiry and
investigation, except as set forth in the Environmental Report, no other Person has at any time,
handled, buried, stored, retained, refined, transported, processed, manufactured, generated,
produced, spilled, allowed to seep, leak, escape or leach, or pumped, poured, emitted, emptied,
discharged, injected, dumped, transferred or otherwise disposed of or dealt with Hazardous
Materials on, to or from the Premises or any other real property owned and/or occupied by Borrower
other than Permitted Materials, and Borrower does not intend to and shall not use the Property or
any part thereof or any such other real property for the purpose of handling, burying, storing,
retaining, refining, transporting, processing, manufacturing, generating, producing, spilling,
seeping, leaking, escaping, leaching, pumping, pouring, emitting, emptying, discharging, injecting,
dumping, transferring or otherwise disposing of or dealing with Hazardous Materials, except for use
and storage for use of heating oil, cleaning fluids, pesticides and other substances customarily
used in the operation of properties that are being used for the same purposes as the Property is
presently being used, provided such use and/or storage for use is in compliance with the
requirements hereof and the other Loan Documents and does not give rise to liability under
applicable Legal Requirements or Environmental Statutes or be the basis for a lien against the
Property or any part thereof (collectively, “
Permitted Materials
”). In addition, without
limitation to the foregoing provisions, Borrower represents and warrants that, to the best of its
knowledge, after due inquiry and investigation, except as previously disclosed in writing to
Lender, including the Environmental Report, there is no asbestos in, on, over, or under all or any
portion of the fire-proofing or any other portion of the Property.
(b) Borrower, after due inquiry and investigation, knows of no seepage, leak, escape, leach,
discharge, injection, release, emission, spill, pumping, pouring, emptying or dumping of
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Hazardous Materials into waters on, under or adjacent to the Property or any part thereof or
any other real property owned and/or occupied by Borrower, or onto lands from which such Hazardous
Materials might seep, flow or drain into such waters, except as disclosed in the Environmental
Report and other than Permitted Materials.
(c) Borrower shall not permit any Hazardous Materials to be handled, buried, stored, retained,
refined, transported, processed, manufactured, generated, produced, spilled, allowed to seep, leak,
escape or leach, or to be pumped, poured, emitted, emptied, discharged, injected, dumped,
transferred or otherwise disposed of or dealt with on, under, to or from the Property or any
portion thereof at any time, except for use and storage for use of Permitted Materials.
(d) Other than as described in the Environmental Report, Borrower represents and warrants that
no actions, suits, or proceedings have been commenced, or are pending, or to the knowledge of
Borrower, are threatened with respect to any Legal Requirement governing the use, manufacture,
storage, treatment, transportation, or processing of Hazardous Materials with respect to the
Property or any part thereof. Borrower has received no written notice of, and, except as disclosed
in the Environmental Report, after due inquiry, has no knowledge of any fact, condition, occurrence
or circumstance which with notice or passage of time or both would give rise to a claim under or
pursuant to any Environmental Statute pertaining to Hazardous Materials on, in, under or
originating from the Property or any part thereof or any other real property owned or occupied by
Borrower or arising out of the conduct of Borrower, including, without limitation, pursuant to any
Environmental Statute.
(e) Borrower has not waived any Person’s liability with regard to Hazardous Materials in, on,
under or around the Property, nor has Borrower retained or assumed, contractually or by operation
of law, any other Person’s liability relative to Hazardous Materials or any claim, action or
proceeding relating thereto.
(f) In the event that there shall be filed a lien against the Property or any part thereof
pursuant to any Environmental Statute pertaining to Hazardous Materials, Borrower shall, within
sixty (60) days or, in the event that the applicable Governmental Authority has commenced steps to
cause the Premises or any part thereof to be sold pursuant to the lien, within fifteen (15) days,
from the date that Borrower receives notice of such lien, either (i) pay the claim and remove the
lien from the Property, or (ii) furnish (A) a bond satisfactory to Lender in the amount of the
claim out of which the lien arises, (B) a cash deposit in the amount of the claim out of which the
lien arises, or (C) other security reasonably satisfactory to Lender in an amount sufficient to
discharge the claim out of which the lien arises.
(g) Borrower represents and warrants that (i) except as disclosed in the Environmental Report,
Borrower has no knowledge of any violation of any Environmental Statute or any Environmental
Problem in connection with the Property, nor has Borrower been requested or required by any
Governmental Authority to perform any remedial activity or other responsive action in connection
with any Environmental Problem, and (ii) neither the Property nor any other property owned by
Borrower is included or, to Borrower’s best knowledge, after due inquiry and investigation,
proposed for inclusion on the National Priorities List issued pursuant to CERCLA by the United
States Environmental Protection Agency (the “
EPA
”) or on the inventory of other potential
“Problem” sites issued by the EPA or has been identified by the
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EPA as a potential CERCLA site or included or, to Borrower’s knowledge, after due inquiry and
investigation, proposed for inclusion on any list or inventory issued pursuant to any other
Environmental Statute, if any, or issued by any other Governmental Authority. Borrower covenants
that Borrower will comply with all Environmental Statutes affecting or imposed upon Borrower or the
Property.
(h) Borrower covenants that it shall promptly notify Lender of the presence and/or release of
any Hazardous Materials (except for use and storage for use of Permitted Materials) and of any
request for information or any inspection of the Property or any part thereof by any Governmental
Authority with respect to any Hazardous Materials and provide Lender with copies of such request
and any response to any such request or inspection. Borrower covenants that it shall, in
compliance with applicable Legal Requirements, conduct and complete all investigations, studies,
sampling and testing (and promptly shall provide Lender with copies of any such studies and the
results of any such test) and all remedial, removal and other actions necessary to clean up and
remove all Hazardous Materials in, on, over, under, from or affecting the Property or any part
thereof in accordance with all such Legal Requirements applicable to the Property or any part
thereof to the reasonable satisfaction of Lender.
(i) Following the occurrence and during the continuance of an Event of Default hereunder, and
without regard to whether Lender shall have taken possession of the Property or a receiver has been
requested or appointed or any other right or remedy of Lender has or may be exercised hereunder or
under any other Loan Document, Lender shall have the right (but no obligation) to conduct such
investigations, studies, sampling and/or testing of the Property or any part thereof as Lender may,
in its discretion, determine to conduct, relative to Hazardous Materials. All costs and expenses
incurred in connection therewith including, without limitation, consultants’ fees and disbursements
and laboratory fees, shall constitute a part of the Debt and shall, upon demand by Lender, be
immediately due and payable and shall bear interest at the Default Rate from the date so demanded
by Lender until reimbursed. Borrower shall, at its sole cost and expense, fully and expeditiously
cooperate in all such investigations, studies, samplings and/or testings including, without
limitation, providing all relevant information and making knowledgeable people available for
interviews.
(j) Other than as described in the Environmental Report, Borrower represents and warrants that
all paint and painted surfaces existing within the interior or on the exterior of the Improvements
are not flaking, peeling, cracking, blistering, or chipping, and do not contain lead or are
maintained in a condition that prevents exposure of young children to lead-based paint, as of the
date hereof, and that the current inspections, operation, and maintenance program at the Property
with respect to lead-based paint is consistent with FNMA guidelines and sufficient to ensure that
all painted surfaces within the Property shall be maintained in a condition that prevents exposure
of tenants to lead-based paint. To Borrower’s knowledge, there are currently no claims for adverse
health effects from exposure on the Property to lead-based paint or requests for the investigation,
assessment or removal of lead-based paint at the Property.
(k) Borrower represents and warrants that except in accordance with all applicable
Environmental Statutes and as disclosed in the Environmental Report, (i) no underground treatment
or storage tanks or pumps or water, gas, or oil wells are or have been located about the Property,
(ii) no PCBs or transformers, capacitors, ballasts or other equipment that contain
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dielectric fluid containing PCBs are located about the Property, (iii) no insulating material
containing urea formaldehyde is located about the Property, and (iv) no asbestos-containing
material is located about the Property.
Section 16.02.
Environmental Indemnification
. Borrower shall defend, indemnify and
hold harmless the Indemnified Parties for, from and against any claims, demands, penalties, fines,
liabilities, settlements, damages, costs and expenses of whatever kind or nature, known or unknown,
contingent or otherwise, whether incurred or imposed within or outside the judicial process,
including, without limitation, reasonable attorneys’ and consultants’ fees and disbursements and
investigations and laboratory fees arising out of, or in any way related to any Environmental
Problem, including without limitation:
(a) the presence, disposal, escape, seepage, leakage, spillage, discharge, emission, release
or threat of release of any Hazardous Materials in, on, over, under, from or affecting the Property
or any part thereof whether or not disclosed by the Environmental Report;
(b) any personal injury (including wrongful death, disease or other health condition related
to or caused by, in whole or in part, any Hazardous Materials) or property damage (real or
personal) arising out of or related to any Hazardous Materials in, on, over, under, from or
affecting the Property or any part thereof whether or not disclosed by the Environmental Report;
(c) any action, suit or proceeding brought or threatened, settlement reached, or order of any
Governmental Authority relating to such Hazardous Material whether or not disclosed by the
Environmental Report; and/or
(d) any violation of the provisions, covenants, representations or warranties of Section 16.01
hereof or of any Legal Requirement which is based on or in any way related to any Hazardous
Materials in, on, over, under, from or affecting the Property or any part thereof including,
without limitation, the cost of any work performed and materials furnished in order to comply
therewith whether or not disclosed by the Environmental Report.
Notwithstanding the foregoing provisions of this Section 16.02 to the contrary, Borrower shall
have no obligation to indemnify Lender for (i) liabilities, claims, damages, penalties, causes of
action, costs and expenses relative to the foregoing which result directly from (A) Lender’s
willful misconduct or gross negligence or (B) any Hazardous Materials initially placed in, on or
under the Property or any other condition relating to Hazardous Materials created after
foreclosure, delivery of a deed in lieu or other taking of title to the Property by Lender or its
successors and assigns. Any amounts payable to Lender by reason of the application of this Section
16.02 shall be secured by this Security Instrument and shall, upon demand by Lender, become
immediately due and payable and shall bear interest at the Default Rate from the date so demanded
by Lender until paid.
This indemnification shall survive the termination of this Security Instrument whether by
repayment of the Debt, foreclosure or deed in lieu thereof, assignment, or otherwise. The
indemnity provided for in this Section 16.02 shall not be included in any exculpation of Borrower
or its principals from personal liability provided for in this Security Instrument or in any of the
other Loan Documents. Nothing in this Section 16.02 shall be deemed to deprive
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Lender of any rights or remedies otherwise available to Lender, including, without limitation,
those rights and remedies provided elsewhere in this Security Instrument or the other Loan
Documents.
ARTICLE XVII: ASSIGNMENTS
Section 17.01.
Participations and Assignments
. Lender, at its sole cost and expense,
shall have the right to assign this Security Instrument and/or any of the Loan Documents, and to
transfer, assign or sell participations and subparticipations (including blind or undisclosed
participations and subparticipations) in the Loan Documents and the obligations hereunder to any
Person; provided, however, that no such participation shall increase, decrease or otherwise affect
either Borrower’s or Lender’s obligations under this Security Instrument or the other Loan
Documents.
ARTICLE XVIII: MISCELLANEOUS
Section 18.01.
Right of Entry
. Lender and its agents shall have the right to enter
and inspect the Property or any part thereof at all reasonable times, and, except in the event of
an emergency, upon reasonable notice and to inspect Borrower’s books and records and to make
abstracts and reproductions thereof, all at the cost and expense of Lender so long as there is no
continuing Default.
Section 18.02.
Cumulative Rights
. The rights of Lender under this Security
Instrument shall be separate, distinct and cumulative and none shall be given effect to the
exclusion of the others. No act of Lender shall be construed as an election to proceed under any
one provision herein to the exclusion of any other provision. Lender shall not be limited
exclusively to the rights and remedies herein stated but shall be entitled, subject to the terms of
this Security Instrument, to every right and remedy now or hereafter afforded by law.
Section 18.03.
Liability
. If Borrower consists of more than one Person, the
obligations and liabilities of each such Person hereunder shall be joint and several.
Section 18.04.
Exhibits Incorporated
. The information set forth on the cover hereof,
and the Exhibits annexed hereto, are hereby incorporated herein as a part of this Security
Instrument with the same effect as if set forth in the body hereof.
Section 18.05.
Severable Provisions
. If any term, covenant or condition of the Loan
Documents including, without limitation, the Note or this Security Instrument, is held to be
invalid, illegal or unenforceable in any respect, such Loan Document shall be construed without
such provision.
Section 18.06.
Duplicate Originals
. This Security Instrument may be executed in any
number of duplicate originals and each such duplicate original shall be deemed to constitute but
one and the same instrument.
Section 18.07.
No Oral Change
. The terms of this Security Instrument, together with
the terms of the Note and the other Loan Documents, constitute the entire understanding and
agreement of the parties hereto and supersede all prior agreements, understandings and
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negotiations between Borrower and Lender with respect to the Loan. This Security Instrument,
and any provisions hereof, may not be modified, amended, waived, extended, changed, discharged or
terminated orally or by any act on the part of Borrower or Lender, but only by an agreement in
writing signed by the party against whom enforcement of any modification, amendment, waiver,
extension, change, discharge or termination is sought.
Section 18.08.
Waiver of Counterclaim, Etc.
BORROWER HEREBY WAIVES THE RIGHT TO
ASSERT A COUNTERCLAIM, OTHER THAN A COMPULSORY COUNTERCLAIM, IN ANY ACTION OR PROCEEDING BROUGHT
AGAINST IT BY LENDER OR ITS AGENTS, AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, WAIVES TRIAL BY
JURY IN ANY ACTION OR PROCEEDING BROUGHT BY EITHER PARTY HERETO AGAINST THE OTHER OR IN ANY
COUNTERCLAIM BORROWER MAY BE PERMITTED TO ASSERT HEREUNDER OR WHICH MAY BE ASSERTED BY LENDER OR
ITS AGENTS, AGAINST BORROWER, OR IN ANY MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED
WITH THIS SECURITY INSTRUMENT OR THE DEBT.
Section 18.09.
Headings; Construction of Documents; Etc.
The table of contents,
headings and captions of various paragraphs 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. Borrower acknowledges that it was represented by competent counsel in
connection with the negotiation and drafting of this Security Instrument and the other Loan
Documents and that neither this Security Instrument nor the other Loan Documents shall be subject
to the principle of construing the meaning against the Person who drafted same.
Section 18.10.
Sole Discretion of Lender
. Whenever 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 specifically provided herein.
Section 18.11.
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
or the other Loan Documents specifically and expressly provides for the giving of notice by Lender
to Borrower and except with respect to matters for which Borrower is not, pursuant to applicable
Legal Requirements, permitted to waive the giving of notice.
Section 18.12.
Covenants Run with the Land
. All of the grants, covenants, terms,
provisions and conditions herein shall run with the Premises, shall be binding upon Borrower and
shall inure to the benefit of Lender, subsequent holders of this Security Instrument and their
successors and assigns. Without limitation to any provision hereof, the term “Borrower” shall
include and refer to the borrower named herein, any subsequent owner of the Property, and its
respective heirs, executors, legal representatives, successors and assigns. The representations,
warranties and agreements contained in this Security Instrument and the other Loan Documents are
intended solely for the benefit of the parties hereto, shall confer no rights hereunder, whether
legal or equitable, in any other Person and no other Person shall be entitled to rely thereon.
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Section 18.13.
Applicable Law
. THIS SECURITY INSTRUMENT AND THE OBLIGATIONS ARISING
HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
CALIFORNIA APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE AND ANY APPLICABLE LAW OF THE
UNITED STATES OF AMERICA.
Section 18.14.
Security Agreement
. (a) (i) This Security Instrument is both a real
property mortgage, deed to secure debt or deed of trust, as applicable, and a “security agreement”
within the meaning of the UCC. 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. This
Security Instrument is filed as a fixture filing and covers goods which are or are to become
fixtures on the Property. Borrower by executing and delivering this Security Instrument has
granted to Lender, as security for the Debt, a security interest in the Property to the full extent
that the Property may be subject to the UCC (said portion of the Property so subject to the UCC
being called in this Section 18.14 the “
Collateral
”). If an Event of Default shall occur
and be continuing, Lender, in addition to any other rights and remedies which it may have, shall
have and may exercise immediately and without demand, any and all rights and remedies granted to a
secured party upon default under the UCC, 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 during the continuance of an Event of Default,
Borrower shall, at its expense, assemble the Collateral and make it available to Lender at a
convenient place acceptable to Lender. Borrower shall pay to Lender on demand any and all
expenses, including reasonable legal expenses and attorneys’ fees, incurred or paid by Lender in
protecting its interest in the Collateral and in enforcing its rights hereunder with respect to the
Collateral. Any disposition pursuant to the UCC of so much of the Collateral as may constitute
personal property shall be considered commercially reasonable if made pursuant to a public sale
which is advertised at least twice in a newspaper in which sheriff’s sales are advertised in the
county where the Premises is located. Any notice of sale, disposition or other intended action by
Lender with respect to the Collateral given to Borrower in accordance with the provisions hereof at
least ten (10) days prior to such action, shall constitute 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 Debt in such priority and proportions as Lender in its discretion shall deem proper.
It is not necessary that the Collateral be present at any disposition thereof. Lender shall have
no obligation to clean-up or otherwise prepare the Collateral for disposition.
(ii) The mention in a financing statement filed in the records normally pertaining to
personal property of any portion of the Property shall not derogate from or impair in any
manner the intention of this Security Instrument. Lender hereby declares that all items of
Collateral are part of the real property encumbered hereby to the fullest extent permitted
by law, regardless of whether any such item is physically attached to the Improvements or
whether serial numbers are used for the better identification of certain items.
Specifically, the mention in any such financing statement of any items included in the
Property shall not be construed to alter, impair or impugn any rights of Lender as
determined by this Security Instrument or the priority of Lender’s lien upon and security
interest in the Property in the event that notice of Lender’s priority of interest as to any
portion of the Property is required to be filed in accordance with the UCC to be effective
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against or take priority over the interest of any particular class of persons,
including the federal government or any subdivision or instrumentality thereof. No portion
of the Collateral constitutes or is the proceeds of “
Farm Products
”, as defined in
the UCC.
(iii) If Borrower is at any time a beneficiary under a letter of credit now or
hereafter issued in favor of Borrower, Borrower shall promptly notify Lender thereof and, at
the request and option of Lender, Borrower shall, pursuant to an agreement in form and
substance satisfactory to Lender, either (A) arrange for the issuer and any confirmer of
such letter of credit to consent to an assignment to Lender of the proceeds of any drawing
under the letter of credit or (B) arrange for Lender to become the transferee beneficiary of
the letter of credit, with Lender agreeing, in each case, that the proceeds of any drawing
under the letter to credit are to be applied as provided in this Security Instrument.
(iv) Borrower and Lender acknowledge that for the purposes of Article 9 of the UCC, the
law of the State of California shall be the law of the jurisdiction of the bank in which the
Central Account is located.
(v) Lender may comply with any applicable Legal Requirements in connection with the
disposition of the Collateral, and Lender’s compliance therewith will not be considered to
adversely affect the commercial reasonableness of any sale of the Collateral.
(vi) Lender may sell the Collateral without giving any warranties as to the Collateral.
Lender may specifically disclaim any warranties of title, possession, quiet enjoyment or
the like. This procedure will not be considered to adversely affect the commercial
reasonableness of any sale of the Collateral.
(vii) If Lender sells any of the Collateral upon credit, Borrower will be credited only
with payments actually made by the purchaser, received by Lender and applied to the
indebtedness of Borrower. In the event the purchaser of the Collateral fails to fully pay
for the Collateral, Lender may resell the Collateral and Borrower will be credited with the
proceeds of such sale.
(b) 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 secured party, or, to the extent permitted under the UCC,
unsigned, in connection with the Collateral covered by this Security Instrument.
Section 18.15.
Actions and Proceedings
. Lender has the right to appear in and defend
any action or proceeding brought with respect to the Property in its own name or, if required by
Legal Requirements or, if in Lender’s reasonable judgment, it is necessary, in the name and on
behalf of Borrower, which Lender believes will adversely affect the Property or this Security
Instrument and to bring any action or proceedings, in its name or in the name and on behalf of
Borrower, which Lender, in its reasonable discretion, decides should be brought to protect its
interest in the Property.
Section 18.16.
Usury Laws
. This Security Instrument and the Note are subject to the
express condition, and it is the expressed intent of the parties, that at no time shall Borrower be
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obligated or required to pay interest on the principal balance due under the Note 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 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 principal balance due under the Note at a rate in
excess of such maximum rate, such rate of interest 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 been
payments in reduction of the principal balance of the Note. No application to the principal
balance of the Note pursuant to this Section 18.16 shall give rise to any requirement to pay any
prepayment fee or charge of any kind due hereunder, if any.
Section 18.17.
Remedies of Borrower
. In the event that a claim or adjudication is
made that Lender has acted unreasonably or unreasonably delayed acting in any case where by law or
under the Note, this Security Instrument or the Loan Documents, it has an obligation to act
reasonably or promptly, Lender shall not be liable for any monetary damages, and Borrower’s
remedies shall be limited to injunctive relief or declaratory judgment.
Section 18.18.
Offsets, Counterclaims and Defenses
. Any assignee of this Security
Instrument, the Assignment and the Note shall take the same free and clear of all offsets,
counterclaims or defenses which are unrelated to the Note, the Assignment or this Security
Instrument which Borrower may otherwise have against any assignor of this Security Instrument, the
Assignment and the Note and no such unrelated counterclaim or defense shall be interposed or
asserted by Borrower in any action or proceeding brought by any such assignee upon this Security
Instrument, the Assignment or the Note and any such right to interpose or assert any such unrelated
offset, counterclaim or defense in any such action or proceeding is hereby expressly waived by
Borrower.
Section 18.19.
No Merger
. If Borrower’s and Lender’s estates become the same
including, without limitation, upon the delivery of a deed by Borrower in lieu of a foreclosure
sale, or upon a purchase of the Property by Lender in a foreclosure sale, this Security Instrument
and the lien created hereby shall not be destroyed or terminated by the application of the doctrine
of merger and in such event Lender shall continue to have and enjoy all of the rights and
privileges of Lender as to the separate estates; and, as a consequence thereof, upon the
foreclosure of the lien created by this Security Instrument, any Leases or subleases then existing
and created by Borrower shall not be destroyed or terminated by application of the law of merger or
as a result of such foreclosure unless Lender or any purchaser at any such foreclosure sale shall
so elect. No act by or on behalf of Lender or any such purchaser shall constitute a termination of
any Lease or sublease unless Lender or such purchaser shall give written notice thereof to such
lessee or sublessee.
Section 18.20.
Restoration of Rights
. In case Lender shall have proceeded to enforce
any right under this Security Instrument by foreclosure sale, entry or otherwise, and such
proceedings shall have been discontinued or abandoned for any reason or shall have been determined
adversely, then, in every such case, Borrower and Lender shall be restored to their former
positions and rights hereunder with respect to the Property subject to the lien hereof.
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Section 18.21.
Waiver of Statute of Limitations
. The pleadings of any statute of
limitations as a defense to any and all obligations secured by this Security Instrument are hereby
waived to the full extent permitted by Legal Requirements.
Section 18.22.
Advances
. This Security Instrument shall cover any and all advances
made pursuant to the Loan Documents, rearrangements and renewals of the Debt and all extensions in
the time of payment thereof, even though such advances, extensions or renewals be evidenced by new
promissory notes or other instruments hereafter executed and irrespective of whether filed or
recorded. Likewise, the execution of this Security Instrument shall not impair or affect any other
security which may be given to secure the payment of the Debt, and all such additional security
shall be considered as cumulative. The taking of additional security, execution of partial
releases of the security, or any extension of time of payment of the Debt shall not diminish the
force, effect or lien of this Security Instrument and shall not affect or impair the liability of
Borrower and shall not affect or impair the liability of any maker, surety, or endorser for the
payment of the Debt.
Section 18.23.
Application of Default Rate Not a Waiver
. Application of the Default
Rate shall not be deemed to constitute a waiver of any Default or Event of Default or any rights or
remedies of Lender under this Security Instrument, any other Loan Document or applicable Legal
Requirements, or a consent to any extension of time for the payment or performance of any
obligation with respect to which the Default Rate may be invoked.
Section 18.24.
Intervening Lien
. To the fullest extent permitted by law, any
agreement hereafter made pursuant to this Security Instrument shall be superior to the rights of
the holder of any intervening lien.
Section 18.25.
No Joint Venture or Partnership
. Borrower and Lender intend that the
relationship created hereunder be solely that of mortgagor and mortgagee or grantor and beneficiary
or borrower and lender, as the case may be. Nothing herein is intended to create a joint venture,
partnership, tenancy-in-common, or joint tenancy relationship between Borrower and Lender nor to
grant Lender any interest in the Property other than that of mortgagee, beneficiary or lender.
Section 18.26.
Time of the Essence
. Time shall be of the essence in the performance
of all obligations of Borrower hereunder.
Section 18.27.
Borrower’s Obligations Absolute
. Borrower acknowledges that Lender
and/or certain Affiliates of Lender are engaged in the business of financing, owning, operating,
leasing, managing, and brokering real estate and in other business ventures which may be viewed as
adverse to or competitive with the business, prospect, profits, operations or condition (financial
or otherwise) of Borrower. Except as set forth to the contrary in the Loan Documents, all sums
payable by Borrower hereunder shall be paid without notice or demand, counterclaim, set-off,
deduction or defense and without abatement, suspension, deferment, diminution or reduction, and the
obligations and liabilities of Borrower hereunder shall in no way be released, discharged, or
otherwise affected (except as expressly provided herein) by reason of: (a) any damage to or
destruction of or any Taking of the Property or any portion thereof; (b) any restriction or
prevention of or interference with any use of the Property or any portion thereof;
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(c) any title defect or encumbrance or any eviction from the Premises or any portion thereof
by title paramount or otherwise; (d) any bankruptcy proceeding relating to Borrower, any General
Partner, or any guarantor or indemnitor, or any action taken with respect to this Security
Instrument or any other Loan Document by any trustee or receiver of Borrower or any such General
Partner, guarantor or indemnitor, or by any court, in any such proceeding; (e) any claim which
Borrower has or might have against Lender; (f) any default or failure on the part of Lender to
perform or comply with any of the terms hereof or of any other agreement with Borrower; or (g) any
other occurrence whatsoever, whether similar or dissimilar to the foregoing, whether or not
Borrower shall have notice or knowledge of any of the foregoing.
Section 18.28.
Publicity
. All promotional news releases, publicity or advertising by
Manager, Borrower or their respective Affiliates through any media intended to reach the general
public shall not refer to the Loan Documents or the financing evidenced by the Loan Documents, or
to Lender or to any of its Affiliates without the prior written approval of Lender or such
Affiliate, as applicable, in each instance, such approval not to be unreasonably withheld or
delayed. Lender shall be authorized to provide information relating to the Property, the Loan and
matters relating thereto to rating agencies, underwriters, potential securities investors,
auditors, regulatory authorities and to any Persons which may be entitled to such information by
operation of law and may use basic transaction information (including, without limitation, the name
of Borrower, the name and address of the Property and the Loan Amount) in press releases or other
marketing materials.
Section 18.29.
Securitization Opinions
. In the event the Loan is included as an
asset of a Securitization by Lender or any of its Affiliates, Borrower shall, within ten (10)
Business Days after Lender’s written request therefor, deliver opinions in form and substance and
delivered by counsel reasonably acceptable to Lender and each Rating Agency, as may be reasonably
required by Lender and/or the Rating Agency in connection with such securitization. Borrower’s
failure to deliver the opinions required hereby within such ten (10) Business Day period shall
constitute an “
Event of Default
” hereunder. The cost of any “bringdown” opinion of any
legal opinion given in connection with the origination of the Loan will be paid by Borrower. The
reasonable cost of any other opinion requested by Lender and/or any Rating Agency will be paid by
Lender. Notwithstanding the foregoing, Borrower shall not be required to deliver a “10b-5” or
“REMIC” Opinion in connection with any Securitization.
Section 18.30.
Cooperation with Rating Agencies
. Borrower covenants and agrees that
in the event the Loan is to be included as an asset of a Securitization, Borrower shall, so long as
the following may be accomplished at no material expense to Borrower and with no more than an
insignificant allocation of Borrower’s time (a) gather any information reasonably required by each
Rating Agency in connection with such a Securitization to the extent in Borrower’s possession or
control or reasonably obtainable by Borrower, (b) at Lender’s request, meet with representatives of
each Rating Agency to discuss the business and operations of the Property, and (c) cooperate with
the reasonable requests of each Rating Agency and Lender in connection with all of the foregoing as
well as in connection with all other matters and the preparation of any offering documents with
respect thereto, including, without limitation, entering into any amendments or modifications to
this Security Instrument or to any other Loan Document which may be requested by Lender to conform
to Rating Agency or market standards for a Securitization provided that no such modification shall
modify (a) the interest rate payable under
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the Note, (b) the stated maturity of the Note, (c) the amortization of principal under the
Note, (d) Section 18.32 hereof, (e) any other material economic term of the Loan, (f) expand the
scope of representation made hereunder or (g) any provision, the effect of which would materially
increase Borrower’s obligations or materially decrease Borrower’s rights under the Loan Documents.
Borrower acknowledges that the information provided by Borrower to Lender may be incorporated into
the offering documents for a Securitization and to the fullest extent permitted, Borrower
irrevocably waives all rights, if any, to prohibit such disclosures including, without limitation,
any right of privacy. Lender and each Rating Agency shall be entitled to rely on the information
supplied by, or on behalf of, Borrower, and Borrower indemnifies and holds harmless the Indemnified
Parties, their Affiliates and each Person who controls such Persons within the meaning of Section
15 of the Securities Act or Section 20 of the Securities Exchange Act of 1934, as same may be
amended from time to time, for, from and against any claims, demands, penalties, fines,
liabilities, settlements, damages, costs and expenses of whatever kind or nature, known or unknown,
contingent or otherwise, whether incurred or imposed within or outside the judicial process,
including, without limitation, reasonable attorneys’ fees and disbursements that arise out of or
are based upon any untrue statement or alleged untrue statement of any material fact contained in
such information or arise out of or are based upon the omission or alleged omission (collectively,
“
Securities Liabilities
”); provided, however, that Borrower will be liable under the
foregoing indemnity only to the extent that such Securities Liabilities arise out of, or are based
upon, any such untrue statement or omission made therein in reliance upon, and in conformity with,
information furnished to Lender by or on behalf of Borrower or its Affiliates in connection with
the preparation of the disclosure documents or in connection with the underwriting of the Loan; and
provided further, however, that with respect to information provided by third parties and with
respect to statements made in the disclosure documents that are based upon information provided by
third parties, Borrower will be liable only if Borrower or its Affiliates knew that such
information was false or omitted to state a material fact known to Borrower and necessary to make
the statements made, in light of the circumstances under which they were made, not misleading.
Section 18.31.
Securitization Financials
. Borrower covenants and agrees that, upon
Lender’s written request therefor in connection with a Securitization, Borrower shall, at
Borrower’s sole cost and expense, promptly deliver (a) audited financial statements and related
documentation prepared by an Independent certified public accountant that satisfy securities laws
and requirements for use in a public registration statement (which may include up to three (3)
years of historical audited financial statements) and (b) if, at the time one or more Disclosure
Documents are being prepared in connection with a Securitization, Lender expects that Borrower
alone or Borrower and one or more of its Affiliates collectively, or the Property alone or the
Property and any other parcel(s) of real property, together with improvements thereon and personal
property related thereto, that is “related”, within the meaning of the definition of Significant
Obligor, to the Property (a “
Related Property
”) collectively, will be a Significant
Obligor, Borrower shall furnish to Lender upon request (i) the selected financial data or, if
applicable, net operating income, required under Item 1112(b)(1) of Regulation AB and meeting the
requirements thereof, if Lender expects that the principal amount of the Loan, together with any
loans made to an Affiliate of Borrower or secured by a Related Property that is included in a
Securitization with the Loan (a “
Related Loan
”), as of the cut-off date for such
Securitization may, or if the principal amount of the Loan together with any Related Loans as of
the cut-off date for such Securitization and at any time during which the Loan and any Related
Loans are
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included in a Securitization does, equal or exceed ten percent (10%) (but less than twenty
percent (20%)) of the aggregate principal amount of all mortgage loans included or expected to be
included, as applicable, in the Securitization or (ii) the financial statements required under Item
1112(b)(2) of Regulation AB and meeting the requirements thereof, if Lender expects that the
principal amount of the Loan together with any Related Loans as of the cut-off date for such
Securitization may, or if the principal amount of the Loan together with any Related Loans as of
the cut-off date for such Securitization and at any time during which the Loan and any Related
Loans are included in a Securitization does, equal or exceed twenty percent (20%) of the aggregate
principal amount of all mortgage loans included or expected to be included, as applicable, in the
Securitization. Such financial data or financial statements shall be furnished to Lender within
ten (10) Business Days after notice from Lender in connection with the preparation of Disclosure
Documents for the Securitization and, with respect to the data or financial statements required
pursuant to clause (b) hereof, (A) not later than thirty (30) days after the end of each fiscal
quarter of Borrower and (B) not later than seventy-five (75) days after the end of each Fiscal
Year; provided, however, that Borrower shall not be obligated to furnish financial data or
financial statements pursuant to clauses (A) or (B) of this sentence with respect to any period for
which a filing pursuant to the Securities Exchange Act of 1934 in connection with or relating to
the Securitization is not required.
Section 18.32.
Exculpation
. Notwithstanding anything herein or in any other Loan
Document to the contrary, except as otherwise set forth in this Section 18.32 to the contrary,
Lender shall not enforce the liability and obligation of Borrower or (a) if Borrower or any of its
direct or indirect owners is a partnership, its or their constituent partners or any of their
respective partners, (b) if Borrower or any of its direct or indirect owners is a trust, its or
their beneficiaries or any of their respective Partners (as hereinafter defined), (c) if Borrower
or any of its direct or indirect owners is a corporation, any of its or their shareholders,
directors, principals, officers or employees, or (d) if Borrower or any of its direct or indirect
owners is a limited liability company, any of its or their members (the Persons described in the
foregoing clauses (a) — (d), as the case may be, are hereinafter referred to as the
“
Partners
”) to perform and observe the obligations contained in this Security Instrument or
any of the other Loan Documents by any action or proceeding, including, without limitation, any
action or proceeding wherein a money judgment shall be sought against Borrower or the Partners,
except that Lender may bring a foreclosure action, action for specific performance, or other
appropriate action or proceeding (including, without limitation, an action to obtain a deficiency
judgment) solely for the purpose of enabling Lender to realize upon (i) Borrower’s interest in the
Property, (ii) the Rent to the extent received by Borrower during the existence of an Event of
Default (all Rent covered by this clause (ii) being hereinafter referred to as the “
Recourse
Distributions
”) and not applied towards the operation or maintenance of the Property, and (iii)
any other collateral then subject to the Loan Documents (the collateral described in the foregoing
clauses (i) — (iii) is hereinafter referred to as the “
Default Collateral
”); provided,
however, that any judgment in any such action or proceeding shall be enforceable against Borrower
only to the extent of any such Default Collateral. The provisions of this Section shall not,
however, (a) impair the validity of the Debt evidenced by the Note or in any way affect or impair
the lien of this Security Instrument or any of the other Loan Documents or the right of Lender to
foreclose this Security Instrument following the occurrence of an Event of Default; (b) impair the
right of Lender to name Borrower as a party defendant in any action or suit for judicial
foreclosure and sale under this Security Instrument; (c) affect the validity or enforceability of
the Note, this Security Instrument,
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or any of the other Loan Documents, or impair the right of Lender to seek a personal judgment
against Guarantor to the extent contained in the Guaranty; (d) impair the right of Lender to obtain
the appointment of a receiver; (e) impair the enforcement of the Assignment; (f) impair the right
of Lender to bring suit for a monetary judgment with respect to fraud or material misrepresentation
by Borrower, or any Affiliate of Borrower in connection with this Security Instrument, the Note or
the other Loan Documents, and the foregoing provisions shall not modify, diminish or discharge the
liability of Borrower with respect to same; (g) impair the right of Lender to bring suit for a
monetary judgment to obtain the Recourse Distributions received by Borrower; (h) impair the right
of Lender to bring suit for a monetary judgment with respect to Borrower’s misappropriation of
tenant security deposits or Rent collected more than one (1) month in advance and not applied to
the operation of the Property, and the foregoing provisions shall not modify, diminish or discharge
the liability of Borrower; (i) impair the right of Lender to obtain Loss Proceeds due to Lender
pursuant to this Security Instrument; (j) impair the right of Lender to enforce the provisions of
Sections 2.02(g), 12.01, 16.01 or 16.02, inclusive of this Security Instrument, even after
repayment in full by Borrower of the Debt or to bring suit for a monetary judgment against Borrower
with respect to any obligation set forth in said Sections; (k) prevent or in any way hinder Lender
from exercising, or constitute a defense, or counterclaim, or other basis for relief in respect of
the exercise of, any other remedy against any or all of the collateral securing the Note as
provided in the Loan Documents; (l) impair the right of Lender to bring suit for a monetary
judgment with respect to any misapplication or conversion of Loss Proceeds, and the foregoing
provisions shall not modify, diminish or discharge the liability of Borrower; (m) impair the right
of Lender to sue for, seek or demand a deficiency judgment against Borrower solely for the purpose
of foreclosing the Property or any part thereof, or realizing upon the Default Collateral;
provided, however, that any such deficiency judgment referred to in this clause (m) shall be
enforceable against Borrower only to the extent of any of the Default Collateral; (n) impair the
ability of Lender to bring suit for a monetary judgment with respect to arson or waste to or of the
Property or damage to the Property resulting from the gross negligence or willful misconduct of
Borrower or, to the extent that there is sufficient cash flow, failure to pay any Imposition, or in
lieu thereof, deposit a sum equal to any Impositions into the Basic Carrying Costs Sub-Account; (o)
impair the right of Lender to bring a suit for a monetary judgment in the event of the exercise of
any right or remedy under any federal, state or local forfeiture laws resulting in the loss of the
lien of this Security Instrument, or the priority thereof, against the Property; (p) be deemed a
waiver of any right which Lender may have under Sections 506(a), 506(b), 1111(b) or any other
provision of the Bankruptcy Code to file a claim for the full amount of the Debt or to require that
all collateral shall continue to secure all of the Debt; (q) impair the right of Lender to bring
suit for monetary judgment with respect to any actual losses resulting from any claims, actions or
proceedings initiated by Borrower (or any Affiliate of Borrower) alleging that the relationship of
Borrower and Lender is that of joint venturers, partners, tenants in common, joint tenants or any
relationship other than that of debtor and creditor; (r) impair the right of Lender to bring suit
for a monetary judgment in the event of a Transfer in violation of the provisions of Article IX
hereof; (s) impair the right of Lender to bring suit for a monetary judgment in the event that
Borrower moves its principal place of business or its books and records relating to the Property
which are governed by the UCC, or changes its name, its jurisdiction of organization, type of
organization or other legal structure or, if it has one, organizational identification number,
without first giving Lender thirty (30) days prior written notice; (t) impair the right of Lender
to bring suit for a monetary judgment in the
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event that Borrower changes its name of otherwise does anything which would make the
information set forth in any UCC Financing Statements relating to the Property materially
misleading without giving Lender thirty (30) days prior written notice thereof; or (u) impair the
right of Lender to bring suit for a monetary judgment in the event that Borrower consents to any
modification, change, supplement, alteration or amendment of the Ground Lease without Lender’s
prior written consent, which shall not be unreasonably withheld, or termination of the Ground Lease
without Lender’s prior written consent, which consent shall be subject to Lender’s sole and
absolute discretion. The provisions of this Section 18.32 shall be inapplicable to Borrower if (a)
any proceeding, action, petition or filing under the Bankruptcy Code, or any similar state or
federal law now or hereafter in effect relating to bankruptcy, reorganization or insolvency, or the
arrangement or adjustment of debts, shall be (A) filed by Borrower or Guarantor or (B) filed
against Borrower or Guarantor and consented to or acquiesced in by Borrower or Guarantor or if any
Affiliate of Borrower or Guarantor, or if Borrower or Guarantor or any Affiliate of either of them
shall institute any proceeding for Borrower’s dissolution or liquidation, or Borrower or Guarantor
shall make an assignment for the benefit of creditors, or (b) Borrower or any Affiliate contests or
in any material way interferes in bad faith with, directly or indirectly (collectively, a
“
Contest
”), any foreclosure action, UCC sale or other material remedy exercised by Lender
upon the occurrence of any Event of Default whether by making any motion, bringing any counterclaim
(other than a compulsory counterclaim), claiming any defense, seeking any injunction or other
restraint, commencing any action, or otherwise (provided that if any such Person obtains a
non-appealable order successfully asserting a Contest, Borrower shall have no liability under this
clause (b) and provided, further, that the liability under this clause (b) shall be limited to the
actual and consequential costs, expenses and damages of Lender which result, directly or
indirectly, from any such Contest), in which event Lender shall have recourse against all of the
assets of Borrower including, without limitation, any right, title and interest of Borrower in and
to the Property, and any Recourse Distributions received by Guarantor or Borrower (but excluding
the other assets of such Guarantor to the extent Lender would not have had recourse thereto other
than in accordance with the provisions of this Section 18.32).
Section 18.33.
Concerning the Trustee
. Trustee shall be under no duty to take any
action hereunder except as expressly required hereunder or by law, or to perform any act which
would involve Trustee in any expense or liability or to institute or defend any suit in respect
hereof, unless properly indemnified to Trustee’s reasonable satisfaction. Trustee, by acceptance
of this Security Instrument, covenants to perform and fulfill the trusts herein created, being
liable, however, only for gross negligence or willful misconduct, and hereby waives any statutory
fee and agrees to accept reasonable compensation, in lieu thereof, for any services rendered by
Trustee in accordance with the terms hereof. Trustee may resign at any time by written instrument
to that effect delivered to Lender. Lender may remove Trustee at any time or from time to time and
select a successor trustee. In the event of the death, removal, resignation, refusal to act, or
inability to act of Trustee, or in its sole discretion for any reason whatsoever Lender may,
without notice and without specifying any reasons therefor and without applying to any court,
select and appoint a successor trustee, by an instrument recorded wherever this Security Instrument
is recorded, and all powers, rights, duties and authority of Trustee, as aforesaid, shall thereupon
become vested in such successor. Such substitute trustee shall not be required to give bond for
the faithful performance of the duties of Trustee hereunder unless required by Lender. The
procedure provided for in this Section 18.33 for substitution of Trustee
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shall be in addition to and not in exclusion of any other provisions for substitution, by law
or otherwise.
Section 18.34.
Trustee’s Fees
. Borrower shall pay all costs, fees and expenses
incurred by Trustee and Trustee’s agents and counsel in connection with the performance by Trustee
of Trustee’s duties hereunder, and all such costs, fees and expenses shall be secured by this
Security Instrument.
Section 18.35.
Mezzanine Loan Option
. (a) Lender, at its sole cost and expense,
shall have the right at any time to divide the Loan into two or more parts (the “
Mezzanine
Option
”): a “mortgage loan” and one or more “mezzanine loans.” The principal amount of the
mortgage loan plus the principal amount of the mezzanine loan(s) shall equal the outstanding
principal balance of the Loan immediately prior to the creation of the mortgage loan and the
mezzanine loan(s). In effectuating the foregoing, Lender will make one or more loans to one or
more entities that will be the direct or indirect equity owner(s) of Borrower as described in
Section 18.35(b) (collectively, the “
Mezzanine Borrower(s)
”). The Mezzanine Borrower(s)
will contribute the amount of the mezzanine loan(s) to Borrower (in its capacity as borrower under
the mortgage loan, “mortgage borrower”) and the mortgage borrower will apply the contribution to
pay down the Loan to the mortgage loan amount. The mortgage loan and the mezzanine loan(s) will be
on the same terms and subject to the same conditions set forth in the Loan Documents except as
follows. The mezzanine loan(s) shall be made pursuant to Lender’s standard mezzanine loan
documents.
(b) Lender shall have the right to establish different interest rates and debt service
payments for the mortgage loan and the mezzanine loan(s) and to require the payment of the mortgage
loan and the mezzanine loan(s) in such order of priority as may be designated by Lender; provided,
that (i) the total loan amounts for the mortgage loan and the mezzanine loan(s) shall equal the
amount of the Loan immediately prior to the creation of the mortgage loan and the mezzanine
loan(s), (ii) the weighted average interest rate of the mortgage loan and the mezzanine loan(s)
shall on the date created equal the interest rate which was applicable to the Loan immediately
prior to creation of the mortgage loan and mezzanine loan(s) and (iii) the debt service payments on
the mortgage loan note and the mezzanine loan note(s) shall on the date created equal the debt
service payment which was due under the Loan immediately prior to creation of a mortgage loan and a
mezzanine loan(s).
(c) The Mezzanine Borrower(s) shall be special purpose, bankruptcy remote entities pursuant to
applicable Rating Agency criteria and shall own directly or indirectly one hundred percent (100%)
of the mortgage borrower. The security for the mezzanine loan(s) shall be a pledge of one hundred
percent (100%) of the direct and indirect ownership interests in the mortgage borrower.
(d) Borrower shall cooperate with all reasonable requests of Lender in order to convert the
Loan into a mortgage loan and one or more mezzanine loans and shall execute and deliver such
documents as shall reasonably be required by Lender in connection therewith, including, without
limitation, the delivery of non-consolidation, enforceability, authorization and execution opinions
and an “Eagle 9” or “UCC plus” (or equivalent) UCC insurance policy and
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the modification of organizational documents and loan documents and the transfer of the
membership interest in Borrower to the Mezzanine Borrower(s).
It shall be an Event of Default if Borrower fails to comply with any of the terms, covenants
or conditions of this Section 18.35 after expiration of ten (10) Business Days notice thereof.
Section 18.36.
Component Notes
. Lender, without in any way limiting Lender’s other
rights hereunder, in its sole and absolute discretion, shall have the right at any time to require
Borrower to execute and deliver “component” notes (including senior and junior notes), which notes
may be paid in such order of priority as may be designated by Lender, provided that (a) the
aggregate principal amount of such “component” notes shall equal the outstanding principal balance
of the Loan immediately prior to the creation of such “component” notes, (b) the weighted average
interest rate of all such “component” notes shall on the date created equal the interest rate which
was applicable to the Loan immediately prior to the creation of such “component” notes, (c) the
debt service payments on all such “component” notes shall on the date created equal the debt
service payment which was due under the Loan immediately prior to the creation of such component
notes and (d) the other terms and provisions of each of the “component” notes shall be identical in
substance and substantially similar in form to the Loan Documents. Borrower shall cooperate with
all reasonable requests of Lender in order to establish the “component” notes and shall execute and
deliver such documents as shall reasonably be required by Lender in connection therewith, all in
form and substance reasonably satisfactory to Lender, including, without limitation, the severance
of security documents if requested. It shall be an Event of Default if Borrower fails to comply
with any of the terms, covenants or conditions of this Section 18.36 after the expiration of ten
(10) Business Days after notice thereof.
Section 18.37.
Certain Matters Relating to Property Located in the State of
California
. With respect to the Property which is located in the State of California,
notwithstanding anything contained herein:
(a)
Power of Sale
. Lender may deliver to Trustee a written declaration of an Event of
Default and demand for sale which requests that Trustee record and serve a written notice of
default and of election to cause the Property to be sold, and cause any or all of the Property to
be sold under the power of sale granted by this Security Instrument in the manner hereinbelow
specified in this Section 18.37.
(i)
Declaration of Default; Acceptance
. Lender shall (1) deliver to Trustee a
written declaration of an Event of Default which recites facts which demonstrate Borrower’s
default, and a demand that Trustee sell the Property, and (2) deposit the Note and this
Security Instrument, if required by law, with Trustee. Trustee shall accept Lender’s
declaration of an Event of Default as true and as demonstrative of Borrower’s default, and
shall record and serve a written notice of default and of election to cause the Property to
be sold in the manner required by applicable law.
(ii)
Rescission of Notice of Default
. Lender may rescind any notice of default
at any time before Trustee’s sale by executing a notice of rescission and recording it. The
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recordation of the notice will constitute a cancellation of any prior declaration of an
Event of Default and demand for sale and of any acceleration of maturity of the Debt
affected by any prior declaration or notice of an Event of Default. The exercise by Lender
of the right of rescission will not constitute a waiver of any default then existing or
subsequently occurring, or impair the right of Lender to execute other declarations of
default and demand for sale, or notices of default and of election to cause the Property to
be sold, nor otherwise affect the Note or this Security Instrument, or any of the rights,
obligations or remedies of Lender or Trustee hereunder or under applicable law.
(iii)
Date of Trustee’s Sale
. If, after the expiration of any period of time
provided by applicable law, Borrower’s Event of Default has not been cured and Borrower’s
Debt has not been reinstated in the manner required by applicable law, Trustee shall
establish a date for the sale of the Property and record and serve a notice of sale in the
manner required by applicable law.
(iv)
Trustee’s Sale
. If, on or before the date scheduled for the sale of the
Property, Borrower’s Event of Default has not been cured and the Debt has not been
reinstated, Trustee, without demand on Borrower, shall sell the Property at the time and
place fixed by Trustee in the notice of sale, either as a whole or in separate parcels, and
in such order as Trustee may determine, at public auction, and to any Person, including
Borrower, Lender or Trustee. The Property shall be sold to the highest bidder for cash
payable at the time of sale. Notwithstanding the foregoing, instead of paying cash for the
Property, Lender may credit the amount of its auction sale bid by the amount of the Debt, or
any fraction thereof, including, without limitation, Trustee’s cost and expenses from the
sale of the Property. Lender will be entitled to bid, at any trustee’s or foreclosure sale
of the Property, the amount of the Environmental Damages (as hereinafter defined), any costs
incurred by Lender with respect to any Environmental Problem and interest in addition to the
amount of other Debt as a credit bid, the equivalent of cash. Furthermore, if a bid has
been made by Lender in the amount of the Debt, other than Debt for Environmental Damages and
any costs incurred by Lender with respect to any Environmental Problem incurred by Lender,
any Debt comprised of the Environmental Damages and any costs incurred by Lender with
respect to any Environmental Problem shall not be discharged by virtue of the full credit
bid and shall remain an obligation of Borrower to be satisfied under this Security
Instrument.
(v)
Delivery of Deed
. Trustee shall deliver to the purchaser of the Property a
deed which conveys title to the Property without any covenant or warranty, express or
implied. The recitals in the deed of any matters or facts shall be conclusive proof of
their truthfulness.
(vi)
Postponement of Trustee’s Sale
. Trustee may postpone the sale of all or
any portion of the Property in accordance with California Civil Code §2924g, by public
announcement at the time and place of sale, and from time to time thereafter Trustee may
postpone such sale by public announcement at the time fixed by the preceding postponement or
as otherwise allowed by said statute.
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(vii)
Application of Sale Proceeds
. The proceeds of Trustee’s public auction
of the Property shall be applied in the following manner: (1) payment of the portion of the
Debt attributable to the costs and expenses of the sale; (2) repayment of the portion of the
Debt attributable to any sums expended or advanced by Lender (other than the Environmental
Damages and costs incurred by Lender with respect to any Environmental Problem) under the
terms of this Security Instrument, plus interest at the Default Rate; (3) payment of all
other Debt and all other obligations of Borrower secured by this Security Instrument, in any
order that Lender chooses; (4) repayment of the portion of the Debt attributable to the
Environmental Damages and costs incurred by Lender with respect to any Environmental Problem
under the terms of this Security Instrument, plus interest at the Default Rate; and (5) the
remainder, if any, to satisfy the outstanding balance of obligations secured by any junior
encumbrances in the order of their priority, then to Borrower or Borrower’s successor in
interest.
(viii)
Proof of Compliance with the Law
. If there is a sale of the Property,
or any part of it, and the execution of a deed for it, the recital of default and of
recording notice of breach and election of sale, and of the elapsing of the required time
between the recording and the following notice, and of the sale should be made, will be
conclusive proof of the default, recording, election, elapsing of time, and the due giving
of notice, and that the sale was regularly and validly made on proper demand by Lender. Any
deed with these recitals will be effectual and conclusive against Borrower, its successors,
and assigns, and all other Persons. The receipt for the purchase money recited or in any
deed executed to the purchaser will be sufficient discharge to the purchaser from all
obligations to see to the proper application of the purchase money.
(b)
Acceptance by Trustee
. Trustee accepts this trust when this Security Instrument,
duly executed and acknowledged, is made a public record as provided by law. Trustee is not
obligated to notify any party hereto of pending sale under any other deed of trust or of any action
or proceeding in which Borrower, Lender or Trustee shall be a party unless brought by Trustee.
(c)
Rights and Duties
. It shall be no part of the duty of Trustee to see to any
recording, filing or registration of this Security Instrument or any other instrument in addition
or supplemental hereto, or to give any notice thereof, or to see to the payment of or be under any
duty in respect of any tax or assessment or other governmental charge which may be levied or
assessed on the Property, or any part thereof, or against Trustee, or to see to the performance or
observance by Borrower of any of the covenants and agreements contained herein. Trustee shall not
be responsible for the execution, acknowledgement or validity of this Security Instrument or of any
instrument in addition or supplemental hereto or for the sufficiency of the security purported to
be created hereby, and makes no representation in respect thereof or in respect of the rights of
Lender. Trustee shall have the right to advice of counsel upon any matters arising hereunder and
shall be fully protected in relying as to legal matters on the advice of counsel. Trustee shall
not incur any personal liability hereunder except for its own gross negligence or willful
misconduct and Trustee shall have the right to rely on any instrument, document or signature
authorizing or supporting any action taken or proposed to be taken by Trustee hereunder and
believed by Trustee in good faith to be genuine.
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(d)
Subrogation to Existing Liens; Vendor’s Lien
. To the extent that proceeds of the
Note are used to pay Debt secured by any outstanding lien, security interest, charge or prior
encumbrance against the Property, such proceeds have been advanced by Lender at Trustee’s request,
and Lender shall be subrogated to any and all rights, security interests and liens owned by any
owner or holder of such outstanding liens, security interests, charges or encumbrances, however
remote, irrespective of whether said liens, security interests, charges or encumbrances are
released, and all of the same are recognized as valid and subsisting and are renewed and continued
and merged herein to secure the Debt, but the terms and provisions of this Security Instrument
shall govern and control the manner and terms of enforcement of the liens, security interests,
charges and encumbrances to which Lender is subrogated hereunder. It is expressly understood that,
in consideration of the payment of such indebtedness by Lender, Borrower hereby waives and releases
all demands and causes of action for offsets and payments in connection with the said indebtedness.
If all or any portion of the proceeds of the loan evidenced by the Note or of any other secured
indebtedness has been advanced for the purpose of paying the purchase price for all or a part of
the Property, no vendor’s lien is waived; and Lender shall have, and is hereby granted, a vendor’s
lien on the Property as cumulative additional security for the secured indebtedness. Lender may
foreclose under this Security Instrument or under the vendor’s lien without waiving the other or
may foreclose under both.
(e)
Substitute Trustee
. Trustee may resign by an instrument in writing addressed to
Lender, or Trustee may be removed at any time with or without cause by an instrument in writing
executed by Lender. In case of the death, resignation, removal or disqualification of Trustee, or
if for any reason Lender shall deem it desirable to appoint a substitute or successor trustee to
act instead of the herein named trustee or any substitute or successor trustee, then Lender shall
have the right and is hereby authorized and empowered to appoint a successor trustee, or a
substitute trustee, without other formality than appointment and designation in writing executed by
Lender, and the authority hereby conferred shall extend to the appointment of other successor and
substitute trustees successively until the Debt secured hereby has been paid in full, or until the
Property is fully and finally sold hereunder. In the event that the Debt is owned by more than one
person or entity, the holder or holders of not less than a majority in amount of such indebtedness
shall have the right and authority to make the appointment of a successor or substitute trustee as
provided for in the preceding sentence or to remove Trustee as provided in the first sentence of
this Section 18.37(e). Such appointment and designation by Lender, or by the holder or holders of
not less than a majority of the Debt secured hereby, shall be full evidence of the right and
authority to make the same and of all facts therein recited. If Lender is a corporation or
association or trust and such appointment is executed in its behalf by an officer or trustee of
such corporation or association or trust, 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 or association or trust. Upon the making
of any such appointment and designation, all of the estate and title of Trustee in the Property
shall vest in the named successor or substitute trustee, and it shall thereupon succeed to and
shall hold, possess and execute, all of the rights, powers, privileges, immunities and duties
herein conferred upon Trustee; but, nevertheless, upon the written request of Lender or of the
successor or substitute trustee, the trustee ceasing to act shall execute and deliver an instrument
transferring to such successor or substitute trustee all of the estate and title in the Property of
the trustee so ceasing to act, together with all the rights, powers, privileges, immunities and
duties herein conferred upon the Trustee, and shall duly assign,
- 114 -
transfer and deliver any of the properties and moneys held by said trustee hereunder to said
successor or substitute trustee. All references herein to “
Trustee
” shall be deemed to
refer to Trustee (including any successor or substitute appointed and designated as herein
provided) from time to time acting hereunder.
(f)
No Liability of Trustee
. TRUSTEE SHALL NOT BE LIABLE FOR ANY ERROR OF JUDGMENT OR
ACT DONE BY TRUSTEE IN GOOD FAITH, OR BE OTHERWISE RESPONSIBLE OR ACCOUNTABLE UNDER ANY
CIRCUMSTANCES WHATSOEVER (INCLUDING TRUSTEE’S NEGLIGENCE), EXCEPT FOR TRUSTEE’S GROSS NEGLIGENCE OR
MISCONDUCT. Trustee shall have the right to rely on any instrument, document or signature
authorizing or supporting any action taken or proposed to be taken by it hereunder, believed by it
in good faith to be genuine. All moneys received by Trustee shall, until used or applied as herein
provided, be held in trust for the purposes for which they were received, but need not be
segregated in any manner from any other moneys (except to the extent required by law), and Trustee
shall be under no liability for interest on any moneys received by it hereunder. Trustee hereby
ratifies and confirms any and all acts which the herein-named Trustee or its successor or
successors, substitute or substitutes, in this trust, shall do lawfully by virtue hereof.
(g)
Judgment on Environmental Provision
.
(i)
Judgment Sought
. Pursuant to California Code of Civil Procedure §736,
Lender may bring an action (as such term is defined in California Code of Civil Procedure
§22) for breach of contract against Borrower for breach of any provision contained in
Article XVI hereof (the “
Environmental Provision
”), for the recovery of the
Environmental Damages listed in Section (ii) hereof, and for the enforcement of the
Environmental Provision, whether the Environmental Provision is or was contained in or
secured by this Security Instrument and whether or not this Security Instrument has been
discharged, reconveyed or foreclosed upon. Notwithstanding the foregoing, no injunction for
the enforcement of an Environmental Provision may be issued after (x) satisfaction of the
Debt or (y) transfer of Borrower’s right, title and interest in and to the “
Real
Property Security
” (as such term is defined in California Code of Civil Procedure
§736(f)(4) in a bona fide transaction to an unaffiliated third party for fair value.
(ii)
Damages
. The damages that Lender may recover pursuant to Section (i) above shall be
limited to reimbursement or indemnification of the following (collectively, the “
Environmental
Damages
”): (w) if not pursuant to an order of any Governmental Authority relating to the
cleanup, remediation, or other response action required by any applicable rule promulgated by a
Governmental Authority, those costs relating to a reasonable and good faith cleanup, remediation,
or other response action concerning a Release (such term shall have the meaning ascribed to it
under California Civil Code §2929.5 and under California Civil Code of Procedure §726.5 and §736)
or threatened release of Hazardous Materials which is anticipated by the Environmental Provision;
(x) if pursuant to an order of any Governmental Authority which is anticipated by the Environmental
Provision, all amounts reasonably advanced in good faith by Lender in connection therewith,
provided that Lender negotiated, or attempted to negotiate, in good faith to minimize the amounts
it was required to advance under the order; (y)
- 115 -
indemnification against all liabilities of Lender to any third party relating to the
breach and not arising from acts, omissions or other conduct which occur after Borrower is
no longer an owner or operator of the “Real Property Security” in accordance with the
standards set forth in California Code of Civil Procedure §726.5(d) (for the purposes of
this Section (ii), the term “owner or operator” means those persons described in §101(20)(A)
of CERCLA); and (z) attorneys’ fees and costs incurred by Lender relating to the breach.
Notwithstanding the foregoing, the Environmental Damages recoverable by Lender shall not
include (w) any part of the principal amount or accrued interest of the Debt, except for any
amounts advanced by Lender to cure or mitigate the breach of any Environmental Provision
that is added to the principal amount, and contractual interest thereon, or (x) amounts
which relate to a Release which was knowingly permitted, caused or contributed to by Lender
or any affiliate or agent of Lender.
(h)
Waiver of Lien
. Pursuant to the terms of California Code of Civil Procedure
§726.5, Lender may (i) waive its lien against (A) any parcel of “Real Property Security” that is
“environmentally impaired” (as such term is defined in California Code of Civil Procedure
§726.5(e)(3)), or is an “affected parcel” (as such term is defined in California Code Civil
Procedure §726.5(e)(1)), and (B) all or any portion of the personal property attached to such
parcels and (ii) exercise (A) the rights and remedies of an unsecured creditor including reduction
of its claim against Borrower to judgment and (B) any other rights and remedies permitted by law.
As between Lender and Borrower, for purposes of California Code of Civil Procedure §726.5, Borrower
shall have the burden of proving that (1) the Release or threatened Release was not (x) knowingly
or negligently caused or contributed to, or (y) knowingly or willfully permitted or acquiesced to,
by Borrower or any related party (as such term is defined in California Code of Civil Procedure
§726.5(e)(6)), or any affiliate or agent of Borrower or any related party, and (2) in conjunction
with the making, renewal or modification of the Debt, (x) neither Borrower, any related party nor
any affiliate or agent of Borrower or any related party had actual knowledge or notice of the
Release or threatened Release of any Hazardous Materials, or (y) if such a person had knowledge or
notice of the Release or threatened Release, Borrower made written disclosure thereof to Lender
after Lender’s written request for information concerning the environmental condition of the Real
Property Security (provided that Lender shall be deemed to have knowledge of any matter disclosed
in the Environmental Reports), or (z) Lender otherwise obtained actual knowledge thereof prior to
the making, renewal or modification of the Debt.
(i)
Reconveyance Upon Payment of Debt
. In the event that Borrower shall cause to be
paid the entire Debt and perform in full all of its obligations under the Loan Documents, Lender
shall release and shall cause Trustee to release the Property from the lien of this Security
Instrument and to reconvey (without warranty by or recourse against Trustee or Lender) the Property
to Borrower. Upon Trustee’s receipt of Lender’s request for reconveyance, Trustee shall reconvey,
without warranty, the Property or that portion held. When the Property has been fully reconveyed,
the last reconveyance will operate as a reassignment of all future Rents to the Person legally
entitled.
(j)
Environmental Addendum
.
- 116 -
(i) Lender shall have the right, but not the obligation, to enter upon the Property, from time
to time upon prior reasonable notice, and in its sole and absolute discretion, to conduct
inspections of the Property and the activities conducted thereon to determine the compliance with
all Environmental Statutes, the presence of Hazardous Materials and the existence of any potential
damages as a result of the condition of the Property in the event that Lender reasonably believes
that there are Hazardous Materials on the Property that are not in compliance with applicable
Environmental Requirements. In furtherance thereof, Borrower hereby grants to Lender and its
agents, employees and qualified consultants and contractors, the right to enter upon the Property
and to perform such tests on the Property (including invasive tests) as are reasonably necessary.
Lender shall conduct such inspections and tests at reasonable times, shall use its best efforts to
minimize interference with the operation of the Property and agrees to restore the condition of the
Property, but Lender shall not be liable for any interference caused thereby unless due to the
gross negligence or willful misconduct or omission of Lender. In furtherance of the purposes
above, without limitation of any of Lender’s other rights, Lender may: (x) obtain a court order to
enforce Lender’s right to enter and inspect the Property under California Civil Code §2929.5, to
which the reasonable, good faith decision of Lender as to whether there exists any Hazardous
Materials on or about the Property in violation of any Environmental Statutes, or a breach by
Borrower of any environmental provision of this Security Instrument or any of the other Loan
Documents, will be deemed reasonable and conclusive as between the parties; and (y) have a receiver
be appointed under California Code of Civil Procedure §564 to enforce Lender’s right to enter and
inspect the Property for the purpose set forth above.
(ii) Borrower and Lender agree that: (x) this paragraph is intended as Lender’s
written request for information and Borrower’s written response concerning the environmental
condition of the Property as provided in California Code of Civil Procedure §726.5; and (y)
each representation, warranty or covenant, or indemnity made by Borrower in this Security
Instrument or in the other Loan Documents that relates to the environmental condition of the
Property is intended by Borrower and Lender to be an “environmental provision” for the
purposes of California Code of Civil Procedure §736 and will survive the payment of the Debt
and the termination or expiration of this Security Instrument and will not be affected by
Lender’s acquisition of any interest in the Property, whether by full credit bid at
foreclosure, deed in lieu of that, or otherwise. If there is any transfer of any portion of
Borrower’s interest in the Property, any successor-in-interest to Borrower agrees by its
succession to that interest that the written request made pursuant to this paragraph will be
deemed remade to the successor-in-interest without any further or additional action on the
part of Lender and that by assuming the Debt secured by this Security Instrument or by
accepting the interest of Borrower subject to the lien of this Security Instrument, the
successor remakes each of the representations and warranties in this Security Instrument and
agrees to be bound by each covenant in this Security Instrument, including but not limited
to any indemnity provision.
(k)
Financing Statement
. This Security Instrument shall also constitute a financing
statement pursuant to UCC §9502, and shall be filed as a fixture filing in the Official Records of
the County Recorder of the County in which the Property is located and covers goods which are or
are to become fixtures on the Property.
- 117 -
(l)
Border Zone Property
. Borrower represents and warrants that the Property has not
been designated as Border Zone Property under the provisions of California Health and Safety Code
§25220
et seq.
or any regulation adopted in accordance therewith and there has been no
occurrence or condition on any real property adjoining or in the vicinity of the Property that is
reasonably likely to cause the Property or any part thereof to be designated as Border Zone
Property.
(m)
Waiver of Statutory Regulation
. By initialing below, Borrower waives any right
under California Civil Code §2954.10 or otherwise to prepay the Note, in whole or in part, without
a Prepayment Charge (as described in Section 13.03 and Article XV hereof). Borrower acknowledges
that prepayment of the Note may result in Lender’s incurring additional losses, costs, expenses,
and liabilities, including, but not limited to, lost revenue and lost profits. Borrower therefore
agrees to pay any prepayment charges on the terms and conditions provided herein, including,
without limitation, upon any Event of Default attributable to the transfer or conveyance of any
right, title, or interest in the Property to the extent the same would be due pursuant to Section
13.03 or Article XV hereof.
BORROWER AGREES THAT LENDER’S WILLINGNESS TO MAKE THE LOAN AT THE INTEREST RATE FOR THE TERM
SET FORTH HEREIN CONSTITUTES ADEQUATE CONSIDERATION, GIVEN INDIVIDUAL WEIGHT BY BORROWER, FOR THIS
WAIVER AND AGREEMENT.
[Borrower’s Initials]
- 118 -
IN WITNESS WHEREOF, Borrower has duly executed this Security Instrument the day and year first
above written.
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Borrower’s Organizational
Identification Number: 199822200005
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MARITIME HOTEL ASSOCIATES, L.P.
, a California
limited partnership
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By:
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Hyde Street Hospitality, LLC, a Delaware limited
liability company, its general partner
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By:
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Kimpton Group Holding LLC, a Delaware limited liability
company, its sole member
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By:
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/s/ Gregory J. Wolkom
Name: Gregory J. Wolkom
Title: CFO
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Acknowledgment
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State Of California
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)
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) ss:
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County Of San Francisco
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)
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On
February, 9, 2007, before me, Jessie Holland
personally appeared Gregory Wolkom, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument
and acknowledged to me that he executed the same in his authorized capacity, and that by his
signature on the instrument the person, or the entity upon behalf of which the person acted,
executed the instrument.
WITNESS my hand and official seal.
Signature
/s/ Jessie Holland
(seal)
EXHIBIT A
Legal Description of Premises
EXHIBIT B
SUMMARY OF RESERVES
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Monthly Installment
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Reserve Items
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Initial Deposit Amount
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Amount
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Basic Carrying Costs
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•
Taxes
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$0
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$48,500
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•
Insurance Premiums
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$0
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$TBD
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•
Ground Rents
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$0
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$TBD
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Initial Engineering Deposits
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Not Applicable
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•
Immediate Repairs
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$0
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•
Environmental Remediation
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$0
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Recurring Replacement Reserve
Monthly Installment
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Not Applicable
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$70,983.36
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EXHIBIT D
Required Engineering Work
None.
EXHIBIT E
Form of Direction Letter
[Letterhead of Landlord]
[Name and Address of tenant]
Re: [Address of Premises]
Dear tenant:
You are hereby directed to make all future payments of rent and other sums due to Landlord
under the Lease payable as follows:
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Payable To:
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Borrower and Wachovia Bank, National Association, as secured party
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ABA #
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Account #
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Address:
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Please take particular care in making the check payable only to the above-mentioned names
because only checks made payable to the referenced names will be credited against sums due by you
to landlord. Until otherwise advised in writing by Landlord and the above-mentioned bank (or its
successor), you should continue to make your payments for rent and other sums as directed by the
terms of this letter.
Thank you in advance for your cooperation with this change in payment procedures.
EXHIBIT F
CREDIT CARD PAYMENT DIRECTION LETTER
[Date]
Re:
(the “
Company
”)
Gentlemen:
_____________________________ (the “
Processor
”) has entered into arrangements pursuant
to which Processor acts as credit card processing service provider with respect to certain credit
card and debit card sales by Company and makes payments to Company in respect of such sales as set
forth in the [Merchant Services Bankcard Agreement], dated _______________ between Processor and
Company (and together with any replacement agreement thereto, referred to herein as the “
Card
Processing Agreement
”).
Please be advised that Company has entered or is about to enter into financing arrangements
with _____________________________ (the “
Lender
”) pursuant to which Lender may from time to
time make loans and advances and provide other financial accommodations to Company, secured by,
among other things, all of Company’s right, title and interest in and to all deposit and other bank
accounts and proceeds of the foregoing, including all amounts at any time payable by Processor to
Company pursuant to the Card Processing Agreement or otherwise.
Notwithstanding anything to the contrary contained in the Card Processing Agreement or any
prior instructions to Processor, unless and until Processor receives written instructions from
Lender to the contrary, effective as of the day after the date of Processor’s written
acknowledgement below all amounts payable by Processor to Company pursuant to the Card Processing
Agreement or otherwise shall be sent by federal funds wire transfer or electronic depository
transfer to the following bank account of Lender:
________________ (the “
Bank
”)
ABA Number: _____________________
For the Account of: _____________________________
its successors and assigns
Account Number: ___________________
Attn: __________________, Fax: __________________
___________________________
In the event Processor at any time receives any other instructions from Lender with respect to
the disposition of amounts payable by or through Processor to Company pursuant to the Card
Processing Agreement or otherwise, Processor is hereby irrevocably authorized and directed to
follow such instructions, without inquiry as to Lender’s right or authority to give such
instructions. Company and Lender acknowledge that (a) any instructions from Lender to Processor to
change the account to which funds must be sent by a vice president or other officer of Lender to
_____________________________; (b) such instructions shall only provide for funds to be sent to a
single deposit account of Lender, in a manner with respect to the nature of the funds transfer and
at times consistent with the payment practices of Processor as then in effect, unless otherwise
agreed by Processor. The Company agrees to hold harmless Processor for any action taken by
Processor in accordance with the terms of this letter and the Card Processing Agreement; and Lender
shall complete such account change forms as Processor may require. The Company hereby acknowledges
that the account set forth above is owned by Company but is under the control of Lender.
Lender and Company hereby confirm and agree as follows: (i) the Card Processing Agreement is
in full force and effect and (ii) this Payment Direction Letter does not prohibit or limit any
rights Processor possesses under the Card Processing Agreement, including but not limited to
Processor’s right to debit, offset or charge back any amount owing to Processor under the Card
Processing Agreement or any replacement or renewal thereof, against funds sent to or to be sent to
the above referenced bank account.
This Payment Direction Letter cannot be changed, modified, or terminated, except by written
agreement signed by Lender, Company and Processor. Processor agrees to use reasonable efforts to
ensure payment instructions are followed, but Lender and Company herein acknowledge that Processor
shall incur no liability for changes or modifications wherein Processor has received instructions
from Company or Lender to change deposit instructions. The terms of this Payment Direction Letter
shall be governed by the laws of the State of New York.
Please acknowledge your receipt of, and agreement to, the foregoing by signing in the space
provided below.
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Very truly yours,
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_________________________ (the “
Company
”)
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By:
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Name:
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Title:
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Date:
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- 2 -
EXHIBIT G
GROUND LEASE
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1.
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Historic Lease (HL-SAFR001-98), effective as of October 16, 2000, by and between Ground
Lessor and Borrower.
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2.
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First Amendment to Historic Lease (HL-SAFR001-98), effective as of January 16, 2001, by and
between Ground Lessor and Borrower.
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3.
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Second Amendment to Historic Lease (HL-SAFR001-98), effective as of January 18, 2001, by and
between Ground Lessor and Borrower.
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4.
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Third Amendment to Historic Lease (HL-SAFR001-98), effective as of January 22, 2001, by and
between Ground Lessor and Borrower.
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5.
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Fourth Amendment to Historic Lease (HL-SAFR001-98), effective as of January 24, 2001, by and
between Ground Lessor and Borrower.
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6.
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Fifth Amendment to Historic Lease (HL-SAFR001-98), effective as of January 29, 2001, by and
between Ground Lessor and Borrower.
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7.
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Sixth Amendment to Historic Lease (HL-SAFR001-98), effective as of February 1, 2001, by and
between Ground Lessor and Borrower.
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8.
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Seventh Amendment to Historic Lease (HL-SAFR001-98) effective as of 12:00 (noon) Pacific
Standard Time February 6, 2001, by and between Ground Lessor and Borrower.
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9.
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Eighth Amendment to Historic Lease (HL-SAFR001-98), effective as of August 10, 2001, by and
between Ground Lessor and Borrower.
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10
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Ninth Amendment to Historic Lease (HL-SAFR001-98) effective as of May 14, 2004, by and
between Ground Lessor and Borrower.
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INDEX
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PAGE
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ARTICLE I: DEFINITIONS
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5
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Section 1.01. Certain Definitions.
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5
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ARTICLE II: REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER
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24
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Section 2.01. Payment of Debt. Borrower will pay the Debt
at the time and in the manner provided in the Note and the
other Loan Documents, all in lawful money of the United
States of America in immediately available funds.
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24
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Section 2.02. Representations, Warranties and Covenants of
Borrower. Borrower represents and warrants to and covenants
with Lender:
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24
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Section 2.03. Further Acts, etc. Borrower will, at the
cost of Borrower, and without expense to Lender, do,
execute, acknowledge and deliver all and every such further
acts, deeds, conveyances, mortgages or deeds of trust, as
applicable, assignments, notices of assignments, transfers
and assurances as Lender or Trustee shall, from time to
time, reasonably require for the better assuring, conveying,
assigning, transferring, and confirming unto Lender and
Trustee the property and rights hereby mortgaged, given,
granted, bargained, sold, alienated, enfeoffed, conveyed,
confirmed, pledged, assigned and hypothecated, or which
Borrower may be or may hereafter become bound to convey or
assign to Lender and Trustee, or for carrying out or
facilitating the performance of the terms of this Security
Instrument or for filing, registering or recording this
Security Instrument and, 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 comparable security instruments to
evidence more effectively the lien hereof upon the Property.
Borrower grants to Lender an irrevocable power of attorney
coupled with an interest for the purpose of protecting,
perfecting, preserving and realizing upon the interests
granted pursuant to this Security Instrument and to effect
the intent hereof, all as fully and effectually as Borrower
might or could do; and Borrower hereby ratifies all that
Lender shall lawfully do or cause to be done by virtue
hereof; provided, however, that Lender shall not exercise
such power of attorney unless and until Borrower fails to
take the required action within the five (5) Business Day
time period stated above unless the failure to so exercise,
could, in Lender’s reasonable judgment, result in a Material
Adverse Effect. Upon (a) 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, (b) receipt of an indemnity of Lender
related to losses resulting solely from the issuance of a
replacement note or other applicable Loan Document and (c)
in the case of any such mutilation, upon surrender and
cancellation of such Note or other
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applicable Loan Document,
Borrower will issue, in lieu thereof, a replacement Note or
other applicable 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.
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Section 2.04. Recording of Security Instrument, etc.
Borrower forthwith upon the execution and delivery of this
Security Instrument and thereafter, from time to time, will
cause this Security Instrument, and any security instrument
creating a lien or security interest or evidencing the lien
hereof upon the Property and each instrument of further
assurance to be filed, registered or recorded in such manner
and in such places as may be required by any present or
future law in order to publish notice of and fully protect
the lien or security interest hereof upon, and the interest
of Lender in, the Property. Borrower will pay all filing,
registration or recording fees, and all expenses incident to
the preparation, execution and acknowledgment of this
Security Instrument, any mortgage or deed of trust, as
applicable, supplemental hereto, any security instrument
with respect to the Property and any instrument of further
assurance, and all federal, state, county and municipal,
taxes, duties, imposts, assessments and charges arising out
of or in connection with the execution and delivery of this
Security Instrument, any mortgage or deed of trust, as
applicable, supplemental hereto, any security instrument
with respect to the Property or any instrument of further
assurance, except where prohibited by law to do so, in which
event Lender may declare the Debt to be immediately due and
payable. Borrower shall hold harmless and indemnify Lender
and Trustee, and their successors and assigns, against any
liability incurred as a result of the imposition of any tax
on the making and recording of this Security Instrument.
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Section 2.05. Representations, Warranties and Covenants
Relating to the Property. Borrower represents and warrants
to and covenants with Lender with respect to the Property as
follows:
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Section 2.06. Removal of Lien. (a) Borrower shall, at its
expense, maintain this Security Instrument as a first lien
on the Property and shall keep the Property free and clear
of all liens and encumbrances of any kind and nature other
than the Permitted Encumbrances. Borrower shall, within ten
(10) days following the filing thereof, promptly discharge
of record, by bond or otherwise, any such liens and,
promptly upon request by Lender, shall deliver to Lender
evidence reasonably satisfactory to Lender of the discharge
thereof.
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Section 2.07. Cost of Defending and Upholding this Security
Instrument Lien. If any action or proceeding is commenced
to which Lender or Trustee is made a party relating to the
Loan Documents and/or the Property or Lender’s or Trustee’s
interest therein or in which it becomes necessary to defend
or uphold the lien of this Security Instrument or any other
Loan Document, Borrower shall, on written demand, reimburse
Lender and/or Trustee, as applicable, for all expenses
(including, without limitation, reasonable attorneys’ fees
and disbursements) incurred by Lender and/or Trustee, as
applicable, in connection therewith, and
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such sum, together
with interest thereon at the Default Rate from and after
such demand until fully paid, shall constitute a part of the
Debt.
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Section 2.08. Use of the Property. Borrower will use, or
cause to be used, the Property for such use as is permitted
pursuant to the Ground Lease and applicable Legal
Requirements including, without limitation, under the
certificate of occupancy applicable to the Property, and
which is required by the Loan Documents. Borrower shall not
suffer or permit the Property or any portion thereof to be
used by the public, any tenant, or any Person not subject to
a Lease, in a manner as is reasonably likely to impair
Borrower’s title to the Property, or in such manner as may
give rise to a claim or claims of adverse usage or adverse
possession by the public, or of implied dedication of the
Property or any part thereof.
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Section 2.09. Financial Reports. (a) Borrower will keep
and maintain or will cause to be kept and maintained on a
Fiscal Year basis, in accordance with GAAP and The Uniform
System of Accounts (or such other accounting basis
reasonably acceptable to Lender) consistently applied,
proper and accurate books, tax returns, records and accounts
reflecting (i) all of the financial affairs of Borrower and
Guarantor and (ii) all items of income and expense in
connection with the operation of the Property or in
connection with any services, equipment or furnishings
provided in connection with the operation thereof, whether
such income or expense may be realized by Borrower or by any
other Person whatsoever, excepting lessees unrelated to and
unaffiliated with Borrower who have leased from Borrower
portions of the Premises for the purpose of occupying the
same. Lender shall have the right from time to time at all
times during normal business hours upon reasonable notice to
examine such books, tax returns, records and accounts at the
office of Borrower or other Person maintaining such books,
tax returns, records and accounts and to make such copies or
extracts thereof as Lender shall desire, provided that (i)
Borrower shall have a right to have a representative present
at all times and (ii) Lender shall do so in a manner so as
to avoid disruption to the operation of the Hotel or to
Manager’s management thereof. After the occurrence and
during the continuation of an Event of Default, Borrower
shall pay any reasonable costs and expenses incurred by
Lender to examine Borrower’s and Guarantor’s accounting
records with respect to the Property, as Lender shall
determine to be necessary or appropriate in the protection
of Lender’s interest.
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Section 2.10. Litigation. Borrower will give prompt
written notice to Lender of any litigation or governmental
proceedings pending or threatened (in writing) against
Borrower which could reasonably have a Material Adverse
Effect.
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Section 2.11. Updates of Representations. Borrower shall
deliver to Lender within ten (10) Business Days of the
request of Lender an Officer’s Certificate updating all of
the representations and warranties contained in this
Security Instrument and the other Loan Documents and
certifying that all of the representations and warranties
contained in this Security Instrument and the other
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Loan
Documents, as updated pursuant to such Officer’s
Certificate, are true, accurate and complete as of the date
of such Officer’s Certificate or shall set forth the
exceptions to representations and/or warranties in
reasonable detail, as applicable, and, upon Lender’s request
for further information with respect to such exceptions,
shall provide Lender such additional information as Lender
may reasonably request. Notwithstanding the foregoing,
provided that no Event of Default has occurred and is
continuing, Borrower shall not be required to deliver the
foregoing Officer’s Certificate more than three (3) times
during the term of the Loan and, subsequent to a
Securitization, in no event more than one (1) time in any
calendar year.
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Section 2.12. Ground Lease. (a) Borrower will comply in
all material respects with the terms and conditions of the
Ground Lease. Borrower will not do or permit anything to be
done, the doing of which, or refrain from doing anything,
the omission of which, will impair or tend to impair the
security of the Premises under the Ground Lease or will be
grounds for declaring a forfeiture of the Ground Lease.
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ARTICLE III: INSURANCE AND CASUALTY RESTORATION
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Section 3.01. Insurance Coverage. Borrower shall, at its
expense, maintain the following insurance coverages with
respect to the Property during the term of this Security
Instrument:
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Section 3.02. Policy Terms. (a) All insurance required by
this Article III shall be in the form (other than with
respect to Sections 3.01(a)(vi) and (vii) above when
insurance in those two sub-sections is placed with a
governmental agency or instrumentality on such agency’s
forms) and amount and with deductibles as, from time to
time, shall be reasonably acceptable to Lender, under valid
and enforceable policies issued by financially responsible
insurers authorized to do business in the State where the
Property is located, with a general policyholder’s service
rating of not less than A and a financial rating of not less
than XIII as rated in the most currently available Best’s
Insurance Reports (or the equivalent, if such rating system
shall hereafter be altered or replaced) and shall have a
claims paying ability rating and/or financial strength
rating, as applicable, of not less than “AA” (or its
equivalent), or such lower claims paying ability rating
and/or financial strength rating, as applicable, as Lender
shall, in its sole and absolute discretion, consent to, from
a Rating Agency (one of which after a Securitization in
which Standard & Poor’s rates any securities issued in
connection with such Securitization, shall be Standard &
Poor’s). Originals or certified copies of all insurance
policies shall be delivered to and held by Lender. All such
policies (except policies for worker’s compensation) shall
name Lender, its successors and/or assigns as an additional
named insured, with respect to the insurance required
pursuant to Section 3.01(a)(iii) above, shall provide for
loss payable to Lender, its successors and/or assigns and
shall contain (or have attached): (i) standard
“non-contributory mortgagee” endorsement or its equivalent
relating, inter alia, to recovery by Lender notwithstanding
the negligent or willful acts or
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omissions of Borrower; (ii)
a waiver of subrogation endorsement as to Lender; (iii) an
endorsement indicating that neither Lender nor Borrower
shall be or be deemed to be a co-insurer with respect to any
casualty risk insured by such policies and shall provide for
a deductible per loss of an amount not more than $10,000,
and (iv) a provision that such policies shall not be
canceled, terminated, denied renewal or amended, including,
without limitation, any amendment reducing the scope or
limits of coverage, without at least thirty (30) days’ prior
written notice to Lender in each instance. Not less than
thirty (30) days, or, with respect to non-payment of
premiums, ten (10) days, prior to the expiration dates of
the insurance policies obtained pursuant to this Security
Instrument, originals or certified copies of renewals of
such policies (or certificates evidencing such renewals)
bearing notations evidencing the payment of premiums or
accompanied by other reasonable evidence of such payment
(which premiums shall not be paid by Borrower through or by
any financing arrangement which would entitle an insurer to
terminate a policy unless Borrower has on deposit in the
Basic Carrying Costs Escrow Account an amount, as reasonably
determined by Lender, equal to not less than one-fourth of
the annual insurance premium with respect to the insurance
required by this Article III) shall be delivered by Borrower
to Lender. Borrower shall not carry separate insurance,
concurrent in kind or form or contributing in the event of
loss, with any insurance required under this Article III.
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Section 3.03. Assignment of Policies. (a) Borrower hereby
assigns to Lender the proceeds of all insurance (other than
worker’s compensation and liability insurance) obtained
pursuant to this Security Instrument, all of which proceeds
shall be payable to Lender as collateral and further
security for the payment of the Debt and the performance of
Borrower’s obligations hereunder and under the other Loan
Documents, and Borrower hereby authorizes and directs the
issuer of any such insurance to make payment of such
proceeds directly to Lender. Except as otherwise expressly
provided in Section 3.04 or elsewhere in this Article III,
Lender shall have the option, in its discretion, and without
regard to the adequacy of its security, to apply all or any
part of the proceeds it may receive pursuant to this Article
in such manner as Lender may elect to any one or more of the
following: (i) the payment of the Debt, whether or not then
due, in any proportion or priority as Lender, in its
discretion, may elect, (ii) the repair or restoration of the
Property, (iii) the cure of any Default or (iv) the
reimbursement of the costs and expenses of Lender incurred
pursuant to the terms hereof in connection with the recovery
of the Insurance Proceeds. Nothing herein contained shall
be deemed to excuse Borrower from repairing or maintaining
the Property as provided in this Security Instrument or
restoring all damage or destruction to the Property,
regardless of the sufficiency of the Insurance Proceeds, and
the application or release by Lender of any Insurance
Proceeds shall not cure or waive any Default or notice of
Default.
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Section 3.04. Casualty Restoration. (a) (i) In the event
of any damage to or destruction of the Property, Borrower
shall give prompt written notice to Lender (which notice
shall set forth Borrower’s good faith estimate of the cost of
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repairing or restoring such damage or destruction, or if
Borrower cannot reasonably estimate the anticipated cost of
restoration, Borrower shall nonetheless give Lender prompt
notice of the occurrence of such damage or destruction, and
will diligently proceed to obtain estimates to enable
Borrower to quantify the anticipated cost and time required
for such restoration, whereupon Borrower shall promptly
notify Lender of such good faith estimate) and, provided
that restoration does not violate any Legal Requirements,
Borrower shall promptly commence and diligently prosecute to
completion the repair, restoration or rebuilding of the
Property so damaged or destroyed to a condition such that
the Property shall be at least equal in value to that
immediately prior to the damage to the extent practicable,
in full compliance with all Legal Requirements and the
provisions of all Leases, and in accordance with Section
3.04(b) below. Such repair, restoration or rebuilding of
the Property are sometimes hereinafter collectively referred
to as the “
Work
”.
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Section 3.05. Compliance with Insurance Requirements.
Borrower promptly shall comply with, and shall cause the
Property to comply with, all Insurance Requirements, even if
such compliance requires structural changes or improvements
or would result in interference with the use or enjoyment of
the Property or any portion thereof; provided, however,
Borrower shall have a right to contest in good faith and
with diligence such Insurance Requirements provided (a) no
Event of Default shall exist during such contest and such
contest shall not subject the Property or any portion
thereof to any lien or affect the priority of the lien of
this Security Instrument, (b) failure to comply with such
Insurance Requirements will not subject Lender, Trustee or
any of their agents, employees, officers or directors to any
civil or criminal liability, (c) such contest will not cause
any reduction in insurance coverage then existing on the
Property, (d) such contest shall not affect the ownership,
use or occupancy of the Property, (e) the Property or any
part thereof or any interest therein shall not be in any
danger of being sold, forfeited or lost by reason of such
contest by Borrower, (f) Borrower has given Lender prompt
notice of such contest and, upon request by Lender from time
to time, notice of the status of such contest by Borrower
and/or information of the continuing satisfaction of the
conditions set forth in clauses (a) through (e) of this
Section 3.05, (g) upon a final determination of such
contest, Borrower shall promptly comply with the
requirements thereof, and (h) prior to and during such
contest, Borrower shall furnish to Lender security
satisfactory to Lender, in its reasonable discretion,
against loss or injury by reason of such contest or the
non-compliance with such Insurance Requirement (and if such
security is cash, Lender shall deposit the same in an
interest-bearing account and interest accrued thereon, if
any, shall be deemed to constitute a part of such security
for purposes of this Security Instrument, but Lender (i)
makes no representation or warranty as to the rate or amount
of interest, if any, which may accrue thereon and shall have
no liability in connection therewith and (ii) shall not be
deemed to be a trustee or fiduciary with respect to its
receipt of any such security and any such security may be
commingled with other monies of Lender). If Borrower shall
use the Property or any portion thereof in any manner which
permits the insurer to cancel any insurance required to be
provided hereunder, Borrower immediately shall
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obtain a
substitute policy which shall satisfy the requirements of
this Security Instrument and which shall be effective on or
prior to the date on which any such other insurance policy
shall be canceled. Borrower shall not by any action or
omission invalidate any insurance policy required to be
carried hereunder unless such policy is replaced as
aforesaid, or materially increase the premiums on any such
policy above the normal premium charged for such policy.
Borrower shall cooperate with Lender in obtaining for Lender
the benefits of any Insurance Proceeds lawfully or equitably
payable to Lender in connection with the transaction
contemplated hereby.
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Section 3.06. Event of Default During Restoration.
Notwithstanding anything to the contrary contained in this
Security Instrument including, without limitation, the
provisions of this Article III, if, at the time of any
casualty affecting the Property or any part thereof, or at
any time during any Work, or at any time that Lender is
holding or is entitled to receive any Insurance Proceeds
pursuant to this Security Instrument, either a Default of
which Borrower has been given notice or an Event of Default
exists and is continuing, Lender shall then have no
obligation to make such proceeds available for Work (unless,
provided no Event of Default exists, the disbursement of
such Insurance Proceeds will cure the Default, in which
event Lender shall disburse Insurance Proceeds for Work) and
Lender shall have the right and option, to be exercised in
its sole and absolute discretion and election, with respect
to the Insurance Proceeds, either to retain and apply such
proceeds in reimbursement for the actual costs, fees and
expenses incurred by Lender in accordance with the terms
hereof in connection with the adjustment of the loss and,
after the occurrence of an Event of Default, any balance
toward payment of the Debt in such priority and proportions
as Lender, in its sole discretion, shall deem proper, or
towards the Work, upon such terms and conditions as Lender
shall determine, or to cure such Event of Default, or to any
one or more of the foregoing as Lender, in its sole and
absolute discretion, may determine. If Lender shall receive
and retain such Insurance Proceeds, the lien of this
Security Instrument shall be reduced only by the amount
thereof received, after reimbursement to Lender of expenses
of collection, and actually applied by Lender in reduction
of the principal sum payable under the Note in accordance
with the Note.
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Section 3.07. Application of Proceeds to Debt Reduction.
(a) No damage to the Property, or any part thereof, by fire
or other casualty whatsoever, whether such damage be partial
or total, shall relieve Borrower from its liability to pay
in full the Debt and to perform its obligations under this
Security Instrument and the other Loan Documents.
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ARTICLE IV: IMPOSITIONS
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Section 4.01. Payment of Impositions, Utilities and Taxes,
etc. Subject to any right to contest pursuant to the terms
of the Loan Documents and Lender’s obligations pursuant to
Article V hereof, Borrower shall pay or cause to be paid all
Impositions at least five (5) days prior to the date upon
which any fine,
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penalty, interest or cost for nonpayment is
imposed, and furnish to Lender, upon request, receipted
bills of the appropriate taxing authority or other
documentation reasonably satisfactory to Lender evidencing
the payment thereof. If Borrower shall fail to pay any
Imposition in accordance with this Section and is not
contesting or causing a contesting of such Imposition in
accordance with Section 4.04 hereof, or if there are
insufficient funds in the Basic Carrying Costs Escrow
Account to pay any Imposition, Lender shall have the right,
but shall not be obligated, to pay that Imposition, and
Borrower shall repay to Lender, on demand, any amount paid
by Lender, with interest thereon at the Default Rate from
the date of the advance thereof to the date of repayment,
and such amount shall constitute a portion of the Debt
secured by this Security Instrument.
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Section 4.02. Deduction from Value. In the event of the
passage after the date of this Security Instrument of any
Legal Requirement deducting from the value of the Property
for the purpose of taxation, any lien thereon or changing in
any way the Legal Requirements now in force for the taxation
of this Security Instrument and/or the Debt for federal,
state or local purposes, or the manner of the operation of
any such taxes so as to adversely affect the interest of
Lender, or imposing any tax or other charge on any Loan
Document, then Borrower will pay such tax, with interest and
penalties thereon, if any, within the statutory period. In
the event the payment of such tax or interest and penalties
by Borrower would be unlawful, or taxable to Lender or
unenforceable or provide the basis for a defense of usury,
then in any such event, Lender shall have the option, by
written notice of not less than thirty (30) days, to declare
the Debt immediately due and payable, with no prepayment fee
or charge of any kind.
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Section 4.03. No Joint Assessment. Borrower shall not
consent to or initiate the joint assessment of the Premises
or the Improvements (a) with any other real property
constituting a separate tax lot and Borrower represents and
covenants that the Premises and the Improvements are and
shall remain a separate tax lot or (b) with any portion of
the Property which may be deemed to constitute personal
property, or any other procedure whereby the lien of any
taxes which may be levied against such personal property
shall be assessed or levied or charged to the Property as a
single lien.
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Section 4.04. Right to Contest. Borrower shall have the
right, after prior notice to Lender, at its sole expense, to
contest by appropriate legal proceedings diligently
conducted in good faith, without cost or expense to Lender
or any of its agents, employees, officers or directors, the
validity, amount or application of any Imposition or any
charge described in Section 4.01, provided that (a) no Event
of Default shall exist during such proceedings and such
contest shall not (unless Borrower shall comply with clause
(d) of this Section 4.04) subject the Property or any
portion thereof to any lien or affect the priority of the
lien of this Security Instrument, (b) failure to pay such
Imposition or charge will not subject Lender, Trustee or any
of their agents, employees, officers or directors to any
civil or criminal liability, (c) the contest suspends
enforcement of the Imposition or charge (unless Borrower
first pays the Imposition or charge), (d) prior to and
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during such contest, Borrower shall furnish to Lender
security satisfactory to Lender, in its reasonable
discretion, against loss or injury by reason of such contest
or the non-payment of such Imposition or charge (and if such
security is cash, Lender may deposit the same in an
interest-bearing account and interest accrued thereon, if
any, shall be deemed to constitute a part of such security
for purposes of this Security Instrument, but Lender (i)
makes no representation or warranty as to the rate or amount
of interest, if any, which may accrue thereon and shall have
no liability in connection therewith and (ii) shall not be
deemed to be a trustee or fiduciary with respect to its
receipt of any such security and any such security may be
commingled with other monies of Lender), (e) such contest
shall not affect the ownership, use or occupancy of the
Property, (f) the Property or any part thereof or any
interest therein shall not be in any danger of being sold,
forfeited or lost by reason of such contest by Borrower, (g)
Borrower has given Lender notice of the commencement of such
contest and upon request by Lender, from time to time,
notice of the status of such contest by Borrower and/or
confirmation of the continuing satisfaction of clauses (a)
through (f) of this Section 4.04, and (h) upon a final
determination of such contest, Borrower shall promptly
comply with the requirements thereof. Upon completion of
any contest, Borrower shall immediately pay the amount due,
if any, and deliver to Lender proof of the completion of the
contest and payment of the amount due, if any, following
which Lender shall return the security, if any, deposited
with Lender pursuant to clause (d) of this Section 4.04.
Borrower shall not pay any Imposition in installments unless
permitted by applicable Legal Requirements, and shall, upon
the request of Lender, deliver copies of all notices and
bills relating to any Imposition or other charge covered by
this Article IV to Lender.
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Section 4.05. No Credits on Account of the Debt. Borrower
will not claim or demand or be entitled to any credit or
credits on account of the Debt for any part of the
Impositions assessed against the Property or any part
thereof and no deduction shall otherwise be made or claimed
from the taxable value of the Property, or any part thereof,
by reason of this Security Instrument or the Debt. In the
event such claim, credit or deduction shall be required by
Legal Requirements, Lender shall have the option, by written
notice of not less than thirty (30) days, to declare the
Debt immediately due and payable, and Borrower hereby agrees
to pay such amounts not later than thirty (30) days after
such notice.
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Section 4.06. Documentary Stamps. If, at any time, the
United States of America, any State or Commonwealth thereof
or any subdivision of any such State shall require revenue
or other stamps to be affixed to the Note, this Security
Instrument or any other Loan Document, or impose any other
tax or charges on the same, Borrower will pay the same, with
interest and penalties thereon, if any.
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ARTICLE V: CENTRAL CASH MANAGEMENT
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Section 5.01. Cash Flow. Borrower hereby acknowledges and
agrees that the Rents (which for the purposes of this
Section 5.01 shall not include security deposits from
tenants under Leases held by Borrower and not applied
towards
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Rent) derived from the Property and Loss Proceeds
shall be utilized to fund the Sub-Accounts. Borrower shall
give each tenant under a Space Lease an irrevocable
direction in the form of Exhibit E attached hereto and made
a part hereof to deliver all rent payments made by tenants
and other payments constituting Rent directly into the Rent
Account. All payments constituting Rent, other than
payments received from tenants under a Lease and payments
made by credit cards, shall be delivered to Manager.
Manager shall collect all of such Rent and shall deposit
such funds, within three (3) Business Days after receipt
thereof in the Rent Account, the name and address of the
bank in which such account is located and the account number
of which to be identified in writing by Manager to Lender.
Borrower shall cause Manager to give to the bank in which
the Rent Account is located an irrevocable written
instruction, in form and substance acceptable to Lender,
that, upon receipt of notice from Lender that an Event of
Default exists (the “
Trigger Notice
”), all funds deposited
in such account shall be automatically transferred through
automated clearing house funds (“
ACH
”) or by Federal wire to
the Central Account prior to 5:00 p.m. (New York City time)
on a daily basis. Provided that the bank in which the Rent
Account is located has not received a Trigger Notice, all
sums on deposit in the Rent Account shall be transferred on
a daily basis to an account designated in writing by
Borrower (the “Borrower Account”). Within two (2) Business
Days of the Closing Date, Borrower shall deliver to Lender a
copy of the irrevocable notice which Borrower delivered to
the bank in which the Rent Account is located pursuant to
the provisions of this Section 5.01, the receipt of which is
acknowledged in writing by such bank. Additionally,
Borrower shall, or shall cause Manager to send to each
respective credit card company or credit card clearing bank
with which Borrower or Manager has entered into merchant’s
agreements (each, a “Credit Card Company”) a direction
letter in the form of Exhibit F annexed hereto and made a
part hereof (the “Credit Card Payment Direction Letter”)
directing such Credit Card Company to make all payments due
in connection with goods or services furnished at or in
connection with the Property by Federal wire or through ACH
directly to the Rent Account. Without the prior written
consent of Lender, neither Borrower nor Manager shall (i)
terminate, amend, revoke or modify any Credit Card Payment
Direction Letter in any manner or (ii) direct or cause any
Credit Card Company to pay any amount in any manner other
than as specifically provided in the related Credit Card
Payment Direction Letter. Lender may elect to change the
financial institution in which the Central Account shall be
maintained; however, Lender shall give Borrower and the bank
in which the Rent Account is located not fewer than five (5)
Business Days’ prior notice of such change. Neither
Borrower nor Manager shall change such bank or the Rent
Account without the prior written consent of Lender, which
shall not be unreasonably withheld, conditioned or delayed.
All fees and charges of the bank(s) in which the Rent
Account and the Central Account are located shall be paid by
Borrower. Promptly following the cure of any Event of
Default which resulted in Lender giving a Trigger Notice,
Lender shall inform the bank holding the Rent Account of the
cure of such Event of Default, and at Borrower’s sole cost
and expense take all such actions and execute and deliver
all such documents
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and instruments as are reasonably
required to restore Borrower’s right to daily withdrawals
from the Rent Account.
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Section 5.02. Establishment of Accounts. Lender has
established the Escrow Accounts and the Central Account in
the name of Lender as secured party and Borrower has
established the Rent Account in the joint names of Lender,
as secured party, and Borrower. The Escrow Accounts, the
Rent Account and the Central Account shall be under the sole
dominion and control of Lender and funds held therein shall
not constitute trust funds. Borrower hereby irrevocably
directs and authorizes Lender to withdraw funds from the
Rent Account and to deposit into and withdraw funds from the
Central Account and the Escrow Accounts, all in accordance
with the terms and conditions of this Security Instrument.
Borrower shall have no right of withdrawal in respect of the
Central Account, the Rent Account or the Escrow Accounts,
except to the extent expressly provided for in this
Agreement, including without limitation as provided for in
Section 5.01. Each transfer of funds to be made hereunder
shall be made only to the extent that funds are on deposit
in the Rent Account, the Central Account or the affected
Sub-Account or Escrow Account, and Lender shall have no
responsibility to make additional funds available in the
event that funds on deposit are insufficient. The Central
Account shall contain the Basic Carrying Costs Sub-Account,
the Debt Service Payment Sub-Account, the Recurring
Replacement Reserve Sub Account, the Management Fee
Sub-Account and the Operations and Maintenance Expense
Sub-Account, each of which accounts shall be Eligible
Accounts or book-entry sub-accounts of an Eligible Account
(each a “Sub-Account” and collectively, the “Sub-Accounts”)
to which certain funds shall be allocated and from which
disbursements shall be made pursuant to the terms of this
Security Instrument. Sums held in the Escrow Accounts may
be commingled with other monies held by Lender.
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Section 5.03. Intentionally Omitted.
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Section 5.04. Servicing Fees. Provided that no Default has
occurred and is continuing, Borrower shall have no
obligation to reimburse Lender for servicing fees incurred
in connection with the ordinary, routine servicing of the
Loan; provided, however, that Borrower shall reimburse
Lender for (a) any and all costs and expenses incurred after
the occurrence of a Default of which Borrower has been given
notice or an Event of Default and (b) as otherwise provided
for in this Security Instrument. Additionally, in the event
that Borrower requests more than one disbursement from an
Escrow Account in any month and Lender, in its sole and
absolute discretion, consents to such disbursement, Borrower
shall pay Lender a disbursement fee in the amount of $250.00
with respect to each Escrow Account from which the
additional disbursement is sought.
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Section 5.05. Monthly Funding of Sub-Accounts and Escrow
Accounts. (a) On or before each Payment Date during the
term of the Loan, commencing on the first (1st) Payment Date
occurring after the month in which the Loan is initially
funded, Borrower shall pay or cause to be paid to the
Central Account all sums
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required to be deposited in the
Sub-Accounts pursuant to this Section 5.05(a) and all funds
transferred or deposited into the Central Account shall be
allocated among the Sub-Accounts as follows and in the
following priority:
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Section 5.06. Payment of Basic Carrying Costs. Borrower
hereby agrees to pay all Basic Carrying Costs (without
regard to the amount of money in the Basic Carrying Costs
Sub-Account or the Basic Carrying Costs Escrow Account). At
least ten (10) Business Days prior to the due date of any
Basic Carrying Costs, and not more frequently than once each
month, Borrower may notify Lender in writing and request
that Lender pay such Basic Carrying Costs on behalf of
Borrower on or prior to the due date thereof, and, provided
that no Event of Default has occurred and that there are
sufficient funds available in the Basic Carrying Costs
Escrow Account, Lender shall make such payments out of the
Basic Carrying Costs Escrow Account before same shall be
delinquent. Together with each such request, Borrower shall
furnish Lender with bills and all other documents necessary,
as reasonably determined by Lender, for the payment of the
Basic Carrying Costs which are the subject of such request.
Borrower’s obligation to pay (or cause Lender to pay) Basic
Carrying Costs pursuant to this Security Instrument shall
include, to the extent permitted by applicable law,
Impositions resulting from future changes in law which
impose upon Lender an obligation to pay any property taxes
or other Impositions or which otherwise adversely affect
Lender’s interests. Notwithstanding the foregoing, in the
event that Lender receives a tax bill directly from a
Governmental Authority relating to any Real Estate Taxes,
Lender shall pay all sums due thereunder prior to the date
such Real Estate Taxes would accrue late charges or interest
thereon or within ten (10) Business Days of the receipt of
such tax bill, whichever is later. In making any payment of
Real Estate Taxes, Lender may rely on any bill, statement or
estimate obtained from the applicable Governmental Authority
without inquiry into the accuracy of such bill, statement or
estimate or into the validity of any Real Estate Taxes or
claim with respect thereto.
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Section 5.07. Intentionally Omitted.
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Section 5.08. Recurring Replacement Reserve Escrow Account.
Borrower hereby agrees to pay all Recurring Replacement
Expenditures with respect to the Property (without regard to
the amount of money then available in the Recurring
Replacement Reserve Sub-Account or the Recurring Replacement
Reserve Escrow Account). Provided that (a) Lender has
received written notice from Borrower at least five (5)
Business Days prior to the due date of any payment relating
to Recurring Replacement Expenditures and not more
frequently than once each month, and further provided that
no Event of Default has occurred and is continuing, (b)
there are sufficient funds available in the Recurring
Replacement Reserve Escrow Account, and (c) Borrower shall
have theretofore furnished Lender with lien waivers (which
lien waivers may be conditional pending final payment, if
applicable), copies of bills, invoices and other reasonable
documentation as may be required by Lender to establish that
the Recurring Replacement Expenditures which are the subject
of such request
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represent amounts due for completed or
partially completed additions, replacements, capital work
and improvements performed at the Property, then Lender
shall make such payments out of the Recurring Replacement
Reserve Escrow Account.
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Section 5.09. Operation and Maintenance Expense Escrow
Account. Borrower hereby agrees to pay all Operating
Expenses with respect to the Property (without regard to the
amount of money then available in the Operation and
Maintenance Expense Sub-Account or the Operation and
Maintenance Expense Escrow Account). All funds allocated to
the Operation and Maintenance Expense Escrow Account shall
be held by Lender pursuant to the provisions of this
Security Instrument. Any sums held in the Operation and
Maintenance Expense Escrow Account shall be disbursed to
Borrower within five (5) Business Days of receipt by Lender
from Borrower of (a) a written request for such disbursement
which shall indicate the Operating Expenses (exclusive of
Basic Carrying Costs and any Required Management Fee payable
to Borrower, or to any Affiliate of Borrower) for which the
requested disbursement is to pay and (b) an Officer’s
Certificate stating that no Operating Expenses with respect
to the Property are more than sixty (60) days past due;
provided, however, in the event that Borrower legitimately
disputes any invoice for an Operating Expense, and (i) no
Event of Default has occurred and is continuing hereunder,
(ii) Borrower shall have set aside adequate reserves for the
payment of such disputed sums together with all interest and
late fees thereon, (iii) Borrower has complied with all the
requirements of this Security Instrument relating thereto,
and (iv) the contesting of such sums shall not constitute a
default under any other instrument, agreement, or document
to which Borrower is a party (other than any agreement with
the vendor with respect to which the unpaid Operating
Expenses relates), then Borrower may, after certifying to
Lender as to items (i) through (iv) hereof, contest such
invoice. Together with each such request, Borrower shall
furnish Lender with bills and all other documents necessary
for the payment of the Operating Expenses which are the
subject of such request. Borrower may request a
disbursement from the Operation and Maintenance Expense
Escrow Account no more than one (1) time per calendar month.
Should an Event of Default occur and be continuing, the
sums on deposit in the Operation and Maintenance Expense
Sub-Account or the Operation and Maintenance Expense Escrow
Account shall be applied by Lender in payment of any
Operating Expenses for the Property or, if Lender has
accelerated the outstanding Principal Amount, may be applied
to the payment of the Debt or any other charges affecting
all or any portion of the Property as Lender, in its sole
discretion, may determine; provided, however, that no such
application shall be deemed to have been made by operation
of law or otherwise until actually made by Lender as herein
provided.
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Section 5.10. Intentionally Omitted.
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Section 5.11. Management Fee Escrow Account. Borrower
hereby agrees to pay all Required Management Fees (without
regard to the amount of money then available in the
Management Fee Sub-Account or the Management Fee Escrow
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Account). All funds allocated to the Management Fee Escrow
Account shall be held by Lender pursuant to the provisions
of this Security Instrument. Any sums held in the
Management Fee Escrow Account shall be disbursed to Borrower
within five (5) Business Days of receipt by Lender from
Borrower of (a) a written request for such disbursement
which shall indicate the Required Management Fee for which
the requested disbursement is to pay and (b) an Officer’s
Certificate stating that no Required Management Fees are
more than sixty (60) days past due; provided, however, in
the event that Borrower legitimately disputes any invoice
for a Required Management Fee, and (i) no Event of Default
has occurred and is continuing hereunder, (ii) Borrower
shall have set aside adequate reserves for the payment of
such disputed sums together with all interest and late fees
thereon, (iii) Borrower has complied with all the
requirements of this Security Instrument relating thereto,
and (iv) the contesting of such sums shall not constitute a
default under any other instrument, agreement, or document
to which Borrower is a party, then Borrower may, after
certifying to Lender as to items (i) through (iv) hereof,
contest such invoice. Together with each such request,
Borrower shall furnish Lender with bills and all other
documents necessary for the payment of the Required
Management Fees which are the subject of such request.
Borrower may request a disbursement from the Management Fee
Escrow Account no more than one (1) time per calendar month.
Should an Event of Default occur, the sums on deposit in
the Management Fee Sub-Account or the Management Fee Escrow
Account shall be applied by Lender in payment of any
Required Management Fee or, if Lender has accelerated the
outstanding Principal Amount, may be applied to the payment
of the Debt or any other charges affecting all or any
portion of the Property as Lender, in its sole discretion,
may determine; provided, however, that no such application
shall be deemed to have been made by operation of law or
otherwise until actually made by Lender as herein provided.
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Section 5.12. Performance of Engineering Work. (a)
Borrower shall promptly commence and diligently thereafter
pursue to completion (without regard to the amount of money
then available in the Engineering Escrow Account) the
Required Engineering Work prior to the six (6) month
anniversary of the Closing Date. After Borrower completes
an item of Required Engineering Work, Borrower may submit to
Lender an invoice therefor with lien waivers (which may be
conditional pending payment, if applicable) and a statement
from the Engineer, reasonably acceptable to Lender,
indicating that the portion of the Required Engineering Work
in question has been completed in compliance with all Legal
Requirements, and Lender shall, within twenty (20) days
thereafter, although in no event more frequently than once
each month, reimburse such amount to Borrower from the
Engineering Escrow Account; provided, however, that Borrower
shall not be reimbursed out of the Engineering Escrow
Account more than the amount set forth on Exhibit D hereto
as the amount allocated to the portion of the Required
Engineering Work for which reimbursement is sought.
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Section 5.13. Loss Proceeds. In the event of a casualty to
the Property, except to the extent Lender elects, or is
required pursuant to Article III hereof to make all or any
portion of the Insurance Proceeds available to Borrower for
restoration,
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Lender and Borrower shall cause all such
Insurance Proceeds to be paid by the insurer directly to the
Central Account, whereupon Lender shall, after deducting
Lender’s costs of recovering and paying out such Insurance
Proceeds, including without limitation, reasonable
attorneys’ fees, apply same to reduce the Debt in accordance
with the terms of the Note; provided, however, that if
Lender elects, or is deemed to have elected, or is otherwise
required pursuant to the terms of this Security Instrument,
to make all or a portion of the Insurance Proceeds available
for restoration, all Insurance Proceeds in respect of rent
loss, business interruption or similar coverage shall be
maintained in the Central Account, to be applied by Lender
in the same manner as Rent received with respect to the
operation of the Property; provided, further, however, that
in the event that the Insurance Proceeds with respect to
such rent loss, business interruption or similar insurance
policy are paid in a lump sum in advance, Lender shall hold
such Insurance Proceeds in a segregated interest-bearing
escrow account, which shall be an Eligible Account, shall
estimate, in Lender’s reasonable discretion, the number of
months required for Borrower to restore the damage caused by
the casualty, shall divide the aggregate rent loss, business
interruption or similar Insurance Proceeds by such number of
months, and shall disburse from such bank account into the
Central
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Account each month during the performance of such
restoration such monthly installment of said Insurance
Proceeds until such time as the Debt Service Coverage for
two (2) consecutive calendar quarters, the first of which
shall not occur prior to the applicable casualty, shall
equal the Required Debt Service Coverage or greater, at
which time, after receipt of a written request from
Borrower, all sums held by Lender which related to rent
loss, business interruption insurance or similar Insurance
Proceeds shall be disbursed to Borrower. In the event that
Insurance Proceeds are to be applied toward restoration,
Lender shall hold such funds in a segregated bank account at
the Bank, which shall be an Eligible Account, and shall
disburse same in accordance with the provisions of Section
3.04 hereof. Except to the extent Lender elects, or is
required pursuant to Section 6.01 hereof to make all or a
portion of the Condemnation Proceeds available to Borrower
for restoration, Lender and Borrower shall cause all such
Condemnation Proceeds to be paid to the Central Account,
whereupon Lender shall, after deducting Lender’s costs of
recovering and paying out such Condemnation Proceeds,
including without limitation, reasonable attorneys’ fees,
apply same to reduce the Debt in accordance with the terms
of the Note; provided, however, that any Condemnation
Proceeds received in connection with a temporary Taking
shall be maintained in the Central Account, to be applied by
Lender in the same manner as Rent received with respect to
the operation of the Property; provided, further, however,
that in the event that the Condemnation Proceeds of any such
temporary Taking are paid in a lump sum in advance, Lender
shall hold such Condemnation Proceeds in a segregated
interest-bearing bank account, which shall be an Eligible
Account, shall estimate, in Lender’s reasonable discretion,
the number of months that the Property shall be affected by
such temporary Taking, shall divide the aggregate
Condemnation Proceeds in connection with such temporary
Taking by such number of months, and shall disburse from
such bank account into the Central
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Account each month during
the pendency of such temporary Taking such monthly
installment of said Condemnation Proceeds. In the event
that Condemnation Proceeds are to be applied toward
restoration, Lender shall hold such funds in a segregated
bank account at the Bank, which shall be an Eligible
Account, and shall disburse same in accordance with the
provisions of Section 3.04 hereof. If any Loss Proceeds are
received by Borrower, such Loss Proceeds shall be received
in trust for Lender, shall be segregated from other funds of
Borrower, and shall be forthwith paid into the Central
Account, or paid to Lender to hold in a segregated bank
account at the Bank, in each case to be applied or disbursed
in accordance with the foregoing. Any Loss Proceeds made
available to Borrower for restoration in accordance
herewith, to the extent not used by Borrower in connection
with, or to the extent they exceed the cost of, such
restoration, shall be deposited into the Central Account, to
be held by Lender as additional collateral for the Loan,
until such time, if any, at any time subsequent to the
completion of the Work, the Debt Service Coverage is 1.2:1.0
or greater for two (2) consecutive calendar quarters and
provided a Default does not exist, at the request of
Borrower, such excess Loss Proceeds shall be disbursed to
Borrower provided any such Loss Proceeds still remain in the
Central Account.
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ARTICLE VI: CONDEMNATION
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Section 6.01. Condemnation. (a) Borrower shall notify
Lender promptly of the commencement or threat of any Taking
of the Property or any portion thereof. Lender is hereby
irrevocably appointed as Borrower’s attorney-in-fact,
coupled with an interest, with exclusive power to collect,
receive and retain the proceeds of any such Taking as to
which Borrower is or may be entitled and to make any
compromise or settlement in connection with such proceedings
(subject to Borrower’s reasonable approval, except after the
occurrence of an Event of Default, in which event Borrower’s
approval shall not be required), subject to the provisions
of this Security Instrument; provided, however, that
Borrower may participate in any such proceedings (without
regard to the extent of the Taking) and Borrower shall be
authorized and entitled to compromise or settle any such
proceeding with respect to Condemnation Proceeds in an
amount less than five percent (5%) of the Loan Amount.
Borrower shall execute and deliver to Lender any and all
instruments reasonably required in connection with any such
proceeding promptly after request therefor by Lender.
Except as set forth above, Borrower shall not adjust,
compromise, settle or enter into any agreement with respect
to such proceedings without the prior consent of Lender.
All Condemnation Proceeds are hereby assigned to and shall
be paid to Lender to be applied in accordance with the terms
hereof. With respect to Condemnation Proceeds in an amount
in excess of five percent (5%) of the Loan Amount, Borrower
hereby authorizes Lender to compromise, settle, collect and
receive such Condemnation Proceeds, and to give proper
receipts and acquittance therefor. Subject to the
provisions of this Article VI, Lender may apply such
Condemnation Proceeds (less any cost to Lender of recovering
and paying out such proceeds, including, without limitation,
reasonable attorneys’ fees and disbursements and costs
allocable to inspecting any repair, restoration or
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rebuilding work and the plans and specifications therefor)
toward the payment of the Debt or to allow such proceeds to
be used for the Work.
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ARTICLE VII: LEASES AND RENTS
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Section 7.01. Assignment. (a) Borrower does hereby
bargain, sell, assign and set over unto Lender, all of
Borrower’s interest in the Leases and Rents pursuant to the
terms hereof. The assignment of Leases and Rents in this
Section 7.01 is an absolute, unconditional and present
assignment from Borrower to Lender and not an assignment for
security and the existence or exercise of Borrower’s
revocable license to collect Rent shall not operate to
subordinate this assignment to any subsequent assignment.
The exercise by Lender of any of its rights or remedies
pursuant to this Section 7.01 shall not be deemed to make
Lender a mortgagee-in-possession. In addition to the
provisions of this Article VII, Borrower shall comply with
all terms, provisions and conditions of the Assignment.
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Section 7.02. Management of Property. (a) Borrower shall
manage the Property or cause the Property to be managed in a
manner which is consistent with the Approved Manager
Standard. All Space Leases shall provide for rental rates
comparable to then existing local market rates for
comparable space in hotel properties and terms and
conditions which constitute good and prudent business
practice and are consistent with prevailing market terms and
conditions for comparable space in hotel properties, and
shall be arms-length transactions. All Space Leases shall
be on a form reasonably acceptable to Lender and shall
provide that they are subordinate to this Security
Instrument and that the lessees thereunder attorn to Lender.
Borrower shall deliver copies of all Leases, amendments,
modifications and renewals thereof to Lender. All proposed
Leases for the Property shall be subject to the prior
written approval of Lender, provided, however that Borrower
may enter into new leases with unrelated third parties
without obtaining the prior consent of Lender provided
that: (i) the proposed leases conform with the requirements of
this Section 7.02; (ii) the space to be leased pursuant to
such proposed lease together with any space leased or to be
leased to an Affiliate of the tenant thereunder does not
exceed 5,000 square feet; and (iii) the term of the proposed
lease inclusive of all extensions and renewals, does not
exceed five (5) years or, if all extensions and renewals are
at the then prevailing market rates, does not exceed ten
(10) years.
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ARTICLE VIII: MAINTENANCE AND REPAIR
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Section 8.01. Maintenance and Repair of the Property;
Alterations; Replacement of Equipment. Borrower hereby
covenants and agrees:
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ARTICLE IX: TRANSFER OR ENCUMBRANCE OF THE PROPERTY
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Section 9.01. Other Encumbrances. Borrower shall not
further encumber or permit the further encumbrance in any
manner (whether by grant of a pledge, security interest or
otherwise) of the Property or any part thereof or interest
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therein, including, without limitation, of the Rents
therefrom other than Permitted Liens. In addition, Borrower
shall not further encumber and shall not permit the further
encumbrance in any manner (whether by grant of a pledge,
security interest or otherwise) of Borrower or any direct or
indirect interest in Borrower except as expressly permitted
pursuant to this Security Instrument.
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Section 9.02. No Transfer. Borrower acknowledges that
Lender has examined and relied on the expertise of Borrower
and, if applicable, each General Partner, 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 Borrower acknowledges that Lender has a valid interest
in maintaining the value of the Property. Borrower shall
not Transfer, nor permit any Transfer, without the prior
written consent of Lender, which consent Lender may withhold
in its sole and absolute discretion. 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 a
Transfer without Lender’s consent. This provision shall
apply to every Transfer regardless of whether voluntary or
not, or whether or not Lender has consented to any previous
Transfer.
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Section 9.03. Due on Sale. Lender may declare the Debt
immediately due and payable upon any Transfer or further
encumbrance without Lender’s consent without regard to
whether any impairment of its security or any increased risk
of default hereunder can be demonstrated. This provision
shall apply to every Transfer or further encumbrance of the
Property or any part thereof or interest in the Property or
in Borrower regardless of whether voluntary or not, or
whether or not Lender has consented to any previous Transfer
or further encumbrance of the Property or interest in
Borrower.
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Section 9.04. Permitted Transfer. Notwithstanding the
foregoing provisions of this Article IX, a sale, conveyance
or transfer of the Property in its entirety (hereinafter,
“Sale”) shall be permitted hereunder provided that each of
the following terms and conditions are satisfied:
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ARTICLE X: CERTIFICATES
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Section 10.01. Estoppel Certificates. (a) After request by
Lender, Borrower, within fifteen (15) days and at its
expense, will furnish Lender with a statement, duly
acknowledged and certified, setting forth (i) the amount of
the original principal amount of the Note, and the unpaid
principal amount of the Note, (ii) the rate of interest of
the Note, (iii) the date payments of interest and/or
principal were last paid, (iv) any offsets or defenses to
the payment of the Debt, and, if any are alleged, the nature
thereof, (v) that the Note, this Security Instrument and the
other Loan Documents have not been modified or if modified,
giving particulars of such modification and (vi) that there
has occurred and is then continuing no
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Event of Default or
if such Event of Default exists, the nature thereof, the
period of time it has existed, and the action being taken to
remedy such Event of Default.
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ARTICLE XI: NOTICES
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Section 11.01. Notices. Any notice, demand, statement,
request or consent made hereunder shall be in writing and
delivered personally or sent to the party to whom the
notice, demand or request is being made by Federal Express
or other nationally recognized overnight delivery service,
as follows and shall be deemed given when delivered
personally or one (1) Business Day after being deposited
with Federal Express or such other nationally recognized
delivery service:
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ARTICLE XII: INDEMNIFICATION
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Section 12.01. Indemnification Covering Property. In
addition, and without limitation, to any other provision of
this Security Instrument or any other Loan Document,
Borrower shall protect, indemnify and save harmless Lender,
Trustee and their successors and assigns, and each of their
agents, employees, officers, directors, stockholders,
partners and members (collectively, “Indemnified Parties”)
for, from and against any claims, demands, penalties, fines,
liabilities, settlements, damages, costs and expenses of
whatever kind or nature, known or unknown, contingent or
otherwise, whether incurred or imposed within or outside the
judicial process, including, without limitation, reasonable
attorneys’ fees and disbursements imposed upon or incurred
by or asserted against any of the Indemnified Parties by
reason of (a) ownership of this Security Instrument, the
Assignment, the Property or any part thereof or any interest
therein or receipt of any Rents; (b) any accident, injury to
or death of any person or loss of or damage to property
occurring in, on or about the Property or any part thereof
or on the adjoining sidewalks, curbs, parking areas, streets
or ways; (c) any use, nonuse or condition in, on or about,
or possession, alteration, repair, operation, maintenance or
management of, the Property or any part thereof or on the
adjoining sidewalks, curbs, parking areas, streets or ways;
(d) any failure on the part of Borrower to perform or comply
with any of the terms of this Security Instrument or the
Assignment; (e) performance of any labor or services or the
furnishing of any materials or other property in respect of
the Property or any part thereof; (f) any claim by brokers,
finders or similar Persons claiming to be entitled to a
commission in connection with any Lease or other transaction
involving the Property or any part thereof; (g) any
Imposition including, without limitation, any Imposition
attributable to the execution, delivery, filing, or
recording of any Loan Document, Lease or memorandum thereof;
(h) any lien or claim arising on or against the Property or
any part thereof under any Legal Requirement or any
liability asserted against any of the Indemnified Parties
with respect thereto; (i) any claim arising out of or in any
way relating to any tax or other imposition on the making
and/or recording of this Security Instrument, the Note or
any of the other Loan Documents; (j) a Default under
Sections 2.02(f), 2.02(g), 2.02(k), 2.02(t) or 2.02(w)
hereof, (k) the failure of any Person to file timely with
the Internal Revenue Service an accurate Form 1099-B,
Statement for Recipients of
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Proceeds from Real Estate,
Broker and Barter Exchange Transactions, which may be
required in connection with the Loan, or to supply a copy
thereof in a timely fashion to the recipient of the proceeds
of the Loan; (l) the claims of any lessee or any Person
acting through or under any lessee or otherwise arising
under or as a consequence of any Lease or (m) the failure to
pay any insurance premiums. Notwithstanding the foregoing
provisions of this Section 12.01 to the contrary, Borrower
shall have no obligation to indemnify the Indemnified
Parties pursuant to this Section 12.01 for liabilities,
obligations, claims, damages, penalties, causes of action,
costs and expenses relative to the foregoing which result
from Lender’s, and its successors’ or assigns’, willful
misconduct or gross negligence or if the condition or event
which gave rise to liability first arose or accrued
following the date of transfer of title to the Property to
Lender in connection with any foreclosure of the Property or
acceptance by Lender of a deed-in-lieu thereof. Any amounts
payable to Lender by reason of the application of this
Section 12.01 shall constitute a part of the Debt secured by
this Security Instrument and the other Loan Documents and
shall become immediately due and payable and shall bear
interest at the Default Rate from the date the liability,
obligation, claim, cost or expense is sustained by Lender,
as applicable, until paid. The provisions of this Section
12.01 shall survive the termination of this Security
Instrument whether by repayment of the Debt, foreclosure or
delivery of a deed in lieu thereof, assignment or otherwise.
In case any action, suit or proceeding is brought against
any of the Indemnified Parties by reason of any occurrence
of the type set forth in (a) through (m) above, Borrower
shall, at Borrower’s expense, take all commercially
reasonable steps to resist and defend such action, suit or
proceeding or will cause the same to be resisted and
defended by counsel at Borrower’s expense for the insurer of
the liability or by counsel designated by Borrower (unless
reasonably disapproved by Lender promptly after Lender has
been notified of such counsel); provided, however, that
nothing herein shall compromise the right of Lender (or any
other Indemnified Party) to appoint its own counsel at
Borrower’s expense for its defense with respect to any
action which, in the reasonable opinion of Lender or such
other Indemnified Party, as applicable, presents a conflict
or potential conflict between Lender or such other
Indemnified Party that would make such separate
representation advisable. Any Indemnified Party will give
Borrower prompt notice after such Indemnified Party obtains
actual knowledge of any potential claim by such Indemnified
Party for indemnification hereunder. The Indemnified
Parties shall not settle or compromise any action,
proceeding or claim as to which it is indemnified hereunder
without notice to Borrower.
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ARTICLE XIII: DEFAULTS
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Section 13.01. Events of Default. The Debt shall become
immediately due at the option of Lender upon any one or more
of the following events (“Event of Default”):
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Section 13.02. Remedies. (a) Upon the occurrence and
during the continuance of any Event of Default, Lender may,
in addition to any other rights or remedies
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available to it
hereunder or under any other Loan Document, at law or in
equity, take such action, without notice or demand, as it
reasonably 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 singly, concurrently or otherwise, at such time and
in such order as Lender may determine, in its sole
discretion, without impairing or otherwise affecting any
other rights and remedies of Lender hereunder, at law or in
equity: (i) declare all or any portion of the unpaid Debt
to be immediately due and payable; provided, however, that
upon the occurrence of any of the events specified in
Section 13.01(i), the entire Debt will be immediately due
and payable without notice or demand or any other
declaration of the amounts due and payable; or (ii) bring,
or instruct Trustee to bring, an action to foreclose this
Security Instrument and without applying for a receiver for
the Rents, but subject to the rights of the tenants under
the Leases, enter into or upon the Property or any part
thereof, either personally or by its agents, nominees or
attorneys, and dispossess Borrower and its agents and
servants therefrom, and thereupon Lender may (A) use,
operate, manage, control, insure, maintain, repair, restore
and otherwise deal with all and every part of the Property
and conduct the business thereat, (B) make alterations,
additions, renewals, replacements and improvements to or on
the Property or any part thereof, (C) exercise all rights
and powers of Borrower with respect to the Property or any
part thereof, whether in the name of Borrower or otherwise,
including, without limitation, the right to make, cancel,
enforce or modify Leases, obtain and evict tenants, and
demand, sue for, collect and receive all earnings, revenues,
rents, issues, profits and other income of the Property and
every part thereof and Borrower shall have no liability
under this clause (C) for any actions taken by Lender which
are grossly negligent or which constitute willful
misconduct, and (D) apply the receipts from the Property or
any part thereof to the payment of the Debt, after deducting
therefrom all expenses (including, without limitation,
reasonable attorneys’ fees and disbursements) reasonably
incurred in connection with the aforesaid operations and all
amounts necessary to pay the Impositions, insurance and
other charges in connection with the Property or any part
thereof, as well as just and reasonable compensation for the
services of Lender’s third-party agents; or (iii) have an
appraisal or other valuation of the Property or any part
thereof performed by an Appraiser (and Borrower covenants
and agrees it shall cooperate in causing any such valuation
or appraisal to be performed) and any cost or expense
incurred by Lender in connection therewith shall constitute
a portion of the Debt and be secured by this Security
Instrument and shall be immediately due and payable to
Lender with interest, at the Default Rate, until the date of
receipt by Lender; or (iv) sell, or instruct Trustee to
sell, the Property or institute, or instruct Trustee to
institute, proceedings for the complete foreclosure of this
Security Instrument, or take such other action as may be
allowed pursuant to Legal Requirements, at law or in equity,
for the enforcement of this Security Instrument in which
case the Property or any part thereof may be sold for cash
or credit in one or more parcels; or (v) with or without
entry, and to the extent permitted and pursuant to the
procedures provided by applicable Legal Requirements,
institute proceedings for the partial
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foreclosure of this
Security Instrument, or take such other action as may be
allowed pursuant to Legal Requirements, at law or in equity,
for the enforcement of this Security Instrument for the
portion of the Debt then due and payable, subject to the
lien of this Security Instrument continuing unimpaired and
without loss of priority so as to secure the balance of the
Debt not then due; or (vi) sell, or instruct Trustee to
sell, the Property or any part thereof and any or all
estate, claim, demand, right, title and interest of Borrower
therein and rights of redemption thereof, pursuant to power
of sale or otherwise, at one or more sales, in whole or in
parcels, in any order or manner, at such time and place,
upon such terms and after such notice thereof as may be
required or permitted by law, at the discretion of Lender,
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 on the remaining portion of the
Property; or (vii) institute an action, suit or proceeding
in equity for the specific performance of any covenant,
condition or agreement contained in the Loan Documents, or
any of them; or (viii) recover judgment on the Note or any
guaranty either before, during or after (or in lieu of) any
proceedings for the enforcement of this Security Instrument;
or (ix) apply, or direct Trustee to apply, ex parte, for the
appointment of a custodian, trustee, receiver, keeper,
liquidator or conservator of the Property or any part
thereof, irrespective of the adequacy of the security for
the Debt and without regard to the solvency of Borrower or
of any Person liable for the payment of the Debt, to which
appointment Borrower does hereby consent and such receiver
or other official shall have all rights and powers permitted
by applicable law and such other rights and powers as the
court making such appointment may confer, but the
appointment of such receiver or other official shall not
impair or in any manner prejudice the rights of Lender to
receive the Rent with respect to any of the Property
pursuant to this Security Instrument or the Assignment; or
(x) require, at Lender’s option, Borrower to pay monthly in
advance to Lender, or any receiver appointed to collect the
Rents, the fair and reasonable rental value for the use and
occupation of any portion of the Property occupied by
Borrower and may require Borrower to vacate and surrender
possession to Lender of the Property or to such receiver and
Borrower may be evicted by summary proceedings or otherwise;
or (xi) without notice to Borrower (A) apply all or any
portion of the cash collateral in any Sub-Account and Escrow
Account, including any interest and/or earnings therein, to
carry out the obligations of Borrower under this Security
Instrument and the other Loan Documents, to protect and
preserve the Property and for any other purpose permitted
under this Security Instrument and the other Loan Documents
(but in all events subject to Lender’s obligations pursuant
to Section 5.05 hereof) and/or (B) have all or any portion
of such cash collateral immediately paid to Lender to be
applied against the Debt in the order and priority set forth
in the Note (but in all events subject to Lender’s
obligations pursuant to Section 5.05 hereof); or (xii)
pursue any or all such other rights or remedies as Lender
and Trustee may have under applicable law or in equity;
provided, however, that the provisions of this Section
13.02(a) shall not be construed to extend or modify any of
the notice requirements or grace periods provided for
hereunder or under any of the other Loan Documents.
Borrower hereby waives, to the fullest extent
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permitted by
Legal Requirements, any defense Borrower might otherwise
raise or have by the failure to make any tenants parties
defendant to a foreclosure proceeding and to foreclose their
rights in any proceeding instituted by Lender or Trustee.
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Section 13.03. Payment of Debt After Default. If,
following the occurrence of any Event of Default, Borrower
shall tender payment of an amount sufficient to satisfy the
Debt in whole or in part at any time prior to a foreclosure
sale of the Property, and if at the time of such tender
prepayment of the principal balance of the Note is not
permitted by the Note or this Security Instrument, Borrower
shall, in addition to the entire Debt, also pay to Lender a
sum equal to (a) all accrued interest on the Note and all
other fees, charges and sums due and payable hereunder, (b)
all costs and expenses in connection with the enforcement of
Lender’s rights hereunder, and (c) a prepayment charge (the
“Prepayment Charge”) equal to the greater of (i) 2% of the
Principal Amount and (ii) the present value of a series of
payments each equal to the Payment Differential (as
hereinafter defined) and payable on each Payment Date over
the remaining original term of the Note and on the Payment
Date occurring two months prior to the Maturity Date,
discounted at the Reinvestment Yield (as hereinafter
defined) for the number of months remaining as of the date
of such prepayment to each such Payment Date and the Payment
Date occurring two months prior to the Maturity Date. The
term “Payment Differential” shall mean an amount equal to
(i) the Interest Rate less the Reinvestment Yield, divided
by (ii) twelve (12) and multiplied by (iii) the Principal
Amount after application of the constant monthly payment due
under the Note on the date of such prepayment, provided that
the Payment Differential shall in no event be less than
zero. The term “Reinvestment Yield” shall mean an amount
equal to the lesser of (i) the yield on the U.S. Treasury
issue (primary issue) with a maturity date closest to the
Payment Date occurring two months prior to the Maturity
Date, or (ii) the yield on the U.S. Treasury issue (primary
issue) with a term equal to the remaining average life of
the indebtedness evidenced by the Note, with each such yield
being based on the bid price for such issue as published in
the Wall Street Journal on the date that is fourteen (14)
days prior to the date of such prepayment set forth in the
notice of prepayment (or, if such bid price is not published
on that date, the next preceding date on which such bid
price is so published) and converted to a monthly compounded
nominal yield. In addition to the amounts described above,
if, during the first (1st) Loan Year, Borrower shall tender
payment of an amount sufficient to satisfy the Debt in whole
or in part following the occurrence of any Event of Default,
Borrower shall, in addition to the entire Debt, also pay to
Lender a sum equal to three percent (3%) of the Principal
Amount. Failure of Lender to require any of these payments
shall not constitute a waiver of the right to require the
same in the event of any subsequent default or to exercise
any other remedy available to Lender hereunder, under any
other Loan Document or at law or in equity. In the event
that any prepayment charge is due hereunder, Lender shall
deliver to Borrower a statement setting forth the amount and
determination of the prepayment fee, and, provided that
Lender shall have in good faith applied the formula
described above, Borrower shall not have the right to
challenge the
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calculation or the method of calculation set
forth in any such statement in the absence of manifest
error, which calculation may be made by Lender on any day
during the fifteen (15) day period preceding the date of
such prepayment. Lender shall not be obligated or required
to have actually reinvested the prepaid principal balance at
the Reinvestment Yield or otherwise as a condition to
receiving the prepayment charge. If at the time of such
tender, prepayment of the principal balance of the Note is
permitted, such tender by Borrower shall be deemed to be a
voluntary prepayment of the principal balance of the Note,
and Borrower shall, in addition to the entire Debt, also pay
to Lender the applicable prepayment consideration specified
in the Note and this Security Instrument. Notwithstanding
the foregoing, Lender acknowledges that, pursuant to Section
15.01, the Loan may be prepaid at any time in accordance
with said Section 15.01 and that upon the occurrence of an
Event of Default the only prepayment charge due pursuant to
this Section 13.03 will be as set forth in Section 15.01.
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Section 13.04. Possession of the Property. Upon the
occurrence and during the continuance of any Event of
Default and the acceleration of the Debt or any portion
thereof, Borrower, if an occupant of the Property or any
part thereof, upon demand of Lender, shall immediately
surrender possession of the Property (or the portion thereof
so occupied) to Lender, and if Borrower is permitted to
remain in possession, the possession shall be as a
month-to-month tenant of Lender and, on demand, Borrower
shall pay to Lender monthly, in advance, a reasonable rental
for the space so occupied and in default thereof Borrower
may be dispossessed. The covenants herein contained may be
enforced by a receiver of the Property or any part thereof.
Nothing in this Section 13.04 shall be deemed to be a waiver
of the provisions of this Security Instrument making the
Transfer of the Property or any part thereof without
Lender’s prior written consent an Event of Default.
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Section 13.05. Interest After Default. If any amount due
under the Note, this Security Instrument or any of the other
Loan Documents is not paid within any applicable notice and
grace period after same is due, whether such date is the
stated due date, any accelerated due date or any other date
or at any other time specified under any of the terms hereof
or thereof, then, in such event, Borrower shall pay interest
on the amount not so paid from and after the date on which
such amount first becomes due at the Default Rate; and such
interest shall be due and payable at such rate until the
earlier of the cure of all Events of Default or the payment
of the entire amount due to Lender, whether or not any
action shall have been taken or proceeding commenced to
recover the same or to foreclose this Security Instrument.
All unpaid and accrued interest shall be secured by this
Security Instrument as part of the Debt. Nothing in this
Section 13.05 or in any other provision of this Security
Instrument shall constitute an extension of the time for
payment of the Debt.
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Section 13.06. Borrower’s Actions After Default. After the
happening of any Event of Default and immediately upon the
commencement of any action, suit or other legal proceedings
by Lender to obtain judgment for the Debt, or of any other
nature in aid of the enforcement of the Loan Documents,
Borrower will (a) after
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receipt of notice of the institution
of any such action, waive the issuance and service of
process and enter its voluntary appearance in such action,
suit or proceeding, and (b) if required by Lender, consent
to the appointment of a receiver or receivers of the
Property or any part thereof and of all the earnings,
revenues, rents, issues, profits and income thereof.
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Section 13.07. Control by Lender After Default.
Notwithstanding the appointment during the continuance of an
Event of Default of any custodian, receiver, liquidator or
trustee of Borrower, or of any of its property, or of the
Property or any part thereof, to the extent permitted by
Legal Requirements, Lender shall be entitled to obtain
possession and control of all property now and hereafter
covered by this Security Instrument and the Assignment in
accordance with the terms hereof.
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Section 13.08. Right to Cure Defaults. (a) Upon the
occurrence and during the continuance of any Event of
Default, Lender or its agents may, but without any
obligation to do so and without notice to or demand on
Borrower and without releasing Borrower from any obligation
hereunder, make or do the same in such manner and to such
extent as Lender may deem necessary to protect the security
hereof. Lender and its agents are authorized to enter upon
the Property or any part thereof for such purposes, or
appear in, defend, or bring any action or proceedings to
protect Lender’s interest in the Property or any part
thereof or to foreclose this Security Instrument or collect
the Debt, and the cost and expense thereof (including
reasonable attorneys’ fees to the extent permitted by law),
with interest as provided in this Section 13.08, shall
constitute a portion of the Debt and shall be immediately
due and payable to Lender upon demand. All such costs and
expenses incurred by Lender or its agents in remedying such
Event of Default or in appearing in, defending, or bringing
any such action or proceeding shall bear interest at the
Default Rate, for the period from the date so demanded to
the date of payment to Lender. All such costs and expenses
incurred by Lender or its agents together with interest
thereon calculated at the above rate shall be deemed to
constitute a portion of the Debt and be secured by this
Security Instrument.
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Section 13.09. Late Payment Charge. If any portion of the
Debt is not paid in full on or before the day on which it is
due and payable hereunder, Borrower shall pay to Lender an
amount equal to five percent (5%) of such unpaid portion of
the Debt (“Late Charge”) to defray the expense incurred by
Lender in handling and processing such delinquent payment,
and such amount shall constitute a part of the Debt.
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Section 13.10. Recovery of Sums Required to Be Paid.
Lender shall have the right from time to time to take action
to recover any sum or sums which constitute a part of the
Debt as the same become due and payable hereunder (after the
expiration of any grace period or the giving of any notice
herein provided, if any), without regard to whether or not
the balance of the Debt shall be due, and without prejudice
to the right of Lender thereafter to bring an action of
foreclosure, or any
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other action, for a default or defaults
by Borrower existing at the time such earlier action was
commenced.
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Section 13.11. Marshalling and Other Matters. Borrower
hereby waives, to the fullest extent permitted by law, the
benefit of all appraisement, valuation, stay, extension,
reinstatement, redemption (both equitable and statutory) and
homestead 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, whether equitable or statutory and on behalf of
each and every Person acquiring any interest in or title to
the Property or any part thereof subsequent to the date of
this Security Instrument and on behalf of all Persons to the
fullest extent permitted by applicable law.
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Section 13.12. Tax Reduction Proceedings. During the
continuance of an Event of Default, Borrower shall be deemed
to have appointed Lender as its attorney-in-fact to seek a
reduction or reductions in the assessed valuation of the
Property for real property tax purposes or for any other
purpose and to prosecute any action or proceeding in
connection therewith. This power, being coupled with an
interest, shall be irrevocable for so long as any part of
the Debt remains unpaid and any Event of Default shall be
continuing.
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Section 13.13. General Provisions Regarding Remedies.
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ARTICLE XIV: COMPLIANCE WITH REQUIREMENTS
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Section 14.01. Compliance with Legal Requirements. (a)
Borrower shall promptly comply with all present and future
Legal Requirements, foreseen and unforeseen, ordinary and
extraordinary, whether requiring structural or nonstructural
repairs or alterations including, without limitation, all
zoning, subdivision, building, safety and environmental
protection, land use and development Legal Requirements, all
Legal Requirements which may be applicable to the curbs
adjoining the Property or to the use or manner of use
thereof, and all rent control, rent stabilization and all
other similar Legal Requirements relating to rents charged
and/or collected in connection with the Leases.
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Section 14.02. Compliance with Recorded Documents; No
Future Grants. Borrower shall promptly perform and observe
or cause to be performed and observed, all of the material
terms, covenants and conditions of all Property Agreements
and all things necessary to preserve intact and unimpaired
any and all appurtenances or other interests or rights
affecting the Property.
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ARTICLE XV: PREPAYMENT
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94
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Section 15.01. Prepayment. (a) Except as set forth in this
Section 15.01 or as otherwise specifically provided in the
Loan Documents, no prepayment of the Debt may be made in
whole or in part.
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94
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ARTICLE XVI: ENVIRONMENTAL COMPLIANCE
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95
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Section 16.01. Covenants, Representations and Warranties.
(a) Borrower has not, at any time, and, to Borrower’s
knowledge after due inquiry and investigation, except as set
forth in the Environmental Report, no other Person has at
any time, handled, buried, stored, retained, refined,
transported, processed, manufactured, generated, produced,
spilled, allowed to seep, leak, escape or leach, or pumped,
poured, emitted, emptied, discharged, injected, dumped,
transferred or otherwise disposed of or dealt with Hazardous
Materials on, to or from the Premises or any other real
property owned and/or occupied by Borrower other than
Permitted Materials, and Borrower does not intend to and
shall not use the Property or any part thereof or any such
other real property for the purpose of handling, burying,
storing, retaining, refining, transporting, processing,
manufacturing, generating, producing, spilling, seeping,
leaking, escaping, leaching, pumping, pouring, emitting,
emptying, discharging, injecting, dumping, transferring or
otherwise disposing of or dealing with Hazardous Materials,
except for use and storage for use of heating oil, cleaning
fluids, pesticides and other substances customarily used in
the operation of properties that are being used for the same
purposes as the Property is presently being used, provided
such use and/or storage for use is in compliance with the
requirements hereof and the other Loan Documents and does
not give rise to liability under applicable Legal
Requirements or Environmental Statutes or be the basis for a
lien against the Property or any part thereof (collectively,
“Permitted Materials”). In addition, without limitation to
the foregoing provisions, Borrower represents and warrants
that, to the best of its knowledge, after due inquiry and
investigation, except as previously disclosed in writing to
Lender, including the Environmental Report, there is no
asbestos in, on, over, or under all or any portion of the
fire-proofing or any other portion of the Property.
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95
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Section 16.02. Environmental Indemnification. Borrower
shall defend, indemnify and hold harmless the Indemnified
Parties for, from and against any claims, demands,
penalties, fines, liabilities, settlements, damages, costs
and expenses of whatever kind or nature, known or unknown,
contingent or otherwise, whether incurred or imposed within
or outside the judicial process, including, without
limitation, reasonable attorneys’ and consultants’ fees and
disbursements and investigations and laboratory fees arising
out of, or in any way related to any Environmental Problem,
including without limitation:
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98
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ARTICLE XVII: ASSIGNMENTS
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99
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Section 17.01. Participations and Assignments. Lender, at
its sole cost and expense, shall have the right to assign
this Security Instrument and/or any of the Loan Documents,
and to transfer, assign or sell participations and
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subparticipations (including blind or undisclosed
participations and subparticipations) in the Loan Documents
and the obligations hereunder to any Person; provided,
however, that no such participation shall increase, decrease
or otherwise affect either Borrower’s or Lender’s
obligations under this Security Instrument or the other Loan
Documents.
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99
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ARTICLE XVIII: MISCELLANEOUS
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99
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Section 18.01. Right of Entry. Lender and its agents shall
have the right to enter and inspect the Property or any part
thereof at all reasonable times, and, except in the event of
an emergency, upon reasonable notice and to inspect
Borrower’s books and records and to make abstracts and
reproductions thereof, all at the cost and expense of Lender
so long as there is no continuing Default.
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99
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Section 18.02. Cumulative Rights. The rights of Lender
under this Security Instrument shall be separate, distinct
and cumulative and none shall be given effect to the
exclusion of the others. No act of Lender shall be
construed as an election to proceed under any one provision
herein to the exclusion of any other provision. Lender
shall not be limited exclusively to the rights and remedies
herein stated but shall be entitled, subject to the terms of
this Security Instrument, to every right and remedy now or
hereafter afforded by law.
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99
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Section 18.03. Liability. If Borrower consists of more
than one Person, the obligations and liabilities of each
such Person hereunder shall be joint and several.
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99
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Section 18.04. Exhibits Incorporated. The information set
forth on the cover hereof, and the Exhibits annexed hereto,
are hereby incorporated herein as a part of this Security
Instrument with the same effect as if set forth in the body
hereof.
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99
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Section 18.05. Severable Provisions. If any term, covenant
or condition of the Loan Documents including, without
limitation, the Note or this Security Instrument, is held to
be invalid, illegal or unenforceable in any respect, such
Loan Document shall be construed without such provision.
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99
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Section 18.06. Duplicate Originals. This Security
Instrument may be executed in any number of duplicate
originals and each such duplicate original shall be deemed
to constitute but one and the same instrument.
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99
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Section 18.07. No Oral Change. The terms of this Security
Instrument, together with the terms of the Note and the
other Loan Documents, constitute the entire understanding
and agreement of the parties hereto and supersede all prior
agreements, understandings and negotiations between Borrower
and Lender with respect to the Loan. This Security
Instrument, and any provisions hereof, may not be modified,
amended, waived, extended, changed, discharged or terminated
orally or by any act on the part of Borrower or Lender, but
only by an agreement in writing signed by the party against
whom enforcement of any modification, amendment, waiver,
extension, change, discharge or termination is sought.
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99
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Section 18.08. Waiver of Counterclaim, Etc. BORROWER
HEREBY WAIVES THE RIGHT TO ASSERT A COUNTERCLAIM, OTHER THAN
A COMPULSORY COUNTERCLAIM, IN ANY ACTION OR PROCEEDING
BROUGHT AGAINST IT BY LENDER OR ITS AGENTS, AND, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, WAIVES TRIAL BY JURY IN
ANY ACTION OR PROCEEDING BROUGHT BY EITHER PARTY HERETO
AGAINST THE OTHER OR IN ANY COUNTERCLAIM BORROWER MAY BE
PERMITTED TO ASSERT HEREUNDER OR WHICH MAY BE ASSERTED BY
LENDER OR ITS AGENTS, AGAINST BORROWER, OR IN ANY MATTERS
WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS
SECURITY INSTRUMENT OR THE DEBT.
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100
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Section 18.09. Headings; Construction of Documents; etc.
The table of contents, headings and captions of various
paragraphs 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. Borrower acknowledges that it was represented by
competent counsel in connection with the negotiation and
drafting of this Security Instrument and the other Loan
Documents and that neither this Security Instrument nor the
other Loan Documents shall be subject to the principle of
construing the meaning against the Person who drafted same.
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100
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Section 18.10. Sole Discretion of Lender. Whenever 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
specifically provided herein.
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100
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Section 18.11. 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 or the other Loan Documents specifically and
expressly provides for the giving of notice by Lender to
Borrower and except with respect to matters for which
Borrower is not, pursuant to applicable Legal Requirements,
permitted to waive the giving of notice.
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100
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Section 18.12. Covenants Run with the Land. All of the
grants, covenants, terms, provisions and conditions herein
shall run with the Premises, shall be binding upon Borrower
and shall inure to the benefit of Lender, subsequent holders
of this Security Instrument and their successors and
assigns. Without limitation to any provision hereof, the
term “Borrower” shall include and refer to the borrower
named herein, any subsequent owner of the Property, and its
respective heirs, executors, legal representatives,
successors and assigns. The representations, warranties and
agreements contained in this Security Instrument and the
other Loan Documents are intended solely for the benefit of
the parties hereto, shall confer no rights hereunder,
whether legal or equitable, in any other Person and no other
Person shall be entitled to rely thereon.
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100
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Section 18.13. Applicable Law. THIS SECURITY INSTRUMENT
AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
CALIFORNIA APPLICABLE TO CONTRACTS MADE AND PERFORMED IN
SUCH STATE AND ANY APPLICABLE LAW OF THE UNITED STATES OF
AMERICA.
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101
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Section 18.14. Security Agreement. (a) (i) This Security
Instrument is both a real property mortgage, deed to secure
debt or deed of trust, as applicable, and a “security
agreement” within the meaning of the UCC. 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. This Security
Instrument is filed as a fixture filing and covers goods
which are or are to become fixtures on the Property.
Borrower by executing and delivering this Security
Instrument has granted to Lender, as security for the Debt,
a security interest in the Property to the full extent that
the Property may be subject to the UCC (said portion of the
Property so subject to the UCC being called in this Section
18.14 the “Collateral”). If an Event of Default shall occur
and be continuing, Lender, in addition to any other rights
and remedies which it may have, shall have and may exercise
immediately and without demand, any and all rights and
remedies granted to a secured party upon default under the
UCC, 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 during
the continuance of an Event of Default, Borrower shall, at
its expense, assemble the Collateral and make it available
to Lender at a convenient place acceptable to Lender.
Borrower shall pay to Lender on demand any and all expenses,
including reasonable legal expenses and attorneys’ fees,
incurred or paid by Lender in protecting its interest in the
Collateral and in enforcing its rights hereunder with
respect to the Collateral. Any disposition pursuant to the
UCC of so much of the Collateral as may constitute personal
property shall be considered commercially reasonable if made
pursuant to a public sale which is advertised at least twice
in a newspaper in which sheriff’s sales are advertised in
the county where the Premises is located. Any notice of
sale, disposition or other intended action by Lender with
respect to the Collateral given to Borrower in accordance
with the provisions hereof at least ten (10) days prior to
such action, shall constitute 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
Debt in such priority and proportions as Lender in its
discretion shall deem proper. It is not necessary that the
Collateral be present at any disposition thereof. Lender
shall have no obligation to clean-up or otherwise prepare
the Collateral for disposition.
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101
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Section 18.15. Actions and Proceedings. Lender has the
right to appear in and defend any action or proceeding
brought with respect to the Property in its own name or, if
required by Legal Requirements or, if in Lender’s reasonable
judgment, it is necessary, in the name and on behalf of
Borrower, which Lender
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believes will adversely affect the
Property or this Security Instrument and to bring any action
or proceedings, in its name or in the name and on behalf of
Borrower, which Lender, in its reasonable discretion,
decides should be brought to protect its interest in the
Property.
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102
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Section 18.16. Usury Laws. This Security Instrument and
the Note are subject to the express condition, and it is the
expressed intent of the parties, that at no time shall
Borrower be obligated or required to pay interest on the
principal balance due under the Note 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 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 principal balance due under
the Note at a rate in excess of such maximum rate, such rate
of interest 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 been payments in reduction of the principal
balance of the Note. No application to the principal
balance of the Note pursuant to this Section 18.16 shall
give rise to any requirement to pay any prepayment fee or
charge of any kind due hereunder, if any.
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102
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Section 18.17. Remedies of Borrower. In the event that a
claim or adjudication is made that Lender has acted
unreasonably or unreasonably delayed acting in any case
where by law or under the Note, this Security Instrument or
the Loan Documents, it has an obligation to act reasonably
or promptly, Lender shall not be liable for any monetary
damages, and Borrower’s remedies shall be limited to
injunctive relief or declaratory judgment.
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103
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Section 18.18. Offsets, Counterclaims and Defenses. Any
assignee of this Security Instrument, the Assignment and the
Note shall take the same free and clear of all offsets,
counterclaims or defenses which are unrelated to the Note,
the Assignment or this Security Instrument which Borrower
may otherwise have against any assignor of this Security
Instrument, the Assignment and the Note and no such
unrelated counterclaim or defense shall be interposed or
asserted by Borrower in any action or proceeding brought by
any such assignee upon this Security Instrument, the
Assignment or the Note and any such right to interpose or
assert any such unrelated offset, counterclaim or defense in
any such action or proceeding is hereby expressly waived by
Borrower.
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103
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Section 18.19. No Merger. If Borrower’s and Lender’s
estates become the same including, without limitation, upon
the delivery of a deed by Borrower in lieu of a foreclosure
sale, or upon a purchase of the Property by Lender in a
foreclosure sale, this Security Instrument and the lien
created hereby shall not be destroyed or terminated by the
application of the doctrine of merger and in such event
Lender shall continue to have and enjoy all of the rights
and privileges of Lender as to the separate estates; and, as
a consequence thereof, upon the foreclosure of the lien
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created by this Security Instrument, any Leases or subleases
then existing and created by Borrower shall not be destroyed
or terminated by application of the law of merger or as a
result of such foreclosure unless Lender or any purchaser at
any such foreclosure sale shall so elect. No act by or on
behalf of Lender or any such purchaser shall constitute a
termination of any Lease or sublease unless Lender or such
purchaser shall give written notice thereof to such lessee
or sublessee.
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103
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Section 18.20. Restoration of Rights. In case Lender shall
have proceeded to enforce any right under this Security
Instrument by foreclosure sale, entry or otherwise, and such
proceedings shall have been discontinued or abandoned for
any reason or shall have been determined adversely, then, in
every such case, Borrower and Lender shall be restored to
their former positions and rights hereunder with respect to
the Property subject to the lien hereof.
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103
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Section 18.21. Waiver of Statute of Limitations. The
pleadings of any statute of limitations as a defense to any
and all obligations secured by this Security Instrument are
hereby waived to the full extent permitted by Legal
Requirements.
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104
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Section 18.22. Advances. This Security Instrument shall
cover any and all advances made pursuant to the Loan
Documents, rearrangements and renewals of the Debt and all
extensions in the time of payment thereof, even though such
advances, extensions or renewals be evidenced by new
promissory notes or other instruments hereafter executed and
irrespective of whether filed or recorded. Likewise, the
execution of this Security Instrument shall not impair or
affect any other security which may be given to secure the
payment of the Debt, and all such additional security shall
be considered as cumulative. The taking of additional
security, execution of partial releases of the security, or
any extension of time of payment of the Debt shall not
diminish the force, effect or lien of this Security
Instrument and shall not affect or impair the liability of
Borrower and shall not affect or impair the liability of any
maker, surety, or endorser for the payment of the Debt.
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104
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Section 18.23. Application of Default Rate Not a Waiver.
Application of the Default Rate shall not be deemed to
constitute a waiver of any Default or Event of Default or
any rights or remedies of Lender under this Security
Instrument, any other Loan Document or applicable Legal
Requirements, or a consent to any extension of time for the
payment or performance of any obligation with respect to
which the Default Rate may be invoked.
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104
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Section 18.24. Intervening Lien. To the fullest extent
permitted by law, any agreement hereafter made pursuant to
this Security Instrument shall be superior to the rights of
the holder of any intervening lien.
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104
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Section 18.25. No Joint Venture or Partnership. Borrower
and Lender intend that the relationship created hereunder be
solely that of mortgagor and mortgagee or grantor and
beneficiary or borrower and lender, as the case may be.
Nothing
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herein is intended to create a joint venture,
partnership, tenancy-in-common, or joint tenancy
relationship between Borrower and Lender nor to grant Lender
any interest in the Property other than that of mortgagee,
beneficiary or lender.
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104
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Section 18.26. Time of the Essence. Time shall be of the
essence in the performance of all obligations of Borrower
hereunder.
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104
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Section 18.27. Borrower’s Obligations Absolute. Borrower
acknowledges that Lender and/or certain Affiliates of Lender
are engaged in the business of financing, owning, operating,
leasing, managing, and brokering real estate and in other
business ventures which may be viewed as adverse to or
competitive with the business, prospect, profits, operations
or condition (financial or otherwise) of Borrower. Except
as set forth to the contrary in the Loan Documents, all sums
payable by Borrower hereunder shall be paid without notice
or demand, counterclaim, set-off, deduction or defense and
without abatement, suspension, deferment, diminution or
reduction, and the obligations and liabilities of Borrower
hereunder shall in no way be released, discharged, or
otherwise affected (except as expressly provided herein) by
reason of: (a) any damage to or destruction of or any
Taking of the Property or any portion thereof ; (b) any
restriction or prevention of or interference with any use of
the Property or any portion thereof; (c) any title defect or
encumbrance or any eviction from the Premises or any portion
thereof by title paramount or otherwise; (d) any bankruptcy
proceeding relating to Borrower, any General Partner, or any
guarantor or indemnitor, or any action taken with respect to
this Security Instrument or any other Loan Document by any
trustee or receiver of Borrower or any such General Partner,
guarantor or indemnitor, or by any court, in any such
proceeding; (e) any claim which Borrower has or might have
against Lender; (f) any default or failure on the part of
Lender to perform or comply with any of the terms hereof or
of any other agreement with Borrower; or (g) any other
occurrence whatsoever, whether similar or dissimilar to the
foregoing, whether or not Borrower shall have notice or
knowledge of any of the foregoing.
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104
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Section 18.28. Publicity. All promotional news releases,
publicity or advertising by Manager, Borrower or their
respective Affiliates through any media intended to reach
the general public shall not refer to the Loan Documents or
the financing evidenced by the Loan Documents, or to Lender
or to any of its Affiliates without the prior written
approval of Lender or such Affiliate, as applicable, in each
instance, such approval not to be unreasonably withheld or
delayed. Lender shall be authorized to provide information
relating to the Property, the Loan and matters relating
thereto to rating agencies, underwriters, potential
securities investors, auditors, regulatory authorities and
to any Persons which may be entitled to such information by
operation of law and may use basic transaction information
(including, without limitation, the name of Borrower, the
name and address of the Property and the Loan Amount) in
press releases or other marketing materials.
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Section 18.29. Securitization Opinions. In the event the
Loan is included as an asset of a Securitization by Lender
or any of its Affiliates, Borrower shall, within ten (10)
Business Days after Lender’s written request therefor,
deliver opinions in form and substance and delivered by
counsel reasonably acceptable to Lender and each Rating
Agency, as may be reasonably required by Lender and/or the
Rating Agency in connection with such securitization.
Borrower’s failure to deliver the opinions required hereby
within such ten (10) Business Day period shall constitute an
“Event of Default” hereunder. The cost of any “bringdown”
opinion of any legal opinion given in connection with the
origination of the Loan will be paid by Borrower. The
reasonable cost of any other opinion requested by Lender
and/or any Rating Agency will be paid by Lender.
Notwithstanding the foregoing, Borrower shall not be
required to deliver a “10b-5” or “REMIC” Opinion in
connection with any Securitization.
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105
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Section 18.30. Cooperation with Rating Agencies. Borrower
covenants and agrees that in the event the Loan is to be
included as an asset of a Securitization, Borrower shall, so
long as the following may be accomplished at no material
expense to Borrower and with no more than an insignificant
allocation of Borrower’s time (a) gather any information
reasonably required by each Rating Agency in connection with
such a Securitization to the extent in Borrower’s possession
or control or reasonably obtainable by Borrower, (b) at
Lender’s request, meet with representatives of each Rating
Agency to discuss the business and operations of the
Property, and (c) cooperate with the reasonable requests of
each Rating Agency and Lender in connection with all of the
foregoing as well as in connection with all other matters
and the preparation of any offering documents with respect
thereto, including, without limitation, entering into any
amendments or modifications to this Security Instrument or
to any other Loan Document which may be requested by Lender
to conform to Rating Agency or market standards for a
Securitization provided that no such modification shall
modify (a) the interest rate payable under the Note, (b) the
stated maturity of the Note, (c) the amortization of
principal under the Note, (d) Section 18.32 hereof, (e) any
other material economic term of the Loan, (f) expand the
scope of representation made hereunder or (g) any provision,
the effect of which would materially increase Borrower’s
obligations or materially decrease Borrower’s rights under
the Loan Documents. Borrower acknowledges that the
information provided by Borrower to Lender may be
incorporated into the offering documents for a
Securitization and to the fullest extent permitted, Borrower
irrevocably waives all rights, if any, to prohibit such
disclosures including, without limitation, any right of
privacy. Lender and each Rating Agency shall be entitled to
rely on the information supplied by, or on behalf of,
Borrower, and Borrower indemnifies and holds harmless the
Indemnified Parties, their Affiliates and each Person who
controls such Persons within the meaning of Section 15 of
the Securities Act or Section 20 of the Securities Exchange
Act of 1934, as same may be amended from time to time, for,
from and against any claims, demands, penalties, fines,
liabilities, settlements, damages, costs and expenses of
whatever kind or nature, known or unknown, contingent or
otherwise, whether incurred or imposed within or outside the
judicial process, including, without limitation, reasonable
attorneys’ fees and
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disbursements that arise out of or are
based upon any untrue statement or alleged untrue statement
of any material fact contained in such information or arise
out of or are based upon the omission or alleged omission
(collectively, “Securities Liabilities”); provided,
however, that Borrower will be liable under the foregoing
indemnity only to the extent that such Securities
Liabilities arise out of, or are based upon, any such untrue
statement or omission made therein in reliance upon, and in
conformity with, information furnished to Lender by or on
behalf of Borrower or its Affiliates in connection with the
preparation of the disclosure documents or in connection
with the underwriting of the Loan; and provided further,
however, that with respect to information provided by third
parties and with respect to statements made in the
disclosure documents that are based upon information
provided by third parties, Borrower will be liable only if
Borrower or its Affiliates knew that such information was
false or omitted to state a material fact known to Borrower
and necessary to make the statements made, in light of the
circumstances under which they were made, not misleading.
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105
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Section 18.31. Securitization Financials. Borrower
covenants and agrees that, upon Lender’s written request
therefor in connection with a Securitization, Borrower
shall, at Borrower’s sole cost and expense, promptly deliver
(a) audited financial statements and related documentation
prepared by an Independent certified public accountant that
satisfy securities laws and requirements for use in a public
registration statement (which may include up to three (3)
years of historical audited financial statements) and (b)
if, at the time one or more Disclosure Documents are being
prepared in connection with a Securitization, Lender expects
that Borrower alone or Borrower and one or more of its
Affiliates collectively, or the Property alone or the
Property and any other parcel(s) of real property, together
with improvements thereon and personal property related
thereto, that is “related”, within the meaning of the
definition of Significant Obligor, to the Property (a
“Related Property”) collectively, will be a Significant
Obligor, Borrower shall furnish to Lender upon request (i)
the selected financial data or, if applicable, net operating
income, required under Item 1112(b)(1) of Regulation AB and
meeting the requirements thereof, if Lender expects that the
principal amount of the Loan, together with any loans made
to an Affiliate of Borrower or secured by a Related Property
that is included in a Securitization with the Loan (a
“Related Loan”), as of the cut-off date for such
Securitization may, or if the principal amount of the Loan
together with any Related Loans as of the cut-off date for
such Securitization and at any time during which the Loan
and any Related Loans are included in a Securitization does,
equal or exceed ten percent (10%) (but less than twenty
percent (20%)) of the aggregate principal amount of all
mortgage loans included or expected to be included, as
applicable, in the Securitization or (ii) the financial
statements required under Item 1112(b)(2) of Regulation AB
and meeting the requirements thereof, if Lender expects that
the principal amount of the Loan together with any Related
Loans as of the cut-off date for such Securitization may, or
if the principal amount of the Loan together with any
Related Loans as of the cut-off date for such Securitization
and at any time during which the Loan and any Related Loans
are included in a Securitization does, equal or exceed
twenty percent (20%) of the
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aggregate principal amount of
all mortgage loans included or expected to be included, as
applicable, in the Securitization. Such financial data or
financial statements shall be furnished to Lender within ten
(10) Business Days after notice from Lender in connection
with the preparation of Disclosure Documents for the
Securitization and, with respect to the data or financial
statements required pursuant to clause (b) hereof, (A) not
later than thirty (30) days after the end of each fiscal
quarter of Borrower and (B) not later than seventy-five (75)
days after the end of each Fiscal Year; provided, however,
that Borrower shall not be obligated to furnish financial
data or financial statements pursuant to clauses (A) or (B)
of this sentence with respect to any period for which a
filing pursuant to the Securities Exchange Act of 1934 in
connection with or relating to the Securitization is not
required.
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106
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Section 18.32. Exculpation. Notwithstanding anything
herein or in any other Loan Document to the contrary, except
as otherwise set forth in this Section 18.32 to the
contrary, Lender shall not enforce the liability and
obligation of Borrower or (a) if Borrower or any of its
direct or indirect owners is a partnership, its or their
constituent partners or any of their respective partners,
(b) if Borrower or any of its direct or indirect owners is a
trust, its or their beneficiaries or any of their respective
Partners (as hereinafter defined), (c) if Borrower or any of
its direct or indirect owners is a corporation, any of its
or their shareholders, directors, principals, officers or
employees, or (d) if Borrower or any of its direct or
indirect owners is a limited liability company, any of its
or their members (the Persons described in the foregoing
clauses (a) — (d), as the case may be, are hereinafter
referred to as the “Partners”) to perform and observe the
obligations contained in this Security Instrument or any of
the other Loan Documents by any action or proceeding,
including, without limitation, any action or proceeding
wherein a money judgment shall be sought against Borrower or
the Partners, except that Lender may bring a foreclosure
action, action for specific performance, or other
appropriate action or proceeding (including, without
limitation, an action to obtain a deficiency judgment)
solely for the purpose of enabling Lender to realize upon
(i) Borrower’s interest in the Property, (ii) the Rent to
the extent received by Borrower during the existence of an
Event of Default (all Rent covered by this clause (ii) being
hereinafter referred to as the “Recourse Distributions”) and
not applied towards the operation or maintenance of the
Property, and (iii) any other collateral then subject to the
Loan Documents (the collateral described in the foregoing
clauses (i) — (iii) is hereinafter referred to as the
“Default Collateral”); provided, however, that any judgment
in any such action or proceeding shall be enforceable
against Borrower only to the extent of any such Default
Collateral. The provisions of this Section shall not,
however, (a) impair the validity of the Debt evidenced by
the Note or in any way affect or impair the lien of this
Security Instrument or any of the other Loan Documents or
the right of Lender to foreclose this Security Instrument
following the occurrence of an Event of Default; (b) impair
the right of Lender to name Borrower as a party defendant in
any action or suit for judicial foreclosure and sale under
this Security Instrument; (c) affect the validity or
enforceability of the Note, this Security Instrument, or any
of the other Loan Documents, or impair the right of Lender
to
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seek a personal judgment against Guarantor to the extent
contained in the Guaranty; (d) impair the right of Lender to
obtain the appointment of a receiver; (e) impair the
enforcement of the Assignment; (f) impair the right of
Lender to bring suit for a monetary judgment with respect to
fraud or material misrepresentation by Borrower, or any
Affiliate of Borrower in connection with this Security
Instrument, the Note or the other Loan Documents, and the
foregoing provisions shall not modify, diminish or discharge
the liability of Borrower with respect to same; (g) impair
the right of Lender to bring suit for a monetary judgment to
obtain the Recourse Distributions received by Borrower; (h)
impair the right of Lender to bring suit for a monetary
judgment with respect to Borrower’s misappropriation of
tenant security deposits or Rent collected more than one (1)
month in advance and not applied to the operation of the
Property, and the foregoing provisions shall not modify,
diminish or discharge the liability of Borrower; (i) impair
the right of Lender to obtain Loss Proceeds due to Lender
pursuant to this Security Instrument; (j) impair the right
of Lender to enforce the provisions of Sections 2.02(g),
12.01, 16.01 or 16.02, inclusive of this Security
Instrument, even after repayment in full by Borrower of the
Debt or to bring suit for a monetary judgment against
Borrower with respect to any obligation set forth in said
Sections; (k) prevent or in any way hinder Lender from
exercising, or constitute a defense, or counterclaim, or
other basis for relief in respect of the exercise of, any
other remedy against any or all of the collateral securing
the Note as provided in the Loan Documents; (l) impair the
right of Lender to bring suit for a monetary judgment with
respect to any misapplication or conversion of Loss
Proceeds, and the foregoing provisions shall not modify,
diminish or discharge the liability of Borrower; (m) impair
the right of Lender to sue for, seek or demand a deficiency
judgment against Borrower solely for the purpose of
foreclosing the Property or any part thereof, or realizing
upon the Default Collateral; provided, however, that any
such deficiency judgment referred to in this clause (m)
shall be enforceable against Borrower only to the extent of
any of the Default Collateral; (n) impair the ability of
Lender to bring suit for a monetary judgment with respect to
arson or waste to or of the Property or damage to the
Property resulting from the gross negligence or willful
misconduct of Borrower or, to the extent that there is
sufficient cash flow, failure to pay any Imposition, or in
lieu thereof, deposit a sum equal to any Impositions into
the Basic Carrying Costs Sub-Account; (o) impair the right
of Lender to bring a suit for a monetary judgment in the
event of the exercise of any right or remedy under any
federal, state or local forfeiture laws resulting in the
loss of the lien of this Security Instrument, or the
priority thereof, against the Property; (p) be deemed a
waiver of any right which Lender may have under Sections
506(a), 506(b), 1111(b) or any other provision of the
Bankruptcy Code to file a claim for the full amount of the
Debt or to require that all collateral shall continue to
secure all of the Debt; (q) impair the right of Lender to
bring suit for monetary judgment with respect to any actual
losses resulting from any claims, actions or proceedings
initiated by Borrower (or any Affiliate of Borrower)
alleging that the relationship of Borrower and Lender is
that of joint venturers, partners, tenants in common, joint
tenants or any relationship other than that of debtor and
creditor; (r) impair the right of
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Lender to bring suit for a
monetary judgment in the event of a Transfer in violation of
the provisions of Article IX hereof; (s) impair the right of
Lender to bring suit for a monetary judgment in the event
that Borrower moves its principal place of business or its
books and records relating to the Property which are
governed by the UCC, or changes its name, its jurisdiction
of organization, type of organization or other legal
structure or, if it has one, organizational identification
number, without first giving Lender thirty (30) days prior
written notice; (t) impair the right of Lender to bring suit
for a monetary judgment in the event that Borrower changes
its name of otherwise does anything which would make the
information set forth in any UCC Financing Statements
relating to the Property materially misleading without
giving Lender thirty (30) days prior written notice thereof;
or (u) impair the right of Lender to bring suit for a
monetary judgment in the event that Borrower consents to any
modification, change, supplement, alteration or amendment of
the Ground Lease without Lender’s prior written consent,
which shall not be unreasonably withheld, or termination of
the Ground Lease without Lender’s prior written consent,
which consent shall be subject to Lender’s sole and absolute
discretion. The provisions of this Section 18.32 shall be
inapplicable to Borrower if (a) any proceeding, action,
petition or filing under the Bankruptcy Code, or any similar
state or federal law now or hereafter in effect relating to
bankruptcy, reorganization or insolvency, or the arrangement
or adjustment of debts, shall be (A) filed by Borrower or
Guarantor or (B) filed against Borrower or Guarantor and
consented to or acquiesced in by Borrower or Guarantor or if
any Affiliate of Borrower or Guarantor, or if Borrower or
Guarantor or any Affiliate of either of them shall institute
any proceeding for Borrower’s dissolution or liquidation, or
Borrower or Guarantor shall make an assignment for the
benefit of creditors, or (b) Borrower or any Affiliate
contests or in any material way interferes in bad faith
with, directly or indirectly (collectively, a “Contest”),
any foreclosure action, UCC sale or other material remedy
exercised by Lender upon the occurrence of any Event of
Default whether by making any motion, bringing any
counterclaim (other than a compulsory counterclaim),
claiming any defense, seeking any injunction or other
restraint, commencing any action, or otherwise (provided
that if any such Person obtains a non-appealable order
successfully asserting a Contest, Borrower shall have no
liability under this clause (b) and provided, further, that
the liability under this clause (b) shall be limited to the
actual and consequential costs, expenses and damages of
Lender which result, directly or indirectly, from any such
Contest), in which event Lender shall have recourse against
all of the assets of Borrower including, without limitation,
any right, title and interest of Borrower in and to the
Property, and any Recourse Distributions received by
Guarantor or Borrower (but excluding the other assets of
such Guarantor to the extent Lender would not have had
recourse thereto other than in accordance with the
provisions of this Section 18.32).
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Section 18.33. Concerning the Trustee. Trustee shall be
under no duty to take any action hereunder except as
expressly required hereunder or by law, or to perform any
act which would involve Trustee in any expense or liability
or to institute or defend any suit in respect hereof, unless
properly indemnified to
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Trustee’s reasonable satisfaction.
Trustee, by acceptance of this Security Instrument,
covenants to perform and fulfill the trusts herein created,
being liable, however, only for gross negligence or willful
misconduct, and hereby waives any statutory fee and agrees
to accept reasonable compensation, in lieu thereof, for any
services rendered by Trustee in accordance with the terms
hereof. Trustee may resign at any time by written
instrument to that effect delivered to Lender. Lender may
remove Trustee at any time or from time to time and select a
successor trustee. In the event of the death, removal,
resignation, refusal to act, or inability to act of Trustee,
or in its sole discretion for any reason whatsoever Lender
may, without notice and without specifying any reasons
therefor and without applying to any court, select and
appoint a successor trustee, by an instrument recorded
wherever this Security Instrument is recorded, and all
powers, rights, duties and authority of Trustee, as
aforesaid, shall thereupon become vested in such successor.
Such substitute trustee shall not be required to give bond
for the faithful performance of the duties of Trustee
hereunder unless required by Lender. The procedure provided
for in this Section 18.33 for substitution of Trustee shall
be in addition to and not in exclusion of any other
provisions for substitution, by law or otherwise.
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Section 18.34. Trustee’s Fees. Borrower shall pay all
costs, fees and expenses incurred by Trustee and Trustee’s
agents and counsel in connection with the performance by
Trustee of Trustee’s duties hereunder, and all such costs,
fees and expenses shall be secured by this Security
Instrument.
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Section 18.35. Mezzanine Loan Option. (a) Lender, at its
sole cost and expense, shall have the right at any time to
divide the Loan into two or more parts (the “Mezzanine
Option”): a “mortgage loan” and one or more “mezzanine
loans.” The principal amount of the mortgage loan plus the
principal amount of the mezzanine loan(s) shall equal the
outstanding principal balance of the Loan immediately prior
to the creation of the mortgage loan and the mezzanine
loan(s). In effectuating the foregoing, Lender will make
one or more loans to one or more entities that will be the
direct or indirect equity owner(s) of Borrower as described
in Section 18.35(b) (collectively, the “Mezzanine
Borrower(s)”). The Mezzanine Borrower(s) will contribute
the amount of the mezzanine loan(s) to Borrower (in its
capacity as borrower under the mortgage loan, “mortgage
borrower”) and the mortgage borrower will apply the
contribution to pay down the Loan to the mortgage loan
amount. The mortgage loan and the mezzanine loan(s) will be
on the same terms and subject to the same conditions set
forth in the Loan Documents except as follows. The
mezzanine loan(s) shall be made pursuant to Lender’s
standard mezzanine loan documents.
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Section 18.36. Component Notes. Lender, without in any way
limiting Lender’s other rights hereunder, in its sole and
absolute discretion, shall have the right at any time to
require Borrower to execute and deliver “component” notes
(including senior and junior notes), which notes may be paid
in such order of priority as may be designated by Lender,
provided that (a) the aggregate principal amount of such
“component” notes shall equal the outstanding principal
balance
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of the Loan immediately prior to the creation of
such “component” notes, (b) the weighted average interest
rate of all such “component” notes shall on the date created
equal the interest rate which was applicable to the Loan
immediately prior to the creation of such “component” notes,
(c) the debt service payments on all such “component” notes
shall on the date created equal the debt service payment
which was due under the Loan immediately prior to the
creation of such component notes and (d) the other terms and
provisions of each of the “component” notes shall be
identical in substance and substantially similar in form to
the Loan Documents. Borrower shall cooperate with all
reasonable requests of Lender in order to establish the
“component” notes and shall execute and deliver such
documents as shall reasonably be required by Lender in
connection therewith, all in form and substance reasonably
satisfactory to Lender, including, without limitation, the
severance of security documents if requested. It shall be
an Event of Default if Borrower fails to comply with any of
the terms, covenants or conditions of this Section 18.36
after the expiration of ten (10) Business Days after notice
thereof.
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Section 18.37. Certain Matters Relating to Property Located
in the State of California. With respect to the Property
which is located in the State of California, notwithstanding
anything contained herein:
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EXHIBITS
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EXHIBIT A
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Legal Description of Premises
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EXHIBIT B
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Summary Of Reserves
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EXHIBIT C
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Cash Flow Statement
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EXHIBIT D
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Required Engineering Work
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EXHIBIT E
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Form of Direction Letter
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EXHIBIT F
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Underwritten Rent Escrow
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EXHIBIT G
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Credit Card Payment Direction Letter
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