EXHIBIT 10.5
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LHO FINANCING PARTNERSHIP I, L.P.
(Borrower)
to
BENJAMIN GRANT
(Trustee)
for the benefit of
GENERAL ELECTRIC CAPITAL CORPORATION
(Lender)
______________________________________________________________
DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
______________________________________________________________
Dated: As of July 29, 1999
Property Location: 650 Pearl Street
Dallas
Dallas County, Texas
DOCUMENT PREPARED BY AND WHEN RECORDED, RETURN TO:
Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, New York 10038
Attention: Reese Mason, Esq.
DEED OF TRUST, ASSIGNMENT OF LEASES
AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING
This Deed of Trust, Assignment of Leases and Rents, Security
Agreement and Fixture Filing (this "Deed of Trust") is executed as of
July 29, 1999, by LHO FINANCING PARTNERSHIP I, L.P., a Delaware limited
partnership ("Borrower"), whose address for notice hereunder is 1401 Eye
Street, N.W., Suite 900, Washington, D.C. 20005 to Benjamin Grant, an
individual ("Trustee"), whose address for notice hereunder is 2001 Bryan
Street, Suite 1700, Dallas, Texas 75201, for the benefit of GENERAL
ELECTRIC CAPITAL CORPORATION, a New York corporation ("Lender"), whose
address for notice is 292 Long Ridge Road, Stamford, Connecticut 06927.
R E C I T A L S
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WHEREAS, Lender is making a first deed of trust loan in the
original principal amount of $16,200,000.00 (the "Loan") to Borrower
pursuant to that certain Loan Agreement of even date herewith between
Borrower and Lender (the "Loan Agreement") to be evidenced by that certain
Promissory Note of even date herewith made by Borrower to Lender payable to
the order of Lender in the stated principal amount of $16,200,000.00 (the
"Note") and secured by this Deed of Trust;
WHEREAS, concurrently herewith, Lender has made an additional
first mortgage loan in the aggregate principal amount of $30,300,000.00
(the "Other Loan") to Borrower, pursuant to a Loan Agreement of even date
herewith between Lender and Borrower (the "Other Loan Agreement");
WHEREAS, the Other Loan is evidenced by a promissory note of
even date herewith with a maturity date of August 1, 2024 from Borrower to
Lender (the "Other Note") and is secured by, among other things, a Fee and
Leasehold Mortgage, Assignment of Leases and Rents, Security Agreement and
Fixture Filing dated of even date herewith and made by Borrower to Lender
(the "Other First Mortgage") encumbering the real and personal property
described therein (the "Other Property"); and
WHEREAS, in order to secure the full and punctual payment and
performance of all of the obligations of Borrower to Lender now or
hereafter existing, whether for principal, interest, fees, expenses or
otherwise (collectively, the "Obligations") under the Other Loan Agreement,
the Other Note, the Other First Mortgage and all other documents evidencing
or securing the Other Loan (collectively, the "Other Loan Documents") and
the Loan Documents, Borrower by these presents is hereby deeding,
mortgaging, giving, granting, bargaining, selling, alienating, enfeoffing,
conveying, confirming, warranting, pledging, assigning and hypothecating
unto Lender all of Borrower's right, title and interest in and to the
Property.
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. As used herein, the following terms
shall have the following meanings:
"Debt": The sum of all (a) principal, interest and all other
amounts due under or secured by the Loan Documents and the Other Loan
Documents (b) any and all advances or disbursements made by Lender of funds
other than funds deposited with Lender by Borrower to protect and preserve
the Property, or the lien hereof on the Property and/or the Other Property,
including without limitation, advances or disbursements made for the
payment of taxes, levies or insurance on the Property and/or the Other
Property, advances or disbursements made under the Loan Agreement and the
Other Loan Documents to enable completion of improvements on or to the
Property and/or the Other Property and advances or disbursements made to
repair or maintain the Property and/or the Other Property, with interest on
all such advances or disbursements, and (c) all other indebtedness,
obligations and liabilities now or hereafter existing of any kind of
Borrower to Lender under documents which recite that they are intended to
be secured by this Deed of Trust.
"Loan Documents": The (a) Loan Agreement of even date
herewith, between Borrower and Lender (the "Loan Agreement"),
(b) Promissory Note of even date, executed by Borrower, payable to the
order of Lender, in the stated principal amount of $16,200,000.00, (the
"Note") (c) this Deed of Trust, (d) all other documents now or hereafter
executed by Borrower, or any other person or entity, to evidence, secure or
guaranty the payment of all or any portion of the Debt or the performance
of all or any portion of the Obligations or otherwise executed in
connection with the Note or this Deed of Trust, (e) the Other Loan
Documents, and (f) all amendments, modifications, restatements, extensions,
renewals or replacements of the foregoing.
"Obligations": All of the agreements, covenants, conditions,
warranties, representations and other obligations (other than to repay the
Debt) made or undertaken by Borrower or any other person or entity to
Lender or others as set forth in the Loan Documents.
"Permitted Encumbrances": The outstanding liens, easements,
restrictions, security interests and other exceptions to title set forth in
the policy of title insurance insuring the lien of this Deed of Trust,
together with (i) the liens and security interests in favor of Lender
created by the Loan Documents, (ii) the liens for taxes, not yet
delinquent, which are being contested in accordance with Loan Agreement and
(iii) any rights under Leases entered into in accordance with the Loan
Agreement.
"Property": (a) The condominium unit designated on Exhibit B
(the "Condominium Unit"), together with the proportionate and undivided
interest in the common elements appurtenant to the Condominium Unit (the
"Common Elements"), which are located on the real property described in
Exhibit A (the "Land"), (b) all of Borrower's rights, powers and privileges
and all credits, refunds and other sums of money to which Borrower is now
or hereafter becomes entitled to under that certain Declaration of
Covenants, Conditions and Restrictions for Plaza of the Americas, a
Condominium Regime, dated as of September 6, 1991 (as the same may be
further amended from time to time, the "Declaration"), that certain Article
of Incorporation of Plaza of the Americas Condominium Association, a Texas
Non-Profit Corporation (as the same may be further amended from time to
time, the "Article of Incorporation"), and those certain By-Laws of Plaza
of the Americas Condominium Association, a Texas Non-Profit Corporation (as
the same may be further amended from time to time, the "Bylaws"; the
Bylaws, the Declaration and the Article of Incorporation are collectively,
the "Condominium Documents"), (c) all materials, supplies, equipment,
apparatus and other items of personal property now owned or hereafter
acquired by Borrower and now or hereafter attached to, installed in or used
in connection with any of the Improvements or the Land, and all the right,
title and interest of Borrower in and to water, gas, electrical, storm and
sanitary sewer facilities and all other utilities whether or not situated
in easements (the "Fixtures"), including, without limitation, Borrower's
reversionary interest in Fixtures pursuant to the Operating Lease, if any,
(d) all right, title and interest of Borrower in and to all goods,
accounts, general intangibles, instruments, documents, chattel paper and
all other personal property of any kind or character, including such items
of personal property as defined in the UCC, now owned or hereafter acquired
by Borrower and now or hereafter affixed to, placed upon, used in
connection with, arising from or otherwise related to the Land and
Improvements or which may be used in or relating to the planning,
development, financing or operation of the Property, including, without
limitation, furniture, furnishings, equipment, machinery, money, insurance
proceeds, accounts, contract rights, trademarks, goodwill, chattel paper,
documents, trade names, licenses and/or franchise agreements, rights of
Borrower under leases of Fixtures or other personal property or equipment,
inventory, all refundable, returnable or reimbursable fees, deposits or
other funds or evidences of credit or indebtedness deposited by or on
behalf of Borrower with any governmental authorities, boards, corporations,
providers of utility services, public or private, including specifically,
but without limitation, all refundable, returnable or reimbursable tap
fees, utility deposits, commitment fees and development costs (the
"Personalty"), (e) all right, title and interest of Borrower in and to
that certain Promissory Note dated as of April 29, 1998 by Operating Lessee
(as defined in the Loan Agreement) in favor of Operating Partnership (as
defined in the Loan Agreement), predecessor-in-interest to Borrower,
(f) all reserves, escrows or impounds required under the Loan Agreement and
all deposit accounts maintained by Borrower with respect to the Property
including without limitation any lockbox account and cash management
account and all securities, investments, property and financial assets held
from time to time, all accounts and monies held by Operating Lessee and/or
Manager which Borrower has an interest in and is entitled to receive and
all proceeds, products, distributions or dividends or substitutions thereon
and thereof (the "Accounts"), (g) all the right, title and interest of
Borrower in and to all plans, specifications, shop drawings and other
technical descriptions prepared for construction, repair or alteration of
the Improvements, and all amendments and modifications thereof (the
"Plans"), (h) all the right, title and interest of Borrower in and to all
leases, subleases, operating leases, licenses, concessions, occupancy
agreements, rental contracts, or other agreements (written or oral) now or
hereafter existing relating to the use or occupancy of all or any part of
the Property, together with all guarantees, letters of credit and other
credit support, modifications, extensions and renewals thereof, whether
before or after the filing by or against Borrower of any petition of relief
under 11 U.S.C. Section 101 et. seq. (as same may be amended from time to
time, the "Bankruptcy Code") and all related security and other deposits
(the "Leases") and all of Borrower's claims and rights (the "Bankruptcy
Claims") to the payment of damages arising from any rejection by a lessee
of any Lease under the Bankruptcy Code, (i) all of the Operating Lease Rent
(as defined in the Loan Agreement) and, if any, all of the rents, revenues,
issues, income, proceeds, profits, and all other payments of any kind under
the Leases actually received by Borrower for using, leasing, licensing,
possessing, operating from, residing in, selling or otherwise enjoying the
Property whether paid or accruing before or after the filing by or against
Borrower of any petition for relief under the Bankruptcy Code including,
without limitation, all hotel receipts, revenues and credit card receipts
collected from guest rooms, restaurants, bars, meeting rooms, banquet rooms
and recreational facilities, all receivables, customer obligations,
installment payment obligations and other obligations now existing or
hereafter arising or created out of the sale, lease, sublease, license,
concession or other grant of the right of the use and occupancy of property
or rendering of services by Borrower or any operator or manager of the
hotel or the commercial space located in the Improvements or acquired from
others (including, without limitation, from the rental of any office space,
retail space, guest rooms or other space, halls, stores, and offices, and
deposits securing reservations of such space), license, lease, sublease and
concession fees and rentals, health club membership fees, food and beverage
wholesale and retail sales, service charges, vending machine sales and
security deposits under Leases (collectively, the "Rents"), (j) all other
agreements, such as construction contracts, architects' agreements,
operating agreements, engineers' contracts, utility contracts, maintenance
agreements, franchise agreements, service contracts, permits, licenses,
certificates and entitlements in any way relating to the development,
construction, use, occupancy, operation, maintenance, enjoyment,
acquisition or ownership of the Property (the "Property Agreements"),
(k) all rights, privileges, tenements, hereditaments, rights-of-way,
easements, reciprocal easement agreements, appendages and appurtenances
appertaining to the foregoing, and all right, title and interest, if any,
of Borrower in and to any streets, ways, alleys, strips or gores of land
adjoining the Land or any part thereof, (l) all accessions, replacements
and substitutions for any of the foregoing and all proceeds thereof,
(m) all insurance policies, unearned premiums therefor and proceeds from
such policies covering any of the above property now or hereafter acquired
by Borrower, (n) all mineral, water, oil and gas rights now or hereafter
acquired and relating to all or any part of the Property, (o) all
tradenames, trademarks, service marks, logos, copyrights, goodwill, books
and records and all other general intangibles relating to or used in
connection with the operation of the Property, (p) all of Borrower's right,
title and interest in and to all inventory and articles of personal
property and accessions thereof and renewals and replacements thereof and
substitutions therefor, if any (including, but not limited to, beds,
bureaus, chiffoniers, chests, chairs, desks, lamps, mirrors, bookcases,
tables, rugs, carpeting, drapes, draperies, curtains, shades, venetian
blinds, screens, paintings, hangings, pictures, divans, couches, luggage
carts, luggage racks, stools, sofas, chinaware, 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, private
telephone systems, medical equipment, potted plants, heating, lighting and
plumbing fixtures, fire prevention and extinguishing apparatus, 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, electrical signs, bulbs,
bells, ash and fuel, conveyors, cabinets, lockers, shelving, spotlighting
equipment, dishwashers, garbage disposals, washers and dryers), other
customary hotel equipment, and (q) all of Borrower's right, title and
interest in and to any awards, remunerations, reimbursements, settlements
or compensation heretofore made or hereafter to be made by any governmental
authority pertaining to the Land, Improvements, Fixtures or Personalty. As
used in this Deed of Trust, the term "Property" shall mean all or, where
the context permits or requires, any portion of the above or any interest
therein.
"UCC": The Uniform Commercial Code of Texas or, if the
creation, perfection and enforcement of any security interest herein
granted is governed by the laws of a state other than Texas, then, as to
the matter in question, the Uniform Commercial Code in effect in that
state.
Section 1.2Other Terms. Capitalized terms not otherwise
defined herein shall have the respective meanings set forth in the Loan
Agreement.
ARTICLE II
GRANT
Section 2.1Grant. To secure the full and timely payment of
the Debt and the full and timely performance of the Obligations, Borrower
hereby MORTGAGES, GRANTS, BARGAINS, SELLS and CONVEYS to Trustee all of
Borrower's right, title and interest in and to the Property, subject,
however, to the Permitted Encumbrances; TO HAVE AND TO HOLD the Property to
Trustee, its successors and assigns, IN TRUST, WITH POWER OF SALE, and
Borrower does hereby bind itself, its successors and assigns to WARRANT AND
FOREVER DEFEND the title to the Property unto Lender.
ARTICLE III
WARRANTIES, REPRESENTATIONS AND COVENANTS
Borrower warrants, represents and covenants to Lender as
follows:
Section 3.1Title to Property and Lien of this Instrument.
Borrower owns the Property free and clear of any liens, claims or
interests, except the Permitted Encumbrances. This Deed of Trust creates
valid, enforceable first priority liens and security interests against the
Property. Borrower warrants that Borrower has good, marketable and
insurable title to the Property and has the full power, authority and right
to execute, deliver and perform its obligations under this Deed of Trust.
None of the Permitted Encumbrances, individually or in the aggregate,
materially interfere with the benefits of the security intended to be
provided by this Deed of Trust, materially and adversely affect the value
of the Property, materially impair the use or operations of the Property or
impair Borrower's ability to pay its obligations in a timely manner.
Section 3.2First Lien Status. Borrower shall preserve and
protect the first lien and security interest status of this Deed of Trust
and the other Loan Documents. If any lien or security interest other than
the Permitted Encumbrances is asserted against the Property, Borrower shall
promptly, and at its expense, (a) give Lender a detailed written notice of
such lien or security interest (including origin, amount and other terms),
and (b) pay the underlying claim in full or take such other action so as to
cause it to be released or, in Lender's discretion, provide a bond or other
security satisfactory to Lender for the payment of such claim or contest
such claim in accordance with the Loan Agreement.
Section 3.3Payment and Performance. Borrower shall pay the
Debt when due under the Loan Documents and shall perform the Obligations in
full when they are required to be performed.
Section 3.4Replacement of Fixtures and Personalty. Borrower
shall not, without the prior written consent of Lender, permit any of the
Fixtures or Personalty to be removed at any time from the Land,
Improvements, Condominium Unit or Common Elements, unless the removed item
is removed temporarily for maintenance and repair or, if removed
permanently, is obsolete and is replaced by an article of equal or better
suitability and value, owned by Borrower subject to the liens and security
interests of this Deed of Trust and the other Loan Documents, and free and
clear of any other lien or security interest except such as may be first
approved in writing by Lender.
Section 3.5Maintenance of Rights of Way, Easements and
Licenses. Borrower shall maintain all rights of way, easements, grants,
privileges, licenses, certificates, permits, entitlements and franchises
necessary for the use of the Property and will not, without the prior
consent of Lender, consent to any public restriction (including any zoning
ordinance) or private restriction as to the use of the Property. Borrower
shall comply in all material respects with all restrictive covenants
affecting the Property, and all zoning ordinances and other public or
private restrictions as to the use of the Property.
Section 3.6Inspection. Borrower shall permit Lender, and
Lender's agents, representatives and employees, upon reasonable prior
notice to Borrower and during normal business hours, to inspect the
Property and conduct such environmental and engineering studies as Lender
may require, provided that such inspections and studies shall not
materially interfere with the use and operation of the Property.
Section 3.7Other Covenants. All of the covenants in the Loan
Agreement and the other Loan Documents are incorporated herein by reference
and, together with covenants in this Article 3, shall be covenants running
with the land. The covenants set forth in the Loan Agreement include,
among other provisions: (a) the obligation to pay (subject to Borrower's
right to contest pursuant to the terms of the Loan Agreement) when due all
taxes on the Property or assessed against Lender with respect to the Loan,
(b) the right of Lender to inspect the Property, (c) the obligation to keep
the Property insured as set forth therein, (d) the obligation to comply
with all legal requirements (including environmental laws), maintain the
Property in good condition, and promptly repair any damage or casualty, and
(e) except as otherwise permitted under the Loan Agreement, the obligation
of Borrower to obtain Lender's consent prior to entering into, modifying or
taking other actions with respect to Leases.
Section 3.8Condemnation Awards and Insurance Proceeds.
(a) Condemnation Awards. Borrower assigns all awards and
compensation for any condemnation or other taking, or any purchase in lieu
thereof, to Lender and authorizes Lender to collect and receive such awards
and compensation and to give proper receipts and acquittances therefor,
subject to the terms of the Loan Agreement.
(b) Insurance Proceeds. Borrower assigns to Lender all
proceeds of any insurance policies insuring against loss or damage to the
Property. Borrower authorizes Lender to collect and receive such proceeds
and authorizes and directs the issuer of each of such insurance policies to
make payment for all such losses directly to Lender, instead of to Borrower
and Lender jointly in accordance with Section 5.1 of the Loan Agreement.
Section 3.9Transfer or Encumbrance of Property.
(a) Without the prior written consent of Lender, neither
Borrower nor any other Person having a direct or indirect ownership or
beneficial interest in Borrower shall (i) directly or indirectly sell,
transfer, convey, mortgage, pledge, or assign the Property, any part
thereof or any interest therein (including any partnership or any other
ownership interest in Borrower); (ii) further encumber, alienate, grant a
Lien or grant any other interest in the Property or any part thereof
(including any partnership or other ownership interest in Borrower),
whether voluntarily or involuntarily; or (iii) enter into any easement or
other agreement granting rights in or restricting the use or development of
the Property.
(b) As used in this Section 3.9, "transfer" shall include,
without limitation, (i) an installment sales agreement wherein Borrower
agrees to sell the Property or any part thereof for a price to be paid in
installments; (ii) an agreement by Borrower leasing all or a substantial
part of the Property for other than actual occupancy by a space tenant
thereunder or a sale, assignment or other transfer of, or the grant of a
security interest in, Borrower's right, title and interest in and to any
Leases or any Rents, (iii) if Borrower or any general partner or managing
member of Borrower is a corporation, the voluntary or involuntary sale,
conveyance or transfer of such corporation's stock (or the stock of any
corporation directly or indirectly controlling such corporation by
operation of law or otherwise) or the creation or issuance of new stock
such that such corporation's stock shall be vested in a party or parties
who are not now stockholders or any change in the control of such
corporation; and (iv) if Borrower or any general partner or managing member
of Borrower is a limited or general partnership, joint venture or limited
liability company, the change, removal, resignation or addition of a
general partner, managing partner, limited partner, joint venturer or
member or the transfer of the partnership interest of any general partner,
managing partner or limited partner or the transfer of the interest of any
joint venture or member.
(c) Lender shall not be required to demonstrate any actual
impairment of its security or any increased risk of default hereunder in
order to declare the Debt immediately due and payable upon Borrower's sale,
conveyance, alienation, mortgage, encumbrance, pledge or transfer of the
Property without Lender's consent. This provision shall apply to every
sale, conveyance, alienation, mortgage, encumbrance, pledge or transfer of
the Property regardless of whether voluntary or not, or whether or not
Lender has consented to any previous sale, conveyance, alienation,
mortgage, encumbrance, pledge or transfer of the Property.
(d) Lender's consent to one sale, conveyance, alienation,
mortgage, encumbrance, pledge or transfer of the Property shall not be
deemed to be a waiver of Lender's right to require such consent to any
future occurrence of same. Any sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer of the Property made in contravention of
this paragraph shall be null and void and of no force and effect.
(e) Borrower agrees to bear and shall pay or reimburse Lender
on demand for all reasonable expenses (including, without limitation,
reasonable attorneys' fees and disbursements, title search costs and title
insurance endorsement premiums) incurred by Lender in connection with the
review, approval and documentation of any such sale, conveyance,
alienation, mortgage, encumbrance, pledge or transfer.
(f) Lender's consent to a one-time sale or transfer of the
Property will not be unreasonably withheld if such sale occurs in
connection with the sale of the Other Property together with the Property
to one purchaser and after consideration of all relevant factors, provided
that:
(i) no Event of Default or event which with the giving of
notice or the passage of time would constitute an Event of Default shall
have occurred and remain uncured;
(ii) the proposed transferee ("Transferee") and any
indemnitor for non-recourse carveouts shall each be a reputable entity or
person of good character, creditworthy, with sufficient financial worth as
determined by Lender in its reasonable discretion considering the
obligations assumed and undertaken, as evidenced by financial statements
and other information reasonably requested by Lender;
(iii) the Transferee and its property manager shall have
sufficient experience in the ownership and management of properties similar
to the Property and the Other Property, and Lender shall be provided with
reasonable evidence thereof (and Lender reserves the right to approve the
Transferee without approving the substitution of the property manager);
(iv) (a) the Manager (as defined in the Loan Agreement)
for the Property shall be either (1) the manager immediately prior to such
transfer, (2) a professional management company, which at the time of its
engagement as manager shall be the property manager for at least ten (10)
hotel properties containing at least two thousand (2000) rooms, exclusive
of the Property and Other Property or (3) such other manager reasonably
satisfactory to Lender and (b) any new Management Agreement (as defined in
the Loan Agreement) shall be satisfactory to Lender in its reasonable
discretion;
(v) (a) the Operating Lessee shall be either (1) the
operating lessee immediately prior to such transfer, (2) an affiliate of
hotel operating company, which such operating company at the time of
engagement shall be operating and controlling, as owner, manager or
operating lessee, at least ten (10) hotel properties consisting of at least
two thousand (2000) rooms, exclusive of the Property and Other Property,
and a single purpose bankruptcy-remote entity in accordance with the then-
current standards of the Rating Agencies or (3) such other operating lessee
reasonably satisfactory to Lender and (b) any new Operating Lease (as
defined in the Loan Agreement) shall be satisfactory to Lender in its
reasonable discretion;
(vi) Lender shall have confirmation in writing from the
Rating Agencies (as hereinafter defined) to the effect that such transfer
will not result in a re-qualification, reduction or withdrawal of the then
current rating assigned in a Securitization (as defined in the Loan
Agreement). The term "Rating Agencies" as used herein shall mean each of
Standard & Poor's Ratings Group, a division of McGraw-Hill, Inc., Moody's
Investors Service, Inc., Duff & Phelps Credit Rating Co. and Fitch IBCA,
Inc., or any other nationally-recognized statistical rating agency which
has been selected by Lender;
(vii) Lender shall have received evidence satisfactory to
it (which shall include a legal non-consolidation opinion reasonably
acceptable to Lender) that the single purpose nature and bankruptcy
remoteness of Transferee, its shareholders, partners, or members, as the
case may be, following such transfers are in accordance with the standards
of the Rating Agencies;
(viii) the Transferee shall have executed and delivered to
Lender an assumption agreement in form and substance reasonably acceptable
to Lender, evidencing such Transferee's agreement to abide and be bound by
the terms of the Note, this Deed of Trust and the other Loan Documents,
together with such legal opinions and title insurance endorsements as may
be reasonably requested by Lender;
(ix) the franchise or franchise system for the Property
shall be either the franchise or franchise system in place immediately
prior to such transfer or a franchise or franchise system reasonably
satisfactory to Lender; and
(x) Lender shall have received the payment of all out of
pocket costs and expenses incurred by Lender in connection with such
assumption (including reasonable attorney's fees and costs).
(g) Notwithstanding anything to the contrary contained herein
or any other Loan Documents, Lender's consent shall not be required for any
of the following sales, transfers, assignments, pledges, conveyances or
encumbrances, provided that Lender has received payment in full of all its
costs and expenses incurred in connection therewith:
(i) with respect to the REIT, (A) any transfer of all or any
portion of any shares of beneficial interests of the REIT for so long as
the shares of the REIT continues to be publicly traded on a national stock
exchange and (B) the issuance of additional shares of the REIT;
(ii) with respect to the Operating Partnership, (A) any
transfer of limited partnership interests in the Operating Partnership and
(B) the issuance of additional limited partnership units or other
securities, even if such issuance results in a reduction of the partnership
interest of the REIT in the Operating Partnership, provided that, after
giving effect to such transfer or series of transfers described in (A) or
(B), the REIT owns more than fifty-one percent (51%) of the partnership
interests of the Operating Partnership.
Section 3.10Intentionally Deleted.
Section 3.11Intentionally Deleted.
Section 3.12Intentionally Deleted.
Section 3.13Intentionally Deleted.
ARTICLE IV
DEFAULT AND FORECLOSURE
Section 4.1Remedies. If an Event of Default (as defined in
the Loan Agreement) exists, Lender or Trustee may, at Lender's election,
exercise any or all of the following rights, remedies and recourses:
(a) Acceleration. Declare the Debt to be immediately due and
payable, without further notice, presentment, protest, notice of intent to
accelerate, notice of acceleration, demand or action of any nature
whatsoever (each of which hereby is expressly waived by Borrower),
whereupon the same shall become immediately due and payable.
(b) Entry on Property. Enter the Property and take exclusive
possession thereof and of all books, records and accounts relating thereto.
If Borrower remains in possession of the Property after an Event of Default
and without Lender's prior written consent, Lender may invoke any legal
remedies to dispossess Borrower.
(c) Operation of Property. Hold, lease, develop, manage,
operate or otherwise use the Property upon such terms and conditions as
Lender may deem reasonable under the circumstances (making such repairs,
alterations, additions and improvements and taking other actions, from time
to time, as Lender deems necessary or desirable), and apply all Rents and
other amounts collected by Lender or Trustee in connection therewith in
accordance with the provisions of Section 4.6.
(d) Foreclosure and Sale. Institute proceedings for the
complete foreclosure of this Deed of Trust, in which case the Property may
be sold for cash or credit in one or more parcels. At any such sale by
virtue of any judicial proceedings or any other legal right, remedy or
recourse, the title to and right of possession of any such property shall
pass to the purchaser thereof, and to the fullest extent permitted by law,
Borrower shall be completely and irrevocably divested of all of its right,
title, interest, claim and demand whatsoever, either at law or in equity,
in and to the property sold and such sale shall be a perpetual bar both at
law and in equity against Borrower, and against all other persons claiming
the property sold or any part thereof, by, through or under Borrower.
Lender may be a purchaser at such sale and if Lender is the highest bidder,
may credit the portion of the purchase price that would be distributed to
Lender against the Debt in lieu of paying cash.
(e) Receiver. Make application to a court of competent
jurisdiction for, and obtain from such court as a matter of strict right
and without notice to Borrower or regard to the adequacy of the Property
for the repayment of the Debt, the appointment of a receiver of the
Property, and Borrower irrevocably consents to such appointment. Any such
receiver shall have all the usual powers and duties of receivers in similar
cases, including the full power to rent, maintain and otherwise operate the
Property upon such terms as may be approved by the court, and shall apply
such Rents in accordance with the provisions of Section 4.6.
(f) UCC. Exercise any and all rights and remedies granted to
a secured party upon default under the Uniform Commercial Code, including,
without limiting the generality of the foregoing: (i) the right to take
possession of the Personalty or any part thereof, and to take such other
measures as Lender may deem necessary for the care, protection and
preservation of the Personalty, and (ii) request Borrower at its expense to
assemble the Personalty and make it available to Lender at a convenient
place acceptable to Lender. Any notice of sale, disposition or other
intended action by Lender with respect to the Personalty sent to Borrower
in accordance with the provisions hereof at least ten (10) days prior to
such action, shall constitute commercially reasonable notice to Borrower;
(g) Other. Exercise all other rights, remedies and recourses
granted under the Loan Documents or otherwise available at law or in equity
(including an action for specific performance of any covenant contained in
the Loan Documents, or a judgment on the Note and/or the Other Note either
before, during or after any proceeding to enforce this Deed of Trust).
Section 4.2Separate Sales. The Property may be sold in one or
more parcels and in such manner and order as Lender in its sole discretion,
may elect; the right of sale arising out of any Event of Default shall not
be exhausted by any one or more sales.
Section 4.3Remedies Cumulative, Concurrent and Nonexclusive.
Lender and Trustee shall have all rights, remedies and recourses granted
in the Loan Documents and available at law or equity (including the UCC),
which rights (a) shall be cumulative and concurrent, (b) may be pursued
separately, successively or concurrently against Borrower or others
obligated under the Note and the other Loan Documents, or against the
Property, or against any one or more of them, at the sole discretion of
Lender, (c) may be exercised as often as occasion therefor shall arise, and
the exercise or failure to exercise any of them shall not be construed as a
waiver or release thereof or of any other right, remedy or recourse, and
(d) are intended to be, and shall be, nonexclusive. No action by Lender in
the enforcement of any rights, remedies or recourses under the Loan
Documents or otherwise at law or equity shall be deemed to cure any Event
of Default or any Event of Default under the Other Loan Documents.
Section 4.4Release of and Resort to Collateral. Lender may
release, regardless of consideration and without the necessity for any
notice to or consent by the holder of any subordinate lien on the Property,
any part of the Property without, as to the remainder, in any way
impairing, affecting, subordinating or releasing the lien or security
interests created in or evidenced by the Loan Documents or their status as
a first and prior lien and security interest in and to the Property. For
payment of the Debt, Lender or Trustee may resort to any other security in
such order and manner as Lender may elect.
Section 4.5Discontinuance of Proceedings. If Lender or
Trustee shall have proceeded to invoke any right, remedy or recourse
permitted under the Loan Documents and shall thereafter elect to
discontinue or abandon it for any reason, Lender shall have the unqualified
right to do so and, in such an event, Borrower and Lender shall be restored
to their former positions with respect to the Debt, the Obligations, the
Loan Documents, the Property and otherwise, and the rights, remedies,
recourses and powers of Lender shall continue as if the right, remedy or
recourse had never been invoked, but no such discontinuance or abandonment
shall waive any Event of Default which may then exist or the right of
Lender thereafter to exercise any right, remedy or recourse under the Loan
Documents for such Event of Default.
Section 4.6Application of Proceeds. The proceeds of any sale
of, and the Rents and other amounts generated by the holding, leasing,
management, operation or other use of the Property, shall be applied by
Lender or Trustee (or the receiver, if one is appointed) in the following
order unless otherwise required by applicable law:
(a) to the payment of the reasonable costs and expenses of
taking possession of the Property and of holding, using, leasing,
repairing, and selling the same, including, without limitation (i)
receiver's fees and expenses, (ii) court costs, (iii) attorneys' and
accountants' fees and expenses, (iv) costs of advertisement, (v) insurance
premiums and (vi) the payment of all ground rent, real estate taxes and
assessments, except any taxes, assessments or other charges subject to
which the Property shall have been sold;
(b) to the payment of all amounts (including interest), other
than the unpaid principal balance of the Note and the Other Note and
accrued but unpaid interest, which may be due to Lender under the Loan
Documents;
(c) to the payment of the Debt in such manner and order of
preference as Lender in its sole discretion may determine; and
(d) the balance, if any, to the payment of the persons
legally entitled thereto.
Section 4.7Occupancy After Foreclosure. The purchaser at any
foreclosure sale pursuant to Section 4.1(d) shall become the legal owner of
the Property. All occupants of the Property shall, at the option of such
purchaser and subject to the rights of tenants to remain in possession,
become tenants of the purchaser at the foreclosure sale and shall deliver
possession thereof immediately to the purchaser upon demand. It shall not
be necessary for the purchaser at said sale to bring any action for
possession of the Property other than the statutory action of forcible
detainer in any justice court having jurisdiction over the Property.
Section 4.8 Additional Advances and Disbursements, Costs of
Enforcement.
(a) If any Event of Default exists, Lender shall have the
right, but not the obligation, to cure such Event of Default in the name
and on behalf of Borrower. All sums advanced and expenses incurred at any
time by Lender under this Section 4.8, or otherwise under this Deed of
Trust or any of the other Loan Documents or applicable law, shall bear
interest from the date that such sum is advanced or expense incurred, to
and including the date of reimbursement, computed at the Default Rate (as
defined in the Loan Agreement), and all such sums, together with interest
thereon, shall be secured by this Deed of Trust.
(b) Borrower shall pay all reasonable expenses (including
reasonable attorneys' fees and expenses) of or incidental to the perfection
and enforcement of this Deed of Trust and the other Loan Documents, or the
enforcement, compromise or settlement of the Debt or any claim under this
Deed of Trust and the other Loan Documents, and for the curing thereof, or
for defending or asserting the rights and claims of Lender in respect
thereof, by litigation or otherwise.
Section 4.9No Lender in Possession. Neither the enforcement
of any of the remedies under this Article 4, the assignment of the Rents
and Leases under Article 5, the security interests under Article 6, nor any
other remedies afforded to Lender or Trustee under the Loan Documents, at
law or in equity shall cause Lender to be deemed or construed to be a
mortgagee in possession of the Property, to obligate Lender to lease the
Property or attempt to do so, or to take any action, incur any expense, or
perform or discharge any obligation, duty or liability whatsoever under any
of the Leases or otherwise.
Section 4.10 Actions and Proceedings. Lender or Trustee
has the right to appear in and defend any action or proceeding brought with
respect to the Property, if reasonably necessary to protect Lender's
interest in the Property, and to bring any action or proceeding, 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 4.11 Waiver of Redemption, Notice and Marshalling
of Assets. To the fullest extent permitted by law, Borrower hereby
irrevocably and unconditionally waives and releases (a) all benefit that
might accrue to Borrower by virtue of any present or future statute of
limitations or law or judicial decision exempting the Property from
attachment, levy or sale on execution or providing for any appraisement,
valuation, stay of execution, exemption from civil process, redemption or
extension of time for payment, (b) all notices of any Event of Default or
of Lender's or Trustee's election to exercise or its actual exercise of any
right, remedy or recourse provided for under the Loan Documents, and (c)
any right to a marshalling of assets or a sale in inverse order of
alienation.
ARTICLE V
ASSIGNMENT OF RENTS AND LEASES
Section 5.1Assignment. Borrower acknowledges and confirms
that it has executed and delivered to Lender an Assignment of Leases and
Rents of even date herewith (the "Assignment of Leases and Rents"),
intending that such instrument create a present, absolute assignment to
Lender of the Leases and Rents. Without limiting the intended benefits or
the remedies provided under the Assignment of Leases and Rents, Borrower
hereby assigns to Lender and Trustee, as further security for the Debt and
the Obligations, the Leases and Rents. While any Event of Default exists,
Lender shall be entitled to exercise any or all of the remedies provided in
the Assignment of Leases and Rents and in Article 4 hereof including,
without limitation, the right to have a receiver appointed. If any
conflict or inconsistency exists between the assignment of the Rents and
the Leases in this Deed of Trust and the absolute assignment of the Leases
and Rents in the Assignment of Leases and Rents, the terms of the
Assignment of Leases and Rents shall control.
Section 5.2No Merger of Estates. So long as any part of the
Debt and the Obligations secured hereby remain unpaid and undischarged, the
fee and leasehold estates to the Property shall not merge, but shall remain
separate and distinct, notwithstanding the union of such estates either in
Borrower, Lender, any lessee or any third party by purchase or otherwise.
ARTICLE VI
SECURITY AGREEMENT
Section 6.1Security Interest. This Deed of Trust constitutes
a "Security Agreement" on personal property within the meaning of the UCC
and other applicable law and with respect to the Personalty, Fixtures,
Plans, Leases, Rents, Accounts and Property Agreements. To this end,
Borrower grants to Lender, a first and prior security interest in the
Personalty, Fixtures, Plans, Leases, Rents, Accounts and Property
Agreements and all other Property which is personal property to secure the
payment of the Debt and performance of the Obligations, and agrees that
Lender shall have all the rights and remedies of a secured party under the
UCC with respect to such property. Any sale of the Property may be held as
part of and in conjunction with a sale by Trustee of the Land. Any notice
of sale, disposition or other intended action by Lender with respect to the
Personality, Fixtures, Plans, Leases, Rents, Accounts and Property
Agreements sent to Borrower at least ten (10) days prior to any action
under the UCC shall constitute reasonable notice to Borrower.
Section 6.2Financing Statements. Borrower shall execute and
deliver to Lender, in form and substance reasonably satisfactory to Lender,
such financing statements and such further assurances as Lender may, from
time to time, reasonably consider necessary to perfect and preserve
Lender's security interest hereunder and Lender may cause such statements
and assurances to be recorded and filed, at such times and places as may be
required or permitted by law to so create, perfect and preserve such
security interest. Borrower's chief executive office is in the District of
Columbia at the address set forth in the first paragraph of this Deed of
Trust.
Section 6.3Fixture Filing. This Deed of Trust shall also
constitute a "fixture filing" for the purposes of the UCC against all of
the Property which is or is to become fixtures. Information concerning the
security interest herein granted may be obtained at the addresses of Debtor
(Borrower) and Secured Party (Lender) as set forth in the first paragraph
of this Deed of Trust.
ARTICLE VII
MISCELLANEOUS
Section 7.1Limitation on Interest. It is the intention of the
parties hereto to conform strictly to applicable usury laws. Accordingly,
all agreements between Borrower and Lender with respect to the Loan are
hereby expressly limited so that in no event, whether by reason of
acceleration of maturity or otherwise, shall the amount paid or agreed to
be paid to Lender or charged by Lender for the use, forbearance or
detention of the money to be lent hereunder or otherwise, exceed the
maximum amount allowed by law. If the Loan would be usurious under
applicable law (including the laws of the state where the Property is
located and the laws of the United States of America), then,
notwithstanding anything to the contrary in the Loan Documents: (a) the
aggregate of all consideration which constitutes interest under applicable
law that is contracted for, taken, reserved, charged or received under the
Loan Documents shall under no circumstances exceed the maximum amount of
interest allowed by applicable law, and any excess shall be credited on the
Debt; and (b) if maturity is accelerated by reason of an election by
Lender, or in the event of any prepayment, then any consideration which
constitutes interest may never include more than the maximum amount allowed
by applicable law. In such case, excess interest, if any, provided for in
the Loan Documents or otherwise, to the extent permitted by applicable law,
shall be amortized, prorated, allocated and spread from the date of advance
until payment in full so that the actual rate of interest is uniform
through the term hereof. If such amortization, proration, allocation and
spreading is not permitted under applicable law, then such excess interest
shall be canceled automatically as of the date of such acceleration or
prepayment and, if theretofore paid, shall be credited on the Debt. The
Loan Documents are contracts made under and shall be construed in
accordance with and governed by the laws of the State of New York, except
that if at any time the laws of the United States of America permit Lender
to contract for, take, reserve, charge or receive a higher rate of interest
than is allowed by the laws of the State of New York (whether such federal
laws directly so provide or refer to the law of any state), then such
federal laws shall to such extent govern as to the rate of interest which
Lender may contract for, take, reserve, charge or receive under the Loan
Documents.
Section 7.2Notices. Any notice required or permitted to be
given under this Deed of Trust shall be (a) in writing, (b) sent in the
manner set forth in the Loan Agreement, and (c) effective in accordance
with the terms of the Loan Agreement.
Section 7.3Covenants Running with the Land. All Obligations
contained in this Deed of Trust are intended by Borrower and Lender to be,
and shall be construed as, covenants running with the Property. As used
herein, "Borrower" shall refer to the party named in the first paragraph of
this Deed of Trust and to any subsequent owner of all or any portion of the
Property (without in any way implying that Lender has or will consent to
any such conveyance or transfer of the Property). All persons or entities
who may have or acquire an interest in the Property shall be deemed to have
notice of, and be bound by, the terms of the Loan Agreement and the other
Loan Documents; however, no such party shall be entitled to any rights
thereunder without the prior written consent of Lender.
Section 7.4Attorney-in-Fact. Borrower hereby irrevocably
appoints Lender and its successors and assigns, as its attorney-in-fact,
which agency is coupled with an interest, (a) to execute and/or record any
notices of completion, cessation of labor or any other notices that Lender
deems reasonably necessary to protect Lender's interest, if Borrower shall
fail to do so within ten (10) days after written request by Lender, (b)
upon the issuance of a deed pursuant to the foreclosure of this Deed of
Trust or the delivery of a deed in lieu of foreclosure, to execute all
instruments of assignment, conveyance or further assurance with respect to
the Leases, Rents, Personalty, Fixtures, Plans and Property Agreements in
favor of the grantee of any such deed and as may be reasonably necessary
for such purpose, (c) to prepare, execute and file or record financing
statements, continuation statements, applications for registration and like
papers necessary to create, perfect or preserve Lender's security interests
and rights in or to any of the collateral and (d) while any Event of
Default exists, to perform any obligation of Borrower hereunder; however:
(i) Lender shall not under any circumstances be obligated to perform any
obligation of Borrower; (ii) any sums advanced by Lender in such
performance shall be added to and included in the Debt and shall bear
interest at the Default Rate; (iii) Lender as such attorney-in-fact shall
only be accountable for such funds as are actually received by Lender; and
(iv) Lender shall not be liable to Borrower or any other person or entity
for any failure to take any action which it is empowered to take under this
Section.
Section 7.5Successors and Assigns. This Deed of Trust shall
be binding upon and inure to the benefit of Lender, Trustee and Borrower
and their respective successors and assigns. Borrower shall not, without
the prior written consent of Lender, except as expressly permitted pursuant
to Section 3.9 hereof, assign any rights, duties or obligations hereunder.
Section 7.6No Waiver. Any failure by Lender to insist upon
strict performance of any of the terms, provisions or conditions of the
Loan Documents shall not be deemed to be a waiver of same, and Lender shall
have the right at any time to insist upon strict performance of all of such
terms, provisions and conditions.
Section 7.7Subrogation. To the extent proceeds of the Note
and/or the Other Note have been used to extinguish, extend or renew any
indebtedness against the Property, then Lender shall be subrogated to all
of the rights, liens and interests existing against the Property and held
by the holder of such indebtedness and such former rights, liens and
interests, if any, are not waived, but are continued in full force and
effect in favor of Lender.
Section 7.8Loan Agreement. If any conflict or inconsistency
exists between this Deed of Trust and (a) the Loan Agreement, the Loan
Agreement shall govern, or (b) the Other Loan Agreement, the Other Loan
Agreement shall govern.
Section 7.9Release. Upon payment in full of the Debt and
performance in full of the Obligations, Lender, at Borrower's expense,
shall release the liens and security interests created by this Deed of
Trust.
Section 7.10 Waiver of Stay, Moratorium and Similar
Rights. Borrower agrees, to the full extent that it may lawfully do so,
that it will not at any time insist upon or plead or in any way take
advantage of any appraisement, valuation, stay, marshaling of assets,
extension, redemption or moratorium law now or hereafter in force and
effect so as to prevent or hinder the enforcement of the provisions of this
Deed of Trust or the Debt secured hereby, or any agreement between Borrower
and Lender or any rights or remedies of Lender.
Section 7.11 Limitation on Liability. Borrower's
liability hereunder is subject to the limitation on liability provisions of
Article 13 of the Loan Agreement.
Section 7.12 Obligations of Borrower, Joint and Several.
If more than one person or entity has executed this Deed of Trust as
"Borrower," the obligations of all such persons or entities hereunder shall
be joint and several.
Section 7.13 Governing Law. THIS DEED OF TRUST WAS
NEGOTIATED IN THE STATE OF NEW YORK, AND MADE BY LENDER AND ACCEPTED BY
BORROWER IN THE STATE OF NEW YORK, AND THE PROCEEDS OF THE NOTE SECURED
HEREBY WERE DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE PARTIES
AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING
TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING, WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY
AND PERFORMANCE, THIS DEED OF TRUST AND THE OBLIGATIONS ARISING HEREUNDER
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE
(WITHOUT REGARD TO PRINCIPLES OF CONFLICT LAWS) AND ANY APPLICABLE LAW OF
THE UNITED STATES OF AMERICA, EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR
THE CREATION, PERFECTION, AND ENFORCEMENT OF THE LIENS AND SECURITY
INTERESTS CREATED ON REAL PROPERTY (INCLUDING FIXTURES) PURSUANT HERETO AND
PURSUANT TO THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED
ACCORDING TO THE LAW OF THE STATE IN WHICH THE PROPERTY IS LOCATED, IT
BEING UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW OF SUCH
STATE, THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE CONSTRUCTION,
VALIDITY AND ENFORCEABILITY OF ALL LOAN DOCUMENTS AND ALL OF THE
OBLIGATIONS ARISING HEREUNDER OR THEREUNDER. TO THE FULLEST EXTENT
PERMITTED BY LAW, BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES
ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS
DEED OF TRUST, AND THIS DEED OF TRUST SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION 5-
1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
Section 7.14 Headings. The Article, Section and
Subsection titles hereof are inserted for convenience of reference only and
shall in no way alter, modify or define, or be used in construing, the text
of such Articles, Section or Subsections.
Section 7.15 Entire Agreement. This Deed of Trust and the
other Loan Documents embody the entire agreement and understanding between
Lender and Borrower and supersede all prior agreements and understandings
between such parties relating to the subject matter hereof and thereof.
Accordingly, the Loan Documents may not be contradicted by evidence of
prior, contemporaneous or subsequent oral agreements of the parties. There
are no unwritten oral agreements between the parties.
Section 7.16 Interpretation. To the extent that this Deed
of Trust references provisions in the Loan Agreement, such Loan Agreement
shall be deemed to remain in existence for the purpose of the
interpretation of this Deed of Trust whether or not the Loan is outstanding
or has been paid in full.
ARTICLE VIII
PROVISIONS REGARDING THE CONDOMINIUM
Section 8.1Mortgage of Condominium Documents. (a) Borrower
hereby assigns, conveys and mortgages to Lender, as further and additional
security for the Debt and Borrower's obligations under this Deed of Trust,
all of the rights and benefits accruing to Borrower under the Condominium
Documents, including, without limitation, (i) any right of Borrower to
amend, modify or terminate any of the Condominium Documents, (ii) any right
of Borrower to terminate the Condominium Unit, including, without
limitation, as a result of condemnation or casualty and (iii) any right of
Borrower to determine whether or not the Condominium Unit or Common
Elements will be restored or repaired following a fire or other casualty.
If Lender, its nominee, designee, successor, or assignee acquires title to
the Condominium Unit by reason of foreclosure of this Deed of Trust, deed-
in-lieu of foreclosure or otherwise, Lender, its nominee, designee,
successor, assign or such purchaser shall (A) succeed to all of the rights
of and benefits accruing to Borrower under the Condominium Documents, as
amended or supplemented, (B) be entitled to exercise all of the rights and
benefits accruing to Borrower under the Condominium Documents, as so
amended, and (B) have the immediate right to remove any and all managers,
members, directors, trustees and/or officers of the Condominium Unit
appointed by Borrower, anything in the Condominium Documents to the
contrary notwithstanding, and thereupon Lender, its nominee, designee,
successor or assignee shall have the right to appoint managers, members,
directors, trustees and/or officers of the Condominium Unit, in replacement
for those managers, members, directors, trustees and/or officers so
removed. At such time as Lender shall request, Borrower shall execute and
deliver to Lender such documents as Lender and its counsel may reasonably
require in order to ensure that the provisions of this paragraph will be
validly and legally enforceable and effective against Borrower and all
parties claiming by, through, under or against Borrower. Borrower hereby
absolutely and irrevocably appoints Lender as its true and lawful attorney,
coupled with an interest, in its name and stead to make and execute on
behalf of Borrower any documents necessary to validly and legally carry out
the rights granted to Lender under the terms of this paragraph, Borrower
ratifying all that its said attorney shall do by virtue thereof. In
addition, Borrower covenants and agrees to give to Lender prompt notice of
any notice of any special assessment relating to the Condominium Unit
received by Borrower. Borrower hereby assigns to Lender, as further and
additional security for the Debt and Borrower's obligations hereunder, all
of Borrower's right to make rules and regulations for the Condominium Unit
and Borrower hereby covenants and agrees not to make or cause to be made
any rules and regulations, and not to suffer or permit any rules and
regulations to be made, without in all cases first obtaining the prior
written consent of Lender thereto, which consent shall not be unreasonably
withheld, conditioned or delayed.
(b) Notwithstanding that the assignment of Borrower's rights
under the Condominium Documents is an absolute assignment and not merely
the collateral assignment of, or the grant of a lien or security interest
in such rights, Lender grants to Borrower, subject to the terms and
conditions of the Loan Documents, a revocable license to exercise such
rights. Such license may be revoked by Lender upon the occurrence of any
Event of Default and Lender shall immediately be entitled to exercise such
rights on behalf of Borrower, whether or not Lender enters upon and takes
control of the Property.
ARTICLE IX
DEED OF TRUST PROVISIONS
Section 9.1 Concerning the Trustee. Trustee shall be under no
duty to take any action hereunder except as expressly required hereunder or
by law, or to perform any act which would involve Trustee in any expense or
liability or to institute or defend any suit in respect hereof, unless
properly indemnified to Trustee's reasonable satisfaction. Trustee, by
acceptance of this Deed of Trust, covenants to perform and fulfill the
trusts herein created, being liable, however, only for willful negligence
or misconduct, and hereby waives any statutory fee and agrees to accept
reasonable compensation, in lieu thereof, for any services rendered by
Trustee in accordance with the terms hereof. Trustee may resign at any
time upon giving thirty (30) days' notice to Borrower and to Lender.
Lender may remove Trustee at any time or from time to time and select a
successor trustee. In the event of the death, removal, resignation,
refusal to act, or inability to act of Trustee, or in its sole discretion
for any reason whatsoever Lender may, without notice and without specifying
any reason therefor and without applying to any court, select and appoint a
successor trustee, by an instrument recorded wherever this Deed of Trust is
recorded and all powers, rights, duties and authority of Trustee, as
aforesaid, shall thereupon become vested in such successor. Such
substitute trustee shall not be required to give bond for the faithful
performance of the duties of Trustee hereunder unless required by Lender.
The procedure provided for in this paragraph for substitution of Trustee
shall be in addition to and not in exclusion of any other provisions for
substitution, by law or otherwise.
Section 9.2 Trustee's Fees. Borrower shall pay all reasonable
costs, fees and expenses incurred by Trustee and Trustee's agents and
counsel in connection with the performance by Trustee of Trustee's duties
hereunder and all such costs, fees and expenses shall be secured by this
Deed of Trust.
Section 9.3 Power of Sale. (a) Upon the occurrence of an
Event of Default, Trustee, or the agent or successor of Trustee, at the
request of Lender, shall sell or offer for sale the Property in such
portions, order and parcels as Lender may determine with or without having
first taken possession of same, to the highest bidder for cash at one or
more public auctions in accordance with the terms and provisions of the law
of the State in which the Property is located. Such sale shall be made at
the area within the courthouse of the county in which the Property (or any
portion thereof to be sold) is situated (whether the parts or parcels
thereof, if any, in different counties are contiguous or not, and without
the necessity of having any personal property hereby secured present at
such sale) which is designated by the applicable court of such County as
the area in which public sales are to take place, or, if no such area is
designated, at the area at the courthouse designated in the notice of sale
as the area in which the sale will take place, on such day and at such
times as permitted under applicable law of the State where the Property is
located, after advertising the time, place and terms of sale and that
portion of the Property in accordance with such law, and after having
served written or printed notice of the proposed sale by certified mail on
each Borrower obligated to pay the Note, the Other Note and other secured
indebtedness secured by this Deed of Trust according to the records of
Lender in accordance with applicable law. The affidavit of any person
having knowledge of the facts to the effect that such service was completed
shall be prima facie evidence of the fact of service.
At any such public sale, Trustee may execute and deliver in the
name of Borrower to the purchaser a conveyance of the Property or any part
of the Property in fee simple. In the event of any sale under this Deed of
Trust by virtue of the exercise of the powers herein granted, or pursuant
to any order in any judicial proceeding or otherwise, the Property may be
sold in its entirety or in separate parcels and in such manner or order as
Lender in its sole discretion may elect, and if Lender so elects, Trustee
may sell the personal property covered by this Deed of Trust at one or more
separate sales in any manner permitted by the UCC, and one or more
exercises of the powers herein granted shall not extinguish or exhaust such
powers, until all the Property is sold or the Debt and other secured
indebtedness is paid in full. If the Note, the Other Note and other
secured indebtedness is now or hereafter further secured by any chattel
mortgages, pledges, contracts or guaranty, assignments of lease, or other
security instruments, Lender at its option may exhaust the remedies granted
under any of said security instruments either concurrently or
independently, and in such order as Lender may determine.
(b) Upon any foreclosure sale or sales of all or any portion
of the Property under the power herein granted, Lender may bid for and
purchase the Property and shall be entitled to apply all or any part of the
Debt as a credit to the purchase price.
(c) In the event of a foreclosure or a sale of all or any
portion of the Property under the power herein granted, the proceeds of
said sale shall be applied, in whatever order Lender in its sole discretion
may decide, to the expenses of such sale and of all proceedings in
connection therewith (including, without limitation, attorneys' fees and
expenses), to fees and expenses of Trustee (including, without limitation,
Trustee's attorneys' fees and expenses), to insurance premiums, liens,
assessments, taxes and charges (including, without limitation, utility
charges advanced by Lender), to payment of the outstanding principal
balance of the Debt, and to the accrued interest on all of the foregoing;
and the remainder, if any, shall be paid to Borrower, or to the person or
persons entitled thereto, or as otherwise required by law.
Section 9.4 Certain Rights. With the approval of Lender,
Trustee shall have the right to take any and all of the following actions:
(i) to select, employ, and advise with counsel (who may be, but need not
be, counsel for Lender) upon any matters arising hereunder, including the
preparation, execution, and interpretation of the Loan Agreement, the Note,
this Deed of Trust, the Guaranty or the other Loan Documents, and shall be
fully protected in relying as to legal matters on the advice of counsel,
(ii) to execute any of the trusts and powers hereof and to perform any duty
hereunder either directly or through his agents or attorneys, (iii) to
select and employ, in and about the execution of his duties hereunder,
suitable accountants, engineers and other experts, agents and attorneys-in-
fact, either corporate or individual, not regularly in the employ of
Trustee, and Trustee shall not be answerable for any act, default,
negligence, or misconduct of any such accountant, engineer or other expert,
agent or attorney-in-fact, if selected with reasonable area, or for any
error of judgment or act done by Trustee in good faith, or be otherwise
responsible or accountable under any circumstances whatsoever, except for
Trustee's gross negligence or bad faith, and (iv) any and all other lawful
action as Lender may instruct Trustee to take to protect or enforce
Lender's rights hereunder. Trustee shall not be personally liable in case
of entry by Trustee, or anyone entering by virtue of the powers herein
granted to Trustee, upon the Property for debts contracted for or liability
or damages incurred in the management or operation of the Property.
Trustee shall have the right to rely on any instrument, document, or
signature authorizing or supporting an action taken or proposed to be taken
by Trustee hereunder, believed by Trustee in good faith to be genuine.
Trustee shall be entitled to reimbursement for actual expenses incurred by
Trustee in the performance of Trustee's duties hereunder and to reasonable
compensation for such of Trustee's services hereunder as shall be rendered.
Section 9.5 Retention of Money. All moneys received by Trustee
shall, until used or applied as herein provided, be held in trust for the
purposes for which they were received, but need not be segregated in any
manner from any other moneys (except to the extent required by applicable
law) and Trustee shall be under no liability for interest on any moneys
received by Trustee hereunder.
Section 9.6 Perfection of Appointment. Should any deed,
conveyance, or instrument of any nature be required from Borrower by any
Trustee or substitute trustee to more fully and certainly vest in and
confirm to the Trustee or substitute trustee such estates rights, powers,
and duties, then, upon request by the Trustee or substitute trustee, any
and all such deeds, conveyances and instruments shall be made, executed,
acknowledged, and delivered and shall be caused to be recorded and/or filed
by Borrower.
Section 9.7 Succession Instruments. Any substitute trustee
appointed pursuant to any of the provisions hereof shall, without any
further act, deed, or conveyance, become vested with all the estates,
properties, rights, powers, and trusts of its or his predecessor in the
rights hereunder with like effect as if originally named as Trustee herein;
but nevertheless, upon the written request of Lender or of the substitute
trustee, the Trustee ceasing to act shall execute and deliver any
instrument transferring to such substitute trustee, upon the trusts herein
expressed, all the estates, properties, rights, powers, and trusts of the
Trustee so ceasing to act, and shall duly assign, transfer and deliver any
of the property and moneys held by such Trustee to the substitute trustee
so appointed in the Trustee's place.
ARTICLE X
SPECIAL STATE PROVISIONS
Section 10.1Principles of Construction. In the event of any
inconsistencies between the terms and provisions of this Article X and the
terms and provisions of any other Article of this Deed of Trust, the terms
and provisions of this Article X shall govern and control.
Section 10.2Texas.
(a) Assignment of Leases and Rents Amended. The assignments
of Leases and Rents set forth in this Deed of Trust are not intended to
constitute payment to Lender or Trustee unless Borrower's license to
collect Rents is terminated, and then only to the extent that the Rents are
actually received by Lender (as opposed to constituting a portion of the
voluntary payments of principal and interest on the Note and the Other
Note) and are not used for the operation or maintenance of the Property or
for the payment of costs and expenses in connection therewith, taxes,
assessments, water charges, sewer rents, and other charges levied, assessed
or imposed against the Property, insurance premiums, costs and expenses
with respect to any litigation affecting the Property, the leases, the
concessions, and the rent, any wages and salaries of employees, commissions
of agents and attorneys fees. It is further the intent of Borrower and
Lender that the Rents hereby absolutely assigned are no longer, during the
term of this Deed of Trust, property of Borrower or property of any estate
of Borrower as defined in 11 U.S.C. Section 541 and shall not constitute
collateral, cash or otherwise, of Borrower. The term Rents as used herein
shall mean the gross rents without deduction or offsets of any kind.
(b) Additional Remedy Provisions.
(i) Delivery Upon Sale. Upon the completion of any sale or
sales pursuant hereto, Trustee shall execute and deliver to the accepted
purchaser or purchasers a good and sufficient instrument, or good and
sufficient instruments, conveying, assigning and transferring all estate,
right, title and interest in and to the property and rights sold by general
warranty of title. Trustee is hereby irrevocably appointed the true and
lawful attorney of Borrower, in its name and stead, to make all necessary
conveyances, assignments, transfers and deliveries of the Property and
rights so sold and for that purpose Trustee may execute all necessary
instruments of conveyance, assignment and transfer, and may substitute one
or more persons with like power, Borrower hereby ratifying and confirming
all that its said attorney or such substitute or substitutes shall lawfully
do by virtue hereof. Any sale or sales made under or by virtue of this
section, whether made under the power of sale herein granted or under or by
virtue of judicial proceedings or of a judgment or decree of foreclosure
and sale, shall operate to divest all the estate, right, title, interest,
claim and demand whatsoever, whether at law or in equity, of Borrower in
and to the properties and rights so sold, and shall be a perpetual bar both
at law and in equity against Borrower and against any and all persons
claiming or who may claim the same, or any part thereof from, through or
under Borrower.
(ii) Option to Bid. Upon any sale made under or by
virtue of this paragraph, whether made under the power of sale herein
granted or under or by virtue of judicial proceedings or of a judgment or
decree of foreclosure and sale, Lender may bid for and acquire the Property
or any part thereof and in lieu of paying cash therefor may make settlement
for the purchase price by crediting upon the Debt the net sales price after
deducting therefrom the expenses of the sale and costs of the action and
any other sums which Lender is authorized to deduct under this Deed of
Trust.
(iii) Remaining Liens. No recovery of any judgment by
Lender and no levy of an execution under any judgment upon the Property or
upon any other property of Borrower shall affect in any manner or to any
extent the lien of this Deed of Trust upon the Property or any part
thereof, or any liens, rights, powers or remedies of Lender hereunder, but
such liens, rights, powers and remedies of Lender shall continue unimpaired
as before.
(iv) No Waiver of Remedies. Lender may resort to any
remedies and the security given by the Note, the Loan Agreement, this Deed
of Trust or the other Loan Documents in whole or in part, and in such
portions and in such order as determined by Lender's sole discretion. No
such action shall in any way be considered a waiver of any rights, benefits
or remedies evidenced or provided by the Note, the Loan Agreement, this
Deed of Trust or any of the other Loan Documents. The failure of Lender to
exercise any right, remedy or option provided in the Note, the Loan
Agreement, this Deed of Trust or any of the other Loan Documents shall not
be deemed a waiver of such right, remedy or option or of any covenant or
obligation secured by the Note, the Loan Agreement, this Deed of Trust or
the other Loan Documents. No acceptance by Lender of any payment after the
occurrence of any Event of Default and no payment by Lender of any
obligation for which Borrower is liable hereunder shall be deemed to waive
or cure any Event of Default with respect to Borrower, or Borrower's
liability to pay such obligation. No sale of all or any portion of the
Property, no forbearance on the part of Lender, and no extension of time
for the payment of the whole or any portion of the Debt or any other
indulgence given by Lender to Borrower, shall operate to release or in any
manner affect the interest of Lender in
the remaining Property or the liability of Borrower to pay the Debt.
No waiver by Lender shall be effective unless it is in writing and then
only to the extent specifically stated. All costs and expenses of Lender
in exercising its rights and remedies under this Deed of Trust (including
reasonable attorneys' fees and disbursements to the extent permitted by
law), shall be paid by Borrower immediately upon notice from Lender, and
such costs and expenses shall constitute a portion of the Debt and shall be
secured by this Deed of Trust.
(v) No Waiver Continued. The interests and rights of Lender
under the Note, the Loan Agreement, this Deed of Trust or in any of the
other Loan Documents shall not be impaired by any indulgence, including (A)
any renewal, extension or modification which Lender may grant with respect
to any of the Debt, (B) any surrender, compromise, release, renewal,
extension, exchange or substitution which Lender may grant with respect to
the Property or any portion thereof; or (C) any release or indulgence
granted to any maker, endorser, guarantor or surety of any of the Debt.
(vi) Foreclosure. Upon the occurrence and the
continuance of any Event of Default, Lender may request Trustee to proceed
with foreclosure under the power of sale which is hereby conferred, such
foreclosure to be accomplished in accordance with the following provisions:
(A) Public Sale. Trustee is hereby authorized and empowered,
and it shall be Trustee's special duty, upon such request of Lender, to
sell the Property, or any part thereof, at public auction to the highest
bidder for cash, with or without having taken possession of same. Any such
sale (including notice thereof) shall comply with the applicable
requirements, at the time of the sale, of Section 51.002 of the Texas
Property Code or, if and to the extent such statute is not then in force,
with the applicable requirements, at the time of the sale, of the successor
statute or statutes, if any, governing sales of Texas real property under
powers of sale conferred by deeds of trust. If there is no statute in
force at the time of the sale governing sales of Texas real property under
powers of sale conferred by deeds of trust, such sale shall comply with
applicable law, at the time of the sale, governing sales of Texas real
property under powers of sale conferred by deeds of trust. Trustee or his
successor or substitute may appoint or delegate any one or more persons as
agent to perform any act or acts necessary or incident to any sale held by
Trustee, including the posting of notices, and the conduct of sale, but in
the name and on behalf of Trustee, his successor or substitute.
(B) Right to Require Proof of Financial Ability and/or Cash
Bid. At any time during the bidding, the Trustee may require a bidding
party (I) to disclose its full name, state and city of residence,
occupation, and specific business office location, and the name and address
of the principal the bidding party is representing (if applicable), and
(II) to demonstrate reasonable evidence of the bidding party's financial
ability (or, if applicable, the financial ability of the principal of such
bidding party), as a condition to the bidding party submitting bids at the
foreclosure sale. If any such bidding party (the "Questioned Bidder")
declines to comply with the Trustee's requirement in this regard, or if
such Questioned Bidder does respond but the Trustee,
in Trustee's sole and absolute discretion, deems the
information or the evidence of the financial ability of the Questioned
Bidder (or, if applicable, the principal of such bidding party) to be
inadequate, then the Trustee may continue the bidding with reservation; and
in such event (1) the Trustee shall be authorized to caution the Questioned
Bidder concerning the legal obligations to be incurred in submitting bids,
and (2) if the Questioned Bidder is not the highest bidder at the sale, or
if having been the highest bidder the Questioned Bidder fails to deliver
the cash purchase price payment promptly to the Trustee, all bids by the
Questioned Bidder shall be null and void. The Trustee may, in Trustee's
sole and absolute discretion, determine that a credit bid may be in the
best interest of the Borrower and Lender, and elect to sell the Property
for credit or for a combination of cash and credit; provided, however, that
the Trustee shall have no obligation to accept any bid except an all cash
bid. In the event the Trustee requires a cash bid and cash is not
delivered within a reasonable time after conclusion of the bidding process,
as specified by the Trustee, but in no event later than 3:45 p.m. local
time on the day of sale, then said contingent sale shall be null and void,
the bidding process may be recommenced, and any subsequent bids or sale
shall be made as if no prior bids were made or accepted.
(C) Sale Subject to Unmatured Debt. In addition to the
rights and powers of sale granted under the preceding provisions of this
subsection, if default is made in the payment of any installment of the
Debt and is not cured within applicable cure periods, Lender may, at
Lender's option, at once or at any time thereafter while any matured
installment remains unpaid, without declaring the entire Debt to be due and
payable, orally or in writing direct Trustee to enforce this Deed of Trust
and to sell the Property subject to such unmatured Debt and to the rights,
powers, liens, security interests, and assignments securing or providing
recourse for payment of such unmatured Debt, in the same manner, all as
provided in the preceding provisions of this subsection. Sales made
without maturing the Debt may be made hereunder whenever there is a default
in the payment of any installment of the Debt, without exhausting the power
of sale granted hereby, and without affecting in any way the power of sale
granted under this subsection, the unmatured balance of the Debt or the
rights, powers, liens, security interests, and assignments securing or
providing recourse for payment of the Debt.
(D) Partial Foreclosure. Sale of a part of the Property
shall not exhaust the power of sale, but sales may be made from time to
time until the Debt is paid in full. It is intended by each of the
foregoing provisions of this subsection that Trustee may, after any request
or direction by Lender, sell not only the Land and the Improvements, but
also the Fixtures and other interests constituting a part of the Property
or any part thereof, along with the Land and the Improvements or any part
thereof, as a unit and as a part of a single sale, or may
sell at any time or from time to time any part or parts
of the Property separately from the remainder of the Property. It shall
not be necessary to have present or to exhibit at any sale any of the
Property. Any sale of personal property made hereunder shall be deemed to
have been a public sale conducted in a commercially reasonable manner if
held contemporaneously with, or as part of, and upon the same notice as
required for the sale of real property under the power of sale granted
herein.
(E) Trustee's Deeds. After any sale under this subsection,
Trustee shall make good and sufficient deeds, assignments, and other
conveyances to the purchaser or purchasers thereunder in the name of
Borrower, conveying the Property or any part thereof so sold to the
purchaser or purchasers with general warranty of title by Borrower. It is
agreed that in any deeds, assignments or other conveyances given by
Trustee, any and all statements of fact or other recitals therein made as
to the identity of Lender, the occurrence or existence of any Event of
Default, the notice of intention to accelerate, or acceleration of, the
maturity of the Debt, the request to sell, notice of sale, time, place,
terms and manner of sale, and receipt, distribution, and application of the
money realized therefrom, the due and proper appointment of a substitute
trustee, and without being limited by the foregoing, any other act or thing
having been duly done by or on behalf of Lender or by or on behalf of
Trustee, shall be taken by all courts of law and equity as prima facie
evidence that such statements or recitals state true, correct, and complete
facts and are without further question to be so accepted, and Borrower does
hereby ratify and confirm any and all acts that Trustee may lawfully do in
the premises by virtue hereof.
(c) Inapplicability of Credit Code. In no event shall the
provisions of Article 5069, ch. 15 of the Revised Civil Statutes of Texas
(which regulates certain revolving credit loan accounts and revolving
triparty accounts) apply to the loan evidenced by the Loan Documents and/or
secured hereby.
(d) Entire Agreement. THIS DEED OF TRUST AND THE OTHER LOAN
DOCUMENTS EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND
SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND
UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER
HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OR
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE
PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO.
(e) Maturity Date. The maturity date of the Note secured
hereby is August 1, 2024.
(f) Notice of Indemnification. BORROWER ACKNOWLEDGES THAT
THIS DEED OF TRUST PROVIDES FOR INDEMNIFICATION OF LENDER AND TRUSTEE BY
BORROWER. IT IS SPECIFICALLY INTENDED BY BORROWER, LENDER, AND TRUSTEE
THAT ALL INDEMNITY DEBT AND LIABILITIES ASSUMED BY BORROWER HEREUNDER BE
WITHOUT LIMIT AND WITHOUT REGARD TO THE CAUSE OR CAUSES THEREOF (INCLUDING
PREEXISTING CONDITIONS), STRICT LIABILITY, OR THE NEGLIGENCE OF ANY PARTY
OR PARTIES (INCLUDING LENDER AND TRUSTEE) WHETHER SUCH NEGLIGENCE BE SOLE,
JOINT OR CONCURRENT, OR PASSIVE. THE PARTIES SPECIFICALLY INTEND THAT
LENDER AND TRUSTEE ARE TO BE INDEMNIFIED AGAINST THEIR OWN NEGLIGENCE.
(g) Future Advances. This Deed of Trust shall secure any and
all future advances of the proceeds of the Loan and the Other Loan made to
Borrower by Lender pursuant to the terms of the Loan Documents. This
provision shall not constitute an obligation upon or commitment of Lender
to make additional advances or loans to Borrower.
EXECUTED as of the date first above written.
LHO FINANCING PARTNERSHIP I, L.P.,
a Delaware limited partnership
By: LHO Financing, Inc.,
a Delaware corporation
By: /s/ Hans Weger
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Name: Hans Weger
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Title: Chief Financial Officer
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