EXHIBIT 10.20
AFTER RECORDING, RETURN TO:
General Electric Capital Business
Asset Funding Corporation
Middle Market Risk/Operations
10900 NE 4th Street, Suite 500
Bellevue, Washington 98004
Attn: Lisa Wagner
Loan No. 050-10756-001
[space above reserved for recorder's use only]
COMMERCIAL DEED OF TRUST,
SECURITY AGREEMENT,
ASSIGNMENT OF LEASES AND RENTS,
AND FIXTURE FILING
BORROWER: ADMINISTAFF SERVICES, L.P.
BORROWER'S ENTITY: LIMITED PARTNERSHIP
STATE OF ORGANIZATION OF BORROWER: DELAWARE
ORGANIZATIONAL I.D. OF BORROWER: 2947664
THIS DEED OF TRUST (herein this "Instrument") is made effective as of
December 20, 2002, by the Trustor, ADMINISTAFF SERVICES, L.P., a Delaware
limited partnership, whose address is 19001 Crescent Springs Drive, Kingwood,
Texas 77339 (herein "Borrower"), in favor of GEORGE C. DUNLAP, JR., ESQ., whose
address is c/o Jenkens & Gilchrist, a professional corporation, 1445 Ross
Avenue, Suite 3200, Dallas, Texas 75202-2799 (herein "Trustee"), for the benefit
of the Beneficiary, GENERAL ELECTRIC CAPITAL BUSINESS ASSET FUNDING CORPORATION,
a Delaware corporation, whose address is Middle Market Risk/Operations, 10900 NE
4th Street, Suite 500, Bellevue, Washington 98004 (herein "GE CAPITAL").
Borrower, in consideration of the indebtedness herein recited and the
trust herein created, irrevocably grants, conveys and assigns to Trustee, IN
TRUST, WITH POWER OF SALE, all of Borrower's estate, right, title and interest,
now owned or hereafter acquired, including any reversion or remainder interest,
in the real property located in Montgomery County, Texas, more particularly
described on Exhibit A attached hereto and incorporated herein, including all
heretofore or hereafter vacated alleys and streets abutting the property, and
all easements, rights, appurtenances, tenements, hereditaments, rents,
royalties, mineral, oil and gas rights and profits, water, water rights, and
water stock appurtenant to the property (collectively, the "Premises");
TOGETHER with all of Borrower's estate, right, title and interest, now
owned or hereafter acquired, in:
(a) all buildings, structures, improvements, parking areas,
landscaping, equipment, fixtures and articles of property now or hereafter
erected on or attached to the Premises
including, but without being limited to, all heating, air conditioning and
incinerating apparatus and equipment; all boilers, engines, motors, dynamos,
generating equipment, piping and plumbing fixtures, water heaters, cooling,
ventilating, sprinkling and vacuum cleaning systems, fire extinguishing
apparatus, gas and electric fixtures, carpeting, floor coverings, underpadding,
elevators, escalators, partitions, mantels, built-in mirrors, window shades,
blinds, draperies, screens, storm sash, awnings, signs, and shrubbery and
plants, and including also all interest of Borrower in any of such items
hereafter at any time acquired (all of the foregoing, together with replacements
and additions thereto, are referred to herein as "Improvements"); and
(b) all compensation, awards, damages, rights of action and
proceeds, including interest thereon and/or the proceeds of any policies of
insurance therefor, arising out of or relating to a (i) taking or damaging of
the Premises or the Improvements thereon by reason of any public or private
improvement, condemnation proceeding (including change of grade), sale or
transfer in lieu of condemnation, or fire, earthquake or other casualty, or (ii)
any injury to or decrease in the value of the Premises or the Improvements for
any reason whatsoever; and
(c) return premiums or other payments upon any insurance any time
provided for the benefit of or naming GE CAPITAL, and refunds or rebates of
taxes or assessments on the Premises; and
(d) all written and oral leases and rental agreements (including
extensions, renewals and subleases; all of the foregoing shall be referred to
collectively herein as the "Leases") now or hereafter affecting the Premises
including, without limitation, all rents, issues, profits and other revenues and
income therefrom and from the renting, leasing or bailment of the Improvements
and equipment, all guaranties of tenants' performance under the Leases, and all
rights and claims of any kind that Borrower may have against any tenant under
the Leases or in connection with the termination or rejection of the Leases in a
bankruptcy or insolvency proceeding; and
(e) to the extent assignable by Borrower without the consent of
any third party, all plans, specifications, contracts and agreements relating to
the design or construction of the Improvements; Borrower's rights under any
payment, performance, or other bond in connection with the design or
construction of the Improvements; and all contracts, agreements and warranties
of architects, contractors or subcontractors incidental to the design or
construction of the Improvements; and
(f) all contracts, accounts, rights, claims or causes of action
pertaining solely to the Premises or the Improvements, including, without
limitation, management contracts, service or supply contracts, deposits, general
intangibles (excluding, however, trademarks, trade names and symbols), permits,
licenses, franchises and certificates, and all commitments or agreements, now or
hereafter in existence, intended by the obligor thereof to provide Borrower with
proceeds to satisfy the loan evidenced hereby, and the right to receive all
proceeds due under such commitments or agreements including refundable deposits
and fees (the term "general intangibles" as used in this paragraph shall have
the meaning given such term in the Uniform Commercial Code-Secured Transactions
of the state where the Premises is located); and
(g) all books, records, surveys, reports and other documents
pertaining solely to the Premises, the Improvements, the Leases, or other items
of collateral described herein; and
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(h) all additions, accessions, replacements, substitutions,
proceeds and products of the real and personal property, tangible and
intangible, described herein.
All of the foregoing described collateral is exclusive of any
furniture, furnishings or trade fixtures owned and supplied by Borrower or any
tenants of the Premises. The Premises, the Improvements, the Leases and all of
the rest of the foregoing property are herein referred to as the "Property."
TO SECURE TO GE CAPITAL (a) the repayment of the indebtedness evidenced
by Borrower's note dated of even date herewith in the principal sum of THIRTY
- -SIX MILLION AND NO/100 DOLLARS ($36,000,000.00), with interest thereon as set
forth in the note, and all renewals, extensions and modifications thereof
(herein the "Note"), and with a final maturity date of January 1,2008 (the
"Maturity Date"); (b) the repayment of any future advances, with interest
thereon, made by GE CAPITAL to Borrower pursuant to Section 30 hereof (herein
"Future Advances"); (c) the payment of all other sums, with interest thereon,
advanced in accordance herewith to protect the security of this Instrument or to
fulfill any of Borrower's obligations hereunder or under the other Loan
Documents (as defined below); (d) the performance of the covenants and
agreements of Borrower contained herein or in the other Loan Documents; and (e)
the repayment of all sums now or hereafter owing to GE CAPITAL pursuant to the
Loan Documents. The indebtedness and obligations described in clauses (a)-(e)
above are collectively referred to herein as the "Indebtedness." The Note, this
Instrument, and all other documents evidencing, securing or guarantying the
Indebtedness (except any Certificate and Indemnity Agreement Regarding Hazardous
Substances), as the same may be modified or amended from time to time, are
referred to herein as the "Loan Documents." The terms of the Note secured hereby
may provide that the interest rate or payment terms or balance due may be
indexed, adjusted, renewed, or renegotiated from time to time, and this
Instrument shall continue to secure the Note notwithstanding any such indexing,
adjustment, renewal or renegotiation.
Borrower represents and warrants that Borrower has good, marketable and
insurable title to, and has the right to grant, convey and assign an
indefeasible fee simple estate in, the Premises, Improvements, rents and leases
(or, if this Instrument is on a leasehold, good, marketable and insurable title
to, and the right to convey the leasehold estate and that the ground lease is in
full force and effect without modification except as noted above and without
default on the part of either lessor or lessee thereunder), and the right to
convey the other Property, that the Property is unencumbered except for the
matters set forth on Exhibit B attached to and made a part of this Instrument
(such matters being called the "Permitted Exceptions"), and that Borrower will
warrant and forever defend unto Trustee and GE CAPITAL the title to the Property
against all claims and demands, subject only to the Permitted Exceptions.
Borrower represents, warrants, covenants and agrees for the benefit of
GE CAPITAL as follows:
1. PAYMENT OF PRINCIPAL AND INTEREST. Borrower shall promptly pay
when due the principal of and interest on the Indebtedness, any prepayment and
other charges provided in the Loan Documents and all other sums secured by this
Instrument.
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2. FUNDS FOR TAXES, INSURANCE AND OTHER CHARGES. Upon the
occurrence of an Event of Default (hereinafter defined), and at GE CAPITAL's
sole option at any time thereafter, Borrower shall pay on or before the first
day of each month, in addition to each monthly payment on the Note, one-twelfth
(1/12) of the annual real estate taxes, insurance premiums, assessments, water
and sewer rates, ground rents and other charges (herein "Impositions ") payable
with respect to the Property (as reasonably estimated by GE CAPITAL), to be held
by GE CAPITAL without interest to Borrower, for the payment of any Impositions.
GE CAPITAL shall not exercise its option to require Borrower to pay Impositions
to GE CAPITAL in advance as provided in the immediately preceding sentence
unless GE CAPITAL reasonably determines that the payment of such amounts is
necessary to avoid the occurrence of a subsequent Event of Default resulting
from the nonpayment of any Impositions.
If the amount of such additional payments held by GE CAPITAL ("Funds ")
at the time of the annual accounting thereof shall exceed the amount deemed
necessary by GE CAPITAL to provide for the payment of Impositions as they fall
due, such excess shall be at Borrower's option, either repaid to Borrower or
credited to Borrower on the next monthly installment or installments of Funds
due. If at any time the amount of the Funds held by GE CAPITAL shall be less
than the amount deemed necessary by GE CAPITAL to pay Impositions as they fall
due, Borrower shall pay to GE CAPITAL any amount necessary to make up the
deficiency within thirty (30) days after notice from GE CAPITAL to Borrower
requesting payment thereof.
Upon the occurrence of an Event of Default, GE CAPITAL may apply, in
any amount and in any order as GE CAPITAL shall determine in GE CAPITAL's sole
discretion, any Funds held by GE CAPITAL at the time of application (a) to pay
Impositions which are now or will hereafter become due, or (b) as a credit
against sums secured by this Instrument. Upon payment in full of all sums
secured by this Instrument, GE CAPITAL shall refund to Borrower any Funds held
by GE CAPITAL. If GE CAPITAL is holding Funds at any time pursuant to this
Section 2, Borrower shall deliver written notice to GE CAPITAL of any
Impositions which become due and payable at least thirty (30) days prior to the
date any payment of such Impositions is due. Any such notice shall be
accompanied by an invoice evidencing such Imposition and stating the amount
thereof which is payable. Provided that the amount of the Funds exceeds the
amount of the Imposition which is then due and payable, GE CAPITAL shall either,
on or before the date such Imposition becomes due, pay such Imposition directly
to the payee thereof or deliver Funds to Borrower for payment of such
Imposition.
3. APPLICATION OF PAYMENTS. Unless applicable law provides
otherwise, each complete installment payment received by GE CAPITAL from
Borrower under the Note or this Instrument shall be applied by GE CAPITAL first
in payment of amounts payable to GE CAPITAL by Borrower under Section 2 hereof,
then to interest payable on the Note, then to principal of the Note, and then to
interest and principal on any Future Advances in such order as GE CAPITAL, at GE
CAPITAL's sole discretion, shall determine. Upon the occurrence and during the
continuance of any Event of Default, GE CAPITAL may apply, in any amount and in
any order as GE CAPITAL shall determine in GE CAPITAL's sole discretion, any
payments received by GE CAPITAL under the Note or this Instrument. Any partial
payment received by GE CAPITAL shall, at GE CAPITAL's option, be held in a
non-interest bearing account until GE CAPITAL receives funds sufficient to equal
a complete installment payment.
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4. CHARGES, LIENS. Borrower shall pay all Impositions
attributable to the Property when due and in the manner provided under Section 2
hereof or, if not paid in such manner, by Borrower making payment, when due,
directly to the payee thereof. If requested by GE CAPITAL in writing, Borrower
shall promptly furnish to GE CAPITAL all notices of Impositions which become
due, and in the event Borrower shall make payment directly, Borrower shall
promptly furnish to GE CAPITAL receipts evidencing such payments. Borrower shall
promptly discharge any lien which has, or may have, priority over or equality
with, the lien of this Instrument, and Borrower shall pay, when due, the claims
of all persons supplying labor or materials to or in connection with the
Property. Without GE CAPITAL's prior written permission, Borrower shall not
allow any lien other than this Instrument to be perfected against the Property.
If any lien other than this Instrument is filed against the Property without GE
CAPITAL's prior written permission and without the consent of Borrower, Borrower
shall, within thirty (30) days after receiving notice of the filing of such lien
either (a) cause such lien to be released of record and deliver evidence of such
release to GE CAPITAL, or (b) if Borrower desires to contest the validity of
such lien, either (i) obtain and deliver to GE CAPITAL a bond which operates
under the laws of the State of Texas to release the Property from the claim
evidenced by the lien, or (ii) deliver to GE CAPITAL such other security as GE
CAPITAL deems necessary to protect GE CAPITAL and the Property from the
foreclosure of such lien and to assure GE CAPITAL that the claim evidenced by
the lien, and all costs and charges associated therewith, will be paid in full
if Borrower does not prevail in such contest.
5. INSURANCE. Borrower shall obtain and maintain the following
types of insurance upon and relating to the Property:
(a) "All Risk" property and fire insurance (with extended coverage
endorsement including malicious mischief and vandalism) in an
amount not less than the full replacement value of the
Property (with a deductible not to exceed $5,000), naming GE
CAPITAL under a lender's loss payee endorsement and including
agreed amount, inflation guard, replacement cost and waiver of
subrogation endorsements;
(b) Comprehensive general liability insurance in an amount not
less than $2,000,000.00 insuring against personal injury,
death and property damage and naming GE CAPITAL as additional
insured;
(c) Business interruption insurance covering loss of rental or
other income (including all expenses payable by tenants) for
up to twelve (12) months; and
(d) Such other types of insurance or endorsements to existing
insurance as may be reasonably required from time to time by
GE CAPITAL.
Upon each reasonable request of GE CAPITAL, Borrower shall increase the
coverages under any of the insurance policies required to be maintained
hereunder or otherwise modify such policies in accordance with GE CAPITAL's
request. All of the insurance policies required hereunder shall be issued by
corporate insurers licensed to do business in the state in which the Property is
located and rated A:VIII or better by A.M. Best Company, and shall be in form
reasonably acceptable to GE CAPITAL. If and to the extent that the Property is
located within
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an area that has been or is hereafter designated or identified as an area having
special flood hazards by the Department of Housing and Urban Development or such
other official as shall from time to time be authorized by federal or state law
to make such designation pursuant to any national or state program of flood
insurance, Borrower shall carry flood insurance with respect to the Property in
amounts not less than the maximum limit of coverage then available with respect
to the Property or the amount of the Indebtedness, whichever is less.
Certificates of all insurance required to be maintained hereunder shall be
delivered to GE CAPITAL, along with evidence of payment in full of all premiums
required thereunder, contemporaneously with Borrower's execution of this
Instrument. All such certificates shall be in form acceptable to GE CAPITAL and
shall require the insurance company to give to GE CAPITAL at least thirty (30)
days' prior written notice before canceling the policy for any reason or
materially amending it. Certificates evidencing all renewal and substitute
policies of insurance shall be delivered to GE CAPITAL, along with evidence of
the payment in full of all premiums required thereunder, at least thirty (30)
days before termination of the policies being renewed or substituted. GE CAPITAL
shall have the right, but not the obligation, to make premium payments, at
Borrower's expense, to prevent any cancellation, endorsement, alteration or
reissuance of any policy of insurance maintained by Borrower, and such payments
shall be accepted by the insurer to prevent same.
If any act or occurrence of any kind or nature (including any casualty
for which insurance was not obtained or obtainable) shall result in damage to or
destruction of the Property (such event being called a "Loss"), Borrower will
give prompt written notice thereof to GE CAPITAL. All insurance proceeds paid or
payable in connection with any Loss shall be paid to GE CAPITAL and applied in
accordance with this paragraph. If (i) no Event of Default has occurred and is
continuing hereunder, (ii) Borrower provides evidence satisfactory to GE CAPITAL
of its ability to pay all amounts becoming due under the Note during the
pendency of any restoration or repairs to or replacement of the Property, and
(iii) the available insurance proceeds are, in GE CAPITAL's reasonable judgment,
sufficient to fully and completely restore, repair or replace the Property,
Borrower shall have the right to apply all insurance proceeds received in
connection with such Loss either (a) to restore, repair, replace and rebuild the
Property as nearly as possible to its value, condition and character immediately
prior to such Loss, or (b) to the payment of the Indebtedness in such order as
GE CAPITAL may elect. If an Event of Default has occurred and is continuing
hereunder at the time of such Loss, if GE CAPITAL determines that Borrower will
be unable to pay all amounts becoming due under the Note during the pendency of
any restoration or repairs to or replacement of the Property, or if the
available insurance proceeds are insufficient, in GE CAPITAL's reasonable
judgment, to fully and completely restore, repair or replace the Property, then
all of the insurance proceeds payable with respect to such Loss will be applied
to the payment of the Indebtedness, or if so instructed by GE CAPITAL, Borrower
will promptly, at Borrower's sole cost and expense and regardless of whether
sufficient insurance proceeds shall be available, commence to restore, repair,
replace and rebuild the Property in a good and workmanlike manner and as nearly
as possible to its value, condition, character immediately prior to such Loss.
All such proceeds shall be disbursed in accordance with GE CAPITAL's standard
construction loan disbursement procedures. Borrower shall diligently prosecute
any restoration, repairs or replacement of the Property undertaken by or on
behalf of Borrower pursuant to this Section 5. All such work shall be conducted
pursuant to written contracts approved by GE CAPITAL in writing, which approval
shall not be unreasonably withheld. Notwithstanding anything contained herein to
the contrary, in the event the insurance proceeds received by GE CAPITAL
following any Loss are insufficient in GE CAPITAL's
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reasonable judgment to fully and completely restore, repair or replace the
Property, and if Borrower has complied with all of the other conditions
described in this Section 5, Borrower may elect to restore, repair or replace
the Property if it first deposits with GE CAPITAL such additional sums as GE
CAPITAL determines are necessary in order to fully and completely restore,
repair or replace the Property. In the event any insurance proceeds remain
following the restoration, repair or replacement of the Property, then provided
no Event of Default has occurred which is continuing, such proceeds shall be
paid to Borrower.
6. PRESERVATION AND MAINTENANCE OF THE PROPERTY; LEASEHOLDS.
Borrower (a) shall not commit waste or permit impairment or deterioration of the
Property, (b) shall not abandon the Property, (c) shall keep the Property,
including all improvements, fixtures, equipment, machinery and appliances
thereon, in good repair and shall replace fixtures, equipment, machinery and
appliances on the Property when necessary to keep such items in good repair, (d)
shall comply with all laws, ordinances, regulations and requirements of any
governmental body applicable to the Property (including, without limitation, the
Americans with Disabilities Act of 1990 and all regulations promulgated
thereunder), (e) if all or part of the Property is for rent or lease, then GE
CAPITAL, at its option after the occurrence and during the continuance of an
Event of Default, may require Borrower to provide for professional management of
the Property by a property manager satisfactory to GE CAPITAL pursuant to a
contract approved by GE CAPITAL in writing, unless such requirement shall be
waived by GE CAPITAL in writing, (f) shall comply with the terms of any
restrictive covenants or other similar documents applicable to the Property, and
(g) shall give notice in writing to GE CAPITAL of and, unless otherwise directed
in writing by GE CAPITAL, appear in and defend any action or proceeding
purporting to affect the Property, the security of this Instrument or the rights
or powers of GE CAPITAL hereunder. Neither Borrower nor any tenant or other
person, without the written approval of GE CAPITAL, shall remove, demolish or
alter any Improvement now existing or hereafter erected on the Property or any
fixture, equipment, machinery or appliance in or on the Property except when
incident to the replacement of fixtures, equipment, machinery and appliances
with items of like kind.
7. USE OF PROPERTY. Unless required by applicable law or unless
GE CAPITAL has otherwise agreed in writing, which agreement shall not be
unreasonably withheld, Borrower shall not allow changes in the use for which all
or any part of the Property was intended at the time this Instrument was
executed. Borrower shall not, without GE CAPITAL's prior written consent, (a)
initiate or acquiesce in the adoption of a zoning ordinance applicable to the
Property which would classify the Property as a non-conforming use, (b) after
the adoption of any zoning ordinance applicable to the Property, permit the use
of the Property to become a non-conforming use under such zoning ordinances, (c)
file any subdivision or parcel map affecting the Property, or (d) amend, modify
or consent to any easement or covenants, conditions or restrictions pertaining
to the Property.
Notwithstanding anything contained herein or in the Loan Documents to
the contrary, Borrower may, without the necessity of obtaining any consent from
GE CAPITAL, construct improvements and perform alterations (each a "Construction
Project") within the third (3rd) floor of the portion of the Property designated
as "Center I", as long as such improvements and alterations do not adversely
effect the fair market value of the Property and are otherwise consistent with
the construction and use of the Property. In addition, Borrower may, without the
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necessity of obtaining any consent from GE CAPITAL but subject to the same
conditions set forth in the immediately preceding sentence, perform Construction
Projects from time to time as long as the cost of any such Construction Project
does not exceed $100,000.00. Borrower shall pay all costs and expenses incurred
in connection with any Construction Project.
8. PROTECTION OF GE CAPITAL'S SECURITY. If Event of Default
occurs (unless and until such Event of Default is cured to the satisfaction of
GE CAPITAL), or if any action or proceeding is commenced which affects the
Property or title thereto or the interest of GE CAPITAL therein, including, but
not limited to, eminent domain, insolvency, code enforcement, or arrangements or
proceedings involving a bankrupt or decedent, then GE CAPITAL, at GE CAPITAL's
option, may make such appearances, disburse such sums and take such action as GE
CAPITAL deems necessary, in its sole discretion, to protect GE CAPITAL's
interest, including, but not limited to, (a) disbursement of attorneys' fees,
(b) entry upon the Property to make repairs, and/or (c) procurement of
satisfactory insurance as provided in Section 5 hereof.
Any amounts disbursed by GE CAPITAL pursuant to this Section 8, with
interest thereon, shall become additional Indebtedness of Borrower secured by
this Instrument. Unless Borrower and GE CAPITAL agree to other terms of payment,
such amounts shall be immediately due and payable and shall bear interest from
the date of disbursement at the default rate provided in the Note. Borrower
hereby covenants and agrees that GE CAPITAL shall be subrogated to the lien of
any mortgage or other lien discharged, in whole or in part, by the Indebtedness.
Nothing contained in this Section 8 shall require GE CAPITAL to incur any
expense or take any action hereunder.
9. INSPECTION. GE CAPITAL may make or cause to be made reasonable
entries upon the Property to inspect the interior and exterior thereof during
normal business hours and after reasonable prior notice (except that no prior
notice shall be required for any entry after the occurrence and during the
continuance of an Event of Default).
10. FINANCIAL DATA. Borrower will cause Administaff, Inc., a
Delaware corporation ("Guarantor"), to furnish to GE CAPITAL, upon request,
within ninety (90) days after the close of each calendar year, (a) annual
balance sheet and profit and loss statements for the immediately preceding
calendar year prepared in accordance with generally accepted accounting
principles and practices consistently applied and, (b) if GE CAPITAL so
requires, or annual audit report of an independent certified public accountant
reasonably acceptable to GE CAPITAL. Borrower shall be deemed to have complied
with its obligations in subpart (a) of this Section 10 upon the posting of
Guarantor's annual financial statements to Edgar.
11. CONDEMNATION. If the Property, or any part thereof, shall be
condemned for any reason, including, without limitation, fire or earthquake
damage, or otherwise taken for public or quasi-public use under the power of
eminent domain, or be transferred in lieu thereof, all damages or other amounts
awarded for the taking of, or injury to, the Property shall be paid to GE
CAPITAL, and applied in accordance with this Section 11. GE CAPITAL shall have
the right, in its sole and absolute discretion, to apply the amounts so received
against (a) the costs and expenses of GE CAPITAL or Trustee, including
reasonable attorneys' fees incurred in connection with collection of such
amounts, and (b) the balance against the Indebtedness;
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provided, however, that if (i) no reasonably Event of Default shall have
occurred and be continuing hereunder, (ii) Borrower provides evidence reasonably
satisfactory to GE CAPITAL of its ability to pay all amounts becoming due under
the Note during the pendency of any restoration or repairs to or replacement of
the Property, (iii) GE CAPITAL determines, in its reasonable discretion, that
the proceeds of such award are sufficient to restore, repair, replace and
rebuild the Property as nearly as possible to its value, condition and character
immediately prior to such taking (or, if the proceeds of such award are
insufficient for such purpose, if Borrower provides additional sums to GE
CAPITAL's reasonable satisfaction so that the aggregate of such sums and the
proceeds of such award will be sufficient for such purpose), then the proceeds
of such award, together with additional sums provided by Borrower, shall be
placed in a separate account for the benefit of GE CAPITAL and Borrower to be
used to restore, repair, replace and rebuild the Property as nearly as possible
to its value, condition and character immediately prior to such taking. All such
proceeds shall be disbursed in accordance with GE CAPITAL's standard
construction loan disbursement procedures. All work to be performed in
connection therewith shall be pursuant to a written contract therefor, which
contract shall be subject to the prior approval of GE CAPITAL which approval
shall not be unreasonably withheld. To the extent that any proceeds remain after
the Property has been so restored and repaired, then provided no Event of
Default has occurred which is continuing the same shall be paid to Borrower. To
enforce its rights hereunder, GE CAPITAL shall be entitled to participate in and
control any condemnation proceedings and to be represented therein by counsel of
its own choice, and Borrower will deliver, or cause to be delivered to GE
CAPITAL such instruments as may be requested by GE CAPITAL from time to time to
permit such participation. In the event GE CAPITAL, as a result of any such
judgment, decree or award, reasonably believes that the payment or performance
of any of the Indebtedness is or shall be impaired, GE CAPITAL may declare all
of the Indebtedness immediately due and payable.
12. BORROWER AND LIEN NOT RELEASED. From time to time, GE CAPITAL
may, at GE CAPITAL's option, without giving notice to or obtaining the consent
of Borrower, Borrower's successors or assigns or of any junior lienholder or
guarantors, without liability on GE CAPITAL's part and notwithstanding
Borrower's breach of any covenant or agreement of Borrower in this Instrument,
extend the time for payment of the Indebtedness or any part thereof, reduce the
payments thereon, release anyone liable on any of the Indebtedness, accept an
extension or modification or renewal note or notes therefor, modify the terms
and time of payment of the Indebtedness, release from the lien of this
Instrument any part of the Property, take or release other or additional
security, reconvey any part of the Property, consent to any map or plan of the
Property, consent to the granting of any easement, join in any extension or
subordination agreement, and agree in writing with Borrower to modify the rate
of interest or period of amortization of the Note or decrease the amount of the
monthly installments payable thereunder. Any actions taken by GE CAPITAL
pursuant to the terms of this Section 12 shall not affect the obligation of
Borrower or Borrower's successors or assigns to pay the sums secured by this
Instrument and to observe the covenants of Borrower contained herein, shall not
affect the guaranty of any person, corporation, partnership or other entity for
payment of the Indebtedness, and shall not affect the lien or priority of the
lien hereof on the Property. Borrower shall pay GE CAPITAL a reasonable service
charge specified by GE CAPITAL, together with such title insurance premiums and
attorneys' fees as may be incurred at GE CAPITAL's option, for any such action
if taken at Borrower's request.
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13. FORBEARANCE BY GE CAPITAL NOT A WAIVER. Any forbearance by GE
CAPITAL in exercising any right or remedy hereunder, or otherwise afforded by
applicable law, shall not be a waiver of or preclude the exercise of any other
right or remedy. The acceptance by GE CAPITAL of payment of any sum secured by
this Instrument after the due date of such payment shall not be a waiver of GE
CAPITAL's right to either require prompt payment when due of all other sums so
secured or to declare a default for failure to make payment of any such sums
when due. The procurement of insurance or the payment of taxes or other liens or
charges by GE CAPITAL shall not be a waiver of GE CAPITAL's right to accelerate
the maturity of the Indebtedness secured by this Instrument, nor shall GE
CAPITAL's receipt of any awards, proceeds or damages under Sections 5 or 11
hereof operate to cure or waive Borrower's default in payment of sums secured by
this Instrument.
14. UNIFORM COMMERCIAL CODE SECURITY AGREEMENT. This Instrument is
intended to be a security and a fixture filing agreement pursuant to the Texas
Business and Commerce Code (the "Code") for any and all of the items specified
above as part of the Property which, under applicable law, may be subject to a
security interest pursuant to the Code, and Borrower hereby grants and conveys
to GE CAPITAL a first and prior security interest in all of the Property that
constitutes personalty, whether now owned or hereafter acquired. Borrower is the
debtor and GE CAPITAL is the secured party. The respective addresses of Borrower
and of GE CAPITAL are as provided on page 1 of this Instrument. Borrower hereby
authorizes GE CAPITAL to file this Instrument, or a reproduction thereof, and
any other financing statements describing the Property which are deemed
necessary by GE CAPITAL, in the real estate records and other appropriate
indexes as determined by GE CAPITAL, as a financing statement for any of the
items specified above as part of the Property. Any reproduction of this
Instrument or of any other security agreement or financing statement shall, to
the extent permitted by applicable law, be sufficient as a financing statement.
In addition, Borrower agrees to execute and deliver to GE CAPITAL, upon GE
CAPITAL's request, any additional financing statements, as well as extensions,
renewals and amendments thereof, and reproductions of this Instrument in such
form as GE CAPITAL may reasonably require to perfect a security interest with
respect to the foregoing items. Borrower shall pay all costs of filing such
financing statements and any extensions, renewals, amendments and releases
thereof, and shall pay all costs and expenses of any record searches for
financing statements GE CAPITAL may require. Without the prior written consent
of GE CAPITAL, Borrower shall not create or suffer to be created pursuant to the
Code any other security interest in said items, including replacements and
additions thereto. Upon the occurrence of an Event of Default, GE CAPITAL shall
have the remedies of a secured party under the Code, and GE CAPITAL also may
invoke the remedies provided in Section 26 of this Instrument as to such items.
In exercising any of said remedies, GE CAPITAL may proceed against the items of
real property and any items of personal property specified above, separately or
together, and in any order whatsoever, without in any way affecting the
availability of GE CAPITAL's remedies under the Code or of the remedies provided
in Section 26 of this Instrument. Within ten (10) days following any request
therefor by GE CAPITAL (but no more than two (2) times in any calendar year),
Borrower shall prepare and deliver to GE CAPITAL a written inventory
specifically listing all of the personal property, if any, covered by this
Instrument, which inventory shall be certified by Borrower as being true,
correct and complete in all material respects.
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15. LEASES OF THE PROPERTY. Borrower shall comply with and observe
in all material respects Borrower's obligations as landlord under all Leases of
the Property or any part thereof. All Leases now or hereafter entered into will
be in form and substance subject to the approval of GE CAPITAL (i) which
approval shall not be unreasonably withheld. Notwithstanding the foregoing, GE
CAPITAL's approval shall not be required for one (1) lease for a child-care
facility covering 10,000 square feet of rentable area of the Property or less
for a term of three (3) years or less. All Leases of the Property shall
specifically provide that such Leases are subordinate to this Instrument; that
the tenant attorns to GE CAPITAL, such attornment to be effective upon GE
CAPITAL's acquisition of title to the Property; that the tenant agrees to
execute such further evidences of attornment as GE CAPITAL may, from time to
time, request; that the attornment of the tenant shall not be terminated by
foreclosure; and that GE CAPITAL may, at GE CAPITAL's option, accept or reject
such attornments. Borrower shall not, without GE CAPITAL's written consent,
request or consent to the subordination of any Lease of all or any part of the
Property to any lien subordinate to this Instrument. Upon GE CAPITAL's receipt
of notice of the occurrence of any default or violation by Borrower of any of
its obligations under the Leases, GE CAPITAL shall have the right, but not the
duty or obligation, upon written notice to Borrower, to enter upon the Property
and to take such actions as GE CAPITAL may deem necessary to cure any default or
violation by Borrower under the Leases. The costs incurred by GE CAPITAL in
taking any such actions pursuant to this Section 15 shall become part of the
Indebtedness, shall bear interest at the default rate provided in the Note, and
shall be payable by Borrower to GE CAPITAL on demand. GE CAPITAL shall have no
liability to Borrower or to any third party for any actions taken by GE CAPITAL
or not taken pursuant to this Section 15.
16. REMEDIES CUMULATIVE. Each remedy provided in this Instrument
is distinct and cumulative to all other rights or remedies under this Instrument
or afforded by law or equity, and may be exercised concurrently, independently
or successively, in any order whatsoever.
17. TRANSFERS OF THE PROPERTY OR BENEFICIAL INTERESTS IN BORROWER;
ASSUMPTION.
(a) GE CAPITAL may, at its option, declare all sums
secured by this Instrument to be immediately due and payable, and GE CAPITAL may
invoke any remedies permitted by Section 26 of this Instrument, if title to the
Property is transferred in any manner, whether directly or indirectly (except as
otherwise expressly permitted by this Section 17), without the prior written
consent of GE CAPITAL, which consent shall be at GE CAPITAL's sole discretion.
Any transfer of any interest in the Property or in the income therefrom, by
sale, lease (except for leases which are approved by GE CAPITAL pursuant to
Section 15 of this Instrument), contract, mortgage, deed of trust, further
encumbrance or otherwise (including any such transfers as security for
additional financing of the Property), shall be considered a transfer of the
Property which requires the prior written consent of GE CAPITAL. GE CAPITAL
shall have the right to condition its consent to any proposed sale or transfer
of the Property described in this Section 17 upon, among other things, GE
CAPITAL's approval of the transferee's creditworthiness and management ability,
and the transferee's execution, prior to the sale or transfer, of a written
assumption agreement containing such terms as GE CAPITAL may require, including,
if required by GE CAPITAL, the imposition of a transfer fee of one percent (1%)
of
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the then outstanding balance of the Indebtedness (provided, however, that if the
Property is transferred to an Affiliate, as such term is defined below, the
transfer fee shall be $2500.00). For the purpose of this Section 17, the term
"Affiliate" shall mean any entity which directly or indirectly controls or is
controlled by or is under common control with Borrower, and the term "control"
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such entity, whether
through the ownership of voting securities or by contract or otherwise. Consent
by GE CAPITAL to one transfer of the Property shall not constitute consent to
subsequent transfers or waiver of the provisions of this Section 17. No transfer
by Borrower shall relieve Borrower of liability for payment of the Indebtedness.
(b) Any change in, or transfer, pledge or assignment of,
the ownership interests in Borrower or any entity which controls Borrower shall
be deemed a change of title requiring the prior written consent of GE CAPITAL
pursuant to Section 17(a) above except for (i) transfers of ownership interests
to Affiliates of Guarantor, and (ii) transfers of publicly traded stock.
18. NOTICE. Except for any notice required under applicable law to
be given in another manner, any and all notices, elections, demands, or requests
permitted or required to be made under this Instrument or under the Note shall
be in writing, signed by the party giving such notice, election, demand or
request, and shall be delivered personally, by telegram, or sent by registered,
certified, or Express United States mail, postage prepaid, or by Federal Express
or similar service requiring a receipt, to the other party at the address stated
above, or to such other party and at such other address within the United States
of America as any party may designate in writing as provided herein. The date of
receipt of such notice, election, demand or request shall be the earliest of (a)
the date of actual receipt, (b) two (2) days after the date of mailing by
registered or certified mail, (c) one (1) day after the date of mailing by
Express Mail or the delivery (for redelivery) to Federal Express or another
similar service requiring a receipt, or (d) the date of personal delivery (or
refusal upon presentation for delivery).
19. SUCCESSORS AND ASSIGNS BOUND; JOINT AND SEVERAL LIABILITY;
AGENTS; CAPTIONS. The covenants and agreements herein contained shall bind, and
the rights hereunder shall inure to, the respective heirs, successors and
assigns of GE CAPITAL and Borrower, subject to the provisions of Section 17
hereof. In exercising any rights hereunder or taking any actions provided for
herein, GE CAPITAL may act through its employees, agents or independent
contractors as authorized by GE CAPITAL. The captions and headings of the
sections of this Instrument are for convenience only and are not to be used to
interpret or define the provisions hereof.
20. INTENTIONALLY DELETED
21. WAIVER OF MARSHALLING. Notwithstanding the existence of any
other security interests in the Property held by GE CAPITAL or by any other
party, to the extent permitted by applicable law, GE CAPITAL shall have the
right to determine the order in which any or all of the Property shall be
subjected to the remedies provided herein. GE CAPITAL shall have the right to
determine the order in which any or all portions of the Indebtedness secured
hereby are satisfied from the proceeds realized upon the exercise of the
remedies provided
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herein. Borrower, any party who consents to this Instrument and any party who
now or hereafter acquires a security interest in the Property and who has actual
or constructive notice hereof hereby waives any and all right to require the
marshalling of assets in connection with the exercise of any of the remedies
permitted by applicable law or provided herein.
22. HAZARDOUS SUBSTANCES. GE CAPITAL has received a Phase I
Environmental Site Assessment dated November 27, 2002, prepared by Seccor
International Incorporated (the "Report"). Except as disclosed to GE CAPITAL in
the Report, Borrower has received no notification of any kind suggesting that
the Property or any adjacent property is or may be contaminated with any
hazardous substances or is or may be required to be cleaned up in accordance
with any applicable law or regulation; and Borrower further represents and
warrants that, except as previously disclosed to GE CAPITAL in writing, to the
best of its knowledge as of the date hereof, there are no hazardous substances
located in, on or under the Property or incorporated in any Improvements, nor
has the Property ever been used as a landfill or a waste disposal site, or a
manufacturing, handling, storage, distribution or disposal facility for
hazardous waste or materials. As used herein, the term "hazardous substances"
means asbestos, polychlorinated byphenyls, petroleum products and any chemical,
substance or material classified, defined or designated as hazardous, toxic or
radioactive, or any other similar term, by any federal, state or local statute,
regulation or ordinance now or hereafter in effect. Borrower shall promptly
comply with all statutes, regulations and ordinances, and with all orders,
decrees or judgments of governmental authorities or courts having jurisdiction,
relating to the use, collection, treatment, disposal, storage, control, removal
or cleanup of hazardous substances in, on or under the Property or incorporated
in any Improvements, at Borrower's expense. In the event that GE CAPITAL at any
time has a reasonable belief that Borrower or the Property is in violation of
any applicable environmental law with respect to the Property, then immediately,
upon request by GE CAPITAL, Borrower shall obtain and furnish to GE CAPITAL, at
Borrower's sole cost and expense, an environmental audit and inspection of the
Property from an expert reasonably satisfactory to GE CAPITAL and containing a
scope of work acceptable to GE CAPITAL. In the event that Borrower fails to
immediately obtain such audit or inspection, GE CAPITAL or its agents may
perform or obtain such audit or inspection at Borrower's sole cost and expense.
In the event Borrower fails to comply with any of its obligations under this
Section 22, GE CAPITAL shall deliver written notice thereof to Borrower, and
such failure shall constitute an Event of Default if it is not remedied within
thirty (30) days after Borrower's receipt of any such written notice. If an
Event of Default occurs under this Section 22, then in addition to its other
rights and remedies hereunder, GE CAPITAL may, but is not obligated to, enter
upon the Property and take such actions and incur such costs and expenses to
effect compliance with applicable environmental laws as it deems advisable to
protect its interest in the Property; and whether or not Borrower has actual
knowledge of the existence of hazardous substances or materials on the Property
as of the date hereof, Borrower shall reimburse GE CAPITAL as provided in
Section 23 below for the full amount of all costs and expenses incurred by GE
CAPITAL prior to GE CAPITAL acquiring title to the Property through foreclosure
or acceptance of a deed in lieu of foreclosure, in connection with such
compliance activities. Neither this provision nor any of the other Loan
Documents shall operate to put GE CAPITAL in the position of an owner of the
Property prior to any acquisition of the Property by GE CAPITAL. The rights
granted to GE CAPITAL herein and in the other Loan Documents are granted solely
for the protection of GE CAPITAL's lien and security interest covering the
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Property and do not grant to GE CAPITAL the right to control Borrower's actions,
decisions or policies regarding hazardous substances.
23. ADVANCES, COSTS AND EXPENSES. Borrower shall pay, within ten
(10) days after written demand from GE CAPITAL, all sums advanced by GE CAPITAL
and all costs and expenses incurred by GE CAPITAL in taking any actions pursuant
to the Loan Documents, including reasonable attorneys' fees and disbursements,
accountants' fees, appraisal and inspection fees, and the costs for title
reports and guaranties, together with interest thereon at the rate applicable
under the Note after an Event of Default from the date such costs were advanced
or incurred. All such costs and expenses incurred by GE CAPITAL and advances
made shall constitute advances under this Instrument to protect the Property and
shall be secured by and have the same priority as the lien of this Instrument.
If Borrower fails to pay any such advances, costs and/or expenses and interest
thereon, GE CAPITAL may apply any undisbursed loan proceeds to pay the same and,
without foreclosing the lien of this Instrument, may, at its option, commence an
independent action against Borrower for the recovery of the costs, expenses
and/or advances, with interest, together with costs of suit, costs of title
reports and guaranty of title, disbursements of counsel and reasonable
attorneys' fees incurred therein or in any appeal therefrom.
24. ASSIGNMENT OF LEASES AND RENTS. Borrower, for good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, to secure the Indebtedness, does hereby absolutely and
unconditionally grant, bargain, sell, transfer, assign, convey, set over and
deliver unto GE CAPITAL all right, title and interest of Borrower in, to and
under the Leases of the Property, whether now in existence or hereafter entered
into, and all guaranties, amendments, extensions and renewals of said Leases and
any of them, and all rents, income and profits which may now or hereafter be or
become due or owing under the Leases, and any of them, or on account of the use
of the Property.
Borrower represents, warrants, covenants and agrees with GE CAPITAL as
follows as of the date hereof:
(a) The sole ownership of the entire lessor's interest in the
Leases is vested in Borrower, and Borrower has not, and shall
not, perform any acts or execute any other instruments which
might prevent GE CAPITAL from fully exercising its rights with
respect to the Leases under any of the terms, covenants and/or
conditions of this Instrument.
(b) The Leases, if any, are and shall be valid and enforceable in
accordance with their terms and have not been and shall not be
altered, modified, amended, terminated, canceled, renewed or
surrendered, except as approved in writing by GE CAPITAL,
which approval shall not be unreasonably withheld. The terms
and conditions of the Leases have not been and shall not be
waived in any manner whatsoever, except as approved in writing
by GE CAPITAL, which approval shall not be unreasonably
withheld.
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(c) Borrower shall not materially alter the term or the amount of
rent payable under any Lease without prior written notice to
GE CAPITAL and GE CAPITAL's prior written consent, which
consent shall not be unreasonably withheld.
(d) To the best of Borrower's knowledge, there are no defaults now
existing under any of the Leases and there exists no state of
facts which, with the giving of notice or lapse of time or
both, would constitute a default under any of the Leases.
(e) Borrower shall give prompt written notice to GE CAPITAL of any
notice received by Borrower claiming that a default has
occurred under any of the Leases on the part of Borrower,
together with a complete copy of any such notice.
(f) Each of the Leases shall remain in full force and effect
irrespective of any merger of the interest of lessor and any
lessee under any of the Leases.
(g) Borrower will not permit any Lease to become subordinate to
any lien other than the lien of this Instrument.
(h) Borrower shall not permit or consent to the assignment by any
tenant of its rights under its Lease without the prior written
consent of GE CAPITAL, which consent shall not be unreasonably
withheld. Without limitation of the foregoing, Borrower shall
not permit or consent to the filing of any encumbrance against
the tenant's interest under any Lease including, without
limitation, any leasehold mortgage.
This assignment is absolute, is effective immediately, and is
irrevocable by Borrower so long as the Indebtedness remains outstanding.
Notwithstanding the foregoing, until a Notice is sent to Borrower in writing
that an Event of Default has occurred (which notice is hereafter called a
"Notice"), Borrower may receive, collect and enjoy the rents, income and profits
accruing from the Property .
Upon the occurrence of an Event of Default hereunder, GE CAPITAL may,
at its option, after service of a Notice, receive and collect all such rents,
income and profits from the Property as they become due. GE CAPITAL shall
thereafter continue to receive and collect all such rents, income and profits,
as long as such Event of Default shall exist, and during the pendency of any
foreclosure proceedings.
Borrower hereby irrevocably appoints GE CAPITAL its true and lawful
attorney with power of substitution and with full power for GE CAPITAL in its
own name and capacity or in the name and capacity of Borrower, from and after
service of a Notice, to demand, collect, receive and give complete acquittances
for any and all rents, income and profits accruing from the Property, either in
its own name or in the name of Borrower or otherwise, which GE CAPITAL may deem
necessary or desirable in order to collect and enforce the payment of the rents,
income and profits of and from the Property. Lessees of the Property are hereby
expressly authorized and directed, following receipt of a Notice from GE
CAPITAL, to pay any and all amounts due Borrower pursuant to the Leases to GE
CAPITAL or such nominee as GE CAPITAL may designate in a writing delivered to
and received by such lessees, and the lessees
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of the Property are expressly relieved of any and all duty, liability or
obligation to Borrower in respect of all payments so made.
Upon the occurrence of any Event of Default, from and after service of
a Notice, and unless and until such Event of Default is cured to the
satisfaction of GE CAPITAL, GE CAPITAL is hereby vested with full power to use
all measures, legal and equitable, deemed by it to be necessary or proper to
enforce this Section 24 and to collect the rents, income and profits assigned
hereunder, including the right of GE CAPITAL or its designee, to enter upon the
Property, or any part thereof, and take possession of all or any part of the
Property together with all personal property, fixtures, documents, books,
records, papers and accounts of Borrower relating thereto, and GE CAPITAL may
exclude Borrower, its agents and servants, wholly therefrom. Borrower hereby
grants full power and authority to GE CAPITAL to exercise all rights, privileges
and powers herein granted at any and all times after service of a Notice, with
full power to use and apply all of the rents and other income herein assigned to
the payment of the costs of managing and operating the Property and of any
indebtedness or liability of Borrower to GE CAPITAL, including, but not limited,
to the payment of taxes, special assessments, insurance premiums, damage claims,
the costs of maintaining, repairing, rebuilding and restoring the Improvements
on the Property or of making the same rentable, reasonable attorneys' fees
incurred in connection with the enforcement of this Instrument, and of principal
and interest payments due from Borrower to GE CAPITAL on the Note and this
Instrument, all in such order as GE CAPITAL may determine. GE CAPITAL shall be
under no obligation to exercise or prosecute any of the rights or claims
assigned to it hereunder or to perform or carry out any of the obligations of
the lessor under any of the Leases and does not assume any of the liabilities in
connection with or arising or growing out of the covenants and agreements of
Borrower in the Leases. It is further understood that the assignment set forth
in this Section 24 shall not operate to place responsibility for the control;
care, management or repair of the Property, or parts thereof, upon GE CAPITAL,
nor shall it operate to make GE CAPITAL liable for the performance of any of the
terms and conditions of any of the Leases, or for any waste of the Property by
any lessee under any of the Leases, or any other person, or for any dangerous or
defective condition of the Property or for any negligence in the management,
upkeep, repair or control of the Property resulting in loss or injury or death
to any lessee, licensee, employee or stranger.
25. DEFAULT. The following shall each constitute an event of
default ("Event of Default"):
(a) Failure of Borrower to make any payment of principal,
interest, or any Prepayment Premium due under the Note when due, and such
failure shall continue for a period of ten (10) days after written notice is
given to Borrower by GE CAPITAL specifying such failure (provided that no notice
shall be given of any failure by Borrower to pay all amounts which become due
under the Note on the Maturity Date); or
(b) Failure of Borrower within the time required by this
Instrument to make any payment for taxes, insurance or for reserves for such
payments (to the extent required hereunder), or any other payment necessary to
prevent filing of or discharge of any lien, and such failure shall continue for
a period often (10) days after written notice is given to Borrower by GE CAPITAL
specifying such failure; or
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(c) Failure by Borrower to observe or perform any of its
obligations under any Lease covering more than 5000 square feet of rentable area
at the Property; or
(d) Except as permitted by Section 17 of this Instrument,
if the Property or any part of or interest in the Property is transferred in any
manner whatsoever without the prior written consent of GE CAPITAL; or
(e) Except as permitted by Section 15 hereof, if any
lease agreement covering all or any portion of the Property is executed by
Borrower without GE CAPITAL's prior written consent; or
(f) Filing by Borrower of a voluntary petition in
bankruptcy or filing by Borrower of any petition or answer seeking or
acquiescing in any reorganization, arrangement, composition, readjustment,
liquidation, or similar relief for itself under any present or future federal,
state or other statute, law or regulation relating to bankruptcy, insolvency or
other relief for debtors, or the seeking, consenting to, or acquiescing by
Borrower in the appointment of any trustee, receiver, custodian, conservator or
liquidator for Borrower, any part of the Property, or any of the income or rents
of the Property, or the making by Borrower of any general assignment for the
benefit of creditors, or the inability of or failure by Borrower to pay its
debts generally as they become due, or the insolvency on a balance sheet basis
or business failure of Borrower, or the making or suffering of a preference
within the meaning of federal bankruptcy law, or the making of a fraudulent
transfer under applicable federal or state law, or concealment by Borrower of
any of its property in fraud of creditors, or the imposition of a lien upon the
Property which is not discharged in the manner permitted by Section 4 of this
Instrument, or the giving of notice by Borrower to any governmental body of
insolvency or suspension of operations; or
(g) Filing of a petition against Borrower seeking any
reorganization, arrangement, composition, readjustment, liquidation, or similar
relief under any present or future federal, state or other law or regulation
relating to bankruptcy, insolvency or other relief for debts, or the appointment
of any trustee, receiver, custodian, conservator or liquidator of Borrower, of
any part of the Property or of any of the income or rents of the Property,
unless such petition shall be dismissed within sixty (60) days after such
filing, but in any event prior to the entry of an order, judgment or decree
approving such petition; or
(h) The institution of any proceeding for the dissolution
or termination of Borrower voluntarily, involuntarily, or by operation of law,
unless such proceeding is dismissed within sixty (60) days after the date it is
commenced; or
(i) A material adverse change occurs in the financial
condition of Borrower or Guarantor from the financial condition of Borrower or
Guarantor as previously disclosed to GE CAPITAL, and such material adverse
change continues to exist thirty (30) days after GE CAPITAL delivers written
notice thereof to Borrower; or
(j) Any warranty, representation or statement furnished
to GE CAPITAL by or on behalf of Borrower under the Note, this Instrument, any
of the other Loan Documents or
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the Certificate and Indemnity Agreement Regarding Hazardous Substances, shall
prove to have been false or misleading in any material respect when made; or
(k) Failure of Borrower to observe or perform any other
obligation under this Instrument, any other Loan Document or the Certificate and
Indemnity Regarding Hazardous Substances when such observance or performance is
due, and such failure shall continue beyond the applicable cure period set forth
in such Loan Document, or if the default cannot be cured within such applicable
cure period, Borrower fails within such time to commence and pursue curative
action with reasonable diligence or fails at any time after expiration of such
applicable cure period to continue with reasonable diligence all necessary
curative actions. No notice of default and no opportunity to cure shall be
required if during the prior twelve (12) months GE CAPITAL has already sent two
(2) notices to Borrower concerning default in performance of the same
obligation; or
(l) Any of the foregoing events described in
subparagraphs (f)-(h) above occur with respect to Guarantor; or
(m) The occurrence of any default or event of default
(beyond any applicable notice and cure period) under any of the documents
evidencing and/or securing any loan, whether currently existing or hereafter
extended, by GE CAPITAL or General Electric Company (or any of its affiliates or
subsidiaries) to Borrower or Guarantor.
26. RIGHTS AND REMEDIES ON DEFAULT. Upon the occurrence of any
Event of Default and at any time thereafter while such Event of Default
continues, Trustee or GE CAPITAL may exercise any one or more of the following
rights and remedies:
(a) GE CAPITAL may declare the entire Indebtedness,
including the then unpaid principal balance on the Note, the accrued but unpaid
interest thereon, court costs and attorneys' fees hereunder immediately due and
payable, without notice, presentment, protest, 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. Additionally, GE CAPITAL shall
not be required to make any further advances on the Note or other Loan Documents
upon the occurrence of an Event of Default or an event which, with the giving of
notice or passing of time or both, would constitute an Event of Default.
(b) GE CAPITAL may enter upon the Property and take
exclusive possession thereof and of all books, records and accounts relating
thereto without notice and without being guilty of trespass, and hold, lease,
manage, operate or otherwise use or permit the use of the Property, either
itself or by other persons, firms or entities, in such manner, for such time and
upon such other terms as GE CAPITAL may deem to be prudent and reasonable under
the circumstances (making such repairs, alterations, additions and improvements
thereto and taking any and all other action with reference thereto, from time to
time, as GE CAPITAL shall deem necessary or desirable), and apply all rents and
other amounts collected by GE CAPITAL in connection therewith in accordance with
the provisions of subsection (h) of this Section 26. Borrower hereby irrevocably
appoints GE CAPITAL as the agent and attorney-in-fact of Borrower, with full
power of substitution, and in the name of Borrower, if GE CAPITAL elects to do
so, to (i) endorse the name of Borrower on any checks or drafts representing
proceeds of
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the insurance policies, or other checks or instruments payable to Borrower with
respect to the Property, (ii) prosecute or defend any action or proceeding
incident to the Property, and (iii) take any action with respect to the Property
that GE CAPITAL may at any time and from time to time deem necessary or
appropriate. GE CAPITAL shall have no obligation to undertake any of the
foregoing actions, and if GE CAPITAL should do so, it shall have no liability to
Borrower for the sufficiency or adequacy of any such actions taken by GE
CAPITAL.
(c) (i) GE CAPITAL may, by and through Trustee, or
otherwise, sell or offer for sale the Property in such portions, order and
parcels as GE CAPITAL may determine, with or without having first taken
possession of same, to the highest bidder for cash at public auction in
accordance with the requirements of Section 51.002 of the Texas Property Code.
In instances where the Property is located in the State of Texas, such sale
shall be made at the courthouse of the county in which the Property (or any of
that portion thereof to be sold) is located, whether the parts or parcels
thereof, if any, in different counties are contiguous or not (and without the
necessity of having any personal property present at such sale) in the area
designated by the county commissioners for foreclosure sales (or, if no area has
been designated, at the location at the courthouse designated by GE CAPITAL by
or through Trustee in the written notice hereinafter described) on the first
Tuesday of a month between the hours of 10:00 a.m. and 4:00 p.m. after
advertising the time, place and terms of sale and that portion of the Property
to be sold by posting or causing to be posted written or printed notice thereof
at least twenty-one (21) days before the date of the sale both at the courthouse
door of each county in which the Property is located and with the county clerk
of each county in which the Property is located, which notice shall be posted at
the courthouse door and filed with the county clerk by the Trustee, or by any
person acting for him. The written notice shall include the earliest time at
which the sale will be held. GE CAPITAL shall serve, or shall cause to be served
at least twenty-one (21) days before the date of sale, written or printed notice
of the proposed sale by certified mail on each debtor obligated to pay the
Indebtedness according to the records of GE CAPITAL by the deposit of such
notice in the United States mail, postage prepaid and addressed to each debtor
at such debtor's last known address as shown by the records of GE CAPITAL. The
affidavit of a person knowledgeable of the facts to the effect that service was
completed is prima facie evidence of service.
(ii) GE CAPITAL, may, at its option, accomplish
all or any of the aforesaid in such manner as permitted or required by Section
51.002 of the Texas Property Code relating to the sale of real property or by
Chapter 9 of the Code relating to the sale of personalty after default by a
debtor (as said section and chapter now exist or may be hereinafter amended or
succeeded), or by any other present or subsequent articles or enactments
relating to same. At any such sale:
A. whether made under the power herein
contained, the aforesaid Section 51.002, the Code, any other legal
requirement or by virtue of any judicial proceedings or any other legal
right, remedy or recourse, it shall not be necessary for Trustee to
have physically present, or to have constructive possession of, the
Property (Borrower shall deliver to Trustee any portion of the Property
not actually or constructively possessed by Trustee immediately upon
demand by Trustee), and the title to and right of possession of any
such property shall pass to the purchaser thereof as
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completely as if the same had been actually present and delivered to
purchaser at such sale;
B. each instrument of conveyance executed by
Trustee shall contain a general warranty of title, binding upon
Borrower, but subject to the Permitted Exceptions;
C. each and every recital contained in any
instrument of conveyance made by Trustee shall conclusively establish
the truth and accuracy of the matters recited therein, including,
without limitation, nonpayment of the Indebtedness, advertisement and
conduct of such sale in the manner provided herein and otherwise by law
and appointment of any successor Trustee hereunder;
D. any and all prerequisites to the validity
thereof shall be conclusively presumed to have been performed;
E. the receipt by Trustee or of such other
party or officer making the sale of the full amount of the purchase
money shall be sufficient to discharge the purchaser or purchasers from
any further obligation for the payment thereof, and no such purchaser
or purchasers, or his or their assigns or personal representatives,
shall thereafter be obligated to see to the application of such
purchase money or be in any way answerable for any loss, misapplication
or nonapplication thereof;
F. 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 or to claim the property sold or any part
thereof by, through or under Borrower; and
G. to the extent and under such circumstances
as are permitted by law, GE CAPITAL may be a purchaser at any such
sale.
(d) After sale of the Property, or any portion thereof,
to the extent permitted by applicable law, Borrower will be divested of any and
all interest and claim thereto, including any interest or claim to all insurance
policies, bonds, loan commitments and other intangible property covered hereby.
Additionally, Borrower will be considered a tenant at sufferance of the
purchaser of the Property, and said purchaser shall be entitled to immediate
possession thereof, and if Borrower shall fail to vacate the Property
immediately, the purchaser may and shall have the right, without further notice
to Borrower, to go into any justice court in any precinct or county in which the
Property is located and file an action in forcible entry and detainer, which
action shall lie against Borrower or its assigns or legal representatives, as a
tenant at sufferance. This remedy is cumulative of any and all remedies the
purchaser may have hereunder or otherwise.
(e) (i) Upon, or at any time after, commencement of
foreclosure of the lien and security interest provided for herein or any legal
proceedings hereunder, GE CAPITAL may make application to a court of competent
jurisdiction, as a matter of strict right and without notice to Borrower or
regard to the adequacy of the Property, for the repayment of the
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Indebtedness, for appointment of a receiver of the Property, and Borrower does
hereby irrevocably consent 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 subsection (h) of this Section 26.
(ii) GE CAPITAL may exercise any and all other
rights, remedies and recourses granted under the Loan Documents or now or
hereafter existing in equity, at law, by virtue of statute or otherwise.
(f) Trustee and GE CAPITAL shall have all rights,
remedies and recourses granted in the Loan Documents and available at law or
equity (including specifically those granted by the Code in effect and
applicable to the Property or any portion thereof) and the same (i) shall be
cumulative and concurrent; (ii) may be pursued separately, successively or
concurrently against Borrower, any guarantor of the Indebtedness or others
obligated under the Note, or against the Property, or against anyone or more of
them at the sole discretion of GE CAPITAL; (iii) may be exercised as often as
occasion therefor shall arise, it being agreed by Borrower that the exercise or
failure to exercise any of the same shall in no event be construed as a waiver
or release thereof or of any other right, remedy or recourse; and (iv) are
intended to be, and shall be, nonexclusive.
(g) To the fullest extent permitted by law, Borrower
hereby irrevocably and unconditionally waives and releases (i) all benefits that
might accrue to Borrower by any present or future laws 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; (ii) all notices of any Event of Default (except
as may be specifically provided for under the terms hereof), presentment,
demand, notice of intent to accelerate, notice of acceleration and any other
notice of GE CAPITAL's or Trustee's election to exercise or the actual exercise
of any right, remedy or recourse provided for under the Loan Documents; (iii)
any right to appraisal or marshalling of assets or a sale in inverse order of
alienation; (iv) the exemption of homestead; and (v) the administration of
estates of decedents, or other matter to defeat, reduce or affect the right of
GE CAPITAL under the terms of this Instrument to sell the Property for the
collection of the Indebtedness secured hereby (without any prior or different
resort for collection) or the right of GE CAPITAL, under the terms of this
Instrument, to receive the payment of the Indebtedness out of the proceeds of
sale of the Property in preference to every other person and claimant whatever
(only reasonable expenses of such sale being first deducted). Borrower expressly
waives and relinquishes any right or remedy which it may have or be able to
assert by reason of the provisions of Chapter 34 of the Code pertaining to the
rights and remedies of sureties.
(h) The proceeds of any sale of, and the rents, profits
and other income generated by the holding, leasing, operating or other use of
the Property, shall be applied by GE CAPITAL (or the receiver, if one is
appointed) to the extent that funds are so available therefrom in the following
orders of priority: (i) first, to the payment of the costs and expenses of
taking possession of the Property and of holding, using, leasing, maintaining,
repairing, improving and selling the same, including, without limitation, (A)
receiver's fees; (B) costs of advertisement; (C) attorneys' and accountants'
fees; and (D) court costs, if any; (ii) second, to the payment of all
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amounts, other than the principal amount and accrued but unpaid interest on the
Note which may be due to GE CAPITAL under the Loan Documents, including all
Indebtedness, together with interest thereon as provided therein, in such order
and manner as GE CAPITAL may determine; (iii) third, to the payment of the
principal amount outstanding on the Note in such order and manner as GE CAPITAL
may determine and all other Indebtedness; (iv) fourth, to the payment of all
accrued but unpaid interest due on the Note in such order and manner as GE
CAPITAL may determine; and (v) fifth, to Borrower. Borrower, any guarantor of
the Indebtedness and any other party liable on the Indebtedness shall be liable
for any deficiency remaining in the Indebtedness subsequent to any sale
referenced in this subsection (h).
(i) GE CAPITAL shall have the right to become the
purchaser at any sale of the Property hereunder and shall have the right to be
credited on the amount of its bid therefor all of the Indebtedness due and owing
as of the date of such sale.
(j) If GE CAPITAL shall accelerate the Indebtedness
following the occurrence of an Event of Default, any payments received by GE
CAPITAL following such acceleration, whether as the result of voluntary payments
made by Borrower or as a result of the sale of the Property by Trustee, shall be
deemed voluntary prepayments of the Note and accordingly, the prepayment premium
required under the Note shall also be payable, subject to the terms of the Note.
(k) The purchaser at any trustee's or foreclosure sale
hereunder may disaffirm any easement granted, or rental, lease or other contract
made in violation of any provisions of this Instrument and may take immediate
possession of the Property free from, and despite the terms of, any such grant
of easement, rental, lease or other contract.
27. RELEASE. Upon payment of all sums secured by this Instrument
and any other sums due to GE CAPITAL in connection with the Loan Documents and
upon the performance of all of Borrower's other obligations under the Loan
Documents, and provided that no Event of Default has occurred which is
continuing, GE CAPITAL shall release this Instrument at Borrower's sole cost and
expense.
28. SUBSTITUTE TRUSTEE. Trustee shall not be liable for any error
of judgment or act done by Trustee, or be otherwise responsible or accountable
under any circumstances whatsoever. Trustee shall not be personally liable in
case of entry by it or anyone acting by virtue of the powers herein granted it
upon the Property for debts contracted or liability or damages incurred in the
management or operation of the Property. All monies 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 monies (except to the extent required by law) and Trustee shall be under
no liability for interest on any monies received by it hereunder.
Trustee may resign by giving of notice of such resignation in writing
to GE CAPITAL. If Trustee shall die, resign or become disqualified from acting,
or shall fail or refuse to exercise its powers hereunder when requested by GE
CAPITAL so to do, or if for any reason and without cause GE CAPITAL shall prefer
to appoint a substitute trustee to act instead of the original Trustee named
herein, or any prior successor or substitute trustee, GE CAPITAL shall have full
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power to appoint a substitute trustee and, if preferred, several substitute
trustees in succession who shall succeed to all the estate, rights, powers and
duties of the aforenamed Trustee. Upon appointment by GE CAPITAL, any new
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 predecessor in the rights hereunder with the
same effect as if originally named as Trustee herein.
29. USE OF PROPERTY. The Property is not currently used for
agricultural, farming, timber or grazing purposes.
30. FUTURE ADVANCES. Upon request of Borrower, GE CAPITAL, at GE
CAPITAL's option so long as this Instrument secures Indebtedness held by GE
CAPITAL, may make Future Advances to Borrower. Such Future Advances, with
interest thereon, shall be secured by this Instrument when evidenced by
promissory notes stating that said notes are secured hereby.
31. IMPOSITION OF TAX BY STATE.
(a) State Taxes Covered. The following constitute state
taxes to which this Section 31 applies:
(i) A specific tax upon trust deeds or upon all
or any part of the indebtedness secured by a trust deed.
(ii) A specific tax on a grantor which the
taxpayer is authorized or required to deduct from payments on the indebtedness
secured by a trust deed.
(iii) A tax on a trust deed chargeable against the
beneficiary or the holder of the note secured.
(iv) A specific tax on all or any portion of the
indebtedness or on payments of principal and interest made by a grantor.
(b) Remedies. If any state tax to which this Section 31
applies is enacted subsequent to the date of this Instrument Borrower shall pay
the tax or charge imposed by state tax within thirty (30) days after Borrower
receives notice that the tax law has been enacted.
32. ATTORNEYS' FEES. In the event suit or action is instituted to
enforce or interpret any of the terms of this Instrument (including, without
limitation, efforts to modify or vacate any automatic stay or injunction), the
prevailing party shall be entitled to recover all expenses reasonably incurred
at, before and after trial and on appeal whether or not taxable as costs, or in
any bankruptcy proceeding including, without limitation, attorneys' fees,
witness fees (expert and otherwise), deposition costs, copying charges and other
expenses. Whether or not any court action is involved, all reasonable expenses,
including but not limited to the costs of searching records, obtaining title
reports, surveyor reports, title insurance, trustee fees, and other attorneys'
fees, incurred by GE CAPITAL that are necessary at any time in GE CAPITAL's
opinion for the protection of its interest or enforcement of its rights shall
become a part of the Indebtedness payable on demand and shall bear interest from
the date of expenditure until repaid
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at the interest rate as provided in the Note. The term "attorneys' fees" as used
in the Loan Documents shall be deemed to mean such fees as are reasonable and
are actually incurred.
33. GOVERNING LAW; SEVERABILITY. This Instrument shall be governed
by the law of the State of Texas applicable to contracts made and to be
performed therein (excluding choice-of-law principles). In the event that any
provision or clause of this Instrument or the Note conflicts with applicable
law, such conflict shall not affect other provisions of this Instrument or the
Note which can be given effect without the conflicting provision, and to this
end the provisions of this Instrument and the Note are declared to be severable.
34. TIME OF ESSENCE. Time is of the essence to this Instrument.
35. CHANGES IN WRITING. This Instrument and any of its terms may
only be changed, waived, discharged or terminated by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought. Any agreement subsequently made by Borrower or GE
CAPITAL relating to this Instrument shall be superior to the rights of the
holder of any intervening lien or encumbrance.
36. NO OFFSET. Borrower's obligation to make payments and perform
all obligations, covenants and warranties under this Instrument and under the
Note shall be absolute and unconditional and shall not be affected by any
circumstance, including without limitation any setoff, counterclaim, abatement,
suspension, recoupment, deduction, defense or other right that Borrower or any
guarantor may have or claim against GE CAPITAL or any entity participating in
making the loan secured hereby. The foregoing provisions of this Section 36,
however, do not constitute a waiver of any claim or demand which Borrower or any
guarantor may have in damages or otherwise against GE CAPITAL or any other
person, or preclude Borrower from maintaining a separate action thereon;
provided, however, that Borrower waives any right it may have at law or in
equity to consolidate such separate action with any action or proceeding brought
by GE CAPITAL.
37. AUTHORIZATION TO INSERT. Borrower authorizes GE CAPITAL or its
agent to insert in the spaces provided herein the amount of the Note, the
mortgagee's loan policy number, the title company issuing such policy, the total
amounts of the obligations secured, and the last payment due dates, if any, if
the foregoing information is not typed in on this Instrument.
38. PAYMENTS ON NOTE. Borrower hereby agrees that all payments due
from time to time under the Note shall be paid from Borrower's bank accounts
pursuant to (1) or more recurring wire transfer directions by Borrower, provided
that Borrower receives notice of the amount of each such payment at least three
(3) Business Days before such payment becomes due. No such wire transfer
directions shall be revoked by Borrower unless and until the Note is paid in
full, and any such revocation by Borrower without the prior written consent of
GE CAPITAL shall constitute an Event of Default.
39. WAIVER OF JURY TRIAL. BORROWER HEREBY KNOWINGLY AND
VOLUNTARILY WAIVES ANY AND ALL RIGHTS THAT BORROWER MAY NOW OR HEREAFTER HAVE
UNDER THE LAWS OF THE UNITED STATES OF AMERICA OR THE LAWS OF THE STATE OF TEXAS
TO A TRIAL BY JURY OF ANY AND ALL
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ISSUES ARISING DIRECTLY OR INDIRECTLY IN ANY ACTION OR PROCEEDING RELATING TO
THIS INSTRUMENT, THE LOAN DOCUMENTS OR ANY TRANSACTIONS CONTEMPLATED THEREBY OR
RELATED THERETO INCLUDING SPECIFICALLY, WITHOUT LIMITATION, ANY AND ALL
DEFENSES, RIGHTS, CLAIMS AND/OR COUNTERCLAIMS IN ANY SUCH ACTION OR PROCEEDING.
40. MISCELLANEOUS.
(a) If any time period referenced hereunder (or in any of
the Loan Documents or the Certificate and Indemnity Agreement Regarding
Hazardous Substances) ends on a day other than a Business Day, or the payment of
any amount or the performance of any obligation is due on a day other than a
Business Day, such time period shall be deemed to end on, or such due date shall
be deemed to be, the next succeeding Business Day. "Business Day" shall have the
meaning assigned to such term in the Note. Unless otherwise provided, the term
"days" when used herein shall mean calendar days.
(b) All notices from one party to the other in connection
with the Loan Documents must be in writing.
(c) In the event (i) GE CAPITAL assigns the Note and its
rights under the Loan Documents to a third party without notice to Borrower and
(ii) Borrower thereafter makes payments on the Note to GE CAPITAL without
knowledge of such assignment, Borrower shall not be liable to the assignee for
payments actually paid by Borrower to GE CAPITAL prior to Borrower's receipt of
notice of such assignment.
[SIGNATURE AND NOTARY PAGES FOLLOWS]
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IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS AGREEMENT
SHOULD BE READ CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING
ARE ENFORCEABLE. NO OTHER TERMS OR ORAL PROMISES NOT CONTAINED
IN THIS INSTRUMENT MAY BE LEGALLY ENFORCED. YOU MAY CHANGE THE
TERMS OF THIS INSTRUMENT ONLY BY ANOTHER WRITTEN AGREEMENT.
IN WITNESS WHEREOF, Borrower has executed this Instrument or has caused
the same to be executed by its representatives thereunto duly authorized.
BORROWER:
ADMINISTAFF SERVICES, L.P., a
Delaware limited partnership
By: Administaff of Texas, Inc.,
a Delaware corporation,
its General Partner
By: /s/ Richard G. Rawson
-------------------------------
Print: Richard G. Rawson
Its: Executive Vice President,
Administration, Chief Financial
Officer and Treasurer
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STATE OF TEXAS )
)
COUNTY OF MONTGOMERY )
This instrument was acknowledged before me on the 20TH day of December,
2002, by Richard G. Rawson, as EVP, Administration, CFO & Treasurer of
Administaff of Texas, Inc., a Delaware corporation, the General Partner of
ADMINISTAFF SERVICES, L.P., a Delaware limited partnership, on behalf of said
corporation and limited partnership.
/s/ Susan L. Muck
--------------------------------------------
Notary Public in and for the State of Texas
[SEAL]
Susan L. Muck
--------------------------------------------
Printed Name of Notary Public
My Commission Expires:
5-10-05
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