EXHIBIT 10.28.01
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FELCOR/JPM HOTELS, L.L.C., as mortgagor
and
DJONT/JPM LEASING, L.L.C., as mortgagor
(Mortgagor)
to
JPMORGAN CHASE BANK, as mortgagee
(Lender)
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MORTGAGE AND
SECURITY AGREEMENT
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Dated: As of April 24, 2003
Location:
County:
PREPARED BY AND UPON RECORDATION RETURN TO:
Messrs. Thacher Proffitt & Wood
11 West 42nd Street
New York, New York 10036
Attention: David S. Hall, Esq.
File No.: 86000-00822
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THIS MORTGAGE AND SECURITY AGREEMENT (this "Security Instrument") is made
as of the 24th day of April, 2003 by FELCOR/JPM HOTELS, L.L.C., a Delaware
limited liability company having its principal place of business c/o FelCor
Lodging Trust Incorporated, 545 East John Carpenter Freeway, Suite 1300, Irving,
Texas 75062, as mortgagor ("Owner") and DJONT/JPM LEASING, L.L.C., a Delaware
limited liability company its principal place of business c/o FelCor Lodging
Trust Incorporated, 545 East John Carpenter Freeway, Suite 1300, Irving, Texas
75062, as mortgagor ("Operating Lessee") (Owner and Operating Lessee being
hereinafter collectively referred to as "Mortgagor") to JPMORGAN CHASE BANK, a
New York banking corporation, as mortgagee, having its principal place of
business at 270 Park Avenue, New York, New York 10017 ("Lender").
RECITALS:
Owner is the fee owner of the Land (hereinafter defined).
Operating Lessee is the owner of the leasehold estate in said real
property pursuant to that certain lease by and between Owner, as landlord, and
Operating Lessee, as tenant, dated as of the date hereof (as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time, the "Operating Lease").
This Security Instrument is given to secure a loan (the "Loan") in the
principal sum of ONE HUNDRED FIFTEEN MILLION AND 00/100 DOLLARS
($115,000,000.00) made pursuant to that certain Loan Agreement, dated as of the
date hereof, between Mortgagor and Lender (as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time, the "Loan
Agreement") and evidenced by that certain Promissory Note, dated the date
hereof, made by Mortgagor in favor of Lender (such Promissory Note, together
with all extensions, renewals, replacements, restatements, amendments,
supplements, severances or modifications thereof being hereinafter referred to
as the "Note").
Mortgagor desires to secure the payment of the Debt (as defined in the
Loan Agreement) and the performance of all of Owner's obligations under the
Note, the Loan Agreement and the other Loan Documents (as herein defined).
This Security Instrument is given pursuant to the Loan Agreement, and
payment, fulfillment, and performance by Mortgagor of its obligations thereunder
and under the other Loan Documents are secured hereby, and each and every term
and provision of the Loan Agreement, the Note, and that certain Assignment of
Leases and Rents dated the date hereof made by Mortgagor in favor of Lender
delivered in connection with this Security Instrument (as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time, the "Assignment of Leases"), including the rights, remedies, obligations,
covenants, conditions, agreements, indemnities, representations and warranties
of the parties therein, are hereby incorporated by reference herein as though
set forth in full and shall be considered a part of this Security Instrument
(the Loan Agreement, the Note, this Security Instrument, the Assignment of
Leases and all other documents evidencing or securing the Debt (including all
additional mortgages, deeds to secure debt and assignments of leases and rents)
or executed or delivered in connection therewith, are hereinafter referred to
collectively as the "Loan
Documents"). All capitalized terms not otherwise defined herein shall have the
meaning ascribed to them in the Loan Agreement.
ARTICLE 1 - GRANTS OF SECURITY
Section 1.1 PROPERTY MORTGAGED. Mortgagor does hereby irrevocably
mortgage, grant, bargain, sell, pledge, assign, warrant, transfer and convey to
and grant a security interest to Lender and its successors and assigns in, the
following property, rights, interests and estates now owned, or hereafter
acquired by Mortgagor (collectively, the "Property"):
(a) Land. The real property described in Exhibit A attached hereto and
made a part hereof (the "Land");
(b) Operating Lease. The Operating Lease and the leasehold estate created
thereby, including all assignments, modifications, extensions and renewals of
the Operating Lease and all credits, deposits, options, privileges and rights of
Operating Lessee as tenant under the Operating Lease, including, but not limited
to, rights of first refusal, if any, and the right, if any, to renew or extend
the Operating Lease for a succeeding term or terms, and also including all the
right, title, claim or demand whatsoever of Operating Lessee either in law or in
equity, in possession or expectancy, of, in and to Lender's right, as tenant
under the Operating Lease, to elect under Section 365(h)(l) of the Bankruptcy
Code, Title 11 U.S.C.A. Section 101 et seq. (the "Bankruptcy Code") to terminate
or treat the Operating Lease as terminated in the event (i) of the bankruptcy,
reorganization or insolvency of the lessor thereunder, and (ii) the rejection of
the Operating Lease by the lessor thereunder, as debtor in possession, or by a
trustee for the lessor thereunder, pursuant to Section 365 of the Bankruptcy
Code;
(c) Additional Land. All additional lands, estates and development rights
hereafter acquired by Mortgagor for use in connection with the Land and the
development of the Land and all additional lands and estates therein which may,
from time to time, by supplemental mortgage or otherwise be expressly made
subject to the lien of this Security Instrument;
(d) Improvements. The buildings, structures, fixtures, additions,
enlargements, extensions, modifications, repairs, replacements and improvements
now or hereafter erected or located on the Land (the "Improvements");
(e) Easements. All easements, rights-of-way or use, rights, strips and
gores of land, streets, ways, alleys, passages, sewer rights, water, water
courses, water rights and powers, air rights and development rights, and all
estates, rights, titles, interests, privileges, liberties, servitudes,
tenements, hereditaments and appurtenances of any nature whatsoever, in any way
now or hereafter belonging, relating or pertaining to the Land and the
Improvements, including, but not limited to, those arising under and by virtue
of the Operating Lease, and the reversion and reversions, remainder and
remainders, and all land lying in the bed of any street, road or avenue, opened
or proposed, in front of or adjoining the Land, to the center line thereof and
all the estates, rights, titles, interests, dower and rights of dower, curtesy
and rights of curtesy, property, possession, claim and demand whatsoever, both
at law and in equity, of Mortgagor of, in and to the Land and the Improvements,
including, but not limited to, those arising under and
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by virtue of the Operating Lease and every part and parcel thereof, with the
appurtenances thereto;
(f) Fixtures and Personal Property. All machinery, equipment, fixtures
(including, but not limited to, all heating, air conditioning, plumbing,
lighting, communications and elevator fixtures, inventory and goods), inventory
and articles of personal property and accessions thereof and renewals,
replacements thereof and substitutions therefor (including, but not limited to,
beds, bureaus, chiffonniers, 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,
silverware, 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 other
tangible property of every kind and nature whatsoever owned by Mortgagor, or in
which Mortgagor has or shall have an interest, now or hereafter located upon the
Land and the Improvements, or appurtenant thereto, and usable in connection with
the present or future operation and occupancy of the Land and the Improvements
and all building equipment, materials and supplies of any nature whatsoever
owned by Mortgagor, or in which Mortgagor has or shall have an interest, now or
hereafter located upon the Land and the Improvements, or appurtenant thereto, or
usable in connection with the present or future operation and occupancy of the
Land and the Improvements (collectively, the "Personal Property"), and the
right, title and interest of Mortgagor in and to any of the Personal Property
which may be subject to any security interests, as defined in the Uniform
Commercial Code, as adopted and enacted by the State or States where any of the
Property is located (the "Uniform Commercial Code"), superior in lien to the
lien of this Security Instrument and all proceeds and products of the above;
(g) Leases and Rents. All leases, subleases , rental agreements,
registration cards and agreements, if any, and other agreements , whether or not
in writing, affecting the use, enjoyment or occupancy of the Land and/or the
Improvements heretofore or hereafter entered into and all extensions, amendments
and modifications thereto, whether before or after the filing by or against
Mortgagor of any petition for relief under the Bankruptcy Code (the "Leases")
and all right, title and interest of Mortgagor, its successors and assigns
therein and thereunder, including, without limitation, any guaranties of the
lessees' obligations thereunder, cash or securities deposited thereunder to
secure the performance by the lessees of their obligations thereunder and all
rents, additional rents, revenues, issues, registration fees, if any and profits
(including all oil and gas or other mineral royalties and bonuses) from the
Land, the Improvements, all income, rents, room rates, issues, profits,
revenues, deposits, accounts and other benefits from the operation of the hotel
on the Land and/or the Improvements, including, without limitation, all revenues
and credit card receipts collected from guest rooms, restaurants, bars,
mini-bars,
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meeting rooms, banquet rooms and recreational facilities and otherwise, all
receivables, customer obligations, installment payment obligations and other
obligations now existing or hereafter arising or created out of sale, lease,
sublease, license, concession or other grant of the right of the possession, use
or occupancy of all or any portion of the Land and/or Improvements, or
personalty located thereon, or rendering of services by Mortgagor 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, commercial space, guest room or other
space, halls, stores or offices, including any deposits securing reservations of
such space, exhibit or sales space of every kind, 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 proceeds,
if any, from business interruption or other loss of income insurance relating to
the use, enjoyment or occupancy of the Land and/or the Improvements whether paid
or accruing before or after the filing by or against Mortgagor of any petition
for relief under the Bankruptcy Code (the "Rents") and all proceeds from the
sale or other disposition of the Leases and the right to receive and apply the
Rents to the payment of the Debt;
(h) Condemnation Awards. All awards or payments, including interest
thereon, which may heretofore and hereafter be made with respect to the
Property, whether from the exercise of the right of eminent domain (including
but not limited to any transfer made in lieu of or in anticipation of the
exercise of the right), or for a change of grade, or for any other injury to or
decrease in the value of the Property;
(i) Insurance Proceeds. All proceeds of and any unearned premiums on
any insurance policies covering the Property, including, without limitation, the
right to receive and apply the proceeds of any insurance, judgments, or
settlements made in lieu thereof, for damage to the Property;
(j) Tax Certiorari. All refunds, rebates or credits in connection
with a reduction in real estate taxes and assessments charged against the
Property as a result of tax certiorari or any applications or proceedings for
reduction;
(k) Conversion. All proceeds of the conversion, voluntary or
involuntary, of any of the foregoing including, without limitation, proceeds of
insurance and condemnation awards, into cash or liquidation claims;
(l) Rights. The right, in the name and on behalf of Mortgagor, to
appear in and defend any action or proceeding brought with respect to the
Property and to commence any action or proceeding to protect the interest of
Lender in the Property;
(m) Agreements. All agreements, contracts, certificates,
instruments, franchises, permits, licenses, plans, specifications and other
documents, now or hereafter entered into, and all rights therein and thereto,
respecting or pertaining to the use, occupation, construction, management or
operation of the Land and any part thereof and any Improvements or respecting
any business or activity conducted on the Land and any part thereof and all
right, title and interest of Mortgagor therein and thereunder, including,
without limitation, the right, upon the
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happening of any default hereunder, to receive and collect any sums payable to
Mortgagor thereunder;
(n) Intangibles. All trade names, trademarks, servicemarks, logos,
copyrights, goodwill, books and records, tenant or guest lists, advertising
materials, telephone exchange numbers identified in such materials and all other
general intangibles relating to or used in connection with the operation of the
Property;
(o) Accounts. All Accounts, Account Collateral, reserves, escrows and
deposit accounts maintained by Mortgagor with respect to the Property including,
without limitation, the Lockbox Account and the Property Accounts, and all
complete securities, investments, property and financial assets held therein
from time to time and all proceeds, products, distributions or dividends or
substitutions thereon and thereof;
(p) Causes of Action. All causes of action and claims (including, without
limitation, all causes of action or claims arising in tort, by contract, by
fraud or by concealment of material fact) against any Person for damages or
injury to the Property or in connection with any transactions financed in whole
or in part by the proceeds of the Loan ("Cause of Action");
(q) Interest Rate Cap Agreement. All right, title, interest and claim of
Mortgagor in, to, under or pursuant to any interest rate cap confirmation
purchased by Mortgagor pursuant to the terms of the Loan Documents (the
"Confirmation") together with the corresponding interest rate cap agreement
relating thereto (the "Rate Agreement"), and in, to, under or pursuant to any
and all amendments, supplements and additions thereto (the Confirmation and the
Rate Agreement, together with any amendments, additions or supplements thereto
being hereinafter collectively referred to as the "Cap Agreement"), all claims
of Mortgagor for breach by any counterparty of any covenant, agreement,
representation or warranty contained in the Cap Agreement;
(r) Accounts Receivables. All right, title and interest of Mortgagor
arising from the operation of the Land and the Improvements in and to all
payments for goods or property sold or leased or for services rendered, whether
or not yet earned by performance, and not evidenced by an instrument or chattel
paper, (hereinafter referred to as "Accounts Receivable") including, without
limiting the generality of the foregoing, (i) all accounts, contract rights,
book debts, and notes arising from the operation of a hotel on the Land and the
Improvements or arising from the sale, lease or exchange of goods or other
property and/or the performance of services, (ii) Mortgagor's rights to payment
from any consumer credit/charge card organization or entities which sponsor and
administer such cards as the American Express Card, the Visa Card and the
Mastercard, (iii) Mortgagor's rights in, to and under all purchase orders for
goods, services or other property, (iv) Mortgagor's rights to any goods,
services or other property represented by any of the foregoing, (v) monies due
to or to become due to Mortgagor under all contracts for the sale, lease or
exchange of goods or other property and/or the performance of services including
the right to payment of any interest or finance charges in respect thereto
(whether or not yet earned by performance on the part of Mortgagor) and (vi) all
collateral security and guaranties of any kind given by any person or entity
with respect to any of the foregoing. Accounts Receivable shall include those
now existing or hereafter created, substitutions therefor, proceeds (whether
cash or non-cash, movable or immovable, tangible or intangible) received upon
the
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sale, exchange, transfer, collection or other disposition or substitution
thereof and any and all of the foregoing and proceeds therefrom; and
(s) Security Interests. All right, title and interest of lessor under the
Operating Lease as secured party in the personal property and collateral
pursuant to the security interest granted by Operating Lessee to the lessor
thereunder in the Operating Lease (the "Operating Lease Security Agreement");
(t) Other Rights. Any and all other rights of Mortgagor in and to the
items set forth in Subsections (a) through (r) above.
Section 1.2 ASSIGNMENT OF LEASES AND RENTS. Mortgagor hereby absolutely
and unconditionally assigns to Lender Mortgagor's right, title and interest in
and to all current and future Leases and Rents and the Operating Lease Security
Agreement; it being intended by Mortgagor that this assignment constitutes a
present, absolute assignment and not an assignment for additional security only.
Nevertheless, subject to the terms of this Section 1.2, Section 9.1(h) and the
Loan Agreement, Lender grants to Mortgagor a revocable license to collect and
receive the Rents. Mortgagor shall hold the Rents, or a portion thereof
sufficient to discharge all current sums due on the Debt, for use in the payment
of such sums.
Section 1.3 SECURITY AGREEMENT. This Security Instrument is both a real
property mortgage and a "security agreement" within the meaning of the Uniform
Commercial Code. The Property includes both real and personal property and all
other rights and interests, whether tangible or intangible in nature, of
Mortgagor in the Property. By executing and delivering this Security Instrument,
Mortgagor hereby grants to Lender, as security for the Obligations, (as herein
defined) a security interest in the Personal Property, the Accounts, and the
Account Collateral to the full extent that the Personal Property, the Accounts
and the Account Collateral may be subject to the Uniform Commercial Code and in
the Operating Lease Security Agreement.
Section 1.4 PLEDGE OF MONIES HELD. Mortgagor hereby pledges to Lender any
and all monies now or hereafter held by Lender, including, without limitation,
any sums deposited in the Reserve Funds, the Accounts, Net Proceeds and Awards,
as additional security for the Obligations until expended or applied as provided
in the Loan Agreement or this Security Instrument.
CONDITIONS TO GRANT
TO HAVE AND TO HOLD the above granted and described Property unto and to
the use and benefit of Lender and its successors and assigns, forever;
PROVIDED, HOWEVER, these presents are upon the express condition that, if
Mortgagor shall well and truly pay to Lender the Debt at the time and in the
manner provided in the Note and this Security Instrument, shall well and truly
perform the Other Obligations (as herein defined) as set forth in this Security
Instrument and shall well and truly abide by and comply with each and every
covenant and condition set forth herein, in the Note and in the Loan Agreement,
these presents and the estate hereby granted shall cease, terminate and be void.
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ARTICLE 2 - DEBT AND OBLIGATIONS SECURED
Section 2.1 DEBT. This Security Instrument and the grants, assignments and
transfers made in Article 1 are given for the purpose of securing the Debt,
including without limitation,
(a) the payment of the indebtedness evidenced by the Note in lawful money
of the United States of America;
(b) the payment of interest, default interest, late charges and other
sums, as provided in the Note, the Loan Agreement, this Security Instrument or
the other Loan Documents;
(c) the payment of the Breakage Costs, if any;
(d) the payment of all other moneys agreed or provided to be paid by
Mortgagor in the Note, the Loan Agreement, this Security Instrument or the other
Loan Documents;
(e) the payment of all sums advanced pursuant to the Loan Agreement or
this Security Instrument to protect and preserve the Property and the lien and
the security interest created hereby; and
(f) the payment of all sums advanced and costs and expenses incurred by
Lender in connection with the Debt or any part thereof, any modification,
amendment, renewal, extension, or change of or substitution for the Debt or any
part thereof, or the acquisition or perfection of the security therefor, whether
made or incurred at the request of Mortgagor or Lender.
Section 2.2 OTHER OBLIGATIONS. This Security Instrument and the grants,
assignments and transfers made in Article 1 are also given for the purpose of
securing the following (the "Other Obligations"):
(a) the performance of all other obligations of Mortgagor contained
herein;
(b) the performance of each obligation of Mortgagor contained in any other
agreement given by Mortgagor to Lender which is for the purpose of further
securing the obligations secured hereby, and any renewals, extensions,
substitutions, replacements, amendments, modifications and changes thereto; and
(c) the performance of each obligation of Mortgagor contained in any
renewal, extension, amendment, modification, consolidation, change of, or
substitution or replacement for, all or any part of the Note, the Loan
Agreement, this Security Instrument or the other Loan Documents.
Section 2.3 DEBT AND OTHER OBLIGATIONS. Mortgagor's obligations for the
payment of the Debt and the performance of the Other Obligations shall be
referred to collectively below as the "Obligations."
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ARTICLE 3 - MORTGAGOR COVENANTS
Mortgagor covenants and agrees that:
Section 3.1 PAYMENT OF DEBT. Mortgagor will pay the Debt at the time and
in the manner provided in the Note, the Loan Agreement and in this Security
Instrument.
Section 3.2 INCORPORATION BY REFERENCE. All the covenants, conditions and
agreements contained in the Loan Agreement, the Note and all and any of the
other Loan Documents, are hereby made a part of this Security Instrument to the
same extent and with the same force as if fully set forth herein.
Section 3.3 INSURANCE. Mortgagor shall obtain and maintain, or cause to be
maintained, insurance in full force and effect at all times with respect to
Mortgagor and the Property as required pursuant to the Loan Agreement.
Section 3.4 PAYMENT OF TAXES, ETC. Mortgagor shall promptly pay all Taxes
and Other Charges in accordance with the terms of the Loan Agreement.
Section 3.5 MAINTENANCE AND USE OF PROPERTY. Mortgagor shall cause the
Property to be maintained in a good and safe condition and repair in accordance
with the terms of the Loan Agreement. Subject to the terms of the Loan
Agreement, the Improvements and the Personal Property shall not be removed,
demolished or materially altered or expanded (except for normal replacement of
the Personal Property) without the consent of Lender. Subject to the terms of
the Loan Agreement, Mortgagor shall promptly repair, replace or rebuild any part
of the Property which may be destroyed by any Casualty, or become damaged, worn
or dilapidated or which may be affected by any Condemnation and shall complete
and pay for any structure at any time in the process of construction or repair
on the Land. Subject to the terms of the Loan Agreement, Mortgagor shall not
initiate, join in, acquiesce in, or consent to any change in any private
restrictive covenant, zoning law or other public or private restriction,
limiting or defining the uses which may be made of the Property or any part
thereof. If under applicable zoning provisions the use of all or any portion of
the Property is or shall become a nonconforming use, Mortgagor will not cause or
permit the nonconforming use to be discontinued or the nonconforming Improvement
to be abandoned without the express written consent of Lender.
Section 3.6 WASTE. Mortgagor shall not commit or suffer any waste of the
Property or make any change in the use of the Property which will in any way
materially increase the risk of fire or other hazard arising out of the
operation of the Property, or take any action that might invalidate or give
cause for cancellation of any Policy, or do or permit to be done thereon
anything that may in any way impair the value of the Property or the security of
this Security Instrument. Mortgagor will not, without the prior written consent
of Lender, permit any drilling or exploration for or extraction, removal, or
production of any minerals from the surface or the subsurface of the Land,
regardless of the depth thereof or the method of mining or extraction thereof.
Section 3.7 PAYMENT FOR LABOR AND MATERIALS. Except as may be permitted
under the Loan Agreement, Mortgagor will promptly pay when due all bills and
costs for labor, materials, and specifically fabricated materials incurred in
connection with the Property and
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never permit to exist in respect of the Property or any part thereof any lien or
security interest, even though inferior to the liens and the security interests
hereof, and in any event never permit to be created or exist in respect of the
Property or any part thereof any other or additional lien or security interest
other than the liens or security interests hereof, except for the Permitted
Encumbrances.
Section 3.8 PERFORMANCE OF OTHER AGREEMENTS. Mortgagor shall observe and
perform each and every term to be observed or performed by Mortgagor pursuant to
the terms of the Loan Agreement, any other Loan Documents and any agreement or
recorded instrument affecting or pertaining to the Property, including but not
limited to the Operating Lease and any franchise agreements, or given by
Mortgagor to Lender for the purpose of further securing the Obligations and any
amendments, modifications or changes thereto.
Section 3.9 CHANGE OF NAME, IDENTITY OR STRUCTURE. Except as may be
permitted under the Loan Agreement, Mortgagor will not change Mortgagor's name,
identity (including its trade name or names) or corporate, partnership or other
structure without first obtaining the prior written consent of Lender. Mortgagor
shall execute and deliver to Lender, prior to or contemporaneously with the
effective date of any such change, any financing statement or financing
statement change required by Lender to establish or maintain the validity,
perfection and priority of the security interest granted herein. At the request
of Lender, Mortgagor shall execute a certificate in form satisfactory to Lender
listing the trade names under which Mortgagor intends to operate the Property,
and representing and warranting that Mortgagor does business under no other
trade name with respect to the Property.
Section 3.10 PROPERTY USE. The Property shall be used only for a hotel and
any ancillary uses relating thereto, and for no other uses without the prior
written consent of Lender, which consent may be withheld in Lender's sole and
absolute discretion.
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES
Mortgagor represents and warrants to Lender that:
Section 4.1 WARRANTY OF TITLE. Mortgagor has good title to the Property
and has the right to mortgage, grant, bargain, sell, pledge, assign, warrant,
transfer and convey the same. Owner possesses an unencumbered fee simple
absolute estate and Operating Lessee possesses an unencumbered leasehold estate
(created by and pursuant to the terms of the Operating Lease) in the Land and
the Improvements. Owner owns the Property free and clear of all liens,
encumbrances and charges whatsoever except for the Permitted Encumbrances. The
Permitted Encumbrances do not and will not materially adversely affect or
interfere with the value, or materially adversely affect or interfere with the
current use or operation, of the Property, or the security intended to be
provided by this Security Instrument or the ability of Mortgagor to repay the
Note or any other amount owing under the Note, this Security Instrument, the
Loan Agreement, or the other Loan Documents or to perform its obligations
thereunder in accordance with the terms of the Loan Agreement, the Note, this
Security Instrument or the other Loan Documents. This Security Instrument, when
properly recorded in the appropriate records, together with the Assignment of
Leases and any Uniform Commercial Code financing statements required to be filed
in connection therewith, will create (i) a valid,
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perfected first priority lien on the Property, subject only to Permitted
Encumbrances and (ii) perfected security interests in and to, and perfected
collateral assignments of, all personalty (including the Leases), all in
accordance with the terms thereof, subject only to Permitted Encumbrances. The
Assignment of Leases, when properly recorded in the appropriate records, creates
a valid first priority assignment of, or a valid first priority security
interest in, certain rights under the related Leases, subject only to a license
granted to Mortgagor to exercise certain rights and to perform certain
obligations of the lessor under such Leases, including the right to operate the
Property. No Person other than Mortgagor owns any interest in any payments due
under such Leases that is superior to or of equal priority with the Lender's
interest therein. Mortgagor shall forever warrant, defend and preserve the title
and the validity and priority of the lien of this Security Instrument and shall
forever warrant and defend the same to Lender against the claims of all persons
whomsoever.
ARTICLE 5 - OBLIGATIONS AND RELIANCES
Section 5.1 RELATIONSHIP OF MORTGAGOR AND LENDER. The relationship between
Mortgagor and Lender is solely that of debtor and creditor, and Lender has no
fiduciary or other special relationship with Mortgagor, and no term or condition
of any of the Loan Agreement, the Note, this Security Instrument and the other
Loan Documents shall be construed so as to deem the relationship between
Mortgagor and Lender to be other than that of debtor and creditor.
Section 5.2 NO RELIANCE ON LENDER. The members, general partners,
principals and (if Mortgagor is a trust) beneficial owners of Mortgagor are
experienced in the ownership and operation of properties similar to the
Property, and Mortgagor and Lender are relying solely upon such expertise and
business plan in connection with the ownership and operation of the Property.
Mortgagor is not relying on Lender's expertise, business acumen or advice in
connection with the Property.
Section 5.3 NO LENDER OBLIGATIONS. (a) Notwithstanding the provisions of
Section 1.1(g), (l) and (m) or Section 1.2, Lender is not undertaking the
performance of (i) any obligations under the Leases; or (ii) any obligations
with respect to such agreements, contracts, certificates, instruments,
franchises, permits, trademarks, licenses and other documents.
(b) By accepting or approving anything required to be observed, performed
or fulfilled or to be given to Lender pursuant to this Security Instrument, the
Loan Agreement, the Note or the other Loan Documents, including without
limitation, any officer's certificate, balance sheet, statement of profit and
loss or other financial statement, survey, appraisal, or insurance policy,
Lender shall not be deemed to have warranted, consented to, or affirmed the
sufficiency, the legality or effectiveness of same, and such acceptance or
approval thereof shall not constitute any warranty or affirmation with respect
thereto by Lender.
Section 5.4 RELIANCE. Mortgagor recognizes and acknowledges that in
accepting the Note, the Loan Agreement, this Security Instrument and the other
Loan Documents, (i) Lender is expressly and primarily relying on the truth and
accuracy of the warranties and representations set forth in Article 4 of the
Loan Agreement and Articles 3 and 4 hereof without any obligation to investigate
the Property and notwithstanding any investigation of the Property
10
by Lender; (ii) that such reliance existed on the part of Lender prior to the
date hereof; (iii) that the warranties and representations are a material
inducement to Lender in accepting the Note, the Loan Agreement, this Security
Instrument and the other Loan Documents; and that Lender would not be willing to
make the Loan and accept this Security Instrument in the absence of the
warranties and representations as set forth in Article 4 of the Loan Agreement
and Articles 3 and 4 hereof.
ARTICLE 6 - FURTHER ASSURANCES
Section 6.1 RECORDING OF SECURITY INSTRUMENT, ETC. Mortgagor forthwith
upon the execution and delivery of this Security Instrument and thereafter, from
time to time, will cause this Security Instrument and any of the other Loan
Documents creating a lien or security interest or evidencing the lien hereof
upon the Property and each instrument of further assurance to be filed,
registered or recorded in such manner and in such places as may be required by
any present or future law in order to publish notice of and fully to protect and
perfect the lien or security interest hereof upon, and the interest of Lender
in, the Property. Mortgagor will pay all taxes, filing, registration or
recording fees, and all expenses incident to the preparation, execution,
acknowledgment and/or recording of the Note, the Loan Agreement, this Security
Instrument, the other Loan Documents, and any instrument of further assurance,
and any modification or amendment of the foregoing documents, and all federal,
state, county and municipal taxes, duties, imposts, assessments and charges
arising out of or in connection with the execution and delivery of this Security
Instrument, the other Loan Documents, or any instrument of further assurance,
and any modification or amendment of the foregoing documents, except where
prohibited by law so to do.
Section 6.2 FURTHER ACTS, ETC. Mortgagor will, at the cost of Mortgagor,
and without expense to Lender, do, execute, acknowledge and deliver all and
every such further acts, deeds, conveyances, deeds of trust, mortgages,
assignments, notices of assignments, transfers and assurances as Lender shall,
from time to time, reasonably require, for the better assuring, conveying,
assigning, transferring, and confirming unto Lender the Property and rights
hereby deeded, mortgaged, granted, bargained, sold, conveyed, confirmed,
pledged, assigned, warranted and transferred or intended now or hereafter so to
be, or which Mortgagor may be or may hereafter become bound to convey or assign
to Lender, or for carrying out the intention or facilitating the performance of
the terms of this Security Instrument or for filing, registering or recording
this Security Instrument, or for complying with all Legal Requirements.
Mortgagor, on demand, will execute and deliver and hereby authorizes Lender,
following ten (10) days' notice to Mortgagor, to execute in the name of
Mortgagor or without the signature of Mortgagor to the extent Lender may
lawfully do so, one or more financing statements, chattel mortgages or other
instruments, to evidence more effectively the security interest of Lender in the
Property or any Collateral. Mortgagor grants to Lender an irrevocable power of
attorney coupled with an interest for the purpose of exercising and perfecting
any and all rights and remedies available to Lender at law and in equity,
including without limitation such rights and remedies available to Lender
pursuant to this Section 6.2.
Section 6.3 CHANGES IN TAX, DEBT CREDIT AND DOCUMENTARY STAMP LAWS.
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(a) If any law is enacted or adopted or amended after the date of this
Security Instrument which deducts the Debt from the value of the Property for
the purpose of taxation or which imposes a tax, either directly or indirectly,
on the Debt or Lender's interest in the Property, Mortgagor will pay the tax,
with interest and penalties thereon, if any. If Lender is advised by counsel
chosen by it that the payment of tax by Mortgagor would be unlawful or taxable
to Lender or unenforceable or provide the basis for a defense of usury, then
Lender shall have the option, exercisable by written notice of not less than
ninety (90) days to declare the Debt immediately due and payable.
(b) Mortgagor will not claim or demand or be entitled to any credit or
credits on account of the Debt for any part of the Taxes or Other Charges
assessed against the Property, or any part thereof, and no deduction shall
otherwise be made or claimed from the assessed value of the Property, or any
part thereof, for real estate tax purposes by reason of this Security Instrument
or the Debt. If such claim, credit or deduction shall be required by law, Lender
shall have the option, exercisable by written notice of not less than ninety
(90) days, to declare the Debt immediately due and payable.
(c) If at any time the United States of America, any State thereof or any
subdivision of any such State shall require revenue or other stamps to be
affixed to the Note, the Loan Agreement, this Security Instrument, or any of the
other Loan Documents or impose any other tax or charge on the same, Mortgagor
will pay for the same, with interest and penalties thereon, if any.
Section 6.4 REPLACEMENT DOCUMENTS. Upon receipt of an affidavit of an
officer of Lender as to the loss, theft, destruction or mutilation of the Note
or any other Loan Document which is not of public record, and, in the case of
any such mutilation, upon surrender and cancellation of such Note or other Loan
Documents, Mortgagor will issue, in lieu thereof, a replacement Note or other
Loan Documents, dated the date of such lost, stolen, destroyed or mutilated Note
or other Loan Documents in the same principal amount thereof and containing
substantially identical terms.
Section 6.5 PERFORMANCE AT MORTGAGOR'S EXPENSE. Mortgagor acknowledges and
confirms that Lender shall impose certain administrative processing and/or
commitment fees in connection with (a) the extension, renewal, modification,
amendment and termination of the Loan, (b) the release or substitution of
collateral therefor, (c) obtaining certain consents, waivers and approvals with
respect to the Property, or (d) the review of any Lease or proposed Lease or the
preparation or review of any subordination, non-disturbance agreement (the
occurrence of any of the above shall be called an "Event"). Mortgagor further
acknowledges and confirms that it shall be responsible for the payment of all
costs of reappraisal of the Property or any part thereof, whether required by
law, regulation, Lender or any governmental or quasi-governmental authority.
Mortgagor hereby acknowledges and agrees to pay, immediately, with or without
demand, all such fees (as the same may be increased or decreased from time to
time), and any additional fees of a similar type or nature which may be imposed
by Lender from time to time, upon the occurrence of any Event. Wherever it is
provided for herein that Mortgagor pay any costs and expenses, such costs and
expenses shall include, but not be limited to, all legal fees and disbursements
of Lender (excluding legal fees for in-house staff), whether with respect to
retained firms or otherwise.
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Section 6.6 LEGAL FEES FOR ENFORCEMENT. (a) Mortgagor shall pay all
reasonable legal fees incurred by Lender in connection with the preparation of
the Loan Agreement, the Note, this Security Instrument and the other Loan
Documents and (b) Mortgagor shall pay to Lender on demand any and all expenses,
including legal expenses and attorneys' fees, incurred or paid by Lender in
protecting its interest in the Property or in collecting any amount payable
hereunder or in enforcing its rights hereunder with respect to the Property
(including commencing any foreclosure action), whether or not any legal
proceeding is commenced hereunder or thereunder, together with interest thereon
at the Default Rate from the date paid or incurred by Lender until such expenses
are paid by Mortgagor.
ARTICLE 7 - DUE ON SALE/ENCUMBRANCE
Section 7.1 LENDER RELIANCE. Mortgagor acknowledges that Lender has
examined and relied on the experience of Mortgagor and its partners, members,
principals and (if Mortgagor is a trust) beneficial owners in owning and
operating properties such as the Property in agreeing to make the Loan, and will
continue to rely on Mortgagor's ownership of the Property as a means of
maintaining the value of the Property as security for repayment of the Debt and
the performance of the Other Obligations. Mortgagor acknowledges that Lender has
a valid interest in maintaining the value of the Property so as to ensure that,
should Mortgagor default in the repayment of the Debt or the performance of the
Other Obligations, Lender can recover the Debt by a sale of the Property.
Section 7.2 NO SALE/ENCUMBRANCE. Neither Mortgagor nor any Restricted
Party shall Transfer the Property or any part thereof or any interest therein or
permit or suffer the Property or any part thereof or any interest therein to be
Transferred other than as expressly permitted pursuant to the terms of the Loan
Agreement.
ARTICLE 8 - PREPAYMENT
Section 8.1 PREPAYMENT. The Debt may not be prepaid in whole or in part
except in accordance with the express terms and conditions of the Loan
Agreement.
ARTICLE 9 - RIGHTS AND REMEDIES
Section 9.1 REMEDIES. Upon the occurrence of any Event of Default (as
defined in the Loan Agreement), Mortgagor agrees that Lender may, take such
action, without notice or demand, as it deems advisable to protect and enforce
its rights against Mortgagor and in and to the Property, including, but not
limited to, the following actions, each of which may be pursued concurrently or
otherwise, at such time and in such order as Lender may determine, in its sole
discretion, without impairing or otherwise affecting the other rights and
remedies of Lender:
(a) declare the entire unpaid Debt to be immediately due and payable;
(b) institute proceedings, judicial or otherwise, for the complete
foreclosure of this Security Instrument under any applicable provision of law in
which case the Property or any interest therein may be sold for cash or upon
credit in one or more parcels or in several interests or portions and in any
order or manner;
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(c) with or without entry, to the extent permitted and pursuant to the
procedures provided by Applicable Law, institute proceedings for the partial
foreclosure of this Security Instrument for the portion of the Debt then due and
payable, subject to the continuing lien and security interest of this Security
Instrument for the balance of the Debt not then due, unimpaired and without loss
of priority;
(d) sell for cash or upon credit the Property or any part thereof and all
estate, claim, demand, right, title and interest of Mortgagor therein and rights
of redemption thereof, pursuant to power of sale or otherwise, at one or more
sales, in one or more parcels, at such time and place, upon such terms and after
such notice thereof as may be required or permitted by law;
(e) institute an action, suit or proceeding in equity for the specific
performance of any covenant, condition or agreement contained herein, in the
Note, the Loan Agreement, or in the other Loan Documents;
(f) recover judgment on the Note either before, during or after any
proceedings for the enforcement of this Security Instrument or the other Loan
Documents;
(g) apply for the appointment of a receiver, trustee, liquidator or
conservator of the Property, without notice and without regard for the adequacy
of the security for the Debt and without regard for the solvency of Mortgagor,
any Guarantor or of any person, firm or other entity liable for the payment of
the Debt;
(h) subject to any Applicable Law, the license granted to Mortgagor under
Section 1.2 hereof shall automatically be revoked and Lender may enter into or
upon the Property, either personally or by its agents, nominees or attorneys and
dispossess Mortgagor and its agents and servants therefrom, without liability
for trespass, damages or otherwise and exclude Mortgagor and its agents or
servants wholly therefrom, and take possession of all books, records and
accounts relating thereto and Mortgagor agrees to surrender possession of the
Property and of such books, records and accounts to Lender upon demand, and
thereupon Lender may (i) use, operate, manage, control, insure, maintain,
repair, restore and otherwise deal with all and every part of the Property and
conduct business thereon; (ii) complete any construction on the Property in such
manner and form as Lender deems advisable; (iii) make alterations, additions,
renewals, replacements and improvements to or on the Property; (iv) exercise all
rights and powers of Mortgagor with respect to the Property, whether in the name
of Mortgagor or otherwise, including, without limitation, the right to make,
cancel, enforce or modify Leases, obtain and evict tenants, and demand, sue for,
collect and receive all Rents of the Property and every part thereof; (v)
require Mortgagor to pay monthly in advance to Lender, or any receiver appointed
to collect the Rents, the fair and reasonable rental value for the use and
occupation of such part of the Property as may be occupied by Mortgagor; (vi)
require Mortgagor to vacate and surrender possession of the Property to Lender
or to such receiver and, in default thereof, Mortgagor may be evicted by summary
proceedings or otherwise; and (vii) except as otherwise expressly provided for
in the Loan Agreement, apply the receipts from the Property to the payment of
the Debt, in such order, priority and proportions as Lender shall deem
appropriate in its sole discretion after deducting therefrom all expenses
(including reasonable attorneys' fees) incurred in connection with the aforesaid
operations and all amounts necessary to pay the Taxes, Other Charges, Insurance
Premiums and other expenses in connection with the Property, as well
14
as just and reasonable compensation for the services of Lender, its outside
counsel, agents and employees;
(i) exercise any and all rights and remedies granted to a secured party
upon default under the Uniform Commercial Code, including, without limiting the
generality of the foregoing: (i) the right to take possession of any Collateral
(including, without limitation, the Personal Property) or any part thereof, and
to take such other measures as Lender may deem necessary for the care,
protection and preservation of the Collateral (including without limitation, the
Personal Property), and (ii) request Mortgagor at its expense to assemble the
Collateral, including without limitation, the Personal Property, and make it
available to Lender at a convenient place acceptable to Lender. Any notice of
sale, disposition or other intended action by Lender with respect to the
Collateral, including without limitation, the Personal Property, sent to
Mortgagor in accordance with the provisions hereof at least five (5) days prior
to such action, shall constitute commercially reasonable notice to Mortgagor;
(j) apply any sums then deposited in the Accounts and any other sums held
in escrow or otherwise by Lender in accordance with the terms of this Security
Instrument, the Loan Agreement, or any other Loan Documents to the payment of
the following items in any order in its sole discretion:
(i) Taxes and Other Charges;
(ii) Insurance Premiums;
(iii) interest on the unpaid principal balance of the Note;
(iv) amortization of the unpaid principal balance of the Note; or
(v) all other sums payable pursuant to the Note, the Loan Agreement,
this Security Instrument and the other Loan Documents, including without
limitation advances made by Lender pursuant to the terms of this Security
Instrument;
(k) surrender the Policies, collect the unearned Insurance Premiums and
apply such sums as a credit on the Debt in such priority and proportion as
Lender in its discretion shall deem proper, and in connection therewith,
Mortgagor hereby appoints Lender as agent and attorney-in-fact (which is coupled
with an interest and is therefore irrevocable) for Mortgagor to collect such
Insurance Premiums;
(l) apply the undisbursed balance of any Net Proceeds Deficiency deposit,
together with interest thereon, to the payment of the Debt in such order,
priority and proportions as Lender shall deem to be appropriate in its
discretion;
(m) foreclose by power of sale or otherwise and apply the proceeds of any
recovery to the Debt in accordance with Section 9.2 or to any deficiency under
this Security Instrument;
(n) exercise all rights and remedies under any Causes of Action, whether
before or after any sale of the Property by foreclosure, power of sale, or
otherwise and apply the proceeds
15
of any recovery to the Debt in accordance with Section 9.2 or to any deficiency
under this Security Instrument; or
(o) pursue such other remedies as Lender may have under Applicable Law.
In the event of a sale, by foreclosure, power of sale, or otherwise, of
less than all of the Property, this Security Instrument shall continue as a lien
and security interest on the remaining portion of the Property unimpaired and
without loss of priority.
Section 9.2 APPLICATION OF PROCEEDS. Except as otherwise expressly set
forth in the Loan Agreement, the purchase money, proceeds and avails of any
disposition of the Property, or any part thereof, or any other sums collected by
Lender pursuant to the Note, this Security Instrument, the Loan Agreement, or
the other Loan Documents, may be applied by Lender to the payment of the Debt in
such priority and proportions as Lender in its discretion shall deem proper.
Section 9.3 RIGHT TO CURE DEFAULTS. Upon the occurrence and during the
continuance of any Default or Event of Default Lender may, but without any
obligation to do so and without notice to or demand on Mortgagor and without
releasing Mortgagor from any obligation hereunder, make or do the same in such
manner and to such extent as Lender may deem necessary to protect the security
hereof. Lender is authorized to enter upon the Property for such purposes, or
appear in, defend, or bring any action or proceeding to protect its interest in
the Property or to foreclose this Security Instrument or collect the Debt. The
cost and expense of any cure hereunder (including reasonable attorneys' fees to
the extent permitted by law), with interest as provided below, shall constitute
a portion of the Debt and shall be due and payable to Lender upon demand. All
such costs and expenses incurred by Lender in remedying such Default or Event of
Default shall bear interest at the Default Rate for the period after notice from
Lender that such cost or expense was incurred to the date of payment to Lender
and shall be deemed to constitute a portion of the Debt and be secured by this
Security Instrument and the other Loan Documents and shall be immediately due
and payable upon demand by Lender therefor.
Section 9.4 ACTIONS AND PROCEEDINGS. Lender has the right to appear in and
defend any action or proceeding brought with respect to the Property and, after
the occurrence and during the continuance of an Event of Default, to bring any
action or proceeding, in the name and on behalf of Mortgagor, which Lender, in
its discretion, decides should be brought to protect its interest in the
Property.
Section 9.5 RECOVERY OF SUMS REQUIRED TO BE PAID. Lender shall have the
right from time to time to take action to recover any sum or sums which
constitute a part of the Debt as the same become due, without regard to whether
or not the balance of the Debt shall be due, and without prejudice to the right
of Lender thereafter to bring an action of foreclosure, or any other action, for
a Default or Defaults by Mortgagor existing at the time such earlier action was
commenced.
Section 9.6 OTHER RIGHTS, ETC. (a) The failure of Lender to insist upon
strict performance of any term hereof shall not be deemed to be a waiver of any
term of this Security
16
Instrument. Mortgagor shall not be relieved of Mortgagor's obligations hereunder
by reason of (i) the failure of Lender to comply with any request of Mortgagor
to take any action to foreclose this Security Instrument or otherwise enforce
any of the provisions hereof or of the Note or the other Loan Documents, (ii)
the release, regardless of consideration, of the whole or any part of the
Property, or of any person liable for the Debt or any portion thereof, or (iii)
any agreement or stipulation by Lender extending the time of payment or
otherwise modifying or supplementing the terms of the Note, the Loan Agreement,
this Security Instrument or the other Loan Documents.
(b) It is agreed that the risk of loss or damage to the Property is on
Mortgagor, and Lender shall have no liability whatsoever for decline in value of
the Property, for failure to maintain the Policies, or for failure to determine
whether insurance in force is adequate as to the amount of risks insured.
Possession by Lender shall not be deemed an election of judicial relief, if any
such possession is requested or obtained, with respect to the Property or any
other Collateral not in Lender's possession.
(c) Lender may resort for the payment of the Debt to any other security
held by Lender in such order and manner as Lender, in its discretion, may elect.
Lender may take action to recover the Debt, or any portion thereof, or to
enforce any covenant hereof without prejudice to the right of Lender thereafter
to foreclose this Security Instrument. The rights of Lender under this Security
Instrument shall be separate, distinct and cumulative and none shall be given
effect to the exclusion of the others. No act of Lender shall be construed as an
election to proceed under any one provision herein to the exclusion of any other
provision. Lender shall not be limited exclusively to the rights and remedies
herein stated but shall be entitled to every right and remedy now or hereafter
afforded at law or in equity.
Section 9.7 RIGHT TO RELEASE ANY PORTION OF THE PROPERTY. Lender may
release any portion of the Property for such consideration as Lender may require
without, as to the remainder of the Property, in any way impairing or affecting
the lien or priority of this Security Instrument, or improving the position of
any subordinate lienholder with respect thereto, except to the extent that the
obligations hereunder shall have been reduced by the actual monetary
consideration, if any, received by Lender for such release, and may accept by
assignment, pledge or otherwise any other property in place thereof as Lender
may require without being accountable for so doing to any other lienholder. This
Security Instrument shall continue as a lien and security interest in the
remaining portion of the Property.
Section 9.8 VIOLATION OF LAWS. If the Property is not in compliance with
Legal Requirements, Lender may impose reasonable additional requirements upon
Mortgagor in connection herewith including, without limitation, monetary
reserves or financial equivalents.
Section 9.9 RIGHT OF ENTRY. Subject to the terms of the Loan Agreement,
Lender and its agents shall have the right to enter and inspect the Property at
all reasonable times.
Section 9.10 SUBROGATION. If any or all of the proceeds of the Note have
been used to extinguish, extend or renew any indebtedness heretofore existing
against the Property, then, to the extent of the funds so used, Lender shall be
subrogated to all of the rights, claims, liens, titles, and interests existing
against the Property heretofore held by, or in favor of, the
17
holder of such indebtedness and such former rights, claims, liens, titles, and
interests, if any, are not waived but rather are continued in full force and
effect in favor of Lender and are merged with the lien and security interest
created herein as cumulative security for the repayment of the Debt, and the
performance and discharge of the Obligations.
ARTICLE 10 - INDEMNIFICATIONS
Section 10.1 GENERAL INDEMNIFICATION. Mortgagor shall, at its sole cost
and expense, protect, defend, indemnify, release and hold harmless the
Indemnified Parties from and against any and all Losses imposed upon or incurred
by or asserted against any Indemnified Parties and directly or indirectly
arising out of or in any way relating to any one or more of the following: (a)
any accident, injury to or death of persons or loss of or damage to property
occurring in, on or about the Property or any part thereof or on the adjoining
sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways;
(b) any use, nonuse or condition in, on or about the Property or any part
thereof or on the adjoining sidewalks, curbs, adjacent property or adjacent
parking areas, streets or ways; (c) performance of any labor or services or the
furnishing of any materials or other property in respect of the Property or any
part thereof; (d) any failure of the Property to be in compliance with any Legal
Requirements; (e) any and all claims and demands whatsoever which may be
asserted against Lender by reason of any alleged obligations or undertakings on
its part to perform or discharge any of the terms, covenants, or agreements
contained in any Lease; or (f) the payment of any commission, charge or
brokerage fee to anyone which may be payable in connection with the funding of
the Loan evidenced by the Note and secured by this Security Instrument. Any
amounts payable to Lender by reason of the application of this Section 10.1
shall become immediately due and payable and shall bear interest at the Default
Rate from the date loss or damage is sustained by Lender until paid.
Section 10.2 MORTGAGE AND/OR INTANGIBLE TAX. Mortgagor shall, at its sole
cost and expense, protect, defend, indemnify, release and hold harmless the
Indemnified Parties from and against any and all Losses imposed upon or incurred
by or asserted against any Indemnified Parties and directly or indirectly
arising out of or in any way relating to any tax on the making and/or recording
of this Security Instrument, the Loan Agreement, the Note or any other Loan
Document.
Section 10.3 ENVIRONMENTAL INDEMNITY. Simultaneously with this Security
Instrument, Mortgagor and Indemnitor have executed and delivered the
Environmental Indemnity.
ARTICLE 11 - WAIVERS
Section 11.1 WAIVER OF COUNTERCLAIM. Mortgagor hereby waives the right to
assert a counterclaim, other than a mandatory or compulsory counterclaim, in any
action or proceeding brought against it by Lender arising out of or in any way
connected with this Security Instrument, the Note, the Loan Agreement, any of
the other Loan Documents, or the Obligations.
Section 11.2 MARSHALLING AND OTHER MATTERS. Mortgagor hereby waives, to
the extent permitted by law, the benefit of all appraisement, valuation, stay,
extension, reinstatement and redemption laws now or hereafter in force and all
rights of marshalling in the
18
event of any sale hereunder of the Property or any part thereof or any interest
therein. Further, Mortgagor hereby expressly waives any and all rights of
redemption from sale under any order or decree of foreclosure of this Security
Instrument on behalf of Mortgagor, and on behalf of each Person acquiring any
interest in or title to the Property subsequent to the date of this Security
Instrument and on behalf of all persons to the extent permitted by Legal
Requirements.
Section 11.3 WAIVER OF NOTICE. Mortgagor shall not be entitled to any
notices of any nature whatsoever from Lender except (a) with respect to matters
for which this Security Instrument, the Loan Agreement or any other Loan
Document, specifically and expressly provides for the giving of notice by Lender
to Mortgagor, and (b) with respect to matters for which Lender is required by
any Applicable Law to give notice, and Mortgagor hereby expressly waives the
right to receive any notice from Lender with respect to any matter for which
this Security Instrument does not specifically and expressly provide for the
giving of notice by Lender to Mortgagor.
Section 11.4 WAIVER OF STATUTE OF LIMITATIONS. Mortgagor hereby expressly
waives and releases to the fullest extent permitted by law, the pleading of any
statute of limitations as a defense to payment of the Debt or performance of its
Other Obligations.
Section 11.5 SOLE DISCRETION OF LENDER. Wherever pursuant to this Security
Instrument (a) Lender exercises any right given to it to approve or disapprove,
(b) any arrangement or term is to be satisfactory to Lender, or (c) any other
decision or determination is to be made by Lender, the decision of Lender to
approve or disapprove, all decisions that arrangements or terms are satisfactory
or not satisfactory and all other decisions and determinations made by Lender,
shall be in the sole and absolute discretion of Lender, except as may be
otherwise expressly and specifically provided herein or in any of the other Loan
Documents.
ARTICLE 12 - EXCULPATION
Section 12.1 EXCULPATION. Notwithstanding anything to the contrary
contained in this Security Instrument, the liability of any party to this
Security Instrument to pay the Debt and for the performance of the other
agreements, covenants and obligations contained herein and in the Note, the Loan
Agreement and the other Loan Documents shall be limited as set forth in Section
9.4 of the Loan Agreement.
ARTICLE 13 - SUBMISSION TO JURISDICTION
Section 13.1 SUBMISSION TO JURISDICTION. With respect to any claim or
action arising hereunder or under the Note or the other Loan Documents,
Mortgagor (a) irrevocably submits to the nonexclusive jurisdiction of the courts
of the State of New York and the United States District Court located in the
Borough of Manhattan in New York, New York, and appellate courts from any
thereof, and (b) irrevocably waives any objection which it may have at any time
to the laying on venue of any suit, action or proceeding arising out of or
relating to this Security Instrument brought in any such court, irrevocably
waives any claim that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum.
19
Nothing in this Security Instrument will be deemed to preclude Lender from
bringing an action or proceeding with respect hereto in any other jurisdiction.
ARTICLE 14 - APPLICABLE LAW
Section 14.1 CHOICE OF LAW. THIS SECURITY INSTRUMENT SHALL BE DEEMED TO BE
A CONTRACT ENTERED INTO PURSUANT TO THE LAWS OF THE STATE OF NEW YORK AND SHALL
IN ALL RESPECTS BE GOVERNED, CONSTRUED, APPLIED AND ENFORCED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, PROVIDED HOWEVER, THAT WITH RESPECT TO THE
CREATION, PERFECTION, PRIORITY AND ENFORCEMENT OF THE LIEN OF THIS SECURITY
INSTRUMENT, AND THE DETERMINATION OF DEFICIENCY JUDGMENTS, THE LAWS OF THE STATE
WHERE THE PROPERTY IS LOCATED SHALL APPLY.
Section 14.2 PROVISIONS SUBJECT TO APPLICABLE LAW. All rights, powers and
remedies provided in this Security Instrument may be exercised only to the
extent that the exercise thereof does not violate any applicable provisions of
law and are intended to be limited to the extent necessary so that they will not
render this Security Instrument invalid, unenforceable or not entitled to be
recorded, registered or filed under the provisions of any Legal Requirements.
ARTICLE 15 - DEFINITIONS
Section 15.1 GENERAL DEFINITIONS. Unless the context clearly indicates a
contrary intent or unless otherwise specifically provided herein, words used in
this Security Instrument may be used interchangeably in singular or plural form
and the word "Mortgagor" shall mean "each Mortgagor and any subsequent owner or
owners of the Property or any part thereof or any interest therein," the word
"Lender" shall mean "Lender and any subsequent holder of the Note," the word
"Note," shall mean "the Note and any other evidence of indebtedness secured by
this Security Instrument," the word "Property" shall include any portion of the
Property and any interest of Mortgagor therein, and the phrases "legal fees",
"attorneys' fees" and "counsel fees" shall include any and all attorneys',
paralegal and law clerk fees and disbursements, including, but not limited to,
fees and disbursements at the pre-trial, trial and appellate levels incurred or
paid by Lender in protecting its interest in the Property, the Leases and the
Rents and enforcing its rights hereunder.
Section 15.2 HEADINGS, ETC. The headings and captions of various Articles
and Sections of this Security Instrument are for convenience of reference only
and are not to be construed as defining or limiting, in any way, the scope or
intent of the provisions hereof.
ARTICLE 16 - MISCELLANEOUS PROVISIONS
Section 16.1 NO ORAL CHANGE. This Security Instrument and any provisions
hereof, may not be modified, amended, waived, extended, changed, discharged or
terminated orally or by any act or failure to act on the part of Mortgagor or
Lender, but only by an agreement in writing signed by the party against whom
enforcement of any modification, amendment, waiver, extension, change, discharge
or termination is sought.
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Section 16.2 LIABILITY. If Mortgagor consists of more than one person, the
obligations and liabilities of each such person hereunder shall be joint and
several. This Security Instrument shall be binding upon and inure to the benefit
of Mortgagor and Lender and their respective successors and assigns forever.
Section 16.3 INAPPLICABLE PROVISIONS. If any term, covenant or condition
of this Security Instrument or any other Loan Document, is held to be invalid,
illegal or unenforceable in any respect, the Note and this Security Instrument
or the other Loan Documents, as the case may be, shall be construed without such
provision.
Section 16.4 DUPLICATE ORIGINALS; COUNTERPARTS. This Security Instrument
may be executed in any number of duplicate originals and each duplicate original
shall be deemed to be an original. This Security Instrument may be executed in
several counterparts, each of which counterparts shall be deemed an original
instrument and all of which together shall constitute a single Security
Instrument. The failure of any party hereto to execute this Security Instrument,
or any counterpart hereof, shall not relieve the other signatories from their
obligations hereunder.
Section 16.5 NUMBER AND GENDER. Whenever the context may require, any
pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns and pronouns shall include the
plural and vice versa.
Section 16.6 NOTICE. All notices required or permitted under this Security
Instrument shall be given and be effective in accordance with Section 10.6 of
the Loan Agreement.
ARTICLE 17 - CROSS-COLLATERALIZATION
Section 17.1 CROSS-COLLATERALIZATION. Mortgagor acknowledges that the Debt
is secured by this Security Instrument together with those additional Security
Instruments given by Mortgagor and/or certain Affiliates of Mortgagor to Lender,
together with their respective Assignments of Leases and other Loan Documents
securing or evidencing the Debt, and encumbering the other Individual
Properties, all as more specifically set forth in the Loan Agreement. Upon the
occurrence of an Event of Default, Lender shall have the right to institute a
proceeding or proceedings for the total or partial foreclosure of this Security
Instrument and any or all of the other Security Instruments whether by court
action, power of sale or otherwise, under any applicable provision of law, for
all of the Debt or the portion of the Debt allocated to the Property in the Loan
Agreement, and the lien and the security interest created by the other Security
Instruments shall continue in full force and effect without loss of priority as
a lien and security interest securing the payment of that portion of the Debt
then due and payable but still outstanding. Mortgagor acknowledges and agrees
that the Property and the other Individual Properties are located in one or more
States and counties, and therefore Lender shall be permitted to enforce payment
of the Debt and the performance of any term, covenant or condition of the Note,
this Security Instrument, the Loan Documents or the other Security Instruments
and exercise any and all rights and remedies under the Note, this Security
Instrument, the other Loan Documents or the other Security Instruments, or as
provided by law or at equity, by one or more proceedings, whether
contemporaneous, consecutive or both, to be determined by Lender, in its
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sole discretion, in any one or more of the States or counties in which the
Property or any other Individual Property is located. Neither the acceptance of
this Security Instrument, the other Loan Documents or the other Security
Instruments nor the enforcement thereof in any one State or county, whether by
court action, foreclosure, power of sale or otherwise, shall prejudice or in any
way limit or preclude enforcement by court action, foreclosure, power of sale or
otherwise, of the Note, this Security Instrument, the other Loan Documents, or
any other Security Instruments through one or more additional proceedings in
that State or county or in any other State or county. Any and all sums received
by Lender under the Note, this Security Instrument, and the other Loan Documents
shall be applied to the Debt in such order and priority as Lender shall
determine, in its sole discretion, without regard to the Allocated Loan Amount
for the Property or any other Individual Property or the appraised value of the
Property or any Individual Property.
ARTICLE 18 - INTENTIONALLY OMITTED
ARTICLE 19 - INTENTIONALLY OMITTED
ARTICLE 20 - INTENTIONALLY OMITTED
ARTICLE 21 - OPERATING LEASE PROVISIONS
Section 21.1 NO MERGER OF FEE AND LEASEHOLD ESTATES; RELEASES. So
long as any portion of the Debt shall remain unpaid, unless Lender shall
otherwise consent, the fee title to the Land and the leasehold estate therein
created under the Operating Lease shall not merge but shall always be kept
separate and distinct, notwithstanding the union of such estates in Operating
Lessee, the lessor thereunder, or in any other Person by purchase, operation of
law or otherwise. Lender reserves the right, at any time, to release portions of
the Property, including, but not limited to, the leasehold estate created by the
Operating Lease, with or without consideration, at Lender's election, without
waiving or affecting any of its rights hereunder or under the Note or the other
Loan Documents and any such release shall not affect Lender's rights in
connection with the portion of the Property not so released.
Section 21.2 OWNER JOINING. Operating Lessee hereby joins in the execution
and delivery of this Security Instrument for the purpose of mortgaging its
interest in the Land and the Property as set forth in Article I of this Security
Instrument.
ARTICLE 22 - STATE SPECIFIC PROVISIONS
STATE SPECIFIC PROVISIONS INTENTIONALLY OMITTED.
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IN WITNESS WHEREOF, THIS SECURITY INSTRUMENT has been executed by
Mortgagor the day and year first above written.
FELCOR/JPM HOTELS, L.L.C., a Delaware
limited liability company
By:
-----------------------------------
Joel M. Eastman
Vice President
DJONT/JPM LEASING, L.L.C., a Delaware
limited liability company
By:
-----------------------------------
Joel M. Eastman
Vice President
ACKNOWLEDGMENTS
EXHIBIT A
(Description of Land)