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EXHIBIT 10.21
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
Howard E. Schreiber, Esq.
Jenkens & Gilchrist, P.C.
1445 Ross Avenue, Suite 3200
Dallas, Texas 75202
Instructions to County Recorder: Index this document as a Deed of Trust, as an
Assignment of Leases and Rents, as a Fixture Filing and as a Financing Statement
DEED OF TRUST, SECURITY AGREEMENT,
ASSIGNMENT OF LEASES AND RENTS, FIXTURE FILING
AND FINANCING STATEMENT
This Deed of Trust, Security Agreement, Assignment of Leases and Rents,
Fixture Filing and Financing Statement ("Deed of Trust") is executed effective
as of the 1st day of March, 1999, by FELCOR HOTEL COMPANY II, LTD., a Texas
limited partnership ("Grantor"), whose address is set forth below, as Grantor,
to Howard E. Schreiber, Trustee, whose address is set forth below, in trust for
the benefit of BANKERS TRUST COMPANY, a New York banking corporation ("BTCo"),
whose address is set forth below, as Beneficiary.
Article 1
DEFINITIONS
1. Definitions
As used herein, the following terms shall have the following meanings:
1.1 Assignment: The assignment, contained in Article 4 of this Deed of
Trust, from Grantor to Beneficiary, of all of Grantor's right, title and
interest in and to the Leases and the Rents.
1.2 Awards: All awards and payments with respect to the Mortgaged
Property made or hereafter to be made by any municipal, township, county, state,
Federal or other governmental agencies, authorities or boards or any other
entity having the power of eminent domain to Grantor, including any awards and
payments for any taking of all or a portion of the Mortgaged Property, as a
result of, or by agreement in anticipation of, the exercise of the right of
condemnation or eminent domain, or for any change or changes of grade of streets
affecting the Mortgaged Property.
1.3 Beneficiary: BTCo and its successors and assigns and the holders,
from time to time, of the Note.
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1.4 Beneficiary's Address: 130 Liberty Street, 25th Floor, MS 2257,
York, New York 10006, Attention: Steven Sauer.
1.5 Buildings: All buildings, improvements, alterations or
appurtenances now, or at any time hereafter, located upon the Land or any part
thereof.
1.6 Default Interest Rate: The lesser of (i) the interest rate of five
percent (5%) per annum plus the Applicable Interest Rate (as defined in the
Note), or (ii) the Maximum Rate (as defined in Section 9.10 below).
1.7 Event(s) of Default: The happenings and occurrences described in
Article 6 of this Deed of Trust.
1.8 Exit Fee: None.
1.9 Fixtures: All fixtures now or hereafter affixed or attached to, or
installed in, or used in connection with, the Land or Buildings, whether or not
permanently affixed thereto, together with all accessions, replacements and
substitutions thereto or therefor and the proceeds thereof.
1.10 Grantor: The entity named as such in the preamble of this Deed of
Trust, and its heirs, administrators, executors, successors and assigns and its
successors in interest in and to the Mortgaged Property.
1.11 Grantor's Address: 545 E. John Carpenter Freeway, Suite 1300,
Irving, Texas 75062, Attn: Joel M. Eastman.
1.12 Guarantor and Guarantor's Address: FelCor Lodging Limited
Partnership, whose address for notice hereunder is 545 E. John Carpenter
Freeway, Suite 1300, Irving, Texas 75062, Attn: Joel M. Eastman (the
"Guarantor").
1.13 Guaranty: That certain Unconditional Guaranty (Carve-Outs) of even
date herewith (the "Guaranty") executed by Guarantor and guaranteeing certain
obligations of Grantor under this Deed of Trust, the Note, the Security
Documents and the Indemnity Agreement.
1.14 Hazardous Materials: Any flammable explosives, radioactive
materials, oil or petroleum, chemical liquids or solids, polychlorinated
biphenyls, asbestos, liquid or gaseous products or hazardous wastes, pollutants,
toxic pollutants, toxic substances and similar substances and materials defined
as hazardous or toxic wastes, substances or materials under any applicable law
(excluding cleaning and office supplies customarily found in hotels similar in
size and quality to the Mortgaged Property).
1.15 Impositions: All (i) real estate and personal property taxes and
other taxes (excluding federal income taxes) and assessments, water and sewer
rates and charges, and all other governmental charges and any interest or costs
or penalties with respect thereto, and charges for
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an easement or agreement maintained for the benefit of the Mortgaged Property
which at any time prior to or after the execution of the Security Documents may
be assessed, levied, or imposed upon the Mortgaged Property or the rent or
income received therefrom or any use or occupancy thereof, and (ii) other taxes
(excluding federal income taxes), assessments, fees and governmental charges
levied, imposed or assessed upon or against Grantor or the Mortgaged Property.
1.16 Indebtedness: The principal of and accrued interest on and all
other amounts, payments and premiums due under the Note (including any future
advances), and all other amounts now existing or hereafter arising of Grantor
owing to Beneficiary under and/or secured by the Security Documents, or any
amendments, modifications, renewals and extensions of any of the foregoing.
1.17 Indemnity Agreement: The Environmental Indemnity Agreement, dated
as of even date herewith, executed by Grantor in favor of Beneficiary.
1.18 Land: The real estate described in Schedule A attached hereto.
1.19 Leases: Any and all leases, subleases, licenses, concessions or
grants of other possessory interests now or hereafter in force, oral or written,
covering or affecting the Mortgaged Property, or any part thereof, together with
all rights, powers, privileges, options and other benefits of Grantor
thereunder.
1.20 Loan Documents: The Note, the Indemnity Agreement, this Deed of
Trust, the Guaranty and any and all other documents executed in connection
herewith.
1.21 Mortgaged Property: The Land, the Buildings, the Fixtures, the
Leases, the Rents and the Personalty and all substitutions therefor,
replacements and accessions thereto, and proceeds derived therefrom together
with:
(i) all of the rights, privileges, permits, licenses,
tenements, hereditaments, rights-of-way, easements, appendages and
appurtenances of the Land and/or the Buildings belonging or in anyway
appertaining thereto and all right, title and interest of Grantor in
and to any streets, ways, alleys, strips or gores of land adjoining the
Land or any part thereof;
(ii) all the estate, right, title, interest, claim or demand
whatsoever of Grantor, either at law or in equity, in and to the Land
(including, without limitation, water, mineral and sewer rights), the
Buildings, the Fixtures, the Leases, the Rents and the Personalty;
(iii) all the estate, right, title, interest, claim or demand
whatsoever of Grantor, either at law or in equity, in and to the
Awards, or payments with respect to casualties; and
(iv) all other interest of every kind and character which
Grantor now has or at any time hereafter acquires in and to the above
described real and personal property and all proceeds derived from all
of the foregoing.
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1.22 Note: That certain Promissory Note, dated of even date with this
Deed of Trust, made by Grantor to the order of Beneficiary, in the original
principal amount of $63,000,000.00, due and payable on February 28, 2003, unless
earlier accelerated or extended as provided in the Note, secured by this Deed of
Trust, together with all future advances, extensions, renewals, modifications
and amendments thereof.
1.23 Obligations: Any and all of the covenants, promises and other
obligations (other than the Indebtedness) made or owing by Grantor or Guarantor
to or due to Beneficiary under and/or as set forth in the Note and/or the
Security Documents, and any and all extensions, renewals, modifications and
amendments of any of the foregoing.
1.24 Permitted Encumbrances: The encumbrances described with
particularity, in Schedule B attached hereto and liens contested in accordance
with the terms of this Deed of Trust.
1.25 Personalty:
(i) All tangible and intangible personal property related to
the Mortgaged Property of Grantor (whether now owned or hereafter
acquired), including all equipment, inventory, goods, consumer goods,
accounts, accounts receivable (including, without limitation, credit
card receipts), hotel guest room fees and receipts, hotel facilities
fees and receipts (including, without limitation, fees and receipts
generated from restaurants, bars, catering, room service, mini-bars,
health clubs and gift shops), hotel service fees for the use or
occupancy of rooms and other public or commercial facilities, income,
issues, profits, chattel paper, instruments, working capital reserves,
FF&E/capital improvement reserves (including, without limitation,
Account No. 08-80-6238455 at Chase Bank, N.A.), project escrows, money
(which are rental, tax or insurance deposits), general intangibles,
documents, minerals, crops and timber (as those terms are defined in
the Texas Uniform Commercial Code) and all other personal property of
Grantor which is attached to, installed on or placed or used on, in
connection with or is acquired for such attachment, installation,
placement or use, or which arises out of the development, improvement,
financing, leasing, operation or use of (1) the Land together with all
rights, titles and interests appurtenant thereof, (2) any and all
Buildings, structures, open parking areas and other improvements, now
or any time hereafter situated, placed or constructed upon the Land or
any part thereof, (3) the Fixtures, or (4) other goods located on the
Land or Buildings, together with all additions, accessions,
accessories, amendments and modifications thereto, extensions,
renewals, replacements, enlargements and proceeds thereof,
substitutions therefor, and income and profits therefrom. The following
are included, without limitation, in the definition of Personalty:
accounts receivable, hotel guest room fees and receipts, hotel
facilities fees and receipts (including, without limitation, fees and
receipts generated from restaurants, bars, catering, room service,
mini-bars, health clubs and gift shops), hotel service fees for the use
or occupancy of rooms and other public facilities, income, issues,
profits, furniture and furnishings (including, without limitation,
beds, bureaus, chiffoniers, chests, chairs, desks, lamps, mirrors,
bookcases, tables, rugs, paintings, couches, televisions and clock
radios), building materials, supplies,
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machines, engines, boilers, stokers, pumps, fans, vents, blowers,
dynamos, furnaces, elevators, ducts, shafts, pipes, furniture,
cabinets, shades, blinds, screens, plumbing, heating, air conditioning,
lighting, lifting, ventilating, refrigerating, cooking, medical,
laundry and incinerating equipment, partitions, drapes, carpets, rugs
and other floor coverings, awnings, call and sprinkler systems, fire
prevention and extinguishing apparatus and equipment, water tanks,
swimming pools, compressors, vacuum cleaning systems, disposals,
dishwashers, washers, dryers, ranges, ovens, kitchen equipment,
cafeteria equipment, recreational equipment, loan commitments,
financing arrangements, bonds, construction contracts, leases,
licenses, permits, sales contracts, insurance policies and the proceeds
therefrom, plans and specifications, surveys, rent rolls, books and
records, rental, tax and insurance deposits, and all other intangible
personal property; and
(ii) All materials, supplies, equipment, apparatus and other
items of Grantor now or hereafter attached to, installed on or in the
Land or the Buildings, or which in some fashion are deemed to be
fixtures to the Land or Buildings under the laws of the State of Texas,
including the Texas Uniform Commercial Code; and
(iii) Any and all leases, subleases, licenses, concessions or
other agreements (written or verbal, now or hereafter in effect) which
grant a possessory interest in and to, or the right to extract, mine,
reside in, sell or use the Mortgaged Property or any portion thereof,
and all other agreements, including, but not limited to, utility
contracts, management agreements, maintenance agreements and service
contracts, which in any way relate to the use, occupancy, operation,
maintenance, enjoyment or ownership of the Mortgaged Property, all
contracts or agreements relating to the sale of all or any part of the
Mortgaged Property, save and except any and all leases, subleases or
other agreements pursuant to which Grantor is granted a possessory
interest in the Mortgaged Property.
1.26 Rents: All of the rents, revenues, income, profits, deposits,
tenders and other benefits payable under the Leases and Grantor's rights, title
and interest in and to the rents, revenues, income, profits, deposits, tenders
and other benefits payable and/or arising from the use or enjoyment of all or
any portion of the Mortgaged Property.
1.27 Security Agreement: Individually and collectively means (i) the
Security Agreement contained in this Deed of Trust, wherein and whereby Grantor
grants a security interest in the Personalty and the Fixtures to Beneficiary,
and (ii) the Security Agreement of even date herewith between Grantor, as
debtor, and Beneficiary, as secured party, whereby Grantor grants a security
interest in all hotel revenues, fees, accounts and furniture, fixtures and
equipment.
1.28 Security Documents: This Deed of Trust, the Assignment, the
Security Agreement, the Guaranty, and any and all other documents executed by
Grantor now or hereafter securing the payment of the Indebtedness or the
observance or performance of the Obligations (but specifically excluding the
Indemnity Agreement).
1.29 Trustee: The person, persons or entity named as such in the
preamble of this Deed of Trust and, as the case may be, his, their or its
successors and assigns.
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1.30 Trustee's Address: 1445 Ross Avenue, Suite 3200, Dallas, Texas
75202.
Article 2
GRANT
2.1 Grant. To secure the payment of the Indebtedness and the
performance and discharge of the Obligations, Grantor by these presents hereby
grants, bargains, sells, assigns, mortgages, transfers, conveys and warrants
unto Trustee, in trust for the use and benefit of Beneficiary, with power of
sale and right of entry and possession, the Mortgaged Property, to have and to
hold the Mortgaged Property unto Trustee, its successors, substitutes and,
assigns forever. Grantor hereby binds itself, and Grantor's successors,
substitutes and assigns, to warrant and forever defend unto Beneficiary, its
successors and assigns, the title to the Mortgaged Property subject to the
Permitted Encumbrances.
2.2 Condition of Grant. Provided always, that if Grantor shall pay or
cause to be paid the entire Indebtedness as and when the same shall become due
and payable and shall observe, perform and discharge the Obligations, then the
Security Documents and the estate and rights granted by Grantor shall cease,
terminate and become void, and shall be promptly released or reconveyed by
Beneficiary, at the cost and expense of Grantor.
Article 3
SECURITY AGREEMENT AND FIXTURE FILING
With respect to all Personalty and/or Fixtures and/or other collateral
constituting a part of the Mortgaged Property, this Deed of Trust shall likewise
be a security agreement, and for valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and for the purpose of further
securing payment and performance of the Indebtedness and the Obligations,
Grantor hereby grants to Beneficiary a security interest and lien in all rights,
titles, and interests now owned or hereafter acquired by Grantor in all
Personalty and/or Fixtures. As to the Personalty and Fixtures, the grant,
transfer, and assignment provisions of this Article 3 shall control over the
grant in trust provision of Section 2.1 of this Deed of Trust. Grantor
represents and warrants that, except for any financing statement filed by
Beneficiary or otherwise described on Schedule "B" hereto, no presently
effective financing statement covering the Personalty and/or Fixtures or any
part thereof (except notice filings for permitted equipment leases), has been
filed with any filing officer, and no other security interest has attached or
has been perfected in the Personalty and/or Fixtures or any part thereof. This
Deed of Trust shall be effective as a financing statement filed as a fixture
filing with respect to all Fixtures included within the definitions of Mortgaged
Property and Personalty and/or Fixtures. Beneficiary shall have all the rights
with respect to the Fixtures and Personalty afforded to it by the Uniform
Commercial Code as adopted by the State of Texas, in addition to, but not in
limitation of, the other rights afforded Beneficiary by the Loan Documents. This
Deed of Trust shall also be effective as a financing statement covering minerals
or the like (including oil and gas) and accounts subject to Subsection (e) of
Section 9.103 of the Uniform Commercial Code. A carbon, photographic or other
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reproduction of this Deed of Trust shall be sufficient as a financing statement.
Beneficiary shall have the right at any time to file a manually executed
counterpart or a carbon, photographic or other reproduction of this Deed of
Trust as a financing statement in either the central or local UCC records of any
jurisdiction wherein the Mortgaged Property is located, but the failure of
Beneficiary to do so shall not impair (i) the effectiveness of this Deed of
Trust as both a financing statement covering oil, gas and accounts and as a
fixture filing as permitted by Section 9-402 of the Uniform Commercial Code, or
(ii) the validity and enforceability of this Deed of Trust in any respect
whatsoever. The following information is included for purposes of meeting the
requirements of a financing statement:
(a) The name of the debtor is FelCor Hotel Company II, Ltd.
(b) The name of the secured party is Bankers Trust Company.
(c) The address of the secured party is 130 Liberty Street,
25th Floor, MS 2257, New York, New York 10006, Attention: Steven Sauer.
(d) The mailing address of the debtor is 545 E. John Carpenter
Freeway, Suite 1300, Irving, Texas 75062, Attn: Joel M. Eastman.
(e) This financing statement covers all of the debtor's
Personalty and/or Fixtures (whether now owned or hereafter acquired).
The Personalty and/or Fixtures includes (i) goods which are or are to
become fixtures on the Land described in Schedule A, and (ii) minerals
or the like (including oil and gas) located on the Land described in
Schedule A, and (iii) the Personalty. This financing statement is to be
filed for record in the real estate records. Debtor has an interest of
record in the Land described in Schedule A, and the names of the
additional record owners of the Land described in Schedule A, if any,
are listed thereon.
(f) Proceeds and products of Personalty and/or Fixtures are
also covered.
Article 4
ASSIGNMENT OF RENTS AND LEASES
4.1 Assignment of Rents. All of Grantor's right, title and interest in
and to the Rents are hereby absolutely and irrevocably assigned to Beneficiary
to be applied against the Indebtedness and the Obligations. Grantor hereby
appoints Beneficiary its true and lawful attorney-in-fact, with the right, at
Beneficiary's option at any time to demand, receive and enforce payment, to give
receipts, releases and, satisfactions, and to sue, either in Grantor's or
Beneficiary's name, for all Rents. Notwithstanding the foregoing Assignment of
Rents, so long as no Event of Default has occurred which remains uncured, (i)
Grantor may collect, receive, take, use and enjoy such Rents, as they become due
and payable, but not more than one month in advance thereof and (ii) Beneficiary
shall not send a demand notice to any tenants. The foregoing assignment shall be
fully operative without any further action on the part of either party, and
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specifically Beneficiary shall be entitled at its option, upon the occurrence of
an Event of Default hereunder and for so long as such Event of Default is
continuing, to collect all Rents from the Mortgaged Property whether or not
Beneficiary takes possession of the Mortgaged Property. Upon the occurrence of
an Event of Default hereunder, the permission hereby given to Grantor to collect
the Rents from the Mortgaged Property shall terminate. The permission given by
Beneficiary to Grantor shall be reinstated upon a cure of such Event of Default
with Beneficiary's specific consent which shall not be unreasonably withheld.
This Assignment shall not be deemed or construed to constitute Beneficiary or
Trustee as a mortgagee in possession nor obligate Beneficiary or Trustee to take
any action or to incur expenses or perform or discharge any obligation, duty or
liability. Exercise of any rights under this Section and the application of the
Rents to the Indebtedness or the Obligations shall not cure or waive any Event
of Default but shall be cumulative of all other rights and remedies.
4.2 Assignment of Leases. Grantor hereby assigns to Beneficiary all
right, title and interest of Grantor in and to all Leases, together with all
security therefor and all monies payable thereunder, subject, however, to the
conditional permission given to Grantor above to collect the rentals under any
such Lease. The foregoing assignment of any Lease shall not be deemed to impose
upon Beneficiary any of the obligations or duties of Grantor provided in any
such Lease; and Grantor agrees to fully perform all obligations of the lessor
under all such Leases. Upon Beneficiary's request, Grantor shall deliver to any
new lessee a notice of this assignment in form satisfactory to Beneficiary in
its sole discretion. Beneficiary may deliver such a notice to new lessees if
Grantor fails to do so within a reasonable time after Beneficiary's request.
From time to time, upon request of Beneficiary, Grantor shall specifically
assign to Beneficiary, by an assignment in writing in form approved by
Beneficiary, all right, title and interest of Grantor in and to any and all
Leases, together with all security therefor and all monies payable thereunder,
subject to the conditional permission given to Grantor above to collect and use
the rentals under any such lease. Grantor shall also execute and deliver to
Beneficiary any notification, financing statement, or other document reasonably
required by Beneficiary to perfect the foregoing assignment as to any such
Lease.
4.3 Effect of Assignments. This instrument constitutes an absolute and
present assignment of the rents, royalties, issues, profits, revenue, income and
other benefits from the Mortgaged Property; subject, however, to the conditional
permission given to Grantor to collect, receive, take, use and enjoy the same as
provided above; provided, further, that the existence or exercise of such right
of Grantor shall not operate to subordinate this assignment to any subsequent
assignment by Grantor, in whole or in part, and any such subsequent assignment
by Grantor shall be subject to the rights of Trustee and Beneficiary hereunder.
4.4 No Merger of Leasehold Estates. If both the lessor's and lessee's
estate under any Lease, or any portion thereof, becomes vested at any time in
one owner, this Deed of Trust and the lien created hereby shall not be adversely
affected by the application of the doctrine of merger unless Beneficiary so
elects in writing by recording a written declaration so stating. Unless and
until Beneficiary so elects, Beneficiary and any lessor and lessee shall
continue to have and enjoy all of the rights and privileges to the separate
estates. In addition, upon the foreclosure of the lien created by this Deed of
Trust on the Mortgaged Property, any Leases then existing and affecting
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all or any portion of the Mortgaged Property shall not be destroyed or
terminated by merger or by the foreclosure unless Beneficiary or any purchaser
at the sale so elects. No act by or on behalf of Beneficiary or such purchaser
shall constitute a termination of any Lease unless Beneficiary gives written
notice thereof to the tenant or subtenant affected.
4.5 Assignment to Beneficiary Controlling. The rights of Trustee in the
Leases and Rents created under Article 2 shall be subject to the rights of
Beneficiary in the Leases and Rents created under this Article 4.
Article 5
COVENANTS AND REPRESENTATIONS AND WARRANTIES
5.1 Covenants. Until the entire Indebtedness shall have been paid in
full, Grantor hereby covenants and agrees as follows:
5.1.1 Payment of Indebtedness. Grantor will promptly pay or cause to be
paid the Indebtedness as and when same shall be due and payable under the Note,
the Deed of Trust and the Security Documents.
5.1.2 Compliance with Laws. Grantor will promptly and faithfully comply
in all material respects with, conform to and obey all present and future laws,
ordinances, rules, regulations and requirements of every duly constituted
governmental authority or agency and of every Board of Fire Underwriters having
jurisdiction, or similar body exercising similar functions, which may be binding
upon Grantor or the Mortgaged Property or any part thereof, or to the use or
manner of use, occupancy, possession, operation, maintenance, alteration, repair
or reconstruction of the Mortgaged Property, or any part thereof, whether or not
such law, ordinance, rule, order, regulation or requirement shall necessitate
structural changes or improvements or interfere with the use or enjoyment of the
Mortgaged Property. Grantor shall have the right to contest such law, ordinance,
rule, order, regulation or requirement to the extent contesting same results in
a suspension of the enforcement action and any applicable penalties or fines for
such non-compliance.
5.1.3 Payment of Impositions. Grantor will duly pay and discharge, or
cause to be paid and discharged, the Impositions, such Impositions or
installments thereof to be paid prior to the day before any fine, penalty,
interest or cost may be added thereto or imposed by law for the non-payment
thereof; provided, however, that if, by law, any Imposition may be paid in
installments, Grantor may pay the same in such installments; provided, further,
Grantor shall have the right to contest any such imposition prior to payment so
long as (i) Grantor contests such Imposition in good faith, (ii) Grantor sends
advance written notice to Beneficiary that Grantor is contesting such
Imposition, (iii) Grantor posts a bond with a party acceptable to Beneficiary
which is sufficient to pay the Imposition (or a lower amount acceptable to
Beneficiary), and (iv) such contest does not impair the Mortgaged Property in
any manner.
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5.1.4 Repair and Alterations.
(a) Grantor will keep the Mortgaged Property in good order and
condition and make all necessary or appropriate repairs, replacements
and renewals thereof and will prevent any act or thing which might
impair the value or usefulness of the Mortgaged Property (ordinary wear
and tear excepted).
(b) Grantor will not commit or knowingly permit any waste of
the Mortgaged Property or any part thereof, or make or knowingly permit
to be made any alterations or additions to the Mortgaged Property which
would have the effect of materially diminishing the value thereof, or
make or knowingly permit to be made any other alterations or additions
to the Mortgaged Property of a material nature, without the prior
written consent of Beneficiary.
(c) Grantor will not permit any of the Fixtures or Personalty
to be removed at any time from the Land and/or Buildings, without the
prior written consent of Beneficiary, unless actually replaced by an
article of equal suitability and value and owned by Grantor free and
clear of any lien or security interest except such as may be approved
in writing by Beneficiary.
5.1.5 Insurance. Grantor will purchase and maintain property insurance
on the Mortgaged Property protecting against such hazards, casualties and
contingencies as are usually covered by all risk property policies including,
but not limited to, fire, windstorms, flood (if the Mortgaged Property is
located in a flood plain) and such other risks as specified by Beneficiary. The
policies shall be in effect in the locality where the Mortgaged Property is
situated, in amounts and with insurers acceptable to Beneficiary having a Best's
Insurance Rating of A-/XI or better (or other Standard & Poor's equivalent
rating), but in any event not less than the full insurable value of the
Buildings, Fixtures, Personalty and all other contents on a replacement cost
basis, and which includes riders for increased replacement cost due to inflation
and changes in building codes and ordinances and business interruption insurance
covering the loss of rents for one year. All property insurance policies shall
include a mortgagee clause or loss payee endorsement for the benefit of
Beneficiary. No primary deductible or retention greater than $10,000 per Hotel
Project (as herein defined) and no coinsurance clauses shall be called for in
any such policies, unless agreed to in writing by Beneficiary. Policies shall
contain endorsements providing for breach of warranty, adjustment of value for
inflation, increased costs of demolition, and such other conditions as may be
required by Beneficiary. Policies shall be endorsed with form 438BFUNS, or a
similar endorsement acceptable to Beneficiary, showing Beneficiary as an
additional insured and loss payee as its interests may appear, such loss
payments to be applied to the restoration, repair or replacement of the
Mortgaged Property to the extent provided herein under terms and conditions
acceptable to Beneficiary; provided, however, that if Beneficiary's security
under this Deed of Trust is impaired (i.e., damage in excess of that
contemplated in Section 5.1.6 (a) below) or an Event of Default has occurred and
is continuing, then such payments shall, at the sole option of Beneficiary, be
applied to the payment of the Indebtedness.
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Grantor shall also maintain Commercial General Liability Insurance and
Excess/Umbrella Liability Insurance which shall respond to third-party claims
involving bodily injury, property damage and personal injury arising out of
Grantor's alleged actions or inactions; such policies shall contain endorsements
naming Beneficiary as additional insured under the policies as respects its
interest as mortgagee/secured party and as a loss payee. Such policies shall
provide such combined limits of coverage as Beneficiary shall specify, but in
any event for all of the Hotel Projects not less than Five Million Dollars
($5,000,000.00) per occurrence and in the aggregate Five Million Dollars
($5,000,000.00) as to liability for bodily injury, property damage and personal
injury. No primary deductible or retention shall be called for in the Commercial
General Liability policy. All such insurance policies purchased by Grantor shall
be endorsed to be primary and non-contributory to any insurance carried by the
Beneficiary. In addition, Grantor shall cause the Beneficiary to be named as an
additional insured on any excess or umbrella policy purchased by Grantor.
Grantor shall cause the policy or policies evidencing all insurance referred to
in this paragraph (and the insurer issuing such policy) to certify to
Beneficiary that: (a) the interest of Beneficiary shall be insured regardless of
any breach or violation by Grantor of any warranties, declarations or conditions
in such policy; (b) if any such insurance policy be subject to cancellation,
termination or be endorsed or sought to be endorsed to effect a change in
coverage for any reason whatsoever, such insurer will promptly notify
Beneficiary and such cancellation, termination or change shall not be effective
as to Beneficiary until fifteen (15) days after receipt by Beneficiary of such
notice; and (c) Beneficiary may, but shall not be obligated to, make premium
payments to prevent such cancellation, and that such payments shall be accepted
by such insurer. In addition, Grantor shall furnish to Beneficiary duplicate
executed copies of each such policy at the time of execution hereof and copies
of each renewal policy not less than fifteen (15) days prior to the expiration
of the original policy or the preceding renewal policy (as the case may be),
together with receipts or other evidence that the premiums have been paid and
furnish to Beneficiary certificates of insurance prepared by Grantor's insurance
agent or broker which show evidence of the required coverages and endorsements,
and payment of premiums thereon; and furnish to Beneficiary upon Beneficiary's
request, on or before sixty (60) days after the close of each fiscal year of
Grantor a statement of Grantor of the amounts of insurance maintained in
compliance with this Section 5.1.5, of the risks covered by such insurance and
of the insurance company or companies which carry such insurance, accompanied by
copies of all certificates of insurance evidencing the required coverages and
endorsements.
5.1.6 Restoration Following Casualty. After the happening of any
casualty to the Mortgaged Property or any part thereof, Grantor shall give
prompt written notice thereof to Beneficiary.
(a) In the event of any damage to or destruction of the
Buildings, Beneficiary shall have the option in its sole discretion of
applying or paying all or part of the insurance proceeds (i) to any
Indebtedness and in such order as Beneficiary may determine or (ii) to
the restoration of the Buildings or (iii) to Grantor; provided,
however, Beneficiary agrees that if no Event of Default or event or
condition which with the giving of notice, the passage of time, or
both, could mature into an Event of Default then exists hereunder and
if such proceeds do not exceed $500,000 for the Hotel Project so
damaged, the same shall be applied to the restoration of the Buildings.
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(b) In the event of such loss or damage, all proceeds of
insurance shall be payable to Beneficiary, and Grantor hereby
authorizes and directs any affected insurance company to make payment
of such proceeds directly to Beneficiary. Beneficiary is hereby
authorized and empowered by Grantor to settle, adjust, or compromise
any claims for loss, damage, or destruction under any policy or
policies of insurance, and provided there is no Event of Default
hereunder, Grantor shall be permitted to participate in such
negotiations.
(c) Except to the extent that insurance proceeds are received
by Beneficiary and applied to the Indebtedness, nothing herein
contained shall be deemed to excuse Grantor from repairing or
maintaining the Mortgaged Property as provided in this Deed of Trust or
restoring all damage or destruction to the Mortgaged Property,
regardless of whether or not there are insurance proceeds available or
whether any such proceeds are sufficient in amount, and the application
or release by Beneficiary of any insurance proceeds shall not cure or
waive any default or notice of default under this Deed of Trust or
invalidate any act done pursuant to such notice.
(d) No prepayment penalty shall be applicable to any insurance
proceeds received by Beneficiary under this Section 5.1.6.
5.1.7 Performance of Leases and Other Agreements. All Leases entered
into by Grantor after the date hereof shall be on Grantor's standard form lease
which form has been approved in advance and in writing by Beneficiary. All new
Leases or renewals of existing Leases shall be consistent in form and substance
with existing Leases and shall be subject to the prior written approval of
Beneficiary. Grantor will not, without the prior written consent of Beneficiary,
terminate any Leases or modify or amend any Lease (unless such modification or
amendment does not materially affect the economics or business terms of the
Lease). Grantor will duly and punctually perform all covenants and agreements
expressed as binding upon it under the Leases and other agreements to which it
is a party with respect to the Mortgaged Property or any part thereof, and will
use its diligent good faith efforts to enforce or secure the performance of each
and every obligation and undertaking of the respective lessees under the Leases,
and Grantor will appear and defend, at its cost and expense, any action or
proceeding arising under or in any manner connected with the Leases or the
obligations and undertakings of any lessee or other party thereunder.
Notwithstanding the foregoing, Beneficiary agrees that the terms of this Section
5.1.7 shall only be applicable to the Master Leases (as defined in Section 6.8)
and any third-party restaurant leases at the Mortgaged Property.
5.1.8 Payment of Rents. Grantor hereby agrees that the respective
lessees under the Leases, upon notice from Beneficiary of the occurrence of an
Event of Default, shall thereafter pay to Beneficiary the Rents due and to
become due under the Leases without any obligation to determine whether an Event
of Default in fact exists.
5.1.9 Inspection. Grantor will permit Beneficiary, at all reasonable
times and with reasonable notice, to inspect the Mortgaged Property. Beneficiary
shall have the right, but not the obligation, to enter onto the Mortgaged
Property, at all reasonable times and upon reasonable notice (except in the case
of an emergency or following an Event of Default for which no notice
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shall be required), to inspect the Mortgaged Property for the existence of
Hazardous Materials on the Mortgaged Property and to determine the compliance of
the Mortgaged Property and its use with any law, rule or regulation relating to
industrial hygiene or environmental conditions, including soil and ground water
conditions and the compliance of the Grantor and the Mortgaged Property with the
conditions and covenants set forth herein with respect to Hazardous Materials.
5.1.10 Hold Harmless. Grantor will defend and hold Beneficiary harmless
from any action, proceeding or claim affecting the Mortgaged Property, the
Security Documents or the Guaranty to the extent such action, proceeding or
claim arose prior to Beneficiary's possession of the Mortgaged Property and to
the extent such action, proceeding or claim did not result primarily from
Beneficiary's gross negligence or willful wrongdoing. Grantor shall appear in
and defend (or pay the reasonable expenses of Beneficiary to defend, if
Beneficiary gives Grantor notice of its election to handle such defense) any
action or proceeding purporting to affect the security of this Deed of Trust
and/or the rights and/or powers of Beneficiary hereunder, and Grantor shall pay
all costs and expenses (including costs of evidence of title and reasonable
attorneys' fees) in any action or proceeding in which Beneficiary may so appear
and/or any suit by Beneficiary to foreclose this Deed of Trust, to enforce any
obligations secured by this Deed of Trust, and/or to prevent the breach hereof.
Grantor's obligations under this Section 5.1.10 shall survive payment of the
Indebtedness and the release of the lien granted herein, but are subject to the
terms of Section 9.24 below.
5.1.11 Books and Records. Grantor will maintain full and complete books
of account and other records reflecting the results of its operation of the
Mortgaged Property. Grantor will furnish or cause to be furnished to Beneficiary
(a) within 30 days after the end of each calendar quarter, detailed statements
of income and expenses, balance sheet and statement of cash flow relating to the
Mortgaged Property for such period (including a certified rent roll for the
Mortgaged Property); (b) within 90 days after the end of each calendar year,
detailed statements of income and expenses relating to the Mortgaged Property
for such year; (c) within 90 days after the end of each calendar year, separate
financial statements for such year of Grantor and Guarantor; (d) within 30 days
after the end of each calendar quarter, a report outlining monthly occupancy and
average daily rates for the Mortgaged Property; (e) within 30 days after the end
of each calendar quarter, a delinquency report and accounts receivable aging for
the Mortgaged Property for such months; (f) within 30 days after the end of each
calendar quarter a statement of the balance of the working capital reserve
described in Section 5.1.21 hereof; (g) no less than 10 days prior to each
fiscal year, a budget for the upcoming fiscal year; and (h) at least 10 days
prior to the end of each calendar year, a detailed capital improvement budget
for the replacement reserve described in Section 5.1.21 below), all in
reasonable detail and certified by Grantor (except Guarantor's statements which
shall be certified by Guarantor). All such financial statements and reports
shall be certified by Grantor as accurate and complete in all material respects.
At any time and from time to time, Grantor shall deliver to Beneficiary such
other financial data and other information, including, without limitation,
copies of all Leases, as Beneficiary shall, from time to time, reasonably
request with respect to Grantor and the ownership and operation of the Mortgaged
Property, and Beneficiary (or its designee) shall have the right, at reasonable
times and upon reasonable notice, to audit Grantor's books of account and
records at Grantor's sole cost and expense.
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5.1.12 Awards. Grantor will file and prosecute its claim or claims for
any Awards in good faith and with due diligence and cause the same to be
collected and paid over to Beneficiary, and hereby irrevocably authorizes and
empowers Beneficiary, if it so desires, to file such claim and collect any
Awards and agrees that the proceeds of any Awards will be applied by Beneficiary
in reduction (without a prepayment premium) of any portion of the Indebtedness
as Beneficiary may determine in accordance with Article 8 hereof.
5.1.13 Licenses. Grantor shall keep in full force and effect all
licenses, permits and other governmental approvals which are necessary for the
operation of the Mortgaged Property and related facilities, and furnish evidence
satisfactory to Beneficiary that the Mortgaged Property and the use thereof
comply in all material respects with all applicable zoning and building laws,
regulations, ordinances and other applicable laws.
5.1.14 Junior Financing. Grantor shall not, without the prior written
consent of Beneficiary, such consent to be made in Beneficiary's sole
determination, incur any additional indebtedness or create or permit to be
created or to remain, any mortgage, pledge, lien, encumbrance or charge on, or
conditional sale or other title retention agreement with respect to, the
Mortgaged Property or any part thereof or income therefrom, other than the
Security Documents and the Permitted Encumbrances. Notwithstanding the
foregoing, Mortgagor shall be permitted to incur up to $300,000 (in the
aggregate per Hotel Project) of unsecured debt for the financing of equipment
and other personal property, which debt may be evidenced by either notes or
equipment leases and may be secured by a purchase money security interest(s).
5.1.15 Mechanic's Lien. Grantor shall not permit or suffer any
mechanic's, materialmen's or other lien to be created or to remain a lien upon
any of the Mortgaged Property; provided however, Grantor shall have the right to
contest any such lien prior to payment so long as (i) Grantor contests such lien
in good faith, (ii) Grantor sends advance written notice to Beneficiary that
Grantor is contesting such lien, (iii) either Grantor posts a bond with a party
acceptable to Beneficiary which is sufficient to pay the indebtedness secured by
such lien or Grantor delivers other security reasonably satisfactory to
Beneficiary, and (iv) such contest does not materially impair the Mortgaged
Property.
5.1.16 Hazardous Materials.
(a) Without limiting the generality of Section 5.1.2 hereof,
Grantor shall not cause or permit the violation of any law relating to
industrial hygiene or environmental conditions in connection with the
Mortgaged Property, including soil and ground water conditions and
underground storage tanks ("USTs"); or use, cause or permit a release
(a "Release") of a Hazardous Material, generate, or store any Hazardous
Materials in, on, under, over, from or affecting the Mortgaged
Property, except in accordance with all applicable laws; manufacture or
dispose of any Hazardous Materials in, on, under, over, from or
affecting the Mortgaged Property; or transport any Hazardous Materials
to or from the Mortgaged Property. Without Beneficiary's prior written
consent, which shall not be unreasonably withheld, Grantor shall take
no remedial action with respect to any Hazardous Materials in, on,
under, over, from or affecting the Mortgaged Property, and
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shall not enter into any settlement agreement, consent decree or other
compromise or agreement relating to any such Hazardous Materials.
Beneficiary's consent to such action shall not be construed to mean
that Beneficiary has the capacity to cause or determine the
appropriated Hazardous Materials management practices of Grantor but
only is intended for Beneficiary to assure that its collateral
hereunder is not being impaired.
(b) Grantor shall indemnify and hold Trustee and Beneficiary
harmless from any loss, liability, cost, expense and/or claim
(including without limitation the cost of any fines, remedial action,
damage to the environment and cleanup and the fees of experts and
reasonable attorneys fees) of or against Trustee and/or Beneficiary
arising from (i) the use, generation, storage, Release or disposal of
any Hazardous Materials in, on, under, over, from or affecting the
Mortgaged Property or the transport of any Hazardous Materials to or
from the Mortgaged Property; and (ii) the violation of any law relating
to industrial hygiene or environmental conditions in connection with
the Mortgaged Property, including soil and ground water conditions and
USTs; and (iii) the breach of any of the representations, warranties
and covenants of Grantor with respect to Hazardous Materials set forth
in this Section 5.1.16 and in Section 5.2 hereof. This indemnity shall
only apply to the extent any loss, liability, cost, expense and/or
claim which arose prior to Beneficiary's actual possession of the
Mortgaged Property and did not result primarily from Beneficiary's
gross negligence or willful wrong doing. Beneficiary shall have the
right to approve any counsel selected by Grantor to defend Beneficiary
hereunder. Beneficiary shall have the right, but not the obligation, to
enter into the Mortgaged Property during the term of the Loan following
24 hours prior notice to Grantor, to inspect the Mortgaged Property and
to perform any reasonable testing of the Mortgaged Property for the
existence of any Hazardous Materials thereon and to determine the
compliance of the Mortgaged Property and its uses with any
environmental law. Beneficiary may hire engineers and other consultants
of its choice to perform the inspections, and testing required in the
foregoing paragraph at Grantor's sole expense. The inspection of the
Mortgaged Property by Beneficiary or its agents will not relieve
Grantor of its obligation to comply with any environmental laws.
Grantor's obligations under this Section 5.1.16 shall survive payment
of the Indebtedness and the release of the lien granted herein.
Notwithstanding the foregoing, prior to an Event of Default any such
testing shall be at Beneficiary's cost as opposed to Grantor's cost.
5.1.17 Management. The Mortgaged Property shall at all times be
operated by Grantor or such other management company approved in advance and in
writing by Beneficiary under a management contract satisfactory in form and
substance to Beneficiary. In the event the Mortgaged Property is managed by an
affiliate of Grantor or Guarantor, then the interests of the Grantor and the
management company under such contract shall be subordinate to the rights of
Beneficiary hereunder, and the management agreement shall provide that
Beneficiary may, at its option, terminate such contract upon the occurrence of
an Event of Default which remains uncured following the expiration of any
applicable cure periods. In addition, any economic or material changes in the
franchise agreements/license agreements for the operation of the Mortgaged
Property must receive the prior written consent of Beneficiary. In addition,
Grantor agrees to immediately forward to Beneficiary copies of any
correspondence Grantor receives from any franchisor with regard to a default or
potential default by the tenant under the Master Leases.
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5.1.18 Use of Mortgaged Property. Grantor shall not use the Mortgaged
Property or any part thereof, or allow the same to be used or occupied, for any
purpose other than for the purposes of a hotel or for any unlawful purpose, or
in violation of any certificate of occupancy or other permit or certificate, or
any law, ordinance or regulation, covering or affecting the use or occupancy
thereof. Grantor will not suffer any act to be done or any condition to exist on
the Mortgaged Property or any part thereof or any article to be brought thereon,
which may be dangerous (unless safeguarded as required by law) or which may
constitute a nuisance public or private or which may void or make voidable any
insurance then in force with respect thereto.
5.1.19 Use of Beneficiary's Name. Grantor shall not use the names of
either Beneficiary or any of Beneficiary's subsidiaries or affiliates in
connection with the development and operation of the Mortgaged Property.
5.1.20 No Other Real Estate. At all times during the term of the Note,
Grantor shall not own any real estate other than the Mortgaged Property.
5.1.21 Maintenance of Reserves. At all times during the term of the
Note and for the exclusive benefit of the Mortgaged Property, Grantor shall
maintain a cash working capital replacement reserve with a financial institution
acceptable to Beneficiary, in Beneficiary's sole discretion. Grantor shall
deposit, on a monthly basis, into such reserve an amount equal to four percent
(4%) of the Mortgaged Property's gross revenues. Grantor shall, on a quarterly
basis, send to Beneficiary copies of monthly bank statements for the preceding
quarter, so that Beneficiary can verify the existence and maintenance of such
working capital reserves. Such reserve shall be pledged to Beneficiary as
additional security for the Loan (and will not be applied by Beneficiary unless
there is an Event of Default). The working capital reserve shall be restricted
for the exclusive purpose of funding Beneficiary-approved capital improvements
and replacement of furniture, fixtures and equipment for the Mortgaged Property.
Beneficiary's approval for disbursements from the reserve may be obtained on an
annual basis at the time of the submission of the annual hotel budget to
Beneficiary, with such disbursements available on a monthly basis (Beneficiary
will permit withdrawals from such reserve up to 10% in excess of a specified
line item in such approved budget). Beneficiary agrees that its consent shall
not be unreasonably withheld in connection with such budget approval. All other
disbursements shall require Beneficiary's specific written approval before such
funds are released.
5.2 Representations and Warranties of Grantor. Grantor hereby
represents and warrants to Beneficiary as of the date hereof as follows, and
agrees to give written notice to Beneficiary of any breach of such
representations and warranties:
5.2.1 Good Standing/Licensing. Grantor (and its general partner) is
duly organized and validly existing under the laws of its state of organization,
is duly licensed or qualified to do business and is in good standing and is
authorized to do business in every jurisdiction in which the nature of its
businesses or properties makes such licensing or qualification necessary and
where a failure to so qualify or be licensed would have a materially adverse
effect on the business or operations of the Grantor (and its general partner and
Guarantor), and to its knowledge is in compliance with all laws, regulations,
ordinances and orders of public authorities applicable to
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Grantor (and its general partner). The execution of the Note, the Security
Documents, and the Indemnity Agreement are within Grantor's partnership powers.
5.2.2 No Conflict. The execution, delivery and performance by Grantor
of the Note, the Security Documents, the Indemnity Agreement and by Guarantor of
the Guaranty will not, to Grantor's knowledge, violate any provision of law
(including, but not limited to, any law relating to usury), any order of any
court or other agency or government, or any indenture, agreement or other
instrument to which Grantor or Guarantor is a party or by which Grantor,
Guarantor or any of their property is bound, or be in conflict with, result in a
breach of or constitute (with due notice and/or lapse of time) a default under
any such indenture, agreement or other instrument, or violate the partnership
agreement of the Grantor or result in the creation or imposition of any lien,
charge or encumbrance of any nature whatsoever upon any of the property or
assets of Grantor or Guarantor, except as contemplated by the Note and the
Security Documents, and no action with respect thereto by Grantor or Guarantor
is required.
5.2.3 Consents. No consent or approval of any regulatory body to the
execution, delivery and performance of the Note, the Security Documents, the
Indemnity Agreement or the Guaranty or the transactions contemplated thereby is
required by law.
5.2.4 Suits. There are no suits, proceedings or investigations pending
or, to the best of Grantor's knowledge, threatened against or affecting Grantor
or Guarantor, at law or in equity, or before or by any governmental or
administrative agency or instrumentality which, if adversely determined, would
have a material adverse effect on the business or condition of Grantor or
Guarantor.
5.2.5 Judgments. No judgment, decree or order of any court or
governmental or administrative agency or instrumentality has been issued against
Guarantor or Grantor which has or may have any material adverse effect on the
business or condition of Grantor or Guarantor.
5.2.6 Information. To the best of Grantor's knowledge, all information,
reports, papers and data given to Beneficiary with respect to Grantor, Guarantor
or others obligated under the terms of the Security Documents, and the Guaranty
are accurate and correct in all material respects.
5.2.7 Title to Mortgaged Property/Right to Assign Leases. Grantor has
good and indefeasible title in fee simple to the Land and good and marketable
title to the Buildings, Fixtures and Personalty, and the right to assign the
Leases and Rents to Beneficiary free and clear of any prior assignment, liens,
charges, encumbrances, security interests and adverse claims whatsoever except
the Permitted Encumbrances.
5.2.8 Leases. Grantor has not executed any presently effective prior
assignment of the Leases or of its right, title and interest therein or in the
Rents to accrue thereunder.
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5.2.9 Permitted Encumbrances. The Permitted Encumbrances have not
materially interfered with the operation of the Mortgaged Property, nor does
Grantor reasonably foresee any material interference arising from the Permitted
Encumbrances during the term of the Note.
5.2.10 Taxes. Grantor, its general partner and Guarantor have filed all
Federal, state, county, and municipal income tax returns required to have been
filed by them and have paid all taxes which have become due pursuant to any
assessments received by them, and Grantor and Guarantor do not know of any basis
for additional assessment in respect to such taxes.
5.2.11 Use of Mortgaged Property. The Mortgaged Property is being, and
will continue to be, used for the purpose of a Hotel Project and is not now
homestead property (business or personal).
5.2.12 Hazardous Materials. To the best of Grantor's knowledge after
due inquiry and investigation, no Release of a Hazardous Material has occurred
in, on, under, over, from or affecting the Mortgaged Property except to the
extent disclosed in the environmental assessments delivered to Beneficiary by
Grantor in connection with the closing of the Loan. Grantor has not received any
notice from any governmental agency or from any tenant under a Lease or from any
other party with respect to such Release. To the best of Grantor's knowledge
after due inquiry and investigation, the Mortgaged Property is not in violation
of any applicable environmental or industrial hygiene laws, rules or
regulations. Grantor has not generated, stored, used, released or disposed of
any Hazardous Material in, on, under, over, from or affecting the Mortgaged
Property or in, on, under, over, from or affecting any adjoining property.
5.2.13 Plans and Specifications. To the best of Grantor's knowledge
after due inquiry and investigation, Grantor warrants that the Buildings and
Improvements comply with all applicable laws, codes and other governmental
requirements, except to the extent disclosed in the engineering assessments
delivered to Beneficiary by Grantor in connection with the closing of the Loan.
5.2.14 Single Purpose Entity/Separateness. Grantor represents, warrants
and covenants as follows:
(a) Grantor does not own and will not own any asset or
property other than (i) the Mortgaged Property and (ii) incidental
personal property necessary for the ownership or operation of the
Mortgaged Property and Grantor's permitted business operations.
(b) Grantor will not engage in any business other than the
ownership, management and operation of the Mortgaged Property and
Grantor will conduct and operate its business as presently conducted
and operated.
(c) Grantor will not enter into any contract or agreement with
any affiliate of the Grantor, any constituent party of Grantor, any
Guarantor of the Indebtedness and/or Obligations or any part thereof or
any affiliate of any constituent party or Guarantor, except upon terms
and conditions that are intrinsically fair and substantially similar to
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those that would be available on an arms-length basis with third
parties other than any such party.
(d) Grantor has not incurred and will not incur any
indebtedness, secured or unsecured, direct or indirect, absolute or
contingent (including guaranteeing any obligation), other than (i) the
Indebtedness, (ii) trade and operational debt incurred in the ordinary
course of business with trade creditors and in amounts as are normal
and reasonable under the circumstances (and expressly consented to by
Beneficiary in writing or otherwise permitted hereunder without
Beneficiary's further consent), and (iii) debt incurred in the
financing of equipment and other personal property used on the premises
(and expressly consented to by Beneficiary hereunder). No indebtedness
other than the Indebtedness may be secured (subordinate or pari passu)
by a lien on the Mortgaged Property.
(e) Grantor has not made and will not make any loans or
advances (other than distributions of any net profits to Grantor's
partners and the repayment of permitted intercompany loans) to any
third party (including any affiliate or constituent party, any
Guarantor or any affiliate of any constituent party or Guarantor), and
shall not acquire obligations or securities of its affiliates.
(f) Grantor is and will remain solvent and Grantor will pay
its debts and liabilities (including, as applicable, shared personnel
and overhead expenses) from its assets as the same shall become due.
(g) Grantor has done or caused to be done and will do all
things necessary to observe organizational formalities and preserve its
existence, and Grantor will not, nor will Grantor permit any
constituent party to amend, modify or otherwise change the partnership
certificate, partnership agreement, articles of incorporation and
bylaws, trust or other organizational documents of Grantor or such
constituent party without the prior written consent of Beneficiary.
(h) Grantor will maintain all of its books, records, financial
statements and bank accounts separate from those of its affiliates and
any constituent party and Grantor will file its own tax returns unless
required otherwise by applicable law. Grantor shall maintain its books,
records, resolutions and agreements as official records.
(i) Grantor will be, and at all times will hold itself out to
the public as, a legal entity separate and distinct from any other
entity (including any affiliate of Grantor, any constituent party of
Grantor, any Guarantor or any affiliate of any constituent party or
Guarantor), shall correct any known misunderstanding regarding its
status as a separate entity, shall conduct business in its own name,
shall not identify itself or any of its affiliates as a division or
part of the other and shall maintain and utilize separate stationery,
invoices and checks.
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(j) Grantor will maintain adequate capital for the normal
obligations reasonably foreseeable in a business of its size and
character and in light of its contemplated business operations.
(k) Neither Grantor nor any constituent party will seek the
dissolution, winding up, liquidation, consolidation or merger in whole
or in part, of the Grantor.
(l) Grantor will not commingle the funds and other assets of
Grantor with those of any affiliate or constituent party, any
Guarantor, or any affiliate of any constituent party of Guarantor, or
any other person.
(m) Grantor has and will maintain its assets in such a manner
that it will not be costly or difficult to segregate, ascertain or
identify its individual assets from those of any affiliate or
constituent party, any Guarantor, or any affiliate of any constituent
party or Guarantor, or any other person.
(n) Grantor does not and will not hold itself out to be
responsible for the debts or obligations of any other person.
(o) If Grantor is a limited partnership or a limited liability
company, the general partner or managing member or Guarantor shall be a
limited liability company whose sole asset is its interest in Grantor
and the general partner or managing member will at all times comply,
and will cause Grantor to comply, with each of the representations,
warranties, and covenants contained in this Section 5.2.14 as if such
representation, warranty or covenant was made directly by such general
partner or managing member.
(p) The general partner of Grantor shall at all times maintain
an independent director/member who has been approved in writing by
Beneficiary.
Article 6
EVENTS OF DEFAULT
6. Events of Default
The term "Event(s) of Default," as used in the Security Documents, the
Guaranty and the Note, shall mean the occurrence or happening, from time to
time, of any one or more of the following:
6.1 Payment of Indebtedness. If Grantor shall default in the due and
punctual payment of all or any portion of any installment of the Indebtedness as
and when the same shall become due and payable, whether at the due date thereof
or at a date fixed for prepayment or by acceleration or otherwise and such
default shall continue for a period of ten (10) days; provided that failure to
pay the final installment due at maturity shall immediately constitute an Event
of Default hereunder.
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6.2 Performance of Obligations. If Grantor or Guarantor shall default
in the due observance or performance of any of the Obligations other than
payment of money and such default shall not be curable, or if curable shall
continue for a period of thirty (30) days after written notice thereof from
Beneficiary to Grantor (unless such default, if curable, requires work to be
performed, acts to be done or conditions to be remedied which by their nature
cannot be performed, done or remedied, as the case may be, within such thirty
day period and Grantor shall commence to cure such default within such thirty
(30) day period and shall thereafter diligently and continuously process the
same to completion, but in no event shall the period for cure exceed ninety (90)
days unless otherwise agreed in writing by Beneficiary, and in no event shall
the period for such cure extend beyond the maturity of the Note).
6.3 Bankruptcy Receivership, Insolvency, Etc. If voluntary or
involuntary proceedings under the Federal Bankruptcy Code, as amended, shall be
commenced by or against Grantor, any general partner of Grantor, or Guarantor,
or bankruptcy, receivership, insolvency, reorganization, dissolution,
liquidation or other similar proceedings shall be instituted by or against
Grantor, any general partner of Grantor, or Guarantor, with respect to all or
any part of Grantor's, or Guarantor's property or the property of any general
partner of Grantor under the Federal Bankruptcy Code, as amended, or other law
of the United States or of any state or other competent jurisdiction, and if
such proceedings are instituted against Grantor, any general partner of Grantor
or Guarantor and it shall consent thereto or shall fail to cause the same to be
discharged within sixty (60) days.
6.4 Laws Affecting Obligations and Indebtedness. If subsequent to the
date of this Deed of Trust, any governmental entity having jurisdiction in which
the Mortgaged Property is located passes any law (a) which renders payment of
the Indebtedness and/or performance of the material Obligations by Grantor or by
Guarantor unlawful, or (b) which prohibits Beneficiary from exercising any of
its essential rights and remedies under the Note, the Security Documents, the
Indemnity Agreement or the Guaranty.
6.5 False Representation. If any representation or warranty made by
Grantor, Guarantor or others in, under or pursuant to the Note, the Guaranty or
the Security Documents (including, but not limited to, any representation or
warranty made in Section 5.2 hereof) shall prove to have been false or
misleading in any material respect as of the date on which such representation
or warranty was made.
6.6 Destruction of Improvements. If any of the Buildings is demolished
or removed or demolition or removal thereof is imminent, eminent domain
proceedings excepted, unless Grantor is diligently repairing or replacing the
Mortgaged Property to Beneficiary's satisfaction in accordance with Section
5.1.6 hereof.
6.7 Default Under Other Deed of Trust. If the holder of any junior deed
of trust or any other lien on the Mortgaged Property (without hereby implying
Beneficiary's consent to any such junior deed of trust or lien) institutes
foreclosure or other proceedings for the enforcement of its remedies thereunder,
or if a default exists and is continuing beyond any applicable grace or cure
period under any other deed of trust or lien (excluding mechanics' and
materialmen's liens
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adequately bonded to the sole satisfaction of Beneficiary) on the Mortgaged
Property. Notwith standing anything herein to the contrary, the filing of a
foreclosure proceeding or suit to collect the debt secured by any such deed of
trust or lien shall immediately constitute an Event of Default hereunder.
6.8 Security Documents and Loan Documents. If a default shall occur and
be continuing after the expiration of any applicable grace or cure period under
any of the Security Documents, the Guaranty, or under any of the other Loan
Documents, including, without limitation, the failure of Grantor in connection
with the purchase of a renewal Cap (as defined and described in Section 23 of
the Note).
6.9 Due on Sale. If, without the prior written consent of Beneficiary,
there is directly or indirectly (a) any master lease of an entire Hotel Project
comprising the Mortgaged Property [other than the existing master lease
agreements (the "Master Leases") between Grantor and Bristol Hotel Tenant
Company] or any sale, transfer, assignment, agreement for deed, conveyance,
hypothecation or encumbrance, whether voluntary or involuntary, of all or part
of the Mortgaged Property or any interest therein, or (b) any sale, assignment,
or transfer of the partnership interests, membership interests or of the
corporate voting stock in Grantor or its general partner (or the general partner
or managing member of such general partner), or (c) a seizure of the Mortgaged
Property, or attachment of any lien on the Mortgaged Property, whether voluntary
or involuntary, which has not been removed or bonded off to Beneficiary's sole
satisfaction within thirty (30) days of such attachment. Promptly following any
such transfer, Grantor shall advise Beneficiary in writing of such occurrence.
6.10 Judgment. If a final judgment (i.e., non-appealable and not
covered by insurance) for the payment of money in excess of One Hundred Thousand
Dollars ($100,000.00) shall be rendered against Grantor or Guarantor and the
same shall remain unpaid for a period of sixty (60) consecutive days during
which period execution shall not be effectively stayed.
6.11 Other Real Estate. If Grantor owns real estate other than the
Mortgaged Property.
6.12 Dissolution and Termination. The dissolution or termination, as
may be applicable, of any one or more of Grantor, Grantor's general partner(s)
or Guarantor.
6.13 Hotel Franchise Agreements and License Agreement. If there is an
uncured event of default by Grantor (or its master tenant or management agent)
under any of the franchise agreements and/or license agreements used in
connection with the operation of the Mortgaged Property.
6.14 Master Leases. If there is an uncured event of default by Grantor
under any of the Master Leases.
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Article 7
DEFAULT AND FORECLOSURE
7.1 Remedies. If an Event of Default shall occur, Beneficiary may, at
its option, by or through Trustee or otherwise, exercise one or more or all of
the following remedies:
7.1.1 Acceleration. Declare the unpaid portion of the Indebtedness to
be immediately due and payable, without further notice or demand (each of which
hereby is expressly waived by Grantor), whereupon the same shall become
immediately due and payable.
7.1.2 Operation of Mortgaged Property. Hold, lease, operate or
otherwise use or permit the use of the Mortgaged Property, or any portion
thereof, in such manner, for such time and upon such terms as Beneficiary may
deem to be in its best interest (making such repairs, alterations, additions and
improvements thereto, from time to time, as Beneficiary shall deem necessary or
desirable) and collect and retain all earnings, rents, profits or other amounts
payable in connection therewith.
7.1.3 Judicial Proceedings. Institute proceedings for the complete or
partial foreclosure of this Deed of Trust or take such steps to protect and
enforce its rights whether by action, suit or proceeding in equity or at law for
the specific performance of any covenant, condition or agreement in the Note or
in this Deed of Trust (without being required to foreclose this Deed of Trust),
or in aid of the execution of any power herein granted, or for any foreclosure
hereunder, or for the enforcement of any other appropriate legal or equitable
remedy or otherwise as Beneficiary shall elect.
7.1.4 Sale of Mortgaged Property. Cause the Mortgaged Property and all
estate, right, title and interest, claim and demand therein, or any part thereof
to be sold as follows:
Upon the occurrence of an Event of Default the Trustee, or his
successor or substitute, is authorized and empowered and it shall be his special
duty at the request of Beneficiary to sell the Mortgaged Property or any part
thereof situated within the State of Texas at the courthouse door of any county
in the State of Texas in which any part of the Mortgaged Property is situated,
at public vendue to the highest, bidder for cash between the hours of ten
o'clock a.m. and four o'clock p.m., but not later than three hours after the
earliest time at which sale will begin as set forth in the notice, on the first
Tuesday in any month after having given notice of such sale in accordance with
the statutes of the State of Texas then in force governing sales of real estate
under powers conferred by deed of trust. Any sale made by the Trustee hereunder
may be as an entirety or in such parcels as Beneficiary may request, and any
sale may be adjourned by announcement at the time and place appointed for such
sale without further notice except as may be required by law. The sale by the
Trustee of less than the whole of the Mortgaged Property shall not exhaust the
power of sale herein granted, and the Trustee is specifically empowered to make
successive sale or sales under such power until the whole of the Mortgaged
Property shall be sold; and if the proceeds of such sale of less than the whole
of the Mortgaged Property shall be less than the aggregate of the Indebtedness
secured hereby and the expense of executing this trust as provided
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herein, this Deed of Trust and the lien hereof shall remain in full force and
effect as to the unsold portion of the Mortgaged Property just as though no sale
had been made; provided, however, that Grantor shall never have any right to
require the sale of less than the whole of the Mortgaged Property but
Beneficiary shall have the right, at its sole election, to request the Trustee
to sell less than the whole of the Mortgaged Property. After each sale, the
Trustee shall make to the purchaser or purchasers at such sale good and
sufficient conveyances in the name of Grantor, conveying the property so sold to
the purchaser or purchasers in fee simple with general warranty of title binding
upon the Grantor but not upon the Trustee or Beneficiary, and shall receive the
proceeds of said sale or sales and apply the same as herein provided. The power
of sale granted herein shall not be exhausted by any sale held hereunder by the
Trustee or his substitute or successor, and such power of sale may be exercised
from time to time and as many times as Beneficiary may deem necessary until all
of the Mortgaged Property has been duly sold and all Indebtedness has been fully
paid. In the event any sale hereunder is not completed or is defective in the
opinion of Beneficiary, such sale shall not exhaust the power of sale hereunder
and Beneficiary shall have the right to cause a subsequent sale or sales to be
made hereunder. Any and all statements of fact or other recitals made in any
deed or deeds given by the Trustee or any successor or substitute appointed
hereunder as to the occurrence of an Event of Default or the nonpayment of the
Indebtedness or as to Beneficiary having declared all of said Indebtedness to be
due and payable, or as to the request to sell, or as to notice of time, place
and terms of sale and the property to be sold having been duly given, or as to
the refusal, failure or inability to act of the Trustee, substitute or
successor, or of the appointment of a substitute Trustee, shall be taken as
prima facie evidence of the truth of the facts so stated and recited. The
Trustee or his successor or substitute may appoint or delegate to the extent
permitted by law any one or more persons as agent to perform any act or acts
necessary or incident to any sale held by the Trustee, including the posting of
notices and the conduct of sale, but in the name and on behalf of the Trustee,
his successor or substitute. If the Trustee or his successor or substitute shall
have given notice of sale hereunder, any successor or substitute Trustee
thereafter appointed may complete the sale and the conveyance of the property
pursuant thereto as if such notice had been given by the successor or substitute
Trustee conducting the sale.
7.1.5 Receiver. Beneficiary shall be entitled, as a matter of strict
right, without notice and ex parte, and without regard to the value or occupancy
of the security, or the solvency of the Grantor or of Guarantor, or the adequacy
of the Mortgaged Property as security for the Note, to have a receiver appointed
to enter upon and take possession of the Mortgaged Property, collect the Rents
and profits therefrom and apply the same as the court may direct, such receiver
to have all the rights and powers permitted under the laws of the jurisdiction
in which the Mortgaged Property is located. Grantor hereby waives any
requirements on the receiver or Beneficiary to post any surety or other bond.
Beneficiary or the receiver may also take possession of, and for these purposes
use, any and all Personalty which is a part of the Mortgaged Property and used
by Grantor in the rental or leasing thereof, or any part thereof. The expense,
(including the receiver's fees, counsel fees, costs and agent's compensation)
incurred pursuant to the powers herein contained shall be secured by this Deed
of Trust. Beneficiary shall (after payment of all costs and expenses incurred)
apply such Rents, issues and profits received by it on the Indebtedness in the
order set forth in Section 7.7 hereof. The right to enter and take possession of
the Mortgaged Property, to manage and operate the same, and to collect the
Rents, issues and
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profits thereof, whether by receiver or otherwise, shall be cumulative to any
other right or remedy hereunder or afforded by law, and may be exercised
concurrently therewith or independently thereof. Beneficiary shall be liable to
account only for such Rents, issues and profits actually received by
Beneficiary.
7.1.6 Additional Rights and Remedies. With or without notice, and
without releasing Grantor from the Indebtedness or Obligations, and without
becoming a mortgagee in possession, Beneficiary shall have the right to cure any
breach or default of Grantor and, in connection therewith, to enter upon the
Mortgaged Property and to do such acts and things as Beneficiary or Trustee deem
necessary or desirable to protect the security hereof including, but without
limitation, to appear in and defend any action or proceedings purporting to
affect the security hereof or the rights or powers of Beneficiary or Trustee
hereunder; to pay, purchase, contest or compromise any encumbrance, charge, lien
or claim of lien which, in the judgment of either Beneficiary or Trustee, is
prior or superior hereto, the judgment of Beneficiary or Trustee being
conclusive as between the parties hereto; to obtain insurance; to pay any
premiums or charges with respect to insurance required to be carried hereunder;
and to employ counsel, accountants, contractors and other appropriate persons to
assist them.
7.1.7 Beneficiary as Purchaser. Beneficiary shall have the right to
become the purchaser at any sale held by the Trustee or by any court, receiver
or public officer, and Beneficiary shall have the right to credit upon the
amount of the bid made therefor, the amount of Indebtedness payable to it out of
the net proceeds of such sale. Beneficiary upon any such purchase, shall acquire
good title to the Mortgaged Property so purchased, free from the lien of this
Deed of Trust and free of all rights of redemption, if any, in Grantor. Recitals
contained in any conveyance made to any purchaser at any sale made hereunder
shall presumptively establish the truth and accuracy of the matters therein
stated, including, without limiting the generality of the foregoing, nonpayment
of the unpaid principal sum of, and the interest accrued on, the Note after the
same have become due and payable, advertisement and conduct of such sale in the
manner provided herein or appointment of any successor Trustee hereunder; and
Grantor does hereby ratify and confirm any and all acts that said Beneficiary or
its successors may lawfully do in the premises by virtue of the terms and
conditions of this instrument.
7.1.8 Receipt to Purchaser. Upon any sale, whether made under the power
of sale herein granted and conferred or by virtue of judicial proceedings, the
receipt of the Trustee, or of the officer making sale under judicial
proceedings, shall be sufficient discharge to the purchaser or purchasers at any
sale for his or their purchase money, and such purchaser or purchasers, his or
their assigns or personal representatives, shall not, after paying such purchase
money and receiving such receipt of the Trustee or of such officer therefor, be
obliged to see to the application of such purchase money, or be in anywise
answerable for any loss, misapplication or nonapplication thereof.
7.1.9 Effect of Sale. Any sale or sales of the Mortgaged Property,
whether under the power of sale herein granted and conferred or by virtue of
judicial proceedings, shall operate to divest all right, title, interest, claim,
and demand whatsoever either at law or in equity, of Grantor of, in, and to the
premises and the property sold, and shall be a perpetual bar, both at law and in
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equity, against Grantor, Grantor's successors, and against any and all persons
claiming or who shall thereafter claim all or any of the property sold from,
through or under Grantor, or Grantor's successors or assigns; nevertheless,
Grantor, if requested by the Trustee so to do, shall join in the execution and
delivery of all proper conveyances, assignments and transfers of the properties
so sold.
7.1.10 Remedies Under UCC. Upon the occurrence of an Event of Default,
Beneficiary may exercise its rights of enforcement, if they can be exercised
without a breach of the peace, with respect to the Personalty and/or the
Fixtures under the applicable provisions of the Uniform Commercial Code as
enacted in the State of Texas, and/or under other applicable Texas law, and in
conjunction with, in addition to or in substitution for those rights and
remedies:
(a) Beneficiary may enter upon Grantor's premises to take
possession of, assemble and collect the Personalty and/or Fixtures and
any and all books related to the Mortgaged Property; and
(b) Beneficiary may require Grantor to assemble the Personalty
and/or Fixtures and make same available at a place Beneficiary
designates which is mutually convenient to allow Beneficiary to take
possession or dispose of the Personalty and/or Fixtures; and
(c) Written notice mailed to Grantor as provided herein at
least ten (10) days prior to the date of public sale of the Personalty
and/or Fixtures or prior to the date after which private sale of the
Personalty and/or Fixtures will be made shall constitute reasonable
notice; and
(d) Any sale made pursuant to the provisions of this
Subsection shall be deemed to have been a public sale conducted in a
commercially reasonable manner if held contemporaneously with and upon
the same notice as required for the sale of the Mortgaged Property
under power of sale as provided in Subsection 7.1.4 of this Deed of
Trust; and
(e) In the event of a foreclosure sale, whether made by the
Trustee under the terms hereof, or under judgment of a court, the
Mortgaged Property may, at the option of Beneficiary, be sold as a
whole; and
(f) It shall not be necessary that Beneficiary take possession
of the Personalty and/or Fixtures or any part thereof prior to the time
that any sale pursuant to the provisions of this section is conducted
and it shall not be necessary that the Personalty and/or Fixtures or
any part thereof be present at the location of such sale; and
(g) Prior to application of proceeds of disposition of the
Personalty and/or Fixtures to the Indebtedness, such proceeds shall be
applied to the reasonable expenses of retaking, holding, preparing for
sale or lease, selling, leasing and the like and the reasonable
attorneys' fees and legal expenses incurred by Beneficiary; and
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(h) Any and all statements of fact or other recitals made in
any bill of sale or assignment or other instrument evidencing any
foreclosure sale hereunder as to nonpayment of the Indebtedness or as
to the occurrence of any Event of Default, or to Beneficiary having
declared all of such Indebtedness to be due and payable, or as to
notice of time, place and terms of sale and of the Mortgaged Property
to be sold having been duly done by Beneficiary, shall be taken as
prima facie evidence of the truth of the facts so stated and recited;
and
(i) Beneficiary may appoint or delegate any one or more
persons as agent to perform any act or acts necessary or incident to
any sale held by Beneficiary, including the sending of notices and the
conduct of the sale, but in the name and on behalf of Beneficiary.
7.1.11 Entry on and Operation of Property by the Trustee. Upon the
occurrence of an Event of Default and in addition to all other rights herein
conferred on the Trustee, the Trustee (or any person, firm or corporation
designated by the Trustee) shall have the right and power, but shall not be
obligated, to enter upon and take possession of any of the Mortgaged Property,
and of all books, records, and accounts relating thereto and to exclude Grantor,
and Grantor's agents or servants, wholly therefrom, and to hold, lease, operate,
use, administer, manage, and operate the same to the extent that Grantor shall
be at the time entitled and in his place and stead for such time, and upon such
terms as Beneficiary may deem to be in its best interest (making such repairs,
alterations, additions, and improvements thereto, from time to time, as
Beneficiary shall deem necessary or desirable) and collect and retain all
earnings, rents, profits, or other amounts payable in connection therewith. The
Trustee, or any person, firm or corporation designated by the Trustee, may
operate the same without any liability to Grantor in connection with such
operations, except to use ordinary care in the operation of said properties, and
the Trustee or any person, firm or corporation designated by them, shall have
the right to collect, receive and receipt for all Rents from the Mortgaged
Property, to make repairs, purchase machinery and equipment, and to exercise
every power, right and privilege of Grantor with respect to the Mortgaged
Property. All costs, expenses and liabilities of every character incurred by the
Trustee or Beneficiary in managing, operating, maintaining, protecting or
preserving the Mortgaged Property, respectively, shall constitute a demand
obligation owing by Grantor to Beneficiary and shall bear interest from date of
expenditure until paid at the same rate as is provided in the Note for interest
on past due principal, all of which shall constitute a portion of the
Indebtedness and shall be secured by this Deed of Trust and by any other
instrument securing the Indebtedness. If necessary to obtain the possession
provided for above, the Trustee or Beneficiary, as the case may be, may invoke
any and all remedies to dispossess Grantor including specifically one or more
actions for forcible entry and detainer, trespass to try title and restitution.
When and if the expenses of such operation have been paid and the Indebtedness
paid, the Mortgaged Property shall, if there has been no sale or foreclosure, be
returned to Grantor.
7.1.12 Change in Laws. If any statute now applicable in any state in
which any of the Mortgaged Property is now located provides, or shall hereafter
be amended to provide, a different procedure for the sale of real property under
a power of sale in a deed of trust or mortgage,
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Beneficiary may, in its sole discretion, if same be permitted by applicable law,
follow the sale procedure set forth in this Article VII or that prescribed in
such statute, as amended.
7.1.13 Other. Exercise any other remedy specifically granted under the
Security Documents or the Guaranty, or now or hereafter existing in equity, at
law, by virtue of statute or otherwise, including the rights described below.
7.2 Separate Sales. Any real estate or any interest or estate therein
sold pursuant to any writ of execution issued on a judgment obtained by virtue
of the Note, this Deed of Trust or the other Security Documents, or pursuant to
any other judicial proceedings under this Deed of Trust, or pursuant to the
power of sale granted herein, may be sold in one parcel, as an entirety or in
such parcels, and in such manner or order as Beneficiary, in its sole
discretion, may elect.
7.3 Remedies Cumulative and Concurrent. The rights and remedies of
Beneficiary as provided in the Note, this Deed of Trust, the Guaranty and in the
Security Documents shall be cumulative and concurrent and may be pursued
separately, successively or together against Grantor or Guarantor or against
other obligors or against the Mortgaged Property, or any one or more of them, at
the sole discretion of Beneficiary, and may be exercised as often as occasion
therefor shall arise. The failure to exercise any such right or remedy shall in
no event be construed as a waiver or release thereof, nor shall the choice of
one remedy be deemed an election of remedies to the exclusion of other remedies.
7.4 No Cure or Waiver. Neither Beneficiary's nor Trustee's nor any
receiver's entry upon and taking possession of all or any part of the Mortgaged
Property nor any collection of rents, issues, profits, insurance proceeds,
condemnation proceeds or damages, other security or proceeds of other security,
or other sums, nor the application of any collected sum to any Indebtedness and
Obligations, nor the exercise of any other right or remedy by Beneficiary or
Trustee or any receiver shall impair the status of the security, or cure or
waive any default or notice of default under this Deed of Trust, or nullify the
effect of any notice of default or sale (unless all Indebtedness and Obligations
which are then due have been paid and performed and Grantor has cured all other
defaults), or prejudice Beneficiary or Trustee in the exercise of any right or
remedy, or be construed as an affirmation by Beneficiary of any tenancy, lease
or option or a subordination of the lien of this Deed of Trust.
7.5 Payment of Costs, Expenses and Attorneys' Fees. Grantor agrees to
pay to Beneficiary immediately and without demand all costs and expenses
incurred by Trustee and Beneficiary in exercising the remedies under the Note,
the Guaranty and the Security Documents (including, but without limitation,
court costs and reasonable attorneys' fees, whether incurred in litigation or
not) with interest at the Default Interest Rate from the date of expenditure
until said sums have been paid. Beneficiary shall be entitled to bid, at the
sale of the Mortgaged Property held pursuant to the power of sale granted herein
or pursuant to any judicial foreclosure of this instrument, the amount of said
costs, expenses and interest in addition to the amount of the other Indebtedness
and Obligations as a credit bid, the equivalent of cash.
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7.6 Grantor's Waiver of Appraisement, Marshalling, Other Rights.
Grantor agrees, to the full extent that Grantor may lawfully so agree, that
Grantor will not at any time insist upon or plead or in any manner whatever
claim the benefit of any appraisement, valuation, stay, extension or redemption
law now or hereafter in force, in order to prevent or hinder the enforcement or
foreclosure of this instrument or the absolute sale of the Mortgaged Property or
the possession thereof by any purchaser at any sale made pursuant to any
provision hereof, or pursuant to the decree of any court of competent
jurisdiction; but Grantor, for Grantor and all who may claim through or under
Grantor, so far as Grantor or those claiming through or under Grantor now or
hereafter lawfully may, hereby waives the benefit of all such laws. Grantor, for
Grantor and all who may claim through or under Grantor, waives to the extent
that Grantor may lawfully do so, any and all right to have the Mortgaged
Property marshalled upon any foreclosure of the lien hereof, or sold in inverse
order of alienation, and agrees that the Trustee or any court having
jurisdiction to foreclose such lien may sell the Mortgaged Property as an
entirety. If any law in this section referred, to and now or hereafter in force,
of which Grantor or Grantor's successor or successors might take advantage
despite the provisions hereof, shall hereafter be repealed or cease to be in
force, such law shall not thereafter be deemed to constitute any part of the
contract herein contained or to preclude the operation or application of the
provisions of this section.
7.7 Application of Proceeds. The proceeds of any sale of all or any
portion of the Mortgaged Property and the amounts generated by any holding,
leasing, operation or other use of the Mortgaged Property shall be applied by
Beneficiary in the following order:
(a) first, to the payment of prepayment premiums, if any,
owing under the Note or the Security Documents;
(b) second, to the payment of late charges, if any, owing
under the Note or the Security Documents;
(c) third, to the payment of the costs and expenses of taking
possession of the Mortgaged Property and of holding, using, leasing,
repairing, improving and selling the same (including without limitation
payment of any Impositions or other taxes);
(d) fourth, to the extent allowed by law, to the payment of
attorneys' fees and other legal expenses, including expenses and fees
incurred on appeals, and legal expenses and fees of a receiver;
(e) fifth, to the payment of accrued and unpaid interest on
the Indebtedness; and
(f) sixth, to the payment of the balance of the Indebtedness.
The balance, if any, shall be paid to the parties entitled to receive
it under applicable law.
7.8 Strict Performance. Any failure by Beneficiary to insist upon
strict performance by Grantor or Guarantor of any of the terms and provisions of
the Security Documents, the Guaranty or of the Note shall not be deemed to be a
waiver of any of the terms or provisions of
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the Security Documents, the Guaranty or the Note and Beneficiary shall have the
right thereafter to insist upon strict performance by Grantor or Guarantor of
any and all of them.
7.9 No Conditions Precedent to Exercise of Remedies. Neither Grantor
nor any other person now or hereafter obligated for payment of all or any part
of the Indebtedness (including Guarantor) shall be relieved of such obligation
by reason of the failure of Beneficiary to comply with any request of Grantor or
Guarantor or of any other person so obligated to take action to foreclose on
this Deed of Trust or otherwise enforce any provisions of the Security
Documents, the Guaranty or the Note, or by reason of the release, regardless of
consideration, of all or any part of the security held for the Indebtedness, or
by reason of any agreement or stipulation between any subsequent owner of the
Mortgaged Property and Beneficiary extending the time of payment or modifying
the terms of the Security Documents or Note without first having obtained the
consent of Grantor, Guarantor or such other person; and in the latter event
Grantor, Guarantor and all such other persons shall continue to be liable to
make payment according to the terms of any such extension or modification
agreement, unless expressly released and discharged in writing by Beneficiary.
7.10 Release of Collateral. Beneficiary may release, regardless of
consideration, any part of the security held for the Indebtedness or Obligations
without, as to the remainder of the security, in any way impairing or affecting
the liens of the Security Documents or their priority over any subordinate lien.
Without affecting the liability of Grantor, Guarantor or any other person
(except any person expressly released in writing), for payment of any
Indebtedness secured hereby or for performance of any Obligations contained
herein, and without affecting the rights of Beneficiary with respect to any
security not expressly released in writing, Beneficiary may, at any time and
from time to time, either before or after maturity of said Note, and without
notice or consent: (a) release any person liable for payment of all or any part
of the Indebtedness or for performance of any Obligations; (b) make any
agreement extending the time or otherwise altering terms of payment of all or
any part of the Indebtedness, or modifying or waiving any Obligation, or
subordinating, modifying or otherwise dealing with the lien or charge hereof;
(c) exercise or refrain from exercising or waive any right Beneficiary may have;
(d) accept additional security of any kind; (e) release or otherwise deal with
any property, real or personal, securing the Indebtedness, including all or any
part of the Mortgaged Property.
7.11 Other Collateral. For payment of the Indebtedness, Beneficiary may
resort to any other security therefor held by Beneficiary in such order and
manner as Beneficiary may elect.
7.12 Discontinuance of Proceedings. In the event Beneficiary shall have
proceeded to enforce any right under the Note, the Guaranty or the Security
Documents and such proceedings shall have been discontinued or abandoned for any
reason, then in every such case Grantor, Guarantor and Beneficiary shall be
restored to their former positions and the rights, remedies and powers of
Beneficiary shall continue as if no such proceedings had been taken.
7.13 Release of Liability or Personalty. Without affecting the
liability of any person (other than any person released pursuant to the
provisions of this section) for payment of any Indebtedness secured hereby, and
without affecting or impairing in any way the priority or extent
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of the liens of the Loan Documents upon any property not specifically released
pursuant hereto, Beneficiary may at any time and from time to time (a) release
any person liable for payment of any Indebtedness secured hereby; (b) extend the
time or agree to alter the terms of payment of any of the Indebtedness; (c)
accept additional security of any kind; (d) release any property securing the
Indebtedness; or (e) consent to the creation of any easement on or over the
Mortgaged Property or any covenants restricting the use or occupancy thereof.
7.14 Prepayment Premium. Grantor shall have no right to voluntarily
prepay the principal amount of the Note, in whole or in part, except as set
forth in the Note and Section 9.26 below.
Article 8
CONDEMNATION
8.1 Condemnation. Grantor hereby assigns, transfers and sets over to
Beneficiary all rights of Grantor to any Awards or payment in respect of (a) any
taking of all or a portion of the Mortgaged Property as a result of, or by
agreement in anticipation of, the exercise of the right of condemnation or
eminent domain; (b) any such taking of any appurtenances to the Mortgaged
Property or of vaults, areas or projections outside the boundaries of the
Mortgaged Property, or rights in, under or above the alleys, streets or avenues
adjoining the Mortgaged Property, or rights and benefits of light, air, view or
access to said alleys, streets, or avenues or for the taking of space or rights
therein, below the level of, or above the Mortgaged Property; and (c) any damage
to the Mortgaged Property or any part thereof due to governmental action, but
not resulting in, a taking of any portion of the Mortgaged Property, such as,
without limitation, the changing of the grade of any street adjacent to the
Mortgaged Property. Grantor hereby agrees to file and prosecute its claim or
claims for any such award or payment in good faith and with due diligence and
cause the same to be collected and paid over to Beneficiary, and hereby
irrevocably authorizes and empowers Beneficiary, in the name of Grantor or
otherwise, to collect and receipt for any such award or payment and, in the
event Grantor fails to act, or in the event that an Event of Default has
occurred and is continuing, to file and prosecute such claim or claims.
Notwithstanding the foregoing, Grantor shall be permitted to collect and receive
any Award less than $10,000 per Hotel Project comprising the Mortgaged Property.
8.2 Application of Proceeds. All proceeds received by Beneficiary with
respect to a taking of all or any part of the Mortgaged Property or with respect
to damage to all or any part of the Mortgaged Property from governmental action
not resulting in a taking of the Mortgaged Property, shall be applied as
follows, in the order of priority indicated:
(a) first, to the payment of late charges, if any, owing under
the Note or the Security Documents;
(b) second, to the payment of the costs and expenses including
reasonable attorneys' fees incurred in connection with collecting the
sale proceeds;
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(c) third, to the extent allowed by law, to the payment of
attorneys fees and other legal expenses, including expenses and fees
incurred on appeals, and legal expenses and fees of a receiver;
(d) fourth, to the payment of accrued and unpaid interest on
the Indebtedness; and
(e) fifth, to the payment of the balance of the Indebtedness.
The balance, if any, shall be paid to the parties entitled to receive
it under applicable law.
Article 9
MISCELLANEOUS
9.1 Further Assurances. Grantor, upon the reasonable written request of
Beneficiary, will execute, acknowledge and deliver, or arrange for the
execution, acknowledgment and delivery of, such further reasonable instruments
(including, without limitation, financing statements, estoppel certificates and
declarations of no set-off, attornment agreements and acknowledgments of the
Assignment) and do such further acts as may be reasonably necessary, desirable
or proper to carry out more effectively the purpose of the Security Documents,
to facilitate the assignment or transfer of the Note, the Security Documents,
the Indemnity Agreement and the Guaranty and to subject to the liens of the
Security Documents any property intended by the terms thereof to be covered
thereby, and any renewals, additions, substitutions, replacements or betterments
thereto. Upon any failure of Grantor to execute and deliver such instruments,
certificates and other documents on or before fifteen (15) days after receipt of
written request therefor, Beneficiary may make, execute and record any and all
such instruments, and certificates and Grantor irrevocably appoints Beneficiary
the agent and attorney-in-fact of Grantor to do so.
9.2 Recording and Filing. Grantor, at its expense, will cause the
Security Documents, all supplements thereto and any financing statements at all
times to be recorded and filed and re-recorded and re-filed in such manner and
in such places as Beneficiary shall reasonably request, and will pay all such
recording, filing, re-recording and re-filing taxes, fees and other charges.
9.3 Notice. All notices, demands, requests and other communications
required under the Security Documents and the Note shall be in writing and shall
be deemed effective three (3) business days following the mailing of such notice
by U.S. certified or registered mail, postage prepaid, addressed to the party,
for whom it is intended at the Grantor's Address or the Trustee's Address, as
the case may be, or in the case of notices to Beneficiary, to Beneficiary at the
Beneficiary's Address. Any party may designate a change of address by written
notice to the other, given at least ten (10) business days before such change of
address is to become effective and provided that such address is located within
the continental United States. Grantor may, from time to time, change the
address to which notice of default and notice of sale hereunder shall be sent by
both recording a request therefor and sending a copy of such request to
Beneficiary.
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9.4 Beneficiary's Right to Perform the Obligations. If Grantor shall
fail to make any payment or perform any act required by the Note or the Security
Documents following the expiration of any applicable cure periods, then, at any
time thereafter, without notice to or demand upon Grantor and without waiving or
releasing any obligation or default, Beneficiary may make such payment or
perform such act for the account of and at the expense of Grantor, and shall
have the right to enter the Mortgaged Property for such purpose and to take all
such action thereon and with respect to the Mortgaged Property as may be
necessary or appropriate for such purpose. All sums so paid by Beneficiary, and
all costs, and expenses, including, without limitation, reasonable attorneys'
fees and expenses so incurred together with interest thereon at the Default
Interest Rate, from the date of payment or incurring, shall constitute additions
to the Indebtedness secured by the Security Documents, and shall be paid by
Grantor to Beneficiary, on demand. If Beneficiary shall elect to pay any
Imposition, Beneficiary may do so in reliance on any bill, statement or
assessment procured from the appropriate public office, without inquiring into
the accuracy thereof or into the validity of such Imposition. Grantor shall
indemnify Beneficiary for all losses and expenses, including reasonable
attorneys' fees, incurred by reason of any acts performed by Beneficiary
pursuant to the provisions of this Section 9.4 or by reason of the Security
Documents or the Guaranty, and any funds expended by Beneficiary to which it
shall be entitled to be indemnified, together with interest thereon at the
Default Interest Rate from the date of such expenditures, shall constitute
additions to the Indebtedness and shall be secured by the Security Documents and
shall be paid by Grantor to Beneficiary upon demand.
9.5 Covenants Running with the Land. All covenants contained in the
Security Documents shall run with the Mortgaged Property until the liens and
security interest created hereby are released by Beneficiary.
9.6 Severability. In case any one or more of the Obligations shall be
invalid, illegal or unenforceable in any respect, the validity of the Note, this
Deed of Trust, the Security Documents, the Indemnity Agreement and remaining
Obligations shall be in no way affected, prejudiced or disturbed thereby.
9.7 Modification. The Security Documents and the terms of each of them
may not be changed, waived, discharged or terminated orally, but only by an
instrument or instruments in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is asserted.
9.8 Non-Assumable. The loan evidenced by the Note and secured by this
Deed of Trust is personal to Grantor, and Beneficiary made such loan to Grantor,
based upon the credit of Grantor and Guarantor, and Beneficiary's judgment of
the ability of Grantor to repay the entire Indebtedness and therefore this Deed
of Trust may not be assumed by any subsequent holder of an interest in the
Mortgaged Property without Beneficiary's prior written consent. This Section 9.8
is subject to the terms of Section 6.9 hereof. Beneficiary shall notify Grantor
promptly in writing of any transaction or event described in Section 6.9 hereof.
9.9 Tax on Indebtedness or Deed of Trust. In the event of the passage,
after the date of this Deed of Trust, of any law deducting from the value of
land for the purposes of taxation,
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any lien thereon, or imposing upon Beneficiary the obligation to pay the whole,
or any part, of the taxes or assessments or charges or liens herein required to
be paid by Grantor, or changing in any way the laws relating to the taxation of
deeds of trust, mortgages or debts as to affect this Deed of Trust or the
Indebtedness, the entire unpaid balance of the Indebtedness shall, at the option
of Beneficiary, after thirty (30) days written notice to Grantor, become due and
payable; provided, however, that if, in the opinion of Beneficiary's counsel, it
shall be lawful for Grantor to pay such taxes, assessments, or charges, or to
reimburse Beneficiary therefor, then there shall be no such acceleration of the
time for payment of the unpaid balance of the Indebtedness if a mutually
satisfactory agreement for reimbursement, in writing, is executed by Grantor and
delivered to Beneficiary within the aforesaid period.
9.10 Maximum Rate of Interest. All agreements between Grantor and
Beneficiary, whether now existing or hereafter arising and whether written or
oral, are hereby expressly limited so that in no contingency or event
whatsoever, whether by reason of acceleration of the maturity of the Note or
otherwise, shall the amount paid, or agreed to be paid to Beneficiary for the
use, forbearance, or detention of the money to be loaned under the Note or
otherwise or for the payment or performance of any covenant or obligation
contained herein or in the Note, exceed the Maximum Rate. The term "Maximum
Rate" as used herein shall mean the higher of the maximum interest rate allowed
by applicable United States or Texas law as amended from time to time, in effect
on the date for which a determination of interest accrued hereunder is made. If
from any circumstances whatsoever fulfillment of any provision hereof or of any
such other documents, at the time performance of such provisions shall be due,
shall involve transcending the limit of validity prescribed by applicable usury
law, ipso facto, the obligation to be fulfilled shall be reduced to the limit of
such validity, and if from any such circumstance, Beneficiary shall have ever
received interest or anything which might be deemed interest under applicable
law which would exceed the Maximum Rate, such amount which would be excessive
interest shall be applied to the reduction of the principal amount owing on
account of the Note or the amounts owing on other obligations of Grantor to
Beneficiary hereunder and not to the payment of interest, or if such excessive
interest exceeds the unpaid balance of the principal of the Note and the amounts
owing on other obligations of Grantor to Beneficiary hereunder as the case may
be, such excess shall be refunded to Grantor. All sums paid or agreed to be paid
to Beneficiary for the use, forbearance or detention of the Indebtedness of
Grantor to Beneficiary shall, to the extent permitted by applicable law, (i) be
amortized, prorated, allocated and spread throughout the full term of such
Indebtedness until payment in full so that the actual rate of interest on
account of such Indebtedness does not exceed the Maximum Rate throughout the
term thereof, (ii) be characterized as a fee, expense or other charge other than
interest, and/or (iii) exclude any voluntary prepayments and the effects
thereof.
9.11 Survival of Warranties and Covenants. The warranties,
representations, covenants and agreements set forth in the Security Documents
shall survive the making of the loan and the execution and delivery of the Note,
and shall continue in full force and effect until the Indebtedness shall have
been paid in full, except such obligations as specified in Section 5.1.10 and
5.1.16 hereof which shall survive.
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9.12 APPLICABLE LAW. THE LOAN DOCUMENTS AND THE SECURITY
DOCUMENTS, INCLUDING, WITHOUT LIMITATION, THIS DEED OF TRUST, AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
9.13 Tax and Insurance Escrow. Grantor shall pay to Beneficiary, on
each of the monthly due dates of interest payments set forth in the Note, an
amount equal to one-twelfth of the annual (i) Impositions and (ii) insurance
premiums for such insurance as is required hereunder. Grantor shall also pay
into such account such additional amounts, to be determined by Beneficiary from
time to time, as will provide a sufficient fund, at least thirty days prior to
the due dates of the next installment of such Impositions and premiums, for
payment of such Impositions and premiums so as to realize the maximum discounts
permitted by law. Amounts held hereunder by Beneficiary shall be interest
bearing but may be commingled with Beneficiary's other funds. Upon assignment of
this Deed of Trust, Beneficiary shall have the right to pay over the balance of
such amounts then in its possession to the assignee and Beneficiary shall
thereupon be completely released from all liability with respect to such
amounts. Upon full payment of the Indebtedness, or, at the election of
Beneficiary at any prior time, the balance of such amounts shall be paid over to
Grantor and no other party shall have any right or claim thereto. Amounts held
by Beneficiary pursuant to this Section 9.13 shall be made available to Grantor
in sufficient time to allow Grantor to satisfy Grantor's obligations under the
Security Documents to pay Impositions and required insurance premiums, within
the maximum discount period, where applicable.
9.14 Loan Expenses. Grantor shall pay all costs and expenses in
connection with the preparation, execution, delivery and performance of the
Note, the Guaranty, the Indemnity Agreement and the Security Documents and the
transactions contemplated thereby, including (but not limited to) costs and fees
incurred by Beneficiary's independent inspector, reasonable fees and
disbursements of its and Beneficiary's counsel, broker's fees, costs and
expenses of procuring any environmental audits required to be procured by
Grantor, recording costs and expenses, conveyance fees, documentary stamp,
intangible and other taxes, and costs and expenses of surveys, appraisals and
policies of title insurance, physical damage insurance, and liability insurance.
Grantor shall also pay any and all expenses associated with any future amendment
and modifications to the Loan.
9.15 Substitution of Trustee. Beneficiary may appoint a substitute or
successor trustee or trustees in place of the Trustee or Trustees, with or
without any reason, and without other formality than a designation in writing of
a substitute or successor. Beneficiary may exercise this irrevocable appointment
power at any time without specifying any reason therefor. The power of
appointment of a successor Trustee or Trustees may be exercised as often as and
whenever the Beneficiary may choose, and the exercise of the power of
appointment, no matter how often, shall not be an exhaustion thereof. Whenever
in this Deed of Trust reference is made to the Trustee or Trustees, it shall be
construed to mean the Trustee or Trustees for the time being, whether original
or successors or successor in trust; and all title, estate, rights, powers,
trusts, and duties hereunder given or appertaining to or devolving upon the
Trustee or Trustees shall be in each of the Trustees so that any action
hereunder or purporting to be hereunder of any one of the original
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or any successor Trustees shall for all purposes be considered to be, and as
effective as, the action of all the Trustees.
9.16 No Representations by Beneficiary. By accepting or approving
anything required to be observed, performed or fulfilled or to be given to
Beneficiary, pursuant to the Security Documents, including (but not limited to)
any officer's certificate, survey, appraisal or insurance policy, Beneficiary
shall not be deemed to have warranted or represented the sufficiency, legality,
effectiveness or legal effect of the same, or of any term, provision or
condition thereof, and such acceptance or approval thereof shall not be or
constitute any warranty or representation with respect thereto by Beneficiary.
9.17 Acceptance of Trust. Trustee accepts the Trust created by this
Deed of Trust when this Deed of Trust, duly executed and acknowledged, is made a
public record as provided by law.
9.18 Release. Upon the payment of all sums secured hereby, Beneficiary
shall execute and deliver to Grantor a release of the lien created hereunder;
provided, however, that Beneficiary shall not be responsible for recording same
in the real property records and Grantor shall be solely responsible for the
payment of any recordation fees. The recitals in any such release of any matters
or facts contained in such release shall be conclusive proof thereof.
9.19 Compensation of Trustee. Trustee shall be entitled to reasonable
compensation for all services rendered or expenses incurred in the
administration or execution of the trusts hereby created and Grantor hereby
agrees to pay same (so long as such services are not a duplication of attorney
fees). Trustee and Beneficiary shall be indemnified, held harmless and
reimbursed by Grantor for any liability, damage or expense, including reasonable
attorneys' fees and amounts paid in settlement, which they or either of them may
incur or sustain in the execution of this trust or in the doing of any act which
they, or either of them, are required or permitted to do by the terms hereof or
by law.
9.20 Brokerage Commission. Any brokerage commission or finder's fee
payable in connection with the loan evidenced by the Note shall be payable by
Grantor and not by Beneficiary, and Grantor shall indemnify Beneficiary and hold
Beneficiary harmless against any claim of any broker or finder arising out of
such loan.
9.21 Headings. The article headings and the section and subsection
captions are inserted for convenience of reference only and shall in no way
alter or modify the text of such articles, sections and subsections.
9.22 No Further Agreements. Grantor hereby acknowledges, with respect
to the Loan Documents, that:
1. THE RIGHTS AND OBLIGATIONS OF GRANTOR AND
BENEFICIARY SHALL BE DETERMINED SOLELY FROM THE WRITTEN LOAN
DOCUMENTS AND ANY PRIOR ORAL AGREEMENTS BETWEEN BENEFICIARY
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AND GRANTOR ARE SUPERSEDED BY AND MERGED INTO THE LOAN
DOCUMENTS.
2. THE LOAN DOCUMENTS MAY NOT BE VARIED BY ANY ORAL AGREEMENTS
OR DISCUSSIONS THAT OCCUR BEFORE, CONTEMPORANEOUSLY WITH, OR
SUBSEQUENT TO THE EXECUTION OF SUCH LOAN DOCUMENTS.
3. THE WRITTEN LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENTS
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
9.23 Extension of Prior Liens. If any or all of the proceeds of the
Note have been used to pay any indebtedness heretofore existing against the
Mortgaged Property, then, to the extent of such funds so used, Beneficiary shall
be subrogated to all of the rights, claims, liens, titles and interests
heretofore existing against the Mortgaged Property to secure the indebtedness so
paid and the former rights, claims, liens, titles and interests, if any, are not
waived but rather shall continue in full force and effect in favor of
Beneficiary as cumulative security for the repayment of the Indebtedness and the
satisfactions of the Obligations regardless of whether said liens or debts are
acquired by Beneficiary by assignment or are released by the holder thereof upon
payment.
9.24 Limitation of Liability. Without impairing Beneficiary's rights,
powers, privileges, liens or security interest of this Deed of Trust or any
other document existing as security for the payment of the Indebtedness,
Beneficiary agrees that, for enforcement of payment of the Note, it will look
solely to the Mortgaged Property and such other collateral, as may now or
hereafter be given to secure the payment of the Note, and no other property or
assets of Grantor or its partner(s), except as described in this Deed of Trust,
or the Security Documents, shall be subject to levy, execution or other
enforcement procedure for the satisfaction of the remedies of Beneficiary, or
for any payment required to be made under the Note or under this Deed of Trust
or for the performance of any of the covenants or warranties contained therein
or herein; provided, however, Beneficiary may pursue all of its rights and
remedies against the property of Grantor or its general partner or any
guarantors of the Note described in this Deed of Trust or the other Security
Documents, including, without limitation, the Mortgaged Property, to the full
extent of such rights and remedies at law or in equity including, without
limitation, all such rights and remedies as set forth in this Deed of Trust, the
Note and the other Security Documents.
The foregoing provisions of this section shall not affect in any way
the validity or enforceability of any guaranty (whether of payment and/or
performance) given to Beneficiary in connection with the loan secured hereby or
constitute a waiver by Beneficiary of any rights to damages or other monetary
relief or any other remedy at law or equity against Grantor or its general
partner by reason of any one or more of the following: any actual loss,
liability, damage, cost or expense (including reasonable attorneys' fees but
expressly excluding consequential damages) incurred or to be incurred by
Beneficiary (a) from Grantor's failure to perform its
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obligation to properly account to Beneficiary as mortgagee for any proceeds of
insurance or awards of condemnation as required by this Deed of Trust, to
properly apply same in accordance with the terms and provisions of the Loan
Documents, or for the misapplication or misappropriation by Grantor of
condemnation or insurance proceeds, or any use by Grantor without the prior
written consent of Beneficiary of condemnation or insurance proceeds after an
Event of Default has occurred and is continuing (provided, however, that to the
extent condemnation and insurance proceeds are applied in accordance with this
Deed of Trust, Grantor will not be liable pursuant to the terms of the foregoing
clause); or (b) because of Grantor's attempts to interfere with Beneficiary's
rights under the Security Agreement or the Assignment of Leases and Rents
contained in this Deed of Trust (provided, however, that this provision is not
intended to prevent Grantor from exercising any of its rights or remedies under
law or equity); or (c) because Grantor misappropriates or fails to apply
security deposits, rents (advance, prepaid or otherwise), proceeds of rents and
other income of the Mortgaged Property, working capital reserves, any other
project reserves or project escrows towards the costs of maintenance and
operation of the Mortgaged Property and to payment of real estate taxes and
assessments, lien claims, insurance premiums and debt service to Beneficiary and
on other permitted indebtedness; provided, however, that to the extent Grantor
achieves a positive cash flow for any period after payment of debt service and
Mortgaged Property expenses attributable to such period, Grantor shall have no
personal liability for its failure to reserve or use any portion of such
positive cash flow to cover operating deficits or debt service expenses in later
periods (i.e., distributions to partners of Grantor are permissible during
periods of positive cash flow); or (d) from Grantor's failure to pay for any
loss, liability, damage, cost or expense (including attorneys' fees) incurred by
Beneficiary in connection with either (i) any violation, directive (threatened
or otherwise), order, consent decree, settlement, judgment or verdict arising
from the presence, deposit, storage, disposal, burial, dumping, injecting,
spilling, leaking or other placement or release in, on, over, under or from the
Mortgaged Property of asbestos or a "hazardous substance" as defined in 42
U.S.C. Section 9601, et seq. as amended from time to time, or any other toxic or
hazardous waste or waste products, or any Hazardous Materials, or (ii) any other
cost or expense related to the environmental condition of the Mortgaged Property
which results in a material diminution in value of the Mortgaged Property and
results in actual loss, liability, damage, cost or expense to Beneficiary or
which is otherwise covered by the indemnity set forth in the Indemnity
Agreement; or (e) from any fraud, material misrepresentation, material
misstatement and/or omission, or breach of material representations or
warranties (including, without limitation, those related to the environmental
condition of the Mortgaged Property and those related to Grantor's title to the
Mortgaged Property) of Grantor whether contained in the Loan Documents or other
writing in connection with the Loan evidenced by the Note and the other Loan
Documents; or (f) because of Grantor's failure or refusal to pay any Impositions
except to the extent being properly contested in accordance with the terms of
this Deed of Trust; or (g) because of any waste (ordinary wear and tear
excepted) committed by Grantor with respect to the Mortgaged Property; or (h)
from Grantor's failure to purchase and maintain the insurance required by the
terms of this Deed of Trust; or (i) any damages sustained by Beneficiary as a
result of claims made by tenants at the Mortgaged Property arising out of
matters occurring prior to the date on which Beneficiary succeeds to the
interest of Grantor under the leases, unless such tenants have agreed in writing
that Beneficiary is not responsible for such claims.
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In addition, in the event Grantor files any petition or commences any
proceeding pursuant to the United States Bankruptcy Reform Act of 1978, as
amended, or any successor statute or equivalent debtor relief law, or any such
proceeding is commenced or filing made with respect to Grantor by any member,
partner, or shareholder of Grantor or any affiliate of Grantor or any such
entity, or any other person or entity acting, directly or indirectly, in concert
with one or more of the foregoing, Grantor and Guarantor shall be personally
liable on a full recourse basis for all amounts payable pursuant to the Note and
the other Loan Documents and for all losses, costs and expenses of any nature,
including, without limitation, attorneys fees and disbursements, paid or
incurred by Beneficiary in connection with or arising out of such petition or
proceeding.
The foregoing limitations on personal liability shall in no way impair
or constitute a waiver of the validity of the Note, the indebtedness secured by
the Mortgaged Property or the liens on, security title to, or security interests
in the Mortgaged Property or the right of Beneficiary, as beneficiary or secured
party, to foreclose and/or enforce its rights with respect to the Mortgaged
Property after an Event of Default. Nothing herein shall be deemed to be a
waiver of any right which Beneficiary may have under the United States
Bankruptcy Code to file a claim for the full amount of the debt owing to
Beneficiary by Grantor or to require that all Mortgaged Property shall continue
to secure all of the indebtedness owing to Beneficiary in accordance with the
Loan Documents. Beneficiary may seek a judgment on the Note as part of judicial
proceedings to foreclose under this Deed of Trust or to foreclose pursuant to
any other instrument securing the indebtedness evidenced by the Note, or as a
prerequisite to any such foreclosure or to confirm any foreclosure or sale
pursuant to power of sale thereunder, and in the event any suit is brought on
the Note, or with respect to any indebtedness evidenced by the Note or secured
by this Deed of Trust or any judgment rendered in such judicial proceedings,
such judgment shall constitute a lien on and will be and can be enforced on and
against the Mortgaged Property conveyed by this Deed of Trust or any such other
security instruments and the rents, profits, issues, products and proceeds
thereof. Nothing herein stated shall impair the right of the Beneficiary to
accelerate the maturity of the Note (or to avail itself of any of its other
rights and impair the right of the Beneficiary to accelerate the maturity of the
Note (or to avail itself of any of its other rights and remedies) upon the
occurrence of an Event of Default hereunder or under any other instrument
securing or evidencing the indebtedness represented by the Note, nor shall
anything herein stated impair or be construed to impair the right of Beneficiary
to seek personal judgments and all rights and remedies to enforce same allowed
by law, jointly and severally against any guarantors to the extent allowed by
any applicable guarantees. The provisions set forth in this Section 9.24 are not
intended as any release or discharge of the Indebtedness, or any monies due
under the Note or under any other Loan Documents, but are intended as a
limitation on Beneficiary's right to sue for deficiency or personal judgment
except as provided in this section.
9.25 WAIVER OF JURY TRIAL. GRANTOR AND BENEFICIARY MUTUALLY,
EXPRESSLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY
FOR ANY PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS DEED
OF TRUST, IN THE INTEREST OF AVOIDING DELAYS AND EXPENSES ASSOCIATED
WITH JURY TRIALS.
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9.26 Partial Release of Collateral. The Mortgaged Property is comprised
of three (3) distinct Hotel Projects: Harvey Hotel-DFW (Irving, Texas); Crowne
Plaza Hotel (Addison, Texas); and Crowne Plaza Suites Hotel (Dallas, Texas)
(collectively, the "Hotel Projects", individually, a "Hotel Project"). In
connection with the sale of any of the Hotel Projects comprising the Mortgaged
Property, Beneficiary agrees that Grantor shall have the right to obtain a
release of the Mortgaged Property from the lien of this Deed of Trust upon
compliance with all of the following conditions:
(a) no Event of Default shall then exist under this Deed of
Trust or any other document evidencing or further securing any
indebtedness secured hereby;
(b) Beneficiary shall receive thirty (30) days prior written
notice from Grantor identifying the Hotel Project to be released;
(c) Grantee shall have received a cash payment (the "Release
Price") to reduce the Principal Balance (as defined in the Note) equal
to (i) the greater of (x) the Par Agreement amount set forth below for
the respective Hotel Projects and (y) 100% of the net sales proceeds
(i.e., gross sales price less reasonable and customary closing costs
approved in writing by Beneficiary) from the subject Hotel Project (but
in no event shall the Release Price exceed the Principal Balance of the
Note):
1. Harvey Hotel-DFW ($28,500,000.00);
2. Crowne Plaza Hotel (Addison) ($18,500,000.00); and
3. Crowne Plaza Suites Hotel (Dallas) ($16,000,000.00),
plus (ii) the pro rata portion of the prepayment premium, plus (iii)
all accrued interest on the portion of the Principal Balance being
prepaid.
(d) The debt service coverage for the remaining Hotel Projects
is no less than 2.00 to 1 at the greater of (i) 10% per annum or (ii)
the interest rate of the Note in effect at the time.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, Grantor has executed this Deed of Trust effective
as of the date first above written.
GRANTOR:
FELCOR HOTEL COMPANY II, LTD.,
a Texas limited partnership
By: FelCor Hotels GenPar II, L.L.C.,
a Delaware limited liability
company, its general partner
By: /s/ JOEL M. EASTMAN
------------------------------
Joel M. Eastman
Vice President
ACKNOWLEDGMENT
STATE OF TEXAS )
)
COUNTY OF DALLAS )
This instrument was acknowledged before me this __ day of March, 1999,
by the said Joel M. Eastman, Vice President of FelCor Hotels GenPar II, L.L.C.,
a Delaware limited liability company, general partner of FELCOR HOTEL COMPANY
II, LTD., a Texas limited partnership, on behalf of said limited partnership.
/s/ SOPHIE MALESKI
--------------------------------------
Notary Public in and for the State of
Texas
My Commission Expires:
11/21/00 Sophie Maleski
- ---------------------------- --------------------------------------
Printed Name of Notary
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