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Exhibit 10.168
WHEN RECORDED RETURN TO:
THOMPSON & KNIGHT L.L.P.
1700 PACIFIC AVENUE, SUITE 3300
DALLAS, TEXAS 75201
ATTENTION: JEANNE M. BURTON
NOTICE OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR
STRIKE ANY OF THE FOLLOWING INFORMATION FROM THIS INSTRUMENT BEFORE IT IS FILED
FOR RECORD IN THE PUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER'S
LICENSE NUMBER.
DEED OF TRUST, SECURITY AGREEMENT
AND ASSIGNMENT OF RENTS
LOAN NO. 753943
A. THIS DEED OF TRUST (as the same may from time to time hereafter be
modified, supplemented or amended, this "DEED OF TRUST") is made as of June 7,
2004, by INLAND WESTERN WATAUGA LIMITED PARTNERSHIP, an Illinois limited
partnership, having a principal place of business and post office address at
2901 Butterfield Road, Oak Brook, Illinois 60523, "BORROWER" ("Borrower" to be
construed as "Borrowers" if the context so requires), to S. P. Franzenburg, of
801 Grand Avenue, Des Moines, Iowa 50392-1360, ("TRUSTEE"), as Trustee for the
benefit of PRINCIPAL LIFE INSURANCE COMPANY, an Iowa corporation, having a
principal place of business and post office address c/o Principal Real Estate
Investors, LLC, at 801 Grand Avenue, Des Moines, Iowa 50392-1450, "LENDER".
WITNESSETH:
B. Borrower is justly indebted to Lender for money borrowed (the "LOAN")
in the original principal sum of Nineteen Million Six Hundred Seventeen Thousand
and 00/100 Dollars ($19,617,000.00) (the "LOAN AMOUNT") evidenced by Borrower's
secured promissory note of even date herewith, made payable and delivered to
Lender, (as may be modified, amended, supplemented, extended or consolidated in
writing and any note(s) issued in exchange therefor or replacement thereof) (the
"NOTE") in which Note Borrower promises to pay to Lender the Loan Amount,
together with all accrued and unpaid interest thereon, interest accrued at the
Default Rate (if any), Late Charges (if any), the Make Whole Premium (if any),
all loans and future advances made by Lender to Borrower, and all other
obligations and liabilities due or to become due to Lender pursuant to the Loan
Documents and all other amounts, sums and expenses paid by or payable to Lender
pursuant to the Loan Documents and the Environmental Indemnity (collectively the
"INDEBTEDNESS") until the Indebtedness has been paid, but in any event, the
unpaid balance (if any) remaining due on the Note shall be due and payable on
July 1, 2010, or such earlier date resulting from the acceleration of the
Indebtedness by Lender (the "MATURITY DATE"). Capitalized terms used herein and
not otherwise defined shall have those meanings given to them in the other Loan
Documents.
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C. NOW, THEREFORE, to secure the payment of the Indebtedness in
accordance with the terms and conditions of the Loan Documents, and all
extensions, modifications, and renewals thereof and the performance of the
covenants and agreements contained therein, and also to secure the payment of
any and all other Indebtedness, direct or contingent, that may now or hereafter
become owing from Borrower to Lender in connection with the Loan Documents, and
in consideration of the Loan Amount in hand paid, receipt of which is hereby
acknowledged, Borrower does by these presents grant, bargain, sell, assign and
convey unto Trustee, its successors and assigns forever, in trust with power of
sale that certain real estate located in the County of Tarrant, State of Texas
more particularly described in EXHIBIT A attached hereto and made a part hereof
(the "LAND"), which Land, together with the following described property, rights
and interests, is collectively referred to herein as the "PREMISES".
D. Together with Borrower's interest as lessor in and to all Leases and
all Rents, which are pledged primarily and on a parity with the Land and not
secondarily.
E. Together with all and singular the tenements, hereditaments,
easements, appurtenances, passages, waters, water courses, riparian rights,
sewer rights, rights in trade names, licenses (to the extent assignable),
permits (to the extent assignable), and contracts and all other rights,
liberties and privileges of any kind or character in any way now or hereafter
appertaining to the Land, including but not limited to, homestead and any other
claim at law or in equity as well as any after-acquired title, franchise or
license and the reversion and reversions and remainder and remainders thereof.
F. Together with the right in the case of foreclosure hereunder of the
encumbered property for Lender to take and use the name by which the buildings
and all other improvements situated on the Premises are commonly known and the
right to manage and operate the said buildings under any such name and variants
thereof.
G. Together with any and all buildings and improvements of every kind and
description now or hereafter erected or placed on the said Land and all of
Borrower's right, title and interest in all materials intended for construction,
reconstruction, alteration and repairs of such buildings and improvements now or
hereafter erected thereon, all of which materials shall be deemed to be included
within the Premises immediately upon the delivery thereof to the Premises, and
all fixtures now or hereafter owned by Borrower and attached to or contained in
and used in connection with the Premises including, but not limited to, all
machinery, motors, elevators, fittings, radiators, awnings, shades, screens, and
all plumbing, heating, lighting, ventilating, refrigerating, incinerating,
air-conditioning and sprinkler equipment and fixtures and appurtenances thereto;
and all items of furniture, furnishings, equipment and personal property owned
by Borrower used or useful in the operation of the Premises; and all renewals or
replacements of all of the aforesaid property owned by Borrower or articles in
substitution therefor, whether or not the same are or shall be attached to said
buildings or improvements in any manner (collectively, the "IMPROVEMENTS"); it
being mutually agreed, intended and declared that all the aforesaid property
owned by Borrower and placed by it on the Land or used in connection with the
operation or maintenance of the Premises shall, so far as permitted by law, be
deemed to form a part and parcel of the Land and for the purpose of this Deed of
Trust to be Land and covered by this Deed of Trust, and as to any of the
property aforesaid which does not form a part and parcel of the Land or does not
constitute a "fixture" (as such term is defined in the Uniform Commercial Code)
this Deed of Trust is hereby deemed to be, as well, a security
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agreement under the Uniform Commercial Code for the purpose of creating hereby a
security interest in such property which Borrower hereby grants to Lender as
secured party. Borrower authorizes Lender at any time until the Indebtedness is
paid in full, to prepare and file any and all Uniform Commercial Code financing
statements, amendments, assignments, terminations and the like, necessary to
create and/or maintain a prior security interest in such property all without
Borrower's execution of the same.
H. Together with all right, title and interest of Borrower, now or
hereafter acquired, in and to any and all strips and gores of land adjacent to
and used in connection with the Premises and all right, title and interest of
Borrower, now owned or hereafter acquired, in, to, over and under the ways,
streets, sidewalks and alleys adjoining the Premises.
I. Together with all funds now or hereafter held by Lender under any
escrow security agreement or under any of the terms hereof, including but not
limited to funds held under the provisions of paragraph 5 hereof, insurance
proceeds from all insurance policies required to be maintained by Borrower under
the Loan Documents (subject to the balance of the terms contained in this Deed
of Trust) and, subject to the provisions of paragraph 7 below, all awards,
decrees, proceeds, settlements or claims for damage now or hereafter made to or
for the benefit of Borrower by reason of any damage to, destruction of or taking
of the Premises or any part thereof, whether the same shall be made by reason of
the exercise of the right of eminent domain or by condemnation or otherwise (a
"TAKING").
J. TO HAVE AND TO HOLD the same unto Trustee, Trustee's successors and
substitutes, upon the trusts, covenants and agreements herein expressed.
K. Borrower represents that it has good and indefeasible fee simple title
to the portion of the Premises described in Exhibit A, which Premises are free
and clear of any liens or encumbrances except as set out in Exhibit B attached
hereto, and except for taxes which are not yet due or delinquent. Borrower shall
forever warrant and defend the title to the Premises against all claims and
demands of all persons whomsoever and will on demand execute any additional
instrument which may be required to give Trustee a valid first lien on all of
the Premises, subject to the "PERMITTED ENCUMBRANCES" set forth in Exhibit B.
L. Borrower further represents that (i) the Premises is not subject to
any casualty damage; (ii) Borrower has not received any written notice of any
eminent domain or condemnation proceeding affecting the Premises; and (iii) to
the best of Borrower's knowledge following due and diligent inquiry, there are
no actions, suits or proceedings pending, completed or threatened against or
affecting Borrower or any person or entity owning an interest (directly or
indirectly) in Borrower ("INTEREST OWNER(S)") or any property of Borrower or any
Interest Owner in any court or before any arbitrator of any kind or before or by
any governmental authority (whether local, state, federal or foreign) that,
individually or in the aggregate, could reasonably be expected by Lender to be
material to the transaction contemplated hereby.
M. Borrower further represents and warrants that as of the date hereof
and until the Indebtedness is paid in full: (i) Borrower is not and will not be
an "employee benefit plan" as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), which is subject to Title I
of ERISA; (ii) the assets of Borrower do not and will not constitute "plan
assets" of one or more such plans for purposes of Title I of ERISA; (iii)
Borrower is
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not and will not be a "governmental plan" within the meaning of Section 3(32) of
ERISA; (iv) transactions by or with Borrower are not and will not be subject to
state statutes applicable to Borrower regulating investments of and fiduciary
obligations with respect to governmental plans; (v) Borrower has made and will
continue to make all required contributions to all employee benefit plans, if
any, established for or on behalf of Borrower or to which Borrower is required
to contribute; (vi) Borrower has and will continue to administer each such plan,
if any, in accordance with its terms and the applicable provisions of ERISA and
any other federal or state law; and (vii) Borrower has not and will not permit
any liability under Sections 4201, 4243, 4062 or 4069 of Title IV of ERISA or
taxes or penalties relating to any employee benefit plan or multi-employer plan
to become delinquent or assessed, respectively, which would have a material
adverse effect upon (i) the business or the financial position or results of
operation of Borrower, (ii) the ability of Borrower to perform, or of lender to
enforce, any of the Loan Documents or Environmental Indemnity or (iii) the value
of the Premises.
BORROWER COVENANTS AND AGREES AS FOLLOWS:
1. Borrower shall:
(a) pay each item of Indebtedness secured by this Deed of Trust when
due according to the terms of the Loan Documents;
(b) pay a Late Charge on any payment of principal, interest, Make
Whole Premium or Indebtedness which is not paid on or before the
due date thereof to cover the expense involved in handling such
late payment according to the terms of the Loan Documents;
(c) pay on or before the due date thereof any indebtedness permitted
to be incurred by Borrower pursuant to the Loan Documents and any
other claims which could become a lien on the Premises (unless
otherwise specifically addressed in paragraph 1(e) hereof), and
upon request of Lender exhibit satisfactory evidence of the
discharge thereof;
(d) complete within a reasonable time, the construction of any
Improvements now or at any time in process of construction upon
the Land which are required to be performed by Borrower;
(e) manage, operate and maintain the Premises and keep the Premises,
including but not limited to, the Improvements, in good condition
and repair and free from mechanics' liens or other liens or
claims for liens, provided however, that Borrower may in good
faith, with reasonable diligence and upon written Notice to
Lender within twenty (20) days after Borrower has knowledge of
such lien or claim, contest the validity or amount of any such
lien or claim and defer payment and discharge thereof during the
pendency of such contest in the manner provided by law, provided
that (i) such contest may be made without the payment thereof;
(ii) such contest shall prevent the sale or forfeiture of the
Premises or any part thereof, or any interest therein, to satisfy
such lien or claim; (iii) Borrower shall have obtained a bond
over such lien or claim from a
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bonding company acceptable to Lender which has the effect of
removing such lien or collection of the claim or lien so
contested; and (iv) Borrower shall pay all costs and expenses
incidental to such contest; and further provided, that in the
event of a final, non-appealable ruling or adjudication adverse
to Borrower and provided the court of jurisdiction has not
granted a stay of the enforcement of the ruling or judgment,
Borrower shall promptly pay such claim or lien, shall indemnify
and hold Lender and the Premises harmless from any loss for
damage arising from such contest and shall take whatever action
necessary to prevent sale, forfeiture or any other loss or damage
to the Premises or to the Lender;
(f) comply, and cause each lessee or other user of the Premises to
comply, with all requirements of law and ordinance, and all rules
and regulations, now or hereafter enacted, by authorities having
jurisdiction of the Premises and the use thereof, including but
not limited to all covenants, conditions and restrictions of
record pertaining to the Premises, the Improvements, and the use
thereof (collectively, "LEGAL REQUIREMENTS");
(g) subject to the provisions of paragraph 6 hereof, promptly repair,
restore or rebuild any Improvements now or hereafter a part of
the Premises which may become damaged or be destroyed by any
cause whatsoever, so that upon completion of the repair,
restoration and rebuilding of such Improvements, there will be no
liens of any nature arising out of the construction and the
Premises will be of substantially the same character and quality
as it was prior to the damage or destruction;
(h) if other than a natural person, do all things necessary to
preserve and keep in full force and effect its existence,
franchises, rights and privileges under the laws of the state of
its formation and, if other than its state of formation, the
state where the Premises is located. Borrower shall notify Lender
at least thirty (30) days prior to (i) any relocation of
Borrower's principal place of business to a different state or
any change in Borrower's state of formation, and/or (ii) if
Borrower is an individual, any relocation of Borrower's principal
residence to a different state;
(i) do all things necessary to preserve and keep in full force and
effect Lender's title insurance coverage insuring the lien of
this Deed of Trust as a first and prior lien, subject only to the
Permitted Encumbrances stated in Exhibit B and any other
exceptions after the date of this Deed of Trust approved in
writing by Lender, including without limitation, delivering to
Lender not less than 30 days prior to the effective date of any
rate adjustment, modification or extension of the Note or any
other Loan Document, any new policy or endorsement which may be
reasonably required to assure Lender of such continuing coverage;
(j) execute any and all documents which may be required to perfect
the security interest granted by this Deed of Trust; and
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(k) remain a Single Purpose Entity (hereinafter defined).
2. Borrower shall not:
(a) except as required by applicable Legal Requirements, construct
any building or structure nor make any alteration or addition
(other than normal repair and maintenance) to (i) the roof or any
structural component of any Improvements on the Premises, or (ii)
the building operating systems, including but not limited to, the
mechanical, electrical, heating, cooling, or ventilation systems
(other than replacement with equal or better quality and
capacity), without the prior written consent of Lender not to be
unreasonably withheld;
(b) remove or demolish any material Improvements, or any portion
thereof, which at any time constitutes a part of the Premises.
Notwithstanding anything hereinabove to the contrary, Borrower
may construct, remove or demolish tenant improvements within the
then existing building(s) or other structures to the extent such
work is required solely under the terms of any Leases approved by
Lender provided (i) no Event of Default exists under the Loan
Documents; (ii) the work is completed on a timely basis, in a
good, workmanlike, lien free manner and in accordance with all
Legal Requirements, and (iii) such work does not negatively
affect the structural integrity of the Improvements or the value
of the Premises;
(c) cause or permit any change to be made in the general use of the
Premises without Lender's prior written consent;
(d) initiate any or acquiesce to a zoning reclassification or
material change in zoning without Lender's prior written consent.
Borrower shall use all reasonable efforts to contest any such
zoning reclassification or change;
(e) make or permit any use of the Premises that could with the
passage of time result in the creation of any right of use, or
any claim of adverse possession or easement on, to or against any
part of the Premises in favor of any person or entity or the
public;
(f) allow any of the following to occur (unless a Permitted
Transfer):
(i) a Transfer of all or any portion of the Premises or any
interest in the Premises;
(ii) a Transfer of any ownership interest in Borrower or any
entity which owns, directly or indirectly, an interest in
Borrower at any level of the ownership structure; or
(iii) in addition to (i) and (ii) above, if the Borrower is a
trust, or if a trust owns an interest, directly or
indirectly, in any entity which
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owns an interest in Borrower at any level of the
ownership structure, the addition, deletion or
substitution of a trustee of such trust.
If any of such events occur, it shall be null and void and shall
constitute an Event of Default under the Loan Documents.
It is understood and agreed that the Indebtedness evidenced by
the Note is personal to Borrower and in accepting the same Lender
has relied upon what it perceived as the willingness and ability
of Borrower to perform its obligations under the Loan Documents
and the Environmental Indemnity and as lessor under the Leases of
the Premises. Furthermore, Lender may consent to a Transfer and
expressly waive Borrower's covenants contained in this paragraph
2(f), in writing to Borrower; however any such consent and waiver
shall not constitute any consent or waiver of such covenants as
to any Transfer other than that for which the consent and waiver
was expressly granted. Furthermore, Lender's willingness to
consent to any Transfer and waive Borrower's covenants contained
in this paragraph 2(f), implies no standard of reasonableness in
determining whether or not such consent shall be granted and the
same may be based upon what Lender solely deems to be in its best
interest.
For purposes of the Loan Documents, the following terms shall
have the respective meanings set forth below:
"TRANSFER" or "TRANSFERRED" shall mean with respect to the
Premises, an interest in the Premises, or an ownership interest
or interest therein:
(i) a sale, assignment, transfer, conveyance or other
disposition (whether voluntary, involuntary or by
operation of law);
(ii) the creation, sufferance or granting of any lien,
encumbrance, security interest or collateral assignment
(whether voluntarily, involuntarily or by operation of
law), other than the lien hereof, the leases of the
Premises assigned to Lender, the Permitted Encumbrances,
the granting of a lien on a tenant's interest under any
Lease in accordance with the terms specifically set forth
therein, and those liens which Borrower is contesting in
accordance with the provisions of paragraph 1(e);
(iii) the issuance or other creation of ownership interests in
an entity;
(iv) the reconstitution or conversion from one entity to
another type of entity;
(v) a merger, consolidation, reorganization or any other
business combination; or
(vi) a conversion to or operation of all or any portion of the
Premises as a cooperative or condominium form of
ownership.
"PERMITTED TRANSFER" shall mean:
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(i) a minor (as determined by Lender) conveyance of an
interest in the Premises by Borrower, such as a utility
easement, and for which Lender has given its prior
written consent and imposed such conditions as Lender
deems advisable and appropriate;
(ii) a sale, assignment, transfer or conveyance of all or any
portion of the Premises or an interest in the Premises
for which Borrower has complied with all of the Property
Transfer Requirements; or
(iii) any of the following Transfers for which Borrower has
complied with all of the Ownership Transfer Requirements
as applicable and Lender has given its prior written
consent (and in connection with such consent, Lender may
impose any conditions it wishes in its sole discretion):
(A) a sale, assignment, transfer, or conveyance of an
ownership interest or interest therein;
(B) the issuance or other creation of ownership
interests in an entity;
(C) a reconstitution or conversion from one entity to
another type of entity;
(D) a merger, consolidation, reorganization or any other
business combination;
(iv) with at least thirty (30) days advance written notice,
transfers of ownership interests in Borrower and entities
owning interests in Borrower between Inland Western
Retail Real Estate Trust, Inc., a Maryland corporation
("IWRRET"), and its wholly owned affiliates for which
Borrower has complied with all of the Specific Transfer
Requirements - 1;
(v) with at least thirty (30) days advance written notice,
transfers of ownership interests in Borrower and/or
shares in entities owning interests in Borrower to
Qualified New Partners or Qualified New Members (as the
case may be) (hereinafter defined), for which Borrower
has complied with all of the Specific Transfer
Requirements - 2 (for purposes of this Permitted
Transfer, a "Qualified New Partner" or a Qualified New
Member" shall be defined as an institutional investor or
fund managed by an institutional investor having assets
of $100,000,000 or more);
(vi) with at least thirty (30) days advance written notice,
transfers of direct or indirect ownership interests in
Borrower and entities owning interests in Borrower and
IWRRET, and its wholly owned affiliates to a Qualified
Successor (hereinafter defined) and/or its wholly owned
affiliates for which Borrower has complied with all of
the Specific Transfer Requirements - 3 (for purposes of
this Permitted Transfer, a "Qualified Successor" shall be
defined as an entity with a tangible net worth of
$200,000,000 or more; a debt to equity ratio of 1.5 or
less; and management personnel experienced in the
ownership and management of retail properties similar to
the Premises); or
(vii) transfers of ownership interests in IWRRET.
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"PROPERTY TRANSFER REQUIREMENTS" are all of the following:
1. Prior review and approval of the proposed purchaser or
other transferee and the subject transaction by Lender,
at Lender's sole discretion. Review of the proposed
purchaser or other transferee and the subject transaction
shall encompass various factors, including, but not
limited to, the proposed purchaser's or other
transferee's creditworthiness, financial strength, and
real estate management and leasing expertise as well as
the proposed transaction's effect on the Premises, the
Borrower, and other security for the Loan;
2. Payment to Lender of an assumption fee equal to the
greater of: (a) one half of one percent (0.5%) of the
principal balance of the Note; or (b) $15,000.00;
provided, however, that Lender will require $15,000.00 of
such fee to be paid at the beginning of Lender's review
process, and such sum shall be nonrefundable and earned
upon receipt by Lender whether or not the transaction is
ultimately completed or Lender ultimately approves the
proposed purchaser or other transferee;
3. Receipt, at Borrower's expense, of a new standard loan
policy in a form approved by the insurance commissioner
of the state of Texas in the full amount of the Loan, in
form and by an issuer satisfactory to Lender, and which
insures this Deed of Trust to be a first and prior lien
subject only to those exceptions which were previously
approved by Lender and provides coverage against usury
and mechanic's liens. If usury coverage is not available,
Borrower shall provide, at Borrower's expense, a usury
opinion letter in form and substance and from counsel
acceptable to Lender;
4. Receipt by Lender of copies of all relevant information
and documentation relating to or required by Lender in
connection with the proposed transfer including but not
limited to (a) the organizational documents of the
proposed transferee and an opinion of counsel
satisfactory to Lender as to its due formation, valid
existence and authority to enter into and carry out the
proposed transaction as well as the proposed transferee's
compliance with its status as a Single Purpose Entity;
(b) the deeds or other instruments of transfer and
documents relating to the assignment and assumption of
Leases; (c) evidence of compliance with the insurance
requirements contained in the Loan Documents; and (d)
compliance with such other closing requirements as are
customarily imposed by Lender in connection with such
transactions;
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5. Execution, delivery, acknowledgment and recordation, as
applicable, of new, revised and/or replacement assumption
agreements, loan modification agreements, indemnification
agreements, escrow security or property reserves
agreements, security instruments, financing statements,
UCCs, new or revised letters of credit and/or guarantees
in form and substance satisfactory to Lender;
6. Payment of outside counsel fees and costs, other
applicable professional's fees and costs, taxes,
recording fees and the like, and any other fees and costs
incurred;
7. Receipt by Lender of 60 days advance written notice of
the proposed Transfer in question;
8. Receipt by Lender of a waiver from any tenant having a
right or option to purchase the Premises or any portion
thereof, waiving such right or option in form and
substance acceptable to Lender; and
9. At Lender's option, and if required by the procedures
promulgated by any rating agency(ies) associated with a
securitization transaction with respect to the Loan,
receipt by Lender of written evidence from such
agency(ies) to the effect that the proposed transfer will
not result in a re-qualification, reduction or withdrawal
of any rating in effect immediately prior to such
transfer issued in connection with the securitization
transaction.
"OWNERSHIP TRANSFER REQUIREMENTS" are all of the Property
Transfer Requirements which Lender deems appropriate in its
discretion, as well as a reasonable processing fee to be
determined by Lender; provided, however, that (i) with respect to
item 2 of the Property Transfer Requirements, the 0.5% component
of the fee shall be prorated (subject, however, to the $15,000
minimum) based on Lender's calculation of the effective
percentage interest in Borrower transferred, and (ii) item 3 of
the Property Transfer Requirements shall be required, at Lender's
discretion, only in the event of (A) a merger, consolidation,
reorganization or any other business combination, or (B) a
reconstitution or conversion from one entity to another type of
entity.
"SPECIFIC TRANSFER REQUIREMENTS - 1" are all of the following
which Borrower agrees to provide to Lender prior to each proposed
transfer: (i) a transfer fee of $2,000.00; (ii) all relevant
documentation and information related to the organization,
authority, and validity of the proposed ownership interest
purchaser, transferee and the transaction in general; (iii) all
documents and instruments of conveyance, transfer and assignment;
(iv) at Lender's discretion a reaffirmation of the obligations of
the Guarantor(s) under the Guaranty; and (v) evidence of payment
of all
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outside counsel fees, professional fees, title insurance fees, if
any, and any and all other fees, costs and expenses related to
the proposed transfer (provided that no assumption or transfer
fee other than the $2,000 fee stated in (i) above shall be
required).
"SPECIFIC TRANSFER REQUIREMENTS - 2" are all of the following
which Borrower agrees to provide to Lender prior to each proposed
transfer: IWRRET or a wholly owned affiliate thereof (i) remains
the sole general partner of the Borrower, (ii) (a) retains 51% or
more of the ownership interest in the Borrower, or (b) retains
ownership of 20% to 50% of the ownership interest in the Borrower
subject to Lender's review and approval in each instance of the
proposed transferee and the subject transaction; Lender's review
of the proposed transferee and the subject transaction shall
encompass various factors, including but not limited to,
transferee's creditworthiness, financial strength, and real
estate management expertise, as well as the proposed
transaction's effect on the Premises, Borrower and the other
security for the Loan, and (iii) otherwise retains operational
and management control of Borrower as determined by Lender, and
further provided Borrower provides Lender each of the following
items prior to each proposed transfer: (a) a transfer fee equal
to the greater of $5,000.00 or the product of the percentage
ownership interest in Borrower to be transferred multiplied by
one percent (1%) of the outstanding principal balance of the
Loan; (b) all relevant documentation and information related to
the organization, authority, and validity of the proposed
ownership interest purchaser, transferee and the transaction in
general; (c) all documents and instruments of conveyance,
transfer and assignment; (d) a reaffirmation of the obligations
of the Guarantor(s) under the Guaranty; and (e) evidence of
payment of all outside counsel fees, professional fees, title
insurance fees and any and all other fees, costs and expenses
related to the proposed transfer (provided that no assumption or
transfer fee other than the $5,000.00 fee stated in (a) above
shall be required).
"SPECIFIC TRANSFER REQUIREMENTS - 3" are all of the following
which Borrower agrees to provide to Lender prior to each proposed
transfer: (i) said transfers are made to accommodate either the
merger of IWRRET with the Qualified Successor or the sale of a
majority of IWRRET's assets to the Qualified Successor; (ii) the
Qualified Successor retains direct or indirect ownership of 51%
or more of the ownership interests in the Borrower; (iii) the
Qualified Successor or its wholly owned affiliate remains the
sole general partner of Borrower; and (iv) the Qualified
Successor otherwise retains operational and management control of
Borrower as determined by Lender, and further provided, Borrower
provides Lender with each of the following items prior to the
proposed transfer: (a) a transfer fee of $10,000.00; (b) all
relevant documentation and information related to the
organization, authority, and validity of the proposed ownership
interest purchaser, transferee and the transaction in general;
(c) all documents and instruments of conveyance, transfer and
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assignment; (d) a reaffirmation of the obligations of the
Guarantor(s) under the Guaranty or assumption thereof by an
individual(s) or entity(ies) acceptable to Lender in its sole
discretion; and (e) evidence of payment of all outside counsel
fees, professional fees, title insurance fees and any and all
other fees, costs and expenses related to the proposed transfer
(provided that no assumption or transfer fee other than the
$10,000.00 fee stated in (a) above shall be required).
3. (a) Borrower shall pay or cause to be paid when due and before
any penalty attaches or interest accrues all general taxes,
special taxes, assessments (including assessments for benefits
from public works or improvements whenever begun or completed),
utility charges, water charges, sewer service charges, common
area maintenance charges, if any, vault or space charges and all
other like charges against or affecting the Premises or against
any property or equipment located on the Premises, or which might
become a lien on the Premises, and shall, within 10 days
following Lender's request, furnish to Lender a duplicate receipt
of such payment. If any such tax, assessment or charge may
legally be paid in installments, Borrower may, at its option, pay
such tax, assessment or charge in installments.
(b) If Borrower desires to contest any tax, assessment or charge
relating to the Premises, Borrower may do so by paying the same
in full, under protest, in the manner provided by law; provided,
however, that
(i) if contest of any tax, assessment or charge may be made
without the payment thereof, and
(ii) such contest shall have the effect of preventing the
collection of the tax, assessment or charge so contested
and the sale or forfeiture of the Premises or any part
thereof or any interest therein to satisfy the same,
then Borrower may in its discretion and upon the giving of
written notice to Lender of its intended action and upon the
furnishing to Lender of such security or bond as Lender may
require, contest any such tax, assessment or charge in good faith
and in the manner provided by law. All costs and expenses
incidental to such contest shall be paid by Borrower. In the
event of a ruling or adjudication adverse to Borrower, Borrower
shall promptly pay such tax, assessment or charge. Borrower shall
indemnify and save harmless the Lender and the Premises from any
loss or damage arising from any such contest and shall, if
necessary to prevent sale, forfeiture or any other loss or damage
to the Premises or to Lender, pay such tax, assessment or charge
or take whatever action is necessary to prevent any sale,
forfeiture or loss.
4. (a) Borrower shall at all times keep or cause to be kept in force
(i) property insurance insuring all Improvements which now are or
hereafter become a
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part of the Premises for perils covered by a causes of
loss-special form insurance policy, including coverage against
terrorism containing both replacement cost and agreed amount
endorsements or equivalent coverage; (ii) commercial general
liability insurance naming Lender as an additional insured
protecting Borrower and Lender against liability for bodily
injury or property damage occurring in, on or adjacent to the
Premises in commercially reasonable amounts; (iii) boiler and
machinery insurance if the property has a boiler or is an office
building; (iv) rental value insurance for the perils specified
herein for one hundred percent (100%) of the Rents (including
operating expenses, real estate taxes, assessments and insurance
costs which are lessee's liability) for a period of twelve (12)
months; (v) builders risk insurance during all periods of
construction; and (vi) insurance against all other hazards as may
be reasonably required by Lender, including, without limitation,
insurance against loss or damage by flood. Notwithstanding
anything herein above to the contrary, if neither: (i) property
insurance without an exclusion for terrorism, terrorist acts or
similar perils ("Terrorism") nor; (ii) a separate policy insuring
specifically against Terrorism is available at a cost which is in
Lender's opinion is commercially reasonable, taking into
consideration, among other things: (a) how properties similar in
type, size, quality and location are insured with respect to
Terrorism; and (b) the amount of coverage, premium and deductible
applicable to such insurance, then Lender agrees to waive the
requirement to provide insurance covering Terrorism until such
coverage again becomes available at a cost, which in Lender's
opinion is commercially reasonable.
(b) All insurance (including deductibles and exclusions) shall be in
form, content and amounts approved by Lender and written by an
insurance company or companies approved by Lender and rated A-,
class size VIII or better in the most current issue of Best's
Insurance Reports and which is licensed to do business in the
state in which the Premises are located or a governmental agency
or instrumentality approved by Lender. The policies for such
insurance shall have attached thereto standard mortgagee clauses
in favor of and permitting Lender to collect any and all proceeds
payable thereunder and shall include a 30 day (except for
nonpayment of premium, in which case, a 10 day) notice of
cancellation clause in favor of Lender. All certificates of
insurance (or policies if requested by Lender) shall be delivered
to and held by Lender as further security for the payment of the
Note and any other obligations arising under the Loan Documents,
with evidence of renewal coverage delivered to Lender at least 15
days before the expiration date of any policy. Borrower shall not
carry or permit to be carried separate insurance, concurrent in
kind or form and contributing in the event of loss, with any
insurance required in the Loan Documents.
5. (a) Upon the occurrence of an Event of Default and upon request of
Lender, Borrower shall deposit with and pay to Lender, on the
Closing Date and/or on each payment date specified in the Note,
sums calculated by Lender for
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payment of the following as they become due and payable: (i) the
estimated taxes and assessments assessed or levied against the
Premises, and (ii) the estimated premiums for insurance required
by the Loan Documents, excluding commercial general liability
insurance. Lender shall use such deposits to pay the taxes,
assessments and premiums when the same become due. Borrower shall
procure and deliver to Lender, in advance, statements for such
charges. If the total payments made by Borrower under this
paragraph exceed the amount of payments actually made by Lender
for taxes, assessments and insurance premiums, such excess shall
be credited by Lender on subsequent deposits to be made by
Borrower. If, however, the deposits are insufficient to pay the
taxes, assessments and insurance premiums when the same shall be
due and payable, Borrower will pay to Lender any amount necessary
to make up the deficiency, five (5) business days before the date
when payment of such taxes, assessments and insurance premiums
shall be due. If at any time Borrower shall tender to Lender, in
accordance with the provisions of the Note secured by this Deed
of Trust, full payment of the entire Indebtedness represented
thereby, Lender shall, in computing the amount of such
Indebtedness, credit to the account of Borrower any balance
remaining in the funds accumulated and held by Lender under the
provisions of this paragraph. If there is an Event of Default
resulting in a public sale of the Premises, or if Lender
otherwise acquires the Premises after an Event of Default, Lender
shall apply, at the time of commencement of such proceedings, or
at the time the Premises is otherwise acquired, the balance then
remaining in the funds accumulated under this paragraph as a
credit toward any delinquent or accrued taxes and then in such
priority as Lender elects to the other Indebtedness.
(b) Any funds held under this paragraph shall not constitute any
deposit or account of the Borrower or moneys to which the
Borrower is entitled upon demand, or upon the mere passage of
time, or sums to which Borrower is entitled to any interest or
crediting of interest by virtue of Lender's mere possession of
such deposits. Lender shall not be required to segregate such
deposits and may hold such deposits in its general account or any
other account and may commingle such deposits with any other
moneys of Lender or moneys which Lender is holding on behalf of
any other person or entity.
6. In the event of any damage to or destruction of the Premises, or any
part thereof:
(a) Borrower will immediately notify Lender thereof in the manner
provided in this Deed of Trust for the giving of notices. Lender
shall have the right (which may be waived by Lender in writing)
to settle and adjust any claim under such insurance policies
required to be maintained by Borrower. In all circumstances, the
proceeds thereof shall be paid to Lender and Lender is authorized
to collect and to give receipts therefor. Borrower agrees and
acknowledges that such proceeds shall be held by Lender without
any allowance of interest and that in any bankruptcy proceeding
of Borrower,
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all such proceeds shall be deemed to be "Cash Collateral" as that
term is defined in Section 363 of the Bankruptcy Code. Provided
that no Event of Default exists, Borrower shall have the right to
participate in any settlement or adjustment; provided, however,
that any settlement or adjustment shall be subject to the written
approval of Lender, not to be unreasonably withheld.
(b) Such proceeds, after deducting therefrom any reasonable expenses
incurred by Lender in the collection thereof (including but not
limited to reasonable attorneys' fees and costs), shall be
applied by Lender to pay the Indebtedness secured hereby
including, but not limited to the Make Whole Premium, whether or
not then due and payable, provided, however, that if no Event of
Default exists at the time of such application, no Make Whole
Premium shall be due.
Notwithstanding anything hereinabove to the contrary,
(i) in the event the casualty occurs more than six (6) months
prior to the Maturity Date and no Event of Default
exists, Lender shall apply such proceeds as outlined
below; provided, further, that Lender's rights in this
subparagraph are subject to Borrower's rights to use such
proceeds for rebuilding and restoring the buildings and
improvements as may be required or permitted by law in
effect at the time of the loss.
(A) If the aggregate amount of such proceeds is less
than $250,000, Lender shall pay such proceeds
directly to Borrower, to be held in trust for Lender
and applied to the cost of rebuilding and restoring
the Premises.
(B) If the aggregate amount of such proceeds equals or
exceeds $250,000 Lender shall disburse such amounts
of the proceeds as Lender reasonably deems necessary
for the repair or replacement of the Premises,
subject to the conditions set forth in paragraph
6(c) below.
(ii) in the event (x) an Event of Default exists, or (y) the
casualty occurs during the last six (6) months prior to
the Maturity Date and Lender determines that the repair
and restoration of such casualty cannot be completed
prior to the Maturity Date, or (z) the conditions set
forth in paragraph 6(c) are not met, then Lender, in its
sole and absolute discretion may either:
(A) declare the entire Indebtedness to be immediately
due and payable, provided, however, that if no Event
of Default exists, no Make Whole Premium shall be
due. All proceeds shall be applied toward payment of
the Indebtedness in such priority as Lender elects;
or
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(B) disburse such proceeds as Lender reasonably deems
necessary for the repair or replacement of the
Premises subject to those conditions set forth in
paragraph 6(c) which Lender in its sole and absolute
discretion may require.
(c) (i) In the event that Borrower is to be reimbursed out of the
insurance proceeds or out of any award or payment
received with respect to a Taking, Lender shall from time
to time make available such proceeds, subject to the
following conditions: (a) there continues to exist no
Event of Default; (b) the delivery to Lender of
satisfactory evidence of the estimated cost of completion
of such repair and restoration work and any architect's
certificates, waivers of lien, contractor's sworn
statements, and other evidence of cost and of payment and
of the continued priority of the lien hereof over any
potential liens of mechanics and materialmen (including,
without limitation, title policy endorsements) as Lender
may reasonably require and approve; (c) the time required
to complete the repair and restoration work and for the
income from the Premises to return to the level it was
prior to the loss will not exceed the coverage period of
the rental value insurance required hereunder; (d) the
annual net cash flow (annual net operating income after
deduction for tenant improvements, leasing commissions,
annual replacement reserves, and a management fee) shall
equal or exceed 1.5 times the annual debt service on the
Note. Only net operating income from approved executed
Leases in effect on the Premises, having at least three
(3) years remaining prior to the expiration of their
term, with no uncured defaults, shall be used in Lender's
determination of the annual net cash flow; (e) Lender
approves the plans and specifications of such work before
such work is commenced if the estimated cost of
rebuilding and restoration exceeds 25% of the
Indebtedness or involves any structural changes or
modifications. If said plans and specifications
substantially comply with those previously approved by
Lender, Lender's approval shall not be unreasonably
withheld; (f) if the amount of any insurance proceeds,
award or other payment is insufficient to cover the cost
of restoring and rebuilding the Premises, Borrower shall
pay such cost in excess of such proceeds, award or other
payment before being entitled to reimbursement out of
such funds; (g) Borrower pays to Lender a non-refundable
processing fee equal to the greater of $5,000.00 or .25%
of the amount of such proceeds within sixty (60) days of
the occurrence of any such damage or destruction and
before Lender disburses any proceeds; and (h) such other
conditions to such disbursements, in Lender's reasonable
discretion, as would be customarily required by a
construction lender doing business in the area where the
Premises is located or which are otherwise required by
any rating agency rating a securitization transaction
with respect to the Loan.
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(ii) No payment made by Lender prior to the final completion
of the repair or restoration work shall, together with
all payments theretofore made, exceed 90% of the cost of
such work performed to the time of payment, and at all
times the undisbursed balance of said proceeds shall be
at least sufficient to pay for the cost of completion of
such work free and clear of all liens. Any proceeds
remaining after payment of the cost of rebuilding and
restoration shall, at the option of Lender, either be (a)
applied in reduction of the Indebtedness secured hereby,
provided, however, that if no Event of Default exists at
the time of such application, no Make Whole Premium shall
be due, or (b) paid to Borrower.
(iii) Repair and restoration of the Premises shall be commenced
promptly after the occurrence of the loss and shall be
prosecuted to completion diligently, and the Premises
shall be so restored and rebuilt to substantially the
same character and quality as prior to such damage and
destruction and shall comply with all Legal Requirements.
(d) Should such damage or destruction occur after foreclosure or sale
proceedings have been instituted, the proceeds of any such
insurance policy or policies, if not applied in rebuilding or
restoration of the Improvements, shall be used to pay (i) the
Indebtedness then due and owing in the event of a non-judicial
sale in such priority as Lender elects, or (ii) the amount due in
accordance with any decree of foreclosure or deficiency judgment
that may be entered in connection with such proceedings, and the
balance, if any, shall be paid to the owner of the equity of
redemption if it shall then be entitled to the same, or otherwise
as any court having jurisdiction may direct.
7. In the event of the commencement of a Taking affecting the Premises:
(a) Borrower shall notify Lender thereof in the manner provided in
this Deed of Trust for the giving of notices. Lender may
participate in such proceeding, and Borrower shall deliver to
Lender all documents requested by it to permit such
participation.
(b) Borrower shall cause the proceeds of any award or other payment
made relating to a Taking, to be paid directly to Lender. Lender,
in its sole and absolute discretion: (i) may apply all such
proceeds to pay the Indebtedness in such priority as Lender
elects, provided however, that if no Event of Default exists at
the time of such application no Make Whole Premium shall be due;
or (ii) subject to and in accordance with the provisions set
forth in paragraph 6(c) above, may disburse such amounts of the
proceeds as Lender reasonably deems necessary for the repair or
replacement of the Premises.
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Notwithstanding anything herein above to the contrary, provided no
Event of Default exists, Lender agrees to disburse the proceeds
received from any Inconsequential Taking, as hereinafter defined, to
Borrower for the repair and/or replacement of the Premises. An
Inconsequential Taking shall be a Taking which (i) results in less
than $250,000 in proceeds; (ii) does not, in Lender's determination,
materially or adversely affect the Improvements, parking, access,
ingress, egress or use of the Premises; and (iii) does not trigger any
rights or options of tenants under the Leases.
8. If by the laws of the United States of America or of any state or
governmental subdivision having jurisdiction over Borrower or of the
Premises or of the Loan evidenced by the Loan Documents or any
amendments or modifications thereof, any tax or fee is due or becomes
due or is imposed upon Lender in respect of the issuance of the Note
hereby secured or the making, recording and registration of this Deed
of Trust or otherwise in connection with the Loan Documents, the
Environmental Indemnity or the Loan, except for Lender's income or
franchise tax, to the extent permitted by applicable law Borrower
covenants and agrees to pay such tax or fee in the manner required by
such law and to hold harmless and indemnify Trustee and Lender, their
successors and assigns, against any liability incurred by reason of
the imposition of any such tax or fee.
9. (a) Upon the occurrence of any Event of Default, Lender may, but need
not, make any payment or perform any act herein required of
Borrower, in any form and manner deemed expedient and may, but
need not, make full or partial payments of principal or interest
on prior encumbrances, if any, and purchase, discharge,
compromise or settle any tax lien or other prior lien or title or
claim thereof, or redeem from any tax sale or forfeiture
affecting said Premises, or contest any tax or assessment. All
moneys paid for any of the purposes herein authorized and all
reasonable expenses paid or incurred in connection therewith,
including but not limited to, reasonable attorneys' fees and
costs and reasonable attorneys' fees and costs on appeal, and any
other money advanced by Lender to protect the Premises and the
lien hereof, shall be so much additional Indebtedness secured
hereby and shall become immediately due and payable without
notice and with interest thereon at the Default Rate from the
date of expenditure or advance until paid.
(b) In making any payment hereby authorized relating to taxes or
assessments or for the purchase, discharge, compromise or
settlement of any prior lien, Lender may make such payment
according to any bill, statement or estimate secured from the
appropriate public office without inquiry into the accuracy
thereof or into the validity of any tax, assessment, sale,
forfeiture, tax lien or title or claim thereof or without inquiry
as to the validity or amount of any claim for lien which may be
asserted.
10. If one or more of the following events (herein called an "EVENT OF
DEFAULT" or "EVENTS OF DEFAULT" as the context so requires) shall have
occurred:
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(a) failure to pay when due any principal, interest, Make Whole
Premium or other Indebtedness, utilities, taxes or assessments or
insurance premiums required pursuant to the Loan Documents or the
Environmental Indemnity, and such failure shall have continued
for 5 days as to payment of any principal, interest or taxes or
assessments, or insurance premiums or for 5 days after written
notice specifying such default is given by Lender to Borrower as
to payment of any Make Whole Premium; or
(b) Borrower, Interest Owner or any guarantor voluntarily brings or
acquiesces to any of the following: (A) any action for
dissolution, act of dissolution or dissolution or the like of
Borrower, Interest Owner or any guarantor under the Federal
Bankruptcy Code as now or hereafter constituted; (B) the filing
of a petition or answer proposing the adjudication of Borrower,
Interest Owner or any guarantor as a bankrupt or its
reorganization or arrangement, or any composition, readjustment,
liquidation, dissolution or similar relief with respect to it
pursuant to any present or future federal or state bankruptcy or
similar law; or (C) the appointment by order of a court of
competent jurisdiction of a receiver, trustee or liquidator of
the Premises or any part thereof or of Borrower, Interest Owner
or any guarantor or of substantially all of the assets of
Borrower, Interest Owner or any guarantor; or
(c) one or more of the items set forth in paragraph 10(b) above occur
which were either not (i) voluntarily brought by Borrower,
Interest Owner or any guarantor or (ii) acquiesced in by
Borrower, Interest Owner or any guarantor, and which are not
discharged or dismissed within 90 days after the action, filing
or appointment, as the case may be; or
With respect to the matters in (b) and (c) above for an Interest
Owner only, no Event of Default shall occur until an interested
party or Interest Owner asserts a claim or right against Borrower
or the Premises which delays or otherwise affects Lender's
rights, remedies, or interests granted under the Loan Documents
(whether or not such assertion is successful).
(d) with respect to the matters not described in the other
subparagraphs of this paragraph 10, failure to duly observe or
perform any covenant, condition or agreement of the Borrower or
any guarantor contained in this Deed of Trust, the Guaranty, the
Note or the Assignment of Leases from Borrower to Lender or in
any other instrument or agreement which evidences or secures the
Loan (the "LOAN DOCUMENTS"), or in the Environmental Indemnity
and such failure shall have continued for 30 days after Notice
specifying such failure is given by Lender to Borrower; or
If any failure to observe or perform under (d) above shall be of
such nature that it cannot be cured or remedied within 30 days,
Borrower shall be entitled to a reasonable period of time to cure
or remedy such failure (not to exceed 90 days following the
giving of Notice), provided Borrower commences the cure or remedy
thereof within the 30 day period following
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the giving of Notice and thereafter proceeds with diligence, as
determined by Lender, to complete such cure or remedy.
(e) the failure of Borrower to duly observe or perform any of the
covenants, conditions and agreements of the Borrower contained in
paragraph 2(f) of this Deed of Trust; or
(f) any representation when made by or on behalf of Borrower,
Interest Owner or any guarantor regarding the Premises, the
making or delivery of any of the Loan Documents or the
Environmental Indemnity or in any material written information
provided by or on behalf of Borrower, Interest Owner or any
guarantor in connection with the Loan shall prove to be untrue or
inaccurate in any material respect; or
(g) the failure of Borrower to give Notice to Lender within 90 days
after the death of any individual who is personally liable for
any obligation under the Loan Documents or the Environmental
Indemnity, as Borrower, indemnitor or guarantor, whether or not
such individual had executed the Note or this Deed of Trust; or
(h) subject to the provisions of paragraph 2(f), the failure of
Borrower to provide Lender with an assumption agreement in form
and substance and executed by a person(s) or entity(ies)
acceptable to Lender in its sole discretion to assume the
obligations of any deceased individual who is personally liable
for any obligation under the Loan Documents or the Environmental
Indemnity, as Borrower, indemnitor or guarantor, whether or not
such individual had executed the Note or this Deed of Trust, and
such failure shall have continued for 90 days after the death of
such individual; or
(i) the failure of Borrower to remain a Single Purpose Entity;
then, in each and every such case, the whole of said principal sum
hereby secured shall, at the option of the Lender and without further
notice to Borrower, become immediately due and payable together with
accrued interest thereon, a Make Whole Premium calculated in
accordance with the provisions of the Loan Documents and all other
Indebtedness, and whether or not Lender has exercised said option,
interest shall accrue on the entire principal balance and any interest
or Make Whole Premium or other Indebtedness then due, at the Default
Rate until fully paid or if Lender has not exercised said option, for
the duration of any Event of Default. As used in this Deed of Trust,
"SINGLE PURPOSE ENTITY" means a corporation, limited or general
partnership, limited liability company, or business trust which, at
all times until the Indebtedness is paid in full (i) will be organized
solely for the purpose of owning the Premises, (ii) will not engage in
any business unrelated to the ownership of the Premises, (iii) will
not have any assets other than those related to the Premises, (iv)
will not engage in, seek or consent to any dissolution, winding up,
liquidation, consolidation or merger, and, except as otherwise
expressly permitted by the Loan Documents, will not engage in, seek or
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consent to any asset sale, transfer of partnership, membership,
shareholder, beneficial interests, or amendment of its limited
partnership agreement, articles of incorporation, articles of
organization, certificate of formation, operating agreement, trust
agreement, or trust certificate (as applicable), (v) will not fail to
correct any known misunderstanding regarding the separate identity of
such Entity, (vi) without the unanimous consent of all of the
partners, directors, members, beneficial owners and trustees, as
applicable, will not with respect to itself or to any other Entity in
which it has a direct or indirect legal or beneficial ownership
interest (a) file a bankruptcy, insolvency or reorganization petition
or otherwise institute insolvency proceedings or otherwise seek any
relief under any laws relating to the relief from debts or the
protection of debtors generally; (b) seek or consent to the
appointment of a receiver, liquidator, assignee, trustee,
sequestrator, custodian or any similar official for such Entity or all
or any portion of such Entity's properties; (c) make any assignment
for the benefit of such Entity's creditors; or (d) take any action
that might cause such Entity to become insolvent, (vii) will maintain
its accounts, books and records separate from any other person or
Entity, (viii) will maintain its books, records, resolutions and
agreements as official records, (ix) has not commingled and will not
commingle its funds or assets with those of any other person or
Entity, (x) has held and will hold its assets in its own name, (xi)
will conduct its business in its name, (xii) will maintain its
financial statements, accounting records and other Entity documents
separate from any other person or Entity, (xiii) will pay its own
liabilities out of its own funds and assets, (xiv) will observe all
corporate, limited liability company and partnership formalities, as
applicable, (xv) has maintained and will maintain an arms-length
relationship with its Affiliates, (xvi) if such Entity owns the
Premises, will have no indebtedness other than the Indebtedness and
commercially reasonable unsecured trade payables in the ordinary
course of business relating to the ownership and operation of the
Premises which are paid within sixty (60) days of the date incurred,
(xvii) will not assume or guarantee or become obligated for the debts
of any other person or Entity or hold out its credit as being
available to satisfy the obligations of any other person or Entity,
except for the Indebtedness, (xviii) will not acquire obligations or
securities of its partners, members, trustees, beneficial owners or
shareholders, (xix) will allocate fairly and reasonably shared
expenses, including, without limitation, shared office space and uses
separate stationery, invoices and checks, (xx) will not pledge its
assets for the benefit of any other person or Entity, (xxi) will hold
itself out and identify itself as a separate and distinct Entity under
its own name and not as a division or part of any other person or
Entity, (xxii) will not make loans to any person or Entity, (xxiii)
will not identify its partners, members, shareholders, trustees,
beneficiaries or any Affiliates of any of them as a division or part
of it, (xxiv) will not enter into or be a party to, any transaction
with its partners, members, shareholders, beneficiaries, trustees or
its Affiliates except in the ordinary course of its business and on
terms which are intrinsically fair and are no less favorable to it
than would be obtained in a comparable arms-length transaction with an
unrelated third party, (xxv) will pay the salaries of its own
employees from its own funds, (xxvi) will maintain adequate capital in
light of its contemplated business operations, (xxvii) if such Entity
is a limited liability
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<Page>
company, limited partnership, or business trust then such Entity shall
continue (and not dissolve) for so long as a solvent managing member,
general partner, or trustee, as applicable, exists and such Entity's
organizational documents shall contain such provision.
11. Borrower agrees that if Lender accelerates the whole or any part of
the principal sum hereby secured after the occurrence of an Event of
Default, or applies any proceeds pursuant to the provisions hereof,
Borrower waives any right to prepay the principal sum hereby secured
in whole or in part without premium and agrees to pay, as yield
maintenance protection and not as a penalty, a "MAKE WHOLE PREMIUM".
However, in the event any proceeds from a casualty or Taking of the
Premises are applied to reduce the principal balance under the Note,
no Make Whole Premium shall be due so long as no Event of Default
exists at the time of such application. The Make Whole Premium shall
be the lesser of (i) the maximum amount which is allowable under Texas
law limiting the amount of interest which may be contracted for,
charged or received, after considering all other amounts constituting
or deemed to constitute interest, and (ii) the greater of one percent
(1%) of the principal amount to be prepaid or a premium calculated as
follows:
(a) Determine the "REINVESTMENT YIELD." The Reinvestment Yield will
be equal to the yield on the U.S. Treasury Issue ("PRIMARY
ISSUE")* published one week prior to the date of prepayment and
converted to an equivalent monthly compounded nominal yield.
At this time there is not a U.S. Treasury Issue for this
prepayment period. At the time of prepayment, Lender shall select
in its sole and absolute discretion a U.S. Treasury Issue with
similar remaining time to the Maturity Date.
(b) Calculate the "PRESENT VALUE OF THE LOAN." The Present Value of
the Loan is the present value of the payments to be made in
accordance with the Note (all installment payments and any
remaining payment due on the Maturity Date) discounted at the
Reinvestment Yield for the number of months remaining from the
date of prepayment to the Maturity Date. In the event of a
partial prepayment as a result of the aforementioned application
of proceeds, the Present Value of the Loan shall be calculated in
accordance with the preceding sentence multiplied by the fraction
which results from dividing the amount of the prepaid proceeds by
the principal balance immediately prior to prepayment.
(c) Subtract the amount of the prepaid proceeds from the Present
Value of the Loan as of the date of prepayment. Any resulting
positive differential shall be the premium.
Notwithstanding anything herein to the contrary, during the last 90
days prior to the Maturity Date, the Make Whole Premium shall not be
subject to the one
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percent (1%) minimum and shall be calculated only as provided in (a)
through (c) above.
12. Upon the occurrence of an Event of Default, Lender shall have the
option of declaring all Indebtedness in its entirety to be immediately
due and payable, and the liens and security interests evidenced hereby
shall be subject to foreclosure in any manner provided for herein (to
the extent not inconsistent with applicable law) or provided for by
law, as Lender may elect.
13. Upon the occurrence of an Event of Default, Trustee, Trustee's
successor or substitute, is authorized and empowered and it shall be
Trustee's special duty at the request of Lender to sell the Premises
or any part thereof situated in the State of Texas at the courthouse
of any county in the State of Texas in which any part of the Premises
is situated, at public auction to the highest bidder for cash. The
sale shall take place between the hours of 10 o'clock a.m. and 4
o'clock p.m. on the first Tuesday in any month, at such area of the
courthouse as shall be designated from time to time by the
commissioners court of the specified county (or, if not so designated
by the commissioners court, at such other area in the courthouse as
may be provided in the notice of sale hereinafter described) 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 Trustee hereunder
may be as an entirety or in such parcels as Lender 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 Trustee of less than the whole of the
Premises shall not exhaust the power of sale herein granted, and
Trustee is specifically empowered to make successive sale or sales
under such power until the whole of the Premises shall be sold; and,
if the proceeds of such sale of less than the whole of the Premises
shall be less than the aggregate of the Indebtedness and the expense
of executing this trust as provided herein, this Deed of Trust and the
lien hereof shall remain in full force and effect as to the unsold
portion of the Premises just as though no sale had been made;
provided, however, that Borrower shall never have any right to require
the sale of less than the whole of the Premises, but Lender shall have
the right, at its sole election, to request Trustee to sell less than
the whole of the Premises. After each sale, Trustee shall make to the
purchaser or purchasers at such sale good and sufficient conveyances
in the name of Borrower, conveying the property so sold to the
purchaser or purchasers in fee simple with general warranty of title,
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 Trustee or Trustee's
substitute or successor, and such power of sale may be exercised from
time to time as many times as Lender may deem necessary until all of
the Premises 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 judgment of Lender, such sale shall not exhaust the power of
sale hereunder and Lender shall have the right to cause a subsequent
sale or sales to be made hereunder. If an Event of Default occurs
under this Deed of Trust, Lender shall have the option to proceed with
foreclosure in satisfaction of such item, either through judicial
proceedings or by directing Trustee to
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proceed as if under a full foreclosure, conducting the sale as herein
provided without declaring the entire Indebtedness secured by this
Deed of Trust due and payable, and if sale is made because of a
default of an installment payment or a portion of an installment, such
sale may be made subject to the unmatured part of the remaining unpaid
Indebtedness; and it is agreed that such sale, if so made, shall not
in any manner affect the unmatured portion of the Indebtedness secured
by this Deed of Trust, but as to such unmatured part, this Deed of
Trust shall remain in full force and effect as though no sale had been
made under the provisions of this paragraph. Several sales may be made
hereunder without exhausting the right of sale for any unmatured part
of the Indebtedness secured by this Deed of Trust. Any and all
statements of fact or other recitals made in any deed or deeds given
by Trustee or any successor or substitute appointed hereunder as to
nonpayment of the Indebtedness secured hereby, or as the occurrence of
an Event of Default, or as to Lender having declared all of such
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 of the properties to
be sold having been duly given, or as to the refusal, failure or
inability to act of Trustee or any substitute or successor, or as to
the appointment of any substitute or successor trustee, or as to any
other act or thing having been duly done by Lender or by such Trustee,
substitute or successor, shall be taken as prima facie evidence of the
truth of the facts so stated and recited. Trustee, Trustee's successor
or substitute, may appoint or delegate any one or more persons as
agent to perform any act or acts necessary or incident to any sale
held by Trustee, including the posting of notices and the conduct of
sale, but in the name and on behalf of Trustee, Trustee's successor or
substitute.
14. That portion of the Premises which is personal property is referred to
herein as the "Collateral". To secure the payment of the Indebtedness,
Borrower hereby grants to Lender a security interest in the Collateral
together with all proceeds of the Collateral. Upon the occurrence of
an Event of Default, Lender may exercise its rights of enforcement
with respect to the Collateral under the Texas Business and Commerce
Code, as amended, and in conjunction with, in addition to or in
substitution for those rights and remedies:
(a) the Lender may enter upon the Premises to take possession of,
assemble and collect the Collateral or to render it unusable; and
(b) the Lender may require Borrower to assemble the Collateral and
make it available at a place the Lender designates which is
mutually convenient to allow the Lender to take possession or
dispose of the Collateral; and
(c) written notice mailed to Borrower as provided herein ten (10)
days prior to the date of public sale of the Collateral or prior
to the date after which private sale of the Collateral will be
made shall constitute commercially reasonable notice; and
(d) any sale made pursuant to the provisions of this paragraph shall
be deemed to have been a public sale conducted in a commercially
reasonable manner if held contemporaneously with the sale of the
Premises under power of
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sale as provided herein upon giving the same notice with respect
to the sale of the Collateral hereunder as is required for such
sale of the Premises under power of sale; 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
Collateral and the Premises may, at the option of the Lender, be
sold as a whole; and
(f) it shall not be necessary that the Lender take possession of the
Collateral or any part thereof prior to the time that any sale
pursuant to the provisions of this paragraph is conducted and it
shall not be necessary that the Collateral or any part thereof be
present at the location of such sale; and
(g) prior to application of proceeds of disposition of the Collateral
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
attorney's fees and legal expenses incurred by the Lender; and
(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 default, or as to the Lender
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
properties to be sold having been duly given, or as to any other
act or thing having been duly done by the Lender, shall be taken
as prima facie evidence of the truth of me facts so stated and
recited; and
(i) the Lender 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 the Lender, including the sending of notices and the
conduct of the sale, but in the name and on behalf of the Lender.
15. This instrument shall be effective as a mortgage as well as a deed of
trust and upon the occurrence of an Event of Default may be foreclosed
as to any of the Premises in any manner permitted by the laws of the
State of Texas or of any other state in which any part of the Premises
is situated, and any foreclosure suit may be brought by Trustee or by
Lender. In the event a foreclosure hereunder shall be commenced by
Trustee, or Trustee's substitute or successor, Lender may at any time
before the sale of the Premises direct Trustee to abandon the sale,
and may then institute suit for the collection of the Note and other
Indebtedness, and for the foreclosure of this Deed of Trust. It is
agreed that if Lender should institute a suit for the collection of
the Note or any other Indebtedness and for the foreclosure of this
Deed of Trust, Lender may at any time before the entry of a final
judgment in said suit dismiss the same, and require Trustee, Trustee's
substitute or successor, to sell the Premises in accordance with the
provisions of this Deed of Trust.
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16. Upon such sale, Trustee shall make, execute, and after due payment is
made, deliver to the purchaser or purchasers a deed or deeds for the
Premises or part thereof sold and shall apply the proceeds of the
sale, at the election of Lender first, to all of the expenses of such
sale including the reasonable expenses of this trust or the Trustee
and the fees and costs of any attorneys for this trust, environmental
audits, the Trustee or Lender, all of which shall accrue and become
due from and after any Event of Default, together with any sums which
Trustee or Lender shall have paid for procuring any abstract,
certificate or report of title to the Premises and, second, to
principal, interest and any other Indebtedness and all other sums or
amounts due under the Note or agreed or provided to be paid by
Borrower herein or in any other Loan Documents, all in such order as
Lender may determine. The remainder of such proceeds, if any, shall be
paid to Borrower or Borrower's successors or assigns, as their rights
may appear.
17. In the event of such a sale of the Premises or any part thereof and
the execution of a deed or deeds therefor under these trusts, any
recital therein of the occurrence of an Event of Default or of the
giving or recording of any notice or demand by Trustee or Lender
regarding such sale shall be conclusive proof thereof, and the receipt
of the purchase money recited therein shall fully discharge the
purchaser from any obligation for the proper application of the
proceeds of sale in accordance with these trusts.
18. Following the occurrence of an Event of Default, unless the same has
been specifically waived in writing, Borrower shall forthwith upon
demand of Trustee or Lender surrender to Lender possession of the
Premises, and Lender shall be entitled to take actual possession of
the Premises or any part thereof personally or by its agents or
attorneys, and Lender in its discretion may (to the extent permitted
under applicable law), with or without, force and with or without
process of law, enter upon and take and maintain possession of all or
any part of the Premises together with all documents, books, records,
papers and accounts of the Borrower or the then owner of the Premises
relating thereto, and may exclude Borrower, its agents or assigns
wholly therefrom, and may in the name of the Borrower, or in its own
name as Lender and under the powers herein granted:
(a) hold, operate, maintain, repair, rebuild, replace, alter,
improve, manage or control the Premises as it deems judicious,
insure and reinsure the same and any risks related to Lender's
possession, operation and management thereof and receive all
Rents, either personally or by its agents, and with full power to
use such measures, legal or equitable, as in its discretion it
deems proper or necessary to enforce the payment or security of
the Rents, including actions for the recovery of Rent, actions
in forcible detainer and actions in distress for Rents, hereby
granting full power and authority to exercise each and every of
the rights, privileges and powers herein granted at any and all
times hereafter, without notice to Borrower; and
(b) conduct leasing activity pursuant to the provisions of the
Assignment of Leases.
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Neither Trustee nor Lender shall be obligated to perform or discharge,
nor does either hereby undertake to perform or discharge, any
obligation, duty or liability under any Lease. Except to the extent
that the same is caused solely by Lender's gross negligence or willful
misconduct, should Trustee or Lender incur any liability, loss or
damage under any Leases, or under or by reason of the Assignment of
Leases, or in the defense of any claims or demands whatsoever which
may be asserted against Lender or Trustee by reason of any alleged
obligations or undertakings on its part to perform or discharge any of
the terms, covenants or agreements in any Lease, the amount thereof,
including costs, expenses and reasonable attorneys' fees and costs,
including reasonable attorneys' fees and costs on appeal, shall be
added to the Indebtedness and secured hereby, WHETHER OR NOT SUCH
LIABILITY, LOSS OR DAMAGE ARISES OR ALLEGEDLY ARISES FROM OR IN
CONNECTION WITH ANY ACTS OF NEGLIGENCE OF LENDER OR UNDER ANY THEORY
OF STRICT LIABILITY.
19. Upon the occurrence of an Event of Default, Trustee and Lender in the
exercise of the rights and powers conferred upon them shall have the
full power to use and apply the Rents, less costs and expenses of
collection to the payment of or on account of the items listed in (a)
- (c) below, at the election of Lender and in such order as Lender may
determine as follows:
(a) to the payment of (i) the expenses of operating and maintaining
the Premises, including, but not limited to the cost of
management, leasing (which shall include reasonable compensation
to Trustee, Lender and their respective agent or agents if
management and/or leasing is delegated to an agent or agents),
repairing, rebuilding, replacing, altering and improving the
Premises, (ii) premiums on insurance as hereinabove authorized,
(iii) taxes and special assessments now due or which may
hereafter become due on the Premises, and (iv) expenses of
placing the Premises in such condition as will, in the sole
judgment of Lender, make it readily rentable;
(b) to the payment of any principal, interest or any other
Indebtedness secured hereby or any deficiency which may result
from any foreclosure sale;
(c) to the payment of established claims for damages, if any,
reasonable attorneys' fees and costs and reasonable attorneys'
fees and costs on appeal.
The manner of the application of Rents, the reasonableness of the
costs and charges to which such Rents are applied and the item or
items which shall be credited thereby shall be within the sole and
unlimited discretion of Lender. To the extent that the costs and
expenses in (a) and (c) above exceed the amounts collected, the excess
shall be added to the Indebtedness and secured hereby.
20. Upon the occurrence of any Event of Default, unless the same has been
specifically waived in writing, Lender may apply to any court having
jurisdiction for the appointment of a receiver of the Premises. Such
appointment may be
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made either before or after sale, without notice, without regard to
the solvency or insolvency of Borrower at the time of application for
such receiver and without regard to the then value of the Premises or
the adequacy of Lender's security. Lender may be appointed as such
receiver. The receiver shall have power to collect the Rents during
the pendency of any foreclosure proceedings and, in case of a sale,
during the full statutory period of redemption, if any, as well as
during any further times when Borrower, except for the intervention of
such receiver, would be entitled to collect such Rents. In addition,
the receiver shall have all other powers which shall be necessary or
are usual in such cases for the protection, possession, control,
management and operation of the Premises during the whole of said
period. The court from time to time may authorize the receiver to
apply the net income in its possession at Lender's election and in
such order as Lender may determine in payment in full or in part of
those items listed in paragraph 19.
21. (a) Borrower agrees that all reasonable costs, charges and expenses,
including but not limited to, reasonable attorneys' fees and
costs, incurred or expended by Trustee or Lender arising out of
or in connection with any action, proceeding or hearing, legal,
equitable or quasi-legal, including the preparation therefor and
any appeal therefrom, in any way affecting or pertaining to the
Loan Documents, the Environmental Indemnity, or the Premises,
shall be promptly paid by Borrower. All such sums not promptly
paid by Borrower shall be added to the Indebtedness secured
hereby and shall bear interest at the Default Rate from the date
of such advance and shall be due and payable on demand.
(b) Borrower hereby waives any notice of default, demand for payment
and notice of intent to accelerate the maturity of all or any
portion of the Indebtedness secured hereby, except as may be
otherwise expressly herein provided. Borrower hereby agrees that
upon the occurrence of an Event of Default and the acceleration
of the principal sum secured hereby pursuant to this Deed of
Trust, to the full extent that such rights can be lawfully
waived, Borrower hereby waives and agrees not to insist upon,
plead, or in any manner take advantage of, any notice of
acceleration, any stay, extension, exemption, homestead,
marshaling or moratorium law or any law providing for the
valuation or appraisement of all or any part of the Premises
prior to any sale or sales thereof under any provision of this
Deed of Trust or before or after any decree, judgment or order of
any court or confirmation thereof, or claim or exercise any right
to redeem all or any part of the Premises so sold and hereby
expressly waives to the full extent permitted by applicable law
on behalf of itself and each and every person or entity acquiring
any right, title or interest in or to all or any part of the
Premises, all benefit and advantage of any such laws which would
otherwise be available to Borrower or any such person or entity,
and agrees that neither Borrower nor any such person or entity
will invoke or utilize any such law to otherwise hinder, delay or
impede the exercise of any remedy granted or delegated to Lender
herein but will permit the exercise of such remedy as though any
such laws had not been enacted.
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Borrower hereby further expressly waives to the full extent
permitted by applicable law on behalf of itself and each and
every person or entity acquiring any right, title or interest in
or to all or any part of the Premises any and all rights of
redemption from any sale or any order or decree of foreclosure
obtained pursuant to provisions of this Deed of Trust.
22. As a source of future payment of the Indebtedness, Borrower hereby
assigns to Lender directly and absolutely, and not merely
collaterally, the interest of Borrower as lessor under the Leases of
the Premises and the Rents payable under any Lease and/or with respect
to the use of the Premises, or portion thereof, including any oil, gas
or mineral lease, or any installments of money payable pursuant to any
agreement or any sale of the Premises or any part thereof, subject
only to a license, if any, granted by Lender to Borrower with respect
thereto prior to the occurrence of an Event of Default, as set forth
in the Assignment of Leases and Rents. Borrower has executed and
delivered the Assignment of Leases which grants to Lender specific
rights and remedies in respect of said Leases and governs the
collection of Rents thereunder and from the use of the Premises, and
such rights and remedies so granted shall be cumulative of those
granted herein.
The collection of such Rents and the application thereof as aforesaid
shall not cure or waive any Event of Default or notice of default
hereunder or invalidate any act done pursuant to such notice, except
to the extent any such Event of Default is fully cured. Failure or
discontinuance of Lender at any time, or from time to time, to collect
any such moneys shall not impair in any manner the subsequent
enforcement by Lender of the right, power and authority herein
conferred on Lender. Nothing contained herein, including the exercise
of any right, power or authority herein granted to Lender, shall be,
or be construed to be, an affirmation by Lender of any tenancy, Lease
or option, or an assumption of liability under, or the subordination
of the lien or charge of this Deed of Trust to any such tenancy, Lease
or option. Borrower hereby agrees that, in the event Lender exercises
its rights as provided for in this paragraph or in the Assignment of
Leases, Borrower waives any right to compensation for the use of
Borrower's furniture, furnishings or equipment in the Premises for the
period such assignment of rents or receivership is in effect, it being
understood that the Rents derived from the use of any such items shall
be applied to Borrower's obligations hereunder as above provided.
Notwithstanding the direct and absolute assignment of the Rents, there
shall be no pro tanto reduction of any portion of the Indebtedness
except with respect to Rents actually received by Lender and applied
by Lender toward payment of the Indebtedness.
23. All rights and remedies granted to Trustee or Lender in the Loan
Documents shall be in addition to and not in limitation of any rights
and remedies to which it is entitled in equity, at law or by statute,
and the invalidity of any right or remedy herein provided by reason of
its conflict with applicable law or statute shall not affect any other
valid right or remedy afforded to Trustee or Lender. No waiver of any
default or Event of Default under any of the Loan Documents shall at
any
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time thereafter be held to be a waiver of any rights of the Trustee or
Lender hereunder, nor shall any waiver of a prior Event of Default or
default operate to waive any subsequent Event of Default or default.
All remedies provided for in the Loan Documents are cumulative and
may, at the election of Lender, be exercised alternatively,
successively or concurrently. No act of Trustee or Lender shall be
construed as an election to proceed under any one provision herein to
the exclusion of any other provision or to proceed against one portion
of the Premises to the exclusion of any other portion. Time is of the
essence under this Deed of Trust and the Loan Documents.
24. By accepting payment of any sum secured hereby after its due date,
Lender does not waive its right either to require prompt payment when
due of all other sums or installments so secured or to declare a
default for failure to pay such other sums or installments.
25. The limitation of recourse liability provisions of paragraph 9 of the
Note are fully incorporated herein by reference as if the same were
specifically stated here.
26. In the event one or more provisions of the Loan Documents shall be
held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other
provision hereof, and the Loan Documents shall be construed as if any
such provision had never been contained herein.
27. If the payment of the Indebtedness secured hereby or of any part
thereof shall be extended or varied, or if any part of the security be
released, all persons now or at any time hereafter liable therefor, or
interested in said Premises, shall be held to assent to such
extension, variation or release, and their liability and the lien and
all provisions hereof shall continue in full force, the right of
recourse against all such persons being expressly reserved by Lender
notwithstanding such variation or release.
28. Upon payment in full of the principal sum, interest and other
Indebtedness secured by the Loan Documents, these presents shall be
null and void, and Trustee shall release this Deed of Trust and the
lien hereof by proper instrument executed in recordable form.
29. (a) Borrower hereby grants to Lender and its respective agents,
attorneys, employees, consultants, contractors and assigns an
irrevocable license and authorization to enter upon and inspect
the Premises and all facilities located thereon at reasonable
times, subject to the inspection rights provisions afforded to
Borrower under the Leases. Lender shall make reasonable efforts
to ensure that the operations of the tenants are not disrupted.
(b) In connection with any sale or conveyance of this Deed of Trust,
Borrower grants to Lender and its respective agents, attorneys,
employees, consultants, contractors and assigns an irrevocable
license and
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authorization to conduct, at Lender's expense, a Phase I
environmental audit of the Premises, subject to the inspection
rights provisions afforded to Borrower under the Leases.
(c) In the event there has been an Event of Default or in the event
Lender has formed a reasonable belief, based on its inspection of
the Premises or other factors known to it, that Hazardous
Materials may be present on the Premises, then Borrower grants to
Lender and its respective agents, attorneys, employees,
consultants, contractors and assigns an irrevocable license and
authorization to conduct, at Borrower's expense, using ATC
Associates, Inc. or the firm of Borrower's choice, subject to
Lender's reasonable approval, environmental tests of the
Premises, including without limitation, a Phase I environmental
audit, subsurface testing, soil and ground water testing, and
other tests which may physically invade the Premises or
facilities (the "TESTS"). The scope of the Tests shall be such as
Lender, in its sole discretion, determines is necessary to (i)
investigate the condition of the Premises, (ii) protect the
security interests created under this Deed of Trust, or (iii)
determine compliance with Environmental Laws, the provisions of
the Loan Documents and the Environmental Indemnity and other
matters relating thereto. Lender shall make reasonable efforts to
ensure that the operations of the tenants are not disrupted.
(d) Provided no Event of Default has occurred, Lender will provide
Borrower with reasonable notice of Lender's intent to enter,
inspect and conduct the Tests provided for in this paragraph. In
addition, Lender shall conduct such inspections and Tests during
normal business hours and use reasonable efforts to minimize
disruption of the lessees' business operations. The foregoing
licenses and authorizations are intended to be a means of
protection of Lender's security interest in the Premises and not
as participation in the management of the Premises.
30. Within 15 days after any written request by any party to this Deed of
Trust, the requested party shall certify, by a written statement duly
acknowledged, the amount of principal, interest and other Indebtedness
then owing on the Note, the terms of payment, Maturity Date and the
date to which interest has been paid. Borrower shall further certify
whether any defaults, offsets or defenses exist against the
Indebtedness secured hereby. Borrower shall also furnish to Lender,
within 30 days of its request therefor, tenant estoppel letters from
such tenants of the Premises as Lender may reasonably require; which
Lender shall not request more than one (1) time per annum.
31. (a) Borrower shall furnish to Lender within 90 days after the end of
each fiscal year of Borrower, a detailed and analytical financial
report prepared in accordance with generally accepted accounting
principles consistently applied, certified in a manner and
otherwise in form acceptable to Lender covering the full and
complete operation of the Premises, including without limitation:
(i) income and expense statements, and (ii) a report of
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the leasing status of the Premises as of the end of such period,
identifying the lessee, square footage leased, rental amount,
base rental increases, rental concessions and/or rental
deferments, if any, and commencement and expiration dates under
each Lease of the Premises and a listing of sales volumes
attained by lessees of the Premises under percentage leases for
the immediately preceding year, and (iii) within 15 days after
written request by Lender, an aged accounts receivable report, an
annual budget, and sales volumes for lessees under percentage
leases. Such reports shall be prepared by an accountant who may
be an employee of Borrower, or of an affiliate of Borrower,
acceptable to Lender. In addition to the reports referred to
herein, Borrower shall promptly supply any additional information
or records relating to the Premises or its operation as Lender
may from time to time reasonably request.
(b) Within 15 days after any written request by Lender, Borrower
shall furnish to Lender, for the most recently completed fiscal
quarter of Borrower, the reports specified in (i) and (ii) above.
(c) Within 15 days after any written request by Lender, Borrower
shall furnish to Lender for the most recently completed fiscal
year, a combined or consolidated federal income tax return filed
by IWRRET. Said information shall be subject to Lender's review.
32. Each notice, consent, request, report or other communication under
this Deed of Trust or any other Loan Document (each, a "NOTICE"),
which any party hereto may desire or be required to give to the other
shall be deemed to be an adequate and sufficient notice if given in
writing and service is made by either (i) registered or certified
mail, postage prepaid, in which case notice shall be deemed to have
been received three (3) business days following deposit to U.S. mail;
or (ii) nationally recognized overnight air courier, next day
delivery, prepaid, in which case such notice shall be deemed to have
been received one (1) business day following delivery to such
nationally recognized overnight air courier; provided that service of
a notice required by Tex. Property Code Section 51.002 shall be
considered complete when the requirements of that statute are met. All
Notices shall be addressed to Borrower at its address given on the
first page hereof, or to Lender at c/o Principal Real Estate
Investors, LLC, 801 Grand Avenue, Des Moines, Iowa 50392-1450, Attn:
Commercial Real Estate Servicing, Loan No. 753943, or to such other
place as any party may by written notice to the other parties
designate as a place for service of notice. Borrower shall not be
permitted to designate more than one place for service of Notice
concurrently.
33. Lender, from time to time, may substitute another Trustee in place of
the Trustee named herein, to execute the trusts hereby created; and
upon such appointment, and without conveyance to the successor
trustee, the successor trustee shall be vested with all the title,
interest, powers, duties and trusts in the Premises hereby vested in
or conferred upon Trustee herein named. Each such appointment and
substitution shall be made by written instrument executed by the
Lender containing reference to this Deed of Trust sufficient to
identify it, which
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instrument need not be recorded but when recorded in the office of the
County Recorder of the county or counties in which the Premises is
situated, shall be conclusive proof of proper appointment of the
successor trustee. The recital or statement, in any instrument
executed by Trustee in pursuance of any of said trusts, of the due
authorization of any agent of the Trustee executing the same shall for
all purposes be conclusive proof of such authorization.
34. Trustee at any time, at Trustee's option, may commence and maintain
suit in any court of competent jurisdiction and obtain the aid and
direction of said court in the execution by it of the trusts or any of
them, herein expressed or contained, and, in such suit, may obtain the
orders or decrees, interlocutory or final of said court directing the
execution of said trusts, and confirming and approving Trustee's acts,
or any of them, or any sales or conveyances made by Trustee, and
adjudging the validity thereof, and directing that the purchasers of
the property sold and conveyed be let into immediate possession
thereof, and providing for orders of court or other process requiring
the Sheriff of the county in which said property is situated to place
and maintain said purchasers in quiet and peaceable possession of the
property so purchased by them, and the whole thereof.
35. Borrower has had the opportunity to fully negotiate the terms hereof
and modify the draftsmanship of the Loan Documents and the
Environmental Indemnity. Therefore, the terms of the Loan Documents
and the Environmental Indemnity shall be construed and interpreted
without any presumption, inference, or rule requiring construction or
interpretation of any provision of the Loan Documents and the
Environmental Indemnity against the interest of the party causing the
Loan Documents and the Environmental Indemnity or any portion of it to
be drafted. Borrower is entering into the Loan Documents and the
Environmental Indemnity freely and voluntarily without any duress,
economic or otherwise.
36. Borrower, forthwith upon request, at any and all times hereafter, at
the expense of Borrower, will cause to be made, executed, acknowledged
and delivered to Trustee, any and every deed or assurance in law which
Trustee or counsel of Trustee shall reasonably advise or require for
the more sure, effectual and satisfactory granting and confirming of
said Premises unto Trustee.
37. Trustee shall not be liable or responsible for its acts or omissions
hereunder, INCLUDING TRUSTEE'S NEGLIGENCE, except for Trustee's own
gross negligence or willful default, or be liable or responsible for
any acts or omissions of any agent, attorneys or employee by him
employed hereunder, if selected with reasonable care.
38. Trustee accepts this trust when this Deed of Trust executed and
acknowledged is made a public record as provided by law. Trustee is
not obligated to notify any party hereto of pending sale under any
other deed of trust or of any action or proceeding in which Borrower,
Lender, or Trustee shall be a party unless brought by Trustee.
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39. This Deed of Trust and all provisions hereof shall inure to the
benefit of the heirs, successors and assigns of Lender and shall bind
the heirs and permitted successors and assigns of Borrower.
40. This Deed of Trust shall be governed by, and construed in accordance
with, the laws of the state of Texas, without regard to its conflicts
of law principles.
41. As used herein, the term "DEFAULT RATE" means a rate equal to the
lesser of (i) four percent (4%) per annum above the then applicable
interest rate payable under the Note or (ii) the maximum rate allowed
by applicable law.
42. BORROWER AND LENDER EACH KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE, TO THE EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY ACTIONS
BROUGHT BY BORROWER, TRUSTEE OR LENDER IN CONNECTION WITH THIS DEED OF
TRUST, ANY OF THE LOAN DOCUMENTS, THE INDEBTEDNESS SECURED HEREBY, OR
ANY OTHER STATEMENTS OR ACTIONS OF LENDER.
43. This Deed of Trust and the Indebtedness secured hereby is for the sole
purpose of conducting or acquiring a lawful business, professional or
commercial activity or for the acquisition or management of real or
personal property as a commercial investment, and all proceeds of such
Indebtedness shall be used for said business or commercial investment
purpose. Such proceeds will not be used for the purchase of any
security within the meaning of the Securities Exchange Act of 1934, as
amended, or any regulation issued pursuant thereto, including without
limitation, Regulations U, T and X of the Board of Governors of the
Federal Reserve System. This is not a purchase money deed of trust
where a seller is providing financing to a buyer for the payment of
all or any portion of the purchase price and the Premises secured
hereby is not a residence or homestead or used for mining, grazing,
agriculture, timber or farming purposes.
44. Unless Lender shall otherwise direct in writing, Borrower shall appear
in and defend all actions or proceedings purporting to affect the
security hereunder, or any right or power of the Lender, excluding any
Federal regulatory proceedings against Lender that are not instituted
because of any act or omission by Borrower, any Interest Owner or
which result from the Premises. The Lender shall have the right to
appear in such actions or proceedings. Borrower shall save Lender
harmless from all reasonable costs and expenses, including but not
limited to, reasonable attorneys' fees and costs and costs of a title
search, continuation of abstract and preparation of survey incurred by
reason of any action, suit, proceeding, hearing, motion or application
before any court or administrative body in and to which Lender may be
or become a party by reason hereof, excluding any Federal regulatory
proceedings against Lender that are not instituted because of any act
or omission by Borrower, any Interest Owner or which result from the
Premises. Such proceedings shall include but not be limited to
condemnation, bankruptcy, probate and administration proceedings, as
well as any other action, suit, proceeding, right, motion or
application wherein proof of
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claim is by law required to be filed or in which it becomes necessary
to defend or uphold the terms of this Deed of Trust or the Loan
Documents or otherwise purporting to affect the security hereof or the
rights or powers of Lender. All money paid or expended by Lender in
that regard, together with interest thereon from date of such payment
at the Default Rate shall be additional Indebtedness secured hereby
and shall be immediately due and payable by Borrower without notice.
45. Upon the occurrence of an Event of Default, unless the same has been
specifically waived in writing, all Rents collected or received by
Borrower shall be accepted and held for Lender in trust and shall not
be commingled with the funds and property of Borrower, but shall be
promptly paid over to Lender.
46. If more than one, all obligations and agreements of Borrower and of
any general partner of Borrower are joint and several.
47. This Deed of Trust may be executed in counterparts, each of which
shall be deemed an original; and such counterparts when taken together
shall constitute but one agreement.
48. This Deed of Trust shall be effective as a financing statement filed
as a fixture filing with respect to all fixtures included within the
Property and is to be filed for record in the real estate records in
the office of the county clerk where the Land and Improvements
(including said fixtures) are situated.
IN WITNESS WHEREOF, Borrower has caused this Deed of Trust to be duly
executed and delivered as of the date first above written.
(REMAINDER OF PAGE INTENTIONALLY BLANK
SIGNATURES ON NEXT PAGE)
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SIGNATURE PAGE OF BORROWER TO
DEED OF TRUST, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
INLAND WESTERN WATAUGA LIMITED
PARTNERSHIP, an Illinois limited partnership
By: INLAND WESTERN WATAUGA GP, L.L.C., a
Delaware limited liability company, its General
Partner
By: INLAND WESTERN RETAIL REAL
ESTATE TRUST, INC., a Maryland
corporation, its Sole Member
By: /s/ Valerie Medina
--------------------------------------
Name: Valerie Medina
-------------------------------
Title: asst. Secretary
-------------------------------
STATE OF ILLINOIS )
)
COUNTY OF Cook )
This instrument was acknowledged before me on June 4, 2004 by Valerie
Medina, asst. Secretary of Inland Western Retail Real Estate Trust, Inc., a
Maryland corporation, on behalf of said corporation, in its capacity as sole
member of Inland Western Watauga GP, L.L.C., a Delaware limited liability
company, on behalf of said limited liability company, in its capacity as General
Partner of Inland Western Watauga Limited Partnership, an Illinois limited
partnership, on behalf of said limited partnership.
/s/ Elizabeth Ann Irving
----------------------------------
Notary Public, State of Illinois
My Commission Expires: Elizabeth Ann Irving
11-14-2004 ----------------------------------
- --------------------- Typed or Printed Name
"OFFICIAL SEAL"
ELIZABETH ANN IRVING
NOTARY PUBLIC STATE OF ILLINOIS
My Commission Expires 11/14/2004
<Page>
EXHIBIT A
Legal Description
Loan No. 753943
(Watauga)
Tract I:
BEING all of Lots 2 and 3, Block 1, of Watauga Pavilion Addition, an addition to
the City of Watauga, Tarrant County, Texas, according to the plat thereof
recorded in Cabinet A, Slide 7442, Plat Records of Tarrant County, Texas.
Tax Parcel No. (Lot 2): 00040118231
Tax Parcel No. (Lot 3): 00040118258
Address (Lot 2): 5801 Starnes Road, Watauga, Texas
Address (Lot 3): 7508 Denton Highway, Watauga, Texas
Tract II:
BEING all of Lot 1R, Block 1, of Watauga Pavilion Addition, an addition to the
City of Watauga, Tarrant County, Texas, according to the plat thereof recorded
in Cabinet A, Slide 7912, Plat Records of Tarrant County, Texas.
Tax Parcel No. 00040193187
Address: 5901 Starnes Road, Watauga, Texas
<Page>
EXHIBIT B
Permitted Encumbrances
Loan No. 753943
(Watauga)
1. Taxes for the year 2004 and subsequent years.
2. Rights of tenants, as tenants only, under recorded tenant leases more
particularly described in Exhibit B to the Assignment of Leases and Rents
of even date herewith executed by Borrower in favor of Lender.
3. Restrictive covenants recorded in Volume 14269, Page 474, Deed Records of
Tarrant County, Texas. (Affects Lots 1R, 2 and 3)
4. Restrictive covenants contained in Shopping Center Lease documents recorded
in Volume 16178, Page 187, Volume 16303, Page 90, Volume 16307, Page 62,
Volume 16723, Page 293, Volume 16785, Page 9, Volume 16978, Page 36 and
Volume 17136, Page 143, Deed Records, Tarrant County, Texas.
5. Restrictive covenants filed 02/05/2004, D204038211, Real Property Records
of Tarrant County, Texas.
6. The following easements and building setback lines, set out on and/or
created by the plats of Watauga Pavilion Addition, recorded in Cabinet A,
Slide 7442 and Cabinet A, Slide 7912, Plat Records of Tarrant County,
Texas: 24' firelane access and utility easement running throughout subject
property, 10' utility easements located throughout subject property,
waterline easements located in the central portion of subject property, 5'
utility easements located throughout subject property, 15' utility
easements located in the Western and Southern portions of subject property,
50' drainage and utility easement located in the Southwest portion of
subject property, 25' drainage and utility easement located in the Northern
portion of subject property, and 25' building line setback line along the
West property line and adjacent to Starnes Road, and as shown on survey
dated April 4, 2004, prepared by Shaun G. Spooner, Registered Professional
Land Surveyor No. 4183.
7. Terms, provisions and conditions of lease dated 11/15/2002, between ASG
Watauga Pavilion, Ltd. and Gart Bros. Sporting Goods Company, as evidenced
by instrument filed 12/03/2002, recorded in Volume 16178, Page 187, Deed
Records of Tarrant County, Texas, and as noted on survey dated April 4,
2004, prepared by Shaun G. Spooner, Registered Professional Land Surveyor
No. 4183, as affected by Subordination, Nondisturbance and Attornment
Agreement with Principal Life Insurance Company to be recorded in the Real
Property Records of Tarrant County, Texas.
8. Terms, provisions and conditions of lease between ASG Watauga Pavilion,
Ltd., a Texas limited partnership and Ross Stores Texas, L.P., a Texas
limited partnership, as
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evidenced by instrument filed 01/14/2003, recorded in Volume 16303, Page
90, Deed Records of Tarrant County, Texas, and as noted on survey dated
April 4, 2004, prepared by Shaun G. Spooner, Registered Professional Land
Surveyor No. 4183, as affected by Subordination, Nondisturbance and
Attornment Agreement with Principal Life Insurance Company to be recorded
in the Real Property Records of Tarrant County, Texas.
9. Terms, provisions and conditions of lease between SG Watauga Pavilion,
Ltd., a Texas limited partnership and Ross Stores Texas, L.P., a Texas
limited partnership, as evidenced by instrument filed 01/14/2003, recorded
in Volume 16307, Page 62, Deed Records of Tarrant County, Texas, and as
noted on survey dated April 4, 2004, prepared by Shaun G. Spooner,
Registered Professional Land Surveyor No. 4183, as affected by
Subordination, Nondisturbance and Attornment Agreement with Principal Life
Insurance Company to be recorded in the Real Property Records of Tarrant
County, Texas.
10. Terms, provisions and conditions of lease between ASG Watauga Pavilion,
Ltd. and Pier 1 Imports, Inc., as evidenced by instrument filed 04/21/2003,
recorded in Volume 16610, Page 115, Deed Records of Tarrant County, Texas,
and as noted on survey dated April 4, 2004, prepared by Shaun G. Spooner,
Registered Professional Land Surveyor No. 4183.
11. Terms, provisions and conditions of lease between SG Watauga Pavilion, Ltd.
c/o ASG Real Estate Co. and Cost Plus, Inc., a California corporation, as
evidenced by instrument filed 05/19/2003, recorded in Volume 16723, Page
293, Deed Records of Tarrant County, Texas, and as noted on survey dated
April 4, 2004, prepared by Shaun G. Spooner, Registered Professional Land
Surveyor No. 4183, as affected by Subordination, Nondisturbance and
Attornment Agreement with Principal Life Insurance Company to be recorded
in the Real Property Records of Tarrant County, Texas.
12. Terms, provisions and conditions of lease dated 05/28/2003, between ASG
Watauga Pavilion, Ltd. c/o ASG Real Estate Company and Bed Bath & Beyond
Inc., a New York corporation, as evidenced by instrument filed 06/05/2003,
recorded in Volume 16785, Page 9, Deed Records of Tarrant County, Texas,
and as noted on survey dated April 4, 2004, prepared by Shaun G. Spooner,
Registered Professional Land Surveyor No. 4183, as affected by
Subordination, Nondisturbance and Attornment Agreement with Principal Life
Insurance Company to be recorded in the Real Property Records of Tarrant
County, Texas.
13. Terms, provisions and conditions of lease between ASG Watauga Pavilion,
Ltd., a Texas limited partnership and PetsMart, Inc., a Delaware
corporation, as evidenced by instrument filed 07/25/2003, recorded in
Volume 16978, Page 36, Deed Records of Tarrant County, Texas, and as noted
on survey dated April 4, 2004, prepared by Shaun G. Spooner, Registered
Professional Land Surveyor No. 4183, as affected by Subordination,
Nondisturbance and Attornment Agreement with Principal Life Insurance
Company to be recorded in the Real Property Records of Tarrant County,
Texas.
14. Terms, provisions and conditions of lease between ASG Watauga Pavilion,
Ltd., a Texas limited partnership and Office Depot of Texas, L.P., a
Delaware limited partnership, as evidenced by instrument filed 09/02/2003,
recorded in Volume 17136, Page 143, Deed
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Records of Tarrant County, Texas, and as noted on survey dated April 4,
2004, prepared by Shaun G. Spooner, Registered Professional Land Surveyor
No. 4813, as affected by Subordination, Nondisturbance and Attornment
Agreement with Principal Life Insurance Company to be recorded in the Real
Property Records of Tarrant County, Texas.
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