EXHIBIT 10.3
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WHEN RECORDED, RETURN TO:
Brian S. Short, Esq.
Winstead Sechrest & Minick P.C.
5400 Renaissance Tower
1201 Elm Street
Dallas, Texas 75270
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COVERSHEET RECORDING INFORMATION:
LOAN NO. 323705
TO BE RECORDED IN THE
DEED OF TRUST RECORDS OF
SPOKANE COUNTY, WASHINGTON
DOCUMENT Deed of Trust, Assignment of Leases and Rents, Security
TITLE: Agreement and Fixture Filing
Recording numbers of related documents on following page numbers:
GRANTOR: WHC804, LLC, a Delaware limited liability company
(Last name first)
GRANTEE: COLUMN FINANCIAL, INC., a Delaware corporation
(Beneficiary)
GRANTEE: FIRST AMERICAN TITLE INSURANCE COMPANY
(Trustee)
ABBREVIATED PORTION OF E 1/2, 18-25N-43E
LEGAL (Abbreviated legal description is comprised of
DESCRIPTION: section/township/range quarter/quarter section.)
The complete legal description is on Exhibit A.
ASSESSOR'S
PROPERTY TAX
PARCEL ACCOUNT
NUMBERS: 35185.0074, 35185.0028
THIS DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT
AND FIXTURE FILING (this "Deed of Trust"), executed on August __, 2001, but to
be effective as of August 16, 2001, is entered into by WHC804, LLC, a Delaware
limited liability company, as Grantor ("Grantor"), whose address is 303 West
North River Drive, Spokane, Washington 99201, Attention: Hotel Executive
Offices, to FIRST AMERICAN TITLE INSURANCE COMPANY, as Trustee ("Trustee"),
whose address is 2101 Fourth Avenue, Suite 712, Seattle, Washington 98121-2318,
for the benefit of COLUMN FINANCIAL, INC., a Delaware corporation, as
Beneficiary ("Beneficiary"), whose address is Eleven Madison Avenue, New York,
New York 10010, Attention: Edmund Taylor.
W I T N E S S E T H:
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FOR GOOD AND VALUABLE CONSIDERATION, including the indebtedness herein
recited and the trust herein created, the receipt and sufficiency of which are
hereby acknowledged, Grantor hereby irrevocably grants, transfers, conveys and
assigns to Trustee, IN TRUST WITH POWER OF SALE, for the benefit and security of
Beneficiary, under and subject to the terms and conditions hereinafter set
forth, all of the following described property, whether now owned or hereafter
acquired (collectively, the "Property"):
(A) All that certain real property situated in the County of Spokane,
State of Washington, more particularly described on Exhibit A attached hereto
and incorporated herein by this reference (the "Land"), together with all of the
easements, rights, privileges, franchises, tenements, hereditaments and
appurtenances now or hereafter thereunto belonging or in any way appertaining
thereto, and all of the estate, right, title, interest, claim and demand
whatsoever of Grantor therein or thereto, either at law or in equity, in
possession or in expectancy, now owned or hereafter acquired;
(B) All structures, buildings and improvements of every kind and
description now or at any time hereafter located or placed on the Land (the
"Improvements");
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(C) All easements, rights-of-way, strips and gores of land, vaults,
streets, ways, alleys, passages, sewer rights, and other emblements now or
hereafter located on the Land or under or above the same or any part or parcel
thereof, and all estates, rights, titles, interests, tenements, hereditaments
and appurtenances, reversions and remainders whatsoever, in any way belonging,
relating or appertaining to the Property or any part thereof, or which hereafter
shall in any way belong, relate or be appurtenant thereto, whether now owned or
hereafter acquired by Grantor;
(D) All furniture, furnishings, fixtures, goods, equipment, inventory
or personal property owned by Grantor and now or hereafter located on, attached
to or used in or about the Improvements, including, but not limited to, all
items of personal property located within or adjacent to the Improvements and
included within the definition of "Property and Equipment" and "Inventories"
under the Uniform System of Accounts for Hotels as published by the American
Hotel Association of the United States and Canada (the "Uniform System of
Accounts"), and further including, without limitation, all linen, china,
glassware, tableware, uniforms, all machines, engines, boilers, dynamos,
elevators, stokers, tanks, cabinets, awnings, screens, shades, blinds, carpets,
draperies, lawn mowers, and all appliances, plumbing, heating, air conditioning,
lighting, ventilating, refrigerating, disposals and incinerating equipment,
guest ledgers, telephone systems, televisions and television systems, computer
systems and all fixtures and appurtenances thereto, and such other goods and
chattels and personal property owned by Grantor as are now or hereafter used or
furnished in operating the Improvements, or the activities conducted therein,
and all building materials and equipment hereafter situated on or about the Land
or Improvements, and all warranties and guaranties relating thereto, and all
additions thereto and substitutions and replacements therefor (exclusive of any
of the foregoing owned or leased by tenants of space in the Improvements);
(E) All water, water courses, ditches, wells, reservoirs and drains and
all water, ditch, well, reservoir and drainage rights and powers which are
appurtenant to, located on, under or above or used in connection with the Land
or the Improvements, or any part thereof, together (i) with all utilities,
utility lines, utility commitments, utility capacity, capital recovery charges,
impact fees and other fees paid in connection with same, (ii) reimbursements or
other rights pertaining to utility or utility services provided to the Land
and/or Improvements and (iii) the present or future use or availability of waste
water capacity, or other utility facilities to the extent same pertain to or
benefit the Land and/or Improvements, including, without limitation, all
reservations of or commitments or letters covering any such use in the future,
whether now existing or hereafter created or acquired;
(F) All minerals, crops, timber, trees, shrubs, flowers and landscaping
features now or hereafter located on, under or above the Land;
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(G) All cash funds, deposit accounts and other rights and evidence of
rights to cash, now or hereafter created which are held by Beneficiary pursuant
to this Deed of Trust, the Cash Management Agreement of even date herewith
between Grantor and Beneficiary (hereinafter, the "Cash Management Agreement")
or any other of the Loan Documents (as hereinafter defined), including, without
limitation, all funds now or hereafter on deposit in the Rent Account, the
Central Account and any other Accounts or Sub-Accounts (as all such terms are
identified in the Cash Management Agreement);
(H) All leases, licenses, tenancies, concessions and occupancy
agreements of the Land or the Improvements now or hereafter entered into by
Grantor and all rents, royalties, issues, profits, bonus money, revenue, income,
rights and other benefits, room rentals, and revenues of any kind derived from
all sources (collectively, the "Rents" or "Rents and Profits") of the Land or
the Improvements, or the fixtures or equipment, now or hereafter arising from
the use or enjoyment of all or any portion thereof or from any present or future
lease (including, without limitation, oil, gas and mineral leases), license,
tenancy, concession, occupancy agreement or other agreement pertaining thereto
or arising from any of the Contracts (as hereinafter defined) or any of the
General Intangibles (as hereinafter defined) and all cash or securities held by
Grantor (the "Security Deposits") that secure performance by the tenants,
lessees, licensees or guests, as applicable, of their obligations under any such
leases, licenses, concessions or occupancy agreements, whether said cash or
securities are to be held until the expiration of the terms of said leases,
licenses, concessions or occupancy agreements or applied to one or more of the
installments of rent coming due prior to the expiration of said terms, subject,
however, to the provisions contained in Section 1.11 hereinbelow;
(I) All contracts and agreements now or hereafter entered into by
Grantor covering any part of the Land or the Improvements (collectively, the
"Contracts") and all revenue, income and other benefits thereof, including,
without limitation, management agreements, franchise agreements, service
contracts, maintenance contracts, equipment leases, personal property leases and
so called "patronage" agreements, agreements relating to the collection of
receivables or use of customer lists, all bookings and reservations for space
within the Improvements or other information, and any contracts or documents
relating to construction on any part of the Land or the Improvements (including
plans, specifications, studies, drawings, surveys, tests, operating and other
reports, bonds and governmental approvals) or to the management or operation of
any part of the Land or the Improvements;
(J) All present and future monetary deposits given to any public or
private utility with respect to utility services furnished to any part of the
Land or the Improvements;
(K) All present and future funds, accounts, instruments, accounts
receivable, documents, causes of action, claims, general intangibles (including,
without limitation,
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trademarks, trade names, service marks and symbols now or hereafter used by
Grantor in connection with or related to any part of the Land or the
Improvements, specifically excluding, however, the mark "WestCoast", all names
by which the Land or the Improvements may be operated or known, all rights to
carry on business under such names, all telephone numbers or listings, and all
rights, interest and privileges which Grantor has or may have as developer or
declarant under any covenants, restrictions or declarations now or hereafter
relating to the Land or the Improvements) and all notes or chattel paper now or
hereafter owned by Grantor and arising from or by virtue of Grantor's operations
related to the Land or the Improvements and all customer lists, other lists and
business information relating in any way to the Land, the Improvements or the
use thereof (collectively, the "General Intangibles");
(L) All water taps, sewer taps, certificates of occupancy, permits,
special permits, uses, licenses, franchises, certificates, consents, approvals
and other rights and privileges now or hereafter obtained in connection with the
Land or the Improvements and all present and future warranties and guaranties
relating to the Improvements or to any equipment, fixtures, furniture,
furnishings, personal property or components of any of the foregoing now or
hereafter located or installed on the Land or the Improvements;
(M) All building materials, supplies and equipment now or hereafter
placed on the Land or in the Improvements and all architectural renderings,
models, drawings, plans, specifications, studies and data now or hereafter
relating to the Land or the Improvements;
(N) All right, title and interest of Grantor in any insurance policies
or binders now or hereafter relating to the Property (whether or not such
insurance was requested or required by Beneficiary), including any unearned
premiums thereon;
(O) All proceeds, products, substitutions and accessions (including
claims and demands therefor) of the conversion, voluntary or involuntary, of any
of the foregoing into cash or liquidated claims, including, without limitation,
proceeds of insurance (whether or not such insurance was requested or required
by Beneficiary) and condemnation awards; and
(P) All other or greater rights and interests of every nature in the
Land or the Improvements and in the possession or use thereof and income
therefrom, whether now owned or hereafter acquired by Grantor.
FOR THE PURPOSE OF SECURING:
(1) The repayment of the debt evidenced by those two (2) certain
Promissory Notes as hereinafter described (such Promissory Notes, together with
any and all renewals, modifications, amendments, restatements, consolidations,
substitutions, replacements and extensions thereof, are hereinafter collectively
referred to as the "Note"):
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(a) that certain Promissory Note of even date herewith and
having a maturity date of SEPTEMBER 11, 2011, made by Grantor, as
borrower, and payable to the order of Beneficiary, as lender, in the
original principal amount of FOURTEEN MILLION AND NO/100 DOLLARS
($14,000,000.00) (the "Grand Loan" or the "Grand Loan Amount"),
together with interest and any fees as therein provided; and
(b) that certain Promissory Note of even date herewith having
a maturity date of SEPTEMBER 11, 2011, made by WHC821, LLC, a Delaware
limited liability company, as borrower, and payable to the order of
Beneficiary, as lender, in the original principal amount of SIX MILLION
EIGHT HUNDRED THOUSAND AND NO/100 DOLLARS ($6,800,000.00) (the "Olympia
Loan" or the "Olympia Loan Amount"), together with interest and any
fees as therein provided (the Olympia Loan and the Grand Loan shall be
collectively referred to herein as the "Loan" and the Olympia Loan
Amount and the Grand Loan Amount shall be collectively referred to
herein as the "Loan Amount");
(2) The full and prompt payment and performance of all of the
provisions, agreements, covenants and obligations herein contained and contained
in any other agreements, documents or instruments now or hereafter evidencing,
securing or otherwise relating to the indebtedness evidenced by the Note (the
Note, this Deed of Trust, the Olympia Deed of Trust (as hereinafter defined),
the Cash Management Agreement, the Assignment (as hereinafter defined) and such
other agreements, documents and instruments related thereto, together with any
and all renewals, modifications, amendments, restatements, consolidations,
substitutions, replacements, and extensions and modifications thereof, are
hereinafter collectively referred to as the "Loan Documents"; provided, however,
the term Loan Documents shall specifically exclude (i) the Indemnity and
Guaranty Agreement of even date made by WestCoast Hospitality (as hereinafter
defined) with respect to the Grand Loan, and (ii) the Hazardous Substance
Indemnity Agreement of even date made by WestCoast Hospitality and Grantor
(collectively the "Excluded Agreements") and the obligations set forth therein;
(3) Any and all future or additional advances (whether or not
obligatory) made by Beneficiary to protect or preserve the Property or the lien
or security interest created hereby on the Property, or for taxes, assessments,
operating expenses or insurance premiums as hereinafter provided or for
performance of any of Grantor's obligations hereunder or under the other Loan
Documents or for any other purpose provided herein or in the other Loan
Documents (whether or not the original Grantor remains the owner of the Property
at the time of such advances) together with interest thereon at the Default
Interest Rate; and
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(4) Any and all other indebtedness now owing or which may hereafter be
owing by Grantor to Beneficiary and which is evidenced by a promissory note or
other agreement which specifically states that it is intended to be secured by
this Deed of Trust, and all renewals, modifications, amendments, restatements,
consolidations, substitutions, replacements and extensions thereof.
(All of the sums referred to in Subsections (1) through (4) above are herein
sometimes referred to as the "secured indebtedness" or the "indebtedness secured
hereby").
PROVIDED, HOWEVER, that if the principal and interest and all other
sums due or to become due under the Note, including, without limitation, any
prepayment fees required pursuant to the terms of the Note, shall have been paid
at the time and in the manner stipulated therein and all other sums payable
hereunder and all other indebtedness secured hereby shall have been paid and all
other covenants contained in the Loan Documents shall have been performed, then,
upon written request of Beneficiary stating that all indebtedness secured hereby
have been paid, and upon surrender of this Deed of Trust and the Note to Trustee
for cancellation and retention and upon payment by Grantor of Trustee's fees,
Trustee shall reconvey to Grantor, or the person or persons legally entitled
thereto, without warranty, any portion of the Property then held hereunder. The
recitals in such reconveyance of any matters or facts shall be conclusive proof
of the truthfulness thereof. The grantee in any reconveyance may be described as
"the person or persons legally entitled thereto."
ARTICLE I
COVENANTS OF GRANTOR
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For the purpose of further securing the indebtedness secured hereby and
for the protection of the security of this Deed of Trust, for so long as the
indebtedness secured hereby or any part thereof remains unpaid, Grantor
represents, covenants and agrees as follows:
I.1 Warranties of Grantor. Grantor, for itself and its successors and
assigns, does hereby represent, warrant and covenant to and with Beneficiary,
its successors and assigns, that as of the date hereof:
(a) Grantor has good and marketable fee simple title to the
Property, subject only to those matters expressly set forth on Exhibit B
attached hereto and by this reference incorporated herein (the "Permitted
Exceptions"), and has full power and lawful authority to grant, bargain, sell,
convey, assign, transfer and encumber its interest in the Property in the manner
and form hereby done or intended. Grantor will preserve its interest in and
title to the Property and will forever warrant and defend the same to Trustee
and Beneficiary against any
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and all claims whatsoever and will forever warrant and defend the validity and
priority of the lien and security interest created herein against the claims of
all persons and parties whomsoever, subject to the Permitted Exceptions and such
matters as may be approved in writing by Beneficiary pursuant to this Deed of
Trust. The foregoing warranty of title shall survive the foreclosure, exercise
of any power of sale or other enforcement of this Deed of Trust (whether by
power of sale or otherwise) and shall inure to the benefit of and be enforceable
by Beneficiary in the event Beneficiary acquires title to the Property pursuant
to any foreclosure, exercise of any power of sale or otherwise;
(b) No bankruptcy or insolvency proceedings are pending or
contemplated by Grantor or, to the best knowledge of Grantor, against Grantor or
by or against any endorser, cosigner or guarantor of the Note;
(c) To Grantor's best knowledge, all reports, certificates,
affidavits, statements and other data furnished by Grantor to Beneficiary in
connection with the Loan are true and correct in all material respects and do
not omit to state any fact or circumstance necessary to make the statements
contained therein not misleading;
(d) The execution, delivery and performance of this Deed of
Trust, the Note and all of the other Loan Documents have been duly authorized by
all necessary action to be taken, and are, binding and enforceable against
Grantor in accordance with the respective terms thereof and do not contravene,
result in a breach of or constitute (upon the giving of notice or the passage of
time or both) a default under the partnership agreement, certificate or articles
of incorporation or other organizational documents of Grantor or any contract or
agreement of any nature to which Grantor is a party or by which Grantor or any
of its property may be bound and to the best of Grantor's knowledge do not
violate or contravene any law, order, decree, rule or regulation to which
Grantor is subject;
(e) To Grantor's best knowledge, Grantor is not required to
obtain any consent, approval or authorization from or to file any declaration or
statement with, any governmental authority or the agency in connection with or
as a condition to the execution, delivery or performance of this Deed of Trust,
the Note or the other Loan Documents which has not been so obtained or filed;
(f) To Grantor's best knowledge, Grantor has obtained or made
all necessary (i) consents, approvals and authorizations and registrations and
filings of or with all governmental authorities or agencies and (ii) consents,
approvals, waivers and notifications of partners, stockholders, members,
creditors, lessors and other non-governmental persons and/or entities, in each
case, which are required to be obtained or made by Grantor in connection with
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the execution and delivery of, and the performance by Grantor of its obligations
under, the Loan Documents;
(g) Grantor is not an "investment company," or a company
"controlled" by an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended;
(h) No part of the proceeds of the indebtedness secured hereby
will be used by Grantor for the purpose of purchasing or acquiring any "margin
stock" within the meaning of Regulations T, U or X of the Board of Governors of
the Federal Reserve System or for any other purpose which would be inconsistent
with such Regulations T, U or X or any other Regulations of such Board of
Governors, or for any purpose prohibited by legal requirements or by the terms
and conditions of the Loan Documents;
(i) Grantor and, if Grantor is a partnership, any general
partner of Grantor, has filed all federal, state and local tax returns required
to be filed and has paid or made adequate provision for the payment of all
federal, state and local taxes, charges and assessments, including sales and
payroll taxes, payable by Grantor and its general partners, if any. Grantor and
its general partners, if any, believe that their respective tax returns properly
reflect the income and taxes of Grantor and said general partners, if any, for
the periods covered thereby, subject only to reasonable adjustments required by
the Internal Revenue Service or other applicable tax authority upon audit;
(j) Grantor is not 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 and the assets of Grantor do not
constitute "plan assets" of one or more such plans within the meaning of 29
C.F.R. Section 2510.3-101;
(k) To Grantor's best knowledge, the Land and the Improvements
and the intended use thereof by Grantor comply with all applicable restrictive
covenants, zoning ordinances, subdivision and building codes, flood disaster
laws, applicable health and environmental laws and regulations and all other
ordinances, orders or requirements issued by any state, federal or municipal
authorities having or claiming jurisdiction over the Property. To Grantor's best
knowledge, the Land and Improvements constitute a separate tax parcel for
purposes of ad valorem taxation. To Grantor's best knowledge, the Land and
Improvements do not require any rights over, or restrictions against, other
property in order to comply with any of the aforesaid governmental ordinances,
orders or requirements except for such rights and restrictions which are
described in the Title Insurance Policy (as hereinafter defined);
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(l) All utility services necessary and sufficient for the full
use, occupancy, operation and disposition of the Land and the Improvements for
their intended purposes are available to the Property, including water, storm
sewer, sanitary sewer, gas, electric, cable and telephone facilities, through
public rights-of-way or perpetual private easements reflected in the title
insurance policy insuring the lien of this Deed of Trust and approved by
Beneficiary (the "Title Insurance Policy");
(m) All streets, roads, highways, bridges and waterways
necessary for access to and full use, occupancy, operation and disposition of
the Land and the Improvements have been completed, have been dedicated to and
accepted by the appropriate municipal authority and are open and available to
the Land and the Improvements without further condition or cost to Grantor;
(n) All curb cuts, driveways and traffic signals shown on the
survey delivered to Beneficiary prior to the execution and delivery of this Deed
of Trust are existing and to Grantor's best knowledge have been fully approved
by the appropriate governmental authority;
(o) To Grantor's best knowledge, there are no judicial,
administrative, mediation or arbitration actions, suits or proceedings pending
or threatened against or affecting Grantor (and any member of Grantor) or the
Property which, if adversely determined, would have a material adverse effect on
(a) the Property, (b) the business, prospects, profits, operations or condition
(financial or otherwise) of Grantor, (c) the enforceability, validity,
perfection or priority of the lien of any Loan Document, or (d) the ability of
Grantor to perform any obligations under any Loan Document (collectively, a
"Material Adverse Effect");
(p) As of the date of this Deed of Trust (i) the Property is
free from delinquent water charges, sewer rents, taxes and assessments, and from
unrepaired damage caused by fire, flood, accident or other casualty, and (ii) no
part of the Land or the Improvements has been taken in condemnation, eminent
domain or like proceeding nor is any such proceeding pending or to Grantor's
knowledge and belief, threatened or contemplated;
(q) Grantor possesses all franchises, patents, copyrights,
trademarks, trade names, licenses (including, without limitation, liquor
licenses), and permits (collectively, the "Permits") adequate for the conduct of
its business substantially as now conducted or, with respect to liquor licenses,
has the right to use the same in the operation of the Property pursuant to
legal, valid and enforceable agreements, all fees due and payable in connection
with the Permits have been paid and the Property and the conduct of Grantor's
business thereof materially complies with the Permits;
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(r) Except as set forth in the Title Insurance Policy insuring
the lien of this Deed of Trust and to Grantor's best knowledge no improvements
on adjoining properties encroach upon the Property. To Grantor's best knowledge,
the Improvements are structurally sound, in good repair and free of defects in
materials and workmanship and have been constructed and installed in substantial
compliance with the plans and specifications relating thereto. All major
building systems located within the Improvements, including, without limitation,
the heating and air conditioning systems and the electrical and plumbing
systems, are in good working order and condition, all of the guest rooms in the
Improvements are in good condition and available for regular occupancy and the
lobby, restaurant and lounge facilities, meeting rooms, "back-of-the-house"
areas, parking facilities and other public areas are in good condition and
available for regular use. The Improvements and Grantor's operations of its
business materially comply with the requirements of the Franchise Agreement (as
hereinafter defined);
(s) Except as disclosed in writing by Grantor to Beneficiary
prior to the date hereof, there are no security agreements or financing
statements affecting any of the Property other than the security agreements and
financing statements created in favor of Beneficiary;
(t) Except as previously disclosed in Grantor's Certification
Regarding Project Documents and Financial Information dated of even date
herewith and delivered to Beneficiary or otherwise in writing by Grantor to
Beneficiary, and other than certain incentive compensation systems designed to
promote increased customer use of the Property, there is no collective
bargaining agreement and other labor agreement to which Grantor or the Property,
or any portion thereof, is a party or by which either is or may be bound. To
Grantor's best knowledge, Grantor is not in violation of, in any material
respect, any applicable laws, rules and regulations relating to the employment
of labor, including those relating to wages, hours, collective bargaining and
the payment and withholding of taxes and other sums as required by appropriate
governmental authorities;
(u) The Property is free and clear of any mechanics' or
materialmen's liens or liens in the nature thereof, and no rights are
outstanding that under law would give rise to any such liens, any of which liens
are or may be prior to, or equal with, the lien of this Deed of Trust, except
those which are insured against by the Title Insurance Policy;
(v) Except as disclosed in the Title Insurance Policy, no
Lease or Contract or easement, right of way, permit or declaration
(collectively, "Property Agreements") provides any party with the right to
obtain a lien or encumbrance upon the Property superior to the lien of this Deed
of Trust;
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(w) Grantor has delivered to Beneficiary true, correct and
complete copies of all Property Agreements and no default exists or would exist,
with the passing of time, or the giving of notice, or both, under any Property
Agreement which would, in the aggregate, have a Material Adverse Effect;
(x) To the best knowledge of Grantor, no offset or any right
of offset exists respecting continued contributions to be made by any party to
any Property Agreement except as expressly set forth herein. Except as
previously disclosed to Beneficiary in writing, no material exclusions or
restrictions on the utilization, leasing or improvement of the Property
(including non-compete agreements) exists in any Property Agreement;
(y) All work, if any, to be performed by Grantor under each of
the Property Agreements has been substantially performed, all contributions to
be made by Grantor to any party to such Property Agreements have been made, and
all other conditions to such party's obligations thereunder have been satisfied;
(z) The Land is taxed separately without regard to any other
real estate and constitutes a legally subdivided lot under all applicable legal
requirements (or, if not subdivided, no subdivision or platting of the Property
is required under applicable legal requirements), and for all purposes may be
mortgaged, conveyed, pledged, hypothecated, assigned or otherwise dealt with as
an independent parcel;
(aa) The Land forms no part of any property owned, used or
claimed by Grantor as a residence or business homestead and is not exempt from
forced sale under the laws of the State in which the Property is located.
Grantor hereby disclaims and renounces each and every claim to all or any
portion of the Property as a homestead and the Loan evidenced by the Loan
Documents is made and transacted solely for business, investment, commercial or
other similar purposes. No part of the Property is or will be used for
agricultural or farming purposes;
(bb) There are no outstanding options or rights of first offer
or refusal to purchase all or any portion of the Property or Grantor's interest
therein or ownership thereof made by Grantor and to Grantor's best knowledge
made by any other party;
(cc) There are no actions, suits, proceedings or orders of
record or of which Grantor has notice, and, to the best of Grantor's knowledge,
there are no inquiries or investigations, pending or threatened, in any such
case against, involving or affecting the Property, at law or in equity, or
before or by any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
alleging the violation of any federal, state or local law, statute, ordinance,
rule or
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regulation relating to Environmental Laws. Furthermore, Grantor has not received
any written claim, notice or opinion that the ownership or operation of the
Property violates any federal, state or local law, statute, ordinance, rule,
regulation, decree, order, and/or permit relating to Environmental Laws, and, to
the best of Grantor's knowledge, no valid basis for any proceeding, action or
claim of such nature exists;
(dd) The representations and warranties contained in this Deed
of Trust, or the review and inquiry made on behalf of the Grantor therefor, have
all been made by persons having the requisite expertise and knowledge to provide
such representations and warranties. No statement or fact made by or on behalf
of Grantor in this Deed of Trust or in any certificate, document or schedule
furnished to Beneficiary pursuant hereto, contains any untrue statement of a
material fact or omits to state any material fact necessary to make statements
contained therein or herein not misleading (which may be to Grantor's best
knowledge where so provided herein). There is no fact presently known to Grantor
which has not been disclosed to Beneficiary which would have a Material Adverse
Effect; and
(ee) Any lease, license or occupancy agreement now in effect
permits the application of insurance and condemnation proceeds as provided
herein.
I.2 Defense of Title. If, while this Deed of Trust is in force, the
title to the Property or the interest of Beneficiary or Trustee therein shall be
the subject, directly or indirectly, of any action at law or in equity, or be
attached directly or indirectly, or endangered, clouded or adversely affected in
any manner, Grantor, at Grantor's expense, shall take all necessary and proper
steps for the defense of said title or interest, including the employment of
counsel reasonably approved by Beneficiary, the prosecution or defense of
litigation, and the compromise or discharge of claims made against said title or
interest.
I.3 Performance of Obligations. Grantor shall pay when due the
principal of and the interest on the indebtedness secured hereby including all
charges, fees and other sums required to be paid by Grantor as provided in the
Loan Documents, and shall observe, perform and discharge all obligations and
conditions, and comply with all prohibitions, covenants and agreements to be
observed, performed or discharged by Grantor set forth in the Loan Documents in
accordance with their terms. In the event that Grantor is in default under its
obligations under this Deed of Trust or under any of the other Loan Documents
and the same is continuing after any applicable cure period, Beneficiary may,
without limiting or waiving any other rights or remedies of Beneficiary
hereunder, perform such obligations of Grantor and any and all costs and
expenses reasonably incurred by Beneficiary in connection therewith, together
with interest thereon at the Default Interest Rate from the date incurred by
Beneficiary until actually paid by Grantor, shall be immediately paid by Grantor
on demand and shall be
13
secured by this Deed of Trust and by all of the other Loan Documents securing
all or any part of the indebtedness evidenced by the Note.
I.4 Insurance. Grantor shall, at Grantor's expense, maintain in force
and effect on the Property at all times while this Deed of Trust continues in
effect the following insurance:
(a) "All-risk" coverage insurance against loss or damage to
the Property from all-risk perils. The amount of such insurance shall be not
less than one hundred percent (100%) of the full replacement cost of the
Improvements, furniture, furnishings, fixtures, equipment and other items
(whether personalty or fixtures) included in the Property and owned by Grantor
from time to time, without reduction for depreciation. The determination of the
replacement cost amount shall be adjusted annually to comply with the
requirements of the insurer issuing such coverage or, at Beneficiary's election,
by reference to such indexes, appraisals or information as Beneficiary
determines in its reasonable discretion. Full replacement cost, as used herein,
means, with respect to the Improvements, the cost of replacing the Improvements
without regard to deduction for depreciation, exclusive of the cost of
excavations, foundations and footings below the lowest basement floor, and
means, with respect to such furniture, furnishings, fixtures, equipment and
other items, the cost of replacing the same. Each policy or policies shall
contain a replacement cost endorsement and either an agreed amount endorsement
(to avoid the operation of any co-insurance provisions) or a waiver of any
co-insurance provisions, all subject to Beneficiary's approval.
(b) Commercial general liability insurance for personal
injury, bodily injury, death and property damage liability in amounts not less
than $5,000,000.00 per occurrence, $6,000,000.00 aggregate (inclusive of
umbrella coverage) or such lesser amount as Beneficiary in Beneficiary's sole
discretion may accept, for bodily injury, personal injury and property damage.
Beneficiary hereby retains the right to periodically review the amount of said
liability insurance being maintained by Grantor and to require an increase in
the amount of said liability insurance should Beneficiary deem an increase to be
reasonably prudent under then existing circumstances.
(c) Insurance covering the major components of the central
heating, air conditioning and ventilating systems, boilers, other pressure
vessels, high pressure piping and machinery, elevators and escalators, if any,
and other similar equipment installed in the Improvements, in an amount equal to
one hundred percent (100%) of the full replacement cost of the Improvements
which policies shall insure against physical damage to and loss of occupancy and
use of the Improvements arising out of an accident or breakdown covered
thereunder.
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(d) If the Land or any part thereof is identified by the
Secretary of Housing and Urban Development as being situated in an area now or
subsequently designated as having special flood hazards (including, without
limitation, those areas designated as Zone A or Zone V), flood insurance in an
amount equal to one hundred percent (100%) of the replacement cost of the
Improvements or the maximum amount of flood insurance available, whichever is
the lesser.
(e) During the period of any construction on the Land or
renovation or alteration of the Improvements, a so-called "Builder's All-Risk
Completed Value" or "Course of Construction" insurance policy in non-reporting
form for any Improvements under construction, renovation or alteration in an
amount approved by Beneficiary and Worker's Compensation Insurance covering all
persons engaged in such construction, renovation or alteration.
(f) Business interruption insurance in amounts sufficient to
compensate Grantor for all Rents and Profits during a period of not less than
one (1) year in which the Property may be damaged or destroyed.
(g) Law and ordinance coverage in an amount satisfactory to
Beneficiary if the Property, or any part thereof, shall constitute a
nonconforming use or structure under applicable zoning ordinances, sub-division
and building codes or other laws, ordinances, orders and requirements.
(h) Such other insurance on the Property or on any
replacements or substitutions thereof or additions thereto as may from time to
time be required by Beneficiary against other insurable hazards or casualties,
including, without limitation, innkeeper's liability and liquor liability, which
at the time are commonly insured against in the case of property similarly
situated, due regard being given to the height and type of buildings, their
construction, location, use and occupancy.
All such insurance shall (i) be issued by companies approved by
Beneficiary and authorized and licensed to do business in the state within which
the Land is located, with a claims paying ability rating of "A+" or better, from
Standard & Poor's Rating Services, a division of the McGraw Hill Companies,
Inc., (ii) contain the complete address of the Land (or a complete legal
description), (iii) be for a term of at least one (1) year, (iv) contain
deductibles no greater than $12,500.00 or as otherwise required by Beneficiary,
and (v) be subject to the approval of Beneficiary as to insurance companies,
amounts, content, forms of policies, method by which premiums are paid and
expiration dates.
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Grantor shall as of the date hereof deliver to Beneficiary evidence
that said insurance policies have been paid current as of the date hereof and
original certificates of insurance signed by an authorized agent evidencing such
insurance satisfactory to Beneficiary. Grantor shall renew all such insurance
and deliver to Beneficiary certificates evidencing such renewals at least thirty
(30) days before any such insurance shall expire. Without limiting the required
endorsements to insurance policies, Grantor further agrees that all such
policies and any other policies covering the Property or any portion thereof,
whether or not required or requested by Beneficiary, shall provide that proceeds
thereunder shall be payable to Beneficiary, its successors and assigns, pursuant
and subject to a mortgagee clause (without contribution) of standard form
attached to, or otherwise made a part of, the applicable policy and that
Beneficiary, its successors and assigns, shall be named as an additional insured
under all liability insurance policies. Grantor further agrees that all such
insurance policies and any other policies covering the Property or any portion
thereof, whether or not required or requested by Beneficiary: (i) shall provide
for at least thirty (30) days' prior written notice to Beneficiary prior to any
cancellation or termination thereof and prior to any modification thereof which
affects the interest of Beneficiary; (ii) shall contain an endorsement or
agreement by the insurer that any loss shall be payable to Beneficiary in
accordance with the terms of such policy notwithstanding any act or negligence
of Grantor which might otherwise result in forfeiture of such insurance; and
(iii) shall either name Beneficiary as an additional insured or waive all rights
of subrogation against Beneficiary. The delivery to Beneficiary of the insurance
policies or the certificates of insurance as provided above shall constitute an
assignment of all proceeds payable under such insurance policies by Grantor to
Beneficiary as further security for the indebtedness secured hereby. In the
event of foreclosure of this Deed of Trust, or other transfer of title to the
Property in extinguishment in whole or in part of the secured indebtedness, all
right, title and interest of Grantor in and to all proceeds payable under such
policies then in force concerning the Property shall thereupon vest in the
purchaser at such foreclosure, or in Beneficiary or other transferee in the
event of such other transfer of title. Approval of any insurance by Beneficiary
shall not be a representation of the solvency of any insurer or the sufficiency
of any amount of insurance. In the event Grantor fails to provide, maintain,
keep in force or deliver and furnish to Beneficiary the policies of insurance
required by this Deed of Trust or evidence of their renewal as required herein,
Beneficiary may, but shall not be obligated to, procure such insurance and
Grantor shall pay all amounts advanced by Beneficiary, together with interest
thereon at the Default Interest Rate from and after the date advanced by
Beneficiary until actually repaid by Grantor, promptly upon demand by
Beneficiary. Any amounts so advanced by Beneficiary, together with interest
thereon, shall be secured by this Deed of Trust and by all of the other Loan
Documents securing all or any part of the indebtedness evidenced by the Note.
Beneficiary shall not be responsible for nor incur any liability for the
insolvency of the insurer or other failure of the insurer to perform, even
though Beneficiary has caused the insurance to be placed with the insurer after
failure of Grantor to furnish such insurance.
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I.5 Payment of Taxes. Grantor shall pay or cause to be paid, except to
the extent provision is actually made therefor pursuant to Section 1.6 of this
Deed of Trust, all taxes and assessments which are or may become a lien on the
Property or which are assessed against or imposed upon the Property. Grantor
shall furnish Beneficiary with receipts (or if receipts are not immediately
available, with copies of canceled checks evidencing payment with receipts to
follow promptly after they become available) showing payment of such taxes and
assessments at least fifteen (15) days prior to the applicable delinquency date
therefor. Notwithstanding the foregoing, Grantor may in good faith, by
appropriate proceedings and upon notice to Beneficiary, contest the validity,
applicability or amount of any asserted tax or assessment so long as (a) such
contest is diligently pursued, (b) such contest suspends the obligation to pay
the tax or assessment and that nonpayment of such tax or assessment will not
result in the sale, loss, forfeiture or diminution of the Property or any part
thereof or any interest of Beneficiary therein, and (c) prior to the earlier of
the commencement of such contest or the delinquency date of the asserted tax or
assessment, Grantor deposits in the Impound Account (as hereinafter defined) an
amount determined by Beneficiary to be adequate to cover the payment of such tax
or assessment and a reasonable additional sum to cover possible interest, costs
and penalties; provided, however, that Grantor shall promptly cause to be paid
any amount adjudged by a court of competent jurisdiction to be due, with all
interest, costs and penalties thereon, promptly after such judgment becomes
final; and provided further that in any event each such contest shall be
concluded and the taxes, assessments, interest, costs and penalties shall be
paid prior to the date any writ or order is issued under which the Property may
be sold, lost or forfeited.
I.6 Tax and Insurance Impound Account. Grantor shall establish and
maintain at all times while this Deed of Trust continues in effect an impound
account (the "Impound Account") with Beneficiary for payment of real estate
taxes, ad valorem taxes, personal property taxes, assessments and insurance on
the Property and as additional security for the indebtedness secured hereby.
Grantor shall deposit in the Impound Account an amount determined by Beneficiary
to be sufficient (when added to the monthly deposits described herein) to pay
the next due annual installment of real estate taxes, ad valorem taxes, personal
property taxes and assessments on the Property at least one (1) month prior to
the delinquency date thereof (if paid in one installment) and the next due
annual insurance premiums with respect to the Property at least one (1) month
prior to the due date thereof (if paid in one installment). Commencing on the
first monthly payment date under the Note and continuing thereafter on each
monthly payment date under the Note, Grantor shall pay to Beneficiary (by
distribution from the Rent Account to the Impound Account in accordance with the
Cash Management Agreement), concurrently with the monthly payment due under the
Note, an amount equal to one-twelfth (1/12) of the amount of the annual real
estate taxes, ad valorem taxes, personal property taxes and assessments that
will next become due and payable on the
17
Property, plus one-twelfth (1/12) of the amount of the annual premiums that will
next become due and payable on insurance policies which Grantor is required to
maintain hereunder, each as reasonably estimated and determined by Beneficiary.
So long as no default hereunder or under the other Loan Documents has occurred
and is continuing, all sums in the Impound Account shall be held by Beneficiary
in the Impound Account to pay said taxes, assessments and insurance premiums in
one installment before the same become delinquent. Grantor shall be responsible
for ensuring the receipt by Beneficiary, at least thirty (30) days prior to the
respective due date for payment thereof, of all bills, invoices and statements
for all taxes, assessments and insurance premiums to be paid from the Impound
Account, and so long as no default hereunder or under the other Loan Documents
has occurred and is continuing, Beneficiary shall pay the governmental authority
or other party entitled thereto directly to the extent funds are available for
such purpose in the Impound Account. In making any payment from the Impound
Account, Beneficiary shall be entitled to rely on any bill, statement or
estimate procured from the appropriate public office or insurance company or
agent without any inquiry into the accuracy of such bill, statement or estimate
and without any inquiry into the accuracy, validity, enforceability or
contestability of any tax, assessment, valuation, sale, forfeiture, tax lien or
title or claim thereof. No interest on funds contained in the Impound Account
shall be paid by Beneficiary to Grantor and any interest or other earnings on
funds deposited in the Impound Account shall be solely for the account of
Beneficiary. If the total funds in the Impound Account shall exceed the amount
of payments actually applied by Beneficiary for the purposes of the Impound
Account, such excess may be credited by Beneficiary on subsequent payments to be
made hereunder or, at the option of Beneficiary, refunded to Grantor within ten
(10) business days after payment thereof. If, however, the Impound Account shall
not contain sufficient funds to pay the sums required when the same shall become
due and payable, Grantor shall, within ten (10) days after receipt of written
notice thereof, deposit with Beneficiary the full amount of any such deficiency.
The Impound Account shall at all times be maintained consistent with and subject
to the terms of the Cash Management Agreement.
I.7 FF&E Reserve. As additional security for the indebtedness secured
hereby, Grantor shall establish and maintain at all times while this Deed of
Trust continues in effect a reserve (the "FF&E Reserve") with Beneficiary for
the payment of costs and expenses incurred by Grantor in connection with capital
improvements, repairs and replacements, including the performance of work to the
roofs, chimneys, gutters, downspouts, paving, curbs, ramps, driveways,
balconies, porches, patios, exterior walls, exterior doors and doorways,
windows, carpets, appliances, fixtures, elevators, and mechanical and HVAC
equipment and the replacement of furnishings, fixtures and equipment in the
guest rooms, hallways, lobbies, restaurants, lounges, meeting and banquet rooms,
parking facilities and other public areas accessible by the public for regular
use, including, without limitation, the items more particularly described and
identified on Exhibit D attached hereto and by this reference made a
18
part hereof, and such other items as Beneficiary may approve from time to time
in its reasonable discretion (collectively the "Repairs"). Commencing on the
first monthly payment date under the Note, and continuing thereafter on each
monthly payment date under the Note, Grantor shall pay to Beneficiary (by
distribution from the Rent Account in accordance with the Cash Management
Agreement), concurrently with and in addition to the monthly payment due under
the Note, and until the Note and all other indebtedness secured hereby is fully
paid and performed, a deposit to the FF&E Reserve in an amount equal to FOUR
PERCENT (4%) of the annual "gross revenues", as hereinafter defined, from the
Property for the prior calendar year, divided by twelve (12). As used herein,
"gross revenues" shall mean all Rents and Profits derived by Grantor from room
sales, telephone sales, net fax sales, net vending sales, net catering sales,
net guest laundry sales, and any other miscellaneous sales not including
interest income, dividend income, gains on the sale of stock, bonds or other
securities, or from the sale of used furniture, fixtures and equipment, or from
any other passive income source. So long as no default hereunder or under the
other Loan Documents has occurred and is continuing, (i) all sums in the FF&E
Reserve shall be held by Beneficiary in the FF&E Reserve to pay and/or reimburse
Grantor for the costs and expenses of Repairs, and (ii) Beneficiary shall,
subject to the terms of the Cash Management Agreement and so long as no default
hereunder or under the other Loan Documents has occurred and is continuing, and
to the extent funds are available for such purpose in the FF&E Reserve, disburse
to Grantor the amount paid or incurred by Grantor in performing such Repairs
within ten (10) days following: (a) the receipt by Beneficiary of a written
request from Grantor for disbursement from the FF&E Reserve and a certification
by Grantor to Beneficiary that the applicable item of Repair has been completed;
(b) the delivery to Beneficiary of invoices, receipts or other evidence
verifying the cost of performing the Repairs; and (c) for disbursement requests
(i) in excess of $20,000.00 with respect to any single Repair, or (ii) for any
single Repair that is structural in nature, delivery to Beneficiary of the
following documents, if applicable, (1) affidavits, lien waivers or other
evidence reasonably satisfactory to Beneficiary showing that all materialmen,
laborers, subcontractors and any other parties who might or could claim
statutory or common law liens and are furnishing or have furnished material or
labor to the Property have been paid all amounts due for labor and materials
furnished to the Property; (2) a certification from an inspecting architect or
other third party acceptable to Beneficiary describing the completed Repairs and
verifying the completion of the Repairs and the value of the completed Repairs;
and (3) a new (or amended) certificate of occupancy for the portion of the
Improvements covered by such Repairs, if said new certificate of occupancy is
required by law, or a certification by Grantor that no new certificate of
occupancy is required by law. Beneficiary shall not be required to make advances
from the FF&E Reserve more frequently than once in any thirty (30) day period.
In making any payment from the FF&E Reserve, Beneficiary shall be entitled to
rely on such request from Grantor, and on any bill, statement, or estimate from
any third party, without any inquiry into the accuracy, validity or
contestability of any such amount. Beneficiary may, at Grantor's expense (not to
exceed $2,500.00 annually), make or
19
cause to be made during the term of this Deed of Trust an annual inspection of
the Property to determine the need, as determined by Beneficiary in its
reasonable judgment, for further Repairs of the Property. In the event that such
inspection reveals that further Repairs of the Property are required,
Beneficiary shall provide Grantor with a written description of the required
Repairs and Grantor shall complete such Repairs to the reasonable satisfaction
of Beneficiary within ninety (90) days after the receipt of such description
from Beneficiary, or such later date as may be approved by Beneficiary in its
sole discretion. Interest or other earnings on the funds contained in the FF&E
Reserve shall be credited to Grantor as provided in Section 5.28 hereof. In the
event that the amounts on deposit or available in the FF&E Reserve are
inadequate to pay the cost of the Repairs, Grantor shall pay the amount of such
deficiency. The FF&E Reserve shall at all times otherwise be maintained
consistent with and subject to the terms of the Cash Management Agreement.
I.8 Security Interest in Reserves.
(a) As additional security for the payment and performance by
Grantor of all duties, responsibilities and obligations under the Note and the
other Loan Documents, Grantor hereby unconditionally and irrevocably assigns,
conveys, pledges, mortgages, transfers, delivers, deposits, sets over and
confirms unto Beneficiary, and hereby grants to Beneficiary a security interest
in all sums on deposit or due under this Deed of Trust and the other Loan
Documents including, without limitation, (i) the Rent Account, Central Account,
the Impound Account, the FF&E Reserve, the Curtailment Reserve and any other
reserve, if any, set forth on Exhibit C attached hereto and made a part hereof
and all other Accounts and Sub-Accounts described or defined in the Cash
Management Agreement (collectively, the "Reserves"), (ii) the accounts into
which the Reserves have been deposited, (iii) all insurance on said accounts,
(iv) all accounts, contract rights and general intangibles or other rights and
interests pertaining thereto, (v) all sums now or hereafter therein or
represented thereby, (vi) all replacements, substitutions or proceeds thereof,
(vii) all instruments and documents now or hereafter evidencing the Reserves or
such accounts, (viii) all powers, options, rights, privileges and immunities
pertaining to the Reserves (including the right to make withdrawals therefrom),
and (ix) all proceeds of the foregoing. Grantor hereby authorizes and consents,
subject to the terms of the Cash Management Agreement, to the account into which
the Reserves have been deposited being held in Beneficiary's name or the name of
any entity servicing the Note for Beneficiary and hereby acknowledges and agrees
that Beneficiary, or at Beneficiary's election, such servicing agent, shall have
exclusive control over said account. Notice of the assignment and security
interest granted to Beneficiary herein may be delivered by Beneficiary at any
time to the financial institution wherein the Reserves have been established,
and Beneficiary, or such servicing entity, shall have possession of all
passbooks or other evidences of such accounts. Grantor hereby holds Beneficiary
harmless with respect to all risk of loss regarding amounts on deposit in the
Reserves, except to the extent that any such
20
loss is caused by the gross negligence or intentional misconduct of Beneficiary.
Grantor hereby knowingly, voluntarily and intentionally stipulates, acknowledges
and agrees that the advancement of the funds from the Reserves as set forth
herein or in the Cash Management Agreement is at Grantor's direction and is not
the exercise by Beneficiary of any right of set-off or other remedy upon a
default. If a default shall occur hereunder or under any other of the Loan
Documents which is not cured within any applicable grace or cure period, then
Beneficiary may, without notice or demand on Grantor, at its option: (A)
withdraw any or all of the funds (including, without limitation, interest) then
remaining in the Reserves and apply the same, after deducting all costs and
expenses of safekeeping, collection and delivery (including, but not limited to,
attorneys' fees, costs and expenses) to the indebtedness evidenced by the Note
or any other obligations of Grantor under the other Loan Documents in such
manner as Beneficiary shall deem appropriate in its sole discretion, and the
excess, if any, shall be paid to Grantor, (B) exercise any and all rights and
remedies of a secured party under any applicable Uniform Commercial Code, or (C)
exercise any other remedies available at law or in equity. No such use or
application of the funds contained in the Reserves shall be deemed to cure any
default hereunder or under the other Loan Documents.
(b) The Reserves are solely for the protection of Beneficiary
and entail no responsibility on Beneficiary's part beyond the payment of the
respective costs and expenses in accordance with the terms thereof and beyond
the allowing of due credit for the sums actually received. Upon assignment of
this Deed of Trust by Beneficiary, any funds in the Reserves shall be turned
over to the assignee and any responsibility of Beneficiary, as assignor, with
respect thereto shall terminate. The Reserves shall not, unless otherwise
explicitly required by applicable law, be or be deemed to be escrow or trust
funds, but, at Beneficiary's option and in Beneficiary's discretion, may either
be held in a separate account or be commingled by Beneficiary with the general
funds of Beneficiary. Upon full payment of the indebtedness secured hereby in
accordance with its terms (or if earlier, the completion of the applicable
conditions to release of each Reserve to Beneficiary's satisfaction) or at such
earlier time as Beneficiary may elect, the balance in the Reserves then in
Beneficiary's possession shall be paid over to Grantor and no other party shall
have any right or claim thereto.
(c) Any amounts received by Beneficiary from Grantor may be
invested by Beneficiary (or its servicer) for its benefit, and Beneficiary shall
not be obligated to pay, or credit, any interest earned thereon to Grantor
except as may be otherwise specifically provided in this Deed of Trust.
I.9 Casualty and Condemnation. Grantor shall give Beneficiary prompt
written notice of the occurrence of any casualty affecting greater than
$25,000.00 of the value of the Property, or the institution of any proceedings
for eminent domain or for the condemnation of, the Property or any portion
thereof (collectively, an "Insured Event"). All insurance proceeds
21
on the Property (whether or not such insurance was requested or required by
Beneficiary), and all causes of action, claims, compensation, awards and
recoveries for any damage, condemnation or taking of all or any part of the
Property or for any damage or injury to it for any loss or diminution in value
of the Property, are hereby assigned to and shall be paid to Beneficiary.
Beneficiary may participate in any suits or proceedings relating to any such
proceeds, causes of action, claims, compensation, awards or recoveries, and
Beneficiary is hereby authorized, in its own name or in Grantor's name, to
adjust any loss covered by any insurance (whether or not such insurance was
requested or required by Beneficiary) or any condemnation claim or cause of
action, and to settle or compromise any claim or cause of action in connection
therewith, and Grantor shall from time to time deliver to Beneficiary any
instruments required to permit such participation; provided, however, that
Beneficiary shall not have the right to participate in the adjustment of any
loss which is not in excess of the lesser of (i) ten percent (10%) of the then
outstanding principal balance of the Note, and (ii) $350,000.00. Provided no
default is then continuing hereunder or under any of the other Loan Documents
and no event has occurred which, with the giving of notice or the passage of
time or both, would constitute a default hereunder or under any of the other
Loan Documents, Beneficiary shall apply any sums received by it under this
Section first to the payment of all of its costs and expenses (including, but
not limited to, reasonable legal fees and disbursements) incurred in obtaining
those sums, and then, as follows:
(a) In the event that Beneficiary receives insurance proceeds
or condemnation awards upon the occurrence of an Insured Event in an amount not
in excess of the lesser of (i) ten percent (10%) of the then outstanding
principal balance of the Note, and (ii) $350,000.00, (collectively, the
"Threshold Amount"), Beneficiary shall, to the extent such insurance proceeds or
condemnation awards are available for such purpose, advance such funds to
Grantor in accordance with, and satisfaction of, the terms and conditions for
disbursement set forth in Section 1.7 of this Deed of Trust.
(b) In the event any proceeds or awards from an Insured Event
exceed the Threshold Amount but less than fifty percent (50%) of the
Improvements located on the Land have been taken or destroyed, then if:
(1) the Property can, in Beneficiary's reasonable
judgment, with diligent restoration or repair, be returned to a
condition at least equal to the condition thereof that existed prior to
the casualty or partial taking causing the loss or damage within the
earlier to occur of (i) twelve (12) months after the receipt of
insurance proceeds or condemnation awards by either Grantor or
Beneficiary, and (ii) the stated maturity date of the Note, and
22
(2) all necessary governmental approvals can be
obtained to allow the rebuilding and reoccupancy of the Property as
described in Section 1.9(b)(1) above, and
(3) there are sufficient sums available (through
insurance proceeds or condemnation awards and contributions by Grantor,
the full amount of which additional contributions shall at
Beneficiary's option have been deposited with Beneficiary) for such
restoration or repair (including, without limitation, for any
reasonable costs and expenses of Beneficiary to be incurred in
administering said restoration or repair) and for payment of principal
and interest to become due and payable under the Note during such
restoration or repair, and
(4) the economic feasibility of the Improvements
after such restoration or repair will be such that income from their
operation is reasonably anticipated to be sufficient to pay operating
expenses of the Property and debt service on the indebtedness secured
hereby in full with a 1.40:1 debt service coverage ratio, and
(5) Grantor shall have delivered to Beneficiary, at
Grantor's sole cost and expense, an appraisal report from an appraiser,
in form and substance satisfactory to Beneficiary appraising the value
of the Property as proposed to be restored or repaired to be not less
than the appraised value necessary to support the loan to value ratio
which was initially required Beneficiary in its determination to make
the Loan (i.e., 1.40 to 1.0), and
(6) Such damage or destruction shall not allow the
termination of any franchise agreement covering the Property, or if
such termination is allowed, Grantor has obtained and delivered to
Beneficiary evidence satisfactory to Beneficiary that such right to
terminate has been waived by the franchisor, and
(7) Grantor so elects by written notice delivered to
Beneficiary within ten (10) days after settlement of the aforesaid
insurance or condemnation claim,
then, Beneficiary shall, solely for the purposes of such restoration or repair,
advance so much of the remainder of such sums as may be required to facilitate
such restoration or repair, and any funds deposited by Grantor therefor, to
Grantor in the manner and upon such terms and conditions as would be required by
a prudent interim construction lender, including, but not limited to, the prior
approval by Beneficiary of plans and specifications, contractors and the form of
construction contracts and the furnishing to Beneficiary of permits, bonds, lien
waivers, invoices, receipts and affidavits from contractors and subcontractors,
in form and
23
substance reasonably satisfactory to Beneficiary. Any remaining proceeds shall
be (a)(i) applied for payment of the Grand Loan, and then (ii) applied for
payment of the other indebtedness secured hereby or (b) released to Grantor, in
Beneficiary's absolute discretion.
Any disbursement pursuant to this Section 1.9(b) of sums by
Beneficiary shall, subject to Grantor's satisfaction of the provisions hereof,
be in a manner to promptly facilitate the restoration or repair of the Property.
In the event Grantor fails to meet the requirements of this Section 1.9(b), then
Beneficiary may elect, in its absolute discretion and without regard to the
adequacy of Beneficiary's security, to apply any remaining insurance or
condemnation proceeds (a) (i) for payment of the Grand Loan, then (ii) payment
of the other indebtedness secured hereby, or (b) released to Grantor, in
Beneficiary's absolute discretion.
(c) In all other cases, namely, in the event that fifty
percent (50%) or more of the Improvements located on the Land have been taken or
destroyed Beneficiary may elect, in Beneficiary's absolute discretion and
without regard to the adequacy of Beneficiary's security, to (i) require Grantor
to obtain the release of the Property in accordance with Section 1.39 hereof,
including, without limitation, requiring the payment in full of the accrued
interest and outstanding principal balance of the Grand Loan, and/or (ii) make
insurance or condemnation proceeds available to Grantor for repair or
restoration if Grantor establishes to the satisfaction of Beneficiary, in its
sole discretion, that Grantor otherwise satisfies the requirements of Section
1.9(b) above.
(d) Any reduction in the indebtedness secured hereby resulting
from Beneficiary's application of any sums received by it hereunder shall take
effect only when Beneficiary actually receives such sums and elects to apply
such sums to the indebtedness secured hereby and, in any event, the unpaid
portion of the indebtedness secured hereby shall remain in full force and effect
and Grantor shall not be excused in the payment thereof. Partial payments
received by Beneficiary, as described in the preceding sentence, shall be
applied against the Note consistent with the prepayment provisions described
therein for casualty or condemnation proceeds. If Grantor undertakes to restore
or repair the Property after the occurrence of a casualty or partial taking of
the Property as provided above, Grantor shall promptly and diligently, at
Grantor's sole cost and expense and regardless of whether the insurance proceeds
or condemnation award, as appropriate, shall be sufficient for the purpose,
restore, repair, replace and rebuild the Property as nearly as possible to its
value, condition and character immediately prior to such casualty or partial
taking in accordance with the foregoing provisions and Grantor shall pay to
Beneficiary all costs and expenses of Beneficiary incurred in administering said
rebuilding, restoration or repair, provided that Beneficiary makes such proceeds
or award available for such purpose. Grantor agrees to execute and deliver from
time to time such further instruments as may be requested by Beneficiary to
confirm the foregoing assignment to Beneficiary of any award, damage, insurance
proceeds, payment or other
24
compensation. Grantor hereby irrevocably constitutes and appoints Beneficiary as
the attorney-in-fact of Grantor (which power of attorney shall be irrevocable so
long as any indebtedness secured hereby is outstanding, shall be deemed coupled
with an interest, shall survive the voluntary or involuntary dissolution of
Grantor and shall not be affected by any disability or incapacity suffered by
Grantor subsequent to the date hereof), with full power of substitution, subject
to the terms of this Section, to settle for, collect and receive any such
awards, damages, insurance proceeds, payments or other compensation from the
parties or authorities making the same, to appear in and prosecute any
proceedings therefor and to give receipts and acquittance therefor.
I.10 Mechanics' Liens. Grantor shall pay when due all claims and
demands of mechanics, materialmen, laborers and others for any work performed or
materials delivered for the Land or the Improvements which are performed or
delivered at the direction of Grantor; provided, however, that, Grantor shall
have the right to contest in good faith any such claim or demand, so long as it
does so diligently, by appropriate proceedings and without prejudice to
Beneficiary and provided that neither the Property nor any interest therein
would be in any danger of sale, loss or forfeiture during the pendency of such
proceeding or contest. In the event Grantor shall contest any such claim or
demand, Grantor shall promptly notify Beneficiary of such contest and thereafter
shall, upon Beneficiary's request, promptly provide a bond, cash deposit or
other security satisfactory to Beneficiary to protect Beneficiary's interest and
security should the contest be unsuccessful. If Grantor shall fail to
immediately discharge or provide security against any such claim or demand as
aforesaid, Beneficiary may do so and any and all expenses incurred by
Beneficiary, together with interest thereon at the Default Interest Rate from
the date incurred by Beneficiary until actually paid by Grantor, shall be
immediately paid by Grantor on demand and shall be secured by this Deed of Trust
and by all of the other Loan Documents securing all or any part of the
indebtedness evidenced by the Note.
I.11 Assignment of Leases and Rents. Grantor acknowledges and confirms
that, as additional collateral security for the payment of the indebtedness
secured hereby, and cumulative of any and all rights and remedies herein
provided, it has executed and delivered to Beneficiary an Assignment of Leases
and Rents of even date herewith (the "Assignment"), intending such Assignment to
create a present, absolute assignment to Beneficiary of the Leases and Rents.
Upon the occurrence of a default under this Deed of Trust which has not been
cured within any applicable grace or cure period, Beneficiary shall be entitled
to exercise any or all of the remedies provided in this Deed of Trust and in the
Assignment, including, without limitation, the appointment of a receiver. The
Assignment shall continue in full force and effect during any period of
foreclosure or redemption with respect to the Property.
I.12 Leases and Licenses.
25
(a) All leases entered into by Grantor after the date hereof
(excluding, however, any standard, commercially reasonable registration card for
overnight guests and any standard, commercially reasonable agreements for the
use of banquet facilities or meeting rooms entered into in the ordinary course
of business), shall be written on the standard form lease (without any material
changes) which Beneficiary has approved or shall approve prior to the use
thereof and shall be on arm's length terms consistent with the terms for similar
leases in the market area of the Land or otherwise approved in writing by
Beneficiary, shall provide for free rent only if the same is consistent with
prevailing market conditions and shall provide for market rents then prevailing
in the market area of the Land. Such leases shall also provide for Security
Deposits in reasonable amounts. Grantor shall also submit to Beneficiary for
Beneficiary's approval, which approval shall not be unreasonably withheld, prior
to the execution thereof, any proposed lease, license or occupancy agreement of
the Improvements or any portion thereof that differs materially and adversely
from the aforementioned form lease. Grantor shall not execute any lease, license
or occupancy agreement for all or a substantial portion of the Property, except
for an actual occupancy by the tenant, lessee or licensee thereunder, and shall
at all times promptly and faithfully perform, or cause to be performed, all of
the covenants, conditions and agreements contained in all leases, licenses and
occupancy agreements with respect to the Property, now or hereafter existing, on
the part of the landlord, lessor or licensor thereunder to be kept and
performed. Upon the request of Beneficiary, Grantor shall deliver to Beneficiary
a copy of each such lease, license and occupancy agreement. Grantor shall not do
or suffer to be done any act that might result in a default by the landlord,
lessor or licensor under any such lease, license or occupancy agreement or allow
the tenant, lessee or licensee thereunder to withhold payment or rent and,
except as otherwise expressly permitted by the terms of Section 1.13 hereof,
shall not further assign any such lease, license or occupancy agreement or any
such rents. Grantor, at no cost or expense to Beneficiary, shall enforce, short
of termination, the performance and observance of each and every condition and
covenant of each of the parties under such leases. Grantor shall not, without
the prior written consent of Beneficiary, modify any of the leases, terminate or
accept the surrender of any leases, waive or release any other party from the
performance or observance of any obligation or condition under such leases
except in the normal course of business in a manner which is consistent with
sound and customary leasing and management practices for similar properties in
the community in which the Property is located. Grantor shall not permit the
prepayment of any rents under any of the leases for more than one (1) month
prior to the due date thereof.
(b) Grantor shall be entitled to enter into such discount
programs or other patronage agreements without Beneficiary's prior approval so
long as such programs and agreements are in accordance with industry customs and
standards and otherwise reflect sound business practices.
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I.13 Alienation and Further Encumbrances.
(a) Grantor acknowledges that Beneficiary has relied upon the
principals of Grantor and their experience in owning and operating properties
similar to the Property in connection with the closing of the Loan. Accordingly,
except as specifically allowed hereinbelow in this Section and notwithstanding
anything to the contrary contained in Section 5.5 hereof, in the event that the
Property or any part thereof or interest therein shall be sold (including any
installment sales agreement), conveyed, disposed of, alienated, hypothecated,
leased (except to tenants of space or overnight guests and users of banquet or
meeting facilities in the Improvements in accordance with the provisions of
Section 1.12 hereof), assigned, pledged, mortgaged, further encumbered or
otherwise transferred or Grantor shall be divested of its title to the Property
or any interest therein, in any manner or way, whether voluntarily or
involuntarily, without the prior written consent of Beneficiary being first
obtained, which consent may be withheld in Beneficiary's sole discretion, then
the same shall constitute a default hereunder and Beneficiary shall have the
right, at its option, to declare any or all of the indebtedness secured hereby,
irrespective of the maturity date specified in the Note, immediately due and
payable and to otherwise exercise any of its other rights and remedies contained
in Article III hereof. If such acceleration is during any period when a
prepayment fee is payable pursuant to the provisions set forth in the Note,
then, in addition to all of the foregoing, such prepayment fee shall also then
be immediately due and payable to the same end as though Grantor were prepaying
the entire indebtedness secured hereby on the date of such acceleration. For the
purposes of this Section, the sale, conveyance, transfer, disposition,
alienation, hypothecation, pledge or encumbering (whether voluntarily or
involuntarily) of all or any portion of the ownership interest in (or, through
constituent parties, any of the ultimate beneficial ownership interest in)
Grantor shall be deemed to be a transfer of an interest in the Property.
Notwithstanding the foregoing, however, transfers or assignments of ownership
interests in Grantor (or its constituent parties) may be undertaken without the
consent of Beneficiary in the following circumstances:
(1) In the case of a Grantor which is a limited
partnership, up to 49% of the limited partnership interests in Grantor
shall be freely transferable. Up to 49% of the general partnership
interests in Grantor (or the ownership interests in any such general
partner) may be transferred without the consent of Beneficiary so long
as those persons responsible for the management and control of Grantor
and the Property remain unchanged following such transfer.
(2) In the case of a Grantor which constitutes a
limited liability company, up to 49% of the non-managing membership
interests in Grantor shall be freely transferable. Up to 49% of any
27
manager's interest or managing membership interest in such a Grantor
may be transferred without the consent of Beneficiary so long as those
persons responsible for the management and control of Grantor and the
Property remain unchanged following such transfer.
(3) In the case of a Grantor which constitutes a
corporation, up to 49% of the aggregate of the issued and outstanding
capital stock of Grantor may be sold or assigned, taking into account
(i) any prior sales or assignments, and (ii) the effective change in
ownership resulting from any issuance of new shares of capital stock in
Grantor or its constituent party.
(4) Involuntary assignments or transfers caused by
the death, incompetence or dissolution of Grantor, one of its
constituent parties or the owner of one of its constituent parties are
permitted if: (i) Grantor is reconstituted, if required, following such
death, incompetence or dissolution, and (ii) those persons responsible
for the management and control of Grantor and the Property remain
unchanged as a result of such death, incompetence or dissolution or any
replacement management is approved by Beneficiary.
(5) Gifts for estate planning purposes of any
individual's interests in Grantor or in any of Grantor's general
partners, members or joint venturers to the spouse or any lineal
descendant of such individual, or to a trust for the benefit of any one
or more of such individual, spouse or lineal descendant, shall not be a
default under this Deed of Trust so long as Grantor is reconstituted,
if required, following such gift and so long as those persons
responsible for the management of the Property and Grantor remain
unchanged following such gift or any replacement management is approved
by Beneficiary.
In all cases where assignment of ownership interests is allowed without the
consent of Beneficiary pursuant to this Section 1.13(a), the proportionate
ownership which is proposed to be transferred shall be calculated so as to take
into account prior transfers or assignments. Furthermore, the sale, conveyance,
transfer, disposition, alienation, hypothecation, pledge or encumbering (whether
voluntarily or involuntarily) of all or any portion of the ownership interest in
(or, through constituent parties, any of the ultimate beneficial ownership
interest in) any guarantor of Grantor's obligation hereunder or under any of the
other Loan Documents shall constitute a default hereunder and Beneficiary shall
have the right to exercise its various remedies described hereinabove; provided,
however, ownership interests in any such guarantor may be transferred in a
manner consistent with the allowable transfers of ownership interests in Grantor
described hereinabove.
28
Notwithstanding the foregoing, for so long as WestCoast Hospitality Corporation
("WHC"), a Washington corporation and the general partner of WestCoast
Hospitality, Limited Partnership ("WestCoast Hospitality") (i.e., a guarantor of
Grantor's obligation hereunder) remains a publicly-traded company the stock of
such corporation shall be freely transferrable without the consent of
Beneficiary. At any time that WHC ceases to be a publicly-traded company, WHC
shall be subject to the limitations set forth in this Section 1.13. Furthermore,
limited partnership interests in WestCoast Hospitality shall be freely
transferrable without the consent of Beneficiary so long as WHC remains the sole
general partner, majority owner in WestCoast Hospitality and remains responsible
for the management and control of WestCoast Hospitality. The merger of WHC and
WestCoast Hospitality or the transfer of assets from WestCoast Hospitality to
WHC shall not require the consent of Beneficiary and shall not constitute a
default under this Section 1.13 so long as prior written notice thereof is
provided to Beneficiary.
(b) Notwithstanding the foregoing provisions of this Section
1.13, Beneficiary shall consent to a sale, conveyance or transfer of the
Property in its entirety, including sale, conveyance or transfer of all of the
ownership interest in Grantor (hereinafter, a "Sale") to any person or entity
provided that each of the following terms and conditions are satisfied:
(1) No default is then continuing hereunder or under
any of the other Loan Documents;
(2) Grantor gives Beneficiary written notice of the
terms of such prospective Sale not less than thirty (30) days before
the date on which such Sale is scheduled to close and, concurrently
therewith, gives Beneficiary all reasonable information concerning the
proposed transferee of the Property (hereinafter, a "Buyer") or any
replacement guarantor as Beneficiary would require in evaluating an
initial extension of credit to a borrower and pays to Beneficiary a
non-refundable application fee in the amount of $5,000.00 (the
"Application Fee"). Beneficiary shall have the right, in its reasonable
discretion, to approve or disapprove the proposed Buyer and the
substitution of the replacement guarantor. In determining whether to
give or withhold its approval of the proposed Buyer and replacement
guarantor, Beneficiary shall consider, among other things, the Buyer's
experience and track record in owning and operating facilities similar
to the Property or the same of the professional management company
proposed by Buyer, the Buyer's entity structure, the Buyer's financial
strength, the Buyer's general business standing, the Buyer's or the
proposed manager's relationships and experience with contractors,
vendors, tenants, lenders and other business entities, and the proposed
guarantor's financial ability to perform the obligations of the
indemnity and guaranty;
29
(3) Grantor pays Beneficiary, concurrently with the
closing of such Sale, a non-refundable assumption fee (the "Assumption
Fee") in an amount equal to one-half of one percent (0.5%) of the then
outstanding principal balance of the Note evidencing the Grand Loan.
The Application Fee shall be used to pay Beneficiary's reasonable and
customary out-of-pocket costs and expenses, including, without
limitation, reasonable attorneys' fees, incurred by Beneficiary in
connection with the Sale. Grantor's obligation to pay such
out-of-pocket costs and expenses and attorneys' fees of Beneficiary in
connection with such Sale shall not exceed the Application Fee;
(4) The Buyer assumes and agrees to pay the
indebtedness secured hereby subject to the provisions of Section 5.23
hereof and to perform the covenants of Grantor under the Loan
Documents, and, prior to or concurrently with the closing of such Sale,
the Buyer executes, without any cost or expense to Beneficiary, such
documents and agreements as Beneficiary shall reasonably require to
evidence and effectuate said assumption and delivers such legal
opinions as Beneficiary may require;
(5) Grantor and the Buyer execute, without any cost
or expense to Beneficiary, new financing statements or financing
statement amendments and any additional documents reasonably requested
by Beneficiary in order to perfect Beneficiary's security interest in
the Property;
(6) Grantor delivers to Beneficiary, without any cost
or expense to Beneficiary, such endorsements to Beneficiary's title
insurance policy, hazard insurance endorsements or certificates and
other similar materials as Beneficiary may deem necessary at the time
of the Sale, all in form and substance satisfactory to Beneficiary,
including, without limitation, an endorsement or endorsements to
Beneficiary's title insurance policy insuring the lien of this Deed of
Trust, extending the effective date of such policy to the date of
execution and delivery (or, if later, of recording) of the assumption
agreement referenced above in subsection (4) of this Section 1.13(b),
with no additional exceptions added to such policy except such
encumbrances previously approved in writing by Beneficiary, and
insuring that fee simple title to the Property is vested in the Buyer;
(7) Grantor executes and delivers to Beneficiary,
without any cost or expense to Beneficiary, a release of Beneficiary,
its officers, directors, employees and agents, from all claims and
liability relating to the transactions evidenced by the Loan Documents,
through and including the date of the closing of the Sale, which
agreement shall be in form and substance satisfactory to Beneficiary
and shall be binding upon the Buyer;
30
(8) Subject to the provisions of Section 5.23 hereof,
such Sale is not construed so as to relieve Grantor of any personal
liability under the Note or any of the other Loan Documents for any
acts or events occurring or obligations arising prior to or
simultaneously with the closing of such Sale, and Grantor executes,
without any cost or expense to Beneficiary, such documents and
agreements as Beneficiary shall reasonably require to evidence and
effectuate the ratification of said personal liability;
(9) Such Sale is not construed so as to relieve any
current guarantor or indemnitor of its obligations under any guaranty
or indemnity agreement executed in connection with the Loan and each
such current guarantor and indemnitor executes, without any cost or
expense to Beneficiary, such documents and agreements as Beneficiary
shall reasonably require to evidence and effectuate the ratification of
each such guaranty and indemnity agreement, provided that if the Buyer
or a party associated with the Buyer approved by Beneficiary in its
reasonable discretion assumes the obligations of the current guarantor
or indemnitor under its guaranty or indemnity agreement and the Buyer
or such party associated with the Buyer, as applicable, executes,
without any cost or expense to Beneficiary, a new guaranty or indemnity
agreement which is in the same form and substance as the then existing
guaranty and indemnity agreement or otherwise satisfactory to
Beneficiary, then Beneficiary shall release the current guarantor or
indemnitor from all obligations arising under its guaranty or indemnity
agreement after the closing of such Sale;
(10) The Buyer shall furnish, if the Buyer is a
corporation, partnership, or other entity, all documents evidencing the
Buyer's capacity and good standing, and the qualification of the
signers to execute the assumption of the indebtedness secured hereby,
which documents shall include, but not in any way be limited to,
certified copies of all documents relating to the organization and
formation of the Buyer and of the entities, if any, which are partners
or members of the Buyer. The Buyer and such constituent partners,
members or shareholders of Buyer (as the case may be), as Beneficiary
may require, shall be single purpose, single-asset "bankruptcy remote"
entities, whose formation documents shall be approved by counsel to
Beneficiary; provided, however, the Buyer shall not be required to be
"bankruptcy remote" from any affiliated entity of Buyer which purchases
the Olympia Property as required by subsection (15) herein. An
individual recommended by the Buyer and approved by Beneficiary shall
serve as an Independent Director (as defined in Section 1.32(s) of this
Deed of Trust) of the Buyer (if the Buyer is a corporation or a limited
liability company) or the Buyer's corporate or limited liability
company general partner or an independent member or, in Beneficiary's
discretion, manager, of Buyer if the Buyer is a limited liability
company. Unanimous consent of the board of directors (including the
Independent Director) shall be required for, among other things, any
31
merger, consolidation, dissolution, bankruptcy or insolvency of any
such constituent partner, member or shareholder of the Buyer (as the
case may be) or of the Buyer;
(11) The Buyer, if required by Beneficiary, shall
furnish an opinion of counsel satisfactory to Beneficiary and its
counsel (i) that the Buyer's formation documents provide for the
matters described in Section 1.13(b)(10) hereof, (ii) that the
assumption of the indebtedness evidenced hereby has been duly
authorized, executed and delivered, and that the Loan Documents are
valid, binding and enforceable against the Buyer in accordance with
their terms, (iii) that the Buyer and any entity which is a controlling
stockholder, member or general partner of Buyer, have been duly
organized, and are in existence and in good standing, (iv) that the
assets of the Buyer will not be consolidated with the assets of any
other entity (including the Buyer's general partner or managing member,
if any) having an interest in, or affiliation with, the Buyer, in the
event of bankruptcy or insolvency of any such entity or such general
partner or managing member, and (v) with respect to such other matters,
as Beneficiary may reasonably request; and
(12) If required under the operative documents with
respect to a Secondary Market Transaction (as hereinafter defined),
Beneficiary shall have received evidence in writing from the Rating
Agency to the effect that the Sale will not result in a
re-qualification, reduction, downgrade or withdrawal of any rating
initially assigned or to be assigned in a Secondary Market Transaction
(hereinafter defined) or, if no such rating has been issued, in
Beneficiary's good faith judgment, such Sale shall not have an adverse
effect on the level of rating obtainable in connection with the Loan;
and
(13) Grantor's obligations under the contract of sale
pursuant to which such Sale, conveyance or transfer is proposed to
occur shall expressly be subject to the satisfaction of the terms and
conditions of this Section 1.13(b).
(14) The Buyer shall obtain the written consent of
the Franchisor (hereinafter defined) to the transfer of the Property
and the Franchise Agreement in favor of Franchisor to Buyer as well as
a comfort letter from Franchisor substantially in the form of the
comfort letter obtained in connection with the initial funding of the
Note and otherwise in form and substance satisfactory to Beneficiary.
(15) The Olympia Property (hereinafter defined) shall
be subject to a simultaneous Sale to the identical Buyer in accordance
with the terms of the Olympia Deed of Trust.
32
I.14 Payment of Utilities, Assessments, Charges, Etc. Grantor shall
pay when due all utility charges which are incurred by Grantor or which may
become a charge or lien against any portion of the Property for gas,
electricity, water and sewer services furnished to the Land and/or the
Improvements and all other assessments or charges of a similar nature, or
assessments payable pursuant to any restrictive covenants, whether public or
private, affecting the Land and/or the Improvements or any portion thereof,
whether or not such assessments or charges are or may become liens thereon.
I.15 Access Privileges and Inspections. Beneficiary and the agents,
representatives and employees of Beneficiary shall, subject to the rights of
tenants, have full and free access to the Land and the Improvements and any
other location where books and records concerning the Property are kept at all
reasonable times for the purposes of inspecting the Property and of examining,
copying and making extracts from the books and records of Grantor relating to
the Property. Grantor shall lend assistance to all such agents, representatives
and employees of Beneficiary.
I.16 Waste; Alteration of the Property. Grantor shall not commit,
suffer or permit any waste on the Property nor take any actions that might
invalidate any insurance carried on the Property. Grantor shall maintain the
Property in good condition and repair but in any event, not less than the
standard prevailing for hotels of similar age, size, construction and franchise
affiliation in the metropolitan area where the Property is located. No part of
the Improvements may be removed, demolished or materially altered, without the
prior written consent of Beneficiary, except that Grantor may remove worn-out or
obsolete items of furnishings, equipment or personal property without
Beneficiary's consent provided such items are replaced with items of comparable
value and utility. Without the prior written consent of Beneficiary, Grantor
shall not commence construction of any improvements on the Land other than
improvements required for the maintenance or repair of the Property.
I.17 Zoning/Use. Without the prior written consent of Beneficiary,
Grantor shall not seek, make, suffer, consent to or acquiesce in any change in
the zoning or conditions of use of the Land or the Improvements. Grantor shall
comply with and make all payments required under the provisions of any
covenants, conditions or restrictions affecting the Land or the Improvements.
Grantor shall comply with all existing and future requirements of all
governmental authorities having jurisdiction over the Property. Grantor shall
keep all licenses, permits, franchises, certificates of occupancy, consents, and
other approvals necessary for the operation of the Property in full force and
effect. Grantor shall operate the Property as a hotel complex for so long as the
indebtedness secured hereby is outstanding. If, under applicable zoning
provisions, the use of all or any part of the Land or the Improvements is or
becomes a nonconforming use, Grantor shall not cause or permit such use to be
discontinued or abandoned without the prior written consent of Beneficiary.
Further, without Beneficiary's
33
prior written consent, Grantor shall not file or subject any part of the Land or
the Improvements to any declaration of condominium or cooperative or convert any
part of the Land or the Improvements to a condominium, cooperative or other form
of multiple ownership and governance.
I.18 Financial Statements and Books and Records.
(a) Grantor will keep and maintain or will cause to be kept
and maintained on a fiscal year basis, in accordance with the Uniform System of
Accounts as revised from time to time and sufficient to permit the preparation
therefrom of financial statements in accordance with generally accepted
accounting principles in the United States of America ("GAAP") (or such other
accounting basis reasonably acceptable to Beneficiary) consistently applied,
proper and accurate books, records and accounts reflecting (i) all of the
financial affairs of Grantor and (ii) all items of income and expense in
connection with the operation of the Property or in connection with any
services, equipment or furnishings provided in connection with the operation
thereof, whether such income or expense may be realized by Grantor or by any
other person whatsoever, excepting lessees unrelated to and unaffiliated with
Grantor who have leased from Grantor portions of the Property for the purpose of
occupying the same. Beneficiary shall have the right from time to time at all
times during normal business hours upon reasonable notice to examine such books,
records and accounts at the office of Grantor or other person maintaining such
books, records and accounts and to make such copies or extract thereof as
Beneficiary shall desire. After the occurrence of an Event of Default, Grantor
shall pay any costs and expenses incurred by Beneficiary to examine Grantor's
accounting records with respect to the Property, as Beneficiary shall determine
to be necessary or appropriate in the protection of Grantor's interest.
(b) Grantor will furnish Beneficiary annually, within ninety
(90) days following the end of each fiscal year annual balance sheets for the
Property, and annual financial statements for Grantor, each principal or general
partner in Grantor, and each indemnitor and guarantor under any indemnity and
guaranty executed in connection with the Loan, annualized and audited by an
independent certified public accountant that is acceptable to Beneficiary in
accordance with GAAP (or such other accounting basis reasonably acceptable to
Beneficiary) consistently applied. Together with such annual statement, Grantor
shall furnish to Beneficiary an Officer's Certificate (as such term is defined
in the Cash Management Agreement) certifying as of the date thereof (i) that
such statement accurately represents the results of operations all in accordance
with GAAP consistently applied and (ii) whether there exists an event or
circumstance which constitutes, or which upon notice or lapse of time or both
would constitute, a Default under the Note or any other Loan Document executed
and delivered by Grantor, and if such event or circumstances exists, the nature
34
thereof, the period of time it has existed and the action then being taken to
remedy such event or circumstance.
(c) Grantor will furnish Beneficiary monthly, within thirty
(30) days following the end of each month, with a true, complete and correct
cash flow statement (unaudited) and approved by Beneficiary with respect to the
Property, together with a certification of the Manager stating that such cash
flow statement is true, complete and correct.
(d) Grantor will furnish Beneficiary monthly, within twenty
(20) days following the end of each month, with a certification of the Manager
stating that all Operating Expenses (as such term is defined in the Cash
Management Agreement) with respect to the Property which had accrued as of the
last day of the month preceding the delivery of the cash flow statement referred
to in clause (c) above have been fully paid or otherwise reserved or provided
for by the Manager (such certification or any certification furnished by a
Manager pursuant to clause (c) above, a "Manager Certification").
(e) Grantor shall furnish to Beneficiary, within thirty (30)
days after Beneficiary's request therefor, with such further detailed
information with respect to the operation of the Property and the financial
affairs of Grantor as may be reasonably requested by Beneficiary.
(f) Grantor shall furnish to Beneficiary copies of all tax
returns filed by Grantor, within thirty (30) days after the date of the filing.
If any of the aforementioned materials are not furnished to Beneficiary within
the applicable time periods, Grantor shall pay to Beneficiary a late fee of
$250.00. Further, if any of the aforementioned materials are not furnished to
Beneficiary within the applicable time periods, or there is evidence of an Event
of Default hereunder or under any of the other Loan Documents and Beneficiary is
reasonably dissatisfied with the contents of any of the foregoing, in addition
to any other rights and remedies of Beneficiary contained herein, Beneficiary
shall have the right, but not the obligation, to obtain the same by means of an
audit by an independent certified public accountant selected by Beneficiary, in
which event Grantor agrees to pay, or to reimburse Beneficiary for, any expense
of such audit and further agrees to provide all necessary information to said
accountant and to otherwise cooperate in the making of such audit. Grantor
agrees that any and all materials furnished hereunder are the property of
Beneficiary (and Beneficiary's servicer) and may be released and made available
to such parties as Beneficiary or its servicer deems appropriate in connection
with the servicing the Grand Loan, including any Rating Agency responsible for
rating securities issued in any Secondary Market Transaction. For purposes
hereof, a "Secondary Market Transaction" shall be (a) any sale or assignment of
this Deed of Trust, Note and other Loan Documents to one or more investors as a
whole loan, (b) a participation of the Loan to one or more investors,
35
(c) any deposit of this Deed of Trust, Note and the other Loan Documents with a
trust or other entity which may sell certificates or other instruments to
investors evidencing an ownership interest in the assets of such trust or other
entity, or (d) any other sale, assignment or transfer of the Loan or any
interest therein to one or more investors. If at any time during which the Loan
is an asset of a securitization or is otherwise an asset of any rated
transaction, "Rating Agency" shall mean the rating agency or rating agencies
that from time to time rate the securities, certificates or other instruments
issued in connection with such securitization or other transaction.
I.19 Further Documentation. Grantor shall, on the request of
Beneficiary in Beneficiary's reasonable discretion and at the expense of
Grantor, promptly correct any defect, error or omission which may be discovered
in the contents of this Deed of Trust or in any of the other Loan Documents and
promptly execute, acknowledge, deliver and record or file such further
instruments and do such further acts as may be necessary, desirable or proper to
carry out more effectively the purposes of this Deed of Trust and the other Loan
Documents or as may be deemed advisable by Beneficiary to protect, continue or
preserve the liens and security interests hereunder, including, without
limitation, security instruments, financing statements and continuation
statements.
I.20 Payment of Costs.
(a) Payment. Grantor shall pay all reasonable costs and
expenses of every character incurred in connection with the closing of the Loan
or otherwise attributable or chargeable to Grantor as the owner of the Property,
including, without limitation, appraisal fees, recording fees, documentary,
stamp, mortgage or intangible taxes, brokerage fees and commissions, title
policy premiums and title search fees, uniform commercial code/tax
lien/litigation search fees, escrow fees and reasonable attorneys' fees.
(b) Advances to Protect Property. Without limiting or waiving
any other rights and remedies of Beneficiary hereunder, if Beneficiary
determines that Grantor has failed to perform any of its obligations, covenants
or agreements contained in this Deed of Trust or in any of the other Loan
Documents and such failure is not cured within any applicable grace or cure
period, or if any action or proceeding of any kind (including, but not limited
to, any bankruptcy, insolvency, arrangement, reorganization or other debtor
relief proceeding) is commenced which would affect Beneficiary's interest in the
Property or Beneficiary's right to enforce its security therein, then
Beneficiary may, at its option, with or without notice to Grantor, make any
appearances, disburse or advance any sums and take any actions as may be
necessary or desirable to protect or enforce the security of this Deed of Trust
or to remedy the failure of Grantor to perform its covenants and agreements
(without, however, waiving any default of Grantor); provided, however,
Beneficiary may not for a period of thirty (30) days
36
take the foregoing action if Grantor is contesting such action or proceeding
(unless, in Beneficiary's judgment, any delay would potentially further damage
the Property or Beneficiary's interest therein). Grantor agrees to pay on demand
all expenses of Beneficiary reasonably incurred with respect to the foregoing
(including, but not limited to, fees and disbursements of counsel), together
with interest thereon at the Default Interest Rate from and after the date on
which Beneficiary incurs such expenses until reimbursement thereof by Grantor.
Any such expenses so incurred by Beneficiary, together with interest thereon as
provided above, shall be additional indebtedness of Grantor secured by this Deed
of Trust and by all of the other Loan Documents securing all or any part of the
indebtedness evidenced by the Note. The necessity for any such actions and of
the amounts to be paid shall be determined by Beneficiary in its sole and
absolute discretion. Beneficiary is hereby empowered to enter and to authorize
others to enter upon the Property or any part thereof for the purpose of
performing or observing any such defaulted term, covenant or condition without
thereby becoming liable to Grantor or any person in possession holding under
Grantor. Grantor hereby acknowledges and agrees that the remedies set forth in
this Section 1.20(b) shall be exercisable by Beneficiary, and any and all
payments made or costs or expenses incurred by Beneficiary in connection
therewith shall be secured hereby and shall be, without demand, immediately
repaid by Grantor with interest thereon at the Default Interest Rate,
notwithstanding the fact that such remedies were exercised and such payments
made and costs incurred by Beneficiary after the filing by Grantor of a
voluntary case or the filing against Grantor of an involuntary case pursuant to
or within the meaning of the Bankruptcy Reform Act of 1978, as amended (the
"Act"), Title 11 U.S.C., or after any similar action pursuant to any other
debtor relief law (whether statutory, common law, case law or otherwise) of any
jurisdiction whatsoever, now or hereafter in effect, which may be or become
applicable to Grantor, Beneficiary, any guarantor or indemnitor, the secured
indebtedness or any of the Loan Documents. This indemnity shall survive payment
in full of the indebtedness secured hereby. This Section 1.20(b) shall not be
construed to require Beneficiary to incur any expenses, make any appearances or
take any actions.
I.21 Security Interest. This Deed of Trust is also intended to
encumber and create a security interest in, and Grantor hereby grants to
Beneficiary a security interest in all Reserves (as hereinabove defined),
fixtures, chattels, accounts, equipment, inventory, contract rights, general
intangibles and other personal property included within the Property, all
renewals, replacements of any of the aforementioned items, or articles in
substitution therefor or in addition thereto or the proceeds thereof (said
property is hereinafter referred to collectively as the "Collateral"), whether
or not the same shall be attached to the Land or the Improvements in any manner.
It is hereby agreed that to the extent permitted by law, all of the foregoing
property is to be deemed and held to be a part of and affixed to the Land and
the Improvements. The foregoing security interest shall also cover Grantor's
leasehold interest in any of the foregoing property which is leased by Grantor.
Notwithstanding the foregoing, all
37
of the foregoing property shall be owned by Grantor and no leasing or
installment sales or other financing or title retention agreement in connection
therewith shall be permitted without the prior written approval of Beneficiary.
Grantor shall promptly replace all of the Collateral subject to the lien or
security interest of this Deed of Trust when worn out or obsolete with
Collateral comparable to the worn out or obsolete Collateral when new and will
not, without the prior written consent of Beneficiary, remove from the Land or
the Improvements any of the Collateral subject to the lien or security interest
of this Deed of Trust except such as is replaced by an article of equal
suitability and value as above provided, owned by Grantor free and clear of any
lien or security interest except that created by this Deed of Trust and the
other Loan Documents and except as otherwise expressly permitted by the terms of
Section 1.13 of this Deed of Trust. All of the Collateral shall be kept at the
location of the Land except as otherwise required by the terms of the Loan
Documents. Grantor shall not use any of the Collateral in violation of any
applicable statute, ordinance or insurance policy.
I.22 Security Agreement. This Deed of Trust constitutes both a real
property deed of trust and a "security agreement" between Grantor and
Beneficiary with respect to the Collateral in which Beneficiary is granted a
security interest hereunder, and, cumulative of all other rights and remedies of
Beneficiary hereunder, Beneficiary shall have all of the rights and remedies of
a secured party under any applicable Uniform Commercial Code. Grantor hereby
agrees to execute and deliver on demand such security agreements, financing
statements, continuation statements or other instruments as Beneficiary may
request or require in order to impose, perfect or continue the perfection of the
lien or security interest created hereby. Grantor agrees to furnish Beneficiary
with notice of any change in the name, identity, corporate structure, residence,
or principal place of business or mailing address of Grantor within ten (10)
days of the effective date of any such change.
The name and address of Grantor (as Debtor under any applicable Uniform
Commercial Code) are:
WHC804, LLC
303 West North River Drive
Spokane, Washington 99201
Attention: Hotel Executive Offices
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The name and address of Beneficiary (as Secured Party under any applicable
Uniform Commercial Code) are:
Column Financial, Inc.
Eleven Madison Avenue
New York, New York 10010
Attention: Edmund Taylor
I.23 Easements and Rights-of-Way. Grantor shall not grant any easement
or right-of-way with respect to all or any portion of the Land or the
Improvements without the prior written consent of Beneficiary. The purchaser at
any foreclosure sale hereunder may, at its discretion, disaffirm any easement or
right-of-way granted in violation of any of the provisions of this Deed of Trust
and may take immediate possession of the Property free from, and despite the
terms of, such grant of easement or right-of-way. If Beneficiary consents to the
grant of an easement or right-of-way, Beneficiary agrees to grant such consent
without charge to Grantor other than reasonable expenses, including, without
limitation, reasonable attorneys' fees, incurred by Beneficiary in the review of
Grantor's request and, if applicable, in the preparation of documents relating
to the subordination of this Deed of Trust to such easement or right-of-way.
I.24 Compliance with Laws.
(a) Grantor shall at all times comply with all statutes,
ordinances, regulations and other governmental or quasi-governmental
requirements and private covenants now or hereafter relating to the ownership,
construction, use or operation of the Property, including, but not limited to,
those concerning employment and compensation of persons engaged in operation and
maintenance of the Property and any environmental or ecological requirements,
even if such compliance shall require structural changes to the Property;
provided, however, that, Grantor may, upon providing Beneficiary with security
satisfactory to Beneficiary, proceed diligently and in good faith to contest the
validity or applicability of any such statute, ordinance, regulation or
requirement so long as during such contest the Property shall not be subject to
any lien, charge, fine or other liability and shall not be in danger of being
forfeited, lost or closed during the pendency of such contest. Grantor shall not
use or occupy, or allow the use or occupancy of, the Property in any manner
which violates any lease of or any other agreement applicable to the Property or
any applicable law, rule, regulation or order or which constitutes a public or
private nuisance or which makes void, voidable or cancelable, or materially
increases the premium of, any insurance then in force with respect thereto.
39
(b) Grantor agrees that the Property shall at all times comply
to the extent applicable with the requirements of the Americans with
Disabilities Act of 1990, the Fair Housing Amendments Act of 1988 and all other
state and local laws and ordinances related to handicapped access and all rules,
regulations, and orders issued pursuant thereto including, without limitation,
the Americans with Disabilities Act Accessibility Guidelines for Buildings and
Facilities ("Access Laws"). Grantor agrees to give prompt notice to Beneficiary
of the receipt by Grantor of any complaints related to violations of any Access
Laws and of the commencement of any proceedings or investigations which relate
to compliance with applicable Access Laws.
I.25 Additional Taxes. In the event of the enactment after this date
of any law of the state where the Property is located or of any other
governmental entity deducting from the value of the Property for the purpose of
taxation any lien or security interest thereon, or imposing upon Beneficiary the
payment of the whole or any part of the taxes or assessments or charges or liens
herein required to be paid by Grantor, or changing in any way the laws relating
to the taxation of deeds of trust, mortgages or security agreements or debts
secured by deeds of trust, mortgages or security agreements or the interest of
the beneficiary, mortgagee or secured party in the property covered thereby, or
the manner of collection of such taxes, so as to adversely affect this Deed of
Trust or the indebtedness secured hereby or Beneficiary, then, and in any such
event, Grantor, upon demand by Beneficiary, shall pay such taxes, assessments,
charges or liens, or reimburse Beneficiary therefor; provided, however, that if
in the opinion of counsel for Beneficiary (a) it might be unlawful to require
Grantor to make such payment, or (b) the making of such payment might result in
the imposition of interest beyond the maximum amount permitted by law, then and
in either such event, Beneficiary may elect, by notice in writing given to
Grantor, to declare all of the indebtedness secured hereby to be and become due
and payable in full, sixty (60) days from the giving of such notice.
I.26 Grantor's Waivers. To the full extent permitted by law, Grantor
agrees that Grantor shall not at any time insist upon, plead, claim or take the
benefit or advantage of any law now or hereafter in force providing for any
appraisement, valuation, stay, moratorium or extension, or any law now or
hereafter in force providing for the reinstatement of the indebtedness secured
hereby prior to any sale of the Property to be made pursuant to any provisions
contained herein or prior to the entering of any decree, judgment or order of
any court of competent jurisdiction, or any right under any statute to redeem
all or any part of the Property so sold. To the full extent permitted by law,
Grantor shall not have or assert any right under any statute or rule of law
pertaining to the exemption of homestead or other exemption under any federal,
state or local law now or hereafter in effect, the administration of estates of
decedents or any other matters whatsoever to defeat, reduce or affect the right
of Beneficiary
40
under the terms of this Deed of Trust to a sale of the Property, for the
collection of the secured indebtedness without any prior or different resort for
collection, or the right of Beneficiary under the terms of this Deed of Trust to
the payment of the indebtedness secured hereby out of the proceeds of sale of
the Property in preference to every other claimant whatever. Grantor, for
Grantor and Grantor's successors and assigns, and for any and all persons ever
claiming any interest in the Property, to the full extent permitted by law,
hereby knowingly, intentionally and voluntarily with and upon the advice of
competent counsel waives, releases, relinquishes and forever forgoes: (a) all
rights of valuation, appraisement, stay of execution, reinstatement and notice
of election or intention to mature or declare due the secured indebtedness
(except such notices as are specifically provided for herein); (b) all right to
a marshalling of the assets of Grantor, including the Property, to a sale in the
inverse order of alienation, or to direct the order in which any of the Property
shall be sold in the event of foreclosure of the liens and security interests
hereby created and agrees that any court having jurisdiction to foreclose such
liens and security interests may order the Property sold as an entirety; (c) all
rights and periods of redemption provided under applicable law; and (d) all
present and future statutes of limitations as a defense to any action to enforce
the provisions of this Deed of Trust or to collect any of the indebtedness
secured hereby to the fullest extent permitted by law and agrees that it shall
not solicit or aid the solicitation of the filing of any Petition (as
hereinafter defined) against the Grantor, whether acting on its own behalf or on
behalf of any other party. Without limiting the generality of the foregoing,
Grantor shall not (i) provide information regarding the identity of creditors or
the nature of creditors' claims to any third party unless compelled to do so by
order of a court of competent jurisdiction or by regulation promulgated by a
governmental agency; or (ii) pay the legal fees or expenses of any creditor of
or interest holder in Grantor with respect to any matter whatsoever.
I.27 SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.
(A) GRANTOR, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT
COUNSEL, (I) SUBMITS TO PERSONAL JURISDICTION IN THE STATE OF WASHINGTON OVER
ANY SUIT, ACTION OR PROCEEDING BY ANY PERSON ARISING FROM OR RELATING TO THE
NOTE, THIS DEED OF TRUST OR ANY OTHER OF THE LOAN DOCUMENTS, (II) AGREES THAT
ANY SUCH ACTION, SUIT OR PROCEEDING MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT
OF COMPETENT JURISDICTION PRESIDING OVER SPOKANE COUNTY, WASHINGTON, (III)
SUBMITS TO THE JURISDICTION OF SUCH COURTS, AND (IV) AGREES THAT IT WILL NOT
BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM (BUT NOTHING HEREIN
SHALL AFFECT THE RIGHT OF BENEFICIARY OR TRUSTEE TO BRING ANY ACTION, SUIT OR
PROCEEDING IN ANY OTHER FORUM). TO THE FULL EXTENT PERMITTED BY LAW, GRANTOR
FURTHER CONSENTS AND AGREES TO SERVICE OF ANY
41
SUMMONS, COMPLAINT OR OTHER LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING
BY REGISTERED OR CERTIFIED U.S. MAIL, POSTAGE PREPAID, TO THE GRANTOR AT THE
ADDRESS FOR NOTICES DESCRIBED IN SECTION 5.4 HEREOF, AND CONSENTS AND AGREES
THAT SUCH SERVICE SHALL CONSTITUTE IN EVERY RESPECT VALID AND EFFECTIVE SERVICE
(BUT NOTHING HEREIN SHALL AFFECT THE VALIDITY OR EFFECTIVENESS OF PROCESS SERVED
IN ANY OTHER MANNER PERMITTED BY LAW).
(B) GRANTOR, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT
COUNSEL, WAIVES, RELINQUISHES AND FOREVER FORGOES THE RIGHT TO A TRIAL BY JURY
IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING
TO THE INDEBTEDNESS SECURED HEREBY OR ANY CONDUCT, ACT OR OMISSION OF
BENEFICIARY OR GRANTOR, OR ANY OF THEIR DIRECTORS, OFFICERS, PARTNERS, MANAGERS,
MEMBERS, EMPLOYEES, AGENTS OR ATTORNEYS, OR ANY OTHER PERSONS AFFILIATED WITH
BENEFICIARY OR GRANTOR, IN EACH OF THE FOREGOING CASES, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE.
I.28 Contractual Statute of Limitations. Grantor hereby agrees that
any claim or cause of action by Grantor against Beneficiary, or any of
Beneficiary's directors, officers, employees, agents, accountants or attorneys,
based upon, arising from or relating to the indebtedness secured hereby, or any
other matter, cause or thing whatsoever, whether or not relating thereto,
occurred, done, omitted or suffered to be done by Beneficiary or by
Beneficiary's directors, officers, employees, agents, accountants or attorneys,
whether sounding in contract or in tort or otherwise, shall be barred unless
asserted by Grantor by the commencement of an action or proceeding in a court of
competent jurisdiction by the filing of a complaint within three (3) years after
Grantor first acquires or reasonably should have acquired knowledge of the first
act, occurrence or omission upon which such claim or cause of action, or any
part thereof, is based and service of a summons and complaint on an officer of
Beneficiary or any other person authorized to accept service of process on
behalf of Beneficiary, within thirty (30) days thereafter. Grantor agrees that
such three (3) year period of time is reasonable and sufficient time for a
borrower to investigate and act upon any such claim or cause of action. The one
three (3) year period provided herein shall not be waived, tolled or extended
except by the specific written agreement of Beneficiary. This provision shall
survive any termination of this Deed of Trust or any of the other Loan
Documents.
42
I.29 Management. The management of the Property shall be by either:
(a) Grantor or an entity affiliated with Grantor approved by Beneficiary for so
long as Grantor or said affiliated entity is managing the Property in a first
class manner, or (b) a professional property management company approved by
Beneficiary (any such person or entity which manages the Property, other than
Grantor, is hereinafter referred to as the "Manager"). Any such management by an
affiliated entity or a professional property management company shall be
pursuant to a written agreement approved by Beneficiary. In no event shall any
Manager be removed or replaced or the terms of any management agreement modified
or amended without the prior written consent of Beneficiary. In the event (x) of
default hereunder or under any management contract then in effect, which default
is not cured within any applicable grace or cure period, or (y) of a change in
control (fifty percent or more) of the ownership of Manager or if Manager
provides cause for termination, including, without limitation, gross negligence,
willful misconduct or fraud, Beneficiary shall have the right to terminate, or
direct Grantor to terminate, such management contract at any time and, in any
such event of termination of the management contract, to retain, or to direct
Grantor to retain, a new management agent approved by Beneficiary. Any such
successor manager shall be a reputable management company having a senior
executive with at least seven (7) years' experience in the management of
hotel/hospitality properties in the state where the Property is located, shall
be the manager of at least five (5) projects comparable to the Property and
shall be reasonably acceptable to Beneficiary. Grantor further covenants and
agrees that Grantor shall require the Manager (or any successor managers) to
maintain at all times during the term of this Deed of Trust worker's
compensation insurance as required by applicable governmental authorities or
legal requirements.
I.30 Hazardous Materials and Environmental Concerns.
(a) Grantor hereby represents and warrants to Beneficiary
that, as of the date hereof: (i) to the best of Grantor's knowledge, information
and belief, the Property is not and has not been, in direct or indirect
violation of any Environmental Law (as defined below); (ii) to the best of
Grantor's knowledge, information and belief, no Hazardous Substances (as defined
below) are located on or have been handled, manufactured, generated, stored,
processed, transported to or from, or disposed of on or Released or discharged
from the Property (including underground contamination) except for those
substances used by Grantor in the ordinary course of its business and in
compliance with all Environmental Laws; (iii) the Property is not subject to any
private or governmental lien or judicial, administrative or other notice or
action relating to Hazardous Substances or noncompliance with Environmental
Laws, nor is Grantor aware of any basis for such lien, notice or action; (iv)
except as previously disclosed to Beneficiary, to the best of Grantor's
knowledge, information and belief, there are no underground storage tanks or
other underground storage receptacles for Hazardous Substances on the Property;
(v) Grantor has received no notice of, and to the best of Grantor's
43
knowledge and belief, there does not exist any, investigation, action,
proceeding or claim by any agency, authority or unit of government or by any
third party which could result in any liability, penalty, sanction or judgment
under any Environmental Laws with respect to any condition, use or operation of
the Property, nor does Grantor know of any basis for such investigation, action,
proceeding or claim; (vi) Grantor has received no notice that, and, to the best
of Grantor's knowledge and belief, there has been no claim by any party that,
any use, operation or condition of the Property has caused any nuisance,
trespass or any other liability or adverse condition on any other property, nor
does Grantor know of any basis for such notice or claim; and (vii) to Grantor's
best knowledge, information and belief, there are no present environmental
conditions or events or past environmental conditions or events, on or near the
Property that could be reasonably anticipated to materially adversely affect the
value of the Property.
(b) Grantor shall keep or cause the Property to be kept free
from Hazardous Substances (except those substances used by Grantor in the
ordinary course of its business and in compliance with all Environmental Laws)
and in compliance with all Environmental Laws, shall not install or use any
underground storage tanks, shall expressly prohibit the use, generation,
handling, storage, production, processing and disposal of Hazardous Substances
by all tenants (except those substances used by tenants in the ordinary course
of their activities and in compliance with all Environmental Laws), invitees and
trespassers, and, without limiting the generality of the foregoing, during the
term of this Deed of Trust, shall not install in the Improvements or permit to
be installed in the Improvements asbestos or any substance containing asbestos.
If required by Beneficiary in its reasonable discretion or under any
Environmental Law, Grantor shall maintain an Operation and Maintenance Program
("O&M Program") for the management of asbestos, lead-based paint, radon or any
other Hazardous Substances at the Property.
(c) Grantor shall promptly notify Beneficiary if Grantor shall
become aware of (i) any Hazardous Substances at, on, under or affecting or
threatening to affect the Property (except those substances used by Grantor or
tenants in the ordinary course of their business or activities, respectively,
and in compliance with all Environmental Laws), (ii) any lien, action or notice
affecting or threatening to affect the Property or Grantor resulting from any
violation or alleged violation of Environmental Law, (iii) any investigation,
inquiry or proceeding concerning Grantor or the Property pursuant to any
Environmental Law or otherwise relating to Hazardous Substances, or (iv) any
occurrence, condition or state of facts which would render any representation or
warranty in this Section incorrect in any respect if made at the time of such
discovery. Further, Grantor shall timely deliver to Beneficiary copies of any
and all orders, notices, permits, applications, reports, and other
communications, documents and instruments pertaining to the actual, alleged or
potential non-compliance with any
44
Environmental Laws in connection with the Property or presence or existence of
any Hazardous Substances at, on, about, under, within, near or in connection
with the Property (except those substances used in the ordinary course of its
business and in compliance with all Environmental Laws). Grantor shall, promptly
and when and as required, at Grantor's sole cost and expense, take all actions
as shall be necessary or advisable for compliance with the terms of this Section
1.30 or for the remediation, of any and all portions of the Property or other
affected property, including, without limitation, all investigative, monitoring,
removal, containment, remedial and response actions in accordance with all
applicable Environmental Laws and shall further pay or cause to be paid, at no
expense to Beneficiary, all remediation, response, administrative and
enforcement costs of applicable governmental agencies which may be asserted
against the Property. In the event Grantor fails to do so within thirty (30)
days after Grantor's receipt of written notice thereof (1) Beneficiary may, but
shall not be obligated to, undertake remediation at the Property or other
affected property necessary to bring the Property into conformance with the
terms of Environmental Laws, and (2) Grantor hereby grants to Beneficiary and
its agents and employees access to the Property and a license to do all things
Beneficiary shall deem necessary to bring the Property into conformance with
Environmental Laws. Any and all costs and expenses reasonably incurred by
Beneficiary in connection therewith, together with interest thereon at the
Default Interest Rate from the date incurred by Beneficiary until actually paid
by Grantor, shall be immediately paid by Grantor on demand and shall be secured
by this Deed of Trust and by all of the other Loan Documents securing all or any
part of the indebtedness evidenced by the Note. GRANTOR COVENANTS AND AGREES, AT
GRANTOR'S SOLE COST AND EXPENSE, TO INDEMNIFY, DEFEND (AT TRIAL AND APPELLATE
LEVELS, AND WITH ATTORNEYS, CONSULTANTS AND EXPERTS ACCEPTABLE TO BENEFICIARY),
AND HOLD BENEFICIARY HARMLESS FROM AND AGAINST ANY AND ALL LIENS, DAMAGES,
LOSSES, LIABILITIES, OBLIGATIONS, SETTLEMENT PAYMENTS, PENALTIES, ASSESSMENTS,
CITATIONS, DIRECTIVES, CLAIMS, LITIGATION, DEMANDS, DEFENSES, JUDGMENTS, SUITS,
PROCEEDINGS, COSTS, DISBURSEMENTS OR EXPENSES OF ANY KIND OR OF ANY NATURE
WHATSOEVER (INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS', CONSULTANTS'
AND EXPERTS' FEES AND DISBURSEMENTS ACTUALLY INCURRED IN INVESTIGATING,
DEFENDING, SETTLING OR PROSECUTING ANY CLAIM, LITIGATION OR PROCEEDING) WHICH
MAY AT ANY TIME BE IMPOSED UPON, INCURRED BY OR ASSERTED OR AWARDED AGAINST
BENEFICIARY OR THE PROPERTY, AND ARISING DIRECTLY OR INDIRECTLY FROM OR OUT OF:
(A) THE PRESENCE, RELEASE OR THREAT OF RELEASE OF ANY HAZARDOUS SUBSTANCES ON,
IN, UNDER, AFFECTING OR THREATENING TO AFFECT ALL OR ANY PORTION OF THE PROPERTY
OR ANY SURROUNDING AREAS, REGARDLESS OF WHETHER OR NOT CAUSED BY OR WITHIN THE
CONTROL OF GRANTOR;
45
(B) THE VIOLATION OF ANY ENVIRONMENTAL LAWS RELATING TO, AFFECTING OR
THREATENING TO AFFECT THE PROPERTY, WHETHER OR NOT CAUSED BY OR WITHIN THE
CONTROL OF GRANTOR; (C) THE FAILURE BY GRANTOR TO COMPLY FULLY WITH THE TERMS
AND CONDITIONS OF THIS SECTION 1.30; (D) THE BREACH OF ANY REPRESENTATION OR
WARRANTY CONTAINED IN THIS SECTION 1.30; OR (E) THE ENFORCEMENT OF THIS SECTION
1.30, INCLUDING, WITHOUT LIMITATION, THE COST OF ASSESSMENT, CONTAINMENT AND/OR
REMOVAL OF ANY AND ALL HAZARDOUS SUBSTANCES ON AND/OR FROM ALL OR ANY PORTION OF
THE PROPERTY OR ANY SURROUNDING AREAS, THE COST OF ANY ACTIONS TAKEN IN RESPONSE
TO THE PRESENCE, RELEASE OR THREAT OF RELEASE OF ANY HAZARDOUS SUBSTANCES ON,
IN, UNDER OR AFFECTING ANY PORTION OF THE PROPERTY OR ANY SURROUNDING AREAS TO
PREVENT OR MINIMIZE SUCH RELEASE OR THREAT OF RELEASE SO THAT IT DOES NOT
MIGRATE OR OTHERWISE CAUSE OR THREATEN DANGER TO PRESENT OR FUTURE PUBLIC
HEALTH, SAFETY, WELFARE OR THE ENVIRONMENT, AND COSTS INCURRED TO COMPLY WITH
THE ENVIRONMENTAL LAWS IN CONNECTION WITH ALL OR ANY PORTION OF THE PROPERTY.
THE INDEMNITY SET FORTH IN THIS SECTION 1.30(C) SHALL ALSO INCLUDE ANY
DIMINUTION IN THE VALUE OF THE SECURITY AFFORDED BY THE PROPERTY OR ANY FUTURE
REDUCTION IN THE SALES PRICE OF THE PROPERTY BY REASON OF ANY MATTER SET FORTH
IN THIS SECTION 1.30(C). BENEFICIARY'S RIGHTS UNDER THIS SECTION SHALL SURVIVE
PAYMENT IN FULL OF THE INDEBTEDNESS SECURED HEREBY AND SHALL BE IN ADDITION TO
ALL OTHER RIGHTS OF BENEFICIARY UNDER THIS DEED OF TRUST, THE NOTE AND THE OTHER
LOAN DOCUMENTS.
(d) Upon Beneficiary's request, at any time after the
occurrence of a default of this Section 1.30 or at such other time as
Beneficiary has reasonable grounds to believe that Hazardous Substances are or
have been handled, generated, stored, processed, transported to or from, or
released or discharged from or disposed of on or around the Property (other than
in the normal course of Grantor's or the tenants' business or activities,
respectively, and in compliance with all Environmental Laws) or that the
Grantor, any tenant or the Property may be in violation of Environmental Laws,
Grantor shall provide, at Grantor's sole cost and expense, an inspection or
audit of the Property prepared by a hydrogeologist or environmental engineer or
other appropriate consultant approved by Beneficiary indicating the presence or
absence of Hazardous Substances on the Property or any surrounding areas
(including asbestos containing material or lead-based paint). If Grantor fails
to provide such inspection or audit within sixty (60) days after such request,
Beneficiary may order the same, and Grantor hereby grants to Beneficiary and its
employees and agents access to the Property and a license to
46
undertake such inspection or audit. The cost of such inspection or audit,
together with interest thereon at the Default Interest Rate from the date
incurred by Beneficiary until actually paid by Grantor, shall be immediately
paid by Grantor on demand and shall be secured by this Deed of Trust and by all
of the other Loan Documents securing all or any part of the indebtedness
evidenced by the Note.
(e) Without limiting the foregoing, Beneficiary and its
authorized representatives may, during normal business hours and at its own
expense, inspect the Property and Grantor's records related thereto for the
purpose of determining compliance with Environmental Laws and the terms and
conditions of this Section 1.30.
(f) As used herein, the term "Release(d)" shall include,
without limitation, any intentional or unintentional placing, spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping, disposing, discarding or abandoning of any Hazardous
Substance, other than in the normal course of business or activities of Grantor
or its tenants, and in compliance with all Environmental Laws.
(g) For purposes of this Section 1.30, the term "best
knowledge, information and belief" of Grantor shall mean the conscious awareness
of the directors, officers and employees of Grantor who are involved in the
consummation of the Loan or the management of the Property.
(h) As used herein, the term "Environmental Laws" shall mean
local, state or federal law, rule or regulation pertaining to environmental
regulation, contamination, remediation, human health or clean-up, including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 (42 U.S.C.ss.9601 et seq. and 40 CFRss.302.1 et seq.), the
Resource Conservation and Recovery Act of 1976 (42 U.S.C.ss.6901 et seq.), the
Federal Water Pollution Control Act (33 U.S.C.ss.1251 et seq. and 40 CFRss.116.1
et seq.), the Hazardous Materials Transportation Act (49 U.S.C.ss.1801 et seq.),
and the regulations promulgated pursuant to said laws, all as amended.
(i) As used herein, the term "Hazardous Substances" shall mean
hazardous, toxic or harmful substances, wastes, materials, pollutants or
contaminants, including, without limitation, asbestos, polychlorinated
biphenyls, petroleum products, radon, lead-based paints, flammable explosives,
radioactive materials, infectious substances or raw materials which include
hazardous constituents or any other substances or materials which are included
under or regulated by Environmental Laws.
Notwithstanding anything contained herein to the contrary, specifically
including, but not limited to this Section 1.30 and Section 1.24, this Deed of
Trust does not secure any guaranty
47
or indemnification of Grantor or any third party to the extent the instrument
evidencing the same states that such obligations are not so secured. Any
obligations that are secured by this Deed of Trust that are the substantial
equivalent of Grantor's indemnities in the Hazardous Substances Indemnity
Agreement shall be limited to the actual and consequential damages incurred by
Beneficiary, including all advances or payments paid or agreed to be paid by
Beneficiary pursuant to its rights to require environmental assessments, join or
participate in any proceedings, cure Grantor's default or enforce its remedies
(a) prior to and after any judicial foreclosure of this Deed of Trust or the
date a deed is delivered and accepted in lieu thereof, or (b) prior to any
nonjudicial foreclosure of this Deed of Trust or the date a deed is delivered
and accepted in lieu thereof. The obligations of Grantor under this Section
shall be mutually exclusive of any liabilities arising after a nonjudicial
foreclosure of this Deed of Trust or the delivery and acceptance of a deed in
lieu of such nonjudicial foreclosure which are evidenced by the Hazardous
Substances Indemnity Agreement.
I.31 Indemnification; Subrogation.
(A) GRANTOR SHALL INDEMNIFY, DEFEND AND HOLD BENEFICIARY
HARMLESS AGAINST: (I) ANY AND ALL CLAIMS FOR BROKERAGE, LEASING, FINDER'S OR
SIMILAR FEES WHICH MAY BE MADE RELATING TO THE PROPERTY OR THE SECURED
INDEBTEDNESS, (II) ANY AND ALL LIABILITY, OBLIGATIONS, LOSSES, DAMAGES,
PENALTIES, CLAIMS, ACTIONS, SUITS, LIENS, CHARGES, ENCUMBRANCES, COSTS AND
EXPENSES (INCLUDING BENEFICIARY'S ATTORNEYS' FEES, TOGETHER WITH REASONABLE
APPELLATE COUNSEL FEES, IF ANY) OF WHATEVER KIND OR NATURE WHICH MAY BE ASSERTED
AGAINST, IMPOSED ON OR INCURRED BY BENEFICIARY UNDER ANY LEASE OR OCCUPANCY
AGREEMENT, FOR ANY LOSS ARISING FROM A FAILURE OR INABILITY TO COLLECT RENTS AND
PROFITS OR IN CONNECTION WITH THE SECURED INDEBTEDNESS, THIS DEED OF TRUST, THE
PROPERTY, OR ANY PART THEREOF, OR THE EXERCISE BY BENEFICIARY OF ANY RIGHTS OR
REMEDIES GRANTED TO IT UNDER THIS DEED OF TRUST, AND ANY DEFAULT UNDER THIS DEED
OF TRUST, (III) ANY LIENS (WHETHER JUDGMENTS, MECHANICS', MATERIALMEN'S OR
OTHERWISE), CHARGES AND ENCUMBRANCES FILED AGAINST THE PROPERTY, AND (IV) ANY
CLAIMS AND DEMANDS FOR DAMAGES OR INJURY, INCLUDING CLAIMS FOR PROPERTY DAMAGE,
PERSONAL INJURY OR WRONGFUL DEATH, ARISING OUT OF OR IN CONNECTION WITH ANY
ACCIDENT OR FIRE OR OTHER CASUALTY ON THE REAL ESTATE OR THE IMPROVEMENTS OR ANY
NUISANCE OR TRESPASS MADE OR SUFFERED THEREON, INCLUDING, IN ANY CASE,
ATTORNEYS' FEES, COSTS AND EXPENSES AS AFORESAID,
48
WHETHER AT PRETRIAL, TRIAL OR APPELLATE LEVEL FOR ANY CIVIL, CRIMINAL OR
ADMINISTRATIVE PROCEEDINGS. SHOULD BENEFICIARY INCUR ANY LIABILITY UNDER THIS
DEED OF TRUST OR ANY OF THE OTHER LOAN DOCUMENTS, THE AMOUNT THEREOF, INCLUDING,
WITHOUT LIMITATION, COSTS, EXPENSES AND REASONABLE ATTORNEYS' FEES, TOGETHER
WITH INTEREST THEREON AT THE DEFAULT INTEREST RATE FROM THE DATE INCURRED BY
BENEFICIARY UNTIL ACTUALLY PAID BY GRANTOR, SHALL BE IMMEDIATELY DUE AND PAYABLE
TO BENEFICIARY BY GRANTOR ON DEMAND AND SHALL BE SECURED HEREBY AND BY ALL OF
THE OTHER LOAN DOCUMENTS SECURING ALL OR ANY PART OF THE INDEBTEDNESS EVIDENCED
BY THE NOTE. HOWEVER, NOTHING HEREIN SHALL BE CONSTRUED TO OBLIGATE GRANTOR TO
INDEMNIFY, DEFEND AND HOLD HARMLESS BENEFICIARY FROM AND AGAINST ANY AND ALL
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, CLAIMS, ACTIONS, SUITS,
COSTS AND EXPENSES ENACTED AGAINST, IMPOSED ON OR INCURRED BY BENEFICIARY BY
REASON OF BENEFICIARY'S WILLFUL MISCONDUCT OR GROSS NEGLIGENCE. THIS INDEMNITY
SHALL SURVIVE PAYMENT IN FULL OF THE INDEBTEDNESS SECURED HEREBY.
(b) Beneficiary may engage the services of attorneys to
enforce the terms of this Deed of Trust or to protect its rights hereunder, and
in the event of any such engagement, Grantor shall pay Beneficiary's attorneys'
fees (together with reasonable appellate counsel fees, if any), consultants'
fees, experts' fees and expenses reasonably incurred by Beneficiary, whether or
not an action is actually commenced against Grantor. All references to
"attorneys" in this Subsection and elsewhere in this Deed of Trust shall include
without limitation any attorney or law firm engaged by Beneficiary and
Beneficiary's in-house counsel, and all references to "fees and expenses" in
this Subsection and elsewhere in this Deed of Trust shall include without
limitation any fees of such attorney or law firm and any allocation charges and
allocation costs of Beneficiary's in-house counsel.
(c) A waiver of subrogation shall be obtained by Grantor from
its insurance carrier and, consequently, Grantor waives any and all right to
claim or recover against Beneficiary, its officers, employees, agents and
representatives, for loss of or damage to Grantor, the Property, Grantor's
property or the property of others under Grantor's control from any cause
insured against or required to be insured against by the provisions of this Deed
of Trust to the extent covered by such insurance.
I.32 Covenants with Respect to Indebtedness, Operations and
Fundamental Changes of Grantor. Grantor represents, warrants and covenants as of
the date hereof and until such time as the loan evidenced by the Note is paid in
full, that Grantor:
49
(a) does not own and will not own any encumbered asset other
than (i) the Property, and (ii) incidental personal property necessary for the
operation of the Property;
(b) is not engaged and will not engage in any business other
than the ownership, management and operation of the Property;
(c) will not enter into any contract or agreement with any
member, manager, general partner, principal or affiliate of Grantor or any
affiliate thereof, except upon terms and conditions that are intrinsically fair
and substantially similar to those that would be available on an arm's length
basis with third parties other than an affiliate;
(d) has not incurred and will not incur any debt, secured or
unsecured, direct or contingent (including guaranteeing any obligation), other
than (i) the indebtedness secured hereby, and (ii) unsecured trade and
operational debt incurred in the ordinary course of business not outstanding for
more than sixty (60) days with trade creditors and in amounts as are normal and
reasonable under the circumstances, but, in no event, to exceed in the aggregate
four percent (4%) of the original principal balance of the Grand Loan and the
Olympia Loan (including the costs described in item (iii) below); (iii) debt
related to costs of furniture, fixtures and equipment, including equipment
leases, not to exceed $250,000 in the aggregate; and (iv) such subordinate
financing for purposes of renovating the Property, provided no such subordinate
financing shall be permitted without the prior written approval of Beneficiary.
(e) has not made and will not make any loans or advances to
any third party (including any member, manager, general partner, principal or
affiliate of Grantor, or any guarantor);
(f) is and will be solvent and pay its debts from its assets
as the same shall become due;
(g) has done or caused to be done and will do all things
necessary to preserve its existence and corporate, limited liability company and
partnership formalities (as applicable), and will not, nor will any partner,
limited or general, shareholder or member thereof, amend, modify or otherwise
change its partnership certificate, partnership agreement, certificate, articles
of incorporation, by-laws, articles of organization, operating agreement or
regulations in a manner which adversely affects Grantor's, or any such
partner's, member's or shareholder's existence as a single-purpose, single-asset
"bankruptcy remote" entity;
(h) will conduct and operate its business as presently
conducted and operated;
50
(i) will maintain books and records and bank accounts separate
from those of its affiliates, including its general partners, principals and
members;
(j) will be, and at all times will hold itself out to the
public as, a legal entity separate and distinct from any other entity (including
any general partner, principal, member or affiliate thereof);
(k) will file its own tax returns except to the extent
applicable law permits Grantor to file a consolidated return with its owners in
which event Grantor shall be shown as a separate member of such group and such
consolidated returns shall be maintained in a manner so as to account separately
for Grantor's taxes, such that Grantor's separate information may be readily
accessible;
(l) will maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in light of
its contemplated business operations;
(m) will not, nor will any member, manager, shareholder,
partner, principal or affiliate, seek the dissolution or winding up, in whole or
in part, of Grantor;
(n) will not enter into any transaction of merger or
consolidation, or acquire by purchase or otherwise all or substantially all of
the business or assets of, or any stock or beneficial ownership of, any entity;
(o) will not commingle the funds and other assets of Grantor
with those of any member, manager, general partner, principal or affiliate or
any other person;
(p) has and will maintain its assets in such a manner that it
is not costly or difficult to segregate, ascertain or identify its individual
assets from those of any affiliate or any other person;
(q) has, and any general partner or managing member of Grantor
has, at all times since their respective formation, observed all legal and
customary formalities regarding their respective formation and will continue to
observe all legal and customary formalities;
(r) does not and will not hold itself out to be responsible
for the debts or obligations of any other person;
(s) GRANTOR SHALL AT ALL TIMES CAUSE THERE TO BE AT LEAST ONE
DULY APPOINTED MEMBER OF THE BOARD OF DIRECTORS (AN "INDEPENDENT DIRECTOR") OF
THE GRANTOR
51
REASONABLY SATISFACTORY TO BENEFICIARY WHO SHALL NOT HAVE BEEN AT THE TIME OF
SUCH INDIVIDUAL'S APPOINTMENT, AND MAY NOT HAVE BEEN AT ANY TIME DURING THE
PRECEDING FIVE YEARS (I) A SHAREHOLDER OF, OR AN OFFICER, DIRECTOR, ATTORNEY,
COUNSEL, PARTNER OR EMPLOYEE OF, GRANTOR OR ANY OF ITS SHAREHOLDERS,
SUBSIDIARIES OR AFFILIATES, (II) A CUSTOMER OF, OR SUPPLIER TO, GRANTOR OR ANY
OF ITS SHAREHOLDERS, SUBSIDIARIES OR AFFILIATES, (III) A PERSON OR OTHER ENTITY
CONTROLLING OR UNDER COMMON CONTROL WITH ANY SUCH SHAREHOLDER, PARTNER, SUPPLIER
OR CUSTOMER, OR (IV) A MEMBER OF THE IMMEDIATE FAMILY OF ANY SUCH SHAREHOLDER,
OFFICER, DIRECTOR, PARTNER, EMPLOYEE, SUPPLIER OR CUSTOMER OF ANY OTHER DIRECTOR
OF GRANTOR. AS USED HEREIN, THE TERM "CONTROL" MEANS THE POSSESSION, DIRECTLY OR
INDIRECTLY, OF THE POWER TO DIRECT OR CAUSE THE DIRECTION OF THE MANAGEMENT AND
POLICIES OF A PERSON OR ENTITY, WHETHER THROUGH OWNERSHIP OF VOTING SECURITIES,
BY CONTRACT OR OTHERWISE;
(t) has not caused and shall not cause, as applicable, the
board of directors of Grantor, the members or managers of Grantor, or the board
of directors, members or managers of any general partner of Grantor to take any
action which, under the terms of the organizational documents for Grantor and
its general partner or manager, as applicable, requires the unanimous
affirmative vote of one hundred percent (100%) of the members of the board of
directors, members or manager, [unless at the time of such action there shall be
at least one director, member or manager, as applicable, who is an Independent
Director;
(u) shall conduct its business so that the assumptions of fact
made with respect to Grantor in that certain opinion letter dated the date
hereof delivered by Riddell & Williams P.S. (the "Nonconsolidation Opinion")
with respect to non-consolidation issues, delivered in connection with the
execution and delivery of the Loan Documents shall be true and correct, in all
material respects at all times; and
(v) upon the commencement of a voluntary or involuntary
bankruptcy proceeding by or against Grantor, Grantor shall not seek a
supplemental stay or otherwise pursuant to 11 U.S.C. 105 or any other provision
of the Act, or any other debtor relief law (whether statutory, common law, case
law, or otherwise) of any jurisdiction whatsoever, now or hereafter in effect,
which may be or become applicable, to stay, interdict, condition, reduce or
inhibit the ability of Beneficiary to enforce any rights of Beneficiary against
any guarantor or indemnitor of the secured obligations or any other party liable
with respect thereto by virtue of any indemnity, guaranty or otherwise.
I.33 Litigation. Grantor will give prompt written notice to
Beneficiary of any litigation or governmental proceedings pending or threatened
(in writing) against Grantor which might have a Material Adverse Effect.
I.34 ERISA.
52
(a) Grantor shall not engage in any transaction which would
cause any obligation, or action taken or to be taken, hereunder (or the exercise
by Beneficiary of any of its rights under the Note, this Deed of Trust or any of
the other Loan Documents) to be a non-exempt (under a statutory or
administrative class exemption) prohibited transaction under ERISA.
(b) Grantor further covenants and agrees to deliver to
Beneficiary such certifications or other evidence from time to time throughout
the term of this Deed of Trust, as requested by Beneficiary in its sole
discretion, that (i) Grantor is not an "employee benefit plan" as defined in
Section 3(3) of ERISA, which is subject to Title I of ERISA, or a "governmental
plan" within the meaning of Section 3(3) of ERISA; (ii) Grantor is not subject
to state statutes regulating investments and fiduciary obligations with respect
to governmental plans; and (iii) one or more of the following circumstances is
true:
(1) Equity interests in Grantor are publicly offered
securities within the meaning of 29 C.F.R. Section 2510.3-101(b)(2);
(2) Less than twenty-five percent (25%) of each
outstanding class of equity interests in Grantor are held by "benefit
plan investors" within the meaning of 29 C.F.R. Section
2510.3-101(f)(2); or
(3) Grantor qualifies as an "operating company" or a
"real estate operating company" within the meaning of 29 C.F.R.
Section 2510.3-101(c) or (e) or an investment company registered under
the Investment Company Act of 1940.
(c) GRANTOR SHALL INDEMNIFY BENEFICIARY AND DEFEND AND HOLD
BENEFICIARY HARMLESS FROM AND AGAINST ALL CIVIL PENALTIES, EXCISE TAXES, OR
OTHER LOSS, COST, DAMAGE AND EXPENSE (INCLUDING, WITHOUT LIMITATION, REASONABLE
ATTORNEYS' FEES AND DISBURSEMENTS AND COSTS INCURRED IN THE INVESTIGATION,
DEFENSE AND SETTLEMENT OF CLAIMS AND LOSSES INCURRED IN CORRECTING ANY
PROHIBITED TRANSACTION OR IN THE SALE OF A PROHIBITED LOAN, AND IN OBTAINING ANY
INDIVIDUAL PROHIBITED TRANSACTION EXEMPTION UNDER ERISA THAT MAY BE REQUIRED, IN
BENEFICIARY'S SOLE DISCRETION) THAT BENEFICIARY MAY INCUR, DIRECTLY OR
INDIRECTLY, AS A RESULT OF A DEFAULT UNDER THIS SECTION 1.34. THIS INDEMNITY
SHALL SURVIVE ANY TERMINATION, SATISFACTION OR FORECLOSURE OF THIS DEED OF
TRUST.
53
I.35 Defeasance.
(a) Notwithstanding anything to the contrary contained in the
Note, this Deed of Trust or the other Loan Documents, at any time after the
second (2nd) anniversary of the date that is the "startup day," within the
meaning of Section 860G(a)(9) of the Internal Revenue Code of 1986, as amended
from time to time or any successor statute (the "Code"), of a "real estate
mortgage investment conduit" ("REMIC") within the meaning of Section 860D of the
Code, that holds the Note and this Deed of Trust and provided (unless
Beneficiary shall otherwise consent, in its sole discretion) no default or Event
of Default has occurred and is continuing hereunder or under any of the other
Loan Documents, Grantor shall have the right to obtain the release of the
Property from the lien of this Deed of Trust and the other Loan Documents (the
"Defeasance") upon the satisfaction of each of the following conditions
precedent:
(1) not less than thirty (30) days' prior written
notice to the Beneficiary specifying a regular Payment Date under the
Note (the "Defeasance Election Date") on which the Defeasance Deposit
(hereinafter defined) is to be made;
(2) the remittance to the Beneficiary on the related
Defeasance Election Date of interest accrued and unpaid on the
outstanding principal amount of the Note to and including the
Defeasance Election Date and the scheduled amortization payment due on
such Defeasance Election Date, together with all other amounts then due
and payable under the Note, this Deed of Trust and the other Loan
Documents;
(3) the irrevocable deposit with the Beneficiary of
an amount (the "Defeasance Deposit") of U.S. Government Securities
(hereinafter defined), which through the scheduled payment of principal
and interest in respect thereof in accordance with their terms will
provide, not later than the due date of any payment, cash in an amount
sufficient, without reinvestment, in the opinion of a nationally
recognized firm of independent certified public accountants expressed
in a written certification thereof delivered to the Beneficiary, to pay
and discharge the Scheduled Defeasance Payments (hereinafter defined);
(4) the delivery on or prior to the Defeasance
Election Date to the Beneficiary of:
(A) a security agreement, in form and
substance satisfactory to the Beneficiary, creating a first
priority lien on the Defeasance Deposit (the "Defeasance
Security Agreement"), which Defeasance Security Agreement
54
shall be included within the definition of "Deed of Trust" for
purposes of each Loan Document from and after the date of its
execution;
(B) a release of the Property from this Deed
of Trust, the Assignment and any UCC Financing Statements
relating thereto (for execution by the Beneficiary) in a form
appropriate for cancellation of such documents in the
jurisdiction in which the Property is located and termination
of the Cash Management Agreement;
(C) certificate of an authorized
representative of Grantor certifying that the requirements set
forth in this subparagraph (a) have been satisfied;
(D) an opinion of counsel for Grantor in
form and substance satisfactory to the Beneficiary to the
effect that the Beneficiary has a perfected first priority
security interest in the Defeasance Deposit;
(E) an opinion of counsel for Beneficiary,
prepared and delivered by the servicer at Grantor's reasonable
expense, stating that any trust formed as a REMIC in
connection with any Secondary Market Transaction will not fail
to maintain its status as a REMIC as a result of such
Defeasance;
(F) evidence in writing from the applicable
Rating Agencies to the effect that the collateral substitution
will not result in a downgrading, withdrawal or qualification
of the respective ratings in effect immediately prior to such
Defeasance for any securities issued in connection with the
Secondary Market Transaction which are then outstanding; and
(G) such other certificates, documents or
instruments as Beneficiary may reasonably request;
(5) the payment by Grantor to Beneficiary of all
reasonable out-of-pocket costs and expenses (including, without
limitation, reasonable attorneys' fees and disbursements) incurred or
anticipated to be incurred by Beneficiary in connection with the
release of the Property from the lien of this Deed of Trust and the
other Loan Documents pursuant to this Section 1.35 including, without
limitation, Beneficiary's determination of whether Grantor has
satisfied all of the related conditions and requirements set forth in
this Section 1.35.
55
(6) contemporaneous Defeasance election being
undertaken and completed relative to the Olympia Property and pursuant
to the terms of the Olympia Deed of Trust.
(b) Upon compliance with the requirements of subparagraph (a)
above, the Property shall be released from the lien of this Deed of Trust, the
Assignment and any UCC Financing Statements related thereto, the obligations
hereunder and under the other Loan Documents with respect to the Property shall
no longer be applicable and the Defeasance Deposit shall be the sole source of
collateral securing the Note. Beneficiary shall apply the Defeasance Deposit and
the payments received therefrom to the payment of all scheduled principal and
interest payments (the "Scheduled Defeasance Payments") due on all successive
Payment Dates under the Note after the Defeasance Election Date including the
payment due on the Maturity Date (as defined in the Note). Grantor, pursuant to
the Defeasance Security Agreement or other appropriate document, shall direct
that the payments received from the Defeasance Deposit shall be made directly to
Beneficiary and applied to satisfy the obligations of Grantor under the Note. In
connection with such release, if Grantor shall continue to own any assets other
than the Defeasance Deposit, Grantor shall establish or designate a
single-purpose, bankruptcy-remote successor entity acceptable to Beneficiary
(the "Successor Trustor"), with respect to which a nonconsolidation opinion
satisfactory in form and substance to Beneficiary has been delivered to
Beneficiary (if such nonconsolidation opinion was required of Grantor in
connection with the origination of the indebtedness secured hereby) in which
case Grantor shall transfer and assign to the Successor Trustor all obligations,
rights and duties under the Note and the Defeasance Security Agreement, together
with the pledged Defeasance Deposit. The Successor Trustor shall assume the
obligations of Grantor under the Note and the Defeasance Security Agreement, and
Grantor shall be relieved of its obligations hereunder and thereunder. Grantor
shall pay One Thousand and No/100 Dollars ($1,000.00) to the Successor Trustor
as consideration for assuming such Grantor obligations.
(c) As used herein, the term "U.S. Government Securities"
shall mean securities that are direct obligations of the United States of
America for the full and timely payment of which its full faith and credit is
pledged.
(d) Notwithstanding the provisions of clauses (a)-(c) above,
if at any time following the third (3rd) anniversary of the First P&I Date (as
defined in the Note) Grantor delivers to Beneficiary a written notice pursuant
to Section 1.35(a)(i) above specifying a Defeasance Election Date, and, if as a
result of delays by Beneficiary in including the Loan in a Secondary Market
Transaction, Grantor is unable due to REMIC restrictions to exercise its right
to Defeasance on the specified Defeasance Election Date, then Grantor may prepay
the Note on the specified Defeasance Election Date, in accordance with Section
1.2(e) of the Note.
56
Any such permitted prepayment made on or prior to the Lockout Expiration Date
(as defined in the Note) shall be accompanied with payment of Required Yield
Maintenance.
I.36 Intentionally deleted.
I.37 Franchise Agreement. Grantor shall comply with all terms and
provisions of that certain Franchise Agreement ("Franchise Agreement"), dated
June 15, 2001, between Grantor and WestCoast Hotels, Inc. (the "Franchisor")
relating to the Property, a copy of which has been delivered to Beneficiary, and
shall keep the Franchise Agreement in full force and effect so long as any
portion of the secured indebtedness remains outstanding. Grantor shall promptly
provide Beneficiary with full and complete copies of all notices of default and
other correspondence received by Grantor pursuant to such Franchise Agreement
which relates to the performance of Grantor under such Franchise Agreement,
including, without limitation, all franchise inspections (quality assurance
reports). Notwithstanding anything in this Section to the contrary, Grantor
shall have the right to replace the Franchisor by executing a new franchise
agreement with another franchisor, which agreement and franchisor must be
reasonably acceptable to Beneficiary.
I.38 Personal Property Leases. Grantor has leased certain personal
property pursuant to leases (the "Personal Property Leases"), copies of which
Grantor has delivered or shall immediately deliver to Beneficiary. Grantor shall
comply with all terms and provisions of the Personal Property Leases and shall
keep the Personal Property Leases in full force and effect (except for worn out
or obsolete items replaced by Grantor) so long as any portion of the secured
indebtedness remains outstanding.
I.39 Partial Release. If fifty percent (50%) or more of the
Improvements located on the Property is taken or destroyed as described in
Section 1.9(c) hereinabove, Beneficiary may require a prepayment of the Olympia
Note pursuant to such Section 1.9(c) whether or not the proceeds from such
taking or destruction are adequate to fund such prepayment. The amount of such
partial prepayment (the "Casualty Release Payment") shall equal the greater of
(i) the casualty or condemnation proceeds, or (ii) the Minimum Release Payment
(hereinafter defined). Upon payment of the Casualty Release Payment, Beneficiary
shall give written consent to Grantor to a release (a "Casualty Release") of the
Property upon the satisfaction (in the determination of Beneficiary) of the
following conditions precedent (singularly and collectively referred to as a
"Casualty Release Condition"):
(a) Any and all sums then due and payable to Beneficiary under
the Loan Documents shall be fully paid (including, without limitation, principal
and interest under the Grand Note) and no Event of Default (as described in
Article II herein) shall exist and be continuing, nor shall Beneficiary have
given Grantor notice of any event or condition which,
57
with the passage of time or the giving of notice (or both), could result in an
Event of Default if not cured by Grantor.
(b) Grantor shall have established a good record in the
payment of sums when due under the Loan Documents.
(c) Grantor shall submit a prepared release instrument (the
"Casualty Release Instrument") in form and substance satisfactory to Beneficiary
and any information necessary for Beneficiary to process the Casualty Release
Instrument, including a lot and block or metes and bounds description of the
Property, the name and address of the title insurance company to whose attention
the Casualty Release Instrument should be directed, numbers that reference the
Casualty Release Instrument (i.e., tax parcel numbers, title company order
numbers, release numbers, etc.), the date when the Casualty Release is to become
effective, the name and address of the prospective purchaser of the Property,
the intended use thereof, and such other documents and information as
Beneficiary may reasonably request. The Casualty Release Instrument shall be
delivered, in escrow, by Beneficiary to the title company so designated, to be
held, released, delivered and recorded in accordance with Beneficiary's escrow
instructions, which shall require delivery of the Casualty Release Payment to
Beneficiary prior to delivery and recordation of the Casualty Release Instrument
and the satisfaction of all Casualty Release Conditions. In no event shall the
execution and delivery of a Casualty Release Instrument effect any of
Beneficiary's obligations under this Mortgage or the other Loan Documents.
(d) All reasonable costs and expenses incurred by Beneficiary
(and any servicer of the Grand Loan) in connection with the review, approval and
execution of any Casualty Release shall be paid by Grantor prior to and as a
condition of the execution of any Casualty Release Instrument, including (but
not limited to) the Administration Fee (hereafter described), reasonable
attorneys' fees, all costs and expenses of Beneficiary (and any servicer of the
Grand Loan) incurred in connection with obtaining any engineering reports,
opinions and consents, and the endorsement to the Title Policy. All recording
fees and taxes are to be paid by Grantor.
(e) Payment to Beneficiary of an administrative fee (the
"Administration Fee") in the amount of $500.00.
(f) The satisfaction of such other conditions precedent as
Beneficiary may reasonably require.
As used herein, the term "Minimum Release Payment" shall mean the sum
of the indebtedness outstanding as evidenced by the Olympia Note. Beneficiary
shall (upon written
58
notice to Grantor) apply the required prepayment in the following order and
priority: first, to the accrued interest and outstanding principal balance of
the Grand Loan, next to the to the accrued interest and principal balance of the
Olympia Loan in an amount and in the manner deemed appropriate by Beneficiary in
its sole discretion.
In any instance herein where the approval, consent or the exercise of
judgment of Beneficiary is required, the granting or denial of such approval or
consent and the exercise of such judgment shall be (a) within the sole
discretion of Beneficiary; (b) deemed to have been given only by a specific
writing intended for the purpose and executed by Beneficiary; and (c) free from
any limitation or requirement of reasonableness, unless otherwise expressly
provided. Each provision for consent, approval, inspection, review or
verification by Beneficiary is only for Beneficiary's own purposes and benefit.
I.40 Loan and Olympia Loan. Notwithstanding any conflicting provision
of this Deed of Trust or any other of the Loan Documents, the lien created by
this Deed of Trust shall no longer secure the obligations of Grantor with
respect to the Olympia Loan or any of the Loan Documents related to the Olympia
Loan, upon the satisfaction of the following conditions precedent:
(a) Beneficiary's receipt of MAI appraisals of the Property
and the property located in Thurston County, Washington, which is covered under
the Olympia Deed of Trust (collectively the "Olympia Property") indicating (i)
the unpaid principal balances of the Grand Loan is equal to sixty percent (60%)
or less of the fair market value of the Property, and (ii) the unpaid principal
balances of the Olympia Loan is equal to sixty percent (60%) or less of the fair
market value of the Olympia Property;
(b) The total revenue from the operation of the Property for
the most recent twelve month period ("Property Revenue") shall have sustained a
debt service coverage ratio for the Grand Loan of not less than 1.55:1 based on
the greater of the actual interest rate under the Olympia Loan or eight percent
(8%) per annum, provided that total expenses of the Property (including
reserves) for such period is not less than seventy five percent (75%) of
Property Revenue;
(c) The total revenue from the operation of the Olympia
Property for the most recent twelve month period ("Olympia Property Revenue")
shall have sustained a debt service coverage ratio for the Olympia Loan of not
less than 1.55:1 based on the greater of the actual interest rate under the
Olympia Loan or eight percent (8%) per annum, provided that total expenses of
the Olympia Property (including reserves) for such period is not less than
seventy five percent (75%) of Olympia Property Revenue; and
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(d) If requested by Beneficiary, Grantor shall execute an
amendment to this Deed of Trust (or a new Deed of Trust) and the other Loan
Documents, all of which documents shall be in form and substance reasonably
satisfactory to Beneficiary in all respects.
ARTICLE II
EVENTS OF DEFAULT
-----------------
II.1 Events of Default. The occurrence of any of the following events
shall be a default hereunder:
(a) Grantor fails to make (i) any payment under the Note when
due, or (ii) any regularly scheduled monthly deposit into a Reserve under this
Deed of Trust or any of the other Loan Documents when due.
(b) Grantor fails to punctually perform any covenant,
agreement, obligation, term or condition hereof which requires payment of any
money to Beneficiary and such failure continues for five (5) days after written
notice is provided to Grantor thereof; provided, however, no such notice,
opportunity to cure or grace period shall be applicable with respect to the sums
described in this Section 2.1(a).
(c) Grantor fails to provide insurance as required by Section
1.4 hereof or fails to perform any covenant, agreement, obligation, term or
condition set forth in Section 1.16 or Section 1.30, provided, however, the
cancellation of any such insurance due to Beneficiary's failure to pay the
premium thereof in accordance with Section 1.6 hereof shall not be an event of
default hereunder.
(d) Grantor fails to perform any other covenant, agreement,
obligation, term or condition set forth herein, other than those otherwise
described in this Section 2.1, and, to the extent such failure or default is
susceptible of being cured, the continuance of such failure or default for
thirty (30) days after written notice thereof from Beneficiary to Grantor;
provided, however, that if such default is susceptible of cure but such cure
cannot be accomplished with reasonable diligence within said period of time, and
if Grantor commences to cure such default promptly after receipt of notice
thereof from Beneficiary, and thereafter prosecutes the curing of such default
with reasonable diligence, such period of time shall be extended for such period
of time as may be necessary to cure such default with reasonable diligence, but
not to exceed an additional ninety (90) days.
(e) Any representation or warranty made herein, in or in
connection with any application or commitment relating to the Loan, or in any of
the other Loan Documents to
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Beneficiary by Grantor, by any principal, managing member or general partner in
Grantor or by any indemnitor or guarantor under any indemnity or guaranty
executed in connection with the Loan is determined by Beneficiary to have been
false or misleading in any material respect at the time made and, to the extent
such default is susceptible of being cured, the continuance of such default for
thirty (30) days after written notice thereof from Beneficiary to Grantor.
(f) There shall be a sale, conveyance, disposition,
alienation, hypothecation, leasing, assignment, pledge, mortgage, granting of a
security interest in or other transfer or further encumbrancing of the Property,
Grantor or its owners, or any portion thereof or any interest therein, in
violation of Section 1.13 hereof.
(g) A default occurs under any of the other Loan Documents
which has not been cured within any applicable grace or cure period therein
provided.
(h) Grantor, any principal, general partner or managing member
in Grantor or any indemnitor or guarantor under any indemnity or guaranty
executed in connection with the Loan becomes insolvent, or shall make a transfer
in fraud of Beneficiary or other creditors, or shall make an assignment for the
benefit of creditors other than Beneficiary, shall file a petition in
bankruptcy, shall voluntarily be adjudicated insolvent or bankrupt or shall
admit in writing the inability to pay debts as they mature, shall petition or
apply to any tribunal for or shall consent to or shall not contest the
appointment of a receiver, trustee, custodian or similar officer for Grantor,
for any such principal, general partner or managing member of Grantor or for any
such indemnitor or guarantor or for a substantial part of the assets of Grantor,
of any such principal, general partner or managing member of Grantor or of any
such indemnitor or guarantor, or shall commence any case, proceeding or other
action under any bankruptcy, reorganization, arrangement, readjustment or debt,
dissolution or liquidation law or statute of any jurisdiction, whether now or
hereafter in effect.
(i) A petition ("Petition") is filed or any case, proceeding
or other action is commenced against Grantor, against any principal, general
partner or managing member of Grantor or against any indemnitor or guarantor
under any indemnity or guaranty executed in connection with the Loan seeking to
have an order for relief entered against it as debtor or seeking reorganization,
arrangement, adjustment, liquidation, dissolution or composition of it or its
debts or other relief under any law relating to bankruptcy, insolvency,
arrangement, reorganization, receivership or other debtor relief under any law
or statute of any jurisdiction, whether now or hereafter in effect, or a court
of competent jurisdiction enters an order for relief against Grantor, against
any principal, general partner or managing member of Grantor or against any
indemnitor or guarantor under any indemnity or guaranty executed in connection
with the Loan, as debtor, or an order, judgment or decree is entered appointing,
with or without the consent of Grantor, of any such principal, general partner
or managing
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member of Grantor or of any such indemnitor or guarantor, a receiver, trustee,
custodian or similar officer for Grantor, for any such principal, general
partner or managing member of Grantor or for any such indemnitor or guarantor,
or for any substantial part of any of the properties of Grantor, of any such
principal, general partner or managing member of Grantor or of any such
indemnitor or guarantor, and if any such event shall occur, such petition, case,
proceeding, action, order, judgment or decree shall not be dismissed within
sixty (60) days after being commenced.
(j) Grantor solicits or aids the solicitation of the filing of
any Petition against Grantor including, without limitation: (i) providing
information regarding the identity of creditors or the nature of creditors'
claims to any third party in connection with the filing of a Petition unless
compelled to do so by order of a court of competent jurisdiction or by
regulation promulgated by a governmental agency, or (ii) paying the legal fees
or expenses of any creditor of or interest holder in Grantor in connection with
the filing of a Petition.
(k) The Property or any material part thereof shall be taken
on execution or other process of law in any action against Grantor and, to the
extent such default is susceptible of being cured, the continuance of such
default for thirty (30) days after written notice thereof from Beneficiary to
Grantor.
(l) Grantor abandons all or a material portion of the
Property.
(m) The holder of any lien or security interest on the
Property (without implying the consent of Beneficiary to the existence or
creation of any such lien or security interest), whether superior or subordinate
to this Deed of Trust or any of the other Loan Documents, declares a default and
such default is not cured within any applicable grace or cure period set forth
in the applicable document or such holder institutes foreclosure or other
proceedings for the enforcement of its remedies thereunder and, to the extent
such default is susceptible of being cured, the continuance of such default for
thirty (30) days after written notice thereof from Beneficiary to Grantor.
(n) The Property, or any part thereof, is subjected to actual
or threatened waste or to removal, demolition or material alteration so that the
value of the Property is materially diminished thereby and Beneficiary
reasonably determines that it is not adequately protected from any loss, damage
or risk associated therewith and, to the extent such default is susceptible of
being cured, the continuance of such default for thirty (30) days after written
notice thereof from Beneficiary to Grantor.
(o) Any dissolution, termination, partial or complete
liquidation, merger or consolidation of Grantor, its managing members or WHC.
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(p) Any franchise agreement or management agreement affecting
the Property is terminated and is not replaced with a franchise agreement or
management agreement, as applicable, reasonably acceptable to Beneficiary within
sixty (60) days of such termination.
(q) Any liquor license relating to the Property, if any,
ceases to be in full force and effect, and such liquor license is not restored
within sixty (60) days thereof, except with Beneficiary's prior written consent.
(r) If any of the facts forming the basis of the assumptions
set forth in the Nonconsolidation Opinion, shall no longer be true and correct
in all material respects and, to the extent such default is susceptible of being
cured, the continuance of such default for thirty (30) days after written notice
thereof from Beneficiary to Grantor.
(s) The occurrence of a default (and expiration of any
expressly provided grace or cure period relative thereto) pursuant to the Deed
of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing
(the "Olympia Deed of Trust") dated of even date herewith executed by WHC804,
LLC, a Delaware limited liability company, to a trustee for the benefit of
Beneficiary relative to the Olympia Property.
ARTICLE III
REMEDIES
--------
III.1 Remedies Available. If there shall occur a default under this
Deed of Trust, and such default has not been cured within any applicable grace
or cure period or later accepted by Lender, then this Deed of Trust is subject
to foreclosure as provided by law and Beneficiary may, at its option and by or
through a trustee, nominee, assignee or otherwise, to the fullest extent
permitted by law, exercise any or all of the following rights, remedies and
recourses, either successively or concurrently:
(a) Acceleration. Accelerate the maturity date of the Note and
declare any or all of the indebtedness secured hereby to be immediately due and
payable without any presentment, demand, protest, notice or action of any kind
whatever (each of which is hereby expressly waived by Grantor), whereupon the
same shall become immediately due and payable. Upon any such acceleration,
payment of such accelerated amount shall constitute a prepayment of the
principal balance of the Note and any applicable prepayment fee provided for in
the Note shall then be immediately due and payable.
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(b) Entry on the Property. Without in any way curing or
waiving any default of Grantor, either in person or by agent or by
court-appointed receiver, with or without bringing any action or proceeding, or
by a receiver appointed by a court and without regard to the adequacy of its
security, enter upon and take possession of the Property, or any part thereof,
in its own name or in the name of the Trustee, without force or with such force
as is permitted by law and without notice or process or with such notice or
process as is required by law, unless such notice and process is waivable, in
which case Grantor hereby waives such notice and process, and do any and all
acts and perform any and all work which may be desirable or necessary in
Beneficiary's judgment to complete any unfinished construction on the Land, to
preserve and/or enhance the value, marketability or rentability of the Property,
to increase the income therefrom, to manage and operate the Property or to
protect the security hereof, and all sums expended by Beneficiary therefor,
together with interest thereon at the Default Interest Rate, shall be
immediately due and payable to Beneficiary by Grantor on demand and shall be
secured hereby and by all of the other Loan Documents securing all or any part
of the indebtedness evidenced by the Note.
(c) Collect Rents and Profits. With or without taking
possession of the Property, sue for or otherwise collect the Rents and Profits,
including those past due and unpaid, and apply the same, less costs and expenses
of operation and collection, including reasonable attorneys' fees, upon any
indebtedness secured hereby, all in such order as Beneficiary in its discretion
may determine.
(d) Appointment of Receiver. Upon, or at any time prior or
after, initiating the exercise of any power of sale, instituting any judicial
foreclosure or instituting any other foreclosure of the liens and security
interests provided for herein or any other legal proceedings hereunder, make
application, ex-parte, to a court of competent jurisdiction for appointment of a
receiver for all or any part of the Property, as a matter of strict right and
without notice to Grantor and without regard to the adequacy of the Property for
the repayment of the indebtedness secured hereby or the solvency of Grantor or
any person or persons liable for the payment of the indebtedness secured hereby,
and Grantor hereby irrevocably consents to such appointment, waives any and all
notices of and defenses to such appointment and agrees not to oppose any
application therefor by Beneficiary, but nothing herein is to be construed to
deprive Beneficiary of any other right, remedy or privilege Beneficiary may now
have under the law to have a receiver appointed, provided, however, that the
appointment of such receiver, trustee or other appointee by virtue of any court
order, statute or regulation shall not impair or in any manner prejudice the
rights of Beneficiary to receive payment of the Rents and Profits pursuant to
other terms and provisions of this Deed of Trust or the Assignment. Any such
receiver shall have all of the usual powers and duties of receivers in similar
cases, including, without limitation, the full power to hold, develop, rent,
lease, manage, maintain, operate and otherwise use or permit the use of the
Property upon such terms and conditions as
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said receiver may deem to be prudent and reasonable under the circumstances as
more fully set forth in Section 3.3 below. Such receivership shall, at the
option of Beneficiary, continue until full payment of all of the indebtedness
secured hereby or until title to the Property shall have passed by foreclosure
sale under this Deed of Trust or deed in lieu of foreclosure.
(e) Foreclosure. Immediately commence an action to foreclose
this Deed of Trust or to specifically enforce its provisions or any of the
indebtedness secured hereby, pursuant to the applicable Washington state law,
and sell the Property or cause the Property to be sold in accordance with the
requirements and procedures provided by applicable Washington state law in a
single parcel or in several parcels at the option of Beneficiary.
(1) In the event foreclosure proceedings are filed by
Beneficiary, all expenses incident to such proceedings, including, but
not limited to, attorneys' fees and costs, shall be paid by Grantor and
secured by this Deed of Trust and by all of the other Loan Documents
securing all or any part of the indebtedness evidenced by the Note. The
secured indebtedness and all other obligations secured by this Deed of
Trust, including, without limitation, interest at the Default Interest
Rate, any prepayment charge, fee or premium required to be paid under
the Note in order to prepay principal (to the extent permitted by
applicable law), reasonable attorneys' fees and any other amounts due
and unpaid to Beneficiary under the Loan Documents, may be bid by
Beneficiary in the event of a foreclosure sale hereunder. In the event
of a judicial sale pursuant to a foreclosure decree, it is understood
and agreed that Beneficiary or its assigns may become the purchaser of
the Property or any part thereof.
(2) Beneficiary may, by following the procedures and
satisfying the requirements prescribed by applicable law, foreclose on
all or only a portion of the Property and, in such event, said
foreclosure shall not affect the lien of this Deed of Trust on the
remaining portion of the Property.
(f) Trustee's Sale. Cause the Trustee to sell the Property at
a trustee's sale in accordance with the nonjudicial foreclosure procedures
required by Washington law.
(g) Judicial Remedies. Proceed by suit or suits, at law or in
equity, instituted by Beneficiary, or Trustee, upon written request of
Beneficiary, to enforce the payment of the indebtedness secured hereby or the
other obligations of Grantor hereunder or pursuant to the Loan Documents, to
foreclose the liens and security interests of this Deed of Trust as against all
or any part of the Property, and to have all or any part of the Property sold
under the judgment or decree of a court of competent jurisdiction. In the event
of a judicial sale pursuant to a foreclosure decree, it is understood and agreed
that Beneficiary or its assigns may become the purchaser of the Property. This
remedy shall be cumulative of any other
65
non-judicial remedies available to the Beneficiary with respect to the Loan
Documents. Proceeding with the request or receiving a judgment for legal relief
shall not be or be deemed to be an election of remedies or bar any available
non-judicial remedy of the Beneficiary.
(h) Security Agreement Remedies. Expenses of retaking,
holding, preparing for sale, selling or the like (including, without limitation,
Beneficiary's reasonable attorneys' fees and legal expenses), together with
interest thereon at the Default Interest Rate from the date incurred by
Beneficiary until actually paid by Grantor, shall be paid by Grantor on demand
and shall be secured by this Deed of Trust and by all of the other Loan
Documents securing all or any part of the indebtedness evidenced by the Note. If
notice is required by law, Beneficiary shall give Grantor at least ten (10)
days' prior written notice of the time and place of any public sale of such
property or of the time of or after which any private sale or any other intended
disposition thereof is to be made, and if such notice is sent to Grantor, as the
same is provided for the mailing of notices herein, it is hereby deemed that
such notice shall be and is reasonable notice to Grantor. No such notice is
necessary for any such property which is perishable, threatens to decline
speedily in value or is of a type customarily sold on a recognized market. Any
sale made pursuant to the provisions of this Section 1.22 shall be deemed to
have been a public sale conducted in a commercially reasonable manner if held
contemporaneously with the foreclosure sale as provided in Section 3.1(e) hereof
upon giving the same notice with respect to the sale of the Property hereunder
as is required under said Section 3.1(e). Furthermore, to the extent permitted
by law, in conjunction with, in addition to or in substitution for the rights
and remedies available to Beneficiary pursuant to any applicable Uniform
Commercial Code:
(1) In the event of a foreclosure sale, the Property may, at
the option of Beneficiary, be sold as a whole; and
(2) It shall not be necessary that Beneficiary take possession
of the aforementioned Collateral (as defined in Section 1.21 herein),
or any part thereof, prior to the time that any sale pursuant to the
provisions of this Section is conducted and it shall not be necessary
that said Collateral, or any part thereof, be present at the location
of such sale; and
(3) Beneficiary may appoint or delegate any one or more
persons as agent to perform any act or acts necessary or incident to
any sale held by Beneficiary, including the sending of notices and the
conduct of the sale, but in the name and on behalf of Beneficiary.
(i) Other. Exercise any other right or remedy available
hereunder, under any of the other Loan Documents or at law or in equity.
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III.2 Application of Proceeds. To the fullest extent permitted by law,
the proceeds of any sale under this Deed of Trust shall be applied, to the
extent funds are so available, to the following items in such order as
Beneficiary in its discretion may determine:
(a) To payment of the costs, expenses and fees of taking
possession of the Property, and of holding, operating, maintaining, using,
leasing, repairing, improving, marketing and selling the same and of otherwise
enforcing Beneficiary's right and remedies hereunder and under the other Loan
Documents, including, but not limited to, a reasonable fee to the Trustee,
receivers' fees, court costs, attorneys', accountants', appraisers',
auctioneers', managers' and other professional fees, title charges and transfer
taxes and payment of all expenses, liabilities and advances of Trustee.
(b) To payment of all sums expended by Beneficiary under the
terms of any of the Loan Documents and not yet repaid, together with interest on
such sums at the Default Interest Rate.
(c) To payment of the secured indebtedness and all other
obligations secured by this Deed of Trust, including, without limitation,
interest at the Default Interest Rate for any applicable period and, to the
extent permitted by applicable law, any prepayment fee, charge or premium
required to be paid under the Note in order to prepay principal, in any order
that Beneficiary chooses in its sole discretion.
(d) The remainder, if any, of such funds shall be disbursed to
Grantor or to the person or persons legally entitled thereto.
III.3 Right and Authority of Receiver or Beneficiary in the Event of
Default; Power of Attorney. Upon the occurrence of a default hereunder, which
default is not cured within any applicable grace or cure period, and entry upon
the Property pursuant to Section 3.1(b) hereof or appointment of a receiver
pursuant to Section 3.1(d) hereof, and under such terms and conditions as may be
prudent and reasonable under the circumstances in Beneficiary's or the
receiver's sole discretion, all at Grantor's expense, Beneficiary or said
receiver, or such other persons or entities as they shall hire, direct or
engage, as the case may be, may do or permit one or more of the following,
successively or concurrently: (a) enter upon and take possession and control of
any and all of the Property; (b) take and maintain possession of all documents,
books, records, papers and accounts relating to the Property; (c) manage and
operate the Property; (d) preserve and maintain the Property; (e) make repairs
and alterations to the Property; (f) complete any construction or repair of the
Improvements, with such changes, additions or modifications of the plans and
specifications or intended disposition and use of the Improvements as
Beneficiary may in its sole discretion deem appropriate or desirable to
67
place the Property in such condition as will, in Beneficiary's sole discretion,
make it or any part thereof readily marketable or rentable; (g) conduct a
marketing or leasing program with respect to the Property, or employ a marketing
or leasing agent or agents to do so, directed to the leasing or sale of the
Property under such terms and conditions as Beneficiary may in its sole
discretion deem appropriate or desirable; (h) employ such contractors,
subcontractors, materialmen, architects, engineers, consultants, managers,
brokers, marketing agents, or other employees, agents, independent contractors
or professionals, as Beneficiary may in its sole discretion deem appropriate or
desirable to implement and effectuate the rights and powers herein granted; (i)
execute and deliver, in the name of Beneficiary as attorney-in-fact and agent of
Grantor or in its own name as Beneficiary, such documents and instruments as are
necessary or appropriate to consummate authorized transactions; (j) enter into
such leases, whether of real or personal property, or tenancy agreements, under
such terms and conditions as Beneficiary may in its sole discretion deem
appropriate or desirable; (k) collect and receive the Rents and Profits from the
Property; (l) eject tenants or repossess personal property, as provided by law,
for breaches of the conditions of their leases or other agreements; (m) sue for
unpaid Rents and Profits, payments, income or proceeds in the name of Grantor or
Beneficiary; (n) maintain actions in forcible entry and detainer, ejectment for
possession and actions in distress for rent; (o) compromise or give acquittance
for Rents and Profits, payments, income or proceeds that may become due; (p)
delegate or assign any and all rights and powers given to Beneficiary by this
Deed of Trust; and (q) do any acts which are necessary to protect the security
hereof and use such measures, legal or equitable, reasonably necessary to
implement and effectuate the provisions of this Deed of Trust. This Deed of
Trust shall constitute a direction to and full authority to any lessee, or other
third party who has heretofore dealt or contracted or may hereafter deal or
contract with Grantor or Beneficiary, at the request of Beneficiary, to pay all
amounts owing under any lease, contract, concession, license or other agreement
to Beneficiary without proof of the default relied upon. Any such lessee or
third party is hereby irrevocably authorized to rely upon and comply with (and
shall be fully protected by Grantor in so doing) any request, notice or demand
by Beneficiary for the payment to Beneficiary of any Rents and Profits or other
sums which may be or thereafter become due under its lease, contract,
concession, license or other agreement, or for the performance of any
undertakings under any such lease, contract, concession, license or other
agreement, and shall have no right or duty to inquire whether any default under
this Deed of Trust or under any of the other Loan Documents has actually
occurred or is then existing. Grantor hereby constitutes and appoints
Beneficiary, its assignees, successors, transferees and nominees, as Grantor's
true and lawful attorney-in-fact and agent, with full power of substitution in
the Property, in Grantor's name, place and stead, to do or permit any one or
more of the foregoing described rights, remedies, powers and authorities,
successively or concurrently, and said power of attorney shall be deemed a power
coupled with an interest and irrevocable so long as any indebtedness secured
hereby is outstanding. Any money advanced by Beneficiary in connection with any
action taken under this Section 3.3, together with
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interest thereon at the Default Interest Rate from the date of making such
advancement by Beneficiary until actually paid by Grantor, shall be a demand
obligation owing by Grantor to Beneficiary and shall be secured by this Deed of
Trust and by every other instrument securing the secured indebtedness.
III.4 Occupancy After Foreclosure. In the event there is a foreclosure
sale hereunder and at the time of such sale, Grantor or Grantor's
representatives, successors or assigns, or any other persons claiming any
interest in the Property by, through or under Grantor (except tenants of space
in the Improvements subject to leases entered into prior to the date hereof),
are occupying or using the Property, or any part thereof, then, to the extent
not prohibited by applicable law, each and all shall, at the option of
Beneficiary or the purchaser at such sale, as the case may be, immediately
become the tenant of the purchaser at such sale, which tenancy shall be a
tenancy from day-to-day, terminable at the will of either landlord or tenant, at
a reasonable rental per day based upon the value of the Property occupied or
used, such rental to be due daily to the purchaser. Further, to the extent
permitted by applicable law, in the event Grantor fails to surrender possession
of the Property upon the termination of such tenancy, the purchaser shall be
entitled to institute and maintain an action for unlawful detainer of the
Property in the appropriate court of the county in which the Land is located.
III.5 Notice to Account Debtors. Beneficiary may, at any time after a
default hereunder, which default is not cured within any applicable grace or
cure period, notify the account debtors and obligors of any accounts, chattel
paper, negotiable instruments or other evidences of indebtedness to Grantor
included in the Property to pay Beneficiary directly. Grantor shall at any time
or from time to time upon the request of Beneficiary provide to Beneficiary a
current list of all such account debtors and obligors and their addresses.
III.6 Cumulative Remedies. All remedies contained in this Deed of
Trust are cumulative and Beneficiary shall also have all other remedies provided
at law and in equity or in any other Loan Documents. Such remedies may be
pursued separately, successively or concurrently at the sole subjective
direction of Beneficiary and may be exercised in any order and as often as
occasion therefor shall arise. No act of Beneficiary shall be construed as an
election to proceed under any particular provisions of this Deed of Trust to the
exclusion of any other provision of this Deed of Trust or as an election of
remedies to the exclusion of any other remedy which may then or thereafter be
available to Beneficiary. No delay or failure by Beneficiary to exercise any
right or remedy under this Deed of Trust shall be construed to be a waiver of
that right or remedy or of any default hereunder. Beneficiary may exercise any
one or more of its rights and remedies at its option without regard to the
adequacy of its security.
III.7 Payment of Expenses. Grantor shall pay on demand all of
Beneficiary's expenses reasonably incurred in any efforts to enforce any terms
of this Deed of Trust, whether
69
or not any lawsuit is filed and whether or not foreclosure is commenced but not
completed, including, but not limited to, reasonable legal fees and
disbursements, including those incurred at trial, on appeal and on petition for
review, in arbitration and mediation proceedings and in connection with
negotiation, compromise or settlement of the secured or unsecured obligations
and any proceedings for relief in bankruptcy, foreclosure costs and the costs of
searching records, obtaining title reports, surveyors' reports, engineering and
environmental reports, attorneys' opinions, title insurance policies,
appraisals, expert witness fees and fees for the trustee under the deed of
trust, together with interest thereon from and after the date incurred by
Beneficiary until actually paid by Grantor at the Default Interest Rate, and the
same shall be secured by this Deed of Trust and by all of the other Loan
Documents securing all or any part of the indebtedness evidenced by the Note.
ARTICLE IV
CONCERNING THE TRUSTEE
----------------------
IV.1 No Required Action. Trustee shall not be required to take any
action toward the execution and enforcement of the trust hereby created or to
institute, appear in, or defend any action, suit, or other proceeding in
connection therewith where, in his opinion, such action would be likely to
involve him in expense or liability, unless requested so to do by a written
instrument signed by Beneficiary and, if Trustee so requests, unless Trustee is
tendered security and indemnity satisfactory to Trustee against any and all
cost, expense, and liability arising therefrom. Trustee shall not be responsible
for the execution, acknowledgment, or validity of the Loan Documents, or for the
proper authorization thereof, or for the sufficiency of the lien and security
interest purported to be created hereby, and Trustee makes no representation in
respect thereof or in respect of the rights, remedies, and recourses of
Beneficiary.
IV.2 Certain Rights. With the approval of Beneficiary, Trustee shall
have the right to take any and all of the following actions: (i) to select,
employ, and consult with counsel (who may be, but need not be, counsel for
Beneficiary) upon any matters arising hereunder, including the preparation,
execution, and interpretation of the Loan Documents, and shall be fully
protected in relying as to legal matters on the advice of counsel, (ii) to
execute any of the trusts and powers hereof and to perform any duty hereunder
either directly or through his agents or attorneys, (iii) to select and employ,
in and about the execution of his duties hereunder, suitable accountants,
engineers and other experts, agents and attorneys-in-fact, either corporate or
individual, not regularly in the employ of Trustee (and Trustee shall not be
answerable for any act, default, negligence, or misconduct of any such
accountant, engineer or other expert, agent or attorney-in-fact, if selected
with reasonable care, or for any error of judgment or act done by Trustee in
good faith, or be otherwise responsible or accountable
70
under any circumstances whatsoever, except for Trustee's gross negligence or bad
faith), and (iv) any and all other lawful action that Beneficiary may instruct
Trustee to take to protect or enforce Beneficiary's rights hereunder. Trustee
shall not be personally liable in case of entry by Trustee, or anyone entering
by virtue of the powers herein granted to Trustee, upon the Property for debts
contracted for or liability or damages incurred in the management or operation
of the Property. Trustee shall have the right to rely on any instrument,
document, or signature authorizing or supporting any action taken or proposed to
be taken by Trustee hereunder, believed by Trustee in good faith to be genuine.
Trustee shall be entitled to reimbursement for expenses incurred by Trustee in
the performance of Trustee's duties hereunder and to reasonable compensation for
such of Trustee's services hereunder as shall be rendered. Grantor will, from
time to time, pay the compensation due to Trustee hereunder and reimburse
Trustee for, and save Trustee harmless against, any and all liability and
expenses which may be incurred by Trustee in the performance of Trustee's duties
except for liabilities arising from Trustee's gross negligence of willful
misconduct.
IV.3 Retention of Money. All moneys received by Trustee shall, until
used or applied as herein provided, be held in trust for the purposes for which
they were received, but need not be segregated in any manner from any other
moneys (except to the extent required by applicable law), and Trustee shall be
under no liability for interest on any moneys received by Trustee hereunder.
IV.4 Successor Trustees. Trustee may resign by the giving of notice of
such resignation in writing or verbally to Beneficiary. If Trustee shall die,
resign, or become disqualified from acting in the execution of this trust, or
if, for any reason, Beneficiary shall prefer to appoint a substitute trustee or
multiple substitute trustees, or successive substitute trustees or successive
multiple substitute trustees, to act instead of the aforenamed Trustee,
Beneficiary shall have full power to appoint a substitute trustee (or, if
preferred, multiple substitute trustees) in succession who shall succeed (and if
multiple substitute trustees are appointed, each of such multiple substitute
trustees shall succeed) to all the estates, rights, powers, and duties of the
aforenamed Trustee. Such appointment may be executed by any authorized agent of
Beneficiary, and if such Beneficiary be a corporation and such appointment be
executed in its behalf by any officer of such corporation, such appointment
shall be conclusively presumed to be executed with authority and shall be valid
and sufficient without proof of any action by the board of directors or any
superior officer of the corporation. Grantor hereby ratifies and confirms any
and all acts which the aforenamed Trustee, or his successor or successors in
this trust, shall do lawfully by virtue hereof. If multiple substitute Trustees
are appointed, each of such multiple substitute Trustees shall be empowered and
authorized to act alone without the necessity of the joinder of the other
multiple substitute trustees, whenever any action or undertaking of such
substitute trustees is requested or required under or pursuant to this Deed of
Trust or applicable law.
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IV.5 Perfection of Appointment. Should any deed, conveyance, or
instrument of any nature be required from Grantor by any Trustee or substitute
Trustee to more fully and certainly vest in and confirm to the Trustee or
substitute Trustee such estates, rights, powers, and duties, then, upon request
by the Trustee or substitute Trustee, any and all such deeds, conveyances and
instruments shall be made, executed, acknowledged, and delivered and shall be
caused to be recorded and/or filed by Grantor.
IV.6 Succession Instruments. Any substitute Trustee appointed pursuant
to any of the provisions hereof shall, without any further act, deed, or
conveyance, become vested with all the estates, properties, rights, powers, and
trusts of its or his predecessor in the rights hereunder with like effect as if
originally named as Trustee herein; but nevertheless, upon the written request
of Beneficiary or of the substitute Trustee, the Trustee ceasing to act shall
execute and deliver any instrument transferring to such substitute Trustee, upon
the trusts herein expressed, all the estates, properties, rights, powers, and
trusts of the Trustee so ceasing to act, and shall duly assign, transfer and
deliver any of the property and moneys held by such Trustee to the substitute
Trustee so appointed in the Trustee's place.
IV.7 No Representation by Trustee. By accepting or approving anything
required to be observed, performed, or fulfilled or to be given to Trustee (on
its own behalf or on behalf of Beneficiary) pursuant to the Loan Documents,
including, without limitation, any officer's certificate, balance sheet,
statement of profit and loss or other financial statement, survey, appraisal, or
insurance policy, neither Trustee nor Beneficiary shall be deemed to have
warranted, consented to, or affirmed the sufficiency, legality, effectiveness,
or legal effect of the same, or of any term, provision, or condition thereof,
and such acceptance or approval thereof shall not be or constitute any warranty
or affirmation with respect thereto by Trustee, either on its own behalf or on
behalf of Beneficiary.
ARTICLE V
MISCELLANEOUS TERMS AND CONDITIONS
----------------------------------
V.1 Time of Essence. Time is of the essence with respect to all
provisions of this Deed of Trust.
V.2 Reconveyance by Trustee. Upon written request of Beneficiary
stating that all sums and obligations secured hereby have been paid and
satisfied, and upon surrender of this Deed of Trust and the Note to Trustee for
cancellation and retention and upon payment by Grantor of Trustee's fees,
Trustee shall reconvey to Grantor, or the person or persons legally entitled
thereto, without warranty, any portion of the Property then held hereunder. The
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recitals in such reconveyance of any matters or facts shall be conclusive proof
of the truthfulness thereof. The grantee in any reconveyance may be described as
"the person or persons legally entitled thereto."
V.3 Certain Rights of Beneficiary. Without affecting Grantor's
liability for the payment of any of the indebtedness secured hereby, Beneficiary
may from time to time and without notice to Grantor: (a) release any person
liable for the payment of the indebtedness secured hereby; (b) extend or modify
the terms of payment of the indebtedness secured hereby; (c) accept additional
real or personal property of any kind as security or alter, substitute or
release any property securing the indebtedness secured hereby; (d) recover any
part of the Property; (e) consent in writing to the making of any subdivision
map or plat thereof; (f) join in granting any easement therein; or (g) join in
any extension agreement of this Deed of Trust or any agreement subordinating the
lien hereof.
V.4 Notices. Any notice, report, demand or other instrument authorized
or required to be given or furnished hereunder or as required by law ("Notices")
shall be in writing and shall be given as follows: (a) by hand delivery; (b) by
deposit in the United States mail as first class certified mail, return receipt
requested, postage paid; (c) by overnight nationwide commercial courier service;
or (d) by telecopy transmission (other than for notices of default) with a
confirmation copy to be delivered by duplicate notice in accordance with any of
clauses (a)-(c) above, in each case, addressed to the party intended to receive
the same at the following address(es):
Beneficiary: Column Financial, Inc.
Eleven Madison Avenue
New York, New York 10010
Attention: Edmund Taylor
Telecopier: (212) 325-8106
Re: WestCoast Grand Hotel at the Park,
Spokane, Washington
Loan Amount: $14,0000,000.00
with copies to: Credit Suisse First Boston Mortgage Capital LLC
Legal & Compliance Department
One Madison Avenue
New York, New York 10010
Attention: Pamela McCormack, Esq.
Telecopier: (917) 326-7805
Re: WestCoast Grand Hotel at the Park,
Spokane, Washington
Loan Amount: $14,0000,000.00
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Servicer: ORIX Real Estate Capital Markets, LLC
1717 Main Street
12th Floor
Dallas, Texas 75201
Attention: Wesley Wolf
Telecopier: (214) 237-2046
or any successor servicer of the Loan.
Re: WestCoast Grand Hotel at the Park,
Spokane, Washington
Loan Amount: $14,0000,000.00
Grantor: WHC804, LLC
303 West North River Drive
Spokane, Washington 99201
Attention: Hotel Executive Offices
With a copy to: WestCoast Hospitality Corporation
WHC Building
201 West North River Drive
Suite 100
Spokane, WA 99201
Attention: Chief Financial Officer
Telecopier: (509) 325-7324
with a copy to: Riddell Williams P.S.
1001 4th Avenue Plaza
Suite 4500
Seattle, Washington 98154
Attention: Bruce Bjerke, Esq.
Telecopier: (206) 389-1708
Any party may change the address to which any such Notice is to be
delivered to any other address within the United States of America, by
furnishing ten (10) days written notice of such change to the other parties in
accordance with the provisions of this Section 5.4. All notices, demands and
requests shall be effective upon personal delivery, or one (1) business day
after being deposited with the private courier service, or two (2) business days
after being deposited in the United States mail as required above. The inability
to deliver Notices because of a changed address of which no Notice was given, or
rejection or refusal to accept any Notice
74
offered for delivery shall be deemed to be receipt of the Notice as of the date
of such inability to deliver or rejection or refusal to accept delivery. Notice
for either party may be given by its respective counsel. Additionally, notice
from Beneficiary may also be given by the Servicer.
V.5 Successors and Assigns. The terms, provisions, indemnities,
covenants and conditions hereof shall be binding upon Grantor and the successors
and assigns of Grantor, including all successors in interest in and to all or
any part of the Property, and shall inure to the benefit of Beneficiary and its
successors and assigns and shall constitute covenants running with the land. If
Grantor consists of more than one person or entity, each will be jointly and
severally liable to perform the obligations of Grantor.
V.6 Severability. A determination that any provision of this Deed of
Trust is unenforceable or invalid shall not affect the enforceability or
validity of any other provision.
V.7 Gender. Within this Deed of Trust, words of any gender shall be
held and construed to include any other gender, and words in the singular shall
be held and construed to include the plural, and vice versa, unless the context
otherwise requires.
V.8 Waiver; Discontinuance of Proceedings. Beneficiary may waive any
single default by Grantor hereunder without waiving any other prior or
subsequent default, and may remedy any default by Grantor hereunder without
waiving the default remedied. Neither the failure or delay by Beneficiary in
exercising, any right, power or remedy upon any default by Grantor hereunder
shall be construed as a waiver of such default or as a waiver of the right to
exercise any such right, power or remedy at a later date. No single or partial
exercise by Beneficiary of any right, power or remedy hereunder shall exhaust
the same or shall preclude any other or further exercise thereof, and every such
right, power or remedy hereunder may be exercised at any time and from time to
time. No modification or waiver of any provision hereof nor consent to any
departure by Grantor therefrom shall in any event be effective unless the same
shall be in writing and signed by Beneficiary, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
given. No notice to nor demand on Grantor in any case shall of itself entitle
Grantor to any other or further notice or demand in similar or other
circumstances. Acceptance by Beneficiary of any payment in an amount less than
the amount then due on any of the secured indebtedness shall be deemed an
acceptance on account only and shall not in any way affect the existence of a
default hereunder.
V.9 Section Headings. The headings of the sections and paragraphs of
this Deed of Trust are for convenience of reference only, are not to be
considered a part hereof and shall not limit or otherwise affect any of the
terms hereof.
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V.10 GOVERNING LAW. THIS DEED OF TRUST WILL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF WASHINGTON, PROVIDED THAT
TO THE EXTENT THAT ANY OF SUCH LAWS MAY NOW OR HEREAFTER BE PREEMPTED BY FEDERAL
LAW, IN WHICH CASE SUCH FEDERAL LAW SHALL SO GOVERN AND BE CONTROLLING; AND
PROVIDED FURTHER THAT THE LAWS OF THE STATE IN WHICH THE LAND IS LOCATED SHALL
GOVERN AS TO THE CREATION, PRIORITY AND ENFORCEMENT OF LIENS AND SECURITY
INTERESTS IN PROPERTY LOCATED IN SUCH STATE.
V.11 Counting of Days. The term "days" when used herein shall mean
calendar days. If any time period ends on a Saturday, Sunday or holiday
officially recognized by the state within which the Land is located, the period
shall be deemed to end on the next succeeding business day. The term "business
day" or "Business Day" when used herein shall mean a weekday, Monday through
Friday, except a legal holiday or a day on which banking institutions in New
York, New York are authorized by law to be closed.
V.12 Intentionally omitted.
V.13 Unsecured Portion of Indebtedness. If any part of the secured
indebtedness cannot be lawfully secured by this Deed of Trust or if any part of
the Property cannot be lawfully subject to the lien and security interest hereof
to the full extent of such indebtedness, then all payments made shall be applied
on said indebtedness first in discharge of that portion thereof which is
unsecured by this Deed of Trust.
V.14 Cross Default. A default hereunder which has not been cured
within any applicable grace or cure period shall be a default under each of the
other Loan Documents.
V.15 Interest After Sale. In the event the Property or any part
thereof shall be sold upon foreclosure as provided hereunder, to the extent
permitted by law, the sum for which the same shall have been sold shall, for
purposes of redemption (if applicable pursuant to the laws of the state in which
the Property is located), bear interest at the Default Interest Rate.
V.16 Construction of this Document. This document may be construed as
a mortgage, security deed, deed of trust, chattel mortgage, conveyance,
assignment, security agreement, pledge, financing statement, hypothecation or
contract, or any one or more of the foregoing, in order to fully effectuate the
liens and security interests created hereby and the purposes and agreements
herein set forth.
76
V.17 No Merger. It is the desire and intention of the parties hereto
that this Deed of Trust and the lien hereof do not merge in fee simple title to
the Property.
V.18 Rights With Respect to Junior Encumbrances. Any person or entity
purporting to have or to take a junior deed of trust or mortgage or other lien
upon the Property or any interest therein shall be subject to the rights of
Beneficiary to amend, modify, increase, vary, alter or supplement this Deed of
Trust, the Note or any of the other Loan Documents, to extend the maturity date
of the indebtedness secured hereby, to increase the amount of the indebtedness
secured hereby, to waive or forebear the exercise of any of its rights and
remedies hereunder or under any of the other Loan Documents and to release any
collateral or security for the indebtedness secured hereby, in each and every
case without obtaining the consent of the holder of such junior lien and without
the lien or security interest of this Deed of Trust losing its priority over the
rights of any such junior lien.
V.19 Beneficiary May File Proofs of Claim. In the case of any
receivership, insolvency, bankruptcy, reorganization, arrangement, adjustment,
composition or other proceedings affecting Grantor or the principals, members or
general partners in Grantor, or their respective creditors or property,
Beneficiary, to the extent permitted by law, shall be entitled to file such
proofs of claim and other documents as may be necessary or advisable in order to
have the claims of Beneficiary allowed in such proceedings for the entire
secured indebtedness at the date of the institution of such proceedings and for
any additional amount which may become due and payable by Grantor hereunder
after such date.
V.20 After-Acquired Property. All property acquired by Grantor after
the date of this Deed of Trust which by the terms of this Deed of Trust shall be
subject to the lien and the security interest created hereby, shall immediately
upon the acquisition thereof by Grantor and without further deed, grant,
encumbrance, conveyance or assignment become subject to the lien and security
interest created by this Deed of Trust.
V.21 No Representation. By accepting delivery of any item required to
be observed, performed or fulfilled or to be given to Beneficiary pursuant to
the Loan Documents, including, but not limited to, any officer's certificate,
balance sheet, statement of profit and loss or other financial statement,
survey, appraisal or insurance policy, Beneficiary shall not be deemed to have
warranted, consented to, or affirmed the sufficiency, legality, effectiveness or
legal effect of the same, or of any term, provision or condition thereof, and
such acceptance of delivery thereof shall not be or constitute any warranty,
consent or affirmation with respect thereto by Beneficiary.
V.22 Counterparts. This Deed of Trust may be executed in any number of
counterparts, each of which shall be effective only upon delivery and thereafter
shall be
77
deemed an original, and all of which shall be taken to be one and the same
instrument, for the same effect as if all parties hereto had signed the same
signature page.
V.23 Personal Liability. Notwithstanding anything to the contrary
contained in this Deed of Trust, the liability of Grantor and its members or
general partners for the indebtedness secured hereby and for the performance of
the other agreements, covenants and obligations contained herein and in the Loan
Documents shall be limited as set forth in Section 1.5 of the Note; provided,
however, that nothing herein shall be deemed to be a waiver of any right which
Beneficiary or Trustee may have under Sections 506(a), 506(b), 1111(b) or any
other provisions of the U.S. Bankruptcy Code to file a claim for the full amount
of the indebtedness secured hereby or to require that all collateral shall
continue to secure all indebtedness owing to Beneficiary in accordance with the
Note, this Deed of Trust and the other Loan Documents.
V.24 Recording and Filing. Grantor will cause the Loan Documents and
all amendments and supplements thereto and substitutions therefor to be
recorded, filed, re-recorded and re-filed in such manner and in such places as
Beneficiary shall reasonably request, and will pay on demand all such recording,
filing, re-recording and re-filing taxes, fees and other charges. Grantor shall
reimburse Beneficiary, or its servicing agent, for the costs incurred in
obtaining a tax service company to verify the status of payment of taxes and
assessments on the Property.
V.25 Entire Agreement and Modifications. This Deed of Trust and the
other Loan Documents contain the entire agreements between the parties and
supersede any prior agreements (oral or written), and may not be amended,
revised, waived, discharged, released or terminated orally but only by a written
instrument or instruments executed by the party against which enforcement of the
amendment, revision, waiver, discharge, release or termination is asserted.
V.26 Maximum Interest. The provisions of this Deed of Trust and of all
agreements between Grantor and Beneficiary, whether now existing or hereafter
arising and whether written or oral, are hereby expressly limited so that in no
contingency or event whatsoever, whether by reason of demand or acceleration of
the maturity of the Note or otherwise, shall the amount paid, or agreed to be
paid ("Interest") to Beneficiary for the use, forbearance or detention of the
money loaned under the Note exceed the maximum amount permissible under
applicable law. If, from any circumstance whatsoever, performance or fulfillment
of any provision hereof or of any agreement between Grantor and Beneficiary
shall, at the time performance or fulfillment of such provision shall be due,
exceed the limit for Interest prescribed by law or otherwise transcend the limit
of validity prescribed by applicable law, then ipso facto the obligation to be
performed or fulfilled shall be reduced to such limit, and if, from any
circumstance whatsoever, Beneficiary shall ever receive anything of value deemed
78
Interest by applicable law in excess of the maximum lawful amount, an amount
equal to any excessive Interest shall be applied to the reduction of the
principal balance owing under the Note in the inverse order of its maturity
(whether or not then due) or at the option of Beneficiary be paid over to
Grantor, and not to the payment of Interest. All Interest (including any amounts
or payments judicially or otherwise under law deemed to be Interest) contracted
for, charged, taken, reserved, paid or agreed to be paid to Beneficiary shall,
to the extent permitted by applicable law, be amortized, prorated, allocated and
spread throughout the full term of the Note, including any extensions and
renewals thereof until payment in full of the principal balance of the Note so
that the Interest thereon for such full term will not exceed at any time the
maximum amount permitted by applicable law. This Section will control all
agreements between Grantor and Beneficiary.
V.27 Application of Default Interest Rate Not a Waiver. Application of
the Default Interest Rate shall not be deemed to constitute a waiver of any
default or any rights or remedies of Beneficiary under this Deed of Trust, any
other Loan Document or applicable legal requirements, or a consent to any
extension of time for the payment or performance of any obligation with respect
to which the Default Interest Rate may be invoked.
V.28 Interest Payable by Beneficiary. Beneficiary shall cause funds in
the Curtailment Reserve and the FF&E Reserve (the "Funds") to be deposited into
interest bearing accounts of the type customarily maintained by Beneficiary or
its servicing agent for the investment of similar reserves, which accounts may
not yield the highest interest rate then available. The Funds shall be held in
an account in Beneficiary's name (or such other account name as Beneficiary may
elect) at a financial institution or other depository selected by Beneficiary
(or its servicer) in its sole discretion (collectively, the "Depository
Institution"). Grantor shall earn no more than an amount of interest on the
Funds equal to an amount determined by applying to the average monthly balance
of such Funds the quoted interest rate for the Depository Institution's money
market savings account, as such rate is determined from time to time (such
allocated amount being referred to as "Grantor's Interest"). Beneficiary or its
Depository Institution shall be entitled to report under Grantor's Federal tax
identification number, the Grantor's Interest on the Funds. If the Depository
Institution does not have an established money market savings account (or if an
interest rate for such account cannot otherwise be determined in connection with
the deposit of such Funds), a comparable interest rate quoted by the Depository
Institution and acceptable to Beneficiary (or its servicer) in its reasonable
discretion shall be used. The amount of Grantor's Interest allocated to Funds
shall be added to the balance in the Curtailment Reserve and the FF&E Reserve
and shall be disbursed for payment of the items for which other Funds in the
Curtailment Reserve and the FF&E Reserve are to be disbursed.
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V.29 Further Stipulations. The additional covenants, agreements and
provisions set forth in Exhibit C attached hereto, if any, shall be a part of
this Deed of Trust and shall, in the event of any conflict between such further
stipulations and any of the other provisions of this Deed of Trust, be deemed to
control.
V.30 Relationship of the Parties. The relationship between Grantor and
Beneficiary is that of a borrower and a lender only and neither of those parties
is, nor shall it hold itself out to be, the agent, employee, joint venturer or
partner of the other party.
V.31 Fixture Filing. This Deed of Trust shall be effective from the
date of its recording as a financing statement filed as a fixture filing with
respect to all goods constituting part of the Property which are or are to
become fixtures. The mailing address of Grantor and the address of Beneficiary
from which information concerning the security interests may be obtained are set
forth in Section 1.22 above.
V.32 Sale of Notes and Securitization. At the request of the holder of
the Note and, to the extent not already required to be provided by Grantor under
this Deed of Trust, Grantor shall use reasonable efforts to satisfy the market
standards to which the holder of the Note customarily adheres or which may be
reasonably required in the marketplace or by the Rating Agencies in connection
with any Secondary Market Transaction of rated single or multi-class securities
(the "Securities") secured by or evidencing ownership interests in the Note and
this Deed of Trust, including, without limitation, to:
(a)(i) provide such financial and other information with
respect to the Property, the Grantor and the Manager, (ii) provide budgets
relating to the Property; (iii) perform or permit or cause to be performed or
permitted such site inspection, appraisals, market studies, environmental
reviews and reports (Phase I's and, if appropriate, Phase II's), engineering
reports and other due diligence investigations of the Property, as may be
reasonably requested by the holder of the Note or the Rating Agencies or as may
be necessary or appropriate in connection with the Secondary Market Transaction;
and (iv) make such representations and warranties as of the closing date of the
Secondary Market Transaction with respect to the Property, Grantor and the Loan
Documents as are customarily provided in securitization transactions and as may
be reasonably requested by the holder of the Note or the Rating Agencies and
consistent with the facts covered by such representations and warranties as they
exist on the date thereof, including the representations and warranties made in
the Loan Documents (collectively, the "Provided Information"), together, if
customary, with appropriate verification and/or consents of the Provided
Information through letters of auditors or opinions of counsel of independent
attorneys acceptable to the Beneficiary and the Rating Agencies;
80
(b) at Beneficiary's expense, cause its counsel to render
opinions, which may be relied upon by the holder of the Note, the Rating
Agencies and their respective counsel, agents and representatives, as to
non-consolidation, fraudulent conveyance, and true sale or any other opinion
customary in securitization transactions with respect to the Property and
Grantor and its affiliates, which counsel and opinions shall be reasonably
satisfactory to the holder of the Note and the Rating Agencies; and
(c) execute such amendments to the Loan Documents and
organizational documents, enter into a lockbox or similar arrangement with
respect to the Rents and establish and fund such reserve funds (including,
without limitation, reserve funds for deferred maintenance and capital
improvements) as may be requested by the holder of the Note or the Rating
Agencies or otherwise to effect the Secondary Market Transaction; provided,
however, that the Grantor shall not be required to modify or amend any Loan
Document if such modification or amendment would (i) change the interest rate,
the stated maturity or the amortization of principal set forth in the Note, or
(ii) modify or amend any other material economic term of the Loan.
All reasonable third party costs and expenses incurred by
Beneficiary in connection with Grantor's complying with requests made under this
Section shall be paid by Beneficiary.
In the event that the provisions of this Deed of Trust or any
of the other Loan Documents require the receipt of written confirmation from
each Rating Agency with respect to the ratings on the Securities, or, in
accordance with the terms of the transaction documents relating to a Secondary
Market Transaction, such a rating confirmation is required in order for the
consent of the Beneficiary to be given, Beneficiary shall pay all of the costs
and expenses of the Beneficiary, Servicer and each Rating Agency in connection
therewith, and, if applicable, shall pay any fees imposed by any Rating Agency
as a condition to the delivery of such confirmation.
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO
FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER
WASHINGTON LAW.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, Grantor, intending to be legally bound hereby, has
duly executed this Deed of Trust to be effective as of the date set forth in the
first paragraph hereof.
GRANTOR:
--------
WHC804, LLC,
a Delaware limited liability company
By:
--------------------------------
Name: Richard L. Barbieri
Title: Senior Vice President
STATE OF WASHINGTON ss.
ss.
COUNTY OF SPOKANE ss.
On this _____ day of August, 2001, before me, the undersigned, a Notary
Public in and for the State of Washington, duly commissioned and sworn,
personally appeared Richard L. Barbieri, to me known to be the Senior Vice
President of WHC804, LLC, a Delaware limited liability company, the limited
liability company that executed the foregoing instrument, and acknowledged the
said instrument to be the free and voluntary act and deed of said limited
liability company, for the uses and purposes therein mentioned, and on oath
stated that he is authorized to execute the said instrument and that the seal
affixed is the corporate seal of said limited liability company.
Witness my hand and official seal hereto affixed the day and year first
above written.
[S E A L]
--------------------------------------------
Notary Public, State of Washington
My Commission Expires:
--------------------------------------------
- ---------------------- Printed Name of Notary Public
EXHIBIT LIST
- ------------
Exhibit A - Legal Description
Exhibit B - Permitted Exceptions
Exhibit C - Additional Stipulations
EXHIBIT A
---------
Legal Description
-----------------
EXHIBIT B
---------
Permitted Exceptions
--------------------
EXHIBIT C
---------
Additional Stipulations
-----------------------
C-1 Additional Washington Provisions.
(a) This Deed of Trust shall constitute a Financing Statement filed as a
fixture filing pursuant to Article 9 of the Uniform Commercial Code
(RCW 62A.9-402(6)). Parts of the Property are or are to become
fixtures or Improvements (defined above).
(b) Grantor hereby represents, warrants and covenants that none of the
Property is used principally or at all for agricultural or farming
purposes. The Property does not constitute the homestead of Grantor.
(c) At Beneficiary's option, any written notice or default given to
Grantor under this Deed of Trust may be given in the form of a
statutory notice of default under the Washington Deed of Trust Act
or any other form as Beneficiary may elect.
(d) ORAL AGREEMENTS OR ORAL COMMITMENTS TO LEND MONEY, EXTEND CREDIT OR
TO FORBEAR ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER
WASHINGTON LAW.
C-2 Extensions. At the request of Grantor, which request must be made at least
one hundred eighty (180) days prior to the stated maturity date of the
Note, Beneficiary shall have the option, in its sole discretion, to extend
the maturity date of the Note to the date which is one hundred eighty
(180) days after such maturity date prior to such extension; provided,
however, in no event shall the maturity date of the Note be extended
beyond the date which is the second (2nd) anniversary of the original
stated maturity date of the Note. In the event that a Curtailment Period
(as defined in the Cash Management Agreement) shall be in effect, Grantor
shall automatically be deemed to have made a request for extension
pursuant to this Section by the applicable deadline for such request.
C-3 Cash Management Stipulations. Grantor has executed and delivered to
Beneficiary the Cash Management Agreement which, among other things,
provides for the disposition of Rents and Profits from the Property. The
Reserves shall be subject to both this Deed of Trust, the Cash Management
Agreement and the other Loan Documents. All references in this Deed of
Trust to the Impound Account and to the other Reserves shall be deemed to
refer to the Sub-Account of the Central Account (as defined in the Cash
Management Agreement) into which the proceeds of each such Reserve have
been deposited pursuant to the Cash Management Agreement. All payments
from Grantor to Beneficiary with respect to Reserves shall be made by
disbursement from the Rent Account or as otherwise provided in the Cash
Management Agreement.