HomeMy WebLinkAboutC6 Reading File 2- Deed of Trust
PREPARED FOR OR BY AND UPON
RECORDATION RETURN TO:
City of San Luis Obispo
990 Palm Street
San Luis Obispo, CA 93401
Attention: Katie Lichtig, City Manager
(Space Above For Recorder’s Use)
GARDEN STREET SLO PARTNERS, L.P.,
a California limited partnership, as grantor
to
_____________ TITLE INSURANCE COMPANY, as trustee
for the benefit of
THE CITY OF SAN LUIS OBISPO, as beneficiary
DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, SECURITY
AGREEMENT AND FIXTURE FILING
_____________________________________
NOTICE TO BORROWER: THE LOAN SECURED BY THIS DEED OF TRUST
PROVIDES FOR A BALLOON PAYMENT AT MATURITY
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THIS DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, SECURITY
AGREEMENT AND FIXTURE FILING (this “Security Instrument”) is made as of
_____ ___, 201__, by GARDEN STREET SLO PARTNERS, L.P., a California limited
partnership, having its principal place of business at c/o Westpac Investments, LLC, 895
Aerovista Place, Suite 100, San Luis Obispo, CA 93401, as grantor (together with its permitted
successors and assigns, “Borrower” or "Grantor") to _______ TITLE INSURANCE
COMPANY, having an address at ______________________, as trustee (together with its
successors and assigns, “Trustee”) for the benefit of THE CITY OF SAN LUIS OBISPO, a
municipal corporation and charter city with an address of 990 Palm Street, San Luis Obispo, CA
93401 Attention: Katie Lichtig, City Manager, as beneficiary (together with its successors and
assigns, “Lender” or "Beneficiary"). All capitalized terms not defined herein shall have the
respective meanings set forth in the Note (defined below).
RECITALS:
This Security Instrument is given to Lender to secure a certain loan in the principal
amount of FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($500,000.00), or so
much thereof as is advanced, in lawful money of the United States of America, with interest
thereon advanced pursuant to a certain Promissory Note dated as of __________ between
Borrower and Lender (together with all extensions, renewals, replacements, restatements or other
modifications thereof, whether one or more being hereinafter collectively referred to as the
“Note;
Borrower desires to secure the payment of the outstanding principal amount set forth in,
and evidenced by, the Note together with all interest accrued and unpaid thereon and all other
sums due to Lender in respect of the Loan under the Note, this Security Instrument or any of the
other Loan Documents (as defined below)(but expressly excluding any obligations owed under
any environmental indemnity executed by any party in connection with the Loan) (collectively,
the “Debt”) and the performance of all of the obligations due under the Note, this Security
Instrument, the Assignment of Management Agreement (as defined in the Note), the Assignment
of Hotel Management Agreement (as defined in the Note) and all other documents stating
expressly that they secure the repayment of the Note (as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time, collectively, the “Loan
Documents”); and
This Security Instrument is given pursuant to the Note to secure the payment, fulfillment,
and performance of the obligations due thereunder and under the other Loan Documents are
secured hereby in accordance with the terms hereof.
Article 1 – GRANTS OF SECURITY
Section 1.1. Property Mortgaged. Borrower does hereby irrevocably mortgage, grant,
bargain, sell, pledge, assign, warrant, transfer, convey and grant a security interest to Trustee, its
successors and assigns, for the benefit of Lender and its successors and assigns, in and to the
following property, rights, interests and estates now owned, or hereafter acquired by Borrower
(collectively, the “Property”):
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(a) Land. The real property described in Exhibit A attached hereto and made a part
hereof (collectively, the “Land”);
(b) Additional Land. All additional lands, estates and development rights hereafter
acquired by Borrower for use in connection with the Land and the development of the Land and
all additional lands and estates therein which may, from time to time, by supplemental mortgage
or otherwise be expressly made subject to the lien of this Security Instrument;
(c) Improvements. The buildings, structures, fixtures, additions, enlargements,
extensions, modifications, repairs, replacements and improvements now or hereafter erected or
located on the Land (collectively, the “Improvements”);
(d) Easements. All easements, rights-of-way or use, rights, strips and gores of land,
streets, ways, alleys, passages, sewer rights, water, water courses, water rights and powers, air
rights and development rights, and all estates, rights, titles, interests, privileges, liberties,
servitudes, tenements, hereditaments and appurtenances of any nature whatsoever, in any way
now or hereafter belonging, relating or pertaining to the Land and the Improvements, and the
reversions and remainders, and all land lying in the bed of any street, road or avenue, opened or
proposed, in front of or adjoining the Land, to the center line thereof and all the estates, rights,
titles, interests, rights of dower, rights of curtesy, property, possession, claim and demand
whatsoever, both at law and in equity, of Borrower of, in and to the Land and the Improvements,
and every part and parcel thereof, with the appurtenances thereto;
(e) Fixtures and Personal Property. All machinery, equipment, fixtures (including,
but not limited to, all heating, air conditioning, plumbing, lighting, communications and elevator
fixtures), furniture, software used in or to operate any of the foregoing and other property of
every kind and nature whatsoever owned by Borrower, or in which Borrower has or shall have
an interest, now or hereafter located upon the Land and the Improvements, or appurtenant
thereto, and usable in connection with the present or future operation and occupancy of the Land
and the Improvements, including their development, construction and use as a hotel, residential
units, restaurants and retail space (collectively, the "Project") and all building equipment,
materials and supplies of any nature whatsoever owned by Borrower, or in which Borrower has
or shall have an interest, now or hereafter located upon the Land, the Improvements and the
Project, or appurtenant to the Land, the Improvements or the Project, or usable in connection
with the present or future operation and occupancy of the Land, the Improvements and the
Project (collectively, the “Personal Property”), and the right, title and interest of Borrower in
and to any of the Personal Property which may be subject to any security interests, as defined in
the Uniform Commercial Code, as adopted and enacted by the state or states where any of the
Property is located (the “Uniform Commercial Code”), and all proceeds and products of the
above;
(f) Leases and Rents. All leases, subleases, subsubleases, lettings, licenses,
concessions or other agreements (whether written or oral) pursuant to which any Person is
granted a possessory interest in, or right to use or occupy all or any portio n of the Land and the
Improvements, and every modification, amendment or other agreement relating to such leases,
subleases, subsubleases, or other agreements entered into in connection with such leases,
subleases, subsubleases, or other agreements and every guarantee of the performance and
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observance of the covenants, conditions and agreements to be performed and observed by the
other party thereto, heretofore or hereafter entered into, whether before or after the filing by or
against Borrower of any petition for relief under any Creditors Rights Laws (collectively, the
“Leases”) and all right, title and interest of Borrower, its successors and assigns therein and
thereunder, including, without limitation, cash or securities deposited thereunder to secure the
performance by the lessees of their obligations thereunder and all rents, additional rents, rent
equivalents, moneys payable as damages or in lieu of rent or rent equivalents, royalties
(including, without limitation, all oil and gas or other mineral ro yalties and bonuses), income,
receivables, receipts, revenues, deposits (including, without limitation, security, utility and other
deposits), accounts, cash, issues, profits, charges for services rendered, and other consideration
of whatever form or nature received by or paid to or for the account of or benefit of Borrower or
its agents or employees from any and all sources arising from or attributable to the Property,
including, all receivables, customer obligations, installment payment obligations and ot her
obligations now existing or hereafter arising or created out of the sale, lease, sublease, license,
concession or other grant of the right of the use and occupancy of property or rendering of
services by Borrower or Manager and proceeds, if any, from business interruption or other loss
of income insurance whether paid or accruing before or after the filing by or against Borrower of
any petition for relief under any Creditors Rights Laws (collectively, the “Rents”) and all
proceeds from the sale or other disposition of the Leases and the right to receive and apply the
Rents to the payment of the Debt;
(g) Insurance Proceeds. All insurance proceeds in respect of the Property under any
insurance policies covering the Property, including, without limitation, the right to receive and
apply the proceeds of any insurance, judgments, or settlements made in lieu thereof, for damage
to the Property (collectively, the “Insurance Proceeds”);
(h) Condemnation Awards. All condemnation awards, including interest thereon,
which may heretofore and hereafter be made with respect to the Property by reason of any taking
or condemnation, whether from the exercise of the right of eminent domain (including, but not
limited to, any transfer made in lieu of or in anticipation of the exercise of the right), or for a
change of grade, or for any other injury to or decrease in the value of the Property (collectively,
the “Awards”);
(i) Tax Certiorari. All refunds, rebates or credits in connection with reduction in real
estate taxes and assessments charged against the Property as a result of tax certiorari or any
applications or proceedings for reduction;
(j) Rights. The right, in the name and on behalf of Borrower, to appear in and defend
any action or proceeding brought with respect to the Property and to commence any action or
proceeding to protect the interest of Lender in the Property;
(k) Agreements. All agreements, contracts, certificates, instruments, franchises,
permits, licenses, plans, specifications and other documents, now or hereafter entered into, and
all rights therein and thereto, respecting or pertaining to the use, occupation, construction,
management or operation of the Land and any part thereof and any Improvements or any
business or activity conducted on the Land and any part thereof and all right, title and interest of
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Borrower therein and thereunder, including, without limitation, the right, upon the happening of
any Event of Default hereunder, to receive and collect any sums payable to Borrower thereunder;
(l) Intangibles. All tradenames, trademarks, servicemarks, logos, copyrights,
goodwill, books and records and all other general intangibles relating to or used in connection
with the operation of the Property;
(m) Accounts. All reserves, escrows and deposit accounts maintained by Borrower
with respect to the Property, including without limitation, the Accounts and all cash, checks,
drafts, certificates, securities, investment property, financial assets, instruments and other
property held therein from time to time and all proceeds, products, distributions or dividends or
substitutions thereon and thereof;
(n) Surveys, Entitlements. All surveys of the Land, all entitlements to develop or
build improvements thereon;
(o) Other Personal Property. All other personal property of any kind, nature or
description in which Borrower now or hereafter has rights, including, without limitation, all
“accounts,” “chattel paper,” “commercial tort claims,” “deposit accounts,” “documents,”
“general intangibles,” “goods,” “instruments,” “investment property,” “letter-of-credit rights,”
“letters of credit” and “money” (as such terms are defined in Section 1-201, 5-102 or 9-102, as
applicable, of the Uniform Commercial Code);
(p) Proceeds. All proceeds of any of the foregoing items set forth in subsections (a)
through (m) including, without limitation, Insurance Proceeds and Awards, into cash or
liquidation claims; and
(q) Other Rights. Any and all other rights of Borrower in and to the items set forth in
subsections (a) through (p) above.
Section 1.2. ASSIGNMENT OF RENTS. Borrower hereby absolutely and unconditionally
assigns to Lender all of Borrower’s right, title and interest in and to all current and future Leases
and Rents; it being intended by Borrower that this assignment constitutes a present, absolute
assignment and not an assignment for additional security only. Nevertheless, subject to the terms
of this Security Instrument, Lender grants to Borrower a revocable license to (i) collect, receive,
use and enjoy the Rents and Borrower shall hold the Rents, or a portion thereof sufficient to
discharge all current sums due on the Debt, for use in the payment of such sums, and (ii) enforce
the terms of the Leases.
Section 1.3. SECURITY AGREEMENT. This Security Instrument is both a real property
mortgage and a “security agreement” within the meaning of the Uniform Commercial Code. The
Property includes both real and personal property and all other rights and interests, whether
tangible or intangible in nature, of Borrower in the Property. By executing and delive ring this
Security Instrument, Borrower hereby grants to Lender, as security for the Obligations
(hereinafter defined), a security interest in all of the items and types of personal property that are
included in the Property (all such items and types of personal property being collectively referred
to as the “Collateral”) to the full extent that a security interest in the Collateral may be subject to
Article 9 of the Uniform Commercial Code.
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Section 1.4. FIXTURE FILING. This Security Instrument shall also constitute a "fixture
filing" for the purposes of the Uniform Commercial Code with respect to all of the Property
consisting of goods that are or are to become “fixtures” (as that term is defined in Section 9-102
of the Uniform Commercial Code) related to the real property described in this Security
Instrument, upon being filed for record in the real estate records of the County in which such
fixtures are or are to be located. With respect to said fixture filing, (a) the name of the debtor is
Garden Street SLO Partners, L.P., (b) the name of the secured party is The City Of San Luis
Obispo, (c) the collateral covered hereby includes goods that are or are to become “fixtures” (as
that term is defined in Section 9-102 of the Uniform Commercial Code) related to the real
property described in this Security Instrument, and (d) the debtor is the record owner of, or
otherwise has an interest of record in, the real property described in this Security Instrument.
Section 1.5. CONDITIONS TO GRANT. TO HAVE AND TO HOLD the above granted
and described Property unto Trustee and to the use and benefit of Lender and Trustee and their
successors and assigns, forever; IN TRUST, WITH POWER OF SALE, to secure payment to
Lender of the Debt at the time and in the manner provided for its payment in the Note;
PROVIDED, HOWEVER, these presents are upon the express condition that, if Lender shall be
well and truly paid the Debt at the time and in the manner provided in the Note, and this Security
Instrument, if Borrower shall well and truly perform the Other Obligations as set forth in this
Security Instrument and shall well and truly abide by and comply with each and every covenant
and condition set forth herein and in the Note and the other Loan Documents, these presents and
the estate hereby granted shall cease, terminate and be void.
Article 2 – DEBT AND OBLIGATIONS SECURED
Section 2.1. DEBT. This Security Instrument and the grants, assignments and transfers
made in Article 1 are given for the purpose of securing the Debt, expressly excluding any
obligations under that certain Environmental Indemnity Agreement.
Section 2.2. OTHER OBLIGATIONS. This Security Instrument and the grants,
assignments and transfers made in Article 1 are also given for the purpose of securing the
performance of the following (the “Other Obligations”): (a) all other obligations of Borrower
contained herein; (b) each obligation of Borrower contained in the Note, this Security Instrument
and any other Loan Document; and (c) each obligation of Borrower contained in any renewal,
extension, amendment, modification, consolidation, change of, or substitution or replacement
for, all or any part of the Note, this Security Instrument or any other Loan Document.
Section 2.3. DEBT AND OTHER OBLIGATIONS. Borrower’s obligations for the payment
of the Debt and the performance of the Other Obligations shall be referred to collectively herein
as the “Obligations.”
Section 2.4. PAYMENT OF DEBT. Borrower will pay the Debt at the time and in the
manner provided in the Note and this Security Instrument.
Section 2.5. INCORPORATION BY REFERENCE. All the covenants, conditions and
agreements contained in (a) the Note and (b) all and any of the other Loan Documents to which
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Borrower is party, are hereby made a part of this Security Instrument to the same extent and with
the same force as if fully set forth herein.
Article 3. BORROWER REPRESENTATIONS
Section 3.1. LEGAL STATUS AND AUTHORITY. Borrower (a) is duly organized, validly
existing and in good standing under the laws of its state of formation; (b) is duly qualified to
transact business and is in good standing in the State; and (c) has all necessary approvals,
governmental and otherwise, and full power and authority to own, operate and lease the
Property. Borrower has full power, authority and legal right to mortgage, grant, bargain, sell,
pledge, assign, warrant, transfer and convey the Property pursuant to the terms hereof and to
keep and observe all of the terms of the Note, this Security Instrument and the other Loan
Documents on Borrower's part to be performed.
Section 3.2. VALIDITY OF DOCUMENTS. (a) The execution, delivery and performance of
this Security Instrument, the Note and the other Loan Documents by Borrower and its applicable
Affiliates, and the borrowing evidenced by the Note and secured by this Security Instrument (i)
are within the power and authority of such parties; (ii) have been authorized by all requisite
organizational action of such parties; (iii) have received all necessary approvals and consents ,
corporate, governmental or otherwise; (iv) will not violate, conflict with, result in a breach of or
constitute (with notice or lapse of time, or both) a material default under any provision of law,
any order or judgment of any court or board, agency, commission, office or other authority of
any nature whatsoever for any governmental unit (foreign, federal, state, county, district,
municipal, city or otherwise) whether now or hereafter in existence (each, a "Governmental
Authority"), any license, certificate or other approval required to operate the Property,
Borrower's organizational documents, or any indenture, agreement or other instrument to which
Borrower is a party or by which it or any of its assets or the Property is or may be bound or
affected; (v) will not result in the creation or imposition of any lien, charge or encumbrance
whatsoever upon any of its assets, except the lien and security interest created hereby and by the
other Loan Documents; and (vi) will not require any authorization or license from, or any filing
with, any Governmental Authority (except for the recordation of the Security Instrument in
appropriate land records in the State and except for Uniform Commercial Code filings related to
the security interests created hereby), (b) this Security Instrument, the Note, and the other Loan
Documents have been duly executed and delivered by Borrower through the undersigned
authorized representative of Borrower, and (c) this Security Instrument, the Note, and the other
Loan Documents constitute the legal, valid and binding obligations of Borrower. The Loan
Documents are not subject to any right of rescission, set-off, counterclaim or defense by
Borrower, including the defense of usury, nor would the operation of any of the terms of the
Loan Documents, or the exercise of any right thereunder, render the Loan Documents
unenforceable (except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar creditors' rights laws, and by general principles of
equity (regardless of whether such enforceability is considered in a proceeding in equity or at
law)), and Borrower has not asserted any right of rescission, set-off, counterclaim or defense
with respect thereto.
Section 3.3. LITIGATION. There is no action, suit or proceeding, judicial, administrative
or otherwise (including any condemnation or similar proceeding) pending or, to the best of
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Borrower's knowledge, threatened or contemplated against Borrower or against or affecting the
Property that has not been disclosed to Lender by Borrower in writing in connection with the
closing of the Loan, is not fully covered by insurance or, if determined adversely to Borrower,
would have a material adverse effect on (i) the Property, (ii) the business, profits, prospects,
management, operations or condition (financial or otherwise) of the Borrower or the Property,
(iii) the enforceability, validity perfection or priority of the lien of the Security Instrument or the
other Loan Documents, (iv) the ability of Borrower to perform its obligations under the Security
Instrument or the other Loan Documents (each, a "Material Adverse Effect"). There have not
been any judgments against Borrower in the past ten (10) years.
Section 3.4. AGREEMENTS. Borrower is not a party to any agreement or instrument or
subject to any restriction which would have or cause a Material Adverse Effect. Borrower is not
in default in any material respect in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any agreement or instrument to which it is a
party or by which Borrower or the Property is bound. Borrower has no material financial
obligation under any agreement or instrument to which Borrower is a party or by which
Borrower or the Property is otherwise bound, other than (a) obligations incurred in the ordinary
course of the operation of the Property and (b) obligations under this Security Instrument, the
Note and the other Loan Documents. There is no agreement or instrument to which Borrower is
a party or by which Borrower is bound that would require the subordination in right of payment
of any of Borrower's obligations hereunder or under the Note to an obligation owed to another
party.
Section 3.5. FINANCIAL CONDITION.
(a) Borrower is solvent, and no proceeding under creditors’ rights laws with respect to
Borrower has been initiated and Borrower has received reasonably equivalent value for the
granting of the Security Instrument.
(b) No petition in bankruptcy has been filed by or against Borrower or any related entity,
or any principal, general partner or member thereof, in the last ten (10) years, and neither
Borrower nor any related entity, or any principal, general partner or member thereof, in the last
ten (10) years has ever made any assignment for the benefit of creditors or taken advantage of
any Creditors Rights Laws.
(c) Borrower is not contemplating either the filing of a petition by it under any creditors’
rights laws or the liquidation of its assets or property, and Borrower does not have any
knowledge of any Person contemplating the filing of any such petition against it.
Section 3.6. DISCLOSURE. Borrower has disclosed to Lender all material facts and has
not failed to disclose any material fact that could cause any representation or warranty made
herein to be materially misleading.
Section 3.7. NO PLAN ASSETS. As of the date hereof and throughout the term of the
Loan (a) Borrower is not and will not be an “employee benefit plan,” as defined in Section 3(3)
of ERISA, subject to Title I of ERISA, (b) Borrower is not and will not be a “governmental plan”
within the meaning of Section 3(32) of ERISA, (c) transactions by or with Borrower are not and
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will not be subject to any state statute regulating investments of, or fiduciary obligations with
respect to, governmental plans; and (d) none of the assets of Borrower constitutes or will
constitute “plan assets” of one or more such plans within the meaning of 29 C.F.R.
Section 2510.3-101.
Section 3.8. NOT A FOREIGN PERSON. Borrower is not a “foreign person” within the
meaning of § 1445(f)(3) of the IRS Code.
Section 3.9. BUSINESS PURPOSES. The Loan is solely for the business purpose of
Borrower, and is not for personal, family, household, or agricultural purposes.
Section 3.10. BORROWER INFORMATION. Borrower’s principal place of business and its
chief executive office as of the date hereof is _________________. Borrower’s mailing address,
as set forth in Section 13.1 hereof or as changed in accordance with the provisions hereof, is true
and correct. Borrower is not subject to back-up withholding taxes.
Section 3.11. STATUS OF PROPERTY.
(a) Borrower has obtained all necessary certificates, licenses and other approvals,
governmental and otherwise, necessary for the operation of the Property and the conduct of its
business and all required zoning, building code, land use, environmental and other similar
permits or approvals, all of which are in full force and effect as of the date hereof and not subject
to revocation, suspension, forfeiture or modification.
(b) The Property and the present and contemplated use and occupancy thereof are in full
compliance with all applicable zoning ordinances, building codes, land use laws, Environmental
Laws and other similar Applicable Law.
(c) The Property is served by all utilities required for the current or contemplated use
thereof. All utility service is provided by public utilities and the Property has accepted or is
equipped to accept such utility service.
(d) The Property is served by public water and sewer systems.
(e) All public roads and streets necessary for service of and access to the Property for the
current or contemplated use thereof have been completed, are serviceable and all-weather and are
physically and legally open for use by the public. The Property has either direct access to such
public roads or streets or access to such public roads or streets by virtue of a perpetual easement
or similar agreement inuring in favor of Borrower and any subsequent owners of the Property.
(f) The Property is free from damage caused by fire or other casualty. The Property,
including, without limitation, all buildings, improvements, parking facilities, sidewalks, storm
drainage systems, roofs, plumbing systems, HVAC systems, fire protection systems, electrical
systems, equipment, elevators, exterior sidings and doors, landscaping, irrigation systems and all
structural components, are in good condition, order and repair in all material respects; there
exists no structural or other material defects or damages in the Property, whether latent or
otherwise, and Borrower has not received notice from any insurance company or bonding
company of any defects or inadequacies in the Property, or any part thereof, which would
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adversely affect the insurability of the same or cause the imposition of extraordinary premiums
or charges thereon or of any termination or threatened termination of any policy of insurance or
bond.
(g) All costs and expenses of any and all labor, materials, supplies and equipment used in
the construction of the Improvements have been paid in full. There are no mechanics’ or similar
liens or claims which have been filed for work, labor or material (and no rights are outstanding
that under Applicable Law could give rise to any such liens) affecting the Property which are or
may be prior to or equal to the lien of the Security Instrument.
(h) Borrower has paid in full for, and is the owner of, all furnishings, fixtures and
equipment (other than Tenants’ property) used in connection with the operation of the Property,
free and clear of any and all security interests, liens or encumbrances, except the lien and
security interest created by this Security Instrument, the Note, and the other Loan Documents
and the lien of any Permitted Senior Mortgage.
(i) All liquid and solid waste disposal, septic and sewer systems located on the Property
are in a good and safe condition and repair and in compliance with all Applicable Law.
(j) No portion of the Improvements is located in an area identified by the Federal
Emergency Management Agency or any successor thereto as an area having special flood
hazards pursuant to the Flood Insurance Acts or, if any portion of the Improvements is located
within such area, Borrower has obtained and will maintain the insurance prescribed in
Section 10.1(a) hereof. No part of the Property consists of or is classified as wetlands, tidelands
or swamp and overflow lands.
(k) All the Improvements lie within the boundaries of the Land and any building
restriction lines applicable to the Land.
(l) To Borrower’s knowledge after due inquiry, there are no pending or proposed special
or other assessments for public improvements or otherwise affecting the Property, nor are there
any contemplated improvements to the Property that may result in such special or other
assessments.
Section 3.12. FINANCIAL INFORMATION. All financial data, including, without
limitation, the balance sheets, statements of cash flow, statements of income and operating
expense and rent rolls, that have been delivered to Lender in respect of Borrower and/or the
Property (a) are true, complete and correct in all material respects, (b) accurately represent the
financial condition of Borrower or the Property, as applicable, as of the date of such reports, and
(c) to the extent prepared or audited by an independent certified public accounting firm, have
been prepared in accordance with GAAP throughout the periods covered, except as disclosed
therein. Borrower does not have any contingent liabilities, liabilities for taxes, unusual forward
or long-term commitments or unrealized or anticipated losses from any unfavorable
commitments that are known to Borrower and reasonably likely to have a Material Adverse
Effect, except as referred to or reflected in said financial statements. Since the date of such
financial statements, there has been no materially adverse change in the financial condition,
operations or business of Borrower from that set forth in said financial statements.
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Section 3.13. CONDEMNATION. No Condemnation or other proceeding has been
commenced or, to Borrower’s best knowledge, is threatened or contemplated with respect to all
or any portion of the Property or for the relocation of the access to the Property.
Section 3.14. SEPARATE LOTS. The Property is assessed for real estate tax purposes as
one or more wholly independent tax lot or lots, separate from any adjoining land or
improvements not constituting a part of such lot or lots, and no other land or improvements is
assessed and taxed together with the Property or any portion thereof.
Section 3.15. INSURANCE. Borrower has obtained and has delivered to Lender certified
copies of all Policies reflecting the insurance coverages, amounts and other requirements set
forth in this Security Instrument. There are no present claims of any material nature under any of
the Policies, and to Borrower’s knowledge, no Person, including Borrower, has done, by act or
omission, anything which would impair the coverage of any of the Policies.
Section 3.16. LEASES AND RENT ROLL. Except as disclosed in any rent roll for the
Property delivered to and approved by Lender (the “Rent Roll”) and the aging report and Tenant
estoppels delivered to and approved by Lender, (a) Borrower is the sole owner of the entire
lessor’s interest in the Leases; (b) the Leases are valid and enforceable against Borrower and the
Tenants set forth therein and are in full force and effect; (c) all of the Leases are arms-length
agreements with bona fide, independent third parties; (d) no party under any Lease is in default;
(e) all Rents due have been paid in full and no Tenant is in arrears in its payment of Rent;
(f) none of the Rents reserved in the Leases have been assigned or otherwise pledged or
hypothecated; (g) none of the Rents have been collected for more than one (1) month in advance
(except a security deposit shall not be deemed rent collected in advance); (h) the premises
demised under the Leases have been completed and the Tenants under the Leases have accepted
the same and have taken possession of the same on a rent-paying basis; (i) there exist no offsets
or defenses to the payment of any portion of the Rents and Borrower has no monetary obligation
to any Tenant under any Lease; (j) Borrower has received no notice from any Tenant challenging
the validity or enforceability of any Lease; (k) there are no agreements with the Tenants under
the Leases other than expressly set forth in each Lease; (l) no Lease contains an option to
purchase, right of first refusal to purchase, right of first refusal to lease additional space at the
Property, or any other similar provision; (m) no person or entity has any possessory interest in, or
right to occupy, the Property except under and pursuant to a Lease; (n) no Tenants have
exercised any right to “go dark” that they may have under their Leases; (o) all security deposits
relating to the Leases reflected on the Rent Roll have been collected by Borrower; (p) no
brokerage commissions or finders’ fees are due and payable regarding any Lease; (q) each
Tenant is in actual, physical occupancy of the premises demised under its Lease and is paying
full rent under its Lease; and (r) no Tenant occupying 20% or more (by square feet) of the net
rentable area of the Property is, to Borrower’s knowledge, a debtor in any state or federal
bankruptcy or insolvency proceeding.
Section 3.17. FILING AND RECORDING TAXES. All mortgage, mortgage recording,
stamp, intangible or other similar tax required to be paid by any Person under Applicable Law
currently in effect in connection with the execution, delivery, recordation, filing, registration,
perfection or enforcement of any of this Security Instrument, the Note and the other Loan
Documents, have been paid or will be paid, and, under current Applicable Law, this Security
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Instrument is enforceable in accordance with its terms by Lender (or any subsequent holder
thereof), except as such enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar Creditors Rights Laws, and by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in equity or at law).
Section 3.18. ILLEGAL ACTIVITY/FORFEITURE.
(a) No portion of the Property has been or will be purchased, improved, equipped or
furnished with proceeds of any illegal activity and to the best of Borrower’s knowledge, there are
no illegal activities or activities relating to controlled substances at the Property.
(b) There has not been and shall never be committed by Borrower or any other person in
occupancy of or involved with the operation or use of the Property any act or omission affording
the federal government or any state or local government the right of forfeiture as against the
Property or any part thereof or any monies paid in performance of Borrower’s obligations under
the Note, this Security Instrument or the other Loan Documents. Borrower hereby covenants and
agrees not to commit, permit or suffer to exist any act or omission affording such right of
forfeiture.
Section 3.19. TAXES. Borrower has filed all federal, state, county, municipal, and city
income, personal property and other tax returns required to have been filed by it and has paid all
taxes and related liabilities which have become due pursuant to such returns or pursuant to any
assessments received by it. Borrower knows of no basis for any additional assessment in respect
of any such taxes and related liabilities for prior years.
Section 3.20. PERMITTED ENCUMBRANCES. None of the Permitted Encumbrances,
individually or in the aggregate, materially interferes with the benefits of the security intended to
be provided by this Security Instrument, the Note and the other Loan Documents materially and
adversely affects the value or marketability of the Property, impairs the use or the operation of
the Property or impairs Borrower’s ability to pay its obligations in a timely manner.
Section 3.21. FEDERAL RESERVE REGULATIONS. No part of the proceeds of the Loan
will be used for the purpose of purchasing or acquiring any “margin stock” within the meaning
of Regulation U of the Board of Governors of the Federal Reserve System or for any other
purpose which would be inconsistent with such Regulation U or any other Regulations of such
Board of Governors, or for any purposes prohibited by Applicable Law or by the terms and
conditions of this Security Instrument, the Note or the other Loan Documents.
Section 3.22. INVESTMENT COMPANY ACT. Borrower is not (a) an “investment
company” or a company “controlled” by an “investment company,” within the meaning of the
Investment Company Act of 1940, as amended; (b) a “holding company” or a “subsidiary
company” of a “holding company” or an “affiliate” of either a “holding company” or a
“subsidiary company” within the meaning of the Public Utility Holding Company Act of 1935,
as amended; or (c) subject to any other federal or state law or regulation which purports to
restrict or regulate its ability to borrow money.
Section 3.23. FRAUDULENT CONVEYANCE. Borrower (a) has not entered into the Loan
or any Loan Document with the actual intent to hinder, delay, or defraud any creditor and
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(b) received reasonably equivalent value in exchange for its obligations under the Loan
Documents. Giving effect to the Loan, the fair saleable value of Borrower’s assets exceeds and
will, immediately following the execution and delivery of the Loan Documents, exceed
Borrower’s total liabilities, including, without limitation, subordinated, unliquidated, disputed or
contingent liabilities. The fair saleable value of Borrower ’s assets is and will, immediately
following the execution and delivery of the Loan Documents, be greater than Borrower’s
probable liabilities, including the maximum amount of its contingent liabilities or its debts as
such debts become absolute and matured. Borrower’s assets do not and, immediately following
the execution and delivery of the Loan Documents will not, constitute unreasonably small capital
to carry out its business as conducted or as proposed to be conducted. Borrower does not intend
to, and does not believe that it will, incur debts and liabilities (including, without limitation,
contingent liabilities and other commitments) beyond its ability to pay such debts as they mature
(taking into account the timing and amounts to be payable on or in respect of obligations of
Borrower).
Section 3.24. EMBARGOED PERSON. As of the date hereof and at all times throughout
the term of the Loan, including after giving effect to any transfers of interests permitted pursuant
to the Loan Documents, (a) none of the funds or other assets of Borrower constitute property of,
or are beneficially owned, directly or indirectly, by any person, entity or country which is a
sanctioned person, entity or country under U.S. law, including but not limited to, the
International Emergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq., The Trading with the
Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Orders or regulations promulgated
thereunder (including regulations administered by the Office of Foreign Assets Control
(“OFAC”) of the U.S. Department of the Treasury and the Specially Designated Nationals List
maintained by OFAC) with the result that the investment in Borrower (whether directly or
indirectly), is prohibited by Applicable Law or the Loan made by Lender is in violation of
Applicable Law (“Embargoed Person”); (b) unless expressly waived in writing by Lender, no
Embargoed Person has any interest of any nature whatsoever in Borrower with the result that the
investment in Borrower (whether directly or indirectly), is prohibited by Applicable Law or the
Loan is in violation of Applicable Law; and (c) to the best knowledge of Borrower, none of the
funds of Borrower have been derived from any unlawful activity with the result t hat the
investment in Borrower (whether directly or indirectly), is prohibited by Applicable Law or the
Loan is in violation of Applicable Law. Borrower covenants and agrees that in the event
Borrower receives any notice that Borrower (or any of its respective beneficial owners, affiliates
or participants) or any Person that has an interest in the Property is designated as an Embargoed
Person, Borrower shall immediately notify Lender in writing. At Lender’s option, it shall be an
Event of Default hereunder if Borrower or any other party to the Loan is designated as an
Embargoed Person.
Section 3.25. PATRIOT ACT. All capitalized words and phrases and all defined terms
used in the USA Patriot Act of 2001, 107 Public Law 56 (October 26, 2001) and in other statutes
and all orders, rules and regulations of the United States government and its various executive
departments, agencies and offices related to the subject matter of the Patriot Act (collectively
referred to in this Section only as the “Patriot Act”) are incorporated into this Section.
Borrower hereby represents and warrants that Borrower and each and every Person affiliated
with Borrower or that to Borrower’s knowledge has an economic interest in Borrower, or, to
Borrower’s knowledge, that has or will have an interest in the transaction contemplated by this
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Security Instrument or in the Property or will participate, in any manner whatsoever, in the Loan,
is: (i) in full compliance with all applicable requirements of the Patriot Act and any regulations
issued thereunder; (ii) operated under policies, procedures and practices, if applicable, that are in
compliance with the Patriot Act and available to Lender for Lender’s review and inspection
during normal business hours and upon reasonable prior notice; (iii) not in receipt of any notice
from the Secretary of State or the Attorney General of the United States or any other department,
agency or office of the United States claiming a violation or possible violation of the Patriot Act;
(iv) not a person who has been determined by competent authority to be subject to any of the
prohibitions contained in the Patriot Act; and (v) not owned or controlled by or now acting and
or will in the future act for or on behalf of any person who has been determined to be subject to
the prohibitions contained in the Patriot Act. Borrower covenants and agrees that in the event
Borrower receives any notice that Borrower (or any of its respective beneficial owners, affiliates
or participants) or any Person that has an interest in the Property is indicted, arraigned, or
custodially detained on charges involving money laundering or predicate crimes to money
laundering, Borrower shall immediately notify Lender. At Lender’s option, it shall be an Event
of Default hereunder if Borrower or any other party to the Loan is indicted, arraigned or
custodially detained on charges involving money laundering or predicate crimes to money
laundering.
Section 3.26. ORGANIZATIONAL CHART. The organizational chart attached as Schedule
___ hereto, relating to Borrower and certain Affiliates and other parties, is true, complete and
correct on and as of the date hereof.
Section 3.27. BANK HOLDING COMPANY. Borrower is not a “bank holding company” or
a direct or indirect subsidiary of a “bank holding company” as defined in the Bank Holding
Company Act of 1956, as amended, and Regulation Y thereunder of the Board of Governors of
the Federal Reserve System.
Section 3.28. GROUND LEASE REPRESENTATIONS. The Ground Lease is in full force and
effect and neither Borrower nor, to Borrower’s knowledge, any other party to the Ground Lease,
is in default thereunder, and to the best of Borrower’s knowledge, there are no conditions which,
with the passage of time or the giving of notice, or both, would constitute a default thereunder.
Section 3.29. NO CHANGE IN FACTS OR CIRCUMSTANCES. All information submitted by
Borrower to Lender and in all financial statements, rent rolls, reports, certificates and other
documents submitted in connection with the Loan or in satisfaction of the terms thereof and all
statements of fact made by Borrower in this Security Instrument or in the other Loan Documents,
are accurate, complete and correct in all material respects. There has been no material adverse
change in any condition, fact, circumstance or event that would make any such information
inaccurate, incomplete or otherwise misleading in any material respect or that would otherwise
have a Material Adverse Effect.
Article 4 – PROPERTY COVENANTS
Borrower covenants and agrees that:
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Section 4.1. INSURANCE. Borrower shall obtain and maintain, or cause to be obtained
and maintained, in full force and effect at all times insurance with respect to Borrower and the
Property as required pursuant to Section 10.1 of this Security Instrument.
Section 4.2. TAXES AND OTHER CHARGES. Borrower shall timely pay all real estate
and personal property taxes, assessments, water rates or sewer rents (collectively “Taxes”),
ground rents, maintenance charges, impositions (other than Taxes), and any other charges,
including, without limitation, vault charges and license fees for the use of vaults, chutes and
similar areas adjoining the Property (collectively, “Other Charges”), now or hereafter levied or
assessed or imposed against the Property or any part thereof in accordance with this Security
Instrument.
Section 4.3. LEASES. Borrower shall not (and shall not permit any other applicable
Person to) enter in any Leases for all or any portion of the Property unless in accordance with the
provisions of this Security Instrument or the Ground Lease.
Section 4.4. WARRANTY OF TITLE. Borrower has good, indefeasible, marketable and
insurable title to the Property and has the right to mortgage, grant, bargain, sell, pledge, assign,
warrant, transfer and convey the same. Borrower possesses an unencumbered fee simple
absolute estate in the Land and the Improvements except for the Permitted Encumbrances, such
other liens as are permitted pursuant to the Loan Documents and the liens created by the Loan
Documents. This Security Instrument, when properly recorded in the appropriate records ,
together with any Uniform Commercial Code financing statements required to be filed in
connection therewith, will create (a) a valid, perfected first priority lien on the Property, subject
only to Permitted Encumbrances and the liens created by the Loan Documents and (b) perfected
security interests in and to, and perfected collateral assignments of, all personalty (including the
Leases), all in accordance with the terms thereof, in each case subject only to any applicable
Permitted Encumbrances, such other liens as are permitted pursuant to the Loan Documents and
the liens created by the Loan Documents. Borrower shall forever warrant, defend and preserve
the title and the validity and priority of the lien of this Security Instrument and shall forever
warrant and defend the same to Lender against the claims of all Persons whomsoever.
“Permitted Encumbrances” shall mean, collectively, (a) the lien and security interests created
by this Security Instrument and the other Loan Documents, (b) all liens, encumbrances and other
matters disclosed in the Title Insurance Policy, (c) liens, if any, for Taxes imposed by any
Governmental Authority not yet due or delinquent, (d) such other title and survey exceptions as
Lender has approved or may approve in writing in Lender’s sole discretion, and (e) the first
priority lien (“Permitted Senior Mortgage”) securing an outstanding loan to Borrower in the
original principal amount of not more than Sixty Five percent (65%) of the fair market value of
the Property once the planned improvements are constructed and completed made by a licensed
lender which is not an Affiliate of Borrower (a “Permitted Senior Mortgagee”), that has
required that this Security Instrument be subordinated to such Permitted Senior Mortgagee’s loan
to Borrower.
Section 4.5. PAYMENT FOR LABOR AND MATERIALS. Borrower will promptly pay (or
cause to be paid) when due all bills and costs for labor, materials, and specifically fabricated
materials incurred in connection with the Property (each, a “Work Charge”) and never permit
to exist beyond the due date thereof in respect of the Property or any part thereof any lien or
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security interest, even though inferior to the liens and the security interests hereof, and in any
event never permit to be created or exist in respect of the Property or any part thereof any other
or additional lien or security interest other than the liens or security interests hereof except for
the Permitted Encumbrances. Borrower represents there are no claims for payment for work,
labor or materials affecting the Property which are or may become a lien prior to, or of equal
priority with, the liens created by the Loan Documents
Section 4.6. BOOKS AND RECORDS. Borrower shall keep adequate books and records of
account in accordance with GAAP, or in accordance with other methods acceptable to Lender in
its reasonable discretion (consistently applied), and furnish to Lender:
(a) quarterly certified rent rolls (in the form approved by Lender in connection with the
closing of the Loan), each signed and dated by a general partner of Borrower, within forty-five
(45) days after the end of each calendar quarter;
(b) quarterly operating statements of the Property, prepared and certified by a general
partner of Borrower in the form required by Lender, detailing the revenues received, the
expenses incurred and major capital improvements for the period of calculation and containing
appropriate year-to-date information, within forty-five (45) days after the end of each calendar
quarter;
(c) quarterly capital expenditure statements of the Property, prepared and certified by a
general partner of Borrower in the form required by Lender, within forty-five (45) days after the
end of each calendar quarter;
(d) an annual balance sheet, profit and loss statement, statement of cash flow, and
statement of change in financial position of Borrower compiled by a certified public accountant
of recognized standing acceptable to Lender in accordance with a scope of work acceptable to
Lender, within ninety (90) days after the close of each fiscal year of Borrower;
(e) within thirty (30) days after filing, a complete copy of Borrower’s Federal and State
income tax returns, certified by a Responsible Officer to be true and complete. In addition to the
foregoing, if Borrower files for an extension of time to file such tax returns, Borrower shall
provide a copy of the extension notice promptly after the filing thereof;
(f) upon request from Lender, a property management report for the Property containing
such information reasonably requested by Lender, in reasonable detail and certified by a
Responsible Officer of Borrower to be true and complete, but no more frequently than quarterly;
(g) upon request from Lender, an accounting of all security deposits held in connection
with any Lease of any part of the Property, including the name and address of the financial
institutions in which such security deposits are held.
(h) Borrower agrees that all financial statements and other items required to be delivered
to Lender pursuant to this Section 4.6 (each a “Required Financial Item” and, collectively, the
“Required Financial Items”) shall: (i) be complete and correct in all material respects;
(ii) present fairly the financial condition of the party; (iii) disclose all liabilities that are required
to be reflected or reserved against; and (iv) be prepared (A) in hardcopy and electronic formats
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and (B) in accordance with GAAP or in accordance with other methods acceptable to Lender in
its sole discretion (consistently applied). Borrower shall be deemed to warrant and represent
that, as of the date of delivery of any such financial statement, there has been no material adverse
change in financial condition, nor have any assets or properties been sold, transferred, assigned,
mortgaged, pledged or encumbered since the date of such financial statement except as disclosed
by Borrower in a writing delivered to Lender. Borrower agrees that all Required Financial Items
shall not contain any misrepresentation or omission of a material fact.
(i) If any Required Financial Item is not timely delivered (“Reporting Failure”),
following written notice from Lender, Borrower shall promptly pay to Lender, as a late charge,
the sum of One Thousand and No/100 Dollars ($1,000) per Required Financial Item. In addition,
Borrower shall promptly pay to Lender an additional late charge of Five Hundred and No/100
Dollars ($500.00) per Required Financial Item for each full month during which such Reporting
Failure continues following written notice from Lender. Borrower acknowledges that Lender
will incur additional expenses as a result of any such Reporting Failure, which expenses would
be impracticable to quantify, and that Borrower’s payments under this Section 4.6 are a
reasonable estimate of such expenses. Borrower acknowledges further that the payment by
Borrower of this late charge does not in any manner affect or otherwise impair or waive any
rights and remedies Lender may have hereunder, under the Loan Documents or under applicable
law for any Event of Default.
Article 5 – FURTHER ASSURANCES
Section 5.1. COMPLIANCE WITH NOTE AND LOAN DOCUMENTS Borrower shall comply
with all covenants set forth in the Note and Loan Documents relating to acts or other further
assurances to be made on the part of Borrower in order to protect and perfect the lien or security
interest hereof upon, and in the interest of Lender in, the Property
Section 5.2. REPLACEMENT DOCUMENTS. Upon receipt of an affidavit of an officer of
Lender as to the loss, theft, destruction or mutilation of the Note, this Security Instrument or any
of the other Loan Documents which is not of public record, and, in the case of any such
mutilation, upon surrender and cancellation of the Note, this Security Instrument or such other
Loan Document, Borrower will issue, in lieu thereof, a replacement thereof, dated the date of the
Note, this Security Instrument or such other Loan Document, as applicable, in the same principa l
amount thereof and otherwise of like tenor.
Section 5.3. RECORDING OF SECURITY INSTRUMENT. Borrower forthwith upon the
execution and delivery of this Security Instrument and thereafter, from time to time, will cause
the Security Instrument and any of the other Lo an Documents creating a lien or security interest
or evidencing the lien hereof upon the Property and each instrument of further assurance to be
filed, registered or recorded in such manner and in such places as may be required by any present
or future law in order to publish notice of and fully to protect and perfect the lien or security
interest hereof upon, and the interest of Lender in, the Property. Borrower will pay all taxes,
filing, registration or recording fees, and all expenses incident to the p reparation, execution,
acknowledgment and/or recording of the Note, the Security Instrument, the other Loan
Documents, any note, deed of trust or mortgage supplemental hereto, any security instrument
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with respect to the Property and any instrument of further assurance, and any modification or
amendment of the foregoing documents, and all federal, state, county and municipal taxes,
duties, imposts, assessments and charges arising out of or in connection with the execution and
delivery of the Security Instrument, any deed of trust or mortgage supplemental hereto, any
security instrument with respect to the Property or any instrument of further assurance, and any
modification or amendment of the foregoing documents, except where prohibited by Applicable
Law so to do.
Section 5.4. FURTHER ACTS.
(a) Borrower will, at the cost of Borrower, and without expense to Lender, do,
execute, acknowledge and deliver all and every further acts, deeds, conveyances, deeds of trust,
mortgages, assignments, notices of assignments, transfers and assurances as Lender shall, from
time to time, reasonably require, for the better assuring, conveying, assigning, transferring, and
confirming unto Lender the property and rights hereby mortgaged, deeded, granted, bargained,
sold, conveyed, confirmed, pledged, assigned, warranted and transferred or intended now or
hereafter so to be, or which Borrower may be or may hereafter become bound to convey or
assign to Lender, or for carrying out the intention or facilitating the performance of the terms of,
or for filing, registering or recording, this Security Instrument, the Note or any other Loan
Documents or for complying with all Applicable Law. Borrower, on demand, will execute and
deliver, and in the event it shall fail to so execute and deliver, hereby authorizes Lender to
execute in the name of Borrower or without the signature of Borrower to the extent Lender may
lawfully do so, one or more financing statements to evidence more effectively the security
interest of Lender in the Property. Borrower grants to Lender an irrevocable power of attorney
coupled with an interest for the purpose of exercising and perfecting any and all rights and
remedies available to Lender at law and in equity, including without limitation, such rights and
remedies available to Lender pursuant to this Section.
(b) Without limiting Lender's rights under any other provision of this Security
Instrument or under applicable law, Borrower hereby irrevocably authorizes Lender at any time
and from time to time to file in any filing office one or more financing statements that (i) indicate
as the collateral covered thereby (A) any or all of the Collateral or (B) all of Borrower's assets or
words of similar import, in each case regardless of whether any particular asset that forms part of
the Collateral falls within the scope of Article 9 of the Uniform Commercial Code, and
(ii) contain such other information as Lender may deem necessary or advisable for the perfection
of its security interests in and liens upon the Collateral or the protection of its rights under this
Security Instrument, including (but not limited to) any information that may be required by part 5
of Article 9 of the Uniform Code for the sufficiency or filing office acceptance of such financing
statements. Borrower agrees to furnish to Lender any such information that Lender may
reasonably require promptly upon request.
Section 5.5. AUTHORIZATION TO FILE FINANCING STATEMENTS; POWER OF ATTORNEY.
Borrower hereby authorizes Lender at any time and from time to time to file any initial financing
statements, amendments thereto and continuation statements as authorized by applicable law, as
applicable to all or part of the Personal Property and as necessary or required in connection
herewith. For purposes of such filings, Borrower agrees to furnish any information requested by
Lender promptly upon request by Lender. Borrower also ratifies its authorization for Lender to
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have filed any like initial financing statements, amendments thereto or continuation statements, if
filed prior to the date of this Security Instrument. Borrower hereby irrevocably constitutes and
appoints Lender and any officer or agent of Lender, with full power of substitution, as its true
and lawful attorneys-in-fact with full irrevocable power and authority in the place and stead of
Borrower or in Borrower’s own name to execute in Borrower’s name any such documents and
otherwise to carry out the purposes of this Section 5, to the extent that Borrower’s authorization
above is not sufficient and Borrower fails or refuses to promptly execute such documents. To
the extent permitted by law, Borrower hereby ratifies all acts said attorneys -in-fact have
lawfully done in the past or shall lawfully do or cause to be done in the future by virtue hereof.
This power of attorney is a power coupled with an interest and shall be irrevocable.
Article 6 – DUE ON SALE/ENCUMBRANCE/SUBORDINATION TO PERMITTED SENIOR
MORTGAGE
Section 6.1. NO SALE/ENCUMBRANCE. Borrower shall not cause or permit a sale,
conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment, or grant of any options
with respect to, or any other transfer or disposition (directly or indirectly, voluntarily or
involuntarily, by operation of law or otherwise, and whether or not for consideration or of
record) of a legal or beneficial interest in the Property or any part thereof, Borrower, any
constituent owner or other holder of a direct or indirect equity interest in Borrower, any
indemnitor or other guarantor of the Loan, any constituent owner or other holder of a direct or
indirect equity interest in such indemnitor or guarantor, any manager or operating lessee of the
Property that is affiliated with Borrower or any constituent owner or other holder of a direct or
indirect equity interest in such manager or such operating lessee, other than a Permitted Senior
Mortgage to a Permitted Senior Mortgagee pursuant to Section 6.2.
Section 6.2. SUBORDINATION TO PERMITTED SENIOR MORTGAGE MADE BY PERMITTED
SENIOR MORTGAGEE. Provided that Borrower gives written notice executed by a responsible
officer or managing member of Borrower to Lender not less than ten (10) days in advance of its
intention to enter into a Permitted Senior Mortgage, which identifies the proposed Permitted
Senior Mortgagee making the loan to be secured by the Permitted Senior Mortgage, and certifies
to Lender that the Permitted Senior Mortgage shall comply in all respects with the requirements
for such Permitted Senior Mortgage stated in Section 4.4, then Borrower may enter into such a
Permitted Senior Mortgage for the benefit of such Permitted Senior Mortgagee. If Borrower
enters into such Permitted Senior Mortgage, this Deed of Trust and the Loan Documents shall
become and be subject and subordinate to any such Permitted Senior Mortgage made by any
such Permitted Senior Mortgagee, as such Permitted Senior Mortgage may be amended from
time to time. This clause shall be self-operative and no further instrument of subordination shall
be required. In confirmation of such subordination, an authorized representative of Lender shall
from time to time, but not more frequently than once during each calendar year, execute within a
commercially reasonable time any commercially reasonable certificate confirming the
subordination of this Deed of Trust and the Loan Documents to such Permitted Senior Mortgage
that such Permitted Senior Mortgagee may request.
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Article 7 – RELEASE OF PROPERTY
Section 7.1. RELEASE OF PROPERTY. Borrower shall not be entitled to a release of any
portion of the Property from the lien of this Security Instrument other than upon payment in full
of the Debt.
Article 8 – DEFAULT
Section 8.1. EVENT OF DEFAULT. The occurrence of any one or more of the following
events shall constitute an “Event of Default”:
(a) if Borrower shall fail to (i) pay when due (A) any sums which by the express terms of
this Security Instrument and the other Loan Documents require immediate or prompt payment
without any grace period or (B) sums which are payable on the Maturity Date, or (ii) pay within
five (5) days when due any monthly installments of principal and interest or any other sums
payable under the Note, this Security Instrument or any of the other Loan Documents;
(b) if any of the Taxes or Other Charges is not paid when the same is due and payable;
(c) if the Policies are not kept in full force and effect or if evidence of the same is not
delivered to Lender as provided in Section 10.1 hereof;
(d) if any of the representations or covenants of Borrower contained herein are breached
or violated;
(e) if any representation or warranty of, or with respect to, Borrower or any member,
general partner, principal or beneficial owner of any of the foregoing, made herein, in the
Environmental Indemnity or in any other guaranty, or in any certificate, report, financial
statement or other instrument or document furnished to Lender shall have been false or
misleading in any material adverse respect when made;
(f) if (i) Borrower shall commence any case, proceeding or other action (A) under any
creditors rights laws seeking to have an order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization, or (B) seeking appointment of a
receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial
part of its assets, or Borrower or any managing member or general partner of Borrower shall
make a general assignment for the benefit of its creditors; (ii) there shall be commenced against
Borrower or any managing member or general partner of Borrower any case, proceeding or other
action of a nature referred to in clause (i) above which (A) results in the entry of an order for
relief or any such adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of sixty (60) days; (iii) there shall be commenced against Borrower any
case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint
or similar process against all or any substantial part of its assets which results in the entry of any
order for any such relief which shall not have been vacated, discharged, or stayed or bonded
pending appeal within sixty (60) days from the entry thereof; (iv) Borrower shall take any action
in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set
forth in clause (i), (ii), or (iii) above; or (v) Borrower shall generally not, or shall be unable to, or
shall admit in writing its inability to, pay its debts as they become due;
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(g) if Borrower shall be in default beyond applicable notice and grace periods under any
other mortgage, deed of trust, deed to secure debt or other security agreement covering any part
of the Property whether it be superior or junior in lien to the Security Instrument;
(h) if the Property becomes subject to any mechanic’s, materialman’s or other lien other
than a lien for any Taxes not then due and payable and the lien shall remain undischarged of
record (by payment, bonding or otherwise) for a period of thirty (30) days;
(i) if any federal tax lien is filed against Borrower or the Property and same is not
discharged of record (by payment, bonding or otherwise) within thirty (30) days after same is
filed;
(j) if Borrower shall fail to deliver to Lender, within twenty (20) days after request by
Lender, a commercially reasonable estoppel certificate setting forth (i) the original principal
amount of the Note, (ii) the unpaid principal amount of the Note, (iii) the rate of interest of the
Note, (iv) the terms of payment and maturity date of the Note, (v) the date installments of
interest and/or principal were last paid, (vi) that, except as provided in such statement, no Event
of Default exists, (vii) that the Note, the Security Instrument and the other Loan Documents are
valid, legal and binding obligations and have not been modified or if modified, giving particulars
of such modification, (viii) whether any offsets or defenses exist against the obligations secured
hereby and, if any are alleged to exist, a detailed description thereof, (ix) listing all leases of the
Property (the “Leases”) and stating that all Leases of the Property are in full force and effect and
have not been modified (or if modified, setting forth all modifications), (x) the date to which the
Rents thereunder have been paid pursuant to the Leases, (xi) whether or not, to the best
knowledge of Borrower, any of the lessees under the Leases are in default under the Leases, and,
if any of the lessees are in default, setting forth the specific nature of all such defaults, (xii) the
amount of security deposits held by Borrower under each Lease and that such amounts are
consistent with the amounts required under each Lease, and (xiii) as to any other matters
reasonably requested by Lender and reasonably related to the Leases, the obligations created and
evidenced hereby and by the Security Instrument or the Property;
(k) if any default occurs under any guaranty or indemnity executed in connection
herewith (including, without limitation, the Environmental Indemnity) and such default
continues after the expiration of applicable grace periods, if any;
(l) if Borrower shall fail to deliver to Lender within thirty (30) days after request by
Lender any financial information requested by Lender pursuant to Section 4.6;
(m) if any representation and/or covenant herein relating to ERISA matters is breached;
(n) if (i) Borrower defaults under the Ground Lease beyond the expiration of applicable
notice and grace periods, if any, thereunder, or (ii) the Ground Lease is canceled, terminated,
surrendered or expires pursuant to its terms, unless in such case Borrower enters into a
replacement thereof acceptable to Lender;
(o) if Borrower shall continue to be in default under any term, covenant or condition of
this Security Instrument or any other Loan Document not specified in subsections (a) through (n)
above or not otherwise specifically specified as an Event of Default herein, (i) for more than ten
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(10) days after notice from Lender, in the case of any default which can be cured by the payment
of a sum of money or (ii) for thirty (30) days after notice from Lender, in the case of any other
default, provided that if such default cannot reasonably be cured within such thirty (30) day
period and Borrower shall have commenced to cure such default within such thirty (30) day
period and thereafter diligently and expeditiously proceeds to cure the same, such thirty (30) day
period shall be extended for so long as it shall require Borrower in the exercise of due diligence
to cure such default, it being agreed that no such extension shall be for a period in excess of
ninety (90) days (subject to further extension by Lender, in Lender’s sole discretion); and/or
(p) if there shall be default under any of the other Loan Documents beyond any
applicable cure periods contained in such Loan Documents, whether as to Borrower or the
Property, or if any other such event shall occur or condition shall exist, if the effect of such event
or condition is to accelerate the maturity of any portion of the Debt or to permit Lender to
accelerate the maturity of all or any portion of the Debt.
Article 9 – RIGHTS AND REMEDIES UPON DEFAULT
Section 9.1. REMEDIES. Upon the occurrence and during the continuance of any Event
of Default, Borrower agrees that Lender may take such action, without notice or demand, as it
deems advisable to protect and enforce its rights against Borrower and in and to the Property,
including, but not limited to, the following actions, each of which may be pursued concurrently
or otherwise, at such time and in such order as Lender may determine, in its sole discretion,
without impairing or otherwise affecting the other rights and remedies of Lender:
(a) declare the entire unpaid Debt to be immediately due and payable;
(b) institute proceedings, judicial or by trustee’s sale, for the complete foreclosure of
this Security Instrument under any applicable provision of law or under the power of sale granted
in this Security Instrument, in which case the Property or any interest therein may be sold for
cash or upon credit in one or more parcels or in several interests or portions and in any order or
manner;
(c) with or without entry, to the extent permitted and pursuant to the procedures
provided by applicable law, institute proceedings for the partial foreclosure of this Security
Instrument for the portion of the Debt then due and payable, subject to the continuing lien and
security interest of this Security Instrument for the balance of the Debt not then due, unimpaired
and without loss of priority;
(d) sell for cash or upon credit the Property or any part thereof and all estate, claim,
demand, right, title and interest of Borrower therein and rights of redemption thereof, pursuant to
power of sale or otherwise, at one or more sales, as an entirety or in parcels, at such time and
place, upon such terms and after such notice thereof as may be required or permitted by law;
(e) institute an action, suit or proceeding in equity for the specific performance of any
covenant, condition or agreement contained herein, in the Note, or in the other Loan Documents,
to the extent permitted under applicable law;
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(f) recover judgment on the Note either before, during or after any proceedings for
the enforcement of this Security Instrument or the other Loan Documents to the extent permitted
under applicable law;
(g) apply for the appointment of a receiver, trustee, liquidator or conservator of the
Property, without notice to Borrower, which notice Borrower expressly waives, and without
regard for the adequacy of the security for the Debt and without regard for the solvency of
Borrower, any guarantor or indemnitor under the Loan or any other Person liable for the payment
of the Debt and whose appointment Borrower expressly consents to take possession of and to
operate the Property and to collect the Rents and to otherwise protect and preserve the Property;
(h) the license granted to Borrower under Section 1.2 hereof shall automatically be
revoked and Lender may enter into or upon the Property, either personally or by its agents,
nominees or attorneys and dispossess Borrower and its agents and servants therefrom, without
liability for trespass, damages or otherwise and exclude Borrower and its agents or servants
wholly therefrom, and take possession of all books, records and accounts relating thereto and
Borrower agrees to surrender possession of the Property and of such books, records and accounts
to Lender upon demand, and thereupon Lender may (i) use, operate, manage, control, insure,
maintain, repair, restore and otherwise deal with all and every part of the Property and conduct
the business thereat; (ii) complete any construction on the Property in such manner and form as
Lender deems advisable; (iii) make alterations, additions, renewals, replacements and
improvements to or on the Property; (iv) exercise all rights and powers of Borrower with respect
to the Property, whether in the name of Borrower or otherwise, including, without limitation, the
right to make, cancel, enforce or modify Leases, obtain and evict tenants, and demand, sue for,
collect and receive all Rents of the Property and every part thereof; (v) require Borrower to pay
monthly in advance to Lender, or any receiver appointed to collect the Rents, the fair and
reasonable rental value for the use and occupation of such part of the Property as may be
occupied by Borrower; (vi) require Borrower to vacate and surrender possession of the Property
to Lender or to such receiver and, in default thereof, Borrower may be evicted by summary
proceedings or otherwise; and (vii) apply the receipts from the Property to the payment of the
Debt, in such order, priority and proportions as Lender shall deem appropriate in its sole
discretion after deducting therefrom all expenses (including reasonable attorneys’ fees) incurred
in connection with the aforesaid operations and all amounts necessary to pay the Taxes, Other
Charges, insurance and other expenses in connection with the Property, as well as just and
reasonable compensation for the services of Lender, its counsel, agents and employees;
(i) apply any sums then deposited or held in escrow or otherwise by or on behalf of
Lender in accordance with the terms of this Security Instrument or any other Loan Document to
the payment of the following items in any order in its sole discretion: (i) Taxes and Other
Charges; (ii) insurance premiums; (iii) interest on the unpaid principal balance of the Note; (iv)
amortization of the unpaid principal balance of the Note; (v) all other sums payable pursuant to
the Note, this Security Instrument and the other Loan Documents, including without limitation
advances made by Lender pursuant to the terms of this Security Instrument;
(j) surrender the insurance policies maintained pursuant to this Security Instrument,
collect the unearned insurance premiums for such insurance policies and apply such sums as a
credit on the Debt in such priority and proportion as Lender in its discretion shall deem proper,
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and in connection therewith, Borrower hereby appoints Lender as agent and attorney-in-fact
(which is coupled with an interest and is therefore irrevocable) for Borrower to collect such
insurance premiums;
(k) apply the undisbursed balance of any deposit made by Borrower with Lender in
connection with the restoration of the Property after a casualty thereto or condemnation thereof,
together with interest thereon, to the payment of the Debt in such order, priority and proportions
as Lender shall deem to be appropriate in its discretion; and/or
(l) pursue such other remedies as Lender may have under Applicable Law.
In the event of a sale, by foreclosure, power of sale or otherwise, of less than all of Property, this
Security Instrument shall continue as a lien and security interest on the remaining portion of the
Property unimpaired and without loss of priority.
Section 9.2. APPLICATION OF PROCEEDS. The purchase money, proceeds and avails of
any disposition of the Property, and or any part thereof, or any other sums collected by Lender
pursuant to the Note, this Security Instrument or the other Loan Documents, may be applied by
Lender to the payment of the Debt in such priority and proportions as Lender in its discretion
shall deem proper.
Section 9.3. RIGHT TO CURE DEFAULTS. Upon the occurrence and during the
continuance of any Event of Default, Lender may, but without any obligation to do so and
without notice to or demand on Borrower and without releasing Borrower from any obligation
hereunder, make any payment or do any act required of Borrower hereunder in such manner and
to such extent as Lender may deem necessary to protect the security hereof. Lender is authorized
to enter upon the Property for such purposes, or appear in, defend, or bring any action or
proceeding to protect its interest in the Property or to foreclose this Security Instrument or collect
the Debt, and the cost and expense thereof (including reasonable attorneys ’ fees to the extent
permitted by law), with interest as provided in this Section, shall constitute a portion of the Debt
and shall be due and payable to Lender upon demand. All such costs and expenses incurred by
Lender in remedying such Event of Default or such failed payment or act or in appearing in,
defending, or bringing any such action or proceeding shall bear interest at any default rate
specified in the Note, if any (the “Default Rate”), for the period after notice from Lender that
such cost or expense was incurred to the date of payment to Lender. All such costs and expenses
incurred by Lender together with interest thereon calculated at the Default Rate shall be deemed
to constitute a portion of the Debt and be secured by this Security Instrument and the other Loan
Documents and shall be immediately due and payable upon demand by Lender therefor.
Section 9.4. ACTIONS AND PROCEEDINGS. Lender has the right to appear in and defend
any action or proceeding brought with respect to the Property and to bring any action or
proceeding, in the name and on behalf of Borrower, which Lender, in its discretion, decides
should be brought to protect its interest in the Property.
Section 9.5. RECOVERY OF SUMS REQUIRED TO BE PAID. Lender shall have the right
from time to time to take action to recover any sum or sums which constitute a part of the Debt
as the same become due, without regard to whether or not the balance of the Debt shall be due,
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and without prejudice to the right of Lender thereafter to bring an action of foreclosure, or any
other action, for a default or defaults by Borrower exist ing at the time such earlier action was
commenced.
Section 9.6. OTHER RIGHTS, ETC. (a) The failure of Lender to insist upon strict
performance of any term hereof shall not be deemed to be a waiver of any term of this Security
Instrument. Borrower shall not be relieved of Borrower’s obligations hereunder by reason of
(i) the failure of Lender to comply with any request of Borrower or any guarantor or indemnitor
with respect to the Loan to take any action to foreclose this Security Instrument or otherwise
enforce any of the provisions hereof or of the Note or the other Loan Documents, (ii) the release,
regardless of consideration, of the whole or any part of the Property, or of any Person liable for
the Debt or any portion thereof, or (iii) any agreement or stipulation by Lender extending the
time of payment or otherwise modifying or supplementing the terms of the Note, this Security
Instrument or the other Loan Documents. It is agreed that the risk of loss or damage to the
Property is on Borrower, and Lender shall have no liability whatsoever for decline in the value of
the Property, for failure to maintain the insurance policies required to be maintained pursuant to
this Security Instrument, or for failure to determine whether insurance in force is adequate as to
the amount of risks insured. Possession by Lender shall not be deemed an election of judicial
relief if any such possession is requested or obtained with respect to any Property or collateral
not in Lender’s possession.
(b) Lender may resort for the payment of the Debt to any other security held by
Lender in such order and manner as Lender, in its discretion, may elect. Lender may take action
to recover the Debt, or any portion thereof, or to enforce any covenant hereof without prejudice
to the right of Lender thereafter to foreclose this Security Instrument. The rights of Lender under
this Security Instrument shall be separate, distinct and cumulative and none shall be given effect
to the exclusion of the others. No act of Lender shall be construed as an election to proceed
under any one provision herein to the exclusion of any other provision. Lender shall be limited
exclusively to the rights and remedies herein stated but shall be entitled to every right and
remedy now or hereafter afforded at law or in equity.
Section 9.7. RIGHT TO RELEASE ANY PORTION OF THE PROPERTY. Lender may release
any portion of the Property for such consideration as Lender may require without, as to the
remainder of the Property, in any way impairing or affecting the lien or priority of this Security
Instrument, or improving the position of any subordinate lienholder with respect thereto, except
to the extent that the obligations hereunder shall have been reduced by the actual monetary
consideration, if any, received by Lender for such release, and may accept by assignment, pledge
or otherwise any other property in place thereof as Lender may require without being
accountable for so doing to any other lienholder. This Security Instrument shall continue as a
lien and security interest in the remaining portion of the Property.
Section 9.8. RIGHT OF ENTRY. Upon reasonable notice to Borrower, Lender and its
agents shall have the right to enter and inspect the Property at all reasonable times.
Section 9.9. BANKRUPTCY. Upon the occurrence and during the continuance of
an Event of Default, Lender shall have the right to proceed in its own name or in the name of
Borrower in respect of any claim, suit, action or proceeding relating to the rejection of any
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Lease, including, without limitation, the right to file and prosecute, to the exclusion of Borrower,
any proofs of claim, complaints, motions, applications, notices and other documents, in any case
in respect of the lessee under such Lease under the Bankruptcy Code (defined below).If there
shall be filed by or against Borrower a petition under the Bankruptcy Code and Borrower, as
lessor under any Lease, shall determine to reject such Lease pursuant to Section 365(a) of the
Bankruptcy Code, then Borrower shall give Lender not less than ten (10) days’ prior notice of
the date on which Borrower shall apply to the bankruptcy court for authority to reject t he Lease.
Lender shall have the right, but not the obligation, to serve upon Borrower within such ten -day
period a notice stating that (i) Lender demands that Borrower assume and assign the Lease to
Lender pursuant to Section 365 of the Bankruptcy Code and (ii) Lender covenants to cure or
provide adequate assurance of future performance under the Lease. If Lender serves upon
Borrower the notice described in the preceding sentence, Borrower shall not seek to reject the
Lease and shall comply with the demand provided for in clause (i) of the preceding sentence
within thirty (30) days after the notice shall have been given, subject to the performance by
Lender of the covenant provided for in clause (ii) of the preceding sentence.
Section 9.10. SUBROGATION. If any or all of the proceeds of the Note have been used to
extinguish, extend or renew any indebtedness heretofore existing against the Property, then, to
the extent of the funds so used, Lender shall be subrogated to all of the rights, claims, liens,
titles, and interests existing against the Property heretofore held by, or in favor of, the holder of
such indebtedness and such former rights, claims, liens, titles, and interests, if any, are not
waived but rather are continued in full force and effect in favor of Lender and are merged with
the lien and security interest created herein as cumulative security for the repayment of the Debt,
the performance and discharge of the Other Obligations.
Article 10
INSURANCE; CASUALTY; CONDEMNATION; RESTORATION
Section 10.1. INSURANCE.
(a) Borrower shall obtain and maintain, or cause to be obtained and maintained,
insurance policies for Borrower and the Property providing at least the following coverages:
1. insurance with respect to the Improvements and the Personal Property
insuring against any peril now or hereafter included within the “Special” or
“All Risks” Causes of Loss form (which shall not exclude fire, lightning,
windstorm, hail, explosion, riot, civil commotion, aircraft, vehicles and
smoke), in each case (A) in an amount equal to 100% of the “Full
Replacement Cost,” which for purposes of this Security Instrument shall mean
actual replacement value exclusive of costs of excavations, foundations,
underground utilities and footings waiving of depreciation; (B) to be written
on a no coinsurance form or containing an agreed amount endorsement with
respect to the Improvements and Personal Property waiving all co-insurance
provisions; (C) providing for no deductible in excess of [$25,000], excluding
windstorm and earthquake insurance which may have a deductible of 5% of
the total insurable value; (D) at all times insuring against at least those hazards
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that are commonly insured against under a “special causes of loss” form of
policy, as the same shall exist on the date hereof, and together with any
increase in the scope of coverage provided under such form after the date
hereof; and (E) providing Law & Ordinance coverage, including Coverage for
Loss to the Undamaged Portion of the Building, Demolition Costs and
Increased Cost of Construction in amounts acceptable to Lender. The Full
Replacement Cost shall be re-determined from time to time (but not more
frequently than once in any twelve (12) calendar months) at the request of
Lender by an appraiser or contractor designated and paid by Borrower and
approved by Lender, or by an engineer or appraiser in the regular employ of
the insurer. After the first appraisal, additional appraisals may be based on
construction cost indices customarily employed in the trade. No omission on
the part of Lender to request any such ascertainment shall relieve Borrower of
any of its obligations under this Section;
2. commercial general liability insurance against all claims for personal injury,
bodily injury, death or property damage occurring upon, in or about the
Property, including “Dram Shop” or other liquor liability coverage if the
Borrower sells or distributes alcoholic beverages from the Property, such
insurance (A) to be on the so-called “occurrence” form with a general
aggregate limit of not less than $[2,000,000] and a per occurrence limit of not
less than $[1,000,000]; (B) to continue at not less than the aforesaid limit until
required to be changed by Lender in writing by reason of changed economic
conditions making such protection inadequate; and (C) to cover at least the
following hazards: (1) premises and operations; (2) products and completed
operations on an “if any” basis; (3) independent contractors; (4) contractual
liability for all insured contracts; and (5) contractual liability covering the
indemnities contained in Articles 12 and 13 hereof to the extent the same is
available
3. at all times during which structural construction, repairs or alterations are
being made with respect to the Improvements, and only if the current property
and liability coverage forms do not otherwise apply, (A) commercial general
liability and umbrella liability insurance covering claims related to the
construction, repairs or alterations being made at the Property which are not
covered by or under the terms or provisions of the commercial general
liability and umbrella liability insurance policies required herein; and (B) the
insurance provided for in Section 10.1(a)(i) written in a so-called builder’s
risk completed value form (1) on a non-reporting basis, (2) against all risks
insured against pursuant to Sections 10.1(a)(1), (2) and (vi) through (viii), as
applicable, (3) including permission to occupy the Property, and (4) written on
a no coinsurance form or containing an agreed amount endorsement waiving
co-insurance provisions;
4. workers’ compensation, subject to the statutory limits of the state in which the
Property is located, and employer’s liability insurance with a limit of at least
$1,000,000 per accident and per disease per employee, and $1,000,000 for
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disease aggregate in respect of any work or operations on or about the
Property, or in connection with the Property or its operation (if applicable);
5. equipment breakdown/boiler and machinery insurance covering all
mechanical and electrical equipment in such amounts as shall be reasonably
be required by Lender, on terms and in amounts consistent with the
commercial property insurance policy required under Section 10.1(a)(1) above
or in such other amount as shall be reasonably required by Lender (if
applicable to the Property);
6. if any portion of the Improvements is at any time located in an area identified
by the Secretary of Housing and Urban Development or any successor thereto
as an area having special flood hazards pursuant to the National Flood
Insurance Act of 1968, the Flood Disaster Protection Act of 1973 or the
National Flood Insurance Reform Act of 1994, as each may be amended, or
any successor law (the “Flood Insurance Acts”), flood hazard insurance in an
amount equal to “Full Replacement Cost”, which shall include, without
limitation, the maximum limit of coverage available for the Property under the
Flood Insurance Acts; provided, that, the insurance provided pursuant to this
clause (vii) shall be on terms consistent with the “All Risk” insurance policy
required in Section 10.1(a)(1) above;
7. earthquake insurance, if required, in amounts equal to one and one-half times
(1.5x) the probable maximum loss or scenario expected loss of the Property as
determined by Lender in its sole discretion and in form and substance
satisfactory to Lender, provided that the insurance pursuant to this subsection
shall be on terms consistent with the all risk insurance policy required under
Section 10.1(a)(1);
8. umbrella liability insurance in an amount not less than $[____________] per
occurrence on terms consistent with the commercial general liability insurance
policy required under subsection (ii) above;
9. such other insurance and in such amounts as Lender from time to time may
reasonably request against such other insurable hazards which at the time are
commonly insured against for property similar to the Property located in or
around the region in which the Property is located.
(b) All insurance provided for in Section 10.1(a) hereof shall be obtained under valid
and enforceable policies (the “Policies” or in the singular, the “Policy”), in such forms and, from
time to time after the date hereof, in such amounts as may be satisfactory to Lender, issued by
financially sound and responsible insurance companies authorized to do business in the state in
which the Property is located and approved by Lender. The insurance companies must have a
financial strength rating of “A” or better and a financial size category of “VIII” or better by A.M.
Best Company, Inc., or a rating of “A-” (or its equivalent) or better by S&P or Moody’s (each
such insurer shall be referred to below as a “Qualified Insurer”). Not less than fifteen (15) days
prior to the expiration dates of the Policies theretofore furnished to Lender pursuant to
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Section 10.1(a), Borrower shall deliver carrier-issued binders and certificates of the renewal
Policies, and thereafter, complete copies of the Policies when issued. Upon renewal of the
Policies, Borrower shall deliver evidence satisfactory to Lender of payment of the premiums due
thereunder (the “Insurance Premiums”).
(c) Except to the extent required pursuant to Section 10.1(a) hereof, Borrower shall not
obtain (or permit to be obtained) (i) any umbrella or blanket liability or casualty Policy unless, in
each case, such Policy is approved in advance in writing by Lender and Lender’s interest is
included therein as provided in this Security Instrument and such Policy is issued by a Qualified
Insurer, or (ii) separate insurance concurrent in form or contributing in the event of loss with that
required in Section 10.1(a) to be furnished by, or which may be reasonably required to be
furnished by, Borrower. In the event Borrower obtains (or causes to be obtained) separate
insurance or an umbrella or a blanket Policy, Borrower shall notify Lender of the same and shall
cause complete copies of each Policy to be delivered as required in Section 10.1(a). Any
umbrella or blanket Policy remains subject to review and approval by Lender based on the
schedule of locations and values. Notwithstanding Lender’s approval of any umbrella or blanket
liability or casualty Policy hereunder, Lender reserves the right, in its sole discretion, to require
Borrower to obtain a separate Policy in compliance with this Section 10.1.
(d) All Policies of insurance provided for or contemplated by Section 10.1(a) shall name
Borrower as the insured and, in the case of liability policies, shall name Lender as additional
insured, as their respective interests may appear, and in the case of property coverages, including
but not limited to property damage, rent loss, business interruption, terrorism, boiler and
machinery, earthquake and flood insurance, shall name Lender as mortgagee/lender’s loss
payable by a standard noncontributing mortgagee clause in favor of Lender providing that the
loss thereunder shall be payable to Lender.
(e) All Policies of insurance provided for in Section 10.1(a) shall provide that:
1. no (A) act, failure to act, violation of warranties, declarations or
conditions, or negligence by Borrower, or anyone acting for Borrower, or by any tenant
under any Lease or other occupant, (B) occupancy or use of the Property for purposes
more hazardous than those permitted, (C) foreclosure or similar action by Lender, or
(D) failure to comply with the provisions of any Policy which might otherwise result in a
forfeiture of the insurance or any part thereof, shall in any way affect the validity or
enforceability of the insurance insofar as Lender is concerned;
2. the Policy shall not be cancelled without at least 30 days’ written notice to
Lender;
3. each Policy shall provide that (A) the issuers thereof shall give written
notice to Lender if the Policy has not been renewed ten (10) days prior to its expiration
and (B) Lender is permitted to make payments to effect the continuation of such Policy
upon notice of cancellation due to non-payment of Insurance Premiums; and
4. Lender shall not be liable for any Insurance Premiums thereon or subject
to any assessments thereunder.
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Additionally, Borrower further covenants and agrees to promptly send to Lender any
notices of non-renewal or cancellation it receives from the insurer with respect to the
liability policies referred to in Section 10.1.
(f) Borrower shall furnish to Lender, on or before thirty (30) days after the close of each
of Borrower’s fiscal years, a statement certified by Borrower or a general partner of Borrower of
the amounts of insurance maintained in compliance herewith, of the risks covered by such
insurance and of the insurance company or companies which carry such insurance and, if
requested by Lender, verification of the adequacy of such insurance by an independent insurance
broker or appraiser acceptable to Lender.
(g) WARNING.
IF BORROWER FAILS TO PROVIDE LENDER WITH EVIDENCE OF THE
INSURANCE COVERAGE REQUIRED BY THIS SECURITY INSTRUMENT,
INCLUDING, WITHOUT LIMITATION, FLOOD INSURANCE, LENDER MAY, IN ITS
SOLE DISCRETION (AND WITHOUT PRIOR NOTICE TO BORROWER IF THERE
IS A LAPSE IN COVERAGE), PURCHASE INSURANCE AT BORROWER’S
EXPENSE TO PROTECT THE PROPERTY; SUCH INSURANCE MAY BE PLACED
BY LENDER DURING ANY STATUTORY OR OTHER REQUIRED NOTICE PERIOD.
BORROWER MAY LATER CANCEL THIS COVERAGE BY PROVIDING EVIDENCE
TO LENDER THAT BORROWER HAS OBTAINED THE APPLICABLE INSURANCE
COVERAGE ELSEWHERE. LENDER SHALL HAVE NO DUTY TO PLACE SUCH
INSURANCE, LENDER SHALL HAVE NO LIABILITY WITH RESPECT TO THE
TERMS OF SUCH INSURANCE OR THE CREDIT OF THE INSURER IF LENDER
ELECTS TO PLACE SUCH INSURANCE, AND BORROWER IS NOT ENTITLED TO
RELY ON THE EXISTENCE OF ANY LENDER PLACED COVERAGE EVEN IF
BORROWER HAS BEEN NOTIFIED THAT LENDER HAS ELECTED TO PLACE
SUCH COVERAGE.
BORROWER IS RESPONSIBLE FOR THE COST OF ANY INSURANCE PU RCHASED
BY LENDER, INCLUDING INSURANCE PURCHASED DURING ANY NOTICE
PERIOD. ALL EXPENSES INCURRED BY LENDER IN OBTAINING SUCH
INSURANCE AND KEEPING IT IN EFFECT SHALL BE PAID BY BORROWER TO
LENDER UPON DEMAND AND UNTIL PAID SHALL BE SECURED BY THE
SECURITY INSTRUMENT AND SHALL BEAR INTEREST AT THE DEFAULT RATE.
AT LENDER’S OPTION, THE COST OF THIS INSURANCE MAY BE ADDED TO
THE LOAN BALANCE. IF THE COST IS ADDED TO THE LOAN BALANCE, THE
INTEREST RATE ON THE UNDERLYING LOAN WILL APPLY TO THIS ADDED
AMOUNT. THE EFFECTIVE DATE OF THE LENDER PURCHASED COVERAGE
MAY BE THE DATE THE PRIOR COVERAGE LAPSED OR THE DATE BORROWER
FAILED TO PROVIDE PROOF OF COVERAGE TO LENDER.
THE COVERAGE PURCHASED BY LENDER MAY BE CONSIDERABLY MORE
EXPENSIVE THAN INSURANCE BORROWER CAN OTHERWISE OBTAIN ON ITS
OWN AND MAY NOT SATISFY ANY NEED FOR PROPERTY DAMAGE COVERAGE
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OR ANY MANDATORY LIABILITY INSURANCE REQUIREMENTS IMPOSED BY
APPLICABLE LAW.
(h) In the event of a foreclosure of the Security Instrument or other transfer of title to the
Property in extinguishment in whole or in part of the Debt, all right, title and interest of
Borrower in and to the Policies then in force concerning the Property and all proceeds payable
thereunder shall thereupon vest exclusively in Lender or the purchaser at such foreclosure or
other transferee in the event of such other transfer of title.
(i) As an alternative to the Policies required to be maintained pursuant to the preceding
provisions of this Section 10.1, Borrower will not be in default under this Section 10.1 if
Borrower maintains (or causes to be maintained) Policies which (i) have coverages, deductibles
and/or other related provisions other than those specified above and/or (ii) are provided by
insurance companies not meeting the credit ratings requirements set forth above (any such
Policy, a “Non-Conforming Policy”), if such Non-Conforming Policies satisfy the insurance
requirements of any Permitted Senior Mortgagee who has made and holds a Permitted Senior
Mortgage secured by the Land and provided that, prior to obtaining such Non-Conforming
Policies (or permitting such Non-Conforming Policies to be obtained), Borrower shall have
given Lender prior written notice thereof.
(j) The property, loss of rents/business interruption, general liability and umbrella
liability insurance policies required in this Section 10.1 shall not exclude Terrorism Coverage
(defined below) (such insurance policies, the “Applicable Policies”). Such Terrorism Coverage
shall comply with each of the applicable requirements for Policies set forth above (including,
without limitation, those relating to deductibles); provided, that, Lender, at Lender ’s option, may
reasonably require Borrower to obtain or cause to be obtained the Terrorism Coverage with
higher deductibles than set forth above. As used above, “Terrorism Coverage” shall mean
insurance for acts of terror or similar acts of sabotage; provided, that, for so long as the
Terrorism Risk Insurance Act of 2002, as extended and modified by the Terrorism Risk
Insurance Program Authorization Act of 2007 (as the same may be further modified, amended,
or extended, “TRIPRA”) (i) remains in full force and effect and (ii) continues to cover both
foreign and domestic acts of terror, the provisions of TRIPRA shall determine what is deemed to
be included within this definition of “Terrorism Coverage.”
Section 10.2. CASUALTY. If the Property shall be damaged or destroyed, in whole or in
part, by fire or other casualty (a “Casualty”), Borrower shall give prompt notice of such damage
to Lender and shall promptly commence and diligently prosecute the completion of the repair
and restoration of the Property as nearly as possible to the condition the Property was in
immediately prior to such Casualty, with such alterations as may be reasonably approved by
Lender (a “Restoration”). Borrower shall pay all costs of such Restoration whether or not such
costs are covered by insurance. Lender may, but shall not be obligated to make proof of loss if
not made promptly by Borrower.
Section 10.3. CONDEMNATION. Borrower shall promptly give Lender notice of the actual
or threatened commencement of any proceeding for the Condemnation of the Property of which
Borrower has knowledge and shall deliver to Lender copies of any and all papers served in
connection with such proceedings. Lender may participate in any such proceedings, and
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Borrower shall from time to time deliver to Lender all instruments requested by it to permit such
participation. Borrower shall, at its expense, diligently prosecute any such proceedings, and
shall consult with Lender, its attorneys and experts, and cooperate with them in the carrying on
or defense of any such proceedings. Notwithstanding any taking by any public or quasi-public
authority through Condemnation or otherwise (including but not limited to any transfer made in
lieu of or in anticipation of the exercise of such taking), Borrower shall continue to pay the Debt
at the time and in the manner provided for its payment in the Note and in this Security
Instrument and the Debt shall not be reduced until any Award shall have been actually received
and applied by Lender, after the deduction of expenses of collection, to the reduction or
discharge of the Debt. Lender shall not be limited to the interest paid on the Award by the
condemning authority but shall be entitled to receive out of the Award interest at the rate or rates
provided herein or in the Note. If the Property or any portion thereof is taken by a cond emning
authority, Borrower shall promptly commence and diligently prosecute the Restoration of the
Property and otherwise comply with the provisions of Section 10.3. If the Property is sold,
through foreclosure or otherwise, prior to the receipt by Lender of the Award, Lender shall have
the right, whether or not a deficiency judgment on the Note shall have been sought, recovered or
denied, to receive the Award, or a portion thereof sufficient to pay the Debt.
Section 10.4. RESTORATION. The following provisions shall apply in connection with
the Restoration of the Property:
(a) If the Net Proceeds shall be less than the Restoration Threshold and the costs of
completing the Restoration shall be less than the Restoration Threshold, the Net Proceeds will be
disbursed by Lender to Borrower upon receipt, provided that all of the conditions set forth in
Section 10.4 are met and Borrower delivers to Lender a written undertaking to expeditiously
commence and to satisfactorily complete with due diligence the Restoration in accordance with
the terms of this Security Instrument.
(b) If the Net Proceeds are equal to or greater than the Restoration Threshold or the costs
of completing the Restoration are equal to or greater than the Restoration Threshold, Lender
shall make the Net Proceeds available for the Restoration in accordance with the prov isions of
this Section 10.4.
(c) The Net Proceeds shall be made available for Restoration provided that each of the
following conditions are met:
a) no Event of Default shall have occurred and be continuing;
(1) (aa) in the event the Net Proceeds are insurance proceeds,
less than thirty percent (30%) of each of (i) the fair market value of
the Property as reasonably determined by Lender, and (ii) the
rentable area of the Property has been damaged, destroyed or
rendered unusable as a result of a Casualty or (bb) in the event the
Net Proceeds are condemnation proceeds, less than ten percent
(10%) of each of (i) the fair market value of the Property as
reasonably determined by Lender and (ii) the rentable area of the
Property is taken, such land is located along the perimeter or
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periphery of the Property, no portion of the Improvements is
located on such land and such taking does not materially impair the
existing access to the Property;
(2) Borrower shall commence the Restoration as soon as
reasonably practicable (but in no event later than thirty (30) days
after the issuance of a building permit with respect thereto) and
shall diligently pursue the same to satisfactory completion in
compliance with all Applicable Laws, in all material respects,
including, without limitation, all applicable Environmental Laws;
(3) Lender shall be satisfied that any operating deficits which
will be incurred with respect to the Property as a result of the
occurrence of any such fire or other casualty or taking will be
covered out of (1) the insurance coverage referred to in
Section 10.1(a) above, or (2) by other funds of Borrower;
(4) Lender shall be satisfied that, upon the completion of the
Restoration, the fair market value and cash flow of the Property
will not be less than the fair market value and cash flow of the
Property as the same existed immediately prior to the applicable
Casualty or Condemnation;
(5) Lender shall be satisfied that the Restoration will be
completed on or before the earliest to occur of (1) six (6) months
prior to the Maturity Date, (2) the expiration of the insurance
coverage referred to in Section 10.1(a) above, or (3) such time as
may be required under applicable zoning law, ordinance, rule or
regulation in order to repair and restore the Property to the
condition it was in immediately prior to such fire or other casualty
or taking;
(6) the Property and the use thereof after the Restoration will
be in compliance with and permitted under the Ground Lease and
all Applicable Law;
(7) the Ground Lease will remain in full force and effect during
and after the Restoration and will not be subject to termination as a
result of the applicable Casualty, Condemnation and/or
Restoration; and
(8) the Restoration shall be done and completed in an
expeditious and diligent fashion and in compliance with the
Ground Lease and all Applicable Law.
(d) If there is then no first mortgage of a lender who is not an Affiliate of Borrower that
is superior to the lien of this Security Instrument, Lender may elect to have the Net Proceeds
shall be held by Lender and, until disbursed in accordance with the provisions of this Section,
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shall constitute additional security for the Debt and other obligations under this Security
Instrument, the Note and the other Loan Documents. The Net Proceeds (other than the Rent
Loss Proceeds) shall be disbursed by Lender to, or as directed by, Borrower from time to time
during the course of the Restoration, upon receipt of evidence satisfactory to Lender that (A) all
materials installed and work and labor performed (except to the extent that they are to be paid for
out of the requested disbursement) in connection with the related Restoration item have been
paid for in full, and (B) there exist no notices of pendency, stop orders, mechanic’s or
materialman’s liens or notices of intention to file same, or any other liens or encumbrances of
any nature whatsoever on the Property which have not either been fully bonded to the
satisfaction of Lender and discharged of record or in the alternative fully insured to the
satisfaction of Lender by the title company issuing the Title Insurance Policy.
(e) If there is then no first mortgage of a lender who is not an Affiliate of Borrower that
is superior to the lien of this Security Instrument, all plans and specifications required in
connection with the Restoration shall be subject to prior review and acceptance in all respects by
Lender and by an independent consulting engineer selected by Lender (the “Casualty
Consultant”). Lender shall have the use of the plans and specifications and all permits, licenses
and approvals required or obtained in connection with the Restoration. The identity of the
contractors, subcontractors and materialmen engaged in the Restoration shall be subject to prior
review and acceptance by Lender and the Casualty Consultant. All costs and expenses incurred
by Lender in connection with making the Net Proceeds available for the Restoration including,
without limitation, reasonable counsel fees and disbursements and the Casualty Consultant’s
fees, shall be paid by Borrower. Borrower shall have the right to settle all claims under the
Policies jointly with Lender, provided that (a) no Event of Default exists, (b) Borrower promptly
and with commercially reasonable diligence negotiates a settlement of any such claims and
(c) the insurer with respect to the Policy under which such claim is brought has not raised any act
of the insured as a defense to the payment of such claim. If an Event of Default exists, Lender
shall, at its election, have the exclusive right to settle or adjust any claims made under the
Policies in the event of a Casualty.
(f) If Lender elects to hold any proceeds, in no event shall Lender be obligated to make
disbursements of the Net Proceeds in excess of an amount equal to the costs actually incurred
from time to time for work in place as part of the Restoration, as certified by the Casualty
Consultant, minus the Restoration Retainage. The term “Restoration Retainage” as used in this
Section shall mean an amount equal to 10% of the costs actually incurred for work in place as
part of the Restoration, as certified by the Casualty Consultant, until such time as the Casualty
Consultant certifies to Lender that Net Proceeds representing 50% of the required Restoration
have been disbursed. There shall be no Restoration Retainage with respect to costs actually
incurred by Borrower for work in place in completing the last 50% of the required Restoration.
The Restoration Retainage shall in no event, and notwithstanding anything to the contrary set
forth above in this Section, be less than the amount actually held back by Borrower from
contractors, subcontractors and materialmen engaged in the Restoration. The Restoration
Retainage shall not be released until the Casualty Consultant certifies to Lender that the
Restoration has been completed in accordance with the provisions of this Section and that all
approvals necessary for the re-occupancy and use of the Property have been obtained from all
appropriate governmental and quasi-governmental authorities, and Lender receives evidence
satisfactory to Lender that the costs of the Restoration have been paid in full or will be paid in
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full out of the Restoration Retainage, provided, however, that Lender will release the portion of
the Restoration Retainage being held with respect to any contractor, subcontractor or
materialman engaged in the Restoration as of the date upon which the Casualty Consultant
certifies to Lender that the contractor, subcontractor or materialman has satisfactorily completed
all work and has supplied all materials in accordance with the provisions of the contractor’s,
subcontractor’s or materialman’s contract, and the contractor, subcontractor or materialman
delivers the lien waivers and evidence of payment in full of all sums due to the contractor,
subcontractor or materialman as may be reasonably requested by Lender or by the title company
insuring the lien of the Security Instrument. If required by Lender, the release of any such
portion of the Restoration Retainage shall be approved by the surety company, if any, which has
issued a payment or performance bond with respect to the contractor, subcontractor or
materialman.
(g) If Lender elects to hold any proceeds, Lender shall not be obligated to make
disbursements of the Net Proceeds more frequently than once every calendar month.
(h) If Lender elects to hold any proceeds, at any time the Net Proceeds or the
undisbursed balance thereof shall not, in the reasonable opinion of Lender in consultation with
the Casualty Consultant, be sufficient to pay in full the balance of the costs which are estimated
by the Casualty Consultant to be incurred in connection with the completion of the Restoration,
Borrower shall deposit the deficiency (the “Net Proceeds Deficiency”) with Lender before any
further disbursement of the Net Proceeds shall be made. The Net Proceeds Deficiency deposited
with Lender shall be held by Lender and shall be disbursed for costs actually incurred in
connection with the Restoration on the same conditions applicable to the disbursement of the Net
Proceeds, and until so disbursed pursuant to this Section shall constitute additional security for
the Debt and other obligations under this Security Instrument, the Note and the other Loan
Documents.
(i) If Lender elects to hold any proceeds, the excess, if any, of the Net Proceeds and the
remaining balance, if any, of the Net Proceeds Deficiency deposited with Lender after the
Casualty Consultant certifies to Lender that the Restoration has been completed in accordance
with the provisions of this Section, and the receipt by Lender of evidence satisfactory to Lender
that all costs incurred in connection with the Restoration have been paid in full, shall be remitted
by Lender to Borrower, provided no Event of Default shall have occurred and shall be continuing
under this Security Instrument, the Note or any of the other Loan Documents.
(j) If Lender elects to hold any proceeds, all Net Proceeds not required (i) to be made
available for the Restoration or (ii) to be returned to Borrower as excess Net Proceeds
hereunder shall be retained and applied by Lender toward the payment of the Debt whether or
not then due and payable in such order, priority and proportions as Lender in its discretion shall
deem proper. If Lender shall receive and retain Net Proceeds, the lien of the Security Instrument
shall be reduced only by the amount thereof received and retained by Lender and actually
applied by Lender in reduction of the Debt.
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Article 11 -- Environmental HAZARDS
Section 11.1. ENVIRONMENTAL COVENANTS. Borrower has provided representations,
warranties and covenants regarding environmental matters set forth in the Environmental
Indemnity, all of which representations, warranties and covenants are incorporated herein as if
set forth in full herein. Borrower shall comply with the aforesaid covenants regarding
environmental matters.
Article 12 – Waivers
Section 12.1. MARSHALLING AND OTHER MATTERS. Borrower hereby waives, to the
extent permitted by law, the benefit of all Applicable Law now or hereafter in force regarding
appraisement, valuation, stay, extension, reinstatement and redemption and all rights of
marshalling in the event of any sale hereunder of the Property or any part thereof or any interest
therein. Further, Borrower hereby expressly waives any and all rights of redemption from sale
under any order or decree of foreclosure of this Security Instrument on behalf of Borrower, and
on behalf of each and every Person acquiring any interest in or title to the Property subsequent to
the date of this Security Instrument and on behalf of all Persons to the extent permitted by
Applicable Law.
Section 12.2. WAIVER OF NOTICE. Borrower shall not be entitled to any notices of any
nature whatsoever from Lender except with respect to matters for which this Security Instrument
specifically and expressly provides for the giving of notice by Lender to Borrower and except
with respect to matters for which Borrower is not permitted by Applicable Law to waive its right
to receive notice, and Borrower hereby expressly waives the right to receive any notice from
Lender with respect to any matter for which this Security Instrument does not specifically and
expressly provide for the giving of notice by Lender to Borrower.
Section 12.3. SOLE DISCRETION OF LENDER. Whenever pursuant to this Security
Instrument, Lender exercises any right given to it to approve or disapprove, or any arrangement
or term is to be satisfactory to Lender, the decision of Lender to approve or disapprove or to
decide whether arrangements or terms are satisfactory or not satisfactory shall (except as is
otherwise specifically herein provided) be in the sole discretion of Lender and shall be final and
conclusive.
Section 12.4. WAIVER OF TRIAL BY JURY. BORROWER AND LENDER EACH
HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF
RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE
EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH
REGARD TO THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR
OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF
RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY
BORROWER AND LENDER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY
EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY
JURY WOULD OTHERWISE ACCRUE. EACH OF LENDER AND BORROWER IS
HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY
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PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY BORROWER
AND LENDER.
Section 12.5. JUDICIAL REFERENCE.
(a) This Section 12.5 concerns the resolution of any controversies or claims between or
among the Borrower, the Lender and any other party to the Loan Documents, whether arising in
contract, tort or by statute, including controversies or claims that arise out of or relate to any of
the Loan Documents (collectively, “Disputes”).
(b) To the extent permitted by law, all Disputes shall be resolved in court by a judge
without a jury, except that any Disputes which are brought in any state court in California shall
be determined by judicial reference as described below.
(c) Any Dispute which is brought in state court in California shall be resolved by a
general reference to a referee as provided in California Code of Civil Procedure (“CCP”) Section
638. The referee shall be a retired judge or justice. The referee shall be selected by mutual
written agreement of the parties; provided, however, that if the parties do not select a referee
within fifteen (15) days after any party invokes this provision, the referee shall be selected by the
Presiding Judge of the Court (or his or her representative) as provided in CCP Section 638 and
the following related sections. The referee shall determine all issues in accordance with existing
California law and the California rules of evidence and civil procedure. The referee shall be
empowered to enter equitable as well as legal relief, provide all temporary or provisional
remedies, enter equitable orders that will be binding on the parties and rule on any motion which
would be authorized in a trial, including motions for summary judgment or summary
adjudication. The award that results from the decision of the referee will be entered as a
judgment in the court that appointed the referee, in accordance with the provisions of CCP
Sections 644(a) and 645. The parties reserve the right to seek appellate review of any judgment
or order, including orders pertaining to class certification, to the same extent permitted in a court
of law.
(d) This Section 12.5 does not limit the right of any party to: (i) exercise self-help
remedies; (ii) initiate judicial or non-judicial foreclosure against any real or personal property
collateral; (iii) exercise any judicial or power of sale rights; or (iv) act in a court of law to obtain
an interim remedy, such as but not limited to, injunctive relief, writ of possession or appointment
of a receiver, or additional or supplementary remedies. The filing of a court action is not
intended to constitute a waiver of the right of any party, including the suing party, thereafter to
request or require submittal of the Dispute to judicial reference as provided herein.
Section 12.6. WAIVER OF FORECLOSURE DEFENSE. Borrower hereby waives any defense
Borrower might assert or have by reason of Lender’s failure to make any tenant or lessee of the
Property a party defendant in any foreclosure proceeding or action instituted by Lender.
Article 13 – Notices
Section 13.1. NOTICES. All notices or other written communications hereunder shall be
deemed to have been properly given (a) upon delivery, if delivered in person or by facsimile
transmission with receipt acknowledged by the recipient thereof and confirmed by telephone by
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sender, (b) one (1) Business Day after having been deposited for overnight delivery with any
reputable overnight courier service, or (c) three (3) Business Days after having been deposited in
any post office or mail depository regularly maintained by the U.S. Postal Service and sent by
registered or certified mail, postage prepaid, return receipt requested, addressed as follows:
If to Lender: The City of San Luis Obispo
990 Palm Street
San Luis Obispo, CA 93401
Attention: Katie Lichtig, City Manager
Tel: (805) 781-7123
Email: klichtig@slocity.org
With a copy to: The City of San Luis Obispo
990 Palm Street
San Luis Obispo, CA 93401
Attention: J. Christine Dietrick, City Attorney
Tel: (805) 781-7143
E-Mail: cdietrick@slocity.org
If to Borrower: Garden Street SLO Partners, L.P.
c/o Westpac Investments, LLC
895 Aerovista Place, Suite 100
San Luis Obispo, CA 93401
Tel: 805-544-7343
Email: hamish@westpacusa.com
With a copy to: Michael E. Pfau, Esq.
Reicker, Pfau, Pyle and McRoy, LLP
1421 State Street, Suite B
Santa Barbara, CA 93101
Tel: (805) 966-2440
E-Mail: mpfau@rppmh.com
If to Trustee: _____________________
or addressed as such party may from time to time designate by written notice to the other parties.
Any party by notice to the other may designate additional or different addresses for subsequent
notices or communications.
Article 14 – APPLICABLE LAW
Section 14.1. GOVERNING LAW. This Security Instrument shall be governed, construed,
applied and enforced in accordance with the internal laws of the state in which the Property is
located and Applicable Laws of the United States of America.
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Section 14.2. PROVISIONS SUBJECT TO APPLICABLE LAW. All rights, powers and
remedies provided in this Security Instrument may be exercised only to the extent that the
exercise thereof does not violate any applicable provisions of law and are intended to be limited
to the extent necessary so that they will not render this Security Instrument invalid,
unenforceable or not entitled to be recorded, registered or filed under the provisions of any
applicable law. If any term of this Security Instrument or any application thereof shall b e invalid
or unenforceable, the remainder of this Security Instrument and any other application of the term
shall not be affected thereby.
Article 15 – DEFINITIONS
Section 15.1. GENERAL DEFINITIONS. Unless the context clearly indicates a contrary
intent or unless otherwise specifically provided herein, words used in this Security Instrument
may be used interchangeably in singular or plural form and the word “Borrower” shall mean
“each Borrower and any subsequent owner or owners of the Property or any part thereof or any
interest therein,” the word “Lender” shall mean “Lender and any of Lender’s successors and
assigns,” the word “Note” shall mean “the Note and any other evidence of indebtedness secured
by this Security Instrument,” “Trustee” shall mean “Trustee and any substitute Trustee of the
estates, properties, powers, trusts and rights conferred upon Trustee pursuant to this Security
Instrument, the word “Property” shall include any portion of the Property and any interest
therein, and the phrases “attorneys’ fees”, “legal fees” and “counsel fees” shall include any and
all attorneys’, paralegal and law clerk fees and disbursements, including, but not limited to, fees
and disbursements at the pre-trial, trial and appellate levels incurred or paid by Lender in
protecting its interest in the Property, the Leases and the Rents and enforcing its rights
hereunder. As used herein, “Applicable Law” shall mean all applicable federal, state, county,
municipal and other governmental statutes, laws, rules, orders, regulations, ordinances,
judgments, decrees and injunctions of Governmental Authorities affecting Borrower or the
Property or any part thereof, or the construction, use, alteration or operation thereof, or any part
thereof, whether now or hereafter enacted and in force, including, without limitation, the
Americans with Disabilities Act of 1990, and all permits, licenses and authorizations and
regulations relating thereto, and all covenants, agreements, restrictions and encumbrances
contained in any instruments, either of record or known to Borrower, at any time in force
affecting Borrower or the Property or any part thereof.
Article 16 – MISCELLANEOUS PROVISIONS
Section 16.1. NO ORAL CHANGE. This Security Instrument, and any provisions hereof,
may not be modified, amended, waived, extended, changed, discharged or terminated orally or
by any act or failure to act on the part of Borrower or Lender, but only by an agreement in
writing signed by the party against whom enforcement of any modification, amendment, waiver,
extension, change, discharge or termination is sought.
Section 16.2. SUCCESSORS AND ASSIGNS. This Security Instrument shall be binding
upon and inure to the benefit of Borrower, Lender and their respective successors and assigns
forever.
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Section 16.3. INAPPLICABLE PROVISIONS. If any term, covenant or condition of the Note
or this Security Instrument is held to be invalid, illegal or unenforceable in any respect, the Note
and this Security Instrument shall be construed without such provision.
Section 16.4. HEADINGS, ETC. The headings and captions of various Sections of this
Security Instrument are for convenience of reference only and are not to be construed as defining
or limiting, in any way, the scope or intent of the provisions hereof.
Section 16.5. NUMBER AND GENDER. Whenever the context may require, any pronouns
used herein shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns and pronouns shall include the plural and vice versa.
Section 16.6. ENTIRE AGREEMENT. This Security Instrument and the other Loan
Documents contain the entire agreement of the parties hereto and thereto in respect of the
transactions contemplated hereby and thereby, and all prior agreements among or between such
parties, whether oral or written, are superseded by the terms of this Security Instrument and the
other Loan Documents.
Section 16.7. LIMITATION ON LENDER’S RESPONSIBILITY. No provision of this Security
Instrument shall operate to place any obligation or liability for the control, care, management or
repair of the Property upon Lender, nor shall it operate to make Lender responsible or liable for
any waste committed on the Property by the tenants or any other Person, or for any dangerous or
defective condition of the Property, or for any negligence in the management, upkeep, repair or
control of the Property resulting in loss or injury or death to any tenant, licensee, employee or
stranger. Nothing herein contained shall be construed as constituting Lender a “mortgagee in
possession.”
Article 17 – DEED OF TRUST PROVISIONS
Section 17.1. CONCERNING THE TRUSTEE. Trustee shall be under no duty to take any
action hereunder except as expressly required hereunder or by law, or to perform any act which
would involve Trustee in any expense or liability or to institute or defend any suit in respect
hereof, unless properly indemnified to Trustee’s reasonable satisfaction. Trustee, by acceptance
of this Security Instrument, covenants to perform and fulfill the trusts herein created, being
liable, however, only for gross negligence or willful misconduct, and hereby waives any
statutory fee and agrees to accept reasonable compensation, in lieu thereof, for any services
rendered by Trustee in accordance with the terms hereof. Trustee ma y resign at any time upon
giving thirty (30) days’ notice to Borrower and to Lender. Lender may remove Trustee at any
time or from time to time and select a successor trustee. In the event of the death, removal,
resignation, refusal to act, or inability to act of Trustee, or in its sole discretion for any reason
whatsoever Lender may, without notice and without specifying any reason therefor and without
applying to any court, select and appoint a successor trustee, by an instrument recorded wherever
this Security Instrument is recorded and all powers, rights, duties and authority of Trustee, as
aforesaid, shall thereupon become vested in such successor. Such substitute trustee shall not be
required to give bond for the faithful performance of the duties of Trustee hereunder unless
required by Lender. The procedure provided for in this paragraph for substitution of Trustee
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shall be in addition to and not in exclusion of any other provisions for substitution, by law or
otherwise.
Section 17.2. TRUSTEE’S FEES. Borrower shall pay all reasonable costs, fees and
expenses incurred by Trustee and Trustee’s agents and counsel in connection with the
performance by Trustee of Trustee’s duties hereunder and all such costs, fees and expenses shall
be secured by this Security Instrument.
Section 17.3. CERTAIN RIGHTS. With the approval of Lender, Trustee shall have the
right to take any and all of the following actions: (i) to select, employ, and advise with counsel
(who may be, but need not be, counsel for Lender) upon any matters arising hereunder, including
the preparation, execution, and interpretation of the Note, this Security Instrument or the other
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/her agents or attorneys, (iii) to select and employ, in and about the
execution of his/her 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 under any circumstances whatsoever, except for Trustee’s gross negligence or bad
faith, and (iv) any and all other lawful action as Lender may instruct Trustee to take to protect or
enforce Lender’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 an action taken or proposed to be taken by Truste e hereunder, believed
by Trustee in good faith to be genuine. Trustee shall be entitled to reimbursement for actual
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.
Section 17.4. 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.
Section 17.5. PERFECTION OF APPOINTMENT. Should any deed, conveyance, or
instrument of any nature be required from Borrower by any Trustee or substitute trustee to more
fully and certainly vest in and confirm to Trustee or substitute trustee such estates rights, powers,
and duties, then, upon request by 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 Borrower.
Section 17.6. 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/her predecessor in the rights
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hereunder with like effect as if originally named as Trustee herein; but nevertheless, upon the
written request of Lender or of the substitute trustee, 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 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 Trustee’s place.
Article 18 – STATE-SPECIFIC PROVISIONS
Section 18.1. PRINCIPLES OF CONSTRUCTION. In the event of any inconsistencies
between the terms and conditions of this Article 18 and the other terms and conditions of this
Security Instrument, the terms and conditions of this Article 18 shall control and be binding.
Section 18.2. CONDITIONS TO GRANT. Upon written request of Lender stating that all
sums secured hereby have been paid, that Borrower has well and truly abided by and complied
with each and every covenant and condition set forth herein and in the Note, and upon the
surrendering of this Security Instrument and the Note to Trustee for cancellation and retention
and upon payment by Borrower of Trustee’s fees, Trustee shall reconvey to Borrower, or to the
person or persons legally entitled thereto, without warranty, any portion of the estate hereby
granted and 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”.
Section 18.3. SECURITY AGREEMENT. This Security Instrument is both a real property
deed of trust and a “security agreement” within the meaning of the Uniform Commercial Code
and is being recorded as a fixture filing. With respect to said security agreement, (i) the debtor is
Borrower, and Borrower’s name and address appear in the first paragraph of this Security
Instrument, and (ii) the secured party is Lender, and Lender’s name and address appear in the
first paragraph of the Security Instrument. The Property includes both real and personal property
and all other rights and interests, whether tangible or intangible in nature, of Borrower in the
Property, including, but not limited to, the Leases and Payments and all proceeds thereof and all
fixtures.
Section 18.4. DUE ON SALE/ENCUMBRANCE. Borrower expressly agrees that upon a
violation of Section 6.1 of this Security Instrument by Borrower and acceleration of the principal
balance of the Note because of such violation, Borrower will pay all sums required to be paid in
connection with a prepayment, if any, as described in the Note, herein imposed on prepayment
after an Event of Default and acceleration of the principal balance. Borrower expressly
acknowledges that Borrower has received adequate consideration for the foregoing agreement.
Section 18.5. 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, which application may be made on an ex parte basis, 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 Borrower and without regard to the adequacy of the
Property for the repayment of the indebtedness secured hereby or the solvency of Borrower or
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any person or persons liable for the payment of the indebtedness secured hereby, and Borrower
does hereby irrevocably consent to such appointment, waives any and all notices of and defenses
to such appointment and agrees not to oppose any application therefor by Lender, but nothing
herein is to be construed to deprive Lender of any other right, remedy or privilege Lender 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 Lender to receiv e payment of the Rents
pursuant to other terms and provisions of this Security Instrument. 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 said receiver may deem to be prudent
and reasonable under the circumstances. Such receivership shall, at the option of Lender,
continue until full payment of all of the indebtedness secured hereby or until title to the Property
shall have passed by foreclosure or trustee’s sale under this Security Instrument or deed in lieu of
foreclosure
Section 18.6. REMEDIES NOT EXCLUSIVE; WAIVER. Trustee and Lender shall have all
powers, rights and remedies under applicable law whether or not specifically or generally
granted or described in this Security Instrument. Nothing contained herein shall be construed to
impair or to restrict such powers, rights and remedies or to preclude any procedures or process
otherwise available to trustees or beneficiaries under deeds of trust in the State of California.
Trustee and Lender, and each of them, shall be entitled to enforce the payment and performance
of any indebtedness or obligations secured hereby and to exercise all rights and powers under
this Security Instrument or under any other Loan Document or other agreement or any laws now
or hereafter in force, notwithstanding the fact that some or all of the indebtedness and obligations
secured hereby may now or hereafter be otherwise secured, whether by Security Instrument,
deed of trust, pledge, lien, assignment or otherwise. Neither the acceptance of this Security
Instrument nor its enforcement, whether by court action or pursuant to the power of sale or other
powers contained herein, shall prejudice or in any manner affect Trustee’s or Lender’s right to
realize upon or enforce any other rights or security now or hereafter held by Trustee or Lender.
Trustee and Lender, and each of them, shall be entitled to enforce this Security Instrument and
any other rights or security now or hereafter held by Lender or Trustee in such order and manner
as they or either of them may in their absolute discretion determine. No remedy herein conferred
upon or reserved to Trustee or Lender is intended to be exclusive of any other remedy contained
herein or by law provided or permitted, but each shall be cumulative and in addition to every
other remedy given hereunder or now or hereafter existing at law or in equity. Every power or
remedy given by any of this Security Instrument or the other Loan Documents to Trustee or
Lender, or to which either of them may be otherwise entitled, may be exercised, concurrently or
independently, from time to time and as often as may be deemed expedient by Trustee or Lender,
and either of them may pursue inconsistent remedies. By exercising or by failing to exercise any
right, option or election hereunder, Lender shall not be deemed to have waived any provision
hereof or to have released Borrower from any of the obligations secured hereby unless such
waiver or release is in writing and signed by Lender. The waiver by Lender of Borrower’s
failure to perform or observe any term, covenant or condition referred to or contained herein to
be performed or observed by Borrower shall not be deemed to be a waiver of such term,
covenant or condition or of any subsequent failure of Borrower to perform or observe the same
or any other such term, covenant or condition referred to or contained herein, and no custom or
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practice which may develop between Borrower and Lender during the term hereof shall be
deemed a waiver of or in any way affect the right of Lender to insist upon the performance by
Borrower of the obligations secured hereby in strict accordance with the terms hereof or of any
other Loan Document.
Section 18.7. POWER OF SALE. The Lender, its successors and assigns, may elect to
cause the Property or any part thereof to be sold as follows:
(a) Lender may proceed as if all of the Property were real property, in accordance
with subparagraph (d) below, or Lender may elect to treat any of the Property which consists of a
right in action or which is property that can be severed from the Land without causing structural
damage thereto as if the same were personal property, and dispose of the same in accordance
with subparagraph (c) below, separate and apart from the sale of real property, the remainder of
the Property being treated as real property.
(b) Lender may cause any such sale or other disposition to be conducted immediately
following the expiration of any grace period, if any, herein provided (or immediately upon the
expiration of any redemption period required by law) or Lender may delay any such sale or other
disposition for such period of time as Lender deems to be in its best interest. Should Lender
desire that more than one such sale or other disposition be conducted, Lender may at its option,
cause the same to be conducted simultaneously, or successively on the same day, or a t such
different days or times and in such order as Lender may deem to be in its best interest.
(c) Should Lender elect to cause any of the Property to be disposed of as personal
property as permitted by subparagraph (a) above, it may dispose of any part hereof in any
manner now or hereafter permitted by Article 9 of the UCC or in accordance with any other
remedy provided by law. Both Borrower and Lender shall be eligible to purchase any part or all
of such property at any such disposition. Any such disposit ion may be either public or private as
Lender may so elect, subject to the provisions of the UCC. Lender shall give Borrower at least
five (5) days’ prior written notice of the time and place of any public sale or other disposition of
such property or of the time at or after which any private sale or any other intended disposition is
to be made, and if such notice is sent to Borrower as provided in subparagraph (k) hereof, it shall
constitute reasonable notice to Borrower.
(d) Should Lender elect to sell the Property which is real property or which Lender
has elected to treat as real property, upon such election Lender or Trustee shall give such notice
of default and election to sell as may then be required by law. Thereafter, upon the expiration of
such time and the giving of such notice of sale as may then be required by law, Trustee, at the
time and place specified in the notice of sale, shall sell such Property, or any portion thereof
specified by Lender, at public auction to the highest bidder for cash in lawful money of the
United States, subject, however, to the provisions of subparagraph (i) hereof. Trustee for good
cause may, and upon request of Lender shall, from time to time, postpone the sale by public
announcement thereof at the time and place noticed therefor. If the Property consists of several
lots or parcels, Lender may designate the order in which such lots or parcels shall be offered fo r
sale or sold. Any person, including Borrower, Trustee or Lender, may purchase at the sale.
Upon any sale Trustee shall execute and deliver to the purchaser or purchasers a deed or deeds
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conveying the property so sold, but without any covenant or warranty whatsoever, express or
implied, whereupon such purchaser or purchasers shall be let into immediate possession.
(e) In the event of a sale or other disposition of any such property, or any part thereof,
and the execution of a deed or other conveyance, pursuant thereto, the recitals therein of facts,
such as a default, the giving of notice of default and notice of sale, demand that such sale should
be made, postponement of sale, terms of sale, sale, purchaser, payment of purchase money, and
any other fact affecting the regularity or validity of such sale or disposition, shall be conclusive
proof of the truth of such facts; and any such deed of conveyance shall be conclusive against all
persons as to such facts recited therein.
(f) Lender and/or Trustee shall apply the proceeds of any sale or disposition
hereunder to payment of the following: (1) the expenses of such sale or disposition together with
Trustee’s fees and reasonable attorneys’ fees, and the actual cost of publishing, recording,
mailing and posting notice; (2) the cost of any search and/or other evidence of title procured in
connection therewith and transfer tax on any deed or conveyance; (3) all sums expended under
the terms hereof, not then repaid, with accrued interest in the amount provided herein; (4) all
other sums secured hereby; and (5) the remainder if any to the person or persons legally entitled
thereto.
(g) The acknowledgment of the receipt of the purchase money, contained in any deed
or conveyance executed as aforesaid, shall be sufficient discharge from all obligations to see to
the proper application of the consideration therefor.
(h) Borrower hereby expressly waives any right which it may have to direct the order
in which any of the Property shall be sold in the event of any sale or sales pursuant hereto.
(i) Upon any sale of the Property, whether made under a power of sale herein granted
or pursuant to judicial proceedings, if the holder of the Note is a purchaser at such sale, it shall
be entitled to use and apply all or any portion of the indebtedness then secured hereby for or in
settlement or payment of all or any portion of the purchase price of the property purchased, and,
in such case, this Security Instrument, the Note and documents evidencing expenditures secured
hereby shall be presented to the person conducting the sale in order that the amount of said
indebtedness so used or applied may be credited thereon as having been paid.
(j) If there exists additional security for the performance of the obligations secured
hereby, the holder of the Note, at its sole option and without limiting or affecting any rights or
remedies hereunder, may exercise any of the rights and remedies to which it may be entitled
hereunder either concurrently with whatever other rights it may have in connection with such
other security or in such order as it may determine.
(k) Borrower hereby requests that every notice of default and every notice of sale be
given in accordance with the provisions of Section 13.1 of this Security Instrument except as
otherwise required by statute. Borrower may, from time to time, change the address to which
notice of default and sale hereunder shall be sent by both filing a request therefor, in the manner
provided by the California Civil Code, Section 2924b, and sending a copy of such request to
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Lender, its successors or assigns in accordance with the provisions of Section 13.1 of this
Security Instrument.
Section 18.8. RIGHT OF RESCISSION. Lender may from time to time rescind any notice
of default or notice of sale before any Trustee’s sale in accordance with the laws of the State of
California. The exercise by Lender of such right of rescission shall not constitute a waiver of
any breach or default then existing or subsequently occurring, or impair the right of Lender to
execute and deliver to Trustee, as above provided, other declarations or notices of default to
satisfy the obligations of this Security Instrument or secured hereby, nor otherwise affect any
provision, covenant or condition of this Security Instrument or any other Loan Document or any
of the rights, obligations or remedies of Trustee or Lender hereunder or thereunder.
Section 18.9. FULL RECONVEYANCE. Upon written request of Lender stating that all
sums secured hereby have been paid in full without right of readvance, upon surrender to Trustee
of the original or a certified copy of this Security Instrument for cancellation and retention, and
upon payment of its fees, Trustee shall fully reconvey, without warranty, the entire remaining
Property then held hereunder. The recitals in such reconveyance of an y matters of facts shall be
conclusive proof of the truthfulness thereof.
Section 18.10. CONCERNING THE TRUSTEE.
(a) Trustee accepts the trust created by this Security Instrument when this Security
Instrument, duly executed and acknowledged, is made a public record as provided by law.
(b) Trustee is not obligated to notify any party hereto of pending sale under any other
deed of trust or of any action or proceeding in which Borrower, Lender or Trustee shall be a
party, unless brought by Trustee.
(c) Trustee shall be entitled to reasonable compensation for all services rendered or
expenses incurred in the administration or execution of the trusts hereby created and Borrower
hereby agrees to pay same. Trustee and Lender shall be indemnified, held harmless and
reimbursed by Borrower for any liability, damage or expense, including attorneys’ fees and
amounts paid in settlement, which they or either of them may incur or sustain in the execution of
this trust or in the doing of any act which they, or either of them, are required or p ermitted to do
by the terms hereof or by law.
Section 18.11. BORDER ZONE PROPERTY. Borrower represents and warrants that the
Property has not been designated as Border Zone Property under the provisions of California
Health and Safety Code §25220 et seq. or any regulation adopted in accordance therewith and
there has been no occurrence or condition on any real property adjoining or in the vicinity of the
Property that is reasonably likely to cause the Property or any part thereof to be designated as
Border Zone Property.
Section 18.12. FUTURE ADVANCES. This Security Instrument also secures future
advances to Borrower and obligations of Borrower to Lender, direct or indirect, absolute or
contingent to the same extent as if the future obligation and/or advance were made on the date of
this Security Instrument.
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IN WITNESS WHEREOF, this Security Instrument has been executed by the
undersigned as of the day and year first above written.
GRANTOR:
GARDEN STREET SLO PARTNERS, L.P.,
a California limited partnership
By: Downtown Investors, LLC,
a California limited liability company,
its general partner
By:__________________________________
Hamish Marshall
Its Manager
Signature must be notarized
CERTIFICATE OF ACKNOWLEDGMENT
A notary public or other officer completing this
certificate verifies only the identity of the
individual who signed the document to which this
certificate is attached, and not the truthfulness,
accuracy, or validity of that document.
STATE OF ______________ )
)
COUNTY OF ____________ )
On ___________, ____, before me, _____________________________, a Notary Public in and
for said State, personally appeared _____________________________________, who proved to
me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to
the within instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the
person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature__________________________ (Seal)
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EXHIBIT A
LEGAL DESCRIPTION
(attached hereto)