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EXHIBIT 10.72
DEED OF TRUST AND SECURITY AGREEMENT
SECURING THE CINEMARK BUILDING
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DEED OF TRUST AND SECURITY AGREEMENT
Wells Operating Partnership, L.P.
to
James R. Potter, as Trustee
For the Benefit of
SouthTrust Bank, National Association
Dated: May 3rd, 2000
This instrument was prepared by
the attorney described below in
consultation with counsel in the
State in which the Property
is located and, when recorded, the recorded
counterparts should be returned to:
Burr & Forman LLP
One Georgia Center - Suite 1200
600 West Peachtree Street
Atlanta, Georgia 30308
Attention: Vanessa G. Morris, Esq.
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THE PRINCIPAL INDEBTEDNESS SECURED HEREBY SHALL NOT EXCEED $35,000,000.00. THE
FINAL PAYMENT DATE OF THE INDEBTEDNESS SECURED HEREBY IS JUNE 10, 2002.
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Deed Of Trust and Security Agreement
THIS DEED OF TRUST AND SECURITY AGREEMENT (this "Security Instrument") is
entered into on this 3/rd/ day of May, 2000, by and between WELLS OPERATING
PARTNERSHIP, L.P., a Delaware limited partnership, as grantor and debtor, whose
address is c/o Wells Real Estate Funds, 6200 Corners Parkway, Suite 250,
Norcross, Georgia 30092 (hereinafter referred to as "Borrower"), in favor of
James R. Potter, a resident of the State of Georgia, whose address is c/o
SouthTrust Bank, National Association, 600 West Peachtree Street, 22nd Floor,
Atlanta, Georgia 30308 (hereinafter referred to as "Trustee," said term
referring always to the named Trustee and his successors in trust), for the use
and benefit of SOUTHTRUST BANK, NATIONAL ASSOCIATION, a national banking
association, whose address is P.O. Box 2554, Attention: Commercial Real Estate,
Birmingham, Alabama 35290 (hereinafter referred to as "Beneficiary," said term
referring always to the lawful owner and holder of the Secured Obligations (as
herein defined)).
W i t n e s s e t h:
Borrower and Beneficiary have entered into a Revolving Loan Agreement of
even date herewith (as the same might hereafter be extended, renewed, modified,
consolidated, substituted, replaced, or restated pursuant to the applicable
provisions thereof, the "Loan Agreement") pursuant to which Beneficiary has
agreed to make a loan to Borrower in the principal sum of Thirty-Five Million
and No/100 Dollars ($35,000,000.00) in lawful money of the United States of
America (the "Loan"), which Loan will be evidenced by a Revolving Note of even
date herewith payable by Borrower to the order of Beneficiary in said principal
amount (as the same might hereafter be extended, renewed, modified,
consolidated, substituted, replaced, restated, or increased, the "Note"), with
interest thereon from the date of the Note at the rates set forth in the Note,
such principal and interest to be paid in installments as provided in the Loan
Agreement and the Note, with the final installment being due and payable on June
10, 2002.
As a condition precedent to making the Loan, Beneficiary has required that
Borrower execute and deliver this Security Instrument as security for the Loan
and the other Secured Obligations (as hereinafter defined).
Article I - Grants of Security
NOW THEREFORE, for and in consideration of the foregoing and other good and
valuable consideration, and the sum of One Hundred and No/100 Dollars ($100.00)
in hand paid, and the other considerations hereinafter mentioned, the receipt
and sufficiency whereof are hereby acknowledged, Borrower does hereby
irrevocably grant, bargain, sell, pledge, assign, warrant, transfer, and convey
to Trustee and Trustee's successors and assigns, the following property,
appurtenances, rights, interests, and Beneficiary in, the following property,
appurtenances, rights, interests, and estates of Borrower, whether now owned or
hereafter acquired by Borrower (all such
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property, appurtenances, rights, interests, and estates being herein referred to
collectively as the "Property"):
(a) All tracts, pieces, or parcels of land located in Collin County,
Texas, more particularly described in Exhibit A attached hereto and by this
reference made a part hereof (the "Land");
(b) All buildings, structures, fixtures, additions, enlargements,
extensions, modifications, repairs, replacements, and improvements of every
nature whatsoever now or hereafter erected or located on the Land (the
"Improvements");
(c) All easements, rights-of-way, strips and gores of land, vaults,
streets, ways, alleys, passages, sewer rights, waters, water courses, water
rights and powers, air rights, and development rights, minerals, flowers,
shrubs, crops, trees, timber, and other emblements now or hereafter located
on, under, or above the Land or any part or parcel thereof, and all ground
leases, estates, rights, titles, interests, privileges, liberties,
tenements, hereditaments, appurtenances, reversions, and remainders
whatsoever in any way belonging, relating, or appertaining to the Land and
the Improvements or any part thereof, or which hereafter shall in any way
belong, relate, or be appurtenant thereto, and all land lying in the bed of
any street, road, or avenue, opened or proposed, in front of or adjoining
the Land, to the center line thereof, and all the estates, rights, titles,
interests, dower and rights of dower, curtesy and rights of curtesy,
property, possession, claim, and demand whatsoever, both at law and in
equity, of Borrower of, in, and to the Land and the Improvements and every
part and parcel thereof, with the appurtenances thereto;
(d) All machinery, equipment, fixtures, appliances, and personal
property of every kind and nature whatsoever now or hereafter owned by
Borrower, or in which Borrower has or shall have an interest, now or
hereafter located in, on, or about the Land and the Improvements, or the
appurtenances thereof, or used or intended to be used with or in connection
with the present or future operation, occupancy, or enjoyment of the Land
and the Improvements (including, without limitation, appliances, machinery,
equipment, signs, artwork, office furnishings and equipment, all
partitions, screens, awnings, shades, blinds, floor coverings, hall and
lobby equipment, heating, lighting, plumbing, ventilating, refrigerating,
incinerating, elevators, escalators, air conditioning and communication
plants or systems with appurtenant fixtures, vacuum cleaning systems, call
or beeper systems, security systems, sprinkler systems and other fire
prevention and extinguishing apparatus and materials; all equipment,
manual, mechanical or motorized, for the construction, maintenance, repair
and cleaning of, parking areas, walks, underground ways, truck ways,
driveways, common areas, roadways, highways and streets), and all building
equipment, materials, and supplies of any nature whatsoever now or
hereafter located in, on, or about the Land and the Improvements, or the
appurtenances thereof, and whether in storage or otherwise, or used or
intended to be used with
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or in connection with the present or future operation, occupancy, or
enjoyment of the Land and the Improvements (hereinafter collectively
referred to as the "Equipment"), including the proceeds of any sale or
transfer of the foregoing, and the right, title and interest of Borrower in
and to any of the Equipment 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 "UCC") superior
in priority to the lien of this Security Instrument. In connection with
Equipment which is leased to Borrower or which is subject to a lien or
security interest which is superior to the lien of this Security
Instrument, this Security Instrument shall also cover all right, title and
interest of Borrower in and to all deposits, and the benefit of all
payments now or hereafter made with respect to such Equipment
(e) All leases, subleases, subtenancies, licenses, occupancy
agreements, and concessions relating to the use and enjoyment of all or any
part of the Land or the Improvements heretofore or hereafter entered into
whether before or after the filing by or against Borrower of any petition
for relief under the United States Bankruptcy Code, 11 U.S.C. (S) 101 et
seq. (the "Bankruptcy Code"), as the same might be amended from time to
time (the "Leases"), and any and all guaranties and other agreements
relating to or made in connection with any of the Leases, and all right,
title, and interest of Borrower, its successors and assigns therein and
thereunder to secure the performance by the lessees of their obligations
thereunder and all rents, additional rents, revenues, issues, and profits
(including oil and gas or other mineral royalties and bonuses) from the
Land and the Improvements, whether paid or accruing before or after the
filing by or against Borrower of any petition for relief under the
Bankruptcy Code (the "Rents"), and all proceeds from the sale or other
disposition of the Leases and the right to receive and apply the Rents to
the payment of the Secured Obligations, and all of Borrower's claims and
rights to damages and any other remedies in connection with or arising from
the rejection of any Lease by the lessee or any trustee, custodian or
receiver pursuant to the Bankruptcy Code in the event that there shall be
filed by or against the lessee any petition, action or proceeding under the
Bankruptcy Code or under any other similar federal or state law now or
hereafter in effect;
(f) All proceeds, including all claims to and demands for them, of
the voluntary or involuntary conversion of any of the Land, the
Improvements, or any of the other Property into cash or liquidated claims,
including proceeds of all present and future fire, hazard, or casualty
insurance policies and all condemnation awards or payments now or hereafter
to be made by any public body or decree by any court of competent
jurisdiction for any taking or in connection with any condemnation or
eminent domain proceeding, and all causes of action and their proceeds for
any damage or injury to the Land, Improvements, or any of the other
Property or any part of them, or breach of warranty in connection with the
construction of the Improvements, including causes of action arising in
tort, contract, fraud, or concealment of a material fact;
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(g) All rights to the payment of money, accounts, accounts
receivable, reserves, deferred payments, refunds, cost savings, payments
and deposits, whether now or hereafter to be received from third parties
(including all earnest money deposits) or deposited by Borrower with
Beneficiary or third parties (including all utility deposits, accounts for
the deposit, collection, and/or disbursement of Rents, and all reserve
accounts provided for under any documentation entered into or delivered by
Borrower in connection with the Loan), chattel paper, instruments,
documents, notes, drafts and letters of credit, which arise from or relate
to construction on the Land, to any business now or hereafter to be
conducted on the Land, or to the Land and the Improvements generally;
(h) All franchises, trade names, trademarks, symbols, goodwill,
service marks, trade styles, books, records, development and use rights,
architectural and engineering plans, specifications and drawings, and as-
built drawings, contracts, licenses, approvals, applications, consents,
subcontracts, service contracts, management contracts, permits, and other
agreements of any nature whatsoever now or hereafter obtained or entered
into by Borrower, or any managing agent of the Property on behalf of
Borrower, with respect to the use, occupation, development, construction,
management, name and/or operation of the Property or any part thereof or
the activities conducted thereon or therein, or otherwise pertaining to the
Property or any part thereof, including, without limitation, (i) all rights
of Borrower to receive moneys due and to become due to it under or in
connection with any of the foregoing, (ii) all rights of Borrower to
damages arising out of or for a breach or default in respect thereof, and
(iii) all rights of Borrower to perform and to exercise all remedies
thereunder;
(i) all rights that Borrower now has or may hereafter acquire, to be
indemnified and/or held harmless from any liability, loss, damage, costs or
expense (including, without limitation, attorneys' fees and disbursements)
relating to the Property or any part thereof;
(j) All books and records pertaining to any and all of the property
described above, including computer-readable memory and any computer
hardware or software necessary to access and process such memory; and
(k) All proceeds of, additions and accretions to, substitutions and
replacements for, and any changes in any of the property described above.
TO HAVE AND TO HOLD the Property and all parts, rights, members and
appurtenances thereof, to the use, benefit and behoof of Beneficiary, its
successors and assigns, in fee simple forever.
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Article II - Obligations Secured
This Security Instrument and the grants, assignments, and transfers made in
Article I hereof are given for the purpose of securing the following obligations
in any order of priority as Beneficiary may determine in its sole discretion
(the "Secured Obligations"):
(a) Payment of all indebtedness evidenced by the Note, including
principal, interest, default interest, late charges, prepayment
consideration , and other sums, as provided in the Note, and the
performance of all other obligations set forth in the Note;
(b) The full and prompt payment and performance of all of the
provisions, agreements, covenants and obligations herein contained and
contained in the Loan Agreement or any of the other Loan Documents (as
defined in the Loan Agreement) and the payment of all other sums therein
covenanted to be paid;
(c) Any and all additional advances made by Beneficiary pursuant to
this Security Instrument or the other Loan Documents to protect or preserve
the Property or the lien or security interest created hereby on the
Property, or for taxes, assessments or insurance premiums as hereinafter
provided or for performance of any of Borrower's obligations hereunder or
under the other Loan Documents or for any other purpose provided herein or
in the other Loan Documents (whether or not the original Borrower remains
the owner of the Property at the time of such advances); and
(d) Payment and performance of all modifications, amendments,
extensions, consolidations, and renewals, however evidenced, of any of the
obligations described in (a) through (c) above.
Article III - Covenants
3.01. Payment of Secured Obligations. Borrower will perform, observe and
comply with the provisions hereof and of each of the other Loan Documents and
duly and punctually will pay to Beneficiary the sum of money expressed in the
Note with interest thereon and all other sums required to be paid by the
Borrower pursuant to the provisions of this Security Instrument, all without any
deduction or credit for taxes or other similar charges paid by the Borrower.
3.02. Incorporation by Reference. All the covenants, conditions, and
agreements contained in the Loan Agreement, the Note, and all of the other Loan
Documents are hereby made a part of this Security Instrument to the same extent
and with the same force as if fully set forth herein.
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3.03. Warranty of Title. Borrower is lawfully seized of an indefeasible
estate in fee simple in the Property hereby conveyed and has good and absolute
title to all other Property in which a security interest is herein granted, and
Borrower has good right, full power, and lawful authority to sell, convey, and
grant a security interest in the same in the manner and form aforesaid. Except
for the Permitted Encumbrances described in the Loan Agreement, the Property is
free and clear of all liens, charges, and encumbrances whatsoever, including
conditional sales contracts, chattel mortgages, security agreements, financing
statements, and anything of a similar nature, and that Borrower shall and will
warrant and forever defend the title thereto unto the Beneficiary, its
successors and assigns, against the lawful claims of all persons whomsoever.
Borrower shall not acquire any portion of the Property subject to any security
interest, conditional sales contract, title retention arrangement, or other
charge or lien taking precedence over the security interest and lien of this
Security Instrument.
3.04. Taxes, Utilities, and Other Charges.
(a) Borrower will pay or cause to be paid, on or before the due date
thereof, all taxes, assessments, levies, license fees, permit fees, dues,
charges, fines, and impositions (in each case whether general or special,
ordinary or extraordinary, or foreseen or unforeseen) of every character
whatsoever (including all penalties and interest thereon) now or hereafter
levied, assessed, confirmed, or imposed on, or in respect of, or which might
constitute a lien upon the Property, or any part thereof, or any estate, right,
or interest therein, or upon the rents, issues, income, or profits thereof, and
shall submit to Beneficiary such evidence of the due and punctual payment of all
such taxes, assessments, and other fees and charges as Beneficiary might
require. Borrower shall have the right, before any such tax, assessment, fee,
or charges become delinquent, to contest or object to the amount or validity of
any such tax, assessment, fee, or charge by appropriate legal proceedings,
provided that said right shall not be deemed or construed in any way as
relieving, modifying, or extending Borrower's covenant to pay any such tax,
assessment, fee, or charge at the time and in the manner provided herein unless
(i) Borrower has given prior written notice to Beneficiary of Borrower's intent
to so contest or object, (ii) Borrower shall demonstrate to Beneficiary's
satisfaction that the legal proceedings shall conclusively operate to prevent
the sale of the Property, or any part thereof, to satisfy such tax, assessment,
fee, or charge prior to final determination of such proceedings, (iii) Borrower
shall furnish a good and sufficient bond or surety as requested by and
satisfactory to Beneficiary, and (iv) Borrower shall have provided a good and
sufficient undertaking as might be required or permitted by law to accomplish a
stay of such proceedings.
(b) Borrower will pay or cause to be paid, on or before the due date
thereof, (i) all premiums on policies of insurance covering, affecting, or
relating to the Property, as required pursuant to the Loan Agreement, (ii) all
ground rentals, other lease rentals, and other sums, if any, owing by Borrower
and becoming due under any lease or rental contract affecting the Property, and
(iii) all utility charges that are incurred by Borrower for the benefit of the
Property, or which might become a charge or lien against the Property for gas,
electricity, water, sewer services, and the like furnished to the Property, and
all other public or private assessments or charges of a similar nature affecting
the Property or any portion thereof, whether or not the nonpayment of same might
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result in a lien thereon. Borrower shall submit to Beneficiary such evidence of
the due and punctual payment of all such premiums, rentals, and other sums as
Beneficiary might require.
(c) Borrower shall not suffer any mechanic's, materialman's, laborer's,
statutory, or other lien (except as expressly permitted by the Loan Agreement)
to be created or remain outstanding against the Property; provided that
Borrower may contest any such lien in good faith by appropriate legal
proceedings provided the lien is bonded off and removed as an encumbrance upon
the Property. Beneficiary has not consented and will not consent to the
performance of any work or the furnishing of any materials that might be deemed
to create a lien or liens against the Property that is superior to the lien and
security interest hereof.
(d) Borrower will pay, on or before the due date thereof, all taxes,
assessments, charges, expenses, costs, and fees that might now or hereafter be
levied upon, or assessed or charged against, or incurred in connection with, the
Note, the Secured Obligations, this Security Instrument, or any of the other
Loan Documents, including, without limitation, any sales or use tax that might
be imposed on Beneficiary with respect to the Secured Obligations (but excluding
taxes calculated solely based upon the income derived by Beneficiary from the
Secured Obligations). In the event of the passage of any state, federal,
municipal, or other governmental law, order, rule, or regulation, subsequent to
the date hereof, in any manner changing or modifying the laws now in force
governing the taxation of deeds to secure debt or security agreements, or debts
secured thereby, or in the manner of collecting such taxes, so as to adversely
affect Beneficiary (excluding any tax upon Beneficiary's income derived from the
Secured Obligations), Borrower will pay any such tax on or before the due date
thereof. If Borrower fails to make such prompt payment or if, in the opinion of
Beneficiary, any such state, federal, municipal, or other governmental law,
order, rule, or regulation prohibits Borrower from making such payment or would
penalize Borrower if Borrower makes such payment, or if, in the opinion of
Beneficiary, the making of such payment might result in the imposition of
interest beyond the maximum amount permitted by applicable law, then the entire
Secured Obligations will, at the option of Beneficiary, become immediately due
and payable.
3.05. Insurance.
(a) Borrower shall cause the Property at all times during the entire term
of this Security Instrument to be insured for the mutual benefit of Borrower and
Beneficiary against loss or damage by fire and against loss or damage by other
risks and hazards covered by a standard "all risk" insurance policy. The amount
of such insurance shall be not less than one hundred percent (100%) of the full
replacement cost of the Improvements, furniture, furnishings, fixtures,
equipment and other items (whether personalty or fixtures) included in the
Property and owned by Borrower from time to time, without reduction for
depreciation, but excluding footings and foundations and parts of the Property
to the extent not insurable. The determination of the replacement cost amount
shall be adjusted annually to comply with the requirements of the insurer
issuing such coverage or, at Beneficiary's election, by reference to such
indices, appraisals or information as Beneficiary determines in its reasonable
discretion. Full replacement cost, as used herein, means, with respect to the
Improvements, the cost of replacing the Improvements without regard to deduction
for depreciation, exclusive of the cost of excavations, foundations and footings
below the lowest basement floor, and means, with respect to such furniture,
furnishings, fixtures, equipment and
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other items, the cost of replacing the same, in each case, with inflation guard
coverage to reflect the effect of inflation. Each such policy or policies, if so
required, shall contain a replacement cost endorsement and either an agreed
amount endorsement (to avoid the operation of any co-insurance provisions) or a
waiver of any co-insurance provisions, all subject to Beneficiary's reasonable
approval. The premiums for the policies of insurance carried in accordance with
this Section shall be paid annually in advance.
(b) Borrower, at its sole cost and expense, for the mutual benefit of
Borrower and Beneficiary, shall also obtain and maintain or cause to be obtained
and maintained during the entire term of this Security Instrument the following
insurance policies:
(i) Flood insurance if any part of the Improvements is located in
an area identified by the Federal Emergency Management Agency as an area
having special flood hazards and in which flood insurance has been made
available under the National Flood Insurance Act of 1968 (and any successor
act thereto) in an amount equal to at least the then full replacement value
of the Property or the amount of flood insurance available under said Act,
whichever is less;
(ii) Comprehensive general liability insurance, including broad form
property damage, blanket contractual and personal injuries (including death
resulting therefrom) coverages on an "occurrence basis" with minimum
combined single limit coverage of not less than $5,000,000.00;
(iii) Insurance covering the major components of the central heating,
air conditioning and ventilating systems, boilers, other pressure vessels,
sprinkler systems, high pressure piping and machinery, elevators and
escalators, if any, and other similar equipment installed in the
Improvements, in an amount equal to one hundred percent (100%) of the full
replacement cost of the Improvements which policies shall insure against
physical damage to and loss of occupancy and use of the Improvements
arising out of an accident or breakdown covered thereunder;
(iv) During the period of any construction of the Improvements or
renovation or alteration of the Improvements, a so-called "Builder's All-
Risk Completed Value" or "Course of Construction" insurance policy in non-
reporting form for any Improvements under construction, renovation or
alteration in an amount reasonably approved by Beneficiary and Worker's
Compensation Insurance covering all persons engaged in such construction,
renovation or alteration;
(v) Loss of rents or loss of business income insurance in amounts
sufficient to compensate Borrower for all Rents during a period of not less
than one (1) year in which the Improvements may be damaged or destroyed;
and
(vi) Such other insurance as may from time to time be reasonably and
customarily required by Beneficiary in order to protect its interests in
the Property.
(c) All insurance policies required pursuant to this Section (the
"Policies") (i) shall be issued by an insurer satisfactory to Beneficiary in its
sole discretion, (ii) shall contain the standard
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New York mortgagee or equivalent non-contribution clause naming Beneficiary as
the person to which all payments made by such insurance company shall be paid,
(iii) shall be maintained throughout the term of this Security Instrument
without cost to Beneficiary, (iv) a certificate thereof shall be delivered to
Beneficiary, (v) shall contain such provisions as Beneficiary deems reasonably
necessary or desirable to protect its interest including, without limitation,
endorsements providing that neither Borrower, Beneficiary nor any other party
shall be a coinsurer under the Policies and that Beneficiary shall receive at
least thirty (30) days prior written notice of any modification or cancellation,
and (vi) shall be reasonably satisfactory in form and substance to Beneficiary
and shall be reasonably approved by Beneficiary as to amounts, form, risk
coverage, deductibles, loss payees and insureds. Not later than ten (10) days
prior to the expiration date of each of the Policies, Borrower shall deliver to
Beneficiary satisfactory evidence of the renewal of each Policy.
(d) Beneficiary is hereby authorized and empowered, at its option, to
adjust or compromise any loss under any Policies and to collect and receive the
proceeds from any such Policies. Each insurance company is hereby authorized
and directed to make payment for all such losses directly to Beneficiary as its
interest might appear, instead of to Borrower and Beneficiary jointly. If any
insurance company fails to disburse directly and solely to Beneficiary but
instead disburses either solely to Borrower or to Borrower and Beneficiary
jointly, Borrower agrees immediately to endorse and transfer such proceeds to
Beneficiary to the extent of Beneficiary's interest therein. Upon the failure
of Borrower to endorse and transfer such proceeds as aforesaid, Beneficiary may
execute such endorsements or transfers for and in the name of Borrower, and
Borrower hereby irrevocably appoints Beneficiary as Borrower's agent and
attorney-in-fact so to do. Beneficiary shall not be held responsible for any
failure to collect any insurance proceeds due under the terms of any policy
regardless of the cause of such failure. The proceeds of any insurance
collected by Beneficiary arising from any casualty affecting the Property shall
be applied and disbursed in accordance with, and subject to the conditions of,
Section 3.07 of this Security Instrument.
3.06. Condemnation. Borrower shall promptly give Beneficiary written notice
of the actual or threatened commencement of any condemnation or eminent domain
proceeding affecting the Property and shall deliver to Beneficiary copies of any
and all papers served in connection with such proceedings. No taking by any
public or quasi-public authority through eminent domain or otherwise (including
but not limited to any transfer made in lieu of or in anticipation of the
exercise of such taking) shall limit or otherwise affect Borrower's obligations
under the Loan Agreement, this Security Instrument, or any of the other Loan
Documents to which Borrower is a party. Beneficiary is authorized, at its
option, to commence, appear in, and prosecute, through counsel selected by
Beneficiary, in its own or in Borrower's name, any action or proceeding relating
to any such condemnation, provided that, if Beneficiary's determines that the
compensation, award, or payment or relief to be collected from such action or
proceeding will likely be less than the Casualty Benchmark (as defined in
Section 3.07 below), then Beneficiary shall not unreasonably withhold its
consent to permitting Borrower the sole right to prosecute any such action or
proceeding. If an Event of Default exists, Beneficiary shall have the sole and
exclusive right to compromise or settle any claim for compensation. All such
compensation, awards, damages, claims, rights of action, and proceeds and the
right thereto are hereby assigned by Borrower to Beneficiary, and Beneficiary is
authorized, at its option, to collect and receive all such compensation, awards,
or damages and to give proper receipts and acquittances therefor without any
obligation to question the amount of any such compensation, awards, or damages.
Beneficiary will be entitled to all
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compensation, awards, and other payments or relief therefor; provided that if
the amount of such compensation, awards, and other payments or relief is equal
to or less than the Casualty Benchmark, Borrower may collect same. Beneficiary
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 and in the Note. Any such compensation, awards, and
other payments received by Beneficiary, after deducting therefrom all of
Beneficiary's expenses incurred in the collection and administration of such
sums, including reasonable attorney's fees actually incurred, shall be applied
and disbursed in accordance with Section 3.07 below. If the Property is sold,
through foreclosure or otherwise, prior to the receipt by Beneficiary of such
award or payment, Beneficiary shall have the right, whether or not a deficiency
judgment on the Note shall have been sought, recovered or denied, to receive
said award or payment, or a portion thereof sufficient to pay the Secured
Obligations. Borrower shall file and prosecute or cause to be filed and
prosecuted its claim or claims for any such award or payment in good faith and
with due diligence and cause the same to be paid over to Beneficiary, and hereby
irrevocably authorizes and empowers Beneficiary, in the name of Borrower or
otherwise, to collect and receive any such award or payment and to file and
prosecute such claim or claims, and although it is hereby expressly agreed that
the same shall not be necessary in any event, Borrower shall, upon demand of
Beneficiary, make, execute and deliver any and all assignments and other
instruments sufficient for the purpose of assigning any such award or payment to
Beneficiary, free and clear of any encumbrances of any kind or nature
whatsoever.
3.07. Restoration and Repair of Property. In the event of a casualty or
a taking by eminent domain of all or other portion of the Property, the
following provisions shall apply in connection with the repair and restoration
of the Property (a "Restoration"):
(a) In the event that (i) the net proceeds of insurance received by
Beneficiary as a result of damage or destruction of the Property, or in the
case of condemnation, the net amount of all awards and payments received by
Beneficiary with respect to such taking, after deduction of Beneficiary's
reasonable costs and expenses (including, but not limited to, reasonable
legal costs and expenses actually incurred), in collecting the same,
whichever the case may be (the "Net Proceeds") do not exceed $250,000.00
(the "Casualty Benchmark"), (ii) the costs of completing the Restoration,
as reasonably estimated by Beneficiary, shall be less than or equal to the
Casualty Benchmark, (iii) no Event of Default shall have occurred and be
continuing, (iv) the Property and the use thereof after the Restoration
shall be in compliance with, and permitted under, all Legal Requirements
(as defined in the Loan Agreement), (v) such fire or other casualty or
taking, as applicable, does not materially impair access to the Land or to
the Improvements, then Beneficiary shall disburse the entire Net Proceeds
directly to Borrower, and Borrower shall commence and diligently prosecute
to completion the Restoration to as nearly as possible the condition the
Property was in immediately prior to such fire or other casualty or to such
taking or to such other condition as may be agreed upon between Borrower
and Beneficiary. Borrower shall segregate the Net Proceeds from other
funds of Borrower to be used to pay for the cost of the Restoration in
accordance with the terms hereof.
<PAGE>
(b) If the Net Proceeds are greater than the Casualty Benchmark, such
Net Proceeds shall be held by Beneficiary in a segregated account to be
made available to Borrower for the Restoration in accordance with the
provisions of this Section. Borrower shall commence and diligently
prosecute to completion the Restoration of the Property (in the case of a
taking, to the extent the Property is capable of being restored). The Net
Proceeds shall be made available to Borrower for payment of, or
reimbursement of Borrower's expenses in connection with, the Restoration,
subject to the following conditions:
(1) No Event of Default shall have occurred and be continuing;
(2) Beneficiary shall, within a reasonable period to time prior
to request for initial disbursement of the Net Proceeds, be furnished
with an estimate of the cost of the Restoration accompanied by an
independent architect's certification as to such costs and appropriate
plans and specifications for the Restoration;
(3) The Net Proceeds, together with any cash or cash equivalent
deposited by Borrower with Beneficiary, are sufficient to cover the
cost of the Restoration as such costs are certified by the independent
architect;
(4) Beneficiary shall be satisfied that any operating deficits,
including all Monthly Payments, that shall be incurred with respect to
the Property as a result of the occurrence of any such fire or other
casualty or taking, whichever the case may be, shall be covered out of
the Net Proceeds or other funds of Borrower;
(5) Beneficiary shall be satisfied that, upon the completion of
the Restoration and related lease-up, the Lease Documents (as defined
in the Loan Agreement) shall remain in full force and affect with no
abatement of rent except to the extent covered by business
interruption insurance and/or condemnation proceeds and the net cash
flow and value of the Property shall otherwise be restored to levels
that existed prior to such casualty or condemnation;
(6) The Restoration can reasonably be completed on or before the
earlier to occur of (i) six (6) months prior to the maturity of the
Note and (ii) the date required pursuant to Legal Requirements (as
defined in the Loan Agreement);
(7) The Property and the use thereof after the Restoration shall
be in compliance with, and permitted under, all Legal Requirements;
and
<PAGE>
(8) Such fire or other casualty or taking, as applicable, does
not materially impair access to the Land or the Improvements.
(b) The Net Proceeds shall be held by Beneficiary, and until
disbursed in accordance with the provisions of this Section, shall
constitute additional security for the Obligations. The Net Proceeds shall
be disbursed by Beneficiary to, or directed by, Borrower from time to time
during the course of the Restoration, in accordance with the Loan Agreement
as if the Net Proceeds constituted the original proceeds of the Loan.
(c) Beneficiary 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, as well as the contracts under
which they have been engaged, shall be subject to prior review and
acceptance by Beneficiary and Beneficiary's Consultant, which acceptance
shall not be unreasonably withheld or delayed more than fifteen (15) days
after submission to Beneficiary and Beneficiary's Consultant. All costs
and expenses incurred by Beneficiary in connection with making the Net
Proceeds available for the Restoration including, without limitation,
reasonable counsel fees and disbursements and Beneficiary's Consultant's
fees, shall be paid by Borrower.
(d) In no event shall Beneficiary 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 Beneficiary's Consultant, minus a reasonably retainage. The
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 retainage shall not be released until Beneficiary's
Consultant certifies to Beneficiary 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
Beneficiary receives evidence satisfactory to Beneficiary that the costs of
the Restoration have been paid in full or shall be paid in full out of the
retainage.
(e) If at any time the Net Proceeds or the undisbursed balance
thereof shall not, in the opinion of Beneficiary, be sufficient to pay in
full the balance of the costs which are estimated by Beneficiary's
Consultant to be incurred in connection with the completion of the
Restoration, Borrower shall deposit the deficiency (the "Net Proceeds
Deficiency") with Beneficiary before any further disbursement of the Net
Proceeds shall be made. The Net Proceeds Deficiency deposited with
Beneficiary shall be held by Beneficiary 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
Obligations.
<PAGE>
(f) The excess, if any, of the Net Proceeds and the remaining
balance, if any, of the Net Proceeds Deficiency deposited with Beneficiary
after Beneficiary's Consultant certifies to Beneficiary that the
Restoration has been completed in accordance with the provisions of this
Section and the receipt by Beneficiary of evidence satisfactory to
Beneficiary that all costs incurred in connection with the Restoration have
been paid in full, shall be remitted by Beneficiary to Borrower, provided
no Event of Default shall have occurred and be continuing.
(g) Any Net Proceeds not required (i) to be made available for the
Restoration or (ii) to be returned to Borrower as excess Net Proceeds
pursuant to the preceding subsection shall be retained and applied by
Beneficiary toward the payment of the Obligations, whether or not then due
and payable, in such order, priority, and proportions as Beneficiary in its
discretion shall deem proper or, at the discretion of Beneficiary, the same
shall be paid, either in whole or in part, to Borrower.
3.08. Care of Property.
(a) Borrower will preserve and maintain the Property in good condition
and repair, will not commit or suffer any waste, and will not do or suffer to be
done anything that will increase the risk of fire or other hazard to the
Property or any part thereof. Borrower will maintain the insurance required by
the Loan Agreement. Beneficiary is hereby authorized to enter upon and inspect
the Property at any time during normal business hours. Borrower will comply
promptly with all present and future laws, ordinances, rules, and regulations of
any governmental authority affecting the Property or any part thereof,
including, without limitation, the Americans with Disabilities Act and
regulations thereunder, and all laws, ordinances, rules and regulations relating
to zoning, building codes, set back requirements, and environmental matters.
(b) No Improvements, Equipment, or other part of the Property shall be
removed, demolished, or substantially altered without the prior written consent
of Beneficiary. Borrower may, free from the lien and security interest of this
Security Instrument, sell or consume Inventory in the ordinary course of
business and, provided no Default or Event of Default then exists, sell or
otherwise dispose of Equipment that might become worn out, undesirable,
obsolete, disused or unnecessary for use in the operation of the Property upon
replacing the same by, or substituting for the same, other Equipment not
necessarily of the same character, but of at least equal value to Borrower and
costing not less than the amount realized from the Equipment sold or otherwise
disposed of, which shall forthwith become, without further action, subject to
the lien and security interest of this Security Instrument.
(c) If the Property or any part thereof is damaged by fire or any other
cause or through condemnation, Borrower will give immediate written notice of
the same to Beneficiary. Upon the occurrence of any such casualty or
condemnation and provided that Beneficiary makes any insurance proceeds or
condemnation awards collected as a result of such casualty or condemnation
available to Borrower pursuant to the provisions of the Loan Agreement, then
Borrower will restore promptly the Property to the equivalent of its original
condition, regardless of whether such insurance proceeds or condemnation awards
shall be sufficient in amount therefor.
<PAGE>
3.09. Leases and Management Agreements. Borrower shall not, without the
prior written consent and approval of Beneficiary, enter into any Lease or
permit any tenancy of or affecting the Property except for Leases conforming to
the requirements of the Loan Agreement, or enter into or permit any management
agreement, of or affecting the Property, except as expressly permitted by the
Loan Agreement.
3.10. Expenses. Borrower will pay or reimburse Beneficiary for all
reasonable attorneys' fees, costs and expenses incurred by Beneficiary in any
proceedings involving the estate of a decedent or an insolvent, or in any
action, legal proceeding or dispute of any kind in which Beneficiary is made a
party, or appears as party plaintiff or defendant, affecting the Secured
Obligations, this Security Instrument or the interest created herein, or the
Property, including but not limited to the exercise of any power of sale of this
Security Instrument, any condemnation action involving the Property, any dispute
or other matter involving a Lease or any tenant thereunder, or any action to
protect the security hereof, and any such amounts paid by Beneficiary shall be
added to the Secured Obligations.
3.11. Further Assurances; After Acquired Property. At any time, and from
time to time, upon request by Beneficiary, Borrower will make, execute and
deliver or cause to be made, executed and delivered, to Beneficiary, any and all
other further instruments, certificates, and other documents as may, in the
reasonable opinion of Beneficiary, be necessary or desirable to (i) perfect and
protect the lien and security interest created or purported to be created
hereby, (ii) enable Beneficiary to exercise and enforce any and all rights and
remedies hereunder in respect of the Property, or (iii) effect otherwise the
purposes of this Security Instrument, including, without limitation, (A)
executing and filing such financing or continuation statements, or amendments
thereto, as may be necessary or desirable or that Beneficiary might request to
perfect and preserve the security interest created by this Security Instrument
as a first and prior security interest upon and security title in and to all of
the Property, whether now owned or hereafter acquired by Borrower, (B) if
certificates of title are now or hereafter issued or outstanding with respect to
any of the Property, by immediately causing the interest of Beneficiary to be
properly noted thereon at Borrower's expense, and (C) furnishing to Beneficiary
from time to time statements and schedules further identifying and describing
the Property and such other reports in connection with the Property as
Beneficiary might request, all in reasonable detail. Upon any failure by
Borrower so to do, Beneficiary may make, execute, and record any and all such
instruments, certificates, and documents for and in the name of Borrower, and
Borrower hereby irrevocably appoints Beneficiary the agent and attorney in fact
of Borrower so to do, which power of attorney is coupled with an interest and
irrevocable. The lien and security interest hereof shall attach automatically
without any further act or deed required of Borrower or Beneficiary to all
after-acquired property of the kind described herein attached to or used in
connection with the operation of the Property or any part thereof.
3.12. Indemnification of Expenses.
(a) Borrower will pay, reimburse, and indemnify Trustee and Beneficiary
for all reasonable attorney's fees, costs, and expenses incurred by Trustee or
Beneficiary in any suit, action, trial, appeal, bankruptcy or other legal
proceeding or dispute of any kind in which Trustee
<PAGE>
or Beneficiary is made a party or appears as party plaintiff or defendant,
affecting the Secured Obligations, this Security Instrument or the interests
created herein, or the Property, or any appeal thereof, including, but not
limited to, any foreclosure action, any condemnation action involving the
Property or any action to protect the security hereof, any bankruptcy or other
insolvency proceeding commenced by or against Borrower, any lessee of the
Property (or any part thereof), or any guarantor of any of the Secured
Obligations, and any such amounts paid by Trustee or Beneficiary shall be added
to the Secured Obligations and shall be secured by this Security Instrument.
Borrower will indemnify and hold Trustee and Beneficiary harmless from and
against all claims, damages, and expenses, including reasonable attorney's fees
and court costs, resulting from any action by a third party against Trustee or
Beneficiary relating to this Security Instrument or the interests created
herein, or the Property, including, but not limited to, any action or proceeding
claiming loss, damage or injury to person or property, or any action or
proceeding claiming a violation of any national, state or local law, rule or
regulation, provided Borrower shall not be required to indemnify Trustee or
Beneficiary for matters directly and solely caused by the willful misconduct or
gross negligence of Trustee or Beneficiary or for matters occurring after the
title to the Property is for any reason transferred to Beneficiary.
(b) Borrower acknowledges that it has undertaken the obligation to pay all
intangibles taxes and documentary taxes now or hereafter due in connection with
the Secured Obligations and the Loan Documents, and Borrower agrees to indemnify
and hold Beneficiary harmless from any intangibles taxes and documentary stamp
taxes, and any interest or penalties, that Beneficiary might hereafter be
required to pay in connection with the Secured Obligations or Loan Documents.
The agreements of this subsection (b) shall expressly survive satisfaction of
this Security Instrument and the repayment of the Secured Obligations.
3.13. Estoppel Certificates.
(a) After request by Beneficiary, Borrower, within ten (10) days, shall
furnish Beneficiary or any proposed assignee with a statement, duly acknowledged
and certified, setting forth (i) the amount of 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, there are no Defaults or Events of
Default under the Note, the Loan Agreement, or this Security Instrument, (vii)
that the Note, the Loan Agreement, and this Security Instrument are valid, legal
and binding obligations and have not modified or if modified, giving particulars
of such modification, (viii) whether any offsets or defenses exist against the
Secured Obligations and, if any are alleged to exist, a detailed description
thereof, (ix) that all Leases are in full force and effect and (provided the
Property is not a residential multifamily property) 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,
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 (xii) the amount of
security deposits held by Borrower under each Lease and that such amounts are
consistent with the amounts required under
<PAGE>
each Lease, and (xiii) as to any other matters reasonably requested by
Beneficiary and reasonably related to the Leases, the Secured Obligations, the
Property or this Security Instrument.
(b) If requested by Beneficiary, Borrower shall use commercially
reasonable efforts to obtain and promptly deliver to Beneficiary, duly executed
estoppel certificates from any one or more tenants as required by Beneficiary
attesting to such facts regarding the Leases as Beneficiary may require,
including, but not limited to attestations that each Lease covered thereby is in
full force and effect with no defaults thereunder or on the part of any party,
that none of the Rents have been paid more than one month in advance, except as
security, and that the tenant claims no defense or offset against the full and
timely performance of its obligations under the Lease.
3.14. Splitting of Security Instrument. This Security Instrument and the
Note shall, at any time until the same shall be fully paid and satisfied, at the
sole election of Beneficiary, be split or divided into two or more notes and two
or more security instruments, each of which shall cover all or a portion of the
Property upon written request of Beneficiary, shall execute, acknowledge and
deliver to Beneficiary and/or its designee or designees substitute notes and
security instruments in such principal amounts, aggregating not more than the
then unpaid principal amount secured by this Security Instrument, and containing
terms, provisions and clauses no less favorable to Borrower than those contained
herein and in the Note, and such other documents and instruments as may be
required by Beneficiary to effect the splitting of the Note and this Security
Instrument.
3.15. Replacement Documents. Upon receipt of an affidavit of an officer
of Beneficiary as to the loss, theft, destruction or mutilation of the Note or
any other Loan Document which is not of public record, and, in the case of any
such mutilation, upon surrender and cancellation of such Note or other Loan
Document which is not of public record, and, in the case of any such mutilation,
upon surrender and cancellation of such Note or other Loan Document, Borrower
will issue, in lieu thereof, a replacement note or other Loan Document, dated
the date of such lost, stolen, destroyed or mutilated note or other Loan
Document in the same principal amount thereof and otherwise of like tenor.
3.16. Subrogation. Beneficiary shall be subrogated to the claims and
liens of all parties whose claims or liens are discharged or paid by Beneficiary
in order to protect or preserve the Property and the value thereof as security
for Secured Obligations.
3.17. Limit of Validity. To the extent the fulfillment of any provision
of this Security Instrument at the time such provision is to be performed shall
involve transcending the limit of validity presently prescribed by any
applicable usury or similar law, the obligation to be fulfilled under such
provision shall ipso facto be reduced to the limit of such validity.
3.18. Hazardous Material.
(a) Borrower hereby represents and warrants to Beneficiary that, as of the
date hereof Borrower has received no written notice (i) that the Property is in
direct or indirect violation of any local, state or federal law, rule or
regulation pertaining to environmental regulation, contamination or clean-up
(collectively, "Hazardous Material Laws"), including, without limitation, the
<PAGE>
Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42
U.S.C. (S)9601 et seq. and 40 CFR (S)302.1 et seq.), the Resource Conservation
and Recovery Act of 1976 (42 U.S.C. (S)6901 et seq.), The Federal Water
Pollution Control Act (33 U.S.C. (S)1251 et seq. and 40 CFR (S)116.1 et seq.),
and the Hazardous Materials Transportation Act (49 U.S.C. (S)1801 et seq.), and
the regulations promulgated pursuant to said laws, all as amended; and any
similar laws and regulations of the state having jurisdiction over the Property;
(ii) of any hazardous, toxic or harmful substances, wastes, materials,
pollutants or contaminants (including, without limitation, asbestos,
polychlorinated biphenyls, petroleum products, flammable explosives, radioactive
materials, infectious substances or raw materials which include hazardous
constituents) or any other substances or materials which are included under or
regulated by Hazardous Material Laws (collectively, "Hazardous Material") are
located on or have been handled, generated, stored, processed or disposed of on
or released or discharged at, onto or under from the Property (including
underground contamination) except for those substances used by Borrower in the
ordinary course of its business and in compliance with all Hazardous Material
Laws; (iii) that the Property is subject to any private or governmental lien or
judicial or administrative notice or action relating to Hazardous Material; (iv)
of any existing or closed underground storage tanks or other underground storage
receptacles for Hazardous Material located on the Property; (v) of any
investigation, action, proceeding or claim by any agency, authority or unit of
government or by any third party which could result in any liability, penalty,
sanction or judgment under any Hazardous Material Laws with respect to any
condition, use or operation of the Property nor does Borrower know of any basis
for such a claim; and (vi) of any claim by any party that any use, operation or
condition of the Property violates any Hazardous Material Laws.
(b) Borrower shall keep or cause the Property to be kept free from
Hazardous Material (except those substances used by Borrower or tenants of the
Property in the ordinary course of their respective business and in compliance
with all Hazardous Material Laws) and in compliance with all Hazardous Material
Laws, shall not install or use any underground storage tanks, shall expressly
prohibit the use, generation, handling, storage, production, processing and
disposal of Hazardous Material (except those substances used by Borrower or
tenants of the Property in the ordinary course of their respective business and
in compliance with all Hazardous Material Laws) by all lessees of space in the
Improvements, and, without limiting the generality of the foregoing, during the
term of this Security Instrument, shall not install in the Improvements or
permit to be installed in the Improvements asbestos or any substance containing
asbestos.
(c) Borrower shall promptly notify Beneficiary if Borrower shall become
aware of the possible existence of any Hazardous Material (except those
substances used by Borrower or tenants of the Property in the ordinary course of
their respective business and in compliance with all Hazardous Material Laws) on
the Property or if Borrower shall become aware that the Property is or may be in
direct or indirect violation of any Hazardous Material Laws. Further,
immediately upon receipt of the same, Borrower shall deliver to Beneficiary
copies of any and all orders, notices, permits, applications, reports, and other
communications, documents and instruments received by Borrower pertaining to the
actual, alleged or potential presence or existence of any such Hazardous
Material at, on, about, under, within, near or in connection with the Property.
Borrower shall, promptly and when and as required by any Hazardous Material
Laws, at Borrower's sole cost and expense, take, or cause Lessee to take, all
actions as shall be necessary or advisable for the
<PAGE>
clean-up of any and all portions of the Property or other affected property,
including, without limitation, all investigative, monitoring, removal,
containment and remedial actions in accordance with all applicable Hazardous
Material Laws (and in all events in a manner satisfactory to Beneficiary), and
shall further pay or cause to be paid, at no expense to Beneficiary, all clean-
up, administrative and enforcement costs of applicable governmental agencies
which may be asserted against the Property. In the event Borrower fails to do
so, Beneficiary may, but shall not be obligated to, cause the Property or other
affected property to be freed from any Hazardous Material (except those
substances used by Borrower or tenants of the Property in the ordinary course of
their respective business and in compliance with all Hazardous Material Laws) or
otherwise brought into conformance with Hazardous Material Laws and any and all
costs and expenses incurred by Beneficiary in connection therewith, together
with interest thereon at the Default Rate (as defined in the Loan Agreement)
from the date incurred by Beneficiary until actually paid by Borrower, shall be
immediately paid by Borrower on demand and shall be secured by this Security
Instrument and by all of the other Loan Documents securing all or any part of
the indebtedness evidenced by the Note. Borrower hereby grants to Beneficiary
and its agents and employees access to the Property and a license to remove any
Hazardous Material (except those substances used by Borrower or tenants of the
Property in the ordinary course of their respective business and in compliance
with all Hazardous Material Laws) and to do all things Beneficiary shall deem
necessary to bring the Property in conformance with Hazardous Material Laws.
Borrower covenants and agrees, at Borrower's sole cost and expense, to
indemnify, defend (at trial and appellate levels, and with attorneys,
consultants and experts acceptable to Beneficiary), and hold Beneficiary
harmless from and against any and all liens, damages, losses, liabilities,
obligations, settlement payments, penalties, assessments, citations, directives,
claims, litigation, demands, defenses, judgments, suits, proceedings, costs,
disbursements or expenses of any kind or of any nature whatsoever (including,
without limitation, reasonable attorneys', consultants' and experts' fees and
disbursements actually incurred in investigating, defending, settling or
prosecuting any claim, litigation or proceeding) which may at any time be
imposed upon, incurred by or asserted or awarded against Beneficiary or the
Property, and arising directly or indirectly from or out of (i) the presence,
release or threat of release of any Hazardous Material on, in, under or
affecting all or any portion of the Property or any surrounding areas,
regardless of whether or not caused by or within control of Borrower; (ii) the
violation of any Hazardous Material Laws relating to or affecting the Property,
caused by Borrower; (iii) the failure by Borrower to comply fully with the terms
and conditions of this Section; (iv) the breach of any representation or
warranty contained in this Section; or (v) the enforcement of this Section,
including, without limitation, the cost of assessment, containment and/or
removal of any and all Hazardous Material from all or any portion of the
Property or any surrounding areas, the cost of any actions taken in response to
the presence, release or threat of release of any Hazardous Material on, in,
under or affecting any portion of the Property or any surrounding areas to
prevent or minimize such release or threat of release so that it does not
migrate or otherwise cause or threaten danger to present or future public
health, safety, welfare or the environment, and costs incurred to comply with
the Hazardous Material Laws in connection with all or any portion of the
Property or any surrounding areas. The indemnity set forth in this Section shall
also include any diminution in the value of the security afforded by the
Property or any future reduction in the sales price of the Property by reason of
any matter set forth in this Section. Beneficiary's rights under this paragraph
shall survive payment in full of the Secured Obligations and shall be in
addition to all other rights of Beneficiary under this Security Instrument,
<PAGE>
the Loan Agreement, the Note and the other Loan Documents. The foregoing
indemnity shall specifically not include any such costs relating to Hazardous
Materials that are initially placed on, in or under the Property after title
thereto is for any reason transferred to Trustee or Beneficiary, or which result
directly and solely from the willful misconduct or gross neglect of Trustee or
Beneficiary.
(d) Upon Beneficiary's request, at any time after the occurrence and
during the continuation of an Event of Default hereunder or at such other time
as Beneficiary has reasonable grounds to believe that Hazardous Material (except
those substances used by Borrower or tenants of the Property in the ordinary
course of their respective business and in compliance with all Hazardous
Material Laws) are or have been released, stored or disposed of on or around the
Property or that the Property may be in violation of the Hazardous Material
Laws, Borrower shall provide, at Borrower's sole cost and expense, an inspection
or audit of the Property prepared by a hydrogeologist or environmental engineer
or other appropriate consultant approved by Beneficiary indicating the presence
or absence of Hazardous Material on the Property or an inspection or audit of
the Improvements prepared by an engineering or consulting firm approved by
Beneficiary in writing indicating the presence or absence of friable asbestos or
substances containing asbestos on the Property. If Borrower fails to provide
such inspection or audit within forty-five (45) days after such request,
Beneficiary may order the same, and Borrower hereby grants to Beneficiary and
its employees and agents access to the Property and a license to undertake such
inspection or audit. The cost of such inspection or audit, together with
interest thereon at the Default Rate from the date incurred by Beneficiary until
actually paid by Borrower, shall be immediately paid by Borrower on demand and
shall be secured by this Security Instrument and by all of the other Loan
Documents.
(e) Without limiting the foregoing, where recommended by a "Phase I" or
"Phase II" assessment (an "Environmental Report"), Borrower shall establish and
comply with an operations and maintenance program relative to the Property, in
form and substance acceptable to Beneficiary, prepared by an environmental
consultant acceptable to Beneficiary, which program shall address any Hazardous
Material (including asbestos containing material or lead based paint) that may
now or in the future be detected on the Property. Without limiting the
generality of the preceding sentence, Beneficiary may require (i) periodic
notices or reports to Beneficiary in form, substance and at such intervals as
Beneficiary may specify to address matters raised in the Environmental Report,
(ii) an amendment to such operations and maintenance program to address changing
circumstances, laws or other matters, (iii) at Borrower's sole expense,
supplemental examination of the Property by consultants specified by Beneficiary
to address matters raised in the Environmental Report, (iv) access to the
Property, by Beneficiary, its agents or servicer, to review and assess the
environmental condition of the Property and Borrower's compliance with any
operations and maintenance program, and (v) variation of the operations and
maintenance program in response to the reports provided by any such consultants.
(f) If any action shall be brought against Beneficiary based upon any of
the matters for which Beneficiary is indemnified under this Section, Beneficiary
shall notify Borrower in writing thereof and Borrower shall promptly assume the
defense thereof, including, without limitation, the employment of counsel
acceptable to Beneficiary and the negotiation of any settlement; provided,
<PAGE>
however, that any failure of Beneficiary to notify Borrower of such matter shall
not impair or reduce the obligations of Borrower hereunder. Beneficiary shall
have the right, at the expense of Borrower (which expense shall be included in
the costs described in subsection (c) above), to employ separate counsel in any
such action and to participate in the defense thereof. In the event Borrower
shall fail to discharge or undertake to defend Beneficiary against any claim,
loss or liability for which Beneficiary is indemnified hereunder, Beneficiary
may, at its sole option and election, defend or settle such claim, loss or
liability. The liability of Borrower to Beneficiary hereunder shall be
conclusively established by such settlement, provided such settlement is made in
good faith, the amount of such liability to include both the settlement
consideration and the costs and expenses, including, without limitation
attorneys' fees and disbursements, incurred by Beneficiary in effecting such
settlement. In such event, such settlement consideration, costs and expenses
shall be included in costs described in subsection (c) above and Borrower shall
pay the same as provided in this Section. Beneficiary's good faith in any such
settlement shall be conclusively established if the settlement is made on the
advice of independent legal counsel for Beneficiary.
Article IV - Events of Default and Remedies
4.01. Events of Default. As used in this Security Instrument, the term
"Event of Default" shall mean the occurrence of any one or more of the following
events:
(a) The default or failure of Borrower properly and timely to
comply with the terms and conditions of this Security Instrument that is
not cured within applicable cure periods set forth herein or, if no cure
period is specified therefor, is not cured within thirty (30) days after
notice is sent by Beneficiary to Borrower specifying such default;
(b) The occurrence of any Event of Default (as therein defined)
under the Loan Agreement, the Note, or any of the other Loan Documents and
not cured within any applicable cure period; or
(c) The sale, transfer, lease, assignment, or other disposition,
voluntarily or involuntarily, of the Property, or any part thereof or any
interest therein, including a sale or transfer in lieu of condemnation, or,
except for Permitted Encumbrances, any further encumbrance of the Property,
unless expressly permitted by the Loan Agreement or unless the prior
written consent of Beneficiary is obtained (which consent may be withheld
with or without cause in Beneficiary's discretion).
4.02. Acceleration of Maturity. If an Event of Default has occurred,
Beneficiary may declare all of the Secured Obligations to be forthwith due and
payable, whereupon all the Secured Obligations shall become and be forthwith due
and payable, without presentment, demand, protest or further notice of any kind,
all of which are hereby expressly waived by Borrower, and Beneficiary may
immediately enforce payment of all such amounts and exercise any or all of its
rights and remedies under this Security Instrument, the Loan Agreement, and the
other Loan Documents.
<PAGE>
No delay or omission on the part of Beneficiary to exercise such option when
entitled so to do shall be considered as a waiver of such right.
4.03. Right of Beneficiary to Enter and Take Possession.
(a) If an Event of Default has occurred, Borrower, upon demand of
Beneficiary, shall forthwith surrender to Beneficiary the actual possession of
the Property and, if and to the extent permitted by law, Beneficiary itself, or
by such officers or agents as it may appoint, may enter and take possession of
all or any part of the Property without the appointment of a receiver or an
application therefor, and may exclude Borrower and its agents and employees
wholly therefrom, and take possession of the books, papers and accounts of
Borrower.
(b) If Borrower shall for any reason fail to surrender or deliver the
Property or any part thereof after such demand by Beneficiary, Beneficiary may
obtain a judgment or decree conferring upon Beneficiary the right to immediate
possession or requiring Borrower to deliver immediate possession of the Property
to Beneficiary. Borrower will pay to Beneficiary, upon demand, all expenses of
obtaining such judgment or decree, including compensation to Beneficiary, its
attorneys and agents, and all such expenses and compensation shall, until paid,
become part of the Secured Obligations and shall be secured by this Security
Instrument.
(c) Upon every such entering upon or taking of possession, Beneficiary
may hold, store, use, operate, manage and control the Property and conduct the
business thereof, and, from time to time (i) make all necessary and proper
repairs, renewals, replacements, additions, betterments, and improvements
thereto and purchase or otherwise acquire additional fixtures, personalty, and
other property; (ii) insure or keep the Property insured; (iii) manage and
operate the Property and exercise all the rights and powers of Borrower, in its
name or otherwise, with respect to the same, and (iv) enter into any and all
agreements with respect to the exercise by others of any of the powers herein
granted Beneficiary, all as Beneficiary may from time to time determine to be to
its best advantage. Beneficiary may collect and receive all Rents and Accounts,
including those past due as well as those accruing thereafter, and after
deducting (aa) all expenses of taking, holding, managing, and operating the
Property (including compensation for the services of all persons employed for
such purposes), (bb) the cost of all such maintenance, repairs, renewals,
replacements, additions, betterments, improvements, purchases, and acquisitions,
(cc) the cost of such insurance, (dd) such taxes, assessments, and other charges
as Beneficiary may reasonably determine to pay, (ee) other proper charges upon
the Property or any part thereof, and (ff) the compensation and expenses of
attorneys and agents of Beneficiary, Beneficiary shall apply the remainder of
the money so received to the other Secured Obligations in such order, priority,
and proportions as Beneficiary may elect. Beneficiary's sole duty with respect
to the custody, safekeeping, and physical preservation of the Property shall be
to deal with it in the same manner as Beneficiary deals with similar property
for its own account. For the purpose of carrying out the provisions of this
Section, Borrower hereby constitutes and appoints Beneficiary the true and
lawful attorney in fact of Borrower, which power of attorney is coupled with an
interest and irrevocable, to do and perform, from time to time, any and all
actions necessary and incidental to such purpose and does, by these presents,
ratify and confirm any and all actions of said attorney in fact on the Property.
Anything in this Section to the contrary notwithstanding, Beneficiary shall not
be obli-
<PAGE>
gated to discharge or perform the duties of a landlord to any tenant or incur
any liability as a result of any exercise by Beneficiary of its rights under
this Security Instrument, and Beneficiary shall be liable to account only for
the Rents actually received by Beneficiary.
(d) Whenever all the Secured Obligations shall have been paid and all
Events of Default shall have been cured, Beneficiary shall surrender possession
of the Property to Borrower and its successors or assigns. The same right of
taking possession, however, shall exist if any subsequent Event of Default shall
occur and be continuing.
4.04. Performance by Beneficiary. If Borrower defaults in the payment of
any tax, lien, assessment, or charge levied or assessed against the Property, or
in the payment of any utility charge, whether public or private, or in the
payment of any insurance premium, or in the procurement of insurance coverage
and the delivery of the insurance policies required in the Loan Agreement, or in
the performance or observance of any other covenant, condition, or term of this
Security Instrument, then Beneficiary, at its option, may perform or observe the
same, and all payments made or costs incurred by Beneficiary in connection
therewith shall constitute Secured Obligations and shall be, without demand,
immediately repaid by Borrower to Beneficiary with interest thereon at the
Default Rate specified in the Loan Agreement. Beneficiary shall be the sole
judge of the legality, validity, and priority of any such tax, lien, assessment,
charge, claim, and premium, of the necessity for any such actions, and of the
amount necessary to be paid in connection therewith. Beneficiary is hereby
empowered to enter and to authorize others to enter upon the Property or any
part thereof for the purpose of performing or observing any such defaulted
covenant, condition, or term, without thereby becoming liable to Borrower.
4.05. Appointment of a Receiver. If an Event of Default has occurred,
Beneficiary, upon application to a court of competent jurisdiction, shall be
entitled, without regard to the adequacy of any security for the Secured
Obligations or the solvency of any party bound for its payment, to the
appointment of a receiver to take possession of and to operate the Property and
to collect the rents, profits, issues and revenues thereof. Borrower will pay
to Beneficiary upon demand all expenses, including, without limitation, all
receivers' fees, reasonable attorneys' fees, and agent's compensation, incurred
pursuant to the provisions of this Section, and all such expenses shall
constitute Secured Obligations.
4.06. Beneficiary's Power of Enforcement.
(a) If an Event of Default exists, Beneficiary may orally or in writing
request Trustee to proceed with foreclosure, and in such event Trustee is hereby
authorized and empowered, and it shall be Trustee's special duty, upon such
request of Beneficiary, to sell the Collateral (as herein defined), or any part
thereof, to the highest bidder or bidders for cash, at the courthouse door of
any county in the state wherein the Property then subject to the lien hereof is
situated; provided that, to the extent permitted by law, if the Property is
situated in more than one county, such sale of the Collateral, or any part
thereof, may be made in any county in such state wherein any part of the
Property then subject to the lien hereof is situated, all pursuant to the
requirements of Section 51.002 of the Texas Property Code, as then amended. Any
such sale shall be made at public auction, between the hours of ten o'clock A.M.
and four o'clock P.M. on the first Tuesday in any month, after a written or
printed notice has been posted at the courthouse door in the county, or
<PAGE>
if more than one, then in each of the counties, wherein the Property subject to
the lien hereof is situated, which notice shall designate the county where the
Collateral, or any part thereof, will be sold, and which notice shall be posted
at least twenty-one (21) days prior to the date of the sale, or as otherwise
required by applicable law with respect to the foreclosure of a deed of trust.
If then required by applicable law of the State of Texas, notice of the proposed
sale shall be given also by filing, at least twenty-one (21) days before the
date of the sale, a copy of such notice in the office of the county clerk of the
county, or if more than one, then of each of the counties, wherein the Property
to be sold is situated, which notice shall designate the county in which the
sale is to be made. At least twenty-one (21) days preceding the date of sale,
Beneficiary shall serve written notice of the proposed sale by certified mail on
each debtor obligated to pay the Loan according to the records of the
Beneficiary. Service of such notice shall be completed upon deposit of the
notice, enclosed in a post paid wrapper, properly addressed to such debtor at
the most recent address shown by the records of the Beneficiary, in a post
office or official depository under the care and custody of the United States
Postal Service. The affidavit of any person having knowledge of the facts to the
effect that such service was completed shall be prima facia evidence of the fact
of service. After such sale, Trustee shall make to the purchaser or purchasers
thereunder good and sufficient deeds and assignments, in the name of Borrower,
conveying the Collateral, or any part thereof, so sold to the purchaser or
purchasers with general warranty of title by Borrower. Sale of a part of the
Collateral shall not exhaust the power of sale, but sales may be made from time
to time until the Loan is paid in full. It shall not be necessary to have
present or to exhibit at any such sale any of the Collateral. In addition to the
rights of sale granted under the preceding provisions of this subsection, if an
Event of Default occurs, Beneficiary, at its option, at once or at any time
thereafter while any matured installment remains unpaid, without declaring the
entire Loan to be due and payable, may orally or in writing direct Trustee to
enforce this Trust and to sell the Collateral subject to such unmatured
indebtedness and the liens securing its payment, in the same manner, on the same
terms, at the same place and time, and after having given notice in the same
manner, all as provided in the preceding provisions of this subsection. After
such sale, Trustee shall make due conveyance to the purchaser or purchasers.
Sales made without maturing the Loan may be made hereunder whenever there is an
Event of Default without exhausting the power of sale granted hereby, and
without affecting in any way the power of sale granted under this subsection on
the unmatured balance of the Loan (except as to any proceeds of any sale which
Beneficiary may apply as a payment or prepayment on the Loan) or the liens
securing payment of the Loan. It is intended by each of the foregoing provisions
of this subsection that Trustee may, after any request or direction by
Beneficiary, sell not only the Property but also the other Collateral, or any
part thereof, along with the Property, or any part thereof, all as unit and as a
part of the single sale, or may sell any part of the Collateral separately from
the remainder of the Collateral. It is agreed that, in any deed or deeds given
by Trustee, any and all statements of fact or other recitals therein made as to
the identity of Beneficiary, or as to the occurrence or existence of any Event
of Default, or as to the acceleration of the maturity of the Loan or as to the
request to sell, notice of sale, time, place, terms, and manner of sale, and
receipt, distribution, and application of the money realized therefrom, or as to
the due and proper appointment of a substitute trustee, and, without being
limited by the foregoing, as to any other act or thing having been duly done by
Beneficiary or by Trustee, shall be taken by all courts of law and equity as
prima facie evidence that such statements or recitals state facts and are
without further question to be so accepted, and Borrower does hereby ratify and
confirm any and all acts that Trustee may lawfully do in the premises by virtue
hereof. In the event of the resignation or death of Trustee, or Trustee's
failure, refusal, or inability, for any reason, to make any such sale or to
perform any of
<PAGE>
the trusts herein declared, or, at the option of Beneficiary, without cause,
then Beneficiary may appoint, in writing, a substitute trustee, who shall
thereupon succeed to all the Collateral, and trusts herein granted to and vested
in Trustee. If Beneficiary is a corporation, such appointment may be made on
behalf of such Beneficiary by any person who is an authorized officer or agent
of Beneficiary. In the event of the resignation or death of any such substitute
trustee, or Trustee's failure, refusal, or inability to make any such sale or
perform such trusts, or, at the option of Beneficiary, without cause, successive
substitute trustees may thereafter, from time to time, be appointed in the same
manner. It shall not be necessary to record the appointment of any substitute
trustee. Wherever herein the word "Trustee" is used, the same shall mean the
person who is the duly appointed trustee or substitute trustee hereunder at the
time in questions.
(b) Beneficiary may, or Trustee may upon written or oral request of
Beneficiary, proceed by suit or suits, at law or in equity, to enforce the
payment and performance of the Loan in accordance with the terms hereof and of
the Note or other instruments evidencing the Loan, to foreclose the liens of
this Security Instrument as against all or any part of the Collateral, and to
have all or any part of the Collateral sold under the judgment or decree of a
court of competent jurisdiction.
(c) After notification, if any, as hereafter provided in this subsection,
Beneficiary may sell, lease, or otherwise dispose of (herein, a "disposition"),
at the office of Beneficiary, or on the Property, or elsewhere, as chosen by
Beneficiary, all or any part of the Improvements and Equipment, in their then
condition or following any commercially reasonable preparation or processing,
and each disposition may be as a unit or in parcels, by public or private
proceedings, and by way of one or more contracts, and, at any disposition, it
shall not be necessary to have present or exhibit the Improvements and
Equipment, or any part thereof being sold. The disposition of any part of the
Improvements and Equipment shall not exhaust Beneficiary's power of disposition,
but dispositions may be made from time to time until the Loan is paid in full.
Reasonable notification of the time and place of any public disposition pursuant
to this subsection, or reasonable notification of the time after which any
private disposition is to be made pursuant to this subsection, shall be sent to
Borrower and to any other person entitled to receive notice under the Texas
Business and Commerce Code or other applicable Uniform Commercial Code (the
"Code") of the State of Texas or other applicable jurisdiction. It is agreed
that notice sent or given not less than ten calendar days prior to the taking of
the action to which the notice relates is reasonable notification for the
purposes of this subsection.
(d) Upon written notice to Borrower, Beneficiary may surrender the
insurance policies maintained pursuant to this Security Instrument and receive
and apply the unearned premiums as a credit on the Loan, and, in connection
therewith, Borrower hereby appoints Beneficiary as the agent and attorney-in-
fact for Borrower to collect such premiums.
(e) Beneficiary shall have and may exercise any and all other rights which
Beneficiary may have at law or in equity, or by virtue of any other Loan
Documents, under the Code, or otherwise.
(f) In the event a foreclosure hereunder should be commenced by Trustee in
accordance with the powers of sale granted in this Security Instrument,
Beneficiary may at any time before the sale, orally or in writing, direct
Trustee to abandon the sale, and may then institute suit
<PAGE>
for the collection of the Loan, and/or for the foreclosure of the liens hereof.
If Beneficiary should institute a suit for the collection of the Loan, and/or
for a foreclosure of the liens hereof, Beneficiary may at any time before the
entry of a final judgment in such suit dismiss such suit (either totally or as
to the counts thereof for judicial foreclosure), and require Trustee to sell the
Collateral, or any part thereof, in accordance with the provisions of this
Security Instrument.
4.07. UCC Remedies. This Security Instrument is a "security agreement"
within the meaning of the UCC. 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. Borrower by executing and delivering this
Security Instrument has granted and hereby grants to Borrower, as security for
the Secured Obligations, a security interest in the Property to the full extent
that the Property may be subject to the UCC (said portion of the Property so
subject to the UCC being referred to in this Security Instrument as the
"Collateral"). If an Event of Default occurs, Beneficiary may exercise, in
addition to all other rights and remedies granted to it in this Security
Instrument and in any other Loan Document, all rights and remedies of a secured
party under the UCC. Without limiting the generality of the foregoing,
Beneficiary, without demand of performance or other demand, presentment,
protest, advertisement or notice of any kind (except any notice required by law
referred to below) to or upon Borrower or any other person (all and each of
which demands, defenses, advertisements and notices are hereby waived), may in
such circumstances forthwith collect, receive, appropriate and realize upon the
Collateral , or any part thereof, and/or may forthwith sell, lease, assign, give
option or options to purchase, or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to do any of the foregoing), in one
or more parcels at public or private sale or sales, at any exchange, broker's
board or office of Beneficiary or elsewhere upon such terms and conditions as it
may deem advisable and at such prices as it may deem best, for cash or on credit
or for future delivery without assumption of any credit risk. Beneficiary shall
have the right upon any such public sale or sales, and, to the extent permitted
by law, upon any such private sale or sales, to purchase the whole or any part
of the Collateral so sold, free of any right or equity of redemption in
Borrower, which right or equity is hereby waived or released. Borrower further
agrees, at Beneficiary's request, to assemble the Collateral and make it
available to Beneficiary at places which Beneficiary shall reasonably select,
whether at Borrower's premises or elsewhere. If any notice of a proposed sale
or other disposition of the Collateral shall be required by law, such notice
shall be deemed reasonable and proper if given at least ten (10) days before
such sale or other disposition.
4.08. Purchase by Beneficiary. Upon any foreclosure or other sale of or
any portion of the Property, Beneficiary may bid for and purchase the Property
or any part thereof and shall be entitled to apply all or any part of the
Secured Obligations as a credit to the purchase price.
4.09. Application of Proceeds of Sale. Any purchase money, proceeds, and
avails of any sale or other disposition of the Property, or any part thereof, or
any other sums collected by Beneficiary pursuant to this Security Instrument,
the Note, or the other Loan Documents may be applied by Beneficiary to the
payment of the Secured Obligations in such priority and proportions as
Beneficiary in its discretion shall deem proper.
4.10. Borrower as Tenant Holding Over. If any sale of the Property or
any part thereof occurs pursuant to this Security Instrument, Borrower shall be
deemed a tenant holding over and
<PAGE>
shall forthwith deliver possession to the purchaser or purchasers at such sale
or be summarily dispossessed according to provisions of law applicable to
tenants holding over.
4.11. Discontinuance of Proceedings; Restoration of Parties. If
Beneficiary proceeds to enforce any right of remedy under this Security
Instrument by receiver, entry, or otherwise and such proceedings are
discontinued or abandoned for any reason or are determined adversely to
Beneficiary, then and in every such case Borrower and Beneficiary shall be
restored to their former positions and rights hereunder, and all rights, powers
and remedies of Beneficiary shall continue as if no such proceeding had been
taken.
4.12. Remedies Cumulative. No right, power, or remedy conferred upon or
reserved to Beneficiary by this Security Instrument or any of the other Loan
Documents is intended to be exclusive of any other right, power, or remedy, but
each and every such right, power, and remedy shall be cumulative and concurrent
and shall be in addition to any other right, power, and remedy given under this
Security Instrument, any such other Loan Document, or now or hereafter existing
at law or in equity or by statute. The exercise by Beneficiary of any such
right, power, and remedy shall not operate as an election of remedies by
Beneficiary and shall not preclude the exercise by Beneficiary of any or all
other such rights, powers, or remedies. If the sale of all or any part of the
Property is permitted hereunder, then such sale of the Property may be in one or
more parcels and in such manner and order as Beneficiary, in its sole
discretion, may elect, it being expressly understood and agreed that the right
of sale arising out of an Event of Default shall not be exhausted by any one or
more sales, but other and successive sales may be made until all of the Property
has been sold or until the Secured Obligations have been fully satisfied.
4.13. Waiver of Appraisement, Valuation, Exemption, Etc. Borrower
agrees, to the full extent permitted by law, that in case of an Event of Default
hereunder, neither Borrower nor anyone claiming through or under Borrower will
set up, claim or seek to take advantage of any appraisement, valuation, stay,
extension, exemption, or laws now or hereafter in force, in order to prevent or
hinder the enforcement or foreclosure of this Security Instrument, or the
absolute sale of the Property or any part thereof, or the delivery of possession
thereof immediately after such sale to the purchaser at such sale, and Borrower,
for itself and all who may at any time claim through or under Borrower, hereby
waives to the full extent that it may lawfully so do, the benefit of all such
laws, and any and all right to have the assets subject to the lien and security
interest of this Security Instrument marshaled upon any foreclosure or sale
under the power herein granted.
4.14. Suits to Protect the Property. Beneficiary shall have power (i) to
institute and maintain such suits and proceedings as it may deem expedient to
prevent any impairment of the Property by any acts which may be unlawful or any
violation of this Security Instrument, (ii) to preserve or protect its interest
in the Property and in the Rents, and (iii) to restrain the enforcement of or
compliance with any legislation or other governmental enactment, rule, or order
that may be unconstitutional or otherwise invalid, if the enforcement of or
compliance with such enactment, rule, or order would impair the security
hereunder or be prejudicial to the interest of Beneficiary.
4.15. Delay or Omission No Waiver. No delay or omission of Beneficiary
or of any holder of the Note to exercise any right, power, or remedy accruing
upon any Event of Default shall
<PAGE>
exhaust or impair any such right, power, or remedy or shall be construed to be a
waiver of any such Event of Default, or acquiescence therein, and every right,
power, and remedy given by this Security Instrument to Beneficiary may be
exercised from time to time and as often as may be deemed expedient by
Beneficiary.
4.16. No Waiver of Event of Default to Affect Another, etc. No waiver of
any Event of Default hereunder shall extend to or shall affect any subsequent or
any other then existing Event of Default or shall impair any rights, powers, or
remedies consequent thereon. If Beneficiary (i) grants forbearance or an
extension of time for the payment of any of the Secured Obligations, (ii) takes
other or additional security for the payment of the Secured Obligations, (iii)
waives or does not exercise any right granted in the Note, this Security
Instrument, or any of the other Loan Documents, (iv) releases any part of the
Property from the lien and interest of this Security Instrument or otherwise
changes any of the terms of the Note, this Security Instrument, or any of the
other Loan Documents, (v) consents to the filing of any map, plat, or replat
pertaining to the Property, (vi) consents to the granting of any easement or
license affecting the Property, or (vii) makes or consents to any agreement
subordinating the lien and interest of this Security Instrument, then any such
act or omission shall not release, discharge, modify, change, or affect the
original liability under the Note, this Security Instrument, or otherwise of
Borrower or any subsequent purchaser of the Property or any part thereof, or any
maker, co-signer, endorser, surety, or guarantor, nor shall any such act or
omission preclude Beneficiary from exercising any right, power, or privilege
herein granted or intended to be granted in the event of any other Event of
Default then made or of any subsequent Event of Default, nor, except as
otherwise expressly provided in an instrument or instruments executed by
Beneficiary, shall the lien and security interest of this Security Instrument be
altered thereby. In the event of the sale or transfer by operation of law or
otherwise of all or any part of the Property, Beneficiary, at its option,
without notice to any person or entity, hereby is authorized and empowered to
deal with any such vendee or transferee with reference to the Property or the
Secured Obligations, or with reference to any of the terms or conditions hereof,
as fully and to the same extent as it might deal with the original parties
hereto and without in any way releasing or discharging any of the liabilities or
undertakings hereunder.
4.17. Proofs of Claim. In the case of any receivership, insolvency,
bankruptcy, reorganization, arrangement, adjustment, composition or other
proceedings affecting Borrower or its creditors or property, Beneficiary, to the
extent permitted by law, shall be entitled to file such proofs of claim and
other documents as may be necessary or advisable in order to have the claims of
Beneficiary allowed in such proceedings for the entire amount due and payable by
Borrower under this Security Instrument at the date of the institution of such
proceedings and for any additional amount which may become due and payable by
Borrower hereunder after such date.
Article V - Financing Statements and Fixture Filing
5.01. Financing Statements. Borrower covenants and agrees to execute,
file, and refile such financing statements, continuation statements, or other
documents as Beneficiary shall require from time to time with respect to the
Collateral. Borrower agrees that the filing of financing statement(s) in the
records normally having to do with the Collateral shall not in any way affect
the
<PAGE>
agreement of Borrower that everything used in connection with the production
of income from the Property or adapted for use therein or that is described or
reflected in this Security Instrument is, and at all times and for all purposes
and in all proceedings, both legal or equitable, shall be, regarded as part of
the Land conveyed hereby regardless of whether (i) any such item is physically
attached to the Improvements, (ii) serial numbers are used for the better
identification of certain items capable of being thus identified in an exhibit
to this Security Instrument, or (iii) any such item is referred to or reflected
in any such financing statement(s) so filed at any time. Similarly, the mention
in any such financing statement(s) of the rights in and to (aa) the proceeds of
any insurance policy, (bb) any award in condemnation proceedings for taking or
for loss of value, or (cc) Borrower's interest as lessor in any present or
future Leases or Rents shall not in any way alter any of the rights of
Beneficiary as determined by this Security Instrument or affect the priority of
Beneficiary's security interest granted hereby or by any other recorded
document, it being understood and agreed that such mention in such financing
statement(s) is solely for the protection of Beneficiary in the event any court
shall at any time hold, with respect to the foregoing items (aa), (bb), or (cc),
that notice of Beneficiary's priority of interest, to be effective against a
particular class of persons, must be filed in the UCC records. This Security
Instrument may be filed as a financing statement in any office where Beneficiary
deems such filing necessary or desirable, and Borrower will promptly upon demand
reimburse Beneficiary for the costs therefor.
5.02. Fixture Filing. To the extent that the Property includes items of
personal property that are or are to become fixtures under applicable law, and
to the extent permitted under applicable law, the filing of this Security
Instrument in the real estate records of the county in which such Property is
located shall also operate from the time of filing as a fixture filing with
respect to such Property, and the following information is applicable for the
purpose of such fixture filing:
(1) Name and address of the debtor:
Wells Operating Partnership, L.P.
c/o Wells Real Estate Funds
6200 Corners Parkway
Suite 250
Norcross, Georgia 30092
(2) Name and address of the secured party:
SouthTrust Bank, National Association
P.O. Box 2554
Birmingham, Alabama 35290
(3) This documents covers goods or items of personal property which are or
are to become fixtures upon the real estate described herein.
(4) The name of the record owner of the real estate on which such fixtures
are or are to be located is Wells Operating Partnership, L.P.
<PAGE>
Article VI - Defeasance
6.01. Defeasance Upon Payment of the Secured Obligations. This Security
Instrument shall cease, terminate, and thereafter be of no further force and
effect in the event that all of the Secured Obligations shall have been paid,
performed, and satisfied in full. Upon such termination and at Borrower's
request and expense, Beneficiary shall execute, acknowledge, and deliver to
Borrower an instrument, in proper form for recording, without warranty,
releasing the lien and security interest of this Security Instrument and
reconveying to Borrower the Property.
6.02. [Intentionally Omitted]
Article VII - Local Law Provisions
7.01. Inconsistencies. In the event of any inconsistencies or dichotomies
between the terms and conditions of this Article VI and the other provisions of
this Security Instrument, the terms and conditions of this Article VI shall be
controlling.
7.02. No Oral Agreements/Notice under Tex. Bus. & Com. Code Ann. (S)
26.02. The Security Documents executed in connection herewith represent the
final agreement between the parties and may not be contradicted by evidence of
prior, contemporaneous or subsequent oral agreements of the parties. There are
no unwritten oral agreements between the parties.
Article VIII - Document Protocols
This Security Instrument is governed by the Document Protocols set forth in
Exhibit A attached to the Loan Agreement, which are specifically incorporated
herein as if fully set forth herein.
Article IX - Deed of Trust Provisions
9.01. Concerning 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. Trustee shall not be
answerable or accountable hereunder except for its own willful misconduct or
gross negligence, and Borrower agrees to indemnify, defend and hold Trustee
harmless from and against any cost, loss, damage, liability or expense
(including, without limitation, reasonable attorney's fees and disbursements)
which Trustee may incur or sustain in the exercise or performance of its powers
and duties hereunder. Trustee 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 may resign at any time upon
giving at least thirty (30) days' notice to Borrower and
<PAGE>
Beneficiary. In the event of the death, removal, resignation, refusal or
inability to act of Trustee, or in its sole discretion for any reason
whatsoever, Beneficiary 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 Beneficiary. The procedure provided for in
this paragraph for substitution of Trustee shall be in addition to and not in
exclusion of any other provisions for substitution, by law or otherwise.
9.02. 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.
9.03. Certain Rights. 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 Trustee hereunder, which
is believed by Trustee in good faith to be genuine.
9.04. 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.
9.05. Perfection of Appointment. If any deed, conveyance or other
instrument of any nature be required from Borrower by Trustee or any substitute
trustee to more fully and certainly vest in and confirm to Trustee or such
substitute trustee the estates rights, powers, and duties conferred hereunder
unto Trustee, then, upon request by Trustee or such 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 at its sole expense.
9.06. 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 predecessor in the rights hereunder with like effect as if originally named
as Trustee herein; but nevertheless, upon the written request of Beneficiary or
of the substitute trustee, the predecessor trustee ceasing to act shall execute
and deliver any instrument transferring to such substitute trustee, upon the
trusts herein expressed, all of the estates, properties, rights, powers and
trusts of such predecessor trustee so ceasing to act, and shall duly assign,
transfer and deliver any of the property and moneys held by such trustee to such
substitute trustee.
<PAGE>
9.07. Conveyance by Trustee. Upon receipt by Trustee of written notice
from Beneficiary that the Secured Obligations have been fully paid as provided
in Section 6.01 above, Trustee shall reconvey the Property, without warranty, to
Borrower or such Person or Persons lawfully entitled thereto.
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<PAGE>
IN WITNESS WHEREOF, Borrower has caused this Security Instrument to be
signed and sealed by its duly authorized representative as of the day and year
first above written.
WELLS OPERATING PARTNERSHIP, L.P., a
Delaware limited partnership
By: Wells Real Estate Investment Trust, Inc., a
Maryland corporation,
Its sole General Partner
By: /s/ Douglas P. Williams
------------------------
Name: Douglas P. Williams
----------------------
Title: Ex VP
---------------------
[Affix corporate seal]
Acknowledgment
STATE OF Georgia )
COUNTY OF Gwinnett )
Before me a Notary Public in and for the State of Georgia, on this day
personally appeared Douglas P. Williams, the Executive Vice President of Wells
Real Estate Investment Trust, Inc., a Maryland corporation, which is the sole
general partner of Wells Operating Partnership, L.P., a Delaware limited
partnership, known to me to be the person and officer whose name is subscribed
to the foregoing instrument, and acknowledged to me that he executed said
instrument as the act and deed of such limited partnership, for the purposes and
consideration therein expressed, and in the capacity therein stated.
Given under my hand and seal of office this 3/rd/ day of May, 2000.
[SEAL]
Martha Jean Cory
----------------------------------------------
NOTARY PUBLIC in and for the State of Georgia
--------
Name (print): MARTHA JEAN CORY
---------------------------------
My Commission expiry:_________________________
This instrument prepared by: [STAMP]
Vanessa G. Morris, Esq.
Burr & Forman LLP
600 West Peachtree Street
Suite 1200
Atlanta, Georgia 30308
